Court Opinion

ID: 1074537
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:10:26.852798+00
Date Added: 2024-06-11T15:43:01.074602
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE

                           AT KNOXVILLE
                                                         FILED
                                                       December 29, 1999

                                                       Cecil Crowson, Jr.
                                                      Appellate Court Clerk

                                               E1998-00535-COA-R3-CV
JERRY DUNCAN FORD, INC.,       )       C/A NO. 03A01-9808-CH-00266
                               )
          Plaintiff-Appellee, )
v.                             )
                               )
                               )
J. ROY FROST d/b/a FROST       )
CONSTRUCTION COMPANY,          )
                               )
          Defendant-Appellant. )
                               )
                               )
J. ROY FROST d/b/a FROST       )
CONSTRUCTION COMPANY,          )
                               )
          Plaintiff-Appellant, )
                               )
v.                             )
                               )       APPEAL AS OF RIGHT FROM THE
JERRY DUNCAN FORD, INC.,       )       ROANE COUNTY CHANCERY COURT
                               )
          Defendant-Appellee. )
                               )
                               )
CUSTOMER SERVICE ELECTRIC      )
SUPPLY, INC.,                  )
                               )
          Plaintiff-Appellant, )
                               )
v.                             )
                               )
JERRY DUNCAN FORD, INC.,       )
J. ROY FROST d/b/a FROST       )
CONSTRUCTION CO., M. JERRY     )
DUNCAN and wife, JUDY C.       )
DUNCAN,                        )
                               )       HONORABLE FRANK V. WILLIAMS, III
          Defendants-Appellees.)       CHANCELLOR

For Appellant Frost                    For Appellees Jerry Duncan Ford,
                                       Inc., M. Jerry Duncan and Judy
WILSON S. RITCHIE                      C. Duncan
WALTER B. JOHNSON, II
Ritchie & Johnson, PLC                 J. POLK COOLEY
Knoxville, Tennessee                   JENNIFER E. RABY
                                       Cooley, Cooley & Agee
For Appellant Customer Service         Rockwood, Tennessee
Electric Supply, Inc.

WILLIAM A. NEWCOMB
Harriman, Tennessee

                                   1
                          O P I N IO N

AFFIRMED AND REMANDED                                  Susano, J.
          This case is a consolidation of three breach of

contract actions, each of which arose out of disputes regarding

major renovations and additions to a commercial building in

Harriman housing an automobile dealership owned by Jerry Duncan

Ford, Inc. (“Jerry Duncan Ford”).     Jerry Duncan Ford filed an

action against the general contractor in charge of the project,

J. Roy Frost, doing business as Frost Construction Company

(“Frost”), after terminating Frost’s services because of

unsatisfactory performance.    Frost in turn filed an action

against Jerry Duncan Ford for breach of contract.     The third

action was filed by Customer Service Electric Supply, Inc.

(“Customer Service”), against Jerry Duncan Ford, Frost, M. Jerry

Duncan (“Mr. Duncan”), and Judy C. Duncan (“Judy Duncan”),

seeking payment for certain exterior light fixtures that it had

installed at the dealership.    After a bench trial, the court

awarded Jerry Duncan Ford damages reflecting the difference

between the total cost of the construction and $313,200, a

“ceiling” that -- as found by the trial court -- Frost had

guaranteed.   The trial court also awarded Customer Service

damages against Frost, but denied the former’s request for a

judgment against Jerry Duncan Ford and the Duncans.     Frost

appeals, raising the following issues for our consideration:

          1. Did the trial court err in admitting
          parol evidence to vary the terms of the
          written contract?

          2. Does the evidence preponderate against
          the finding of an oral agreement of a
          guaranteed maximum price?

                                  2
            3. Is Frost, rather than Jerry Duncan          Ford,
            entitled to breach of contract damages         due to
            the dealership’s failure to give Frost         notice
            and an opportunity to cure any defects         in
            construction?

Customer Service appeals the trial court’s dismissal of its

complaint against Jerry Duncan Ford and the Duncans.

                                      I.

            In December, 1995, the Duncans, as owners and corporate

officers of Jerry Duncan Ford, discussed with Frost the

possibility of doing major renovations and additions to the

dealership’s building.       Upon Frost’s recommendation, Mr. Duncan

contacted Randy Denton (“Denton”), an engineer, who, after

meeting with Mr. Duncan and Frost, drafted a floorplan detailing

the plans for the anticipated work.

            In early January, 1996, Frost gave Mr. Duncan a one-

page estimate showing the projected cost of the construction to

be $100,136.1     Mr. Duncan reviewed this estimate but noted that

it did not reflect everything that he wanted done.            Mr. Duncan

told Frost that he wanted a list of everything that was to be

done and what each item would cost.         On January 20, 1996, Frost

met with the Duncans at their home and gave them a revised

estimate.    The four-page document shows detailed costs for the

construction,     including the cost of (1) building a new service

building and new office area; (2) remodeling of the showroom and

      1
       Frost denies that he showed Mr. Duncan this one-page estimate, but
Duncan testified to the contrