# FILED July 1, 1998 Cecil W. Crowson Appellate Cou rt Clerk 

### IN THE COURT OF APPEALS OF TENN ESSEE

AT NASHVILLE

RAZORBACK MARBLE ) MANUFACTURING CO., INC., ) ) Plaintiff/Appellee, ) ) Appeal No. ) 01-A-01-9709-CH-00512 VS. ) ) Montgomery Chancery ) No. 96-07-0012 D.D. ROBER

TS, ROBERTS ) CONSTRUCTION COM PANY, ) NARAN P. PATEL, KUSUM N. ) PATEL, and HERITAGE BANK, ) ) Defendant/Appellant. )
APPEALED FROM THE CHAN CERY COUR T OF MONTGOM ERY COUNT Y AT CLARKSVILLE, TENNESSEE THE HONORABLE ALEX W. DARNELL, CHAN CELLOR

RODGER N. BOWMAN 601 North Second Street, Suite 4 Clarksville, Tenness

ee 37041-1404 Attorney for Plaintiff/Appellee LARRY J. WALLACE 118 Franklin Street Clarksville, TN 37

040 Attorney for Defendants/Appellants

AFFIRMED AS MODIFIED AND REMANDED

BEN H. CANTRELL, JUDGE CONCUR: TODD, P.J., M.S. KOCH, J.- 2 - 

## O P I N I O N

In this construction contract di spute, the Chancery Cour t of Montgomery Coun ty granted a judgment plus prejudgment interest to Razorback Marble Manufacturing Company, Inc. On appeal, Roberts Construction Company, Inc . and D. D. Roberts, Individually, ra i se issues pertaining to the Contractor’s Licens ing statutes and the Notice of Non-Payments statute. Raz orback insists that it was due a larger judgment and a g reater award of prejudgment interest.

I.

Roberts Construction Company, Inc . received the contract to construct a Fairfield Inn in Clark

sville. D. D. R

oberts, president

of the company, entered into a contract with Razorback M arble Man ufactur ing Company, Inc., an Ar kansas corporation, to install marble products in the motel for a to tal contract price of $39,850.16. Razorback does not have a contractor’s l icense in Tennessee.
Razorback, however, completed it s work and some extra

work it claims the general contractor’s agents authorized and r equested. When it did not re ceive payment, Razorback

sued Robert

s Construc

tion and Mr.Roberts. Th e comp la int alleged that pursuant to Tenn. Code Ann. § 66-11-145 Razorback gave notice of nonpaymentto the defendants on May 22, 1996. The defendants’ answ er admitted the allegation. The chancellor entered judgment in favor of

Razorback in the amount of the original contract pl us $3,800.75 of extras, andallowed prejudgment i nterest on the original contract amount to run from December 8, 1996.

II.- 3 - The first three issues raised by the defendants o n appeal pertain to Razorback’s failure to have a contractor’s license in Tennessee. Because of this fact, the de fendants allege that Razorb ack’s recovery mus

t be limited to actual documented expenses that can be shown b y clear and conv

incing proof. See

Tenn. Code Ann. § 62-6-103(b). Sinc e the record does not contain proof of specif ic expenses, the appellants argue that the judgment in favor of the plaint i ff must be reversed.

We note, however, that the issue of the lic ense wa s not raised as a defense in the defendants’ answer. When th e question was first asked at the trial, Razorback’s lawyer objected bec ause the defense had not been pled. In the ensuing discussion the court immediately rul ed that Razorback did not have to have a license if they were doing w

ork for a contractor. There the issue died in the trial court.

Althou gh the issues in this court relate to the question of whether a contractor

in Razorback’s posi

tion needs to be licensed in Tennes see, we th i nk the defense has been waived by the defendants’ failure to pl ead it in the court below
. See Tenn. R. Civ. Proc. 12.08. The defendants rely on the fact that Razorback did not put on any proof of its ac

tual docum ented expenses in order to r ecover anything under Tenn. Code Ann. § 62-6-103(b), but since the licensing st atute had not been raised as a defense Razorback was not on notice that it needed to do so. Thus, it would not be fair to reject the

claim at this stage based on a defen se that was not raise d below.
We, therefore, pretermit the question of whether Razorb a ck was required to have a Tennessee license. We do note, how ever, tha t in the ma ssive overhaul of the licensing statute in 1994, the legislature r epe aled th e statute that specifically exempted sub-contractors from the statute’s requirements. And we find no comparable exemption in the present statute, although the sponsor of the 1994 act stated on the House floor that his bill had no effect on the sub-contractors. We defer- 4 -

any judgment on theproper interpretation of the statute until the question is squarely presented to us.

III.

The appellants also rely on Tenn. Code Ann. § 66-11-14 5(a), wh ich requires a notice of nonpayment to be g iven to the owner and the contracto r contracting with the owner within s ixty days of the las t day of the month in which work was performed. While we note, parenthetically, that the only consequence of failing to comply with the statute is a loss of lien rights, see Tenn. Code Ann. § 66-11-145(c), the complaint in this case all eged that the notice had been giv en and the defendants’ answer admitted it.

