ÿWPC 6# UN %] 0ñcU<Tw@4Ðä 05ó 0D( l 0@t 0J´ 0Tþ 0^R 0h° 0r 0|Š 0† 0Œ 1u 0d‘ AQõ ÆF 0D  BP 0Dm D/± Bà D3ýU>0B)nDC— AMÚU*'¨QÕùv~ÎvÓL˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLhÎ(ÈhH  Z 6Times New Roman RegularX(É„$¡¡Ñ°°ÑѰ°ÑÒ°ÒÒ„°ÒÓ  ÓÑTR[  AØ'ÿ Legal[  AØ'ÿ Legal AØ'ÿ Legal AØ'ÿ LegalTÑÓÓÔ€X×xXXXÔ-šBu Z‹$Arrus BT Roman þDÿUD DÓ€ ƒ‰#gular3|x(å(3F¢$¤¤Ý ƒ„!ÝѰ°ÑѰ°ÑÒ°ÒÒ„°ÒÓ  ÓÑTR[  AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÓÓÔ€XT;XXXÔÝ  Ýà ` àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó("ÿÿ$££Ò  ÒÒ  Ò2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ !#%Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý d($$””ò òÚ  Ú1Ú  Úó ó'''÷ÿ dxdüÿP Pd""""'ÿÿdxd< Œ 9p`(&Times New Roman% Line 7 d....7Border 1dd /Cþÿ << Gÿÿ< Œ 9p`(Arial žÝ ƒ!ÝÔ€-ÔÒ  ÒÒ „ ÒÓ  ÓÑ\R AØ'\ÑÓÓÔ€ÔÝ  ÝÝ ƒ!"ÝÝ  ÝÔ€1ÔÔ€1ÔÓ  ÓÔ YYY ÔFILEDÔ€1XÔÌÌò òJanuaryÏ28,Ï1998ÌÌCecilÏCrowson,ÏJr.ÌÔ€1ôÔAppellateÏCourtÏClerkó ó ËÝ ƒ!ÝÑ#€d#ÑÔ€-ÔÒ  ÒÒ „ ÒÓ  ÓÑ\R AØ'\ÑÓÓÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÓÓÔ€-ÔTherefore,€the€fact€that€the€Memorandum€in€this€case€refers€to€the€damages€clause€as€aÏpenalty€is€not€determinative.ÌPtPtHHÚ(ÿáÿáùEG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ion-F Geneva ÒÒ  ion-F Geneva ÒÝ ƒ!ÝÔ . ÔÔ€-ÔÒ  ÒÒ „ ÒÓ  ÓÑ\R AØ'\ÑÓÓÔ€ÔÝ  ÝÒ ° ÒÒ ° ÒÓÓò òÔ€-Ô›Þ ÞÌà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEEó óÌà@ àò òWESTERN€SECTION€AT€JACKSONÌÙ€ ÙœßR€02/A1-j|É` à. `€€@ÿRß›à àà àà àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ÌÌóóÌÌCHARLES€E.€CREWS,€€€€€€€€€€€€€à àà àà à)à àÌà àà àà àà àà àà àà à)à àÌà àà àó óPlaintiff/Appelleeò òà àà àà à)à àó óShelby€Chancery€No.€102887€€€€Ìà àà àà àà àà àà àà àò ò)Ìvs.à àà àà àà àà àà àà à)à à€Ìà àà àà àà àà àà àà à)ÌDEXTER€ROAD€PARTNERS,€à àà à€€€€€€€€€€€à à)à àó óAppeal€No.€€02A01„9603„CH„00045Ìò òO.P.€ADNEY,€JR.,€Individually,€à àà àà à)ÌLARRY€L.€€TAYLOR,€Individually,à àà à)Ìand€W.€TERRY€EDWARDS,€Trustee,à àà à)Ìà àà àà àà àà àà àà à)Ìó óà àà àDefendants/Appellants.à àò òà à)à àÌó óòòÌóóò òÌ€€€ÌÌÌà@ àó óAPPEAL€FROM€THE€CHANCERY€COURT€OF€SHELBY€COUNTY€Ìà@ àAT€MEMPHIS,€TENNESSEEÌÌÌÌà@ àTHE€HONORABLE€C.€NEAL€SMALL,€CHANCELLOR€€€€€ÌòòÌÌÌFor€the€Plaintiff/Appelleeóó:òòà àà àà àFor€the€Defendant/Appellantóó:òòÌóóÌJulie€Bartholomew€€€€€€€€à àà àà àDouglas€Hartley€€ÌCordova,€Tennesseeà àà àà àà àCordova,€TennesseeÌÌ€€€€€€€€€€€€€€€€€€€ÌÌò òÌà àà àà àà àà àà àAFFIRMEDÌÌÌÌÌà àà àà àà àà àà àó óHOLLY€KIRBY€LILLARD,€JUDGEÌÌÌÌCONCUR:ÌÌòòÌóóW.€FRANK€CRAWFORD,€P.J.,€W.S.ÌÌÌALAN€E.€HIGHERS,€J.€€€€ÌÇØØÙ  ÙÓÓÑ7€ì·XXdðXXd7ÑÑ  Ñœà@ àò òOPINIONó óÌ›à àIn€this€case,€the€parties€entered€into€a€real€estate€contract€in€which€the€seller€was€required€toÏconstruct€a€road€to€the€property€by€a€specified€date.€€The€road€was€not€completed€by€the€agreedÏdeadline,€and€the€buyer€sued€for€liquidated€damages€provided€for€by€the€contract.€€The€trial€courtÏawarded€liquidated€damages,€and€the€seller€appeals.€€We€affirm.Ìà àOn€December€4,€1991,€Appellant€Dexter€Road€Partners€(ð ðDRPðð)€contracted€with€AppelleeÏCharles€Crews€(ð ðCrewsðð)€to€sell€Crews€4.31€acres€of€land€for€$1,450,000.€€Crews€planned€toÏbuild€a€shopping€center€on€the€property.