                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                                 March 21, 2012 Session

 THE UNIVERSITY CORPORATION, A California Nonprofit Corporation
                    v. BRUCE WRING

              Direct Appeal from the Chancery Court for Shelby County
                  No. CH-02-1414-1     Walter L. Evans, Chancellor


              No. W2011-01126-COA-R3-CV - Filed September 18, 2012


This case involves an agreement between the Appellee, a nonprofit corporation, and the
Appellant, a real estate agent, whereby the Appellant would acquire foreclosed properties,
oversee all necessary repairs and renovations of the properties, and ultimately sell them for
the benefit of the Appellee. The Appellee’s executive director was given the authority to act
on its behalf in all dealings with the Appellant. As compensation, the Appellant received
commissions on the purchase and sale of each property, and a percentage of the repair costs
for his oversight of the repairs and renovations of each property. After operating pursuant
to the oral agreement for over a year, the parties executed a written agreement for the same
purpose. Throughout their relationship, the Appellant acquired approximately eighty-four
(84) properties for the Appellee. Subsequently, after discovering that their records did not
contain documentation of actual repair costs which the Appellant was required to submit
under the written agreement, the Appellee filed a complaint for an accounting. The trial
court appointed a Special Master to conduct an accounting. Following an evidentiary
hearing, the Special Master filed a report in which he ordered that the Appellant be disgorged
of all funds received by virtue of the agreements with the Appellee based on his failure to
provide documentation of actual repair costs, and further suggested an award of attorney’s
fees and costs in favor of the Appellee. Thereafter, the trial court entered a final order
adopting and confirming the Special Master’s findings, and denied the Appellant’s objections
to the Special Master’s report. After thoroughly reviewing the record, we conclude that the
Appellant was not required to submit documentation of actual repair costs on the properties
acquired pursuant to the oral agreement. We further conclude that the course of conduct
between the Appellant and the Appellee’s executive director modified the written agreement,
such that the Appellant was not required to submit documentation of actual repair costs. As
a result, we reverse the judgment of the trial court and remand for further proceedings.

Tenn. R. App. P. Appeal as of Right; Judgment of the Chancery Court Reversed and
                                     Remanded
D AVID R. F ARMER, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J,
W.S., and J. S TEVEN S TAFFORD, J., joined.

Elizabeth E. Chance, Memphis, Tennessee, for the appellant, Michael P. Coury, Chapter 11
Trustee for the Estate of Bruce Wring.

James R. Newsom, III, Memphis, Tennessee, for the appellee, The University Corporation.

                                         OPINION

                         I. Background and Procedural History

       The University Corporation (“TUC”), a California a nonprofit corporation, is an
investment arm of The University of California, Northridge. TUC manages various
investments through a Board of Directors and an Executive Director, who functions as
TUC’s Chief Executive Officer. Donald Queen (“Queen”) served as TUC’s Executive
Director from approximately 1990 until his retirement in July 1998. Following his
retirement, Queen remained at TUC as a consultant for a brief period of time.

       In the fall of 1994, Bruce Wring (“Wring”), an associate realtor in Memphis,
Tennessee, introduced Queen to investment opportunities in Memphis offered through the
United States Department of Housing and Urban Development (“HUD”). The HUD
investment program allowed nonprofit organizations to purchase repossessed HUD properties
in “revitalization zones” at a thirty percent (30%) discount, so long as the nonprofit
organization made a minimum amount of repairs to the properties and offered them for sale
to qualifying low-income buyers. In addition to this program, in November 1995, Wring also
introduced TUC to a second program which involved purchasing repossessed HUD
properties outside of the designated “revitalization zones” at a twenty percent (20%) discount
and offering them on a rent-to-own basis. The benefit of the rent-to-own program was that
the tenant was responsible for all home repairs once the property was initially repaired for
occupancy, removing the nonprofit organization’s responsibility to pay for ongoing repairs.

       As part of these investment programs, a HUD-approved inspector would inspect the
properties and provide a detailed list of repairs needed to pass a HUD inspection. The HUD-
approved inspector determined the costs of repairs by referencing a manual provided by
HUD that listed estimated repair costs based on the region of the country where the property
was located. All estimated repair costs, plus any applicable loan contingencies, were held
in escrow until the necessary repairs were completed. After the repairs were made, a HUD-
approved inspector would reinspect the property to confirm that the repairs had been
satisfactorily completed. Once the inspector approved the repairs, the funds for the repairs

                                             -2-
would be released from escrow.

