# FILED August 11, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk IN THE COURT OF AP PEALS OF TENNESSEE AT JACKSON

WHITE’S ELECTRI C, HEATING, ) AIR AND PLUMBING, ) ) Plaintiff/Appellee, ) Madison Chancery No. 51088 ) v. ) ) LEWIS CONSTRUCTION COMPANY, ) Appeal No. 02A01-9803-CH-00064 a/k/a TOMMY LEWIS ) CONSTRUCTION COMPANY AND ) FRONTIER INSURANCE COMPANY, ) ) Defendants/App

ellants. )

APPEAL FROM THE CHANCERY COURT OF MADISON COUNTY

AT JACKSON, TENNESSEE THE HONORABLE JOE C. MORRIS, CHANCELL OR

For the Plaintiff/Appellee : For the Defend ants/Appellants : Gera ld B . Ki rks ey Ralph D. Golden J. Timothy Crenshaw Memphis, Tennessee Brentwood, Tennessee

AFFIRMED IN P ART, REVERSED IN PART, AND REM

ANDED

HOLL Y KIR BY LI LLA RD, J.

CONCURS: ALAN E. HI GHERS, J. DAVI D R. FAR

MER, J.OPINION

This is a construction contract case. The plaintiff subcontractor sued the general contractor andthe general contractor’s surety seeking unpaid contract payments and d amages for delays

in performance

of the construction contract. The trial court awarded the plaintiff damages for brea ch of contract and for disruption and delay. We affirm in part, rever se in part, and remand. Lewis Construc

tion Company (

“Lewis C o nstruction”) was the general contractor for a constructio n project with the Jackson Housing Authority (“JHA”) to renovate public housing f acili ties in Jackson, Tennessee. The original contract between the JHA and Lewis Construction containeda project deadline of November 15, 1994, or 278 days. The prime contract deadline was subsequently

extended by agreement to September 5, 1995. The project was to be completed

in three separate phases, with Phase

I to be comple

ted before Phase

II beg an and so forth. Frontier

Insurance Company (“Frontier I

nsurance”) se

rved as Lewi

s Construction’s sur

ety on t he project. L

ewis Constructi on and Frontier I nsurance will be

referred to co

llectively a

s the Defendants . White ’ s Electric, Heating, Air and Plumbing (“White’s Plumbing”) was the plumbing subcontractor for the construction project. White’s Plumbing submitted a bid p roposal to Lewis Construction in the amount of $151,000. The proposal referenced the plans and specifications for the project contained in a proje ct manual distributed by Lewis Construction to potential subcontractors. White’s Plumbing’s proposal

was accepted by

Lewis Co

nst ruction on February 22, 1994. The subcontract between White’s Plumbing and Lewis Construction provided that White ’s Plumbing would provide labor, su

pplies, andmaterial for installation of water lines, sanitary vent lines, plumbing fixtures, and gas lines “per plans and specifications for Jackson Housing Authority Modernization Program.” The subcontract providedthat Lewis Construction was to pay White’s Plumbing “per specifications.” The subcontract did not contain a completion date. White’s Plumbing began work on the project on March 4, 1994, and completed its work on the project on April 18, 1995. Two change orders in the record showed that the parties increased the contract price by $1790, making the total due White’s Plumbing under the contra ct $152,790. Le

wis Construction pai d White’s Plumbing $138,651.34 under the subcontract, but withheld the $14,138.66 retainage.2

White’s Plumbing filed a lawsuit on October 13, 1 995 against Lewis Construction and Frontier Insurance. The complaint alleged that Le wis Cons truction caused damages to White’s Plumbing by delaying White’s Plumbing’s completion of its work on the projec t, thereby increasing White’s Plumbing’s cos t s and decreasin g its profits. White ’s Plumbing asser ted that Lewis Construction caused delay by failing to perform necessary site work and clea n up, making changes in the normal sequence for com pleti on of the work, and failing to coordinate the work of other subcontractors.

White’s Plumbing als

o alleged that L

ewis Construction had refused to pay for work that White’s Plumbing performed unde r various change orders to the subcontract. White’s Plumbing contended

that Lewis Cons

truction violated t

he Prompt Pay

Act, Tennessee CodeAnnotated § 66- 34-101 to -703, by f

ailing to pay

White’s Plumbing in a

ti mely manner after it r

eceived pay

ments from the JHA. White’s Plumbing ’s claimsagainst Frontier Insurance were based on the contractor’s bond issued by

Frontier Insurance for Lewis Construction, pursuant to Tennessee Code Annotated § 12-4-201. A copy of the bond was attached to White’s Plumbing complaint. White’s Plumbing sought $15,551 in unpaid contract payments and retainage, and $84,329 for de lay, disrup t ion and impact damages

. Lewis Construction

and Frontier Insurance filed a joint answer. Frontier Insurance admitted that it was Lewis Con

struction’s su

rety, but de nied that it issued a contractor’s bo

nd to Lewis Construction pursuant to

Tennessee Code Annotated § 12-4-201. The Defendants denied that Lewis Construc tion breached the subcontract with White’s Plumbing, that Lewis Construction w a s responsible

for any delays to the

subcontract,

or that Lewis Construction owed White’s Plumbing any monies under the subcontract. The Defendants raised sever al affi rmative defenses, including lack of subje ct matter jurisdiction, failure to state a claim on which relief could be granted, the statute of frauds, and fai lure to give timely notice of the claim as required by Tennessee Code Annotated § 12-4-205. The Defendants later

filed an amended answer in which they asserted the defe nse of unclean hands. The Defendants

alleged that White ’s Plumbin g com mitted the first material breach of the contract,and thus they

were not liable

to White’s Plumbing for any damages. The D

efendants also alleged that White’s Plumbing was not properly licensed by the Tenne ssee Contractor’s Licensing Board for the construc

tion project, that Wh

ite’s Plumbing fa

il ed to mit

igate its damages, and that White’s Plumbing failed to pay requir

ed county a

nd city business taxes and to obtain the required3

county and c

ity business li

censes pursuant

to Tennessee Code Annotated § 67-4-217. Finally, the Defendants asserted that White’s Plumbing waived the claims set forth in its complaint. The case was heard in a bench trial. Jerry