€€Access€to€the€property€was€to€be€provided€by€theÏcompletion€of€two€planned€roads,€New€Dexter€Road€and€Bonnie€Lane.€€An€Addendum€to€theÏcontract€provided€that€Crews€would€have€sixty€days€in€which€to€œeither€close›€the€transaction€orÏreject€it.€€The€Addendum€also€included€a€condition€precedent€requiring€DRP€to€convey€the€propertyÏð ðwith€all€improvements€known€as€New€Dexter€Road€completeðð€at€the€œclosing.›Ìà àNegotiations€followed€in€which€DRP€attempted€to€convince€Crews€to€close€the€transactionÏprior€to€the€completion€of€New€Dexter€Road.€€Finally,€on€July€24,€1992,€the€parties€executed€aÏMemorandum€of€Agreement€(ð ðMemorandumðð),€drafted€by€DRP.€€The€Memorandum€provided€forÏfull€tender€of€the€purchase€price€in€exchange€for€DRPððs€promise€to:ÌÓÓà8 àœsubstantially›€complete€the€General€Street€Requirements€as€set€forth€in€that€certainÏCity/County€Standard€Improvement€Contract€for€New€Dexter€Road€and€BonnieÏLane€by€November€1,€1992;€provided,€however,€that€failure€to€complete€any€suchÏrequired€improvement€under€said€contract€beyond€the€curbs€and€gutters€for€suchÏstreets,€including€but€not€limited€to€sidewalks,€final€grading€and€sodding,€ifÏapplicable,€shall€not€be€subject€to€the€November€1,€1992€completion€œdate.›ÌÌÓÓThe€City/County€Standard€Improvement€Contract€for€New€Dexter€Road€and€Bonnie€LaneÏ(ð ðImprovement€œContractðð),›€referred€to€in€the€œMemorandum,›€was€not€attached€to€it.€€Crews€hadÏoriginally€wanted€the€roads€dedicated€and€accepted€by€all€the€necessary€government€authorities€byÏNovember€œ1,›€but€dropped€this€demand€in€signing€the€Memorandum.€€The€Memorandum€furtherÏprovided€that€DRP€would€pay€Crews€ð ða€penalty€of€$1,335.00€per€day€for€each€day€beyondÏNovember€1,€1992,€until€fully€complete.ððÌà àDRP€contracted€œwith€Construction›€Technologies,€Inc.€(ð ðCTIðð)€to€perform€the€roadÏimprovements.€€A€few€days€after€signing€the€Memorandum,€DRP€and€CTI€€entered€into€anÍIndemnity€Agreement.€€In€this€contract,€CTI€agreed€to€indemnify€DRP€for€any€losses€it€sufferedÏthrough€default€under€the€terms€of€the€Memorandum.€€The€Indemnity€Agreement€referred€to€theÏliquidated€damages€clause€of€the€Memorandum€and€recited€that€time€was€of€the€essence,€but€did€notÏmention€the€Improvement€Contract.€€In€addition,€it€referred€to€ð ðfull€completion€and€development€ofÏNew€Dexter€Road€and€Bonnie€Laneðð€by€November€1,€except€for€those€improvements€outside€theÏcurbs€and€gutters.Ìà àAs€of€November€1,€no€soil€cement€or€asphalt€had€been€laid€for€the€roads.€€Placement€of€theÏsoil€cement€was€€completed€by€November€13.€€By€November€30,€the€roads€were€at€least€partiallyÏbarricaded€and€had€not€been€striped.€€Asphalt€paving€was€complete€by€December€2.€€As€ofÏDecember€28,€barricades€were€still€in€place€on€the€roads,€and€the€traffic€light€had€been€installed€butÏwas€still€operating€in€flashing€mode.€€Road€signs€had€not€been€placed,€and€the€roads€were€not€yetÏready€for€traffic.€€Crews€demanded€payment€by€DRP€of€liquidated€damages,€pursuant€to€theÏMemorandum,€of€$78,765,€representing€$1,335€per€day€for€59€days,€the€period€from€November€1Ïto€œDecember€31.›€€DRP€refused€to€pay,€so€Crews€sued€for€liquidated€damages€under€the€contract.