IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

October 6, 2010 Session

DILLARD CONSTRUCTION, INC. v. HAVRON CONTRACTING CORP.

ET AL.

Appeal from the Chancery Court for Hamilton County

No. 08-0319 W. Frank Brown, III, Chancellor

No. E2010-00170-COA-R3-CV - FILED NOVEMBER 23, 2010

The only parties left litigating in what started out as a complex construction dispute are, on

one side, Dillard Construction, Inc , and, on the other, Dillard’s demolition subcontractor,

1

Havron Contracting Corp. After a bench trial and several post-trial motions, the court held

that (1) Dillard, while not having a contract with Havron, was required by quantum meruit

to pay Havron $91,100 for work performed by Havron’s subcontractors; (2) Dillard was not

entitled to an offset against that judgment for damage done to electrical equipment by

Havron’s subcontractor; (3) Havron was entitled to recover from Dillard, under a “passthrough” indemnity theory, the attorney’s fees awarded against Havron and in favor of its

subcontractor; and (4) Havron was not entitled to recover the attorney’s fees that it, Havron,

incurred in defending against the claims of its subcontractor. Dillard appeals challenging

both the quantum meruit award and the denial of an offset. Havron challenges the trial

court’s denial of indemnification for attorney’s fees Havron incurred in defending the claims

of its subcontractor. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Affirmed; Case Remanded

CHARLES D. SUSANO, JR., J., delivered the opinion of the Court, in which D. MICHAEL

SWINEY and JOHN W. MCCLARTY, JJ., joined.

The bonding company – International Fidelity Insurance Company – that posted a bond on behalf

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of Dillard to remove a lien on the property where the demolition work was being done is also a party. 

Fidelity’s interests are identical to Dillard and both are represented on this appeal by the same attorneys. For

simplicity, we will refer to both parties as “Dillard.” 
Everett L. Hixson, Jr., and Adam U. Holland, Chattanooga, Tennessee, for the appellants,

Dillard Construction, Inc., and International Fidelity Insurance Company.

C. George Caudle, Chattanooga, Tennessee, for the appellee, Havron Contracting Corp.

OPINION

I.

At an earlier time, there were a number of parties in this case and various crossclaims, counterclaims, and third-party claims. Many of these claims have been resolved and

we are now focused only on the claims between Dillard and Havron.

The basic facts that give rise to this dispute are fairly simple. Dillard contracted with

a property owner to relocate an industrial plant. Havron had bid on the same project, but the

owner chose Dillard. Havron specialized in demolition rather than “building” and was

therefore hired by Dillard to perform much of the demolition work on the project. The work

specifically at issue here is the demolition of “Bay 8.” After demolition work began on Bay

8, Dillard and Havron exchanged documents concerning the work on Bay 8, but the trial

court correctly found that the exchanges were only offers and counteroffers with no meeting

of the minds. That finding is not at issue on appeal. What the “minds” of the two parties

never met on was the demolition of the roof of Bay 8. Havron had priced demolition of

“sandwich panels” and “structural steel” for the sum of $63,100. According to Havron, this

price did not include the roof, but, according to Dillard, it did include the roof as part and

parcel of the structural steel demolition. Significantly, the proof at trial was that the term

“structural steel” has a specific meaning in the construction industry that does not include the

roof of a structure.

On December 4, 2009, Dillard’s project manager, Kemp, instructed Havron to start

the demolition of Bay 8, beginning at the northeast corner. Kemp stated that the work needed

to start “yesterday.” This was after a brief walk through that did not include all of Bay 8 and,

as we have stated, before an agreement could be finalized.

Havron is a supervising contractor that does not have its own work crews. Havron

hired Sitton Construction, LLC to begin the demolition of Bay 8. Sitton began its demolition

work on a “lean-to” structure in which electrical components, including switchgear, were

located. In the course of the demolition of the lean-to, Sitton damaged the switchgear. This

did not sit well with the owner because the owner had planned to reuse the switchgear.

Dillard informed the owner that it would do whatever it took to make the owner whole.

Dillard instructed Havron to terminate Sitton. Havron did as instructed and almost

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immediately contracted with Paul Hutcherson dba H&S Construction, which will be referred

to herein as “H&S,” to perform the work started by Sitton.

