In Liberty Constr. Co., LLC v. Curry, the Tennessee Court of Appeals, Nashville Division, reversed a lower court’s holding that the owners of a commercial building failed to provide a construction company with notice and a reasonable opportunity to cure a defect it allegedly caused. 2020 WL 6158461, at *1 (Tenn. Ct. App. Oct. 21, 2020).
The building owners, Peter H. Curry and Patricia B. Curry (“the Currys”), entered into a written contract with the construction company, Liberty Construction Company, LLC (“Liberty”), in July 2013. The parties first entered into a written stipulated sum contract for the construction of a commercial retail facility for the fixed sum of $329,000. Later, the scope of the project was expanded, and the parties entered into an oral cost-plus contract for modifications to the original plans and additional interior work. A notice of completion for the project was filed on November 10, 2014. However, the parties disagreed as to (1) the amount Liberty was entitled to under the written stipulated sum contract, and (2) the remaining balance under the oral cost-plus agreement.
Liberty brought suit against the Currys nearly a year later, on November 5, 2015, and asserted claims for breach of contract and a mechanic’s and materialman’s lien. The Currys filed a counterclaim for breach of contract alleging, in part, that Liberty had not constructed the property in accordance with the plans and failed to perform the work in a timely, workmanlike manner. A bench trial was held in February 2019 which resulted in the trial court awarding Liberty $129,691.53, which included $90,302.61 in damages, plus prejudgment interest. The trial court dismissed the Currys counterclaim “for lack of proof.”
The Currys appealed the decision. The appellate court analyzed, among other questions, whether the trial court erred in ruling the Currys were not entitled to recover the cost of correcting defects which they alleged were caused by Liberty’s failure to construct a pond in accordance with the construction plans. Liberty argued the Currys could not recover this cost because they failed to establish the defect was caused by it and, further, did not provide it with notice and an opportunity to cure, as required by Tennessee law.
Despite affirming the lower court’s finding that the Currys failed to present sufficient evidence that Liberty caused the defect, the appellate court held that Liberty had been provided notice and a reasonable opportunity to cure the alleged defect. The notice the appellate court found to be sufficient was a single email forwarded by Mr. Curry to Liberty, in which an engineer hired by the Currys stated that he: “ha[d] little faith that any instruction [he] [would give] the Contractor [would] be followed” and recommended repairs to the pond be performed by another company.
The appellate court noted that, Tennessee Code, Section 66-36-103, requires only that Liberty was provided an opportunity to assess the alleged defect and given “reasonable access” to determine the cause of the defect and to notify Mr. Curry of its intent to remedy the alleged defect. The appellate court found that Liberty “made it known that it intended to remedy the issue” when it recommended the Currys “hire an engineer to assess what needed to be done to compensate for the loss in volume of the pond.” The Court held that because there was no evidence before it that the Currys prevented Liberty from accessing the pond or interfered with any repair attempts, Liberty was provided with a reasonable opportunity to cure the alleged defect under Tennessee law.
Contractors performing work in Tennessee should take note of the low threshold for a property owner to meet the notice and opportunity to cure requirement set forth in the Tennessee Code, as evidenced in the appellate court’s decision in this case.