Ìà àDuring€discovery,€DRP€initially€failed€to€respond€to€Crewsðð€first€set€of€interrogatories.€ÏCrews€filed€a€motion€to€compel.€€Crews€and€DRP€then€entered€into€a€consent€order,€under€whichÏDRP€had€a€deadline€of€April€1,€1994€to€answer€the€interrogatories.€€As€of€April€27,€theÏinterrogatories€had€not€been€answered,€so€Crews€filed€a€petition€for€scire€facias,€alleging€contemptÏand€asking€for€sanctions€and€attorneyððs€fees.€€DRP€filed€its€answers€to€the€interrogatories€on€JuneÏ10.€€At€the€hearing€on€Crewsðð€petition€for€scire€facias€on€June€27,€1994,€the€trial€court€found€thatÏDRPððs€answers€were€incomplete.€€The€court€ordered€DRP€to€file€supplemental€answers€by€July€11Ïand€reserved€consideration€of€sanctions.€€DRP€filed€its€Supplemental€Answers€on€July€15.€€InÏresponse€to€Crewsðð€request€for€the€production€of€documents,€DRP€provided€three€of€theÏœdocuments€requested€by€plaintiffs.›Ìà àAt€the€bench€trial,€DRPððs€counsel€attended,€but€no€representatives€of€DRP€were€present.€ÏDRPððs€counsel€admitted€to€breach€of€contract€but€maintained€that€the€roads€were€substantiallyÍcomplete€on€December€3,€1992.€€DRP€also€argued€that€the€liquidated€damages€provision€in€theÏcontract€was€unenforceable€as€a€penalty.€€DRP€admitted€that€its€discovery€responses€had€beenÏdilatory€and€incomplete€but€asserted€that€many€of€the€requested€documents€were€not€in€DRPððsÏpossession.€€Proof€at€trial€established€that€several€of€DRPððs€answers€to€Crewsðð€interrogatoriesÏwere€incorrect,€stating€completion€dates€that€were€earlier€than€the€actual€completion€dates.€€InÏaddition,€one€of€the€three€documents€produced€by€DRP,€an€invoice€dated€October€20,€1992,Ïindicated€that€at€least€some€soil€cement€and€paving€work€had€been€done€by€that€date.€€TheÏdocument€proved€to€be€an€invoice€for€unrelated€work€performed€on€an€adjacent€site.€€Crews€wasÏunable€to€begin€construction€of€the€commercial€structure€until€March,€1993.Ìà àThe€trial€court€allowed€into€evidence€documents€extrinsic€to€the€Memorandum,€includingÏthe€Indemnity€Agreement€and€some€letters€between€the€parties.€€In€addition,€the€trial€court€appliedÏthe€missing€witness€rule€against€DRP.€€It€found€that€the€roads€were€not€substantially€complete€untilÏDecember€31,€1992,€the€day€on€which€they€were€complete€from€curb€to€curb€and€open€for€traffic.€ÏThe€trial€court€upheld€the€liquidated€damages€provision€of€$1,335€per€day€and€awarded€CrewsÏliquidated€damages€of€$78,765.€€The€trial€court€also€awarded€Crews€pre„judgment€interest€at€theÏrate€of€10%€from€December€31,€1992,€in€the€amount€of€$22,313.32.€€In€addition,€it€sanctionedÏDRP€for€discovery€violations€by€awarding€Crews€$7,500€in€attorneyððs€fees.€€From€this€decision,ÏDRP€now€appeals.€Ìà àOn€appeal,€DRP€raises€several€issues.€€œFirst,›€DRP€asserts€that,€under€the€contract,€the€roadÏwas€ð ðsubstantially€completeðð€earlier€than€the€date€found€by€the€trial€court.€Next,€DRP€contends€thatÏthe€contractual€provision€for€liquidated€damages€was€a€penalty€and€should€not€have€been€enforced.€€ÏFinally,€DRP€argues€that€the€court€erred€in€awarding€pre„judgment€interest€and€in€sanctioning€DRPÏfor€discovery€violations.