                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                  June 19, 2013 Session

RALEIGH COURT CONDOMINIUMS, HOMEOWNERS’ ASSOCIATION,
     INC. v. E. DOYLE JOHNSON CONSTRUCTION CO., ET AL.

                    Appeal from the Circuit Court for Knox County
                      No. 2-4-40408    Harold Wimberly, Judge


              No. E2012-02474-COA-R3-CV-FILED-AUGUST 29, 2013


Homeowners’ association filed suit against general contractor because of drainage issues
alleging fraud, negligent misrepresentation, negligence, violations of the Tennessee
Consumer Protection Act, and breach of the implied warranty of “good and workmanlike”
construction. The trial court found in favor of homeowners’ association. The general
contractor appeals. We affirm.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                            Affirmed; Case Remanded

J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
J R., P.J., and D. M ICHAEL S WINEY, J., joined.

Arthur F. Knight, III, Knoxville, Tennessee, for the appellant, E. Doyle Johnson Construction
Co.

Mark E. Brown, Knoxville, Tennessee, for the appellee, Raleigh Court Condominiums
Homeowners’ Association, Inc.

                                        OPINION

                                   I. BACKGROUND

       The plaintiff, Raleigh Court Condominiums Homeowners’ Association, Inc. (“HOA”
or “Raleigh Court”) filed the complaint initiating this case in September 2008, against the
defendants, E. Doyle Johnson Construction Company and E. Doyle Johnson, individually
(collectively, “Johnson”). HOA alleged in relevant part as follows:
11.   During construction on Raleigh Court Condominiums, certain members
      of the Raleigh Court HOA noticed a drainage problem between the
      units located on Graham Way and Greensboro Way and the units
      between Greensboro Way and High Point Way. The drainage plan
      developed and subsequently constructed by the Defendants was
      inadequate which caused standing water to collect in the common areas
      between the units and threaten both property values and the health,
      safety and welfare of each unit owner and his or her family.

12.   The members of the Raleigh Court HOA brought the drainage and
      resulting flooding problems to the attention of the Defendants. In
      response, the Defendants made an affirmative representation to the
      members of the Raleigh Court HOA that the drainage and flooding
      problems would be repaired prior to the Defendants turning the
      development over to the Raleigh Court HOA.

13.   On July 26, 2006, the Defendants turned over the development to the
      Raleigh Court HOA. However, the Defendants had not corrected the
      problem as represented.

14.   The members of the Raleigh Court HOA brought the continuing
      problem to the attention of the Defendant E. Doyle Johnson at the
      meeting where the development was turned over to the Raleigh Court
      HOA. The Defendant Johnson affirmatively represented to the
      members of the Raleigh Court HOA, both individually and in his
      capacity as the President of E. Doyle Johnson Construction Co., that the
      drainage and flooding problems would be repaired at the Defendants’
      expense within thirty (30) days.

15.   The Defendants refused and failed to repair the drainage and flooding
      problems within thirty (30) days of the July 26, 2006 meeting.

16.   On January 11, 2008, the Defendants turned over ownership of the
      common elements at Raleigh Court to the Raleigh Court HOA by
      executing a Quitclaim Deed in favor of Raleigh Court HOA. . . .

17.   The drainage and flooding problems were not corrected by the time the
      Quitclaim Deed was executed by the Defendants on January 11, 2008.

18.   As a result of the Defendants’ failure to repair the drainage and

                                     -2-
              flooding problems at Raleigh Court, the members of the Raleigh Court
              HOA have been forced to contract for the repair of the problem at a
              cost of Forty Thousand Dollars ($40,000).

HOA’s complaint alleged negligence, fraud, negligent misrepresentation, violations of the
Tennessee Consumer Protection Act, and breach of the implied warranty of good and
workmanlike construction. HOA requested compensatory damages in the amount of $40,000,
treble damages under the Tennessee Consumer Protection Act, attorney fees and costs,
punitive damages, and general relief.

        At trial, Sherri Fauver, a former resident, described the conditions at Raleigh Court
prior to her purchase:

       Q:     . . . [W]hen you looked at the unit, notice any particular problems in the
              back?

       A:     Yes, there was water drainage that just sat on top of the ground.

       Q:     Where would that have been located?

       A:     In the back of my unit. It faced the back of the units behind me. It was
              in between the units.

       Q:     Who did you purchase this [unit] from?

       A:     Doyle Johnson.

