GREETER CONSTRUCTION         )
COMPANY,                     )

     Plaintiff/Appellant,
                             )
                             )    Appeal No.     FILED
                             )    01-A-01-9808-CH-00427
v.                           )                    August 20, 1999
                             )    Davidson Chancery
RICHARD A. TICE and          )    No. 95-1287-III Cecil Crowson, Jr.
                                                Appellate Court Clerk
NANCY TICE,                  )
                             )
     Defendants/Appellees.   )


                COURT OF APPEALS OF TENNESSEE


 APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY
               AT NASHVILLE, TENNESSEE


THE HONORABLE CLAUDIA BONNYMAN, SPECIAL CHANCELLOR




WILLIAM L. ABERNATHY, JR.
Leitner, Williams, Cooley
 and Napolitan
2300 First American Center
Nashville, Tennessee 37238-2300
      ATTORNEY FOR PLAINTIFF/APPELLANT




PETER H. CURRY
Tuke Yopp & Sweeney
NationsBank Plaza, Suite 1100
414 Union Street
Nashville, Tennessee 37219
      ATTORNEY FOR DEFENDANTS/APPELLEES




                     AFFIRMED AND REMANDED




                                     WILLIAM B. CAIN, JUDGE
                              OPINION

      This appeal represents a consolidated case commenced by Appellant,
Greeter Construction Company (hereafter Greeter) against the Appellees
Richard and Nancy Tice. Greeter had sued the Tices for an amount allegedly
owed under a construction contract. The Tices counterclaimed for breach of
said contract.


      The Tices contracted with Greeter for the renovation of their Brook
Hollow Drive home. The primary portion of this renovation was an 1100 square
foot addition to the house. The construction contract reads in pertinent part as
follows:
                                      ***
      All work is to be performed in a professional workmanlike manner,
      free from all liens or claims of mechanics or materialmen, subject
      to the stipulations and other provisions on the additional attached
      documents:

      “Estimate & Project Outline” and “Stipulations”.

      In case of conflict between the plans and specs the plans shall
      control over the specifications and the provisions of this contract
      shall control both.

      @ The work to be performed by [Greeter] to the Agreement and
      shall be substantially commenced approximately on August 10,
      17, 1994 and shall be substantially completed on November 7, 8,
      1994.

      @ [TICES] promise[] to pay or cause to be paid to [Greeter] in
      consideration for his performance all costs for material and labor
      plus 15% payable as follows: Not to exceed total estimate of
      Construction project of $49,750.00 unless agreed upon by
      “owner.”                                                   /s/ JAG
                                                                  /s/ NT

      This agreement, complete with handwritten and initialized addenda and
alteration, was entered into by the parties on August 14, 1994. From this point
on, the Owners Tice and Greeter enjoyed what the record reveals to be at best
a problematic relationship. Despite Nancy Tice’s frequent presence on the job
site and extensive correspondence between the Tices and Greeter, the renovation
project experienced significant delay and cost inflation. In addition to

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unexpected cost increases and labor delays, three different rains, occurring in
September October and November of 1994 caused extensive damage to the
original structure as well as to the addition. Without any specific prior notice,
the Tices terminated Greeter Construction on December 5, 1994.


      On April 24, 1995, Greeter filed a complaint in the Davidson County
Chancery Court to enforce a materialman’s lien in the amount of $12,000
allegedly due on the contract. The Tices responded and counterclaimed for
breach, alleging the following:
                                      ***
      1. [Greeter] breached the contract between the parties by:
           a. Failing to construct the improvements in accordance
      with the plans and specifications.
           b. Failing to construct the improvements within
                the budget estimate.
           c. Failing to construct the improvements in a professional
      workmanlike manner.
           d. Failing to complete the improvements in a
                timely manner.
           e. Failing to obtain authorization from Defendants before
      ordering material, the cost of which exceeded the agreed to
      estimate.
      2. As a result of [Greeter]’s breach of the contract, Defendants
      have suffered damages in the amount of approximately $52,500,
      the exact amount to be determined at trial.


      The case was tried without a jury before Hon. Claudia Bonnyman, Special
Chancellor, on April 6, 1998. The Chancellor’s memorandum discloses the
following findings of fact which are entitled to a presumption of correctness on
appeal absent a showing that the evidence preponderates against those findings.
Tenn. R. App. P. 13(d).


            Work on the project began in August of 1994. Even the first
      stage, demolition, took longer than Alan Greeter anticipated. He
      asserts that the Owners made changes in the project which caused
      delay. However, Greeter did not provide written change orders to
      support that position. By the end of September, Alan Greeter
      admitted to the Owners that the cost overrun for the first stage was
      already 10-15%. He advised the Owners that the contract price
      was still valid, however, because there were cost savings to be had
      later in the project. In fact, the cost overruns continued. At trial he
      did not know what the revised cost would be if he had completed
      the project. The Owners paid Greeter almost twenty thousand

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      ($20,000) dollars (including the deposit) by the time of termination
      in early December.
            The project had numerous problems. First, the Owners
      proved that Alan Greeter was inexperienced and had previous large
      cost overruns on one of the few projects he had supervised before
      the Owner’s project. It became obvious to the Owners that this
      project could not be completed for any amount near the contract
      price. Second, after the work began, Alan Greeter concluded that
      the design for the back of the house was not possible for him to
      follow. This was disappointing for the Owners but they accepted
      such deviations for a few months. Third, the renovations design
      required removal of an exterior wall and a new roof for the
      addition which would tie into the old roof. It was expected that for
      a brief period, the inside of the house would be exposed to weather.
      Alan Greeter admitted that Greeter had a duty to protect the house
      from rain to the extent that could be done. The Owners proved that
      Greeter failed to take precautions to protect the interior of the
      house during rains in October and November. The last rain
      resulted in major water damage to the interior costing the Owners
      $26,078.19 to repair. ...
            On December 5, 1994, the Owners terminated the project with
      Greeter because of the problems discussed above. Builder’s Group
      completed the project, (reworking much of the Greeter
      construction) pursuant to the original plans. ... Greeter was aware
      that delay and cost problems can and do arise.

      From the order below Greeter appeals asserting as its issue “[w]hether the
Tices are entitled to damages after unilaterally terminating the building contract
with Greeter Construction Company.”


The Special Chancellor concluded regarding the liability of the parties:
           The construction agreement Greeter Drafted, however, did not
      provide for cost contingencies. Although the contract was
      captioned a “cost plus” contract, the agreement was amended to
      establish a set building cost which could only be changed by
      agreement. The Owners did not agree to increase the contract price
      of $49,750. ...
                                   ***
           The Owners are awarded a judgment against Greeter
      Construction Company in the amount of sixty three thousand, four
      hundred thirty-three ($63,433.00) dollars.



So much of this case depends on an appraisal of the credibility of Allen Greeter
as opposed to the credibility of Richard and Nancy Tice. On appeal, we are
bound by the same rules as were articulated in Weaver v. Nelms, 750 S.W.2d
158 (Tenn. App. 1987).

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      In this nonjury case, the trial judge, as the trier of fact, had the
      opportunity to observe the witnesses, Nelms, his daughter Nancy
      Wilson, and her husband, Bill Wilson, as they testified from the
      witness stand concerning the transaction. The weight, faith and
      credit to be given to any witness' testimony lies in the first instance
      with the trier of fact who has the opportunity to observe the manner
      and demeanor of the witnesses as they testify. The credibility
      accorded by the trier of fact will be given great weight by the
      appellate court. See Town of Alamo v. Forcum-James Co., 205
      Tenn. 478, 327 S.W.2d 47 (1959); Sisk v. Valley Forge Insurance
      Co., 640 S.W.2d 844 (Tenn. App. 1982).

750 S.W.2d 158, 160 (Tenn. App. 1987).



      The contract provided that all of the work was to be preformed by Greeter
"... in a professional workmanlike manner ..." and to be completed by November
8, 1994. The total cost of the project was not to exceed $49,750.00 unless
agreed to by the owners.


