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X/&24Technical Document Style.. 23  Ԁ.   CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|xr<6X9`(*Courier 12pt10cpiXXx6X@JQX@( T$   df|$$(G.2Y$ FT!   XX     0  MARVINBERKELESLIEMcWILLIAMS($   0   VANNLASLEYPINCHAKMcDONALDLUFKINAlfordRodgersRodgersesHillsboroSlineyTenn.CodeHennesseeT!:endnote textendnote text          `:footnote reffootnote referenceXXXWQ\  `*Times New RomanTTW        XXXOR<6X9`("Courier NewTTOLYT6Block TextBlock Text  8.` hp x (#8        >4X` hp x (#>PYT8Body Text 2Body Text 2  8.` hp x (#8        >4X` hp x (#>\  `*Times New RomanTT<6X9`("Courier NewTT \] +^_D`aDbcdӀpstuvwxyz#,37=CIQYag1.a.i.(1)(a)(i)1)a)2 0Indent123  2" 0Indent20 23  2, 0Indent30 0 23  26 0Indent40 0 0 23  ("$    2@ 0Indent50 0 0 0 23  2J 0Indent60 0 0 0 0 23  2T 0Indent70 0 0 0 0 0 23  GGGG'dxd2^ 0Indent80 0 0 0 0 0 0 23  Z[\]_`ac ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P 8Mac DefaultMac Default ` X% Line 7 dnnnn7Border 1dd^oC << G<  9p`(Arial  F!  #d#R  qq   YYY FILEDqX July30,1998CecilCrowson,Jr.qAppellateCourtClerk (;s$2,  0  .3  0  (O{$0  2,  a  .3  0` (#(#(bD$0  0` (#(#2,   .3  0 ` (#` (#(x$0  0` (#(#0 ` (#` (#2,(  0  )3  0 (# (#(Ƃ$0  0` (#(#0 ` (#` (#0 (# (#2,(  a  )3  0h(#(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2,(   )3  0h(#h(#(4$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2,  0  )3  0(#(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2,  a  )3  0p(#(# = F!#d#R  I$R         Theestimatedcostof$230,000forthehouseincludedthepriceofaswimmingpool($22,000),whichwasnottobebuiltbyMr.Walker.  F!#d#R  I$R         TheconstructioninterestagreementwithHomeFederalalsoincludedaprovisiontoinformHomeFederalinwritingofanychangesoradditionsthatwouldsubstantiallyincreasethecostofconstruction. k F!#d#R  I$R         Mr.Walkersownexpertwitnessadmittedattrialthatacontractorshouldprovidebuyerswithwrittenconfirmationofmajorchangesthatwillresultinexcessivecostoverruns.PtPtHH(FG(HH(d'h^C<< CLevel 1Level 2Level 3Level 4Level 5Styl{WP}01  HH  2$HH  Geneva  <Px443!#4$*$$*$ KK  Geneva  Geneva .,6 Geneva   h HD: Geneva  h HD: Geneva ($$   1  ' dxdP Pd F! . R    7ZXXdd7\RA'\ `    , 5  n u` RproA1-j|`  `@Rߛ @ INTHECOURTOFAPPEALS@ ATKNOXVILLEALFORDRODGERSand@ @ ) KNOX COUNTY SUZANNERODGERS@ ) 03A019708CH00371@ ) PlaintiffsCounter   @ )   DefendantsAppellees @ ) @ ) @  v.@ ) HON.FREDERICKD.McDONALD,̀@ ) CHANCELLORDONWALKER @ ) @ )  DefendantCounter@ ) AFFIRMEDASMODIFIED PlaintiffAppellant@ ) andREMANDEDJ.THOMASJONESOFKNOXVILLEFORAPPELLANTDAVIDA.LUFKINOFKNOXVILLEFORAPPELLEES    OPINION         Goddard,P.J.  AlfordandSuzanneRodgersfiledacomplaintinKnoxCountyChanceryCourtseekingdamagesarisingfromtheconstructionoftheirhome.Thesuitwasbroughtagainstthegeneralcontractor,DonWalker.TheRodgersesallegedabreachoftheconstructioncontractonthepartofMr.Walkerandsoughtdamagesforexcessivecostsandunreasonabledelayinconstruction.  Mr.Walkeransweredthecomplaintandfiledacounterclaimseekingapastduebalanceontheproject.Theallegedunpaidbalancewas$95,543.08forcostsofcompletingconstructionplusa15percentcontractorsfee.  TheChancellor'sfinaljudgment,whichincorporatedhismemorandumopinion,awardedtheRodgersesamoneyjudgmentagainstMr.Walkerintheamountof$24,256.16.  Aftertheconclusionofposttrialmotions,theChancellorreducedthemoneyjudgmenttoaneven$24,000.AtimelynoticeofappealwaspromptlyfiledbyMr.Walker,andthisappealfollowed.  TheRodgersesandMr.WalkerenteredintoaconstructioncontractdatedJuly14,1994.Thecontractwasapreprintedformtitled SalesorConstructionContract,withblankstobefilledinastocertaininformation.Theblankswerefilledinandotherlanguagewasaddedtothepreprintedform.Severalpageswereattachedtothecontractsettingforthvariousmaterials,includingproposedallowancesandhouseplansketches.  TheRodgersessubmittedthecontracttoHomeFederalSavingsBankinordertoobtainaconstructionloan.TheRodgersesandMr.WalkerbothsignedaconstructionloanagreementprovidedbyHomeFederalstatingthatthehousewastobecompletednolaterthan360daysfromthesigningoftheconstructioncontract.  Paragraph3ofthecontractrelatestopriceandtermsandprovidesinpart: HOMEtobebuiltonaCOSTPLUS15%(ESTIMATEDcostis$230,000.00).  5  n u`  {   ׀Thepartiesaddedthislanguagetothepreprintedcontractintypewrittenform.Mr.Walkersfirstestimateforthehousewas$298,000,buttheRodgersesmadeitcleartheycouldnotaffordthatprice.  Paragraph5relatestothecompletionanddeliverydateoftheresidence.Theblanklineforthenumberofdayswasfilledinsuchthatparagraph5states:    Itisagreedthatthepropertywillbereadyandtenderedfordeliveryonorbeforetheexpirationof210daysfromthedateofthiscontract.Otherwise,thepurchaserwillhavetheoptionofcancelingthiscontractandobtainingarefundofhisearnestmoneydeposit.8    However,attheendofparagraph5,thepartiesadded: IfLOANisapprovedwithinthirty(30)days.Theloanwasnotapprovedwithin30days.  AtthetimeofthecontractthepartiesintendedthatMr.WalkerwouldbuildtheRodgersesatwolevel,3,200squarefoothouse.Thehousethatwasultimatelyconstructedwasathreelevel,4,800squarefoothouse.Theadditionallevelandsquarefootageweretheresultofabasementbeingadded,becausetheslopeofthelotandsoilconditionsmadeitmoreefficienttoputinalowerlevel.Mr.Walkerhadanopportunitytoviewthelandwherethehousewastobebuiltbeforethepartiesenteredintothecontract.  TheRodgerseswereinEuropewhenthedecisionwasmadetoaddthebasement.WhentheRodgersesreturnedtosurprisinglyfindtheirhomehadabasementtheydidagreetopayfortheextrawork.Later,aletterwassenttotheRodgersesstatingthatthecostoverrunattributedtotheaddedbasementwas$10,064.Thereisconflictingtestimonyregardingdecisionstofinishthebasementandotherchangesandadditionsmadeduringtheconstructionprocess.  ThroughoutconstructiontheRodgerseswerepresentedwithmonthlystatementsforcostsofmaterialsandservices,plusMr.Walkers15percentcontractorsfee.TheRodgersespaidallofthestatementssenttothemexceptforthelastonewhichtotaledanunexpected$95,543.08.Beforethesubmissionofthelastinvoice,theRodgerseshadalreadypaidapproximately$220,000.  Theresidencewasnotcompletedwithinthe210dayperiodprovidedforinparagraph5oftheconstructioncontract.Mr.Walkeradmittedattrialthattherewasatwomonthdelayinobtainingthestuccocontractorwhichappearedtobeamajorreasonforthedelay.Eventually,theRodgersesmovedintothehouseinearlyAugustof1995,beforeitwascompletedandmorethanayearafterthecontractwassigned.Soonthereafter,theRodgersesattorneysentMr.Walkeraletterterminatinghimfromthejobbecauseofunduedelay.  Duringtheconstructionprocess,theRodgersesattemptedtocloseonthepermanentmortgageonnumerousoccasionsbutwereunabletodosobecauseofMr.Walkersdelays.InJune1995,whentheRodgerseswerepreparingtoclosetheirpermanentmortgage,Mr.WalkerprovidedtheRodgerseswithadocumenttitled ApproximateCosttoFinish,whereinheestimatedthatitwouldcostapproximately$46,300tofinishthehouse.TheRodgersesusedthisfiguretoobtainafinalclosingforapermanentmortgage.Asstatedabove,thefinalbillprovidedtotheRodgerseswasapproximately$50,000morethantheestimategivenonlyafewmonthsearlier.  AfterterminatingMr.Walker,theRodgerseshiredHermanLovetofinishthehouse.Mr.Lovefinishedthehouseandwaspaid$24,669.90forhiscostsandservices.  