As work progressed, a disagreement between Dillard and Havron as to the scope of

the work came to light. Dillard insisted that the structural steel component of demolition

included the roof. Havron insisted that roof removal was an extra that was not included in

the price of $63,100. H&S concurred with Havron that roof removal was extra work H&S

had not agreed to perform. Dillard insisted that the roof be removed. Havron gave H&S a

change order adding a payment of $21,100 for removal of the roof, which, coincidentally,

brought H&S’s total contract amount with Havron to Havron’s initial price to Dillard of

$63,100. Havron added approximately $7,000 profit and billed Dillard $28,000 for roof

removal and $63,100 for sandwich panel and structural steel demolition for a total of

$91,100.

The property ownersecured replacementswitchgear at a total cost of $72,688. Dillard

agreed with the owner that the cost of the replacement switchgear should be deducted from

Dillard’s contract price. Dillard then tried to pass the cost of the new switchgear on to

Havron. Dillard took the position that Havron was responsible for the full cost of the

replacement switchgear; it refused to pay Havron for the demolition work. Dillard also stood

by its claim that the roof was included in the structural steel demolition and that Havron was

not entitled to extra pay for the roof, beyond the original $63,100 price. Havron filed a lien

against the property in the amount of $91,100. Havron refused to pay H&S until Dillard paid

Havron. Havron relied on a “pay when paid” clause in its contract with H&S. H&S then

filed a lien against the property in the amount of $63,100. Dillard secured a bond from

International Fidelity Insurance Company to discharge the liens.

Almost every person or entity in the chain between the property owner and H&S,

including the bonding company, sued every other person or entity in the chain on a variety

of theories. Included was a claim under the Tennessee Prompt Pay Act, Tenn. Code Ann.

§ 66-34-101 et seq. (2004 & Supp. 2009), by H&S against Havron and Dillard. The bench

trial lasted two days and was successful in resolving much of the case. After the trial, but

before the court decided the case, Havron moved to amend its claim against Dillard to

include a claim for indemnity in the event Havron were held liable to H&S. The trial court

allowed the amendment to conform to the evidence. Four aspects of the trial court’s final

judgment are implicated in this appeal. They are: (1) that there was no meeting of the minds

to support a contract between Havron and Dillard but that Havron was entitled to a quantum

meruit recovery against Dillard in the amount of $91,100, plus interest;(2) that Dillard was

not allowed to deduct the cost of the switchgear from the amount owed Havron; (3) that

Havron was responsible for H&S’s attorney’s fees under the Prompt Pay Act; and (4) that

Havron was entitled to be indemnified by Dillard for its payment of H&S’s attorney’s fees

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but not for Havron’s own attorney’s fees. The trial court’s findings and analysis as to each

of these points, in a well-reasoned opinion, are as follows:

H&S seeks to recover its reasonable attorney’s fees and interest

pursuant to the Prompt Pay Act of 1991, Tenn. Code Ann. § 66-

34-101 et seq. . . .

* * *

There was no trial exhibit introduced whereby anyone responded

to H&S’s claim and provided a reason for nonpayment.

However, at trial on redirect of Mr. Havron, Havron defended

its non-payment of H&S based upon a “pay when paid clause”

in their subcontract agreement. . . . The . . . document reads as

follows:

Payment in full within ten days receipt of full

payment by Havron, which shall be billed to

Owner upon completing of the work and which

shall become due 30 days from the date of such

billing to Owner.

The . . . [a]greement . . . was not signed until after H&S

comp[l]eted all of the work required . . . . Therefore, this “pay

when paid” provision was not part of the original agreement and

has no effect. . . .

* * *

Based upon Tenn. Code Ann. § 66-34-602(b), H&S is able to

recover itsreasonable attorneysfeesfrom Havron, its contractor.

. . . An award of $23,385.52 is reasonable under the facts of this

case.

H&S also alleged that Havron breached the duty of good faith

and fair dealing. . . .

* * *

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Here, the aspect of the case that deals with good faith and fair

dealing relates to the payment from Havron to H&S. Havron

hired H&S to do the work Sitton had previously agreed to do.

Havron sent H&S a letter of intent stating that the contract price

would be $42,000. The parties’ subsequent, written agreement

also contained the same sum. There was a compressed time

schedule to be met. Havron contracted with H&S after Havron

knew there could be a claim from [Dillard] or [the owner]

regarding the damaged switchgear. Havron’s contractual

clauses containing the pay when paid clause were presented to

H&S after H&S’s work was completed. Thus, the after-the-fact

contract terms should not be able to defeat H&S’s legitimate

claims for payment for work well done. The “pay when paid”

clause was not part of the H&S-Havron discussion prior to the

work being done by H&S. Havron also gave H&S a change

order for H&S to remove the roof for an additional $21,100. . . .