White (“W hite”), th e owner of Wh ite’s Plu mbing, testified that he understood the completion date for the subcontract to be November 15, 1994, based

on the original completion date in the project manual and the contract between the JHA and Lewis Construction. White said that he calculated his bid based on his estimate of

the materials needed and the plans and specifications for the job, including the co mp letion date. He considered the completion date t o be an important factor in preparing his bid because of his knowledge that both the genera l contractor

andthe sub contractors would be subject to liquidated damages if the project were not completed on time. White testified that it is th e general con

tractor’s duty

to coordinate

the subcontractors on the project, a n d that Lewis Construction failed to do so. He explained that Lewis Construction never met with the subcontractors to let them know when to show up at the job site, nor did it provide the subcontractors with a schedule. White said that he would be told

to begin work at one job site and then, a few days later, Lewis Construction would send White’s Plumbing to a

nother job site ac

ross town. He described the job site as “jus t chaos.” He testified that he experienced delays and difficulties due to the large turnover in

personnel under Lewis Construction’ssupervision, including twenty-four painters, twenty-two c arpenters, fifty-one

laborers, and six sh

eetrock finishe

rs: “You didn’tknow from one day to the next who the next guy was. Ever y day y ou’d come in and you’d have to reintroduce yourself to the painter and tell him where y ou was and whe the r yo u had that lavatory hung, for him to paint behind it or not.” White also testified that sanitary conditions at the job site were uns ati sfa cto ry. He said that

no commodes were provided at the work sites, and that consequently, his employees had to drive into town to use the restroom. White said that other workers at the site und erLewis Construction’s supervision would pull the tape off the sealed bathtub drains and other drains his employees had to work on and use them as commodes. White testified that he had not received

any complaints about the quality of his work on the project or that he failed

to provide the ma

terial, s ervices, or supp

lies he was suppose

d to furnish under the subcontract. Based on the project manual, he understood his work to be warranted for one year, although the water heate rs White’s Plumbing i

nstalled came

with a five-y

ear warranty

. He said4

that he supplied Le

wis Constructi

on with the purchase tickets on the water heaters containing the warranty information, as required by the p roject manua l, including the se rial numbers. White

as serted that he furnished the warranty parts for other plumbing materia ls directly to the JHA, as required by the project manual. An order fo rm from Tenne ssee Pump and Supply Company was introducedshowing that White’ s Plumbi ng ordered various maintenance parts on July 17, 1995. White testified that he s

ent in his Subcontra

ctor Certificate

and Release

showing that he had

paid for all of the parts and labor used in the project. Despite this, White asserted, he was not pa id approximately $15,000 he was owed under the contract. White also tes tifi ed about several invoices totaling $1412.50 for work done that was not includedin the subcontract, such as clearing bathtub drains, commodes , and a m ain water line clogge d with construction d ebris and trash. T

hese invoices we

re admitted as exhib

its along with pictures showing the cond ition of the work site . White maintained that these repairs were not contemplated by

the subcontract.

He referred to

page 15005-3 of

the project manua

l, which states that “All drainage

openings in

floors, plumbing fixtures to remain, etc., are to be covered so as not to allow mortar, tile, etc., into the sanitary system.” He testified that these drains were not covered by Lewis Co

nstruction, as requir

ed by the pr

oject manual, and

that consequently

they beca

me clogged. A superintendent for

White’s Plumbing on the pro ject, Ricky R

easons, also testi

fied that it is the general c

ontractor’s duty

to coordinate

the work on the site, and that Lewis Construction did notmeet with subcontractors, provide schedules or plans, or provide any information telling White’s Plumbing where it should be working at any given time. Reasons testified that L

ewis Construction failedto have the sites cleaned up as required by the project manual.

Consequently, Reasons said, White’s Plumbing employeeswould have to spend time cleaning up before they could begin work. Re asons a lso testified that, because Lewis Construction failed to provide bathroom facilities as required by the project

ma nual, the men work

ing on the job site w

ould untape the dr

ains and use them as commodes, and that debris would also fall in the uncovered drainsand clog them. It then fellto White’s Plumbing to unclog the drains. Reasons also testified about the problems caused by the excessive turnover in personnel under Lewis Construction’s supervision. Often, Reasons said, White’s Plumbing would arrive at a site and f ind that p ortions of the project that had to be done before White’s Plumbing could begin its work had not been completed.5

Jerry White testified exten

sively about

his dama ges c aused by the delay in the completion of the contract. He said that he based his bid proposal on the information contained in the project manual, including the co mpletion date, bec

ause it was the only

information provid

ed to him o n which he could base his prop osal. White testified that the extra twenty-two week delay on the project caused him to incur a service charge of $1578.54 to avendor for late payment, additional operating expenses of

$26,174.96, and additional labor expenses of $6599.50. Moreover, additional project management work cost $11,440 and additional superintendent work cost $6661.25. White

c alculated t he cost of labor inefficiencies caused by the delay at $14,018.34 and miscellaneous expenses at $1000. White then added his lost profit of ten percent, or $6747.26, to the above figures andten percent prejudgment interest of $21,918.60 to calculate his total delay a nd disruption damages at $96,138.45. Bonnie White, Mr. White’s wife, testified that she performed bookkeeping, secretarial, and scheduling duties for White’s Plumbing. She also testified about the damages White’s Plumbing suffered as a result of the dela

ys. She explained that, when White’s Plumbing prepared its bid on the project, its cost was calculated through November, 1994, and that expenses after that date caused by the dela y had reduce d its profit. She acknowledged that Lewis Construction paid White’s Plumbing $32,000 for supplie s, but testified tha

t White’s Plumbing inc

urred la t e fees because

it owedapproximately

$70,000 to the vend

or. She testified th

at the $14,018.3 4 claim for labor inefficiencies claimed by Je rry White in his testimony was calculated by multiply ing two hours per day at the highest pa

y rate. The

se damages wer

e to compensate Whi

te’s Plu mbing for t ime its employeesspent doing such t h ing s as driving to the restroom, since Lewis Construction provided

no bathroom facilit

ies. White’s Plumbing’s claim for miscellaneous expenses in the amount of $1000 consisted of rent

al charges fo

r items such as tools and a trailer that they had to keep at the job site, which otherwise could have been used at different jobs. On cross examination,