TheChancellorawardedtheRodgerses$63,611.16ontheirclaimfordamagesandawardedMr.Walker$39,355onhiscounterclaim.ThebalanceoftheawardsleftMr.WalkerowingtheRodgersesapproximately$24,000.Asstatedabove,Mr.WalkerthentimelyfiledhisnoticeofappealtothisCourtonDecember15,1997.  Thefollowingissues,whichwerestate,arepresentedbyMr.Walker:     I. DidtheChancellorerrincalculatingdamagesbyusingtheestimatedcostsratherthantheactualcosts? II. DidtheChancellorerrbysubtractingthe15percentcontractorsfeefromtheamountowedtoMr.WalkerbytheRodgerses? III. DidtheChancellorerrinawardingtheRodgersesconstructionloaninterestaspartoftheirdamages? IV. DidtheChancellorerrinawardingtheRodgersdamagesforitemsthatwerenot punchlistitemsbutwereadditionalworknotcoveredbythecontractwithMr.Walker?      Mr.WalkercontendsthattheChancellorimproperlyusedtheestimatedcostratherthantheactualcostincalculatingdamagesunderthecostpluscontractbetweentheparties.Issuesinvolvingatrialjudgescontractinterpretationhavenopresumptionofcorrectnessonappeal.HillsboroPlazaEnterprisesv.Moon,860S.W.2d45(Tenn.App.1993).However,incasessuchasthis,wherethecasewastriedwithoutajury,thereexistsapresumptionofcorrectnessastofindingsoffactbythetrialcourt.Rule13oftheTennesseeRulesofAppellateProcedure.However,nopresumptionarisesastoquestionsoflaw.Campbellv.FloridaSteelCorporation,919S.W.2d26(Tenn.1996.)Thecasesubjudiceinvolvesbothquestionsoflaw(contractinterpretation)andoffacts.ThefirstissuebeforethisCourtisoneofpropercontractinterpretation.     ` ` X  ThereisnoquestionthattheconstructioncontractenteredintobetweentheRodgersesandMr.Walkerwasacostplus15percentagreement.TheChancellormadesucharulingearlyinthetrialandtheRodgersesdonotdisputethatruling.Mr.WalkerarguesthattheChancellorsfinalrulingondamagescontradictedtheholdingthatthecontractwascostplusbecauseMr.Walkerfeltthedamageswerebasedonthefinalestimateof$46,300insteadofhisactualcosts.     ` X  Generally,damagesunderacostpluscontractarebasedontheactualcostsincurredinbuildingthehouse.Whenanestimateisprovidedinacostpluscontractitissimplythatanestimate,notafixedpriceorguaranteedmaximum.Davisv.Sliney,anunpublishedopinionofthisCourt,filedinJacksononJuly21,1988.Mr.WalkerarguesthattheDaviscaseisverysimilartothiscase.InDavis,thecontractorprovidedafinalestimatetocompletethehouseofbetween$18,000and$20,000,butthefinalbillwasforalittleover$39,000.TheCourtofAppealsheldthecontractwascostplusandthatthecontractorwasentitledtohisactualcosts.Mr.WalkerclaimsthesameresultshouldfollowherebecausethereisnodisputethatMr.Walkerincurredtheexpensesheisasserting.  TheproblemwithMr.WalkersrelianceonDavisisthatthereisnodiscussioninthatcasereferringtoaprovisionlikeparagraph7inthecontractwiththeRodgerses.Paragraph7,titled CHANGESANDADDITIONSstates:    Ifproposedconstructionorunderconstruction,itisunderstoodthatanyadditionsorchangesnotincludedinplansandspecificationsaretobeagreeduponbetweenthecontractingpartiesandaretobeconfirmedinwritingastheworkprogresses.    TheChancellorsrulingemphasizedthatalthoughthecontractwascostplusallprovisionsinthecontractmustbeconsideredincalculatingdamages.Heinterpretedparagraph7asplacingadutyonMr.WalkertokeeptheRodgersesreasonablyinformedofincreasingcostsbeyondtheestimateof$230,000.     |   TheChancellorsopinionstated, Theremustbesomepointatwhichanownerreceivessomeprotectionevenunderacostpluspercentcontractsoasnottoendupfindingthemselvesinapositionwheretheyoweatremendousadditionalamountofmoneythatwasunexpected.  WeagreewiththeChancellorsstatement,butonlywhenacostpluscontractcontainsaprovisionlikeparagraph7thetypeofprovisionthatplacesaspecificdutyonthecontractortogetwrittenconfirmationofadditionsandchangesthataddsubstantialcoststotheconstructionofthehouse.Ifthecostplusprovisionistobeenforcedsomustallothervalidprovisionsinthecontract.  