        In February 1995, based upon Queen’s recommendation, TUC’s Board of Directors
approved a plan to participate in the HUD investment program. TUC’s Board of Directors
was not involved in any of the details of the HUD investment program, and relied entirely
on Queen to oversee the transactions on behalf of TUC. To effectuate the plan, Queen
entered into an oral agreement with Wring, whereby Wring would purchase and oversee
repairs and renovations of the HUD properties. Under the oral agreement, Wring was to
receive a six percent (6%) commission on the purchase and sale of the property, and twenty
percent (20%) of the repair costs for overseeing the repairs made to the property, plus any
applicable contingencies. During the time that TUC and Wring operated under the oral
agreement, the costs of the repair work were based upon the HUD-approved inspector’s
estimates. Because Queen’s primary focus was getting the repairs done for the estimated
costs, he did not require Wring to get bids for repairs or send invoices or proposals for repair
work. Wring, however, did send copies of settlement documents to Queen, which included
the estimated repair costs, purchase price, and final mortgage terms of each property.
Pursuant to the oral agreement, from February 1995 until June 1996, Wring purchased and
renovated thirty-one (31) properties for TUC.

       On June 30, 1996, TUC and Wring entered into a written agreement.1 The written
agreement provided that Wring was to act as TUC’s agent in the acquisition and oversight
of the maintenance, repair, and renovation of HUD properties in Memphis. Also, Wring was
to provide TUC with “original documentation of all paperwork involved in each transaction,
including but not limited to, all purchase and sell agreements, settlement agreements,
mortgage/lender documentation, insurance notices, internal accounting records, invoices for
work completed, utility bills, etc.” Regarding compensation, Wring was to receive a six
percent (6%) commission on the purchase and sale of the property, similar to his
commissions under the oral agreement. The written agreement further provided for Wring’s
compensation as follows:

        A DDITIONAL C OMPENSATION. In addition to the commissions as described
        in sections 4 and 5 above, [Wring] will receive twenty percent (20%) of the
        actual maintenance, repair, renovation costs incurred under paragraph 8 hereof
        not to exceed the repair and/or renovation costs as estimated by the mortgage
        company through their independent analysis of the fix up costs of each


        1
         On that same day, TUC entered into a written agreement with Davis Home Improvement (“DHI”),
a Tennessee corporation owned and operated by Wring and his family. The written agreement provided that
DHI would serve as the contractor for TUC in the repair, renovation, and maintenance of the HUD properties
acquired by Wring.

                                                   -3-
       property that is a part of the loan origination package. In the event that the
       actual repair, renovation costs are less than those costs estimated by HUD,
       [Wring] will receive Twenty Five percent (25%) of the difference between the
       estimated cost and the actual costs.

Queen executed the written agreement with Wring on behalf of TUC.

        Throughout their relationship, Wring secured a total of eighty-four (84) properties for
TUC, acquiring the last property on October, 8, 1998. In December 1998, after discovering
that it owned more HUD properties in Memphis than it had originally approved Queen to
acquire, TUC’s Board of Director’s began evaluating its records regarding the HUD
investment properties. Shortly thereafter, Queen retired from TUC as Executive Director.
As a result, in February 1999, TUC hired a new Executive Director, Thomas McCarron
(“McCarron”), who was given the authority to oversee the HUD investment programs. After
reviewing TUC’s files on the HUD properties in Memphis, McCarron discovered that there
was very little documentation regarding the HUD investment properties in Memphis.
Specifically, there were no records concerning the actual repair costs of the HUD properties
as required by the written agreement between TUC and Wring. In November 2000, TUC
hired a Director of Real Estate and Contracts who also began evaluating the HUD investment
properties in Memphis and discovered the lack of documentation and records that were
required to be submitted by Wring under the written agreement. Thereafter, TUC requested
numerous times that Wring provide them with all documentation on each property acquired
during their relationship and increased the restrictions on his authority as manager of the
rental properties. On December 19, 2000, Wring responded to TUC by letter in which he
stated that he wished to resign as TUC’s agent, to be effective January 1, 2001. Litigation
followed.

