Hoover, Inc. v. Ashby Communities, LLC, M2016-01877-COA-R3-CV

Background

Hoover, an asphalt/paving contractor, submitted proposals in Oct–Nov 2009 and began work at King’s Chapel subdivision on Nov 12, 2009; Ashby accepted Hoover’s proposals and Powell guaranteed credit.
Hoover billed $92,588.22 for November 2009 work; Ashby did not pay and Hoover stopped work Dec 14, 2009, later recording a mechanic’s lien and suing for the unpaid invoice, interest, and attorney’s fees.
Ashby asserted multiple defenses and counterclaimed (breach, TCPA, misrepresentation); Land Investment Group (LIG) was subsequently joined and raised related claims about the lien and title.
At trial the court found Ashby breached the contract first by refusing to pay the November invoice, awarded Hoover principal ($89,739.52), contractual interest (1.5%/mo to June 30, 2016), and attorney’s fees ($59,559.42).
The court rejected Ashby’s claims that Hoover materially underperformed or that road failures proved Hoover’s breach, finding evidence did not show Hoover caused the later deficiencies.
On appeal the Court of Appeals affirmed: contract interpreted to require payment for “all work performed” each month; any overbilling was negligible; fee and interest awards were supported and within discretion.

Issues

Issue	Plaintiff's Argument (Hoover)	Defendant's Argument (Ashby)	Held
Whether court improperly reformed the contract to reduce roads from five to three	Contract was valid as written; payment based on work performed per month	Court sua sponte reformed contract (Ashby) and that was error	Court did not reform contract; held payment is for “all work performed” monthly and road-count issue was not determinative; no reformation error
Which party committed the first material breach (nonpayment vs. overbilling/underperformance)	Hoover billed for work performed in Nov. 2009 and was entitled to payment; overbilling negligible	Ashby: Hoover overbilled (claimed ~70% billed though <50% complete); Hoover first breached by inaccurate billing	Trial court’s factual finding that Ashby refused to pay the Nov. invoice stands; evidence does not preponderate against that finding — Ashby first breached by nonpayment
Validity of Ashby’s counterclaims that Hoover’s work was deficient (breach/TCPA/misrepresentation)	Hoover: later road failures attributable to other contractors/flooding; Hoover only laid what it did before leaving	Ashby: road failures and GEOServices’ testing show Hoover failed to place required base stone and therefore breached	Court found Ashby failed to prove deficiencies were Hoover’s fault; expert testimony was speculative and other contractors/flooding likely explanations; counterclaims rejected
Award of attorney’s fees and interest (reasonableness and accrual date)	Fees and contractual interest proper; litigation length partly due to defendants’ tactics; counsel’s affidavit and cross-examination sufficient	Ashby: trial court improperly relied on case duration; lacked billing records and meaningful cross-examination; interest award inequitable/should start later	Court applied proper standard (Tenn. Sup. Ct. R. 8 factors); fee award not an abuse of discretion; interest was contractual (1.5%/mo) and properly applied from due date

Key Cases Cited

Watson v. Watson, 196 S.W.3d 695 (Tenn. Ct. App. 2005) (standard for appellate review of bench trial findings)
Campbell v. Florida Steel Corp., 919 S.W.2d 26 (Tenn. 1996) (deference and standard for appellate review of trial court findings)
Morrison v. Allen, 338 S.W.3d 417 (Tenn. 2011) (trial court’s advantage in witness credibility determinations)
Wright ex rel. Wright v. Wright, 337 S.W.3d 166 (Tenn. 2011) (standard of review and guidance on attorney’s fee awards)
Konvalinka v. Chattanooga–Hamilton Cnty. Hosp. Auth., 249 S.W.3d 346 (Tenn. 2008) (abuse of discretion framework for reviewing discretionary trial-court rulings)
White v. McBride, 937 S.W.2d 796 (Tenn. 1996) (reasonableness of fees depends on case circumstances)