### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE July 10, 2003 Session AMPRITE ELECTRIC COMPANY v. TENNESSEE ST ADIUM GROUP, LLP Appeal from the Chancery Court for Davidson County No. 99-2847-III Ellen Hobbs Lyle, Chancellor

No. M2002-00892-COA-R3-CV - Filed Septem ber 22, 2003

The electri cal subc ontract or on the Adelphia St

adium job w as required b y the contractor, on 212 occasio ns, to perform extra work. Although the subcontract provided that wr itten ch ange orders must prec ede a nd authori ze extra work, this requirement was soon mutually a bandoned because the contractor, encouraged by the owner, was concerned about a timely completion. The principal issue concerns the dolla

r amount o f compen satio n for th e extra work. Amprite priced its extra work acc ordi ng to manuals used in the construction industry, as c ontrasted to its actual costs plus 10 percen t, as the subco ntract p

rovides. Amprite concedes that although its actual costs plus 10 perce nt were substantially less than the amounts claimed, the contr actor was estopped to deny the greater compensation. The trial court h eld that the contract was abandoned and that, in lieu, a diff erent contract would be implied. Am

prite wa s accor

dingly awarded compensation for “8686 hours neve r worked, $90,245.00 for materials never purchased and $6, 87 7.00 for taxes never paid,”for a total recovery of $1,131,311.66. Contractor appeals ins istin g that the contract was not abandoned a nd that its provision s con

trol. We hold that the requirement of written change or ders was waived by mutual agreement

but that the remainder of the contract was enf orceable. The judgment is modified to allow a recovery

of $170,084.00. Tenn. R. App.P. 3 Appeal as of Right ; Judgme nt of the Cha

ncery Court as Modified is Affirme d
W IL LI AM H. I NMAN , S R
. J., deliver ed th e opi nion of the court, in which D AVID R. F ARMER and H OLLY M. K IRBY , J.J., joined.
Ph il li p B yro n J on es , N as hv il le , T en ne ss ee , a tt or ne y fo r a pp el la nt , A mp ri te El ec tr ic Co mp an y. Craig V. Gabbert, Jr., Nashvi lle, Tennessee, and F. Barr y McCabe, Atlanta , Georgia, for the appelle e,, Tennessee Sta

dium Group , LL

P.-2-

Todd E. Panther, Nashville, Tennessee, for the A micus Cur iae, The American Subcontractors Association, Ameri can Su bcontractors Association of Middle Tennessee, and Amer ican Subcontractors Association of Western Tennessee.

OPINION This litigation arises out of the construction of the NFL Stadium (“the P roject”) for the Tennessee Titans. A

mprite Electric Company (“Amprite” , “the Plaintiff” or “the Subcontractor”) was awarded a subcontract for t h e elect rical wo rk (“the Subcontra

ct”) and was ultimately

paid $10,890,000.00 in ac cordance with the Subcontract by Tennessee Stadium Group, L.L .P. ( “the Contractor” or “ the Defe ndant”), a limited liability partnership of two f oreign corporations experienced

in the con struction

of la r ge projects. During the construction, changes in the various drawi ngs were required to be made, for whic h the Plaintiff seeks compensationattributable to the extra wor k occasi oned by

such cha nges. As pertinent here , the Subc ontract provides : CHANGE ORDERS. Owner has reserved the right under the Contract documents to require Contractor to make changes in the work, including additionsthereto and dele tions ther efrom. Without notice to any surety

and without invalidi ng thi s Subcontr act, Contractor

may from t ime t o tim e, by writ ten or der (“C hange Order”) to Subcontra

ctor, ma ke chan ges in

the work to the same

extent and

in t he sa me manner as may

be required of Contractor by Owner under the Contract documents. Subcontractor shall thereupon perform the changed work in accord ance wi t h the terms of this Subcontract and the Change Order. Upon request of Contractor, and in time and manner sufficie nt to permit Contractor to comply with its obligations under the Contract document s, Subcontractor shall submit a written prop osal for any applica ble price and time adjustment attributable to the changed work, detailed as Contractor or Ow ner may r

equire, supported and conform ing to the require ments of th

e Contract documen

ts. Where a Change Order is issued pursuant to a cha nge required

by the Owner, the price shall be adjusted by the net amount of anydirect savin gs and d irectcosts plus profit percentage attributable to the Change Order and