       Q:     Before purchasing your unit, did you have a discussion with him about
              the water you saw in the back?

       A:     I never had a discussion with him, but I put it in my contract that he had
              to remedy the drainage issue?

                                            ***

       Q:     Was Mr. Johnson at the closing, by chance?

       A:     He was.

       Q:     Was there anything in your contract about drainage?

                                             -3-
      A:     There is.

      Q:     Where is that, if you could find that?

      A:     It’s on page six of seven of the contract, under special stipulations
             number two.

      Q:     What does that say?

      A:     “Water drainage between dwellings to be remedied prior to turnover to
             homeowners’ association.”


John Mayes, a current homeowner, testified as follows regarding the drainage problems:

      A:     We live in actually the lowest spot of the whole place, I reckon, and the
             water will come and stand behind our deck – or not deck, but the fence,
             and when the water is really running it would run down between our
             condo and the one next door and stand in our front yard, all back
             through there and all back around behind the condos.

                                           ***
      Q:     The water you talked about being near your unit, what kind of
             problems, if any, did it cause you?

      A:     We have a slab. We don’t have a deck, and my wife put down the big
             concrete pavers and the pea gravel all around those and everything, and
             the pavers would actually float in the water, it was standing so high
             back behind our – even when it was dry, then they’d still squish until
             it hadn’t rained for a month, so you couldn’t even use the back back
             there.


Homeowner Winfred Douglas related:

      Q:     Now, when you moved in at your unit a few years ago, what did you
             observe with respect to water at Raleigh Court?

      A:     We had standing water in the back.



                                            -4-
                                             ***

       Q:     There are, it looks like [in these pictures] – did you put yardsticks out here [in
              the back of the unit]?

       A:     Yes.

       Q:     Why did you do that, sir?

       A:     To measure the standing water.


Mark Goins, another resident, observed that while he was at Raleigh Court, “across the road
from us the water stood pretty constant.” His wife, Debbie Goins, related that she saw
“[s]tanding water, the drains were below or above grade, cracks in the foundation beginning,
just a mess.” Homeowner Ellarece Bradley described her experience with the drainage issues
and the representations made by Johnson:

       Q:     Did you notice anything specifically outside of your unit when you
              looked at it?

       A:     The day that we looked at the unit you could not walk in the backyard
              unless you had on boots because it was so muddy.

                                             ***

       Q:     Was Mr. Johnson at your closing, by any chance?

       A:     Yes, he was.

       Q:     And at your closing, when Mr. Johnson was there, did you have an
              opportunity to talk to him about drainage issues?

       A:     Yes, I did.

       Q:     Tell me what he said to you.

       A:     Before we signed the documents we – actually it was my husband asked
              Mr. Johnson if he knew there was a drainage problem. He said yes. He
              said do you plan to correct the problem? He said yes. Both men stood

                                              -5-
             up. Mr. Johnson shook my husband’s hand, and he said I will definitely
             fix the problem for you.

      Q:     Based on that statement, did you still close on the condo that day?

      A:     Yes, I did.

      Q:     Why did you do that if there was a drainage problem in the back of the
             unit?

      A:     I took this man to be an honest man. He had several developments over
             the city, and I took him at his word.

                                          ***

      Q:     After you moved in, was there ever an occasion where you observed
             any issues with water?

                                          ***

      A:     Every day the ground was wet. I have a deck and underneath my deck
             the water was standing and around the deck area, it was nothing but
             mud.

      Q:     Now, would this occur when it wasn’t raining also?

      A:     Yes.

       On June 28, 2006, the first meeting of HOA was held. Johnson was present. Minutes
from the meeting reflect that in response to a number of owners voicing concerns about
drainage problems, Johnson stated that he was aware of the problem and that it would be
fixed within 30 days. On July 26, 2006, a meeting was held to turn over operation of the
condominiums to the homeowners. Ms. Fauver related her recollection of the meeting:

      Q:     So what happened at that meeting?

      A:     That’s the night [Johnson] turned over the homeowners association to us.

      Q:     Did he say – was he asked about drainage?



                                           -6-
       A:     He was.

       Q:     Did he say anything specifically?

       A:     He said that he was aware of the problem and he was going to fix it at
              his expense and it would be fixed within the next 30 days.