        On July 24, 2002, TUC filed a Complaint for Accounting and Other Relief against
Wring in the Chancery Court of Shelby County. Thereafter, on September 25, 2003, the trial
court granted TUC’s Motion to Require an Accounting, and appointed a Special Master to
conduct an accounting. On September 28, 2006, the trial court denied Wring’s Motion for
Summary Judgment in which he argued that the statute of limitations barred TUC’s claims
for any transactions that occurred before July 24, 1996. On April 26 and 27, 2007, the
Special Master conducted an evidentiary hearing. At the hearing, the evidence presented to
the Special Master included, inter alia, multiple exhibits, the deposition of Queen, and the
live testimony of Wring, TUC’s Director of Real Estate and Contracts, and a member of
TUC’s Board of Directors. Subsequently, on June 15, 2010, the Special Master filed his
report, in which he determined that:

       Since there was a lack of records produced by [Wring] and since [Wring] used

                                              -4-
        ‘estimated’ rather than actual costs, the Special Master finds a) that [Wring]
        should disgorge all funds received by virtue of the subject agreements
        including his 6% commissions on the purchase and sales of the properties, b)
        the 20% fee for oversight of the repairs, c) the 15% contingency, and d) the
        10% contingency.

Further, the Special Master determined that the total damages were $816,581.00, and
suggested that TUC also receive an award of attorney’s fees and expenses. On March 31,
2011, the trial court entered its Final Judgment Adopting and Confirming Report of the
Special Master and Awarding Attorney’s Fees. In addition to adopting and confirming all
of the Special Master’s findings, the trial court denied Wring’s objections to the Special
Master’s report, including Wring’s objection that the Special Master erred by failing to find
that an oral agreement existed and governed any transactions that occurred before the written
agreement was executed. The trial court concluded that “even if there was a prior oral
agreement, the later written [a]greement superseded any prior oral agreement.” 2 Wring
timely filed a notice of appeal to this Court.3

                                         II. Issues Presented

        The following issues, as restated, are presented for our review:

        (1)     Whether the written agreement between the TUC and Wring governed


       2
        The trial court relied on the following provision from the written agreement as the basis of its
conclusion:

        ENTIRE AGREEM ENT ; MODIFICATION ; WAIVER . The parties hereby agree that no
        representations, promises, or inducements of any kind have been made by any party,
        employee, agent or attorney of any party, other than appear in writing in this document, and
        this document (as signed this date) constitutes the entire agreement between the parties
        pertaining to the subject matter contained in it and supersedes all prior and contemporaneous
        agreements, representations, and understandings of the parties. No supplement,
        modification or amendment of this agreement shall be binding unless executed in writing
        by all the parties. No waiver of any of the provisions of this agreement shall be deemed, or
        shall constitute, a waiver of any other provisions, whether or not similar, nor shall any
        waiver constitute a continuing waiver. No waiver shall be binding unless executed by the
        party making the waiver. Waiver of any breach of this agreement shall not be deemed to
        constitute waiver of any other future breach.


       3
         On July 20, 2011, this Court entered an order allowing Michael P. Coury, the Chapter 11 Trustee
for the Estate of Bruce Wring, to substitute as a party/appellant in this cause.

                                                    -5-
              transactions that occurred before its execution,

       (2)    Whether any claims concerning transactions that occurred before July
              24, 1996 are barred by the statute of limitations,

       (3)    Whether the course of conduct between Queen and Wring modified the
              written agreement,

       (4)    Whether the Special Master erred in calculating the amount of damages
              awarded,

       (5)    Whether material evidence supports the concurrent findings of the
              Special Master and the trial court,

       (6)    Whether the trial court erred in awarding attorney's fees and costs to
              TUC, and

       (7)    Whether either party is entitled to an award of attorney’s fees and costs
              incurred on appeal.

                                  III. Standard of Review

        Pursuant to Tennessee Code Annotated section 27-1-113, “[w]here there has been a
concurrent finding of the master and chancellor, which under the principles now obtaining
is binding on the appellate courts, the court of appeals shall not have the right to disturb such
finding.” Tenn. Code Ann. § 27-1-113 (2000). As further explained by this Court in
Blankenship v. Blankenship, 59 S.W.3d 115 (Tenn. Ct. App. 2001):

       The concurrent finding of a master and a chancellor has the same force and
       effect as a jury verdict approved by the trial judge. Such a concurrence is
       conclusive on appeal unless (1) the issue is one not proper for reference to a
       master, (2) the concurrence is based on an error of law or a mixed question of
       law and fact, or (3) the concurrence is not supported by any material evidence.