Ìà àContract€interpretation€is€a€question€of€law,€and€our€review€is€therefore€ò òòòde€novoóóó ó€upon€theÏrecord€with€no€presumption€of€correctness€attached€to€the€trial€courtððs€interpretation.€€Tenn.€R.ÏApp.€P.€13(d);€òòò òGredig€v.€Tennessee€Farmers€Mut.€Ins.€Co.óóó ó,€891€S.W.2d€909,€912Í(Tenn.€App.€1994).€€If,€however,€the€contract€contains€ambiguity€which€necessitates€looking€toÏextrinsic€evidence€to€determine€the€intention€of€the€parties,€then€the€courtððs€factual€findings€areÏpresumed€correct€unless€the€evidence€preponderates€otherwise.€€ò òòòSeeóóó ó€Tenn.€R.€App.€P.€13(d);Ïò òòòAPAC„Tennessee,€Inc.€v.€J.M.€Humphries€Constr.€Co.óóó ó,€732€S.W.2d€601,€604€(Tenn.ÏApp.€1986);€ò òòòSouthern€Ry.€Employees€Credit€Union€v.€Thornburgó óóó,€680€S.W.2d€791,Ï792€(Tenn.€App.€œ1984).›Ìà àDRP€first€raises€the€issue€of€when€New€Dexter€Road€and€Bonnie€Lane€were€ð ðsubstantiallyÏcompleteðð€under€the€terms€of€the€contract.€€This€Court€has€previously€addressed€the€basic€rules€ofÏcontract€construction:ÌÓÓà8 àà àThe€cardinal€rule€for€interpretation€of€contracts€is€to€ascertain€the€intention€ofÏthe€parties€and€to€give€effect€to€that€intention€consistent€with€legal€principles.€€AÏprimary€objective€in€the€construction€of€a€contract€is€to€discover€the€intention€of€theÏparties€from€a€consideration€of€the€whole€contract.€€In€construing€contracts,€theÏwords€expressing€the€partiesðð€intentions€should€be€given€their€usual,€natural€andÏordinary€meaning,€and€neither€party€is€to€be€favored€in€the€construction.ÌÌà8 àà àThe€court,€at€arriving€at€the€intention€of€the€parties€to€a€contract,€does€notÏattempt€to€ascertain€the€partiesðð€state€of€mind€at€the€time€the€contract€was€executed,Ïbut€rather€their€intentions€as€actually€embodied€and€expressed€in€the€contract€asÏwritten.€€All€provisions€of€a€contract€should€be€construed€as€in€harmony€with€eachÏother,€if€such€construction€can€be€reasonably€made,€so€as€to€avoid€repugnancyÏbetween€the€several€provisions€of€a€single€contract.ÌÌÓÓòòò òRainey€v.€Stanselló óóó,€836€S.W.2d€117,€118„19€(Tenn.€App.€1992)€(citations€omitted).€€WhileÏcourts€usually€look€to€the€four€corners€of€a€contract€in€interpreting€it,€ò òòòGredig€v.€TennesseeÏFarmers€Mut.€Ins.€Co.óóó ó,€891€S.W.2d€909,€912€(Tenn.€App.€1994),€extrinsic€evidence€isÏadmissible€to€aid€in€discerning€the€partiesðð€intent€when€a€particular€provision€is€ambiguous.€Ïò òòòSouthern€Ry.€Employees€Credit€Union€v.€Thornburgóóó ó,€680€S.W.2d€791,€792€(Tenn.ÏApp.€1984).€€To€determine€whether€a€provision€is€ambiguous,€courts€follow€certain€acceptedÏprinciples:ÌÓÓà8 àThe€language€in€dispute€must€be€examined€in€the€context€of€the€entire€agreement.€ÏAs€previously€indicated,€words€must€be€given€their€usual€and€ordinaryÏinterpretation.€€The€language€of€a€contract€is€ambiguous€when€its€meaning€isÏuncertain€and€when€it€can€be€fairly€construed€in€more€than€one€way.€€ð ðA€strainedÏconstruction€may€not€be€placed€on€the€language€used€to€find€ambiguity€where€noneÍexists.ððÌÌÓÓò òòòGredigóóó ó,€891€S.W.2d€at€œ912›€(citations€omitted).€€Finally,€if€an€ambiguity€exists,€it€should€beÏconstrued€against€the€party€that€drafted€the€contract.