Bonnie White testified that White’s Plumbing’s total labor cost on the job, including the delay period, totaled $70,091.98. Bonnie White conceded that, wh en she calculated

delay dama

ges, she added

up Whit e’s Plumbi ng’s expenses fr om November, 1994

to April, 1995, rather th

an compari ng the estimated cost to complete a task with the actual cost, and thereforemade no determina tion of whether the

re was an actua

l increase in the cost of performing the work. Bonnie White acknowledged that she includedthe overhead of the business in White’s6

Plumbing’s claim for operatingexpenses, even though White’s Plumbing would havestill incurred these expenses had it finished the project in November, 1994. She testified that the bid proposal includeda percentage of

White’s Plumbing’s overhead, but that the proposal included overhead only until November, 1994. She had not calculated the amount of overhead in the bid that was used up by November. Bonnie

White conceded that she calculated the additional project manager expenses at eight hours per day during the delay period, eventhough the proje ct manager spe

nt at least some time working on other

projects. She also

acknowledged that the

trailer and tools kept on site were notrented but were owned by Whi te’s Plumbi ng. She based the rental fee included in the delay damages on rental payments incurred in other jobs. Several letters from the JHA to Lewis Constr

uction were intro

duced into

evidence to

show that the JHA considered

the delays t

o be Lewis Cons truction’ s fault. In res ponse to a ch ange order submitted by Lewis Construction requesting an extension, a memo from the JHA stated: Leaves the impressions [sic] to an yone revi ewing the reco rds that [Lewis Construction] is in some way entitled to a time extension...in reality there has been no documentation providedby [Lewis Construction] that would substantiate a time e xtens ion... The Authority has been more than lenient in allowing time extensions basedon the limited documentation and rationale provided by [Lewis C onstructi on]. Many issues related to the change order remain unresolved...our records clear

ly show the fact s rel ated to the costs on the change orders...a [Lewis Construction] representativeagreed to these changes in the field as they occurred....it cer

tain ly appears less than ethical that the c ompany now r

efuses to stand by

these agreeme

nts andis unable to provide any documentation or fact s to substantiate their position. However, the person who ag reed to th e changes is no longer with the company for whatever reason. The Authority

simply wishes

to close out this pro

gram . . . We are expending a great deal of time attempting to accomplish contract close out without any results...as soon as we agree to a c

hange order.. .the contractor refuses to sign o

r in most case s provides no response at all...there are an unbelievable number of letters to the contractor

attempting to execute the final change order ...maybe th

is is all a game.... [M]ake it clear to Lewis [Construction] that these changes are not docum ented by fact but our concessions are based on our wish to close her out and say g oodbye. A letter dated February 8, 1995 from the JHA Project Manage r to Lewis Construction

indicated that Lewis Construction had sta

r ted to Phase III of the proje ct wit hout c ompl eting Phase s I and II, contr ary to the project manual, and that therefore liquidated damages would be assessed agai ns t Lewis Construction. The l

etter stated, “Ph

as e I and II appe

ared as though they could have been completedin a timely manner, well within the time you requested, but were left uncompleted for one

reasonor another. . . . It now appears at this point that Phase II I is also falling beh

ind sc hedule.”7

A second letter to

Lewis Construction from t

he JHA Project Mana

ger dated, Apr

il 3, 1995, reads: “[D]uring my field visits, it was evident that work was not progressing due to lack of man power . It is important to the completion of this job that the required manpower be provided.” Wayne Nelson, the constr

uction coordinato

r for Lewis Co

nst ruction on the project, acknowledged

that it was the general contractor’s responsibility to coordinate the subcontractors and ready the site for them to

perform their du

ties. Nelson did not remember a large turnover of painters

or other employees, but said that he would conside r a turno ver of twent y-four painter s during a project “very excessive.” He admitted that schedules should have been provi ded to White’s Plumbing under the subcontract, and did not know of any plans given to White’s Plumbing showing a schedule for the project. Nelson testified that Lewis Construction k ept t he job sites in good condition and even purchased

tub liners in

an attempt to keep debris from clogging the tubs. He admitted, however, that the liners were inef

fective and that

Lewis Construction had to remove them. He agreed that it was essential for the job site to be kept clean beca

use small work areas would become cluttered and there would not be sufficient room in which to work. He acknowledg ed that, on some occasions, the job sites would notbe cleaned prior to White’s Plumbing arrival , but felt that the pl

umbers could still perform their work. Nelson testified that Lewis Construction tried to keep a bathroom in operating order at every site and disagreed with Mr. White’s statement that

employees w

ould have to drive

to

a restroom. Nelson did not deny that workers used the bathtubs as toilets, but claimed that this use of the bathtubs by other construction workers was “ty pical” and was not unique to the JHA project. Nelson conceded that the project had to jump from phase to phase in the beginnin g, bu t asserted that this was due t o the JHA’s inability to make decisions,

such as the ty

pe of cabinet to order. This prevented the project from going forward as planned. Nelson recalled several delay

s,

none of which were caused by Lewis Construction. For example, he testified about a delay caused by a shipper who lost

some doors that the

n had tobe remanufactured. Nelson testified that the JHA created delays because o f its length y approval proc ess for chan ge orders and its issuance of multiple change orders, including those issued aft er the original completion date and those extending the completion date of the contract to September, 1995. Nelson testified that White’s Plumbing caused

some delay by inc

orrectly in

stalling some ven

t pipes, although

he later acknow

ledged that th e majority of this delay was due to the inability of Lewis Construction to obtain a reinspection.8