Id. at 117, (citations omitted). When the findings below are not concurrent, however, we
review the trial court’s findings of fact de novo upon the record with a presumption of
correctness, unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d).
If the trial court fails to make a specific finding of fact on a particular matter, we review the
facts in the record under a purely de novo standard. In re Valentine, 79 S.W.3d 539, 546
(Tenn. 2002) (citing Fields v. State, 40 S.W.3d 450, 457 n. 5 (Tenn. 2001)). We review all

                                               -6-
issues of law de novo with no presumption of correctness. Id. (citing Union Carbide Corp.
v. Huddleston, 854 S.W.2d 87, 91 (Tenn.1993)).

                                        IV. Analysis

                                              A.

       We begin by addressing the issue of whether the written agreement between TUC and
Wring governed transactions that occurred before the execution of the written agreement.
Because this issue involves the interpretation of a contract, the findings below do not have
conclusive effect on this Court. State ex rel. Pope v. U.S. Fire Ins. Co., 145 S.W.3d 529, 533
(Tenn. 2004); Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999) (holding that “[t]he
interpretation of a contract is a matter of law that requires a de novo review on appeal.”).

        It is undisputed that the parties executed the written agreement on June 30, 1996. It
is also undisputed that Wring, as TUC’s agent, acquired and renovated approximately thirty-
one (31) HUD properties before the parties executed the written agreement. In the time
preceding the written agreement, it is undisputed that Wring and Queen instead operated
pursuant to an oral agreement. Notwithstanding these undisputed facts, the Special Master
failed to address the oral agreement, and the trial court merely concluded that, “even if there
was a prior oral agreement, the later written [a]greement superseded any prior oral
agreement.”

       While we agree with the trial court that the merger clause contained in the written
agreement would supersede any prior or contemporaneous agreements between the parties,
we respectfully disagree with the trial court’s conclusion as to the legal effect of that merger
clause. There is simply no factual or legal basis to conclude that the thirty-one (31) HUD
properties, acquired and renovated before the written agreement was executed, were
retroactively governed by the written agreement. Simply put, a merger clause contained in
a written agreement does not affect prior oral agreements until the written agreement is
executed and in effect. See Fabrication Sales Co. of Tennessee v. Pacific Press and Shear,
Inc., No. 01-A-019110CH00363, 1992 WL 85808, at *4 (Tenn. Ct. App. April 29, 1992).
As noted above, the Special Master ordered disgorgement based on Wring’s failure to
provide documentation of actual repair costs to TUC. However, this requirement under the
written agreement was not applicable to the HUD properties acquired pursuant to the oral
agreement. Thus, the Special Master erred in including the HUD properties acquired before
the execution of the written agreement within his determination of liability and damages.
Therefore, we reverse the judgment of the trial court to the extent that it adopts and confirms




                                              -7-
this portion of the Special Master’s report.4

                                                  B.

       Next, we address Wring’s argument that the course of conduct between himself and
Queen modified the requirement in the written agreement that he provide documentation of
actual repair costs on each property. In response, TUC argues that the merger clause in the
written agreement, and the parol evidence rule, prevent any modification of the written
agreement. Although Wring raised the issue in the proceedings below, both the Special
Master and the trial court failed to make any findings as to whether the course of conduct
between the parties resulted in a modification of the written agreement. As a result, we shall
review the record and make those specific findings of fact based on a purely de novo
standard. In re Valentine, 79 S.W.3d 539, 546 (Tenn. 2002) (citing Fields v. State, 40
S.W.3d 450, 457 n. 5 (Tenn. 2001)).

       Under Tennessee law, “parol evidence is inadmissible to contradict or vary the terms
of a written agreement.” In re Estate of Hawkins, W2003-02279-COA-R3CV, 2004 WL
2951993, at *4 (Tenn. Ct. App. Dec. 16, 2004) (citing Starnes v. First Am. Nat'l Bank of
Jackson, 723 S.W.2d 113, 117 (Tenn. Ct. App. 1986) (citing Maddox v. Webb Constr. Co.,
562 S.W.2d 198 (Tenn. 1978); Santa Barbara Capital Corp. v. World Christian Radio
Found., Inc., 491 S.W.2d 852 (Tenn. Ct. App. 1972))).