In regard to the July 2006 meeting, Mr. Mayes recalled that Johnson “stood up and told us
that [turning over the condominiums] was the reason he was there and that he knew there was
a problem with the water drainage and it would be taken care of. He wasn’t taking any
questions or anything and he took off out the door.” Mr. Goins observed that Johnson “came
in and stated that he was turning over the condo[s] to the association and that he would not
take any questions in the meeting. A lady that was there kept bringing up, asking when he
was going to fix the water issues . . . and he stated that he would take care of it.” Ms. Goins
added:

       Q:     What happened at that meeting?

       A:     My husband and I were there at the meeting in Fountain City when the
              condo association was turned over to us. Doyle Johnson was late. He
              came in with a lady and they had a couple, two or three boxes. They
              came in and the first words out of his mouth were hello, I’m Doyle
              Johnson, the purpose of this meeting is to turn it over to the
              homeowners association, there will be no questions, and that was it.
              There was people that were standing up saying what about the drainage,
              what about the water?

                                            ***

       Q:     Was there ever any – did he ever mention anything about any drainage
              problems that you recall, Mr. Johnson?

       A:     In the meeting there were women that were asking him about the
              drainage issues, when they were going to be resolved, and his reply was
              he would resolve it within 30 days.


      The record reveals, however, that the drainage problems were never resolved by
Johnson. Ms. Fauver testified again as follows:

                                              -7-
      Q:     After the July 26th meeting that we’re talking about here in 2006, did
             you continue to observe water problems in the back of your unit?

      A:     I did.

      Q:     Did you contact Mr. Johnson about those?

      A:     I did.

Ms. Fauver related that she wrote a letter to Johnson because of the continuing drainage
issues behind her unit. She received a response from Johnson on February 7, 2007, in which
she was assured the water problems would be addressed. Her testimony continued as
follows:

      Q:     After you received this letter of February 2007, did you continue to
             observe water problems in the back?

      A:     I did.

      Q:     Did you contact Mr. Johnson again?

      A:     I did.

                                          ***

      Q:     Did you ever receive any response to this letter?

      A:     No.

      Q:     Did you ever make any complaints to the city about this issue?

      A:     Yes.

      Q:     Okay. Do you recall who you talked to with the city?

      A:     Curtis Williams.

                                          ***

      Q:     Did you ever observe Mr. Johnson’s company doing any work on the

                                           -8-
              water problems in the back of your unit?

       A:     They came and put some rock underneath our deck and some soil, but
              it was just underneath the decks. There wasn’t nothing between the
              units.

Consistent with Ms. Fauver’s testimony, an email from Mr. Williams dated April 13, 2007,
is found of record:

       FYI, I spoke to a lady named Sherry Satterfield [Fauver] . . . about some
       drainage issues in Raleigh Court Condo’s (sic). She is having a problem with
       the drainage behind her lot which is also an area that is behind a condo that is
       accessed off of another street parallel to hers. She says water ponds up and
       does not run off. She has written the developer and has received no corrective
       response. . . . The developer tried to tell her that he was waiting on the city to
       tell him how to fix it. From a phone conversation I had with Sherry a couple
       of weeks ago, I told her that the city does not perform “design” for developers.
       ...

An inspection memorandum from Mr. Williams dated July 26, 2007, reflects that “[s]tanding
water reported where homes back up to each other.” Another such memorandum, dated
August 8, 2007, again notes: “Standing water reported where homes back up to each other.”

         Ms. Fauver and Mrs. Bradley both testified that the drainage problems continued in
2008, 2009, and 2010. As a result of the continuing problems with ponding water, HOA
hired Berry’s Lawn Service and paid $40,000 to address the drainage concerns. According
to all testimony at trial, the repairs by Mr. Berry resolved the drainage matter.

       HOA’s expert witness, engineer Ronald R. Corum, testified that every time he
traveled to Raleigh Court prior to the work by Mr. Berry, he observed standing water. Mr.
Corum related:

       Q:     Did you, based on what you saw, form any opinions about . . . what was
              the problem with the standing water?

       A:     Yeah, it wasn’t going anywhere. It was there. It was just standing
              water.

       Q:     . . . [W]hat was your opinion based on why the water was standing
              there?

                                              -9-
A:   The reason why the water was standing there was because water runs
     downhill and there w[ere] no slopes in the rear of the homes, so there
     was nowhere to go. It wasn’t sloped away from the houses and it
     wasn’t sloped away from the back yards . . . the reality, the water
     should be flowing away from the back yards and not sitting in the back
     yards.

                                   ***

Q:   Did you at any point, Mr. Corum, while you were at Raleigh Court, in
     formulating your opinions in this case, did you take a look at some
     space between units?