This document does not contain a “pay when paid clause.”

Under the specific fact situation, Havron would not be acting in

good faith and would not be dealing fairly with H&S to deny

H&S payment just because Havron had not been paid by

[Dillard], especially when the contract “pay when paid” term

was not shown to H&S until after the work was completed and

after . . . Havron’s knowledge regarding [Dillard’s] claim for the

damaged switchgear . . . . If H&S were not entitled to relief,

then this would be another example of the old saying that “No

good deed goes unpunished.”

* * *

Havron . . . claims money due from [Dillard] based upon a

quantum meruit theory. Quantum meruit serves as an equitable

substitution for a contract claim that may allow a party to

recover the reasonable value of certain goods and services it has

provided. Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn. Ct.

App. 1995). The elements of quantum meruit are as follows

(citations omitted):

(1) there must be no existing, enforceable contract

between the parties covering the same subject

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matter; (2) the party seeking recovery must prove

that it provided valuable goods and services; (3)

the party to be charged must have received the

goods and services; (4) the circumstances must

indicate that the partiesinvolved in the transaction

should have reasonably understood that the person

providing the goods or services expected to be

compensated; and (5) the circumstances must also

demonstrate that it would be unjust for the party

benefitting from the goods or services to retain

them without paying for them.

In the case at bar, the court has determined there is no

enforceable contract between [Dillard] and Havron. Further,

Havron has proved that it, through its subcontractors, especially

H&S, provided valuable services in performing the demolition

work on the Bay 8 work. [Dillard], as the general contractor . . .

received the services and benefitted therefrom. Also, there is no

doubt that the parties expected [Dillard] to pay for these

services. Indeed, the parties agreed upon a price of $63,100 but

did not agree on the other parts of an agreement, specifically the

scope of work. Finally, under the circumstances of this case, it

would be unjust for [Dillard to] benefit from Havron’s services

without paying for such services.

The issues are how much money does [Dillard] owe Havron and

whether any offset or credit for the damaged switchgear . . .

should be allowed in this case. [Dillard] and Havron initially

agreed on $63,100 as the value of the subcontract. Havron

billed [Dillard] $28,000 for the demolition of the roof. Thus,

Havron seeks a total of $91,100. Mr. Havron’s testimony

supported this amount. No proof has been presented showing

that this amount is inappropriate. The court concludes that the

only proof on the issue of amount substantiates a recovery by

Havron against [Dillard] for $91,100.

. . . . [T]he court finds that Havron should . . . recover a portion

of its attorney’s fees from [Dillard], not under the Prompt Pay

Act but under the indemnity claim.

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The basis for indemnity is stated as follows:

The right to indemnity rests upon the principle

that everyone is responsible for the consequences

of his own wrong, and if another person has been

compelled to pay the damages which the

wrongdoer should have paid, the latter becomes

liable to the former.

14 Tenn. Jur., Indemnity, § 8 (2009). Basically, Havron argues

that if it is liable to H&S, then [Dillard] should indemnify

Havron because [Dillard] was the cause of such liability.

* * *

The court holds that Havron is entitled to indemnity from

[Dillard]. It was [Dillard], as the general contractor, that was

supposed to be in charge of the project. [Dillard] told Havron

when and where to work. [Dillard] made the decision to allow

[the owner] to withhold money from the contract price, instead

of letting [the owner] make a claim against [the owner’s]

insurance. [Dillard] agreed to an inflated claim and

deduction . . . . [Dillard], in effect, by giving [the owner] a

“blank check,” set up a self-fulfilling prophecy that its subs . . .

would not get paid. Therefore, [Dillard] was responsible for

Havron’s non-payment of H&S because [Dillard] withheld

payment from Havron. . . . Therefore, Havron should be

indemnified by [Dillard] for the monies, over and above the base

$63,100 that Havron owes H&S.