the time for performance of the work may be adjusted according to the Contract documents . . .-3- As used i n thi s Sub contr act, S ubcon tract or’s d irect savin gs and direct costs shall mean and be limited to the actual amount of the fo llow ing: cost of materials, inc lu ding sales tax and cost of delivery ; cost of labor, including social security , old ag e and unemployment insurance , and fringe benefits required by agreement or cus tom; w orker’s compensation insurance; bond premiums if and to the extent actually increased; and actual rent not greater tha n the rent cha

rged in the locale, or reasonable value of S u bcontractor-owned equipment and ma ch in er y. If the parties are able to agree u pon the amount of the price adjustmen

t and the e

xtent of an

y tim e adjustment, such adjustmen ts shal l be set-forth in the Change Order whic h shall be accept ed b y Subcontr a ctor. If the parties are unable to agree upon such adjustme nt, Co ntracto

r may elect to i ssue the Ch ange O rder to Subcontractor

directly such wor

k to be performed

by Subcontractor and any adju stments t o price o

r time sha

ll be subject to ultima

te determination in accordance with this changed w ork . . . in no event shallSubcontra

ctor pro ceed with chang ed work with out a Chan ge Order issued pur suant to th

is parag raph 8 and Contrac

tor shall not be liable for any a dditional costs incurred or d elay s e ncountered in the performance

of such changed work

with out s uch a wr itte n Chan ge Order.
From the beginning all parties understood that the construction of the stadium was to be aggr essively performed. The Construction Management Ag reement (“Con tr act”) between the C on tractor

and the Metropolitan Government of Nashville for Davidson County , Metropolitan Development

and Housing Agency

(“the Owner” or “ MDHA”) , included a $10 million contingency fund to be used by the Contractor, in it discr etion, to r esolve pr oblems arising from additional work in order to keep theProject on schedule. If this fund was not depleted the Contractor retained it as extra pro fit.
To the Subcontract was attache d a document identified as Schedule H, which was to be utilized as a uniform method to track the nature and cost of extra work. I t provided an agreed upon hourly rate fo r labor o f $27.97 f

or extra w ork, and

a flat percen

ta ge rate for small tool and other expenses. It wa s also ag reed tha t the hour s necess ary

to perfo rm certain

task s would be

those est imated by t

he Nation al Elect

rical Con tractor s Associa

tion (“NECA”), and that the pricin g o f materia ls for extra work would be as prescribed by the T rade Service Corporation’s publication. While the basic

Contract provided that Ampr

ite would b e paid ‘d

irect co sts’ for e

xtra work, Schedule H provided that, in calculating these costs, fixed or set rates and pr escribed units would be used.
It was agreed that if A

mprite wa s asked to

make cha

nges, it would provide C ontract

or with a Change Order Propo sal, commonly refe rred to as a “COP.” Each COP would have attache d a-4-

Schedule H in the fo

rmat prov ided for in the Subc ontract

. Pricing would be consistent with NECA and the Trade Service

Corporation. The COP would then be approved and thereafter , a change order would be issued, and the additional work would commence co nsistent wi th the Subcontract that provided that in no event was Amprite to perform extra work unless a change order was issued

. Schedule H was a creation of the Contractor’s Project Ma n ager, which had used a similar method in construction of the Olympic Stadium in Atlanta, Geor gia. But Amprite historically used Superintendent

Work Orde

rs (“SWOs”) to document requests for additional work. However, the Contractor

insisted during the negotiation phase tha t the Sche dule H be

used and that it be attached to and incor

porated into the Su

bcont ract. This was because the Manag er was familiar with the NECA Manual and the Trade Service Corporation publication and he believed that rel i ance upon these Manuals wa s a “fair and reasonable” method to price additional work. According to the Manager, it is also preferable to hav e a price agree d upon prior to startin g extra w ork in ord er to eliminate the risks o f estimat

ing cost s. Moreover, the Contractor also had an established corporate policy regarding extra work, change orders, and pay

ment for extra work. That policy wa s promulgated by Contractor’s Executive Committee and compliance was mandated by Contractor’s auditors. It provided for the execution of change orders befor

e extra work is started. The Contractor required Amprite to perform additiona l work to e

xpedite the

job or to reconc ile problemsin the drawings. For instance, the mec hanical drawings consistently called for 4-phase motors for pizza ovens in concession stands. The mechanical contract or orde red ovens consistent with the pl ans, but, the electrical drawings required Amprite to install wiring for 3-phase motors. When this was disco vered, t he Contra ctor ask ed Amprit

e to repl ace the

wiring in order to facilita te the 4- phase mot

ors in doze

ns of conc ession sta

nds. The Contract

or reque sted Ampr

ite on 212 occasions to perform additional and/or modified work, without requiring Amprite to provide in advance a COP and/or a Schedu le H for co sts . The Project Manag er, who r