        But it is well settled that this rule does not prohibit the establishment by parol
        evidence of an agreement made subsequent to the execution of the writing,
        although such subsequent agreement may have the effect of adding to,
        changing, modifying or even altogether abrogating the contract of the parties
        as evidenced by the writing; for the parol evidence does not in any way deny
        that the original agreement of the parties was that which the writing purports
        to express, but merely goes to show that the parties have exercised their right
        to change or abrogate the same, or to make a new and independent contract.

Brunson v. Gladish, 125 S.W.2d 144, 147 (Tenn. 1939) (citations omitted). Thus, any
evidence of the subsequent modification of the written agreement between TUC and Wring
is not barred by the parol evidence rule.

        Additionally, “the course of conduct between parties is the strongest evidence of their


       4
        Because we hold that the HUD properties acquired pursuant to the oral agreement were erroneously
included in the determination of liability and damages, we need not address Wring’s claims concerning
whether they were barred by the statute of limitations.

                                                  -8-
original intent.” Long v. Langley, W2001-01490-COA-R3-CV, 2002 WL 818224, at *5
(Tenn. Ct. App. Apr. 23, 2002) (citing Frierson v. Int'l Agric. Corp., 148 S.W.2d 27, 37
(Tenn. Ct. App. 1940); Pinson & Assoc. v. Kreal, 800 S.W.2d 486, 487 (Tenn. Ct.
App.1990)). “A party’s agreement to a modification need not be express, but may be implied
from a course of conduct; this is true even where the agreement expressly specifies, as in this
case, that the parties may only modify the agreement in writing.” Constr. Crane & Tractor,
Inc. v. Wirtgen Am., Inc., M200901131COAR3CV, 2010 WL 1172224, at *10 (Tenn. Ct.
App. Mar. 24, 2010) (citing Galbreath v. Harris, 811 S.W.2d 88, 91 (Tenn. Ct. App. 1991);
Cooperative Stores Co. v. United States Fid. & Guar. Co., 137 Tenn. 609, 195 S.W. 177, 180
(1917)). Therefore, the presence of the merger clause in the written agreement is not
dispositive in this matter.

      After thoroughly reviewing the record, we conclude that the course of conduct
between Wring and Queen modified the written agreement. Throughout the transcript of
Queen’s deposition, he testified as follows:

       Q.     Now did you ever see any of those proposals that [DHI] submitted?

       A.     I didn’t see any proposals. I know that the work had to be approved by
              the HUD inspector before the bank would put out the money for the
              repair.

       Q.     Well that had to do with the cost of it to get it improved?

       A.     No, HUD had to approve the work.

       Q.     I understand that, Mr. Queen, but if the cost of the, it’s the cost of the
              repairs that I am interested in. Did you ever see any proposals by [DHI]
              about what those repairs were going to cost?

       A.     Ahead of time?

       Q.     Yeah.

       A.     I don’t think so.

       Q.     All right. So he submitted to Wring, didn’t he, [DHI] submitted?

       A.     Well [DHI], I don’t know if they even submitted any, to be honest with
              you.

                                              -9-
Q.     In other words, you don’t have any idea whether the costs of these
       repairs had anything to do with whether that was necessary to obtain
       approval, do you?

A.     My knowledge is that the work was done to the satisfaction of the HUD
       inspector, and I know that it was done within the cost estimate. That’s
       what, that’s all I was interested in knowing.

Q.     All you were interested in was if a door hinge had to be repaired and
       [DHI] charged $500 for it, it didn’t make any difference to you as long
       as it was in the proposal and as long as it was within the estimate and
       as long as they approved it?

A.     Right.

Q.     Didn’t bother you whether you might be paying to much for those
       repairs, did it?

A.     No, it didn’t. As long as the total cost came within what HUD had
       estimated.

....

Q.     All right, let me see if I understand this now. [DHI], under their either
       oral agreement or written agreement, is supposed to submit proposals
       to repair whatever HUD or the mortgage company thought was
       necessary. And as long as that proposal, which you never saw, was less
       than that estimate, that’s all you cared about?

A.     Yes.

Q.     It doesn’t matter to you if you were being overcharged for those, did it?

A.     That’s right.

Q.     You didn’t care if either [sic].

A.     I don’t think I didn’t care. It’s a matter of you had to, if you can’t be
       there, you have to take alternative methods to get something done. And
       since I couldn’t be there, then I had to rely on [Wring] for that. And the

                                      -10-
       fact that the costs never exceeded that, I think that was a rational move.

....