Counsel for Havron submitted an affidavit of time and services

which totaled $67,545.08 with expenses. . . . The court does not

find that Havron should recover all of its attorney’s fee from

[Dillard] for several reasons. First, Havron’s attorney’s fee

represents additional services over and above its defense of the

H&S . . . claim. Second, the court has determined Havron’s

recovery of attorney’s fees against [Dillard] to be based upon

indemnity. The following quotation seems appropriate:

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[I]n a suit for indemnity, the indemnitte[e]

[Havron] seeks a full recovery from the

indemnitor [Dillard] for the former’s legal

liability to a third party [H&S]. 41 Am. Jur. 2d

Indemnity § 1 (1968).

Denny v. Goodwin, No. 89-325-II, 1990 Tenn. App. LEXIS 193

at *9 (March 23 1990).

Thus, because Havron owes H&S the sum of $23,385.52 for

attorney’s fees and expenses, Havron should be limited, under

principles of indemnity, to recovering only $23,385.52 in

attorney’s fees and expenses from [Dillard].

* * *

There are many considerations that have gone into the court’s

decision. First, [the owner] was in a hurry and this “need for

speed” was “passed down” the contracting line to [Dillard],

Havron and others yet there was no printed demolition schedule.

Second, [the owner] was behind the game in several ways. One,

there is no evidence in the record that any [owner] or [Dillard]

representative showed anyone the inside of the switchgear room,

which was always locked. Two, [the owner] did not obtain a bid

. . . to move the switchgear and transformer until December 5,

2007. This proposal was accepted on December 10, 2007. . . .

By then, Sitton’s employees were taking down the sandwich

panels and getting ready to take down the switchgear room. . . .

Third, neither [the owner] nor [Dillard] placed any warning

signs, tapes or other notices or devices on the door to the

switchgear room to warn . . . Havron and others about saving the

switchgear inside the room. It was interesting to note that

Sitton’s employeesremoved the roof above and walls around the

transformer but did not touch the transformer, as such

transformer was specifically pointed out to Havron and Sitton as

an item not to be touched. Fourth, [the owner] did not

follow . . . specs by having the switchgear removed before

demolition. . . . [The owner] changed the engineers’ time frame

by making removal of the switchgear occur after, not before,

most of the demolition had already been accomplished. Fifth,

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[the owner’s] efforts to contract with H&[S] indicates that [the

owner] was keeping control of the project, rather than [Dillard],

who was allegedly the general contractor.

The court notes some of the same problems with [Dillard]. As

Mr. Kemp said . . . to Mr. Havron, “we want you to start

yesterday.” . . . The scope of work should have been concretely

staked out before the work began. This duty to detail the scope

of work lies with the general contractor, not the subcontractor.

Due to the time issues, Mr. Kemp decided that Havron should

work first and be signed up second.

Dillard did not post any notices, warnings or any other

instructions on the switchgear room to warn others of the need

to save the switchgear and busway. . . . Worse yet, [Dillard] had

a job superintendent on site: Bill Edgeman. . . .

There was testimony from several witnesses that Mr. Edgeman

was present on site at Bay 8, when Sitton began the demolition

of the switchgear room and its contents. However, Mr.

Edgeman did not tell Sitton or his employees to refrain from

going into the switchgear room, to stop their work, or anything

else. . . . [Dillard] did not call Mr. Edgeman as a witness. Such

creates an inference that his testimony would not have been

helpful to [Dillard’s] position . . . .

In addition to the construction issues, the court finds that

[Dillard] agreed, without any fight or attempt to mitigate its loss,

to pay whatever [the owner] wanted to replace the switchgear

equipment and busway. The switchgear was initially purchased

in 1957 or 1958 by [the owner’s] predecessor . . . . [Witness]

Berner saw the damaged switchgear . . and the replacement

switchgear. He described the replacement switchgear as a

“Cadillac” compared to the pre-existing equipment, which the

court would refer to as a “Yugo.” Mr. Berner described the

many differences and advances between the damaged

switchgear and the replacement switchgear. . . . The before and

after values were not comparable or close in amounts.

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From a business standpoint alone, one can see the good

“customer relations” in [Dillard’s] decision to let [the owner]

get what it wanted. However, from [Dillard’s] subcontractors’

viewpoint, [Dillard] “hung them out to dry” and denied them

any payment on the Bay 8 demolition project due to the

“inflated” cost of the replacement equipment, compared to its

pre-destruction value. [Dillard] came across, to the court, as

being rather indifferent to the plight [of] its subcontractors,

H&S in particular.

(Underlining in original; headings in original omitted.)