€€ò òòòFrank€Rudy€Heirs€Assocs.€v.€MooreÏ&€Assocs.óóó ó,€919€S.W.2d€609,€613€(Tenn.€App.€1995).Ìà àIn€this€case,€it€is€undisputed€that€the€Memorandum€contains€a€November€1,€1992€deadlineÏfor€substantial€completion€œof›€ð ðthe€General€œStreet›€Requirementsðð€in€the€Improvement€Contract.ÏAlthough€the€Improvement€Contract€is€not€attached€to€the€Memorandum,€clearly€we€must€examineÏit€to€determine€the€meaning€of€the€term€ð ðsubstantially€completeðð€in€the€Memorandum.€€As€ofÏDecember€3,€1992,€DRP€had€completed€most€but€not€all€of€the€requirements€in€the€ImprovementÏContract.€€The€Improvement€Contract€required€signs€to€be€in€place€and€required€barricades€ð ðat€theÏend€of€each€uncompleted€street€at€the€boundaries€of€the€Project.ðð€€Evidence€presented€at€trialÏestablished€that€some€barricades€were€in€place€by€November€30,€but€other€evidence€indicated€thatÏon€December€2€barricades€still€needed€to€be€placed€on€New€Dexter€Road€and€Bonnie€Lane.€€ByÏDecember€8,€at€least€one€barricade€was€in€place.€€By€December€28,€at€least€one€other€barricade€hadÏbeen€erected,€and€street€signs,€as€of€that€date,€were€still€not€in€place.€€The€General€StreetÏRequirements€specified€that€all€street€signs€and€posts€were€to€ð ðbe€in€place€prior€to€paving€ofÏstreets.ðð€€Further,€DRP€was€required€to€ð ðinstall€all€striping,€marking,€and€signing€required€as€aÏresult€of€the€median€modification.ðð€€It€is€not€clear€from€the€evidence€that€all€of€this€had€been€doneÏby€the€28th.€€The€Improvement€Contract€also€provided€for€sidewalk€construction,€but€theÏœMemorandum›€excluded€this€item€from€the€November€1€deadline.Ìà àBased€on€these€facts,€DRP€argues€that€the€roads€were€ð ðsubstantially€completeðð€as€ofÏDecember€3,€1992,€within€the€meaning€of€œthe›€Memorandum.€€The€trial€court€found€the€contractÏambiguous€and€examined€extrinsic€evidence€to€determine€the€meaning€of€€ð ðsubstantially€complete.ðð€ÏFrom€our€examination€of€the€documents€we€agree€that€the€term€ð ðsubstantially€completeðð€isÏambiguous.€€Moreover,€the€record€indicates€that€DRP€did€not€object€to€the€introduction€of€extrinsicÏevidence€at€trial.€€In€addition,€since€DRP€drafted€the€Memorandum,€ambiguities€will€normally€beÍconstrued€in€favor€of€Crews.€€ò òòòSee€Frank€Rudy€Heirs€Assocs.€v.€Moore€&€Assocs.ó óóó,€919ÏS.W.2d€609,€613€(Tenn.€App.€1995).Ìà àThe€documentary€evidence€admitted€at€trial€court€indicates€that€the€parties€intended€the€termÏð ðsubstantially€completeðð€to€mean€that€New€Dexter€Road€and€Bonnie€Lane€would€be€sufficientlyÏcomplete€for€use€by€cars.€€The€Addendum€to€the€initial€contract€signed€by€the€parties€clearlyÏrequired€as€a€condition€precedent€to€closing€that€ð ðall€improvements€known€as€New€Dexter€RoadÏ[be]€complete.ðð€€The€Indemnity€Agreement€between€DRP€and€CTI,€signed€after€DRP€drafted€andÏsigned€the€Memorandum,€contains€the€following€provisions:ÌÓÓà8 àà àWHEREAS,€in€reliance€on€Contractors€[sic]€ability€to€continue€constructionÏto€full€completion€and€development€of€New€Dexter€Road€and€Bonnie€Lane,€SellerÏexecuted€that€certain€Memorandum€of€Agreement€dated€July€24,€1992,€a€copy€ofÏwhich€is€attached€as€ð ðExhibit€Aðð€and€is€incorporated€herein€as€though€copiedÏverbatim;€andÌÌà8 àà àWHEREAS,€the€Memorandum€of€Agreement€provided€that€if€suchÏconstruction€is€not€completed€by€November€1,€1992,€the€Sellers€will€pay€theÏPurchaser€a€penalty€of€$1,335.00€per€day€for€each€day€beyond€November€1,€1992Ïuntil€fully€complete.