A:   Yes.

Q:   What did you observe there?

A:   Well, I observed that they were pretty close together. Normally – well,
     I mean, it’s not that it was wrong that it wasn’t, they were too close
     together. It’s that the ground between the two buildings w[as] flat, and
     they really didn’t have a swale or anything to drain the water away or
     even allow it to go into a ditch system of some sort to get away from
     the land. It needed to get to the street so it could get into the storm
     water system.

                                   ***

Q:   Mr. Corum, based on your personal observations and review of
     photographs and other items that you used in this case, have you formed
     an opinion as to what the cause of the standing water was at Raleigh
     Court?

A:   Yes.

Q:   What is that opinion, sir?

A:   No conveyance system or no drainage system to carry the water away
     from the buildings.

Q:   By that you mean carry it where?

                                   -10-
       A:     Carry it to the pond, carry it to the street. Well, actually carry it to the
              street and then carry it to the ponds.

              Mr. Williams, the city’s storm water engineer, acknowledged at trial that issues
regarding drainage existed at Raleigh Court and recalled that he alerted Mr. Campbell and
Johnson about the problems:

       Q:     Mr. Williams, did you ever personally receive any complaints from
              residents of Raleigh Court about water problems on the site?

       A:     Yes, sir, I had received some phone calls from an individual at the
              development about ponding in the back yard.

       Q:     What did you do in response?

       A:     Tried to make the developer aware of it. We went out and took a look
              at the site. I know Steve Tokay went out probably on multiple
              occasions. I probably went out one or two times myself.

       Q:     Now, did you personally ever tell Mr. Johnson how to correct the water
              problems at Raleigh Court?

       A:     No, sir. That’s typically not our job and not our – we’re typically not
              allowed to tell folks how to do things.

       Q:     Did you ever tell Mr. Johnson personally to, how to, or devise a plan
              for him to correct drainage problems?

       A:     No, sir. We can’t do design work for private developers.

       Q:     Not a city function[,] is that correct?

       A:     No, sir.

Johnson related that some low elevation spots at Raleigh Court were filled in and extra drains
were installed. An e-mail response from Mr. Campbell, dated August 6, 2007, noted as
follows: “Water does not appear to be standing 24 hours after a rain even per the enclosed
pictures. Contractor has added gravel, etc. under decks as requested by City of Knoxville.
Any further changes for this area can be done by contractor on as needed basis. . . .” Shortly
thereafter, in early October 2007, the city released Johnson’s performance bond on the

                                              -11-
project. Johnson claimed at trial that after the performance bond was released, the company
believed that the work at Raleigh Court was complete and that no more drainage problems
existed. Johnson opined that once a performance bond is released, no more work could be
done on a project without the city’s permission.

      On October 8, 2012, the trial court ruled in favor of HOA. In the final order entered
on October 29, 2012, the court provided as follows:

       1.     There was a drainage problem on the common elements between
              Greensboro Way and High Point Way and Greensboro Way and
              Graham Way at Raleigh Court condominiums;

       2.     That the drainage problem existed prior to the turnover of the common
              elements from the Defendant E. Doyle Johnson Construction Company
              to the Raleigh Court Homeowners’ Association, Inc.;

       3.     That the drainage problem continued after the turnover of the common
              elements from the Defendant E. Doyle Johnson Construction Company
              to the Raleigh Court Homeowners’ Association, Inc.;

       4.     That the Defendant E. Doyle Johnson Construction Company agreed to
              correct the drainage on the common elements;

       5.     That the Defendant E. Doyle Johnson Construction Company failed to
              correct the drainage problems as agreed;

       6.     As the result of the Defendant’s failure to correct the drainage problem,
              the Plaintiff was entitled to repair the problem;

              That the Plaintiff spent a total of Forty Thousand Dollars ($40,000.00)
              to repair the drainage problems at Raleigh Court;

       7.     That the Plaintiff is entitled to a judgment against the Defendant E.
              Doyle Johnson Construction Company in the amount of Forty
              Thousand Dollars ($40,000.00) representing the cost of the repairs;

       8.     That the Defendant E. Doyle Johnson, individually acted at all times on
              behalf of the Defendant E. Doyle Johnson Construction Company and
              is not individually liable to the Plaintiff;



                                            -12-
       9.     The Plaintiff has not shown that it is entitled to either punitive damages
              or damages under the Tennessee Consumer Protection Act . . . .