On competing motions to alter or amend, the trial court held that there was a written

contract between H&S and Havron that allowed H&S to recover its attorney’s fees from

Havron under the Prompt Pay Act, but since there was no contract, written or otherwise,

between Dillard and Havron, Havron could not recover attorney’s fees under the Prompt Pay

Act. However, it upheld its earlier award on the basis of indemnity:

The alternative theory for the allowance of attorney’s fees, for

both H&S and Havron, was indemnity. The leading case in

Tennessee is Pullman Standard, Inc. v. Abex Corp., 693

S.W.2d 336 (Tenn. 1985). The Tennessee Supreme Court held:

We are in agreement with the majority view that

attorneys’ fees are recoverable under an implied

indemnity agreement in appropriate cases. We

continue to adhere to the rule in Tennessee that

attorneys’ fees are not recoverable in the absence

of a statute or contract specifically providing for

such recovery, or a recognized ground of equity;

however, we recognize an exception to that rule

and hold that the right of indemnity which arises

by operation of law, based upon the relationship

of the parties, see Cohen v. Noel, 165 Tenn. [1

Beeler] 600, 56 S.W.2d 744 (1933), includes the

right to recover attorneys’ fees and other litigation

costs which have been incurred by the indemnitee

in litigation with a third party.

Id. at 338.

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Here, [Dillard] filed suit for a declaratory judgment that it owed

Havron and H&S nothing and that the liens filed by Havron and

H&S were invalid. Because [Dillard] voluntarily agreed to

allow [the owner] an exorbitant credit against the money

due . . . ., [Dillard] was thereby able to take the position that it

did not have to pay its subcontractors because it did not get paid

in full by [the owner]. When [Dillard] told Havron to fire Sitton

and hire a replacement subcontractor, there is nothing in the

record that supports any notice to Havron (or H&S) that

[Dillard] would not pay for the work. If [Dillard] had told

Havron, and if Havron had told H&S, that [Dillard] was not

going to pay any money on the demolition project, then the court

doubts that H&S would have agreed to do any work and Havron

would have probably abandoned the project. Thus, [Dillard]

would have had to pay any “new” contractor coming onto the

site to complete the demolition work. H&S was such a “new”

contractor.

* * *

In allowing Havron to collect from [Dillard] the amount of

attorney’s fees Havron is having to pay H&S, the court relies

upon [Estate of Wilson]v. Arlington Auto Sales, 743 S.W.2d

923 (Tenn. Ct. App. 1987) and the general principles that:

The right to indemnity rests upon the principle

that everyone is responsible for the consequences

of his own wrong, and, if another person has been

compelled to pay the damages which the

wrongdoer should have paid, the latter becomes

liable to the former.

(Some citations omitted.)

II.

The judgment in favor of H&S has now been satisfied. The only amounts at issue in

this appeal are the $28,000 (for the demolition of the roof) and prejudgment interest awarded

to Havron above and beyond the $63,100 awarded to H&S, and the attorney’s fees –

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Havron’s – denied Havron. Specifically, Dillard raises two issues, as we have rephrased

them:

Whether the evidence preponderates against the quantum meruit

award in favor of Havron.

Whether the evidence preponderates against the trial court’s

denial of an offset for damage to the switchgear.

Havron raises a single issue which we have also restated:

Whether the trial court erred in denying Havron its attorney’s

fees incurred in defense of the claims asserted by H&S.

III.

A trial court’sfactual findings are reviewed de novo with a presumption of correctness

unless the evidence preponderates against those findings. Tenn. R. App. 13(d); Bogan v.

Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). When the trial court’s decision is based on the

credibility of witnesses, it will be accorded “great weight” on appellate review and will not

be reversed absent clear and convincing evidence to the contrary. Machinery Sales Co. v.

Diamondcut Forestry Prods., 102 S.W.3d 638, 643 (Tenn. Ct. App. 2002).

IV.

A.

Dillard’s position as to the quantum meruit award is concisely stated in its brief as

follows:

Havron is not entitled to any recovery under a quantum meruit

theory where it was simply a broker of subcontractors on the

Project who provided no value or benefit to [the owner] or

Dillard.

Having lost in the trial court and having now satisfied the judgment in favor of H&S, Dillard

now takes the position that it and the owner received a benefit from the excellent work of

H&S, but nothing from Havron. Dillard further states in its brief, that “Havron did not take

down the roof, the structural steel, or the sandwich panels . . . .” Dillard also argues that

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Havron did not even adequately supervise the work as proven by the damage to the

switchgear.