egular ly in structed

Amprite to perform the additional work, admittedly never askedAmprite to provide a Schedule H be fore req uiring Amprite to perform the additional work. He informed Amprite consistently that the a dditional work was needed and tha t Amprite s h ould “proceed immediately” and bill Contractor ther eafter according to Schedule H. Amprite complied withthose requests since it was repeatedly assured by the Contra

ctor that it would be paid and that change orders would be issued. Contractor acknowledg es making these representations of pay ment and conced

es that it w as “abso lutely

. . . reas onable

for Ampr ite to believe” Contractor’s promises of pay ment. Mr. Lassetter, the Project Mana ger, testified concerning

this practice: Q. You admitted y

esterda y th at there

were oc casions out in the field wh er e yo u also told Amprite to proceed ahead and y ou also made a statement to them that they would be paid.-5- A. I made the statement yesterda y, and I stand by that state ment, any time [Contra

ctor] directed Ampr

ite to do work on [Contract or’s] behalf, not an Own

er initia ted change, I

did tell Amprite they would be pa id. Q. Did you ever te

ll them that before they

started the work?
A. Ab so lu te ly. Q. Do y ou think the

y w ere re asonable

to believ e it?
A. I think that t

here wa s trust the

re and I think it wa s reason able for Amprite E

lectric to believ e Lou

ie La ssetter, ye s, or, other [Contract or] repre sentative s. Q. You said proceed and do this work and y ou will be paid?
A. It was a [Cont

ractor ] issue, y et, I would say

that, and I think that would be reasonable for Amprite to assume and believe me when I

said they were g oing to be

paid for it.
Mr. Lassetter conce ded that this method, i.e., proceeding with work first (wi thout the b enefit of a signed change or

der) deviated from the contractual sce nario and “does involve risks.”
In sum, Contractor essentially aba ndoned the contractual provision of the Subco ntra ct regarding change orders and in the pro cess ig nored its corporate policy which mandated written change orders before the extra work was commenc ed. The absence, therefore, of a writt en chan ge order isno defen se to the c laim of the Subcontractor for compensation for the extra work entailed by the or al chan ge s di rected by the Contractor. See , The Realty Shop, Inc. v. RR Westminister Holding, Inc. , 7 S.W.3d 581 (Tenn. Ct. App. 1999). Whether this conclusion is propelled by impl icatio n, or by

promissor

y e stoppel, o

r by quantum me

ruit, or c ommon sens e, is nee dless specula tion. Contr

actor c oncede s the point

. But this easy resolution does not

carry with it the further conclusion that the Subcontractor was free to ignore the contractual provisions respecting the amount of its compensation for work occasioned by

requests to perform additional work.
If there were no advanc e change orders, Amprite c onfirmed the requests by letter and a Schedule H calculating the costsaccording to NECA and the Manual of Tra de Service Corporation, utilizing a software styled AcuBid. The extra work for each of the 212 requests using the Sc hedule H format , was pric ed by

the NECA and Tra

de Servic e publica

tions.-6-

The first 24 CO Ps submitted by A mprite were accepted

by t he Contra ctor, wh o paid Amp

rite $228,977.00 for the additional work. But the Contractor balked at payment for

the remaining 188 COPs; according to Burke Waug h, a senior executive of the Contractor, the Owner was infor med that the extra work could not be further funded without approved cha nge orders, even

thou gh “we were having to proceed with the work before we could get them to return the m approved.” Ini ti al ly, the Contractor’s position was that it could not pay Amprite f or the 188 COPs because it had not been paidby the O wner, but by Apr il 19, 2000, the Owner paid Contractor the final amount of the contracted

price, together with the contingency fee. T he Cont ractor

still declined to pay f

or the remaining COPs, asserting that Amprite had grossly overcharged for the e

xtra work. The essence of the defense isthe purpo rted exce ssivenes s of Amprite’s pricing of th e COPs. The Contractor asserted, before trial, upon the trial, and in this Cour

t, that Amp

rite’s c laims for extra work“were

drastica lly o verstated,” and th at Amprite ’s cost re cords sho w that it misrepresented

its direct costs of work. Contractor fur ther ass erts that the trial court held that Amprite was entitled to recove r its admittedly overstat ed claims for extra workunder an implied-infact the ory, and aw arded Amprite compensation for “8686 hours never worked, $90,245.00 for materia ls never purchased, and $6,877.00 for taxes never paid.” This is heady language and