                                        II. ISSUES

       We consolidate and restate the issues raised by Johnson in this appeal as follows:

       1.     Whether the trial court erred in entering judgment against Johnson in
              any amount based upon the complaint filed in this cause because the
              evidence was insufficient.

       2.     Whether Johnson can be found liable for an allegedly inadequate
              drainage system: (a) that Johnson did not design or develop; (b) that
              was expressly approved by the city; (c) that was designed by a third
              party; (d) after the city released the performance bond; and (e) that was
              accepted by HOA.

       3.     Whether Johnson can be found liable for any damages when the amount
              sought is based on the work of an individual who did not follow
              required procedures.


                             III. STANDARD OF REVIEW

       In this non-jury case, our standard of review is de novo upon the record of the trial
court, accompanied by a presumption of the correctness of the factual findings unless the
preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Wright v. City of
Knoxville, 898 S.W.2d 177, 181 (Tenn. 1995). The trial court’s conclusions of law are
reviewed de novo without a presumption of correctness. See Taylor v. Fezell, 158 S.W.3d
352, 357 (Tenn. 2005).


                                    IV. DISCUSSION

       Johnson asserts that the trial court based its judgment on findings that the company
entered into an agreement to repair the drainage problems at Raleigh Court and then failed
to do so. According to Johnson, the court found that there was a breach of that agreement
between the parties. Johnson therefore argues that the court’s findings do not conform to
HOA’s complaint, as there is no allegation for breach of any agreement between the parties,

                                             -13-
and because HOA failed to move to amend its complaint to reflect such a cause of action.
Johnson further contends that the proof at trial was insufficient to support a finding of
liability in favor of HOA under any of the causes of action in the complaint: fraud, negligent
misrepresentation, negligence, violation of the Tennessee Consumer Protection Act, and
breach of implied warranty of good and workmanlike construction.

       Tennessee “recognizes two distinct types of implied contracts; namely, contracts
implied in fact and contracts implied in law, commonly referred to as quasi contracts.”
Paschall’s, Inc. v. Dozier, 407 S.W.2d 150, 154 (Tenn. 1966). Contracts implied in fact arise
under circumstances which show mutual intent or assent to contract. Weatherly v. American
Agric. Chem. Co., 65 S.W.2d 592 (Tenn. Ct. App. 1933). Contracts implied in law are
created by law without the assent of the party bound, on the basis that they are dictated by
reason and justice. Id. A party seeking to recover on an implied in law or quasi contract
theory must prove the following: “A benefit conferred upon the defendant by the plaintiff,
appreciation by the defendant of such benefit, and acceptance of such benefit under such
circumstances that it would be inequitable for him to retain the benefit without payment of
the value thereof.” Paschall’s, Inc., 407 S.W.2d at 155. We find that the proof in this matter
established both types of implied contracts, and that the trial court’s findings conform to the
allegation in HOA’s complaint that Johnson breached a warranty, i.e., a covenant or promise,
of workmanlike construction. See Black’s Law Dictionary 1725 (9 th ed. 2009).

       In 2008, this court, in Bowling v. Jones, 300 S.W.3d 288, 291 (Tenn. Ct. App. 2008),
held as follows:

       Once a builder undertakes a construction contract, the common law imposes
       upon him or her a duty to perform the work in a workmanlike manner, and
       there is an implied agreement that the building or work performed will be
       sufficient for the particular purpose desired or to accomplish a certain result.
       Thus, failure to perform a building contract in a workmanlike manner
       constitutes a breach of the contract.

Id. at 291 (quoting 13 Am. Jur.2d Building and Construction Contracts § 10 (2000)). Thus,
Tennessee has recognized an implied contractual “duty” in construction cases – “a legal
obligation that is owed or due to another”1 – to perform in a workmanlike manner. Federal
Insur. Co. v. Winters, No. E2009-02065-COA-R3-CV, 2010 WL 4065609, at *3 (Tenn. Ct.
App. Oct. 18, 2010). Additionally, the Tennessee Supreme Court has recognized the general
principle that individuals or business entities must answer for any deficiencies in the
performance of services. Federal Insur. Co. v. Winters, 354 S.W.3d 287, 293 (Tenn. 2011).