ÌÌà8 àà àWHEREAS,€the€Memorandum€of€Agreement€further€provided€that€SellerððsÏfailure€to€complete€any€such€required€improvement€beyond€the€curbs€and€gutters€forÏsuch€streets,€including€but€not€limited€to€sidewalks,€final€grading€and€sodding,€ifÏapplicable,€shall€not€be€subject€to€the€November€1,€1992€completion€date.ÌÌÓÓThe€language€of€the€Indemnity€Agreement€indicates€DRPððs€understanding€that€the€MemorandumÏrequired€full€completion€of€the€roads€from€curb€to€curb,€with€only€the€sidewalks€and€similarÏimprovements€outside€the€curbs€excepted.Ìà àThe€evidence€at€trial€€also€included€two€letters€sent€to€DRP€by€Crewsðð€real€estate€agentÏbefore€the€Memorandum€was€signed,€during€the€period€in€which€DRP€was€negotiating€with€CrewsÏfor€an€early€closing.€€The€first€letter,€dated€March€25,€1992,€indicates€that€Crews€had€offered€toÏclose€early€in€exchange€for€a€reduction€in€the€contract€price,€which€DRP€rejected.€€The€letter€thenÏindicates€Crewsðð€willingness€to€close€early€ð ð[u]pon€removal€of€the€contingencies€to€complete€ððNewÏDexterðð€Road€and€approval€of€the€Germantown€Parkway€curb€cut.ðð€€The€second€letter,€dated€JuneÏ3,€1992,€contains€an€agreement€to€close€early€under€certain€conditions,€including€the€followingÍrequirement:€€ÓÓà8 àNew€Dexter€Road€and€the€access€road€back€to€Old€Dexter€Road€mustÏbe€100%€complete,€dedicated€and€accepted€by€all€necessaryÏgovernmental€authorities,€not€later€than€November€1,€1992.€ÏAnything€beyond€November€1,€1992€will€be€subject€to€a€per€diemÏpenalty€of€$€1,335.00€per€day.ÌÌÓÓBoth€letters€evidence€Crewsðð€intention€that€the€roads€be€complete€and€ready€for€traffic€byÏNovember€1,€even€though€in€signing€the€Memorandum€Crews€dropped€his€demand€forÏgovernment€dedication€and€acceptance€as€well€as€completion€of€€the€sidewalks.€Ìà àThis€extrinsic€evidence,€all€of€which€was€admitted€into€evidence€without€objection€fromÏDRP,€indicates€that€both€parties€considered€the€Memorandum€to€require€completion€of€the€roads€byÏNovember€1.€€The€exception€in€the€Memorandum€concerning€the€sidewalks€manifests€the€partiesððÏintent€that€substantial€completion€would€entail€completion€of€the€roads€between€the€curbs,€makingÏthe€roads€usable€for€automobile€traffic,€but€not€pedestrians,€by€the€deadline.€€Therefore,€theÏevidence€preponderates€in€favor€of€the€trial€courtððs€finding€that€the€breach€continued€until€DecemberÏ31,€1992,€when€the€roads€were€complete€enough€to€be€open€to€traffic.€€The€trial€court€is€affirmedÏon€this€issue.€€à àDRP€argues€next€that€the€contractual€provision€for€liquidated€damages€is€a€penaltyÏand€thus€unenforceable.€€While€contracting€parties€may€agree€to€the€payment€of€liquidated€damagesÏin€the€event€of€a€breach,€courts€will€not€enforce€such€a€provision€if€it€is€œdeemed›€a€penalty.€Ïò òòòBeasley€v.€Horrellóóó ó,€864€S.W.2d€45,€48€(Tenn.€App.€1993).