a boost to ou r r es ol ve to st ud y t he record of this protracted trial at leng th. Amprite was awarded $1,265,090.00 for extra work performed, $78,806.79 for cer tain insurance claims, later discussed, prejudgment

interest of 5 perc ent beg inning Ma y 14 , 2000, and 5 perce

nt intere st amounting to $52,062.87 on retained funds, less credits of $264,648.00, for a total recove ry of $1,131,311.66.
Contract or appea ls, and pr esents f or revie w these is sues which we rep roduce v erbatim:
1. Did

the trial court err when it ordered Tenne ssee Stadium Group (“TSG”) to compensa te Amprite Electric Compan y (“Am prite”) for hour s Amprite admittedl y n ever worked, f

or materials Amprite admittedly ne ver bought, and for taxes Amprite admittedly never paid?
2. When TSG and Amprite had entered an enforceable written construction contract that expressly provides that any extra wor

k Amprite

perfor ms will be compensated at cost-plus-10%, and when Amprite acknowledged at trial that cost-plus-10% was the proper formula for awarding any compensa

tion for extra work, did the tr

ial court err by

awarding Amprite a much gr eater am ou nt un de r a n i mp li ed -c on tr ac t t he or y? 3. Did

the trial court er r when it h

eld that T SG was estopped from refusin g to pay costs that Amprite admits wer e never incurred.
4. Did

the trial court err by

requiring TSG to pay

Amprite twic e for ce

rtain work?-7-

5. Did

the trial court

e rr by aw arding Amprite judgment on it “builder’s risk” insurance claims when (a) Amprite offered no evide nce in support

of those claims; and (b) the parties’ contract expressly pr ecludes bui lder’s r

isk claims ?
6. Did

the trial court er r when it a

warded Amprite in

terest on reta inage that exceeds the compound interest actually earned on the funds inthe ret ainage accoun ts?
7. Did

the trial court

properl y a ward Amp

rite pre -judgme

nt intere st when TSG reasona bly conteste d Amprite ’s admitte dly inflated claims? Amprite a

lso prese nts for re view thes e issues:
1. Whether

the Chanc ellor, in l

ight of Co ntracto

r’s admi s sions, cor

rectly held that Contractor had abandoned the Contract’s time consuming Change Order provisions and created instead a separate Contract, implied and by estoppel , as a res ult o f a cons isten t cour se of d ealin g. 2. Whether

the Chanc ellor’s c alculati on of cost s, per the Schedule H format , was correct in light of Contractor’s admissions that the idea for Schedule H was Contractor’s, that it had used the for mat on earli er jobs, t

hat it used

it witho therSub-Contractors on this Project, and that it accepted that form without obj ection in

connec tion with Am

prite’s initial bills

. Becau se t he prese

nted issue s are ta

utologic al, we do

not discus s them in seriatim , b u t ge ne ra ll y. Our review is de novo on the record accompanied with a presumption of cor rectness, as to factual matters, unless the evidence otherwise pr eponderates. Rule 13(d) T.R.A.P. Issue s of law carry no presumption of

correctness. Adams v. Dean Roofing Co. , 715 S.W.2d 341 (Tenn. Ct. App. 1986). If the ag gregate weig ht of the evidencedemonstrates that a finding of fact other than the one found by the trial court is more pr obably true, the judg

ment must be rever sed and rendered. See, Realty Shop Inc. v. RR Westminister Holding In c. , 7 S.W.3d 581 (Tenn. Ct. App. 1999).
I. The trial court held: The plaintiff’s legal right to recover under Ten nessee law for t his work is not by the cour t enforc ing the t

erms of th

e partie s contract. The court determines that the contr act doesnot apply

to these COPs

. Instead, the court awards the recove ry based on contract in fact and estoppel

.1 Amprite’ s execut ive conceded upon t

he tri al t hat i f a Schedul e H attache d to a COP conflicted wi th the int ernal c ost record s, the cost records should control. The trial court noted: “The defendant proved that in numerous (con tinued ...) -8- This conclusi on, with wh ich we c annot ag

ree, is essent ially based on the finding that the Contractor

“made a deliber atedecision to dispose with the delay of the c hange order process so as to bring th

e project in on time. ” This finding is supported by a pre ponderance of the evidence, but in our ju dgm ent it doe s not justif y a nullifica tion of the

entire Co ntract. We think the partie s essentia lly waived the requirement for written chang e orders, a common occurrence, but