       1
           Black’s Law Dictionary 580 (9th ed. 2009).

                                                   -14-
       The record likewise establishes that the “New Construction Purchase and Sale”
agreements used by Johnson and the HOA members reflected that “[t]he home shall be
constructed in accordance with good building practices,” and Johnson “warrant[ed] the
Property against defective workmanship.” The contract with Ms. Fauver specifically
provided that “Water Drainage Between Dwellings to be Remedied Prior to Turn over to
Home Owners Association.” The “Master Deed” of the property reflects that Johnson
provided:

       grantor makes no other implied or express warranties relating to the unit or the
       common areas and facilities, except for such warranties as are set forth in the
       general warranty deed to the unit.

       Consistent with holding in Bowling therefore, once Johnson, as the general contractor,
undertook the Raleigh Court project, the common law imposed a duty to ensure that the
condominium community was completed in workmanlike fashion and that Johnson breached
this duty by failing to remedy the problems with the drainage system.

       HOA also alleges that Johnson was negligent in failing to make repairs to the drainage
system. This claim requires proof of the following elements: (1) a duty of care owed by
defendant to plaintiff; (2) conduct below the applicable standard of care that amounts to a
breach of that duty; (3) an injury or loss; (4) cause in fact; and (5) proximate, or legal, cause.
McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn. 1995). Johnson responds that the
construction company cannot be held liable to HOA for the damages resulting from the
ineffective drainage system because it was designed by a third-party, Robert Campbell &
Associates, L.P., an engineering firm. According to Johnson, he hired Mr. Campbell’s firm
to draw the site plan and paid $43,033.44 for the work. Mr. Campbell acknowledges that he
and his firm prepared the conceptual drawings and plans for the project and designed the
drainage system.

        The proof at trial revealed that there was a problem with the drainage system at
Raleigh Court before Johnson executed on January 11, 2008, the quitclaim deed turning over
control of the common elements to HOA. The drainage problem continued after the
execution of the quitclaim deed. Regardless of who drew the plans for the drainage system,
Johnson had notice of the standing water conditions and of the fact that the system did not
work effectively. One may be held liable for negligent construction if one had notice. See
Blair v. West Town Mall, 130 S.W.3d 761, 764 (Tenn. 2004). By showing Johnson had
notice, HOA has established that Johnson had a duty to act reasonably to remedy the drainage
problem. Id. at 766. The unilateral delegation of work to a third party did not absolve
Johnson of his duty to perform in a workmanlike manner. Bowling, 300 S.W.3d at 295. It

                                              -15-
is a “hornbook principle of contract law” that delegating “performance of a contract does not,
unless the obligee agrees otherwise, discharge the liability of the delegating obligor . . . .”
Fed. Ins. Co., 354 S.W.3d at 294 (quoting Brooks v. Hayes, 395 N.W.2d 167, 169 (Wis.
1986)).

        The evidence presented at trial also was sufficient to support HOA’s allegations of
fraud and/or negligent misrepresentation. Fraud contains four elements: (1) an intentional
misrepresentation of material fact, (2) knowledge of the representation’s falsity, and (3) an
injury caused by reasonable reliance on the representation. Axline v. Kutner, 863 S.W.2d
421, 423 (Tenn. Ct. App. 1992). The fourth element requires that the misrepresentation
involve a past or existing fact or, in the case of promissory fraud, that it involve a promise
of future action with no present intent to perform. Id. at 423; Oak Ridge Precision Indus.,
Inc. v. First Tenn. Bank Nat’l Ass’n, 835 S.W.2d 25, 28 (Tenn. Ct. App. 1992). Persons
asserting a negligent misrepresentation claim must establish:

       One, who, in the course of his business, profession or employment, or in any
       other transaction in which he has a pecuniary interest, supplies false
       information for the guidance of others in their business transactions, is subject
       to liability for pecuniary loss caused to them by their justifiable reliance upon
       the information if he fails to exercise reasonable care or competence in
       obtaining or communicating the information.

Restatement (Second) of Torts § 552(1) (1977); Robinson v. Omer, 952 S.W.2d 423, 427
(Tenn. 1997). At trial, HOA presented testimony of witnesses who all addressed being at the
homeowners’ meeting where Johnson represented to those gathered that he would correct the
drainage problems within 30 days at his expense. The trial court thereafter determined that
Johnson admitted to HOA members that there were drainage problems and declared that he
would fix them. Based on the “testimony of numerous witnesses, and the photographs, and
other information that has been presented as exhibits in this case,” the court concluded that
Johnson did not make the required repairs. After judging the credibility of the witnesses, the
court properly concluded that Johnson did not intend to correct the issues as he represented
he would do. In fact, Johnson testified that he never attempted to implement a new plan to
deal with the drainage issue:

       Q:     So let’s understand here, Mr. Johnson, other than the original plan
              that Robert Campbell came up with for the development of Raleigh
              Court, there was no other plan to deal with the drainage problem?