Nelson explained that, on many occ as ions during the project, when Lewis Construction experienced

delays, White’s Plumbing’s employees would be on site but not performing any work. He indicated that, during one delay, White’s Plumbing fulfilled a change or der to i nsta ll gas lines andventilation to the hot water heaters. Nelson testified that he told White’s Plumbing to remove its employees from the site during the delay s and indicated that he would notify them when it was time for their phase of the work, but that White’s Plumbing did not cooperate. Nelson testified that a subcontractor is bound by the time frames in the contract between the general contractor and

the owner. He asserted that, in the JHA project, the project manual allowed liquidated damages to be assessed against subcontractors that failed to complete the project on time. Nelson felt that it was appropr iate for a subcon

tractor to consid

er the length of

a contract i n preparing its bid, in order to calculate

how long its employ

ees would be on the

job and how long its equipment

would be in use. Nelson admitted that White’s Plumbing had complained to him of the del ays and that White’s Plumb ing said that it would seek recovery for its losses. However, Nelson later testified he had no knowledge of any increase in White’s Plumbing’s costs caused

by the delay

s. He denie d re ceiving a notice of claim from White’ s Plumbing for extra expenses or damag

es. The president of L ewis Cons truction, Linda Lewis, testified about Lewis Construction’s

reasons for withholding White’s Plumbing’s retainage of approximately $14,000. She testified that White’s Plumbing had never provided documentation required by the project manual, such as time sheets or the five-year warranties on the fixtures it installed. She said that the invoices provided by White’s Plumbing for the w ater heaters we

re insufficient b

ecause the proje

ct manual required information such as serial numbers on the warranty paperwork. Lewis Construc

tion also withheld the retainage because White’s Plumbing failed to provide certain maintenance supplies required by the project manual and did not providea signed and nota rized copy of

its certificate

of release of lien. Linda Lewis testified that, as of July 21, 1995, and July 27, 1995 the JHA had not yet received the maintenance parts. A letter from Lewis Construction to White’s Plumbing dated July 27, 1995 was introducedinto evidence which informed White’s Plumbing that the JHAhad not received the parts. Without this information, L inda Lewis expla

ined, the JHA would no

t release the retainage

to Lewis Construction so tha t Lewis Const ruction cou ld pay subcont ractors suc h as White’ s Plumbin g. However, she admitted that th e JHA paid

Lewis Construction its full retainage in September, 1996, butafter receiving that payment, L ewis Construction nevertheless did not pay White’ s Plumbing its9

share. She did

notdispute that White’s Plumbing adequately performed all the phy sical work under the subcontract. Linda Lewis testifie

d that the delay

s to the project were caused by entities other tha

n Lewis Constru ction. She r ecounted a delay of approximately one month due to an ice storm; a delay of approximately

three months caused

by the JHA’s in

decision on the co

lor of the cabine

ts; a delay of approximately

six weeks caused by

incorrect bluep

rints p repar ed by a JHA engineer; a delay of several months caused b y a door vendor; a short delay c aused by a tenant who refused to vacate a unit Lewis Construction

was to renovate; and a delay caused by the JHA’s failure to timely provide furnaces. Linda

Lewis said

that change orders initiated by the JHA would take approximately one month to approve, which also caused considerable delays. The JHA granted Lewis Construction an extension of five we

eks because of t

he weather and c

abinet delay

s. Linda Lewis disputed

that White’s Plumbing’s late fees were due to Lewis Construction’s failure to pay for materials. She testified that White’s Plumbing was paid $32,000 for materials in Jul y, 1994, but several months later Lewis Construction received two letters from Tennessee Pump Supply c oncerning a balance owed by White’s Plumbing in the amount of $18,988 for supplies White’s Plumbing ordered for the JHA project. Linda Lewis testified that she repeatedly asked that White’s Plumbing remove its employees from the job sites during delays because they were causing disruptions to other subcontractors. She said that, nevertheless, Jerry White kept an employee

on the site. She estimated that the interference from White’s Plumbing employees cost Lewis Construction approximately $8000, which was about twenty percent of Lewis Construction’s pay roll from December of 1994 to April of 1995. Thomas Morris Rokitka, an e mployee for

the electrical s

ubcontractor on the JHA project, had

no complaints about Ne

lson or Lewis Co

nstruction’s coor

dination of th

e su bcontractors for the project and could

thi nk o f no del ays caused by Lewis Construction. He also testified that bathroom facilities were available at the job sites and that he never had a problem finding a bathroom. The trial court found that the original contract between Wh ite’s Plumbing and

Lewis Construction for $151,000 had been modified by the parties to the amount of $152,790. The trial court found that Lewis Construction had paid White’s Plumbing $138,651.34 under the contract, but that Lewis Construction still owed White’s Plumbing the balance due of $14,138.66. The trial court also awarded White’s Plumbing $1412.50 for leak repairs it made. The trial c ourt added these10

amounts, plus interest in the amou nt of $4276.80 , for a total award to White’s Plumbing of $19,827.96 for breach of c ontract. The tria

l court’s order d

id not include the specific findings of fact which were the basis for its conclusion that Lewis Construction breached t he co ntract, such as whether Lewis failed to perform its duty to coordinate the project. On the issue of d elay damages, the trial court found that the original contr act was for a duration of 278 days,

but that the projec

t lasted 22 weeks lo

nger than expec

ted, “result[ing

] in additional labor costs, operating expenses, job expenses and lost profits” to White’s Plumbing. Acco rdi ngly, the trial court awarded White’s Plumbing $96,138.4 5 for delay damages, including pre judgment inter est. T heref ore, t he tot al jud gment to Wh ite’s Plum bing a gains t bot h Le wi s Construction and Frontier Insurance was for $115,966.41. From this or der , the Defendants now appeal. On appeal, the Defendants a rgue that the tr

ial court erred

in finding liabilit

y against Frontier Insurance because no evidence was offered

to prove its liability. They argue that, bec ause White’s Plumbing failed to give the statutory ninety-da y notice required under Tennessee Code Annotated § 12-4-2 05 for a statutory

bond, the trial cou

rt erred in not dism

issing White’s Plumbi

ng’s complaint. The Defendants assert that the e videnc e preponderate s against the tria

l court’s finding

that Lewis Construction breached the contract. The Defendants also argue that the damag es award wa s

erroneous because the contract betwe en the JHA and L ewis Construction c

ould be unilatera

lly extende d by the JHA and because White’s Plumbing failed to mitigate its damages. I n t h e alternative, the