this waiver, or abrogation of the contractual provision, in no way affected the amount of the compensation for extra work to which Amprite was justly entitled. See, Realty Shop , supra. In this jurisd

iction, c ontract s are not takenlightly, and their inter pretation is a matter of law the aim of

which is f

irst to ascertain and then to give effect to the intentions of the parties. See, Gredig v. Tennessee Farmers Mut. Ins. Co. , 891 S.W.2d 909 (Tenn. Ct. App. 1994). As we held in Realty Shop , supra , these intentions, in written contracts, are reflected in the c ontracts. Hall v. Jeffer s , 767 S.W.2d 654 (Tenn. Ct. App. 1988). Absent fraud, mistake or waiver, courts are required to interpre

t contra cts as written, giving the languag e used a natural meaning, and must strive

to avoid constructions which cr

eate am biguitie s where

none woul d otherwise exist. Whaley v. Underwood , 922 S.W.2d 11 0 (Tenn. Ct. App. 1995 ). It is firmly planted in our jurisdiction that the courts may not make a new contract for the parties. Petty v. Sloan , 277 S.W.2d 355 (Tenn. 1955). Agains tthe backdrop of these settled principles, w e conclu de th at the tri al court erred i n n ullify ing the written contract and, in lieu, substituting the legal theories of c ontract-in-fact and estoppel as bases for recovery . We cannot conceive that such dra stic ity w as requi red in or der to adjust the equities betwee

n these pa rties. To this end it i s well

to keep in mind, as this record reaches us, that the Contractor does not dispute that the extra work was performed by Amprite, tha t the Contractor ordered or approved the extra work, a nd that Amprite is entitled to be compensated. Contractor

insists t hatthe intention of the parties controls the issue of the amount of compensation, which must be ascertained from the C ont ract, c itin g Commerce Street Co. v. Goodyear Tire & Rubber Co. , 215 S.W.2d 4 (Tenn. Ct. App. 1948) and Galleria Asso. v. Mogk , 34 S .W.3d 874 (Tenn. Ct. App. 2000). Its continuing ar gument is that the Subcontract pro vides tha t Amprite is entitled to receive only its directcosts plus 10 percent for extra work performed. Direct cost as defined in the Co ntract is the actu al cost of

materia ls, includ ing sale s t axes and d elivery charg es, costs of labor, including Social Security , old-age and unemployment, insurance and fri nge benefit s required by

custom, worker’s compensation insurance, bond pre miums, and

applica ble rent charg es. The extra wor

k perfor med by Amprite w as reco

rded in separa te job number s. These

cost data were m aintaine d at its home office s and wer

e period ically furnishe d to its job- site offi ce. I t w a s freque ntly the case that the job costs, as officially recorded, conflicted with the costs reflected on the COPs. 11 (.. .cont inu ed) inst ances the Schedul e H forms at tached t o the COPs lis ted above devi ate f rom the act

ual costs incurred i n performing the wo rk.” A s to this, there can b e no d oub t, the Pla intiff conce des the fact. -9- Suffice to state th at during the prog ress of this protracted

trial, Amprite conceded time and again, that

many of the 188 COPs with Schedules H attache d did not ac curately reflect its direct costs as require d by

the Contra

ct. For instance , in COP 42, with a Sche dule H att ached, Amprite represented

that it inc urred 415 man-hours, although its internal cost recor ds revealed only

154 hours; in COP 115 there was a discrepancy of 627 hours; in CO P 139, a dis crepan cy of 505 hou

rs; in CO P 144, a dis crepancy of 402 hou

rs; in COP 90 , a discr

epancy of 395 hou

rs; in CO P 43 a discrepancy

of 313 hou

rs; in COP 75, a discrepancy

of 214 hours; in COP 130, a discrepancy of 176 hours; in COP 88, a discrepanc y of 174 hours . In sum, Amprite represente d that it had invested 19,940 man-hours for extra wor k , when its internal cost records revealed that it had only worked 11,254 man-hour s. We reite rate that Ampr

ite verif ied, upon the trial , the accuracy

of its inte rnal cos t record s. With respec t to the co st of mate rials purchased to perform extra work, according to COP 121 Amprite spent $19,881.00, when its internal cost records reveal it spent only $7,387.00; COP 115 claims an expenditure of $14,312.00 as contrasted to internal records revealing that

the expenditure was $4,559.00; COP 144 claims an expenditure of $25,901.00, as contrasted to the internal record revealing the expenditure was $18,3 39.00. COPs42, 77, 152 , 130, 116, 113, 188 c ollective ly c laim an expenditure of $44,838.00 as contrasted to actual costs of $25,643.00. Amprite argue s that the S chedule