       A:     No. You have to go by that master plan, the engineer’s plan that the
              city – you got a stamp on this plan that they give you and that’s the

                                             -16-
               plan you start with and the plan you end up with.

(Emphasis added.). “It is well-settled that a trial court’s assessment of witness credibility is
entitled to great weight on appeal because the trial court saw and heard the witness testify.”
C&W Asset Acquisition, LLC v. Oggs, 30 S.W.3d 671, 676 (Tenn. Ct. App. 2007). “As we
have further noted, the trier of fact is free to believe or disbelieve all or part or none of a
witness’s testimony even where the testimony is uncontradicted or is not directly
impeached.” Id. “We give great weight to a trial court’s determination of credibility.” Id.

         Johnson however argues that “even if [he] did represent to some Raleigh Court
homeowners that he would repair drainage problems, an overwhelming amount of evidence
at trial pointed to the conclusion that he did make the necessary repairs prior to executing the
quitclaim deed in favor of the association on January 11, 2008.” To the contrary, the proof
in the record reveals that Johnson threw some dirt and gravel under some decks and installed
some yard drains, but the company did not do anything between the units where the real
issues were located. The court considered the conflicting testimony on the issue of the
alleged repairs and chose to believe the witnesses supporting the position of HOA. Nothing
cited by Johnson is sufficient to set aside the trial court’s findings. The trial court’s decision
must be affirmed.

       Another contention asserted by Johnson is that since the city released the performance
bond, the city placed its stamp of approval on the project and therefore Johnson cannot be
found liable to HOA for damages. The proof at trial however does not support Johnson’s
contention that the release of the performance bond meant that all drainage issues were
resolved at Raleigh Court. In pertinent part, the release specifically addressed the following:

       required site grading, construction of retention basins per approved plans,
       erosion and sediment control from the site during construction, the
       development certification (including as-built plans), “Covenants for Permanent
       Maintenance of Stormwater Facilities” referenced on the final plat and
       stabilization of disturbed areas after construction.

The release, therefore, concerns whether certain infrastructure criteria have been met. Mr.
Williams specifically addressed this issue:

       Q:      What does that bond go to secure?

       A:      It typically goes to secure infrastructure and some of the, I guess,
               information and other things that are related to the infrastructure.



                                              -17-
       Q:     When you say infrastructure, can you tell me exactly what you mean by
              that?

       A:     Typically we’re speaking of the overall grading of the site, the pipes,
              the roadways, the detention ponds or retention ponds, things of that
              nature.

Thus, the release relates to certain minimum requirements demanded by the city and does not
address particular problems that may arise unique to a particular piece of property that is
being developed. Accordingly, while Johnson may have installed the appropriate pipes and
built certain ponds as required by the city, the release did not signify the city’s approval of
the drainage conditions at Raleigh Court. Indeed, Johnson testified to the fact that the city
will not even give advice on how to address a problem, much less stamp its approval on any
plan:

       Q:     Did the city ever give you a specific plan for addressing drainage
              problems?

       A:     The city don’t do that. The engineers give you that. You follow the
              plan that was originally set forth in the project. They give you a – you
              got to have a plan approved by the city, then the engineers lay all this
              stuff out for you.

      Present in the record is an e-mail to Mr. Williams from Mr. Tokay, a former city
employee in the Water Quality division, dated July 10, 2007, acknowledging the city’s
awareness of the drainage problem at Raleigh Court:

       Donald Kitts called . . . today and wanted to know what the City can do to
       eliminate the ponding in the rear yards in Raleigh Court. I told him the bonds
       have not been released yet and the drainage is an issue to be resolved.

       The S/D has been buil[t] in compliance with approved plans, but rear yards
       never did drain well. Doy[le] Johnson has installed some additional yard
       drains. A junction box was an easy tie in point for the yard drains. The yard
       drain has helped in the immediate area around the inlets. In those areas
       where drainage remains a concern there is not a convenient drainage system
       to carry the collected water away. . . .