Dillard furnishes no authority for the proposition that a party cannot recover for the

value of work done by a subcontractor. It seems to us implicit in the reasons for the rule of

quantum meruit that a contractor in the position of Havron who finds itself without an

enforceable contract with its expected payor, Dillard, would be allowed to recover the value

of services bestowed upon Dillard by Havron’s subcontractors. “The most significant

requirement for a recovery on quasi contract is that the enrichment . . . be unjust.”

Paschall’s, Inc. v. J.P.Dozier, 407 S.W.2d 150, 155 (Tenn. 1966). The measure of recovery

is not the “material and labor costs” of the plaintiff, but the “actual value of the . . . services”

to the recipient. Castelli, 910 S.W.2d at 430, 427. In applying Castelli to the present case,

the trial court stated, “there is no doubt that the parties expected [Dillard] to pay for these

services.” See id. at 427. The party to be charged, Dillard, received the services, regardless

who provided them. See id. Also, it is clear from Castelli, that Havron is entitled to

something for its efforts and is not limited to its expenditures for “material and labor costs.”

Id. at 430. We therefore hold that Havron was entitled to recover the value of the services

H&S rendered, under the Havron/H&S contract, to Dillard and ultimately to the owner.

Dillard also argues that there was no proof of the value of the work performed and

that the trial court simply based the award on the contract price. We can illustrate Dillard’s

argument by quoting an excerpt from the trial court’s opinion:

The issues are how much money does [Dillard] owe Havron and

whether any offset or credit for the damaged switchgear . . .

should be allowed in this case. [Dillard] and Havron initially

agreed on $63,100 as the value of the subcontract. Havron

billed [Dillard] $28,000 for the demolition of the roof. Thus,

Havron seeks a total of $91,100. Mr. Havron’s testimony

supported this amount. No proof has been presented showing

that this amount is inappropriate. The court concludes that the

only proof on the issue of amount substantiates a recovery by

Havron against [Dillard] for $91,100.

Dillard is correct that a quantum meruit award cannot be based solely on the price of an

unenforceable contract. Castelli, 910 S.W.2d at 428; Bauman v. Smith, 499 S.W.2d 935,

939-40 (Tenn. Ct. App. 1972). However, Dillard’s argument tries to stretch the facts and law

farther than they will comfortably fit. “No one doubts . . . that the contract price or rate

agreed upon by the parties is admissible . . . to show what is the reasonable value of the

performance that the defendant has received.” Bauman, 499 S.W.2d at 940. Also, “the

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required proof may be an estimation of the value of the goods and services.” Castelli, 910

S.W.2d at 428. As stated in Nations Rent of Tennessee,Inc. v. Lange, M2001-02368-COAR3-CV, 2002 WL 31467882 (Tenn. Ct. App. M.S., filed Nov. 6, 2002):

The reasonable value of goods and services may be proven in

several ways. The party seeking to recover in quantum meruit

can explain the method used to arrive at a base fee and markup.

Additionally, proof as to reasonable value can be obtained from

other professionals or experienced workers in that field.

Id. at *2(citations omitted).

Our de novo review of the record convinces us that the trial court was aware of the

elements of quantum meruit and the proper measure of recovery and properly analyzed the

proof under the law as set forth above. A former employee of the property owner whose job

included evaluating bids of various contractors testified that the demolition work on Bay 8

was worth approximately $93,000 to the owner because that is what it paid Dillard for the

work. The owner of Havron testified that based on his involvement at the job site and his 18

years of experience in demolition, the value of the work performed was $91,100 and

“probably more.” He testified that a fair price for removal of the roof alone was $28,000.

In addition to his knowledge from his general experience, Mr. Havron relied upon the fact

that the “expedited” nature of the work, the height of the roof, the labor-intensive nature of

the work, and the need for specialized equipment were factors to consider in setting the

reasonable value of the work. The trial court accurately noted that no evidence was offered

in opposition to the value assigned by Havron. The best Dillard can come up with on appeal

is that Havron’s testimony coincides with the contract prices discussed. Dillard’s attempt

falls far short of convincing us that the evidence preponderates against the trial court’s award

of $91,100 to Havron for the demolition work.

B.