H docume

nt, attac hed to the Subco ntract a

nd to each COP, was “established as a uniform measure to track the na ture and price of

any extra work,”and since it provided for an hourly

labor rate of $27.99 for extra work, plus additional amounts for other co sts, the “direct costs” provided for by the Contract would be calculated by using the fixed ratio use d in Schedule H. It further arg

ues that the Contractor’s Manager testified that the parties ag reed that the hours nec essary

to perfo rm a cer tain job wo

uld be as p

rescrib ed by

the NECA M anual.
But we have studied the Manager’ s testimony caref ully. He testified that the NECA ra tes could be used only when pricing an estimate before the work was perfor me d . S ig ni fi ca nt ly, Amprite’s Manager

testified: Q. And so rather than go throug h each and every [COP] you would agree . . . that if

th ere is a discrepancy

between Amprite’s cost rep ort trac king a g iven COP, a

nd the Schedule H sub mitte d to TS G [the Contr acto r] the actual cost shou l d govern, correct ? A. Yes, sir. The Contractor argues that Ampr ite’s Man ager r

epeate dly admitted that Amprite knew the Contract require d it

to track its actual costs for extra work, that it knew it was not entitled to more2 Amprite somewhat crypticall y refers to the conti nency f ee as having been paid t o the Contr actor as a “buff er to cover th ings left

out” i f th e Guaranteed Maximum Price was in adequate. But the Owners represen tati ve tes tif ied th at the “bu ffer” wa s spen t on va rious su bco ntracto rs, and was “no t profit to T SG [the C ontra ctor} .” -10- than actual costs plus 10 percent, that it knew the Defendant Contractor was rely ing on Amprite to present it actual costs, b ut repea tedly submitted Sc

hedule H forms whi ch conta

ined amou

nts in excess of actual costs, that the Schedule H forms are not a prope r basis for determining the amount of compensation due Amprite, and that the proper way to compensate Ampr ite is to resolve each discrepancy

between any

Schedule H and its corresponding cost report by re liance upon the c ost report and revi se the COP c laim to reflect the direct cost plus 10 percen t. The re cord supp orts this argume nt. The judgment rep

resentsa substan

tial windf all for A mprite 2 which cannot reasonably be justified under any r

ationale. Amprite is entitled to recover its actua l costs for the extra work plus 10 percent, as its Subcontract provides, and nothing more. Estoppel COPs 1 through 24 were accepte d by the Contractor, and were later incorporated into eig ht Change Orders signed by

the Contractor which increased Amprite’s Contract by $228,977.00 which wa s r outinely paid. Amprite conseque ntly arg ues that Contractor is estopped to question the remaining COPs, because the proof established clearly

that the Contractor agreed to pay for the extra work and did so on t we nt y- four occasions. We think this argument overlooks the fact that the Contrac tor, in this litigation, does not deny that Amprite is entitled to be paid for the extra work performed; the issue is the amount of the compensation. Theprinciple of estoppel is not implicated in any way

insofar as the amount

of compensation is concerne d. Amprite relies on Realty Shop , supra , which is inapposit e here since the Contractor agr eed that Amprite was entitled to be compensated for extra work. The Contractor cannot be estopped from pay ing the Sched

ule H amounts m

erely because it failedto discover in a timely manner that these amounts were more than Amprite’s actual costs plus 10 perce nt. The doctrine of equitable estoppel requires evidence o f conduc t amounting

to false representationor concealment of material facts, the intention that such con duct shall be acted upon by t he other party , and know ledge o f the re al facts

. Werne v. Sanderson , 954 S.W.2d 742 (Tenn. Ct. App. 1997). The party asserting estoppel must prove that it had no knowledge of the truth and could not obtain such knowledge, and that itchanged its position to its detriment. See, Warren Bros
. v. Metro G

ovt. , 540 S.W.2d 243 (Tenn. Ct. App. 1976). This point need not be further labored. Extra Costs
The Subcontract defines extra costs in plain language , heretofor e recited. Amprite argues that it was justified in using the estimates prescr ibed by the Manua

ls, notw i thstandin g that these estimate s far exc eeded th e actua l costs recorded in its records and vouchers offered as ac curate by-11-