Defendants arg

ue that the trial c

ourt did not corre

ctly calculate the damages award for delay. White’ s Plumbin g ra ises the additional issue of whether the bond issued by Frontier Insurance was properly made part of the record. Since this case was tried by the trial court sitting without a jury, we review the case de novo upon the record with a presumption of correctness of

the findings of fact by the trial court. There is no presumption of correctness for questions of law. See Tenn. R. App. P. 13(d ); Union Carbide Corp. v. Huddleston , 854 S.W.2d 87, 91 (Tenn. 1993). The Defendants first note that White’s Plumbing never introduced Frontier Insurance’s bond into evidence, and a

rgue that the tr

ial court was ther

efore preclu

ded from determining Frontier Insurance’sliability on the bond. Consequently, they maintain that it was improper for the trial court to assess liability against Frontier Insuranc e. White’s Plumbing argues that the bond attac hed to its1 Tennessee Code Annotated § 12-4-205 provides certain requirements for notice of

the claim: Such furnisher of lab or or mater ial, or such laborer, to secure the advantage of §§ 12-4-201 - 12-4-206, shall, after such labor or material is furnis

hed, or such labor

is done, and within ninety (9 0) days after th

e compl etion of such public work, give written notice by returnreceipt registered mail, or by personal delivery, either to the contractor

who exec uted the b ond, or to the public official who had charge of the letting or aw ardin g of the contract; such written notice to set forth the nature, an itemized account of the material furnished or labor done, and the balance due therefor; and a description of the property improved; . . . Tenn. Code Ann. § 12-4-205 (1992). 11 complaint was properly

in evidence. I

t notes that, while

Frontier In

surance denied

in its answer that the contractor’s bond was issued pursuant to Tennessee Code Annotated § 12-4-201,it did not deny that the bond attached to White’s Plumbing’s complaint was the bond between Frontier Insurance andLewis C onstr uctio n. In the alternative, White’s Plumbing requests that this Court remand the

case to the trial court for correction of the record pursuant to Tennessee Code Annotated § 27-3-128, which provides: The court shall also, in all cases, where, in its opinion, complete justice cannot be had by reason of some

defect in the record, want of proper parties, or oversight without culpab le n egligence, r

emand the cause

to the court below

for further pro

ceedings, withproper directio

ns to effectuate

the objects of the order, and upon such terms as may be deemed right. Tenn. Code Ann. § 27-3-128 (1980). From the record, it is unclear whether the bond was admitted into evidence, although there appears to be no genuine dispute tha t the bond attached to the complaint is the bond issued by Frontier I nsuran ce to Lewis Construction. This appears to be a proper case for the application of Tennessee Code Annotated § 27-3-128, and in the interest of justice, this case is remanded to the trial court for a determination of whether the bond attached to the complaint is the one issued by Frontier Insurance in the JHA project. If so, we find that White’s Plumbing has provided sufficient evidence on which to base the liability of Frontier Insurance

. Next, the Defendants argue that the trial court erred in granting re lief against Frontier Insurance under the bond bec

ause White ’s Plumbing failed to comply with Tennessee Code Annotated§ 12-4-205, whichrequires the par ty suing to g

ive a ninety

-day notice

of the suit

to the other parties. 1 White’s P lumbing responds t hat its complaint satisfied the statutory notice requirements

and that Lewi

s Construction failed to carry its burden of showing that the n

otice did12

notmeet the statutory

requirements.

In the alternative, White’s Plumbing argues that the bond was

common law rat her t han sta tut ory, and that therefore the statutory notice requirements do not app ly. Tennessee Code Annotated §§ 12-4 -201 through 12-4- 208 “were created to provid e protection for furnishers o f labor and mater

ial o n pub lic works because these workmen are not protected by the mechanics’ and materialmen’s lien laws.” Wal-Board Supply Co. v. Daniels , 629 S.W.2d 686, 687 (Tenn. Ap p. 1981). In c

ontracts involving

public works, the c

ontr ac tor must

ex ecute a bond to the effect that the contractor will pay for all labor and mate rials used by the contractor. See Tenn. Code Ann. § 12-4-201 (Supp. 1998). A subcontractor may bring an action

on the contractor’ s bon d and obtain recovery in its own name. See Tenn. Code Ann. § 12-4-204 (1992). In order to bring

an action on the bond, the subcontractor must provide written notice to the contractor

or p ubl ic o ffi cia l wi thi n ni net y days after the completion of thepublic work. See Tenn. Code Ann. § 12-4-205 (1992). The written notice must set forth the nature of the claim, an account

o f material or labor used in the contract, the unpaid balance, and a description of the improv e d pro pert y. See id. Thus, Frontier Insurance argues that White’s Plumbing’s failure to provide such notice prevents White’s Plumbing from recovering from Frontier Insuranc e under the bond. Wh ere the terms of the contractor’s bond contain only the minimum requirem ents of th e Tennessee Code provisions and no more, the bond is deemed statutory. See Wal-Board , 629 S.W.2d at 688. Where, however, the bond gives the claimant greater protect ion than that provided by the statute, the bond is deemed a common law bond. See id. For a statutory

bond, the claimant

must strictly comply with the notice requirements discussed above;for a commonlaw bond, the claimant needonly comply with the terms of the bond, rather than the statutory notice

requirements. See id. The Tennessee Court o

f Appeals has hel

d that a complaint may, under certain circumstances, meet the notice requirements of a statutory bond. See id. The part ies in this case dispute whether the bond was statutory or common law. Th e Tennessee Supreme Court considered a similar bond in Koch v. Construction Technology Inc. , 924 S.W.2d 68 (Tenn. 1996). The bond in Koch provided that the general c

