578 S.W.3d 879
Tenn.2019Background
- TWB Architects (Burrow) contracted with Progress Capital (Rankin) to design The Braxton condominium project for a fee equal to 2% of construction costs (Architect Agreement).
- Progress Capital/Braxton lacked funds; Rankin proposed and Burrow agreed that Burrow would receive Penthouse P6 as payment. A written Condominium Agreement (stating $0 purchase price "in consideration of design fees") was executed in Feb 2006.
- After the Condominium Agreement, TWB stopped regular billing; Burrow treated and occupied P6, made ~$40,000 in upgrades, and represented himself as owner while closings were delayed.
- Braxton later pledged P6 as loan collateral; Burrow threatened a mechanic’s lien and ultimately TWB filed a lien for the architect fee when Braxton did not deed P6.
- Litigation produced conflicting sworn statements: Rankin initially said the Condominium Agreement created a novation (extinguishing the Architect Agreement), later recanted; Burrow consistently claimed he never intended the Condominium Agreement to extinguish TWB’s fee rights.
- The trial court granted summary judgment to TWB; Court of Appeals affirmed; Supreme Court reversed, holding genuine issues of material fact exist about the parties’ intent to effect a novation and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Condominium Agreement was a novation that extinguished TWB’s fee claim under the Architect Agreement | TWB/Burrow: No novation; parties never agreed to extinguish Architect Agreement; TWB always retained right to fee and filed lien when conveyance failed | Braxton/Rankin: The Condominium Agreement was intended to substitute for and discharge obligations under the Architect Agreement (novation) | Reversed summary judgment for TWB: court held disputed material facts about intent to novate preclude summary judgment and require fact-finder credibility determinations |
Key Cases Cited
- Pacific Eastern Corp. v. Gulf Life Co., 902 S.W.2d 946 (Tenn. 1995) (discusses novation/substituted contract principles and effect of novation)
- Commerce Union Bank v. Burger-In-A-Pouch, Inc., 657 S.W.2d 88 (Tenn. 1983) (intent to discharge prior obligation is a question of fact)
- Rhea v. Marko Constr. Co., 652 S.W.2d 332 (Tenn. 1983) (party asserting novation bears the burden of proof)
- Church v. Perales, 39 S.W.3d 149 (Tenn. 2000) (contradictory testimony may cancel unless corroborated or explained; summary judgment view of such evidence)
- Rye v. Women’s Care Ctr. of Memphis, 477 S.W.3d 235 (Tenn. 2015) (articulates Tennessee summary judgment standard applicable to all movers)
