By Brian Dobbs and Wearen Hughes of Bass, Berry & Sims PLC
Published September 18, 2020
While neither of the recent cases discussed below establishes new law, they serve as good reminders of principles and requirements that can be important to participants in construction projects in Tennessee. The first case, Sifuentes v. D.E.C, LLC, addresses the effects on a subcontractor’s remedies of not being licensed as a contractor as required in Tennessee. The second case, Clark v. Givens, involves the effect of a construction agreement not containing a “time is of the essence” provision.
Unlicensed Subcontractor
Sifuentes v. D.E.C, LLC was a suit by an electrical subcontractor against a general contractor to recover amounts for breach of contract, quantum meruit (also called unjust enrichment), promissory estoppel, and promissory fraud. The trial court dismissed on summary judgment all claims because the subcontractor was not licensed as an electrical subcontractor as required in Tennessee and, thus, could not pursue those claims. On appeal, the Tennessee Court of Appeals ruled the quantum meruit claim should not have been dismissed, but otherwise affirmed the trial court’s judgment.
The court based its ruling primarily on case law in Tennessee related to the effects of a contractor being unlicensed and on Tenn. Code Ann. § 62-6-103, which limits recovery by unlicensed contractors to “actual documented expenses that can be shown by clear and convincing proof.” While disagreeing with the trial court’s reasoning that this provision creates a statutory cause of action for unlicensed contractors, the Court of Appeals said the statute limits the measure of recoverable damages for an unlicensed contractor, consistent with applicable law. Therefore, the claim for quantum meruit, which technically seeks the value of the benefit conferred on the other party when there is no enforceable express contract, was not barred by the subcontractor’s unlicensed status.
Time is of the Essence
Clark v. Givens involved claims between a residential homeowner and a contractor arising out of an oral contract for construction services. Among the issues involved on appeal was whether the trial court erred in dismissing the parties’ claims and rescinding the oral contract for the parties’ mutual mistake as to the time for completion. The Court of Appeals ruled the trial court erred, based on established case law that a party’s failure to complete a project within the time for completion does not constitute a material breach absent a provision in the contract making time of the essence.
Brian Dobbs is a member at Bass, Berry & Sims PLC where he represents clients in the drafting and negotiation of construction and design contracts for real estate projects throughout the United States. Brian also defends clients in various types of construction-related claims and disputes, including contractor licensing matters, pre- and post-award bidding disputes, among other matters. He can be reached at bdobbs@bassberry.com or 615.742.7884.
Wearen Hughes is a member at Bass, Berry & Sims PLC and focuses his practice on construction contracting and litigation, and dispute resolution. Wearen assists clients with construction and related real estate needs, minimizing exposure by helping them navigate design, construction and related contracts and various project delivery options. He can be reached at whughes@bassberry.com or 615.742.6225.