      Early into the work performance it became apparent that significant cost
overruns were inevitable. The trial court held that Allen Greeter was an
inexperienced contractor and in the few projects he had supervised previously,
large cost overruns were experienced. His father, John W. Greeter, was the
founder and real owner of Greeter Construction Company but took little part in
the Tice job and provided practically no oversight of the job. In order to
construct the addition to the existing home it was necessary to remove one entire
exterior wall, thus exposing the house to the elements. Three times the house
was damaged by rainfall. On September 23, 1994, the existing kitchen in the
house fell in due to rain damage. No precautions had been taken to protect
against damage from rain. A similar incident occurred in the first part of
October but with less damage. During the weekend of November 26, 1994,
three weeks after the contract was to have been finished, very heavy rainfall
inundated the house with water resulting in massive internal destruction,
requiring extensive reconstruction by contractors employed by the insurance
companies of both Greeter and Tice. Mrs. Tice testified that weather forecast
prior to November 26, had indicated rain and that she and Mr. Tice had gone
visiting elsewhere for the Thanksgiving holidays. Upon their return they found
the extensive water damage to the house and it appeared that no pre-rain


                                        5
precautions had been taken by the contractor to protect the exposed interior of
the home.


         In spite of the delay in completing the work under the contract, Greeter
preformed practically no work on the house during the month of November
1994. While all of the delay was not caused by Greeter, the trial court held that
the problems with delay, failure to protect the job from rainwaters, cost overruns
and inferior workmanship, breached the contract and justified Mr. and Mrs. Tice
in terminating the building contract with Greeter Construction Company. The
evidence certainly does not preponderate against these conclusions of the trial
judge.


         Appellant argues that, despite its inability to keep within the price it set
with the Tices, Greeter was entitled to notice of dissatisfaction on the part of the
Tices before the termination of the contract on December 5. Appellant argues
that, absent that notice, the Tices termination amounts to “the first material
breach” to the construction contract of August 17, 1994. As this court has
previously stated, “[r]equiring notice is a sound rule designed to allow the
defaulting party to repair the defective work, to reduce the damages, to avoid
additional defective performance, and to promote the informal settlement of
disputes.” McClain v. Kimbrough Const. Co., Inc. 806 S.W.2d 194, 198 (Tenn.
Ct. App. 1990) citing Pollard v. Saxe & Yolkes Dev. Co., 12 Cal.3d 374, 525
P.2d 88, 92, 115 Cal. Rptr. 648, 652 (1974); Sturdy Concrete Corp. v. Nab
Constr. Corp., 65 A.D.2d 262, 411 N.Y.S.2d 637, 644 (1978). However it is
equally true that, “[n]otice ought to be given when information material to the
performance of a contract is within the peculiar knowledge of only one of the
contracting parties.” McClain, 806 S.W.2d at 198, emphasis added. The rain
damage resulting from the absent exterior wall and missing tarps, the increased
costs far outstripping the estimated costs, the delay in beginning the
construction contract, all were well within the knowledge of both contractor and
owner. Even if one were to find to the contrary, the writings between the parties
appearing of record evidence notice to Greeter of the Tice’s dissatisfaction with
at least the cost overruns. Thus we affirm the trial court’s finding of Greeter’s
inability and disinclination to perform under the contract. This inability
operated as an uncured material breach which excused the notice requirement

                                           6
discussed in McClain, 806 S.W.2d at 199.


       No issue is made on appeal as to the amount of damages awarded to Mr.
and Mrs. Tice for breach of contract and our review of the record indicates that
the evidence as to damages does not preponderate against the findings of the
trial court.


       The judgment of the trial court is in all respects affirmed and costs are
taxed against Appellant Greeter Construction Company.




                               ______________________________
                               WILLIAM B. CAIN, JUDGE


CONCUR:


____________________________________
BEN H. CANTRELL, P.J., M.S.


____________________________________
WILLIAM C. KOCH, JR., JUDGE




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