ontractor and sur

ety would pay for all labor and materials used in the project. See id. at 74. In addition, it provided that they13

would also “pay all just claims for damages and injuries to property .” Id. The i ntermediate appellate court

held that the bond w

as statutory . This was revers ed by the Supr

eme Court: We cannot agree with the Court of Appeals' con clusion that the bon d is sta tut ory. While § 12-4-201 merely requires the general contr actor to pay for all the labor and materials use

d by the ge

neral contract

or or an immediate

or remote subcontractor, the bond in the instant case goes further. In the second paragrap h quoted above, the principal and surety ag ree not only

to pay for la

bor and material

s, butalso to pay "all

just claims for dam

ages and injurie

s to property ." This isclearly an obliga tion above and beyond that contemplated by the statutes. Moreover, the bond makes no explicit reference to the Tenn. Code Ann. § 12-4-201 -- 12-4-206, a fact that this Court found significant in Fischer , supra; and it neither expressly se

ts forth any notice requirements nor limits the time for bringing an action on the bond. Therefore, we conclude that the bond is of the common-law variety

. Id. Thus, factors to be considered in determining whether a bond is statutory or common law are: (1) whether the obligat

ions of the surety and contractor go bey ond the statutory obligations, (2) whether the bond references the relevant Tennessee Code provisions , and (3) whether the bond contains notice or time limitations. The bond issued by

Frontier In

surance in this ca

se provides: NOW, THEREFORE, if the Principal [Lewi s Construction] shall p romptly make payment to all persons, firms, subc ontrac tors, and corporations furnishing material for or performing labor in the prosecution of the work provided for

in such Contract and any authorized extension or modification thereof . . . consumed or used in connection with the construction of such work; for all insurance premiums on said work; and for all labor performed in such work whether by subcontra ctor o r otherwise, then this obligatio n shall be void ; otherwise it shall remain in full force and effect. This bond does not “mer

ely requir e[ ] the general c

ontractor to pay

for all th e labor and materials used by the general contractor or an immediate or remote subcontractor, the bond in the instant case goes further.” Id. at

74. The bond in this case also requires the principal and surety to pa

y for “all insurance premiums on said work.” As with the bond in Koch , this bond contains no reference to Ten nessee Code A nnotated §§ 12-4- 201 to -206, nor doe

s it set forth notice

requirements or

time limits for bringing an action on the bond. See id. Considering the factors discussed in Koch , we conclude that the bond in this c ase is a

common law bond. Conseque ntly, White’s Pl

umbing is obligat

ed only to comply with th e terms found withinthe bond, not with the statutory notice requirements. See Wal-Board Supply Co. v . Daniels , 629 S.W.2d 686 (Tenn. App. 1981). The bond contains no notice requirements; therefore Lewis Construction’s defense that it did not receive the required notice must fail.14

On appeal, Lew

is Construction also

asserts that it shou

ld not be held liable

to W hite’s Plumbing for breach of contract because White’s Pl

umbing failed to

give Lewis Construction notice of the alleged defec ts and thus deprived L ewis Construction th

e opportunity

to cure. In su

pport, Lewis Construction cites McClain v. Kimbrough Construction Co. , 806 S.W.2d 194, 198 (Tenn. App. 1990). However, Lewis Construction’s superintend ent of th e JHA project, Wayne Nelson, testified that he had received notice from White’s Plumbing of alleged breach: Q: Now, up through December of 1994, did Mr. White complain to you that he was being delay

ed and that he was

incurring addit

i onal cost s and that s ome things had to be changed? Did you ever hear any thing like that from Mr. White? A: Yes. Q: What did he tell you? A: He said

that he was going to finish the job, but he was going to try to recover his losses up through the job. As noted above, White’s Plumbing asserts that Lewis Construction’s f ailure to coordinate the subcontractors caused delays which i n turn increased White’s Plumbing expenses. Jerry White’s conversationwithNelson put Lewis Construction on notice that these delays were causing White’s Plumbing to incur a

dditional costs. Thi

s argument is with

out merit. On appeal, Lewis Construction and White’s Plumbing eachaccuse the othe

r of being the fi

rst party to br each the contra

ct. White’s Plumbing

argues that L

ewis Construction b

reached fir

s t because of its failure to

coordinate the job and, alternatively, because of its failure to pay all am

ounts due under the c ontract. Lew is Construction cla

ims that it was justifi

ed in not pay

ing the amounts due under the contract, because of White’s Plumbing failure to provide the necessary close-out documents. The trial court’s award of damages to White’sPlumbing for breach of contract contains an implicit finding that White’ s Plumbing was not th e first party to breach the cont

ract and that L

ewis Construction cause d the first material br each. “A party

who has materiall

y breache d a contract is notentitled to

damages stemmin

g from the other

party’s la ter material bre

ach of the same

contract.” McClain v. Kimbrough Constr. Co. , 806 S.W.2d 194, 199 (Tenn. App. 1990). Thus, if White’s Plumbing breached the contract first, it would not be entitled to damages for Lewis Construction’s failure to pay the a

mounts du e under the contr act. The only

breach of contr

act alleged ag

ainst White’s Plumbing was its failure to provide the requ ired close-o ut documents. The trial court implicitly found for White’s Plumbing on this issue.15

There was conflicting testimony on whether White’s Plumbing provided all documentation required by the project manual. Jerry White repeatedly testified that the inv oices for the water heaters contained all the information required by the project manual, including the serial numbers of the heaters;