Q.     And you never required [Wring] to get bids, you just took?

A.     Right.

Q.     His company’s figure?

A.     Right.

Q.     And if it was one cent under the estimate, that’s okay with you?

A.     Right.

....

Q.     You didn’t see any of the proposals for repairs?

A.     Right.

Q.     We know there were no bids for the repairs because you let [DHI] do
       it as long as they were underneath the estimate?

A.     Right.

Q.     Regardless of what the repairs cost?

A.     Mm-mm.

Q.     And [Wring] got a minimum of 20 percent to oversee his own
       company’s repairs?

A.     For the twenty-fifth time, yes.

....

Q.     You were in charge though, right?



                                      -11-
      A.     Right.

      Q.     No question about that?

      A.     Yes.

      Q.     Isn’t this your responsibility, these houses?

      A.     Right.

      Q.     So you didn’t look at them, and if there was a check made to Joe Blow
             for repairs, you had no idea whether those repairs were done or what
             you got for your money?

      A.     That’s right.

      Q.     If you had looked at it.

      A.     If I had looked at it, I wouldn’t have known.

      Q.     You wouldn’t know. Did you have any back up?

      A.     No.

      Q.     Wring ever send you any back up receipts on all these jobs?

      A.     I don’t think so.

      Q.     All right. You never saw the proposals, you have already testified to
             that, that [DHI] made?

      A.     Right.

      Q.     You never saw it?

      A.     Correct.

Moreover, during the evidentiary hearing before the Special Master, Wring testified as
follows:



                                           -12-
Q.     [A]t the inception of your arrangement with [TUC], you made those
       arrangements with [Queen]; is that correct?

A.     That’s correct.

Q.     And you operated under an oral understanding with [Queen] from ‘94
       through ‘96?

A.     That’s correct.

Q.     And during that period of time, there was no written agreement at all,
       in terms of the rehab work to be done by DHI or your agency
       relationship with [TUC]; is that correct?

A.     That’s correct.

Q.     In fact, it was done more or less on a handshake?

A.     That’s correct.

....

Q.     [W]as there any time any disagreement or discontentment or criticisms
       voiced by [Queen] regarding those repair estimates?

A.     Every conversation I ever had with [Queen] is he was very pleased with
       the program and how it was going and was very happy with the work
       and the work quality. . . .

       . . . . That’s all he was ever asking was the work be done
       according to quality that they required.

Q.     And is it your testimony that the disbursing agency, that is, to wit, the
       bank wouldn’t have released a dollar until the repair work had been
       verified?

A.     That’s the only way it could be done. That was the rules. The lender
       couldn’t loan them and couldn’t give you the money unless they had a
       sheet showing it had been done.



                                     -13-
Q.     And the bank would review those?

A.     Yes.

Q.     And then make disbursements?

A.     Uh-huh (affirmative).

Q.     When they were satisfied that the work had been done based on the
       estimate?

A.     That’s correct.

....

Q.     What was your understanding with [Queen] under the oral agreements
       you had with him regarding the method of charging and the method of
       disbursing for repair work?

A.     It was also agreed between he and I that whatever HUD inspector wrote
       out would be the contract price to do the work. And as long as I did not
       exceed that he was happy.

Q.     That was your agreement?

A.     That was our agreement.

....

Q.     And did you ever hear from [TUC] regarding the oral understanding
       you had with [Queen]?

A.     I never heard from anybody at [TUC] except [Queen], and he was
       always happy with the program.

Q.     Did you ever get any correspondence of any sort from anybody from
       [TUC] who expressed any disagreement with the arrangement you had
       with [Queen]?

A.     None.

                                     -14-
Q.     Now I take it that – did [Queen] get all of the closing statements?

A.     He got every closing statement, every contract we purchased. He got
       all the copies of the repairs. All that stuff.

       And I know after we sent some big packets out there he reduced down
       at one time, and said, hey, I only want this paper, this paper, and this
       paper. That’s all I need. I don’t need my – I guess, my filing cabinets
       full of this stuff here that don’t mean anything.

Q.     Did [Queen] ever ask you to give any detail or breakdown outside of
       the written estimate of [the HUD inspector]?

A.     No. He wasn’t concerned about how many nails you used, how many
       screws you used. I think he was interested in, did you get the thing
       done for what the estimate was? If I did, he was happy.

....

