Court Opinion

ID: 5063365
Source: CourtListenerOpinion
Date Created: 2021-10-01 09:35:26.646173+00
Date Added: 2024-06-11T08:19:31.294581
License: Public Domain

BROCK, Justice,
dissenting.
I respectfully dissent.
The majority concludes that T.C.A., § 12-4-108, applies to subcontractors as well as general contractors, regardless of the privity between the subcontractor and the public body. The thrust of its opinion is that since the contractual rights of the plaintiff emanate solely from the public contract between Dick Corporation and the City of Memphis, both contracts are governed by T.C.A., § 12-4-108. I disagree.
The two agreements are separate and made between separate parties. The fact that the subcontract agreement embodies the general contract made between Dick Corporation and the City of Memphis does not convert the two agreements into one and does not convert the subcontract into a contract with a public entity.
I am of the opinion that a more reasonable interpretation of § 12-4-108 than the one set forth in the majority opinion is that the statute applies to a subcontractor only when there is privity between the public body and the subcontractor. My conclusion is supported by the legislative history of the statute. Section 12-4-108 was amended by 1971 Tenn.Pub. Acts 340, § 1 which added the following sentence: “As used in this section, contractor includes the subcontractor.” The sponsor of S.B. 1015, which became Pub. Ch. 340, made the following statement immediately prior to its passage in the Senate:
“This bill, along with the one passed last year, permits contractors on state jobs to put up the proper security that is acceptable to the Treasurer and Comptroller so that they could withdraw their retainage in the job and be permitted to earn money on their retainage rather than have to lose money, or accrue interest on their money while they wait for completion of the job. This merely permits the subcontractor, when they are in direct relationship with the state, to do the same thing. Pending any questions, I move passage on third and final reading.” Legislative recording, May 13, 1971, Senate: Senator Ed Blank S.B. 1015, Disc. No. S-145 (emphasis added).
That statement indicates that the statute as amended was intended to apply only to those subcontractors who are in privity with a public body. A subcontractor could be in privity with a public body, for exam-*89pie, on a job in which the public entity acts as the general contractor for its own project.
The majority opinion cites Harrison Construction Co. v. Gibson County Board of Education, 642 S.W.2d 148 (Tenn.App.1982). The question in that case was whether a contractor on a public job is entitled to interest earned on the retainage held by the public body. Harrison is not controlling in the instant case because here we are dealing with a contract between a general contractor and a subcontractor, neither of which are public entities.
In the subcontract agreement, the parties agreed that if ABC desired to have its retention reduced periodically through the life of the project, ABC would be required to pledge acceptable security to Dick Corporation. That agreement, however, does not negate Dick Corporation’s duty under T.C.A., § 66-11-144, to pay interest to ABC if the retainage is not reduced.
Because the contract between ABC and Dick Corporation does not include a public entity, I would hold that T.C.A., § 66-11-144, is applicable and thus the interest earned on the retainage is the property of A.B.C. I am authorized to state that Mr. Justice Drowota concurs in this dissent.