Northwest Tennessee Motorsports Park, LLC v. Tennessee Asphalt Company
410 S.W.3d 810
Tenn. Ct. App.2011Background
- Northwest contracted TAC to repave ~700 feet of a drag strip; contract quoted that subgrade and base issues were not included and implied a workmanlike standard by industry practices.
- TAC performed coring, milled two inches, and proof rolled; moisture in core holes was observed but not deemed indicative of sub-grade failure by TAC's engineers.
- Soft spots and ground movement were found, leading TAC to offer two options: overrun asphalt or full excavation/replacement of sub-grade.
- Northwest chose the overrun option; TAC began paving, became stuck, and machinery damaged areas beyond the contract scope (staging/runoff).
- Testing later showed high sub-grade moisture; Northwest repaired damaged areas with Ford Construction at a cost of $186,803, losing peak-season business.
- Trial court found TAC breached the implied warranty to warn; appellate court reversed, finding no breach and awarding TAC the contract price of $44,918.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TAC breached by failing to warn about sub-grade moisture | Northwest: duty to warn existed; moisture risk should have been disclosed. | TAC: no duty to warn; core moisture did not indicate sub-grade failure; standard practices absent warning obligation. | No breach; no duty to warn established. |
| Whether TAC breached by the workmanlike standard of practice | Northwest: TAC's actions fell below industry standard. | TAC: evidence showed overrun was standard practice and no breach of workmanlike conduct. | No breach; standard industry practice not shown to require different conduct. |
| Whether Northwest is entitled lost profits damages | Northwest: lost profits from season and customer declines should be recoverable. | TAC: damages limited to contract-related costs; lost profits not proven with certainty. | Lost profits not awarded. |
| Whether TAC is entitled to contract price under overrun or original terms | Northwest: credits/overrun should not keep TAC from liability for full cost. | TAC: overrun was permitted; no breach; contract price should be awarded to TAC. | TAC entitled to full contract price; judgment credited by court affirmed. |
| Whether the trial court erred in awarding credits for partial work | Northwest objected to credits reducing recoveries. | TAC: credits appropriate to reflect partial performance and avoid windfall. | Credits upheld; overall judgment reversed in TAC's favor. |
Key Cases Cited
- Planters Gin Co. v. Fed. Compress & Warehouse Co., Inc., 78 S.W.3d 885 (Tenn. 2002) (central contract interpretation standard: parties' intent governs)
- Bowling v. Jones, 300 S.W.3d 288 (Tenn. Ct. App. 2008) (implied standard of workmanship in absence of explicit contract term)
- Carter v. Krueger, 916 S.W.2d 932 (Tenn. Ct. App. 1995) (breach of contract requires showing conditions fell below standard industry practices)
- Allstate Ins. Co. v. Watson, 195 S.W.3d 609 (Tenn. 2006) (contract interpretation and standard of review principles)