its executives. We cannot und er any legal p rinciple affix a jud

icial impr imatur to t

his argument, which redefines windf

all. Contr

actor de scribesAmprit

e’ s bills as “unreasonable, fictitious, and grossly inflated,” and far in excess of actua l costs plus 10 perc ent a s con trac tuall y p rovid ed. We agree. The B uild er’s Ri sk Cl aims Amprite was awarded $78,806.79 “on its builder’s risk claims.” The Subcontract provides [Amprite] he re by acknowledges it obligatio n for any lo ss to its work, includ ing stored ma

terials, paid for

or not, whether or

not such lo s s is reimbursable by B uilder’s Risk Insurance. Amprite’s builder’ s risk cla ims involved repair s to damag ed duct w ork, dama ge to el ectric equipmen t, and tornado damage. Contractor arg ues that Amprite failed to meet its burden of proof on this is sue because Amprite admitted that it did not know whether these claims were valid or whether its losses had been paid by insurance. Amprite allege d “alsooutstanding are three claims on Contractor’s B uilders Risk Insurance which total $96,977.04. Amprite reserves the right to pursue those cla ims if unpaid.” The complaint was amended to allege “the defendant has since made a small pay

ment on the

Builder s Risk Claim, thereby re ducing

it to $78,80 6.79.” I

t appear s to be re asonably infere ntial that the builde

r’s risk covera ge assumed t

he balance, but the point is n ot crucial in light of the quoted contractual provision. The Defend ant plea

ded that a ny p ayments due

to Amprite

“for the se builder’s risk claims are contingent on approval and pay ment by MDHA, which ha s not yet occurr ed.” Amprite’s Ma na ge r t es ti fi ed th at th e t hr ee cl ai ms we re su bm it te d [ fo r p aym ent] to the builder’s risk insurance company , but he had no knowledge of whether pa yment had bee

n made. The trial court’s basis for its ruling was “the . . . contract requires a w aiver of insuranc e to be in writing. The defendants did not present a signed waiver.” The Contract provided that its te rms can be chan ged only

in writing; we find no provision in the Contract which amends the qu ote d provision that Ampr

ite ackn owledg es its obligation for any loss for its work. The proof presented is meager and somewhat nebulous, and falls short of establishing the liability of the Contractor

for these los ses. Interes t on Reta ined Funds3 $60,000 .00 remained in the retention account owing to a dispute concerning work app arently never perf ormed by Amprite

.

4 The record does not reveal the r eason why a 5 percent rate was uti lized by the accountant. It appears to have bee n arb itrary. -12- The trial co urt awarded Amprite $52,062.87 for “interest wrong fully withheld” on funds re tai ned by the Contractor f rom each pay

ment request by Amprite. T he Subcontract provides for retai nage in bo iler p late l anguage as one assurance the work will be properly accomplished by the subcontractor.
Tennessee Code Annotated § 66-11-144 provides that the retained funds shall be deposited in a separate escrow a

ccoun t but “shall become the sole and separate proper ty of the . . . subcontractor.

. . . All funds accumul ated in the escro w accou nt together

with any int

erest thereon shall be p aid

immediat

elyto the . . . s ubcontra

ctor” up on satisfa

ctory completio n of the c ontract

. The proof es tablished

that the r etention was depo sited “to t

wo speci fic cash accounts” by the Owner , which we

re inter est-bea ring at a rate not revealed , and apparen tl y not inquired into. The Contractor

paid the subcontractors, including the plaintiff Amprite, the actual

interest earned. The total a mount of Amprite’s retention was $555,948.85, the balance of which, $222,379.54, wa s “released to Amprite” on May 17, 2000. 3 Amprite contends that the Contractor violated the statutory require ment that the escrowed funds be deposited in a separate account. Contractor contends that it simply co mmingle d the retained funds of all of its subcontractors which is not prohibited by the statute. In any

event we do not see how the procedure employ ed adversely

affected Amprite. Contractor

contends that the calculation of interest by Amprite is erroneous becau se (1) a fictitious rate of interest [5 percent] was applied 4 as opposed to the actual compound int eres t rate earned, (2) the accountant failed to consider - did not dedu ct from the principal - $60,000.00 withheld by t he Owne r for lig hting Amp

riteadmittedly did not install, (3) the award of interest on the retention did not take into account the compound interest earned and paidto Amprite, and (4) since the Owner

withheld t

he $60,00 0.00, Contr

actor c ould not be

liable for inter est ther eon. We conclude that from all the evidence this critique of Amprite’s calculation of interest is well taken, butin any event a

ll the interest earned on the retainage was paid to Amprite. The award of additional interest is vacated.
Pre- Judgment Interes t Contractor

argues that the trial judge er roneously awa

rded pre-judgment interest because the costs Amprite incurred are no t related to the judgment it seeks, pointing out that the claim was unliquidated and reasonably disputed.-13-

