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Construction Defect – When can the Tennessee Consumer Protection Act be applied in a construction defect case?

Posted on Oct 23 2012 3:18PM by Attorney, Jason A. Lee

Analysis:  The recent Tennessee Court of Appeals decision of Dan C. Ray v. Sadler Homes, Inc., No. M2011-01605-COA-R3-CV, 2012 WL 2150752 (Tenn. Ct. App. 2012) involved a construction defect case concerning the sale of a new home.  Soon after the plaintiffs purchased the home they started to experience hollow spots in the hardwood floors, leaking from the air conditioning, and uneven sagging flooring. Ray at 1.  After the defendant, Sadler Homes, Inc., was advised of the problems, Sadler Homes discovered that a load bearing beam was left off the construction plans and was not installed during construction.  Ray at 1.  Additionally, the home had been “stretched” from the construction plans “meaning the home was somewhat wider and longer and had more square footage than specified in the construction plans.”  Ray at 1.

 

After several repairs were conducted, the defendant refused to continue to conduct more repairs despite the fact the homeowner continued to experience more problems. Ray at 1. Sadler Homes’ representative testified that the plaintiff’s “were never going to be satisfied” which is one of the reasons he stopped making repairs. Ray at 2.  As a result, the case went to trial and the trial court found there was a breach of contract, breach of warranty and a knowing violation of the Tennessee Consumer Protect Act “based upon evidence that the house was built by an experienced contractor who stretched the house and left out a load bearing beam.”  Ray at 2.  The trial court found total damages of $90,000.00 based on diminution in value and also awarded additional attorney’s fee damages under the Tennessee Consumer Protection Act.

 

A prior blog post discussed when a diminution in value award is appropriate as damages in a construction defect case.  The second issue dealt with in this case was whether the trial court’s finding of a violation of the Tennessee Consumer Protection Act was appropriate.  The trial court used the “catch all provision” of the act found in T.C.A. § 47-18-104(b)(27) which makes it a violation of the act for “engaging in any other act or practice which is deceptive to the consumer or to any other person.”  Although the trial court record was not very clear, the appellate court noted it looked like the trial court found there was a deceptive act due to the omission of a load bearing beam and the fact the home was “stretched” from the original construction plans. 

 

The appellate court found that in order to recover damages under the Tennessee Consumer Protection Act a plaintiff must prove: “(1) that the defendant engaged in an unfair or deceptive act or practice declared unlawful by the TCPA and (2) that the defendant's conduct caused an ascertainable loss of money or property, real, personal, or mixed, or any other article, commodity or thing of value wherever situated...”  Ray at 5. (quoting Tucker v. Sierra Builders, 180 S.W.3d 109, 115 (Tenn. Ct. App. 2005).  Additionally, the court found that whether a specific representation in a particular case is “unfair” or “deceptive” is a question of fact.

 

Under the facts of this case the court found that although it appears improper that the house was “stretched” from the construction plans there was no evidence presented that this caused any of the problems at issue.  Additionally, there was no evidence that “the stretching of the home deceived the Rays for which there were damages”. Ray at 5.  The defendant actually admitted the omission of the load bearing beam was improper.  Ray at 6.  However, the evidence showed the load bearing beam was omitted on the plans and the defendant was unaware of this fact until after the construction was complete.  As soon as the defendant was made aware of the load bearing beam, it took corrective action to install the missing load bearing beam.  Ray at 6.  As a result, the court found that under these facts, there was no violation of the Tennessee Consumer Protection Act.

 

It is important to note that the “catch all” provision found in the Tennessee Consumer Protection Act has been eliminated for all causes of action that accrue on or after October 1, 2011.  However, this case is still helpful to show what is required for prove a Tennessee Consumer Protection Act claim in a construction defect context.  Defense counsel for companies and insurance companies need to be aware of the specific requirements for a Tennessee Consumer Protection Act case in order to best establish defenses that are appropriate to defeat such a claim.


TAGS: Damages, Tennessee Consumer Protection Act, Construction Law
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Jason A. Lee is a Member of Burrow Lee, PLLC. He practices in all areas of defense litigation inside and outside of Tennessee.

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Jason A. Lee, Member of Burrow Lee, PLLC
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