Dillard also argues that the trial court erred in not allowing it a set-off for the value

of the electrical equipment that Sitton damaged. This challenge is premised upon the fact

that Havron was familiar with the plans and that the plans called for the equipment to be

removed by “others.” Dillard has furnished no legal authority as to how this requires a result

different from what the trial court reached. We have quoted at length above from the trial

court’s opinion and find no need to print those quotes a second time. For the purpose of our

present analysis, it is sufficient to state that we believe the trial court understood Dillard’s

position but found that the owner’s and Dillard’s actions taken to serve their “need for speed”

placed the responsibility for the damage to the electrical equipment at their feet. The trial

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court also found that in simply agreeing to a “Cadillac” replacement while spurning any offer

by Havron to help find a replacement, Dillard inflated the claim of damages and failed to

mitigate the damages. The evidence does not preponderate against the trial court’s findings.

We hold that there was no error in refusing Dillard a credit or an offset for the value of the

damaged switchgear.

C.

We turn now to Havron’s argument that the trial court erred in failing to award the

attorney’s fees and expenses incurred by Havron in defending against the claims of H&S.

Before commencing our analysis, we note that Dillard does not challenge the $23,385.52

awarded to Havron for indemnification against the attorney’s fees incurred by and awarded

to H&S. Havron argues that having gone as far as finding an obligation on the part of Dillard

to indemnify, the court was required, under Pullman, to take the additional step of finding

an obligation to make Havron whole by paying also the fees and expenses Havron incurred

defending against H&S. We agree with Havron that the holding of Pullman, “in appropriate

cases” allows a party in its position to recover the fees and expenses it incurred in defending

against a claim brought by a third party. 693 S.W.2d at 338. We do not agree that Pullman

requires a different result than the one reached by the trial court in this case.

It is important to understand that Pullman was before the Supreme Court on an

interlocutory appeal from the denial of a motion to dismiss. Id. at 337. In earlier lawsuits,

both Pullman Standard, as the manufacturer of a railroad car, and Abex Corp., as the

manufacturer of a wheel fitted on the car, had been sued for damages caused by a massive

train derailment and explosion. Id. Abex settled most of the cases without Pullman paying

anything. Id. Pullman then filed an action that ultimately made it to the Supreme Court.

Pullman alleged that “no act or omission of its own contributed to the derailment” even

though the earlier lawsuits had contained allegations that Pullman and Abex were both at

fault. Id. at 338. The High Court was required to take Pullman’s allegations of innocence

at face value. Id. The Court held that “the indemnitee’s actual wrongdoing rather than

allegations of wrongdoing [in the earlier cases] . . . should determine the indemnitee’s rights.

. . .” Id. at 339.

In the present case, we do not have mere allegations that Havron was complicit in the

wrongdoing; we have a finding of the trial court supported by a preponderance of the

evidence. The trial court found that “Havron would not be acting in good faith and would

not be dealing fairly with H&S to deny H&S payment just because Havron had not been paid

by [Dillard], especially when the contract ‘pay when paid’ term was not shown to H&S until

after the work was completed and after . . . Havron’s knowledge regarding [Dillard’s] claim

for the damaged switchgear . . . .” The trial court found Havron in violation of the Prompt

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Pay Act. That was the basis for the award to H&S which has not been challenged. In light

of these findings, and after considering the “principles of indemnity” the trial court found

that Havron “should [not] recover all of its attorney’s fees from [Dillard]”; “Havron should

be limited, under principles of indemnity, to recovering only” those fees and expenses paid

to H&S. We have reviewed this ultimate finding de novo, as an application of law to the

facts , and find no error in the trial court’s conclusion. We hold that the trial court did not

2

err in refusing to award Havron the expenses it incurred in defending the claims filed against

it by H&S.

V.

The judgment of the trial court is affirmed. Costs on appeal are taxed to appellants

Dillard Construction, Inc., and International Fidelity Insurance Company. This case is

remanded, pursuant to applicable law, for enforcement of the trial court’s judgment and for

the collection of costs assessed by the trial court.

_______________________________

CHARLES D. SUSANO, JR., JUDGE

The application of law to the facts of a case is treated as a question of law to be reviewed de novo. 2

Jaeger v. Civil Service Com'n of Metropolitan Government of Nashville and Davidson County, No.

M2007-02451-COA-R3-CV, 2009 WL 248266, at *4(Tenn. Ct. App. M.S., filed Feb. 2, 2009)(citing Sanifill

of Tennessee, Inc. v. Tennessee Solid Waste Disposal Control Bd., 907 S.W.2d 807, 810 (Tenn.1995)).

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