It i s provide d by

statute th at pre-

judgmen t interes t may

be awar ded in ac cordanc e with equitabl e principle s. Tenn. Code Ann. § 47-14-123. In Myint v. Allstate Ins. Co. , 970 S.W.2d 920 (Tenn. 1 998) our S upreme Co urt explained that it

. . . is within the sound discretion of the trial court and the decision will not be disturbe d by an appe

llate court unless the record reveals a manif est and palpa

bl e abuse o f discretion . . . . This s tandard of revie w clear ly v ests the tr

ial cour t with consider able defe rence in the prejudgment interest dec ision. Generally stated, the abuse of discr etion standard doe s not autho rize an a ppellate court to me

rely substitute its judgment for that

of t he trial c ourt. Thu s, in case s where the evide nce supp orts the trial court’s decision, no abuse of discretion is found. The Supreme Court expounded further:
Foremos tare the principles of equity. . . . Simply stated, the court must decide whether the awa rd of pre judgmen t interes tis fair, given theparticular circumstances of the case. In re aching an equitable decision, a court must keep in mind that th e purpose of awarding the interest is to fully compensate a plaintiff for the loss of the use of funds to which he or she was legally

entitled, not to penalize a defendant for wrongdoing. . . . In addition to th e p ri nc ip le s o f e qu it y, two other criteria have emerg ed from Tennessee common law. The first criterion provides that prejudgment int e rest is allowedwhen the amount of the obli ga ti on is ce rt ai n, or ca n b e a sc er ta in ed by a proper accounting, and the amount is not disputed on reasonable grounds. . . . The secondprovides that interest is allowed whenthe existen ce of the obligat ion itself is not dispute d on reas onable g rounds. HadAmprite s ought to r

ecover only its actua l costs plus10 perce

nt, it unque stionably

would be entitled to pre-judgement interest. But Amprite sought to recover a

windfall to which it was not entitled. It may

reasonably

be inferred from

this recordthat if Amprite had simply reque sted that the Contractor

pay its actual costs plus 10 percent for the extra

work this litigation would not have been ne ce ss ar y. Under

these ci rcumstan ces, we think it was an abuse of discretion to allow pre-judge ment interest

. Conclusion
In sum, we hold that neither the Contract betwee n the Owner and Contractor nor the Subcontract

between the Contractor and Amprite, was abandoned. We hold that the provi sion requiring Change Orders be in writing wa s waived by the Contractor and Amprite. We hold that all other portions of the Subcontract are valid and

enforceable, particularly

the provision which fixes compe nsation for extra work at actual cost plus 10 percent. We hold that the internal rec ords of Amprite, as generated and authentica ted, with respect to its actual costs, prevail over the f lat or estimated rates pr

escribe d by

Schedule H. We hold that the Contract or was no t estoppe d to insist5 COP s 99 and 139 , [$26,740.00] were allowed, probab ly inadvert ently. The evidence revealed that the work

attributed to th ese COPs was included in the base Contract and for whi ch Amprite had alrea dy been paid. The actual costs should acc ordingl y be reduced t o $447,164.00. We have studie d the testimony of the expe rt witness Miller and do not a gree wit

h Ampri te t

hat his cal cula ti ons of

act ual cost s wer e $700,309. 00
6 Th e Co ntracto r claims a cred it of $1 2,45 2.00 for ov erpa ymen t of in terest on ret aine d fun ds. We cannot deter mine fro m the re cord whethe r these n umb ers are corre ct any the refor d isallow th is claime d cre dit. -14- upon proof of

actual c osts per the Co ntract. We hold tha t Amprite f

ailed to p rove its entitleme

nt to additional interest on the retainage. Our an al ys is of th e Exhibits, particularly 9A, 9B, and 12 r eveal that the represented costs aggrega te $897,582.00 as contrasted to actual costs of $483,904.00. 5
The interna

l reportsof Amprit

e are th e sole ev id ence of its costs. No citation

of author ity is required for the assertion that it was incumbent upon Amprite to prove its case by a pr eponderance of the evidence. We think the proof es tablished

that Ampr

ite was e ntitled to recover $447,164.00, less an undisputed c

redit of $264,648.00, 6 or $170,0 84.00. The judgmen t is accordingly

modified to allow a recovery

of $170,084.00. Costs are taxed evenly a nd the case is remand ed for all appropr iate pur poses.

___________________________________ WILL IAM H. I NMAN, SENIOR JUDGE