(Emphasis added.). This e-mail confirms the city’s recognition that despite the system’s
compliance with city-approved plans, drainage problems remained. Additionally, a note


                                             -18-
from Mr. Tokay of record further reveals the city’s observations of the problems at Raleigh
Court and that Johnson had been advised of the situation:

       Raleigh Court – Service request review – 8-16-2006

       Mrs. Davis of 724 Graham Way requested I review a drainage/mosquito issue
       behind her condo.

       The area behind most of the units do[es] not have sufficient fall to convey
       stormwater to the junction box/yard drain. Ponding was evident in this area
       a few days after the last rain. Grass is having a difficult time growing due
       to the prolonged standing water. Most of the catch basins and junction boxes
       have standing water that pose a potential mosquito habitat. A new opening has
       appeared in the sinkhole/retention pond that poses a potential hazard. The rear
       walls of a few condos show the first signs of failure that may be of a building
       department concern.

                                            ***

       Councilman Bob Becker had gotten a call regarding ponding from a property
       owner in Raleigh Court and wanted to know if inspections were aware of the
       situation. I told Councilm[a]n Becker we had reviewed the site and Todd
       Hu[n]ley (partner with Doyle Johnson) had been made aware of the new
       thr[e]at in the sinkhole and that ponding was an issue.

(Emphasis added.). Clearly, the release of the performance bond did not establish that all
drainage issues were resolved at Raleigh Court.

        Johnson additionally asserts that the trial court erred in holding the company liable
after the project had been accepted by HOA prior to the performance bond being released.
Johnson argues that because a former president of HOA indicated he was satisfied with the
drainage at Raleigh Court, then the entire development is precluded from asserting a claim.

        The scope and extent of an agent’s authority are questions of fact that must be
determined from all of the facts and circumstances of the particular case. Southland Express,
Inc. v. Scrap Metal Buyers of Tampa, Inc., 895 S.W.2d 335, 340 (Tenn. Ct. App.1994). The
burden of proving that an agency relationship exists rests on the party asserting it. Sloan v.
Hall, 673 S.W.2d 548, 551 (Tenn. Ct. App.1984). The bylaws of HOA of record provide,
in pertinent part, as follows:



                                             -19-
       a. President. The President shall be the chief executive officer of the
       Association and he shall have and be vested with all powers and authority as
       are lawfully and customarily incident to the office and those designated by the
       Board. The President shall preside at all meetings of the Association and the
       Board. The President along with countersignature of the Secretary shall sign
       all leases, mortgage deeds and other written instrument (except the signature
       of the Secretary will not be required on checks and other drafts of funds of the
       Association) issued in the name of the Association from time to time.

We find that the bylaws therefore do not confer upon the HOA president the authority to sign
documents without the countersignature of the secretary. Accordingly, the action by the
former president did not waive the rights of HOA to pursue this claim against Johnson.

       Lastly, Johnson argues that the trial court erred in assessing damages against the
construction company because Mr. Berry, the man HOA hired to correct the drainage
problem, was not licensed and did not follow city ordinances.

        The only proof regarding this issue was Mr. Berry’s trial testimony that upon his
inquiry to the city, he was told he did not need a permit to do the work. Johnson had ample
opportunity to explore this line of inquiry with the city officials and failed to do so.
Furthermore, we agree with the position of HOA that Johnson is trying to create a private
right of action pursuant to a city ordinance in an attempt to create an affirmative defense.
The record before this court does not contain any materials to support the contentions of
Johnson. “Determining whether a statute creates a private right of action is a matter of
statutory construction.” Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850, 855 (Tenn.
2010). Under the facts of this case, we must determine the city’s intent “without limiting or
expanding” the ordinance’s coverage beyond what the city intended. Id. In our view, the
power to enforce the ordinance belongs solely to the city. The trial court’s award of damages
was correct in light of the proof presented at trial. The testimony of HOA’s expert witness
established that the prior drainage system did not function correctly. Johnson did not repair
it, so HOA had no choice but to protect its common elements. As the court found, since Mr.
Berry installed his system, there have been no drainage problems at Raleigh Court. The only
reliable evidence before the court as to cost of repairing the drainage problem was that proof
provided by Mr. Berry. Accordingly, the court was justified in awarding the requested
amount.


                                    V. CONCLUSION

       The decision of the trial court is affirmed in its entirety and the case is remanded for

                                             -20-
further proceedings. The cost of the appeal is assessed to E. Doyle Johnson Construction
Company.

                                                 _________________________________
                                                 JOHN W. McCLARTY, JUDGE




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