Q.     Now, on the – under the written agreement, did you sign certain
       contracts. You signed one and [DHI] signed one. Is that a fair
       statement?

A.     Yes.

Q.     And in terms of the method of charging for the repair work, did
       anything change?

A.     No.

Q.     Was it your understanding with [Queen] that nothing was to change?

A.     Yes.

....

Q.     You had the oral agreement. And you had the written agreement.

A.     Yes.



                                     -15-
       Q.     All right. So what change did you make in your procedure to
              accommodate the written agreement?

       A.     As far as I can recall that we were operating the same way before the
              written agreement that we did after the written agreement.

              I don’t know of any changes that were made, because [Queen] already
              understood what we were doing and so on down the line.

       Q.     Was [Queen] fully knowledgeable about your method of charging?

       A.     Yes, he was.

       Q.     And did he ever complain or tell you or say to you in any sort of way
              that he didn’t want you – he wanted you to change your method of
              charging for the repair work done by [DHI]?

       ....

       A.     Every indication I read from [Queen] was that he was very happy with
              all the repairs, and the way things was going. He thought the program
              was great, and he said he only wished we could get more.

       ....

       Q.     Was it ever expressed to you in any kind of way that you couldn’t
              charge the estimated – I mean that [DHI] couldn’t charge the estimated
              repair costs?

       A.     No. I think it was expected. That was what was expected of it to be
              done.

              In some cases where we were able to do it less, and there were
              a few, [Queen] put it there so if there was some way we could,
              that we would get a bonus for doing it. But he didn’t expect it.

        Clearly, both under the oral and written agreements, Wring and Queen operated based
on the estimated repair costs provided by the HUD-approved inspector. Although the written
agreement required Wring to provide documentation of actual repair costs, the subsequent
conduct between Queen and Wring impliedly modified such requirement. Despite TUC’s

                                            -16-
argument that Queen was not authorized to modify the written agreement, it is clear from the
record that TUC’s Board of Directors expressly authorized Queen to act on its behalf in the
pursuit of the HUD investment programs. Even if Queen lacked the express authority to
modify the written agreement, apparent authority existed based on Queen’s ongoing
acceptance of estimated repair costs, TUC’s failure to monitor or intervene, and Wring’s
good faith belief that such conduct was permissible.5 Because Queen and Wring’s course of
conduct modified the written agreement, we conclude that Wring did not breach the written
agreement by failing to provide documentation of actual repair costs. In light of the forgoing,
we reverse the trial court’s award of damages in favor of TUC. Further, as provided in the
written agreement:

         A TTORNEY’S F EES. If any action at law or in equity, including an action for
         declaratory relief, is brought to enforce or interpret the provisions of this
         agreement, the prevailing party shall be entitled to a reasonable attorney’s fees,
         which may be set by the court in the same action or in a separate action
         brought for that purpose, in addition to any other relief to which the party may
         be entitled.

Because TUC is no longer the prevailing party, we reverse the trial court’s award of
attorney’s fees and costs. As the new prevailing party, Wring is entitled under the written
agreement to an award of attorney’s fees and costs incurred in the proceedings below, which
the trial court shall calculate on remand. We decline to award attorney’s fees incurred on
appeal. All other issues in this cause are pretermitted.




         5
             As this Court explained in Milliken Group, Inc. v. Hays Nissan, Inc., 86 S.W.3d 564 (Tenn. Ct. App.
2001):

         The liability of the principal for the acts and contracts of his agent is not limited to such acts
         and contracts of the agent as are expressly authorized, necessarily implied from express
         authority, or otherwise actually conferred by implication from the acts and conduct of the
         principal. So far as concerns a third person dealing with an agent, the agent's “scope of
         authority” includes not only the actual authorization conferred upon the agent by the
         principal, but also that which has apparently been delegated to him.... In effect, therefore,
         an agent's apparent authority is, as to third persons dealing in good faith with the subject of
         his agency and entitled to rely upon such appearance, his real authority, and it may apply to
         a single transaction, or to a series of transactions.

Id. at 570 (quoting 3 Am.Jur.2d Agency § 78 (1986)).

                                                       -17-
                                       Conclusion

       For the forgoing reasons, we reverse the judgment of the trial court and remand for
further proceedings consistent with this Opinion. Costs of this appeal are taxed to the
Appellee, The University Corporation, for which execution may issue if necessary.




                                                  _________________________________
                                                  DAVID R. FARMER, JUDGE




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