Linda Lewis testified that the invoices were not sufficient. Linda Lewis stated that White’s Plumbing never provided the certificate of release; Jerry White testified that he had sent the release to Lewis Construction. In addition, Jerry White testified that he had provided th

e JHA with all maintenance parts required by the proj ect man ual. An order form from Tennessee Pump and Supply Company dated July 15, 1995 showing that W hite’s Plumbing ordered these parts was introducedat trial . Linda Le wis testified that the JHA notified her on July 21, 1995 and July 27, 199 5 that they had not yet received the maintenance parts. A letter from Lewis Construction t o White’s Plumbing dated July 27, 1995 informed White’s Plumbing that the JHA had not received the parts, and thus would not release the retainage. Nevertheless, the JHA released the retainage

to Lewis Construction in September, 1996. Neither party included copies of the water tank invoices in the record on appea

l, inorder to determine if

they comply with the requirements of the project manual. Consequently, on appeal, our assessment

of whether these

invoic es were suff

icient hinges on t

he credibility

of the witnesses. Likewise, the contradictory testimony on the additional maintenance parts and the release turns on the c redibility of

the parties. When the resolution of the issues in a case depends upon the truthfulness

of witness es, the tri al judge who has the opportunity to observe the witn

esses in their

manner and demeano r while testifying is in a far better positi

on than this Court to de

cide those issues. See McCaleb v. Saturn Corp. , 910 S.W.2d 412, 415 (Tenn. 1995); Whitaker v. Whitaker , 957 S.W.2d 834, 837 (Tenn. App. 1997). The weight, faith, and credit to be given to any witness’s testimony lies in th e first ins tance with t he trier of f act, and the credibili ty accorded wil l be gi ve n great weight by the appellate court. See In re Estate of Wa lton v. Young , 950 S.W.2d 956, 959 (Tenn. 1997); Whitaker , 957 S.W.2d at 837. Taking into account the trial court’s impli cit credibility determination and its implicit factual finding that the documentation provided by White’s Plumbing met the requireme

nts of the contract,

we find that

the evidence does not preponderate against the trial court’s finding on this issue. This factual finding is affirmed.16

It is undisputed that the original contract between the parties was for $151,000 and that the t wo change order

s increased the a

mount of the contra

ct to $152,790. I

t was also undispute

d tha t Lewis C onstruction paid White’s Plumbing $138,651.34 under the contract, leaving a balance of $14,138.66 plus $1412.50 for the extra work tha t Wh ite ’s P lum bin g per for med . In h er t est imo ny, Linda Lewis conceded that White’s Plumbing fully performed a ll of the physical work

required of it by the contract. If White’s Plumbing did not cause the fi rst material breach of the contract, then White’s Plumbing is clearly

entitled to the undisputed amounts d ue under the cont

ract as well as th

e amounts due for the extra wo rk perform ed. The trial court’s award of damages to White’s Plumbing for breach of contract is affirmed on this basis. As a result, it is unn ecessary to reach the issue of whether White’s Plumbing produced sufficient proof

on Lewis Constr

uction’s failure

to coordinate the project. Lewis Const

ruction next argu

es that the trial c

ourt erred in aw

arding delay

damages t o White’s Plumbing. This issue turns on the extent to which the subcontract incorporated the project manual. Neither party disputes that the language of t

he subcontract r

eferences the

project manual; however, they dispute

whether this

language incorporates al l or only par

t of the project ma

nual. Lewis Construction conte

nds that the 278 day

deadline in the pr

oject manual was f

inal, subject to the JHA’s authority

to unilaterally

change the dea

dline. Lewis Co

nstruction also as serts that, because the s ubc ontract incorporated the provisions pertaining to the JHA’s ability to extend the deadline, White’s Plumbing was also subject to the thirty-day notice provision for expenses relate d to extensions or change order s. Whit e’s Plumbing argues that the entire project manual was not incorporated

into the subcontract, and therefore White’s Plumbing’s subcontract was not subject to unilateral extension of the contract deadline by the JHA. Interpretation

of a written ag

reement is

a matter of

law and not of fac

t, thus our review

is de

novo upon the record w

ith no presumption of correctness attached to the trial court's interpretation. See APAC-Tennessee, Inc. v. J.M. Humphries Const. Co. , 7 32 S.W.2 d 601, 604 (Tenn. App. 1986); see also Gredig v. Tennessee Farmers Mut. Ins. Co. , 891 S.W.2d 909, 912 (Tenn. App.17

1994); Tenn. R. App . P. 13(d). “Incorporation by reference” is defined in Black' s Law Dictionary as follows: The method of making one document of any kind become a part of another s

eparate document by referring to the former in the latter, and decl

aring that the f

ormer shall be taken and conside

red as a part o f the latter the same as if it were fully set out therein. Black's Law Dictionary, 766-67 (6th ed. 1990). “Althoug h neither phy

sical attachment

nor specific language is necessary

to incorporate a

document by

reference, th

e incorporating

instrument must clearly evidence an inte

nt that the writing

be made part of th

e contract. ” United Cal. Bank v. Prudential

Ins. Co. of Am. , 68 1 P.2d 390, 410 (Ariz. App. 1983) (citing Industrial Comm’n v. Arizona Power Co ., 37 Ariz. 425, 295 P. 3 05 (1931); Beedy v. San Mateo Hotel Co. , 27 Cal.App. 653, 150 P. 810 (1915); 17 A C.J.S. Contracts § 299 at 136 (1963)). The subcontract references the “plans and spe cifications for Jackson Housing Authority Modernization Program,” which accuratel y describes the project manual. This reference is sufficient to incorporate the project manual into the subcontract. The extent to which the pr oject manual is i

ncorporat ed into the subcontract must now be determined. In support of its argument, White’s Plumbing relies on APAC-Tennessee, Inc. v. J. M. Humphries Constr. Co. , 732 S.W.2d 601 (Tenn. App. 1 986). APAC inv olv ed a s uit by a subcontractor

against the general contractor. The parties disputed whether certain provisions found in the prime contract be tween the ge neral contractor and the owner were made a part of the subcontract.The subcontractor argued that the general inc orporation clause in the subcontract incorporated

all provisions of the pr ime cont ract, including payment provisions. The general contractor

argued tha

t the general incorporation clause merely incorpor ated the provisions of the prime contract relating to the plans and specifications and not any payment pro

visions. See id. at 604- 05. The appellate court held that payment provisions in the prime contract were not incorporated

into the subcontract. See id. at 606. The appellate court reasoned that the subcontract contained specific payment clauses, which did not allow any pay increase

s or decreases, while the prime contract permi tted payment adjustments. See id. In addition, the subcontract contained a provision providing that the subcontract wo uld govern if there were inconsistencies between the subcontract

and the prime contract. See id. In this case, however, unlike in APAC , the subcontract contains no provisions that conflict with the prime contract.18