TheChancellorheldthatinlightofparagraph7the$50,000ofadditionalchargeswereunreasonablewithoutthematterbeingagreeduponinwriting.Therefore,theChancellorsfinaljudgmentdidnotcontradicthisrulingthatthecontractwascostplus.ThedamagesweresimplycalculatedonwhattheRodgersescouldreasonablybeexpectedtopaypursuanttoMr.Walkersbreachofparagraph7.  Mr.Walkerarguesinthealternativethatevenifparagraph7doesallowforsuchacalculationofdamagestheRodgerseswaivedstrictcompliancewiththeprovision.TheRodgersesdidadmittoaskingforsomesmallchangesandnotrequiringwrittenconfirmationforthose.However,thereismuchdisputedtestimonyastowhichpartywasresponsibleforthemajorchangesthatresultedinthehugeadditionalexpenses.Itisclearthatthebasement,whichwasthemainreasonfortheextracosts,wasaddedwithouttheRodgerses'priorapproval.  RegardlessoftheRodgersesconduct,thewrittenchangeorderrequirementcannotbewaived. TheclearmeaningofTenn.CodeAnn.4750112(c)preventsgivingeffecttooralorimpliedwaiversofthetermsofacontractwhichrequiresawrittenwaiver."Barnettv.Willis,anunpublishedopinionofthisCourtfiledinNashvilleonJune13,1990.TheCourtinBarnettheldthatT.C.A.4750112supersedespriorcaselawthatholdstherequirementofawrittenchangeorderinanexpresscontractcanbewaivedbytheownersconduct.Therefore,weholdthatparagraph7wasnotwaivedandMr.Walkerwasobligatedtoprovidesuchwrittenchangeorders.     ` X     }   󀀀  Mr.WalkernextarguesthateveniftheChancellorsgeneralcalculationofdamagesisproper,theChancellorerredinsubtractingthe15percentcontractorsfeefromthebalanceowedMr.Walker.Mr.Walkerwasallowedtorecover$46,300asreasonablecoststheRodgerseshadtopay.However,theChancellordecidedtosubtractfromthatfigureMr.Walkers15percentfeeevenuponnoclearevidencethefeewasevenincludedinthebalancedue.  WeunderstandwhyMr.Walkerwasnotallowedtorecoverhiscontractorsfeeontheamountthatwasheldtobeunreasonableandrequiredwrittenconfirmation.WedonotseeanyreasonwhyMr.WalkerisnotentitledtohiscontractorsfeeonthecoststhatwerereasonablefortheRodgersestopay.  TheRodgersesaretoreceivedamagesthatwouldputtheminthesamepositiontheywouldhavebeeninhadMr.Walkernotbreachedthecontract.Theyshouldnotprofitbythedefendantsbreach.Hennesseev.WoodGroupEnterprises,Inc.,816S.W.2d35(Tenn.App.1991).AlthoughMr.Walkerdidnotputforthsufficientevidencetoshowthatthe15percentfeeshouldbeaddedtothebalancedue,subtractingthefeewouldbepunitivetoMr.WalkerandallowtheRodgersestoprofit.Therefore,weholdthatitwaserrorfortheChancellortosubtractMr.WalkerscontractorsfeefromthereasonablebalanceduebytheRodgerses.  Mr.WalkeralsoarguesthattheChancellorerredinawardingtheRodgersesconstructionloaninterestasanelementofdamages.Paragraph5oftheconstructioncontractprovidedthattheRodgersescouldcancelthecontractandobtainarefundoftheirearnestmoneyiftheconstructionofthehousewasnotcompletedontime.Mr.Walkerdoesnotdisputethathebreachedthecontractbynotfinishingtheconstructionontime.However,heclaimsthattheRodgersesdidnotasserttheircontractualrightstodamagesandthuswaivedanyrighttorecoverdamagesforthedelay.Mr.Walkerwouldbecorrectifitwasnotfortheprovisionthatwasaddedtotheendofparagraph5bythepartieswhichstates: IftheLOANisapprovedwithinthirty(30)days.Theloanwasnotapprovedwithin30days,thusmakingparagraph5void.  Withoutvalidprovisionsforacompletiondateandonerestrictingrecovery,theChancellorproperlycalculateddamagesbaseduponareasonabletimeforcompletionandforeseeabledamages.TheChancellorlookedtoboththe210daycompletiontimeperiodintheconstructioncontractandthe360dayperiodintheloanagreementwithHomeFederalinordertodetermineareasonabletimeforcompletion.TheChancellorconcludedthata360daycompletionperiodwasreasonablebecauseitwas150dayslongerthanwhatMr.WalkerhadcontractedfororiginallyandalsobecauseMr.WalkerhadsignedtheagreementwithHomeFederalgivinghimnoticethattheconstructionloanwasbasedona360daycompletionperiod.  