€€In€determining€whether€aÏprovision€is€for€liquidated€damages€or€a€penalty,€a€court€is€not€bound€by€the€descriptive€terms€usedÏby€the€parties€in€the€contract;€rather,€the€court€will€examine€the€substance€of€the€transaction.× ƒ3 ××  ×€Ïò òòòTesterman€v.€Home€Beneficial€Life€Ins.€Co.ó óóó,€524€S.W.2d€664,€œ668›€(Tenn.€App.€1974).€ÏGenerally,€liquidated€damages€are€appropriate€in€situations€where€it€is€difficult€to€ascertainÏdamages.€€ò òòòSee€Airline€Constr.€Inc.€v.€Barró óóó,€807€S.W.2d€247,€œ260›€(Tenn.€App.€1990).€€InÏorder€for€a€liquidated€damages€provision€to€be€upheld,€the€amount€stipulated€to€by€the€parties€mustÏbe€a€reasonable€estimate€of€the€expected€damages€resulting€from€a€breach€of€contract.€€ò òòòV.L.ÍNicholson€Co.€v.€Transcon€Inv.€&€Fin.€œLtd.,€Inc.ó óóó,›€595€S.W.2d€474,€484€(Tenn.€1980).€Ïð ðWhether€a€provision€for€liquidated€damages€is€reasonable€is€determined€prospectively,€at€the€timeÏthat€the€parties€entered€into€the€contract,€rather€than€retrospectively.ðð€€ò òòòKimbrough€&€Co.€v.ÏSchmittóóó ó,€939€S.W.2d€105,€108€(Tenn.€App.€1996).€€However,€even€if€the€damage€amountÏseemed€reasonable€at€the€time€of€contracting,€a€liquidated€damages€provision€will€still€be€treated€asÏa€penalty€if€the€amounts€provided€for€greatly€exceed€the€actual€damages€suffered€by€the€non„breaching€party.€€ò òòòHarmon€v.€Eggersó óóó,€699€S.W.2d€159,€163€(Tenn.€App.€1985).€€Thus,€ð ð[i]nÏTennessee,€a€liquidated€damages€provision€must€be€both€reasonable€in€relation€to€the€anticipatedÏdamages€from€breach€and€not€grossly€disproportionate€to€the€actual€damages€that€occur.ðð€Ïò òòòBeasleyóóó ó,€864€S.W.2d€at€48.€€Tennessee€does€not€favor€penalties;€consequently,€any€doubt€as€toÏthe€character€of€a€liquidated€damages€provision€will€be€resolved€in€favor€of€finding€it€a€penalty.€Ïò òòòTestermanó óóó,€524€S.W.2d€at€668.Ìà àIn€this€case,€the€evidence€at€trial€established€that€the€figure€of€$1,335€per€day€for€liquidatedÏdamages€was€based€on€Crewsðð€projected€net€rental€revenues€for€the€property,€after€development,€ofÏ$40,000€per€month.€€In€its€first€full€year€of€operation,€1994,€the€shopping€center€which€CrewsÏconstructed€on€the€property€earned€an€average€net€rental€income€of€$37,662.87€per€monthÏ($1,255.43€per€day).€€In€1995,€it€earned€an€average€net€rental€income€per€month€of€$40,038.84Ï($1,334.63€per€day).€€These€figures€are€close€to€the€amount€stipulated€for€liquidated€damages.€ÏDRP€points€out€that,€for€1993,€the€shopping€center€only€took€in€a€total€revenue€of€$14,119.82€and,Ïdue€to€various€selling€and€administrative€expenses,€actually€suffered€an€overall€loss€of€$22,424.60.€ÏHowever,€construction€on€the€shopping€center€could€not€even€begin€until€late€February€or€earlyÏMarch€of€1993,€and€the€1993€figures€are€based€on€only€one€monthððs€operations.€€In€addition,€theÏparties€evidently€intended€compensation€based€on€full€occupancy,€which€could€not€have€beenÏexpected€in€the€initial€month€after€the€completion€of€construction.Ìà àUnrebutted€testimony€established€that€Crews€was€unable€to€secure€building€permits€andÏbegin€construction€of€the€shopping€center€until€the€roads€were€complete.€€The€fact€that€the€roadsÍwere€not€finished€until€the€end€of€December€exacerbated€Crewsðð€predicament€because€inclementÏseasonal€weather€delayed€the€beginning€of€construction€even€further.€€Since,€Crews€had€closed€theÏtransaction€early,€at€DRPððs€request,€Crews€lost€the€interest€he€would€œotherwise€have›€earned€on€theÏfunds€used€to€close€the€transaction€had€he€waited€to€close€until€the€roads€were€complete.Ìà àTherefore,€the€evidence€indicates€that€the€amount€stipulated€as€liquidated€damages€wasÏreasonable€at€the€time€of€contracting.€€In€addition,€the€liquidated€damages€were€not€grosslyÏdisproportionate€to€the€actual€damages€suffered.€€Consequently,€the€evidence€preponderates€inÏfavor€of€the€trial€courtððs€implicit€finding€that€the€liquidated€damages€provision€was€not€a€penalty,Ïand€its€award€of€$78,765€in€liquidated€damages.€€The€trial€court€is€affirmed€on€this€issue.Ìà àDRP€also€claims€the€court€erred€in€awarding€pre„judgment€interest€and€$7,500€in€attorneyððsÏfees€as€a€sanction€for€discovery€violations.€€Both€the€award€of€pre„judgment€interest€and€sanctionsÏfor€discovery€violations€lie€within€the€sound€discretion€of€the€trial€court€and€will€only€be€reversedÏupon€an€abuse€of€that€discretion.€€òòò òSee€œSpencer€v.€A„1€Crane€Serv.,€Inc.ó óóó,›€œ880›€S.W.2d€œ938,›Ïœ944›€(Tenn.€œ1994)›€(pre„judgment€interest);€ò òòòAmmons€v.€Bonillaó óóó,€886€S.W.2d€239,€243€(Tenn.ÏApp.€1994)€(discovery€sanctions).€€Since€DRP€admitted€at€trial€to€breaching€the€contract€yetÏrefused€to€pay€damages€before€suit€was€brought,€we€find€no€abuse€of€discretion€in€the€award€ofÏpre„judgment€interest.€€Likewise,€we€affirm€the€courtððs€award€of€attorneyððs€fees€as€a€sanction€forÏdiscovery€violations.€€Once€again,€DRP€admitted€to€its€dilatory€and€incomplete€responses€toÏdiscovery.€€In€addition,€evidence€at€trial€demonstrated€that€DRP,€whether€intentionally€or€not,€gaveÏfalse€answers€to€interrogatories€dealing€with€completion€dates€of€various€phases€of€the€roadÏconstruction.€€DRP€also€supplied€a€document€to€Crews€as€evidence€of€soil€cement€and€asphaltÏwork€done€at€an€early€date,€but€this€document€pertained€to€unrelated€work€on€a€different€project.€ÏAt€trial,€Crewsðð€attorney€informed€the€court€of€the€amount€of€time€expended€in€procuringÏdocuments€not€supplied€by€DRP€and€in€acquiring€valid€information€to€correct€the€misleadingÏinformation€which€DRP€did€supply.€€Crewsðð€attorney€also€informed€the€court€of€her€hourly€rate.€ÏThe€trial€court€based€its€award€of€attorneyððs€fees€on€that€information,€and€we€find€no€abuse€ofÍdiscretion.€€The€decision€of€the€trial€court€is€affirmed€on€these€œissues.€€Ì›œà àAppellee€also€requests€that€this€appeal€be€declared€frivolous.€€Upon€review€of€the€recordÏand€briefs€in€this€case,€we€find€that€the€appeal€was€not€frivolous,€and€deny€Appelleeððs€request.€Ì›à àThe€decision€of€the€trial€court€is€affirmed.€€Costs€are€assessed€against€Appellants,€for€whichÏexecution€may€issue€if€necessary.ÌÌœÌÓÓ›à àà àà àà àà àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ìà àà àà àà àà àò òóóHOLLY€KIRBY€LILLARD,€J.Ìó óà àò òÌCONCUR:ÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ÌóóW.€FRANK€CRAWFORD,€P.€J.,€W.S.ÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌALAN€E.€HIGHERS,€J.ó ó