For these reasons we thi nk this issue is wi thout merit.

IV.

The appellants assert that the chancellor erred in admitting evidence of an offer to compr

omise Razo rback’s cl aim. The reco rd reveal s that the is sue came up in the following way:

Q. [Mr. Bowman] Okay. Mr. Rob erts, this F AX contain s the total billing for the pr oject as far as Razorback was concerned. And you receiv ed this on April 4th, 1996? A. Yes. Q. Did you ever call Razorback when you received this and complain to them in any fashion about the work that had been done or the charges that had been made? A. Yes, I called them, even wrote them a letter. Q. Could I see the letter th at you wr ote to them? A. I don’t have the letter. I have their reply to my letter. Q. Whe re is the le tter that you sent? Do you know? A. I don’t know. We got it lost somew here.- 5 - Q. May I see the reply to the letter? A. Here’s the reply to the letter. Q. May I see that, please? (Document passed to Mr. Bow man.) This was in response to your offer to settle this matter, is that correct? A. That’s right. MR. WALLACE: Objection, Your Honor. THE COURT: No, he can use it, what ever the letter says. MR. BOWMAN: Let’s make this Exhib it 5 to your testimo ny. MR. WALLACE: For the record again, I’m g oing to object that settlement offers are not a dmissible. THE COURT: Of course, t he que stion comes down, counselor, to whether the work was done or not. And th e letter itself may reveal cer

tain things. It has nothing to do with settlement.

The l etter mad e an exhibit at that point w as actually a letter fro m Razorback to Mr. Rob erts and it conta ined the follo wing:

We will settle the

account on the Fairfield Inn for a certified check of $40,000.00forthe marble work, also a $1,350. 00 cer tified check for plumbing and wood work around the whirlpools. The $40,000.00 certified check to be made out to RazorbackMarble, and the $1,350.00 certi fied check to be made out to Tony Weatherford. P aymentshould be made in 14 worki ng days of rec eivi ng this letter. When the checks are recei ved and deposited, all legal action will be withdrawn.

Tenn. R. Evid. 408 prohibits the introduction of evidence showing an offer or acceptance of a compromise “to prove liability for or invalidity

of a civil claim

. . . .” We do not read the exch ange in court nor the letter as tending to prove the defendants’ liability for Raz orback’s claim. There is a hint that Mr. R oberts had- 6 -

proposed a settlement and the letter contai ned Razorback’s counter -proposal. But the evidence in the record about the contract and the c ompleti on of it is so overwh elming that the evidence quoted abov e is at most harmless. See Ten n. R
. App. Proc. 36(b).

V.

Razorbackallegesthat the chancellor should hav e allowed a recovery forall of the extras it per formed. The claim was for $7,451.75, of which the chancellor allowed $3,800.75. The defendants’ defense is that none of it was authorize d by Mr. Roberts.

We find that the record preponderates in favor of a finding that all the work was done and that the agents for t he defendants, on the site and in charge of the work, authorized it. Although Mr. Roberts may have had a pol icy of reserving to himself the right

to approve any contrac t extras, he apparently

did notcommunicate that to Razorback or to hi s agents on the job. Ther efore, t he judgment should be increased to include the total of $7,451.75 in extras.

VI.

Razorbackalso asserts that the chance llor erred in not allowing prejudgmentin tere st from April 4, 1996, the date it billed the defen dants for the full amount.

The award of prejudgment interest is governed by Tenn. Code A nn. § 47-14-123, which says that pr ejudgmentinterest may be awarde d as an el ement of,- 7 -

or in the nature of damages, “in accordance with the principles of equity ” at a rate of up to 10% per annum. The award is within the sound discr etion of the t rial judge
. Myint v. Allstate , ____ S.W.2d ____ (Tenn. 1998). The object is to fully compensate plaintiffs for their losses. Id.

We think the trial judge’s discretion applies t o the tim e at which the prejudgment

interest will beg in to run. The chancellor chose December 8, 1996 when the interest began to accrue. He based the date on a finding that some information had been furnished to Mr. Roberts on Nov ember 8, 1996 and that thirty days from that date was a r

easonable ti me in which to pay the claim.

We think the December 8, 1996 date s hould be affirmed. We also think, however, that the interest began to a ccrue on th e whole amou nt of the clai m, $47,301.91.

As modified the judgment of the court below is affirmed and the cause is remanded to the Chancery Court of Montgomery County for the enforcementof the judgment. Tax the costs on appeal to the appellants.

_______________________________ BEN H. CANTRELL, JUDGE CONCUR:

_______________________________ HENRY F. TODD, PRESI DING JUDGE MIDDLE SECTION

_____________________________ WILLIAM C. KOCH, JR., JUDGE