“[T]he true rule . . . is tha t i n the case

of subcontracts, . . . a reference by the contra cting parties to an extraneous writing for a particular purpose makes it a part of their agreement only for the purpose specified.” Guerini Stone Co. v. P. J. Carlin Constr. Co. , 240 U.S. 264, 277-278, 36 S. Ct. 300, 306, 60 L. Ed. 636 (1916) (hol ding that a subcontract designating that the subcontractor’s work must be performed “according to the said drawings and specifications” of the prime contract, “was evidently for the mere purpose of indicating what work was to be done, and in what manner,” and thus the subcontractor was not bound by other provisions in the pr

ime contract allowing the owner to make changes or extensions). However, wh ere the re ference to the p rime contract is not for a specific purpose and is more general, the effect of the refe rence is a broader incorporation of the prime contract. See Sime Construction Co. v. Washington Pu blic Power Supply Sys. , 621 P.2d 1299, 1303 (Wash. App. 1980) (rejecting the subcontractor’s argument that the subcontract incorporated the pri me contra ct only to the extent it defined the scope of the subcontractors work and holding that the notice procedur

es for delay

damages were

also incorporated

into the subcontra

ct); see also Westinghouse Elec. Supply Co. v. Fidelity and Deposit Co. of Md. , 560 F.2d 1109, 1115-16 (3d Cir. 1977) (holding that language in a subcontract that the subcontractor

would “furnish al

l labor, material, and eq

uipment to complete

electrical wor

k in its entirety . . . in accordance with plans and specs” was sufficient to inc orporate the force account provisions of the prime contract that provided for calculation of compensation for change orders). Thus, if the subcontract between Lewis Construction and White’s Plumbing referenced the project manual for the limited purpose of indicating what

work was to be done

and in what manner, the project manual wo

uld be incorpora

ted only to the extent that it addressed the scope of the work andthe specificatio

ns for the work. Th

e administrative a

nd procedural pr

ovisions of the prime contract,such as the ability of the owner to unilaterally extend the contract and the notice provisions for increased costs caused by such an extension, would not be incorpora

ted. On the other h

and, if th e refer ence to the project manual was more general, both the contract specifications and the proceduralprovisions of the proj ect manua l concerning delay damages would be incor porated by reference. As noted above, the subcontrac t references the “plans and specifications for Jackson Housing Authority M odernization Program.” This clearly indicates that the work is to be performed i n accordance

with the plans and specifications in the project manual. In addition, the subc ontract19

providedthat payment was to be made “per specifications.” This indicates an intent by the parties to incorporate the provisions of the project manual regarding pay ment procedures as well. Mo r eover, the subcontract in this case contains no completion deadline or provisions addressing extension or delay damages. From this it can be inferred that the

parties intended to refer to the prime contra

ct on these issues.

In addition, Jer

ry White testified that he relied on the project manual extensively

when he was preparing his bid, including the completion deadlines in the project manual. Indeed, White ’s Pl umbing consistent ly relies on

the provisions of th

e project manual

in almost all aspects of this appeal, including the provisions detailing the general contractor’s duties regarding coordination of t he project, sanitary conditions, and job site conditions. White’s Plumbing’s actions support the conclusion that the parties int ended for the project manual to be incorporated

into the subcontract f

or general pur

poses, rather tha

n for specific pu

rposes only.

This would include the provisions of the project manual concerning the JHA’s ability to enter c hang e orders, including extensions, and the notice requirements fo r subsequent adju

stments to the parties’ compensation. The project manual provides that the JHA can unilaterally enter change

orders; however

, if such a change

order causes a

n increase in cost to the contractor, theJHA “shall make an e quitable adjustment.” Under these circumstances, White’s Plumbing was required to assert a claim for recovery within thirty d

ays: The Contractor must as sert its right to an adjust ment under this cla

use wit hin 30 d ays after (1) receipt of a wri tten change o rder . . . , or (2) the furnishing of a written notice . . . , by

submitting a written statement describing the general nature and the amount of the proposal. .

. . No proposa

l by the Contractor fo

r an equitable adjustment shall be

allowed if asser

ted after final p

ayment unde

r this contract. Since White’s Plumbing’s c ontract was with Lewis Construction, and not with the JHA, White’s Plumbing was requ ired to submit its

claim for an adju

stment under the su

bcontract to L

ewis Construction. See Sime Construction Co. v . Washington Public Powe r Supply Sys . , 621 P.2d 1299, 1303 (Wash. App. 1980). As White’s Plumbing failedto comply with the notice procedures in the project manua

l, its claim for delay damages under the subcontract is barr ed. The trial court’s award to White’s Plumbing of $96,138.45 for delay damages and prejudgment interest is reversed. In sum, this case is remanded for the trial court’s clarification of t he authenticity of the contractor’s bond attached to White’s Plumbing’s compla int. White’s Plumbing was not required to comply with the ninety-day statutory notice req uirements found in Tennessee Code Annotated20

§12-4-205 because

the bond was a common law bond rather than a statutory bond. The trial court’s award of damages for

breach of contr

act is affirmed.

The trial court’ s award of delay damages is reversed because of White’s Plumbing failure to comply with the notice re

quirements

contained in the project manual incorporated by reference into the subcontract. The decision of the tr

ial court is affir

med in part, reve

rsed in part, and remanded as set forth above. Costs are taxe d equally to A ppellant and Appe

llee, for which e

xecution may i

ssue if necessary.

HOLLY KIRBY LILLARD, J. CONCUR:

ALAN E. HIGHERS, J.

DAVID R. FARMER, J.