BecauseMr.Walkersignedtheconstructionloanagreement,theChancellorheldthatconstructionloaninterestasanelementofdamageswasforeseeable.WeagreewiththeChancellorsholdingonthisissuebutrulethatheerredinawardingtheRodgerses$14,400ininterest.  Asstatedabove,theRodgersesshouldonlybeputbackinthepositiontheywouldhavebeeninhadMr.Walkerfullyperformedthecontract.IftheconstructionwascompletedontimetheRodgerseswouldnothavehadtopaytheadditionalconstructionloaninterest,buttheywouldhavehadtopayamortgagepaymentuponconversionoftheconstructionloantoapermanentmortgage.Therefore,theRodgersesareentitledtothe$14,400minustheinterestontheirmonthlymortgagepaymentsbasedonareasonableratetheRodgersescouldhaveobtainedattheendofthe360daycompletionperiod.AreasonablemonthlymortgagepaymentmustbedeterminedinordertorecalculatethetotalconstructioninteresttheRodgersesshouldbeawarded.  Inaddition,thereshouldbeaddedtotheforegoingtheamountofinteresttheRodgerseshadtopaybecausethehousewasnotcompletedwithinthe360dayperiod.Thiswouldbecalculatedbydeterminingthetimeperiodifanybetweentheendofthe360dayperiodandthedatethepermanentloanwasobtained.Forexample,ifitisdeterminedthedelaywasaperiodofthreemonths,theinterestastothelastthreemonthsoftheloanshouldbeaddedtotheinterestinitiallydeterminedtobeowed.  Mr.WalkersfinalargumentisthattheChancellorerredinawardingtheRodgersesdamagesforitemsthatwerenot punchlistitemsbutwereadditionalworknotcoveredbythecontract.AlthoughtheChancellorisbestsuitedtomakethesefactualdeterminationsandwereviewthemunderapresumptionofcorrectness,wedoholdthatoneitemwasincludedintheRodgerses'damagesthatwasclearlynotcoveredbythecontract.Thetrialrecordmadeitquiteclearthatthe$24,669.90paidtoMr.Lovefortheadditionalworkneededonthehouseincludeda$5000chargeforbanisterwork.ThesebanisterswerenotpartofthecontractbetweentheRodgersesandMr.Walkerand,thus,arenottheresponsibilityofMr.Walkertopay.Therefore,the$5000,plusMr.Loves15percentcontractorsfeeonthatamount,shouldbesubtractedfromMr.Lovestotalcharges,resultinginanewbalanceof$18,669.90.  However,wealsofindthattheChancellormadeasimilarerrorincalculatingthebalanceduetoMr.Walker.Mr.Walkersbalancedueof$46,300includedachargeof$5,500forpoolwork.Mr.Walkeradmittedattrialthatthesewerecostsofthepoolbuilderandnothis.Therefore,the$5,500plushis15percentcontractorsfeeshouldreducethebalancedue.ThefinalpaymentowedbytheRodgersestoMr.Walkerwouldthentotal$39,975.WefindnoerrorinalltheotheritemsincludedbytheChancellorinthedamagecalculations.  OurcorrectionstothedamageawardresultsinMr.Walkerrecovering$39,975forunpaidcosts.TheRodgersesareentitledtothe$18,669.90theyhadtopayMr.Loveandthe$24,541.26spentonmaterialstofinishthehouse,totaling$43,211.16.TheRodgersesarefurtherentitledtotheconstructioninterestremainingafterreasonablemortgagepaymentshavebeensubtracted.Therefore,thesumresultisanawardof$3,236.16plustheremainingconstructioninterestfortheRodgerses.  Forthereasonsstatedabove,thejudgmentoftheChanceryCourtisaffirmedasmodifiedandremandedforrecalculationofinteresttheRodgersesshouldrecoverinaccordancewiththisopinionandcollectionofthejudgmentandcostsbelow.CostsofappealareadjudgedagainsttheRodgersesandtheirsurety.      _______________________________      HoustonM.Goddard,P.J.CONCUR:________________________________DonT.McMurray,J.________________________________CharlesD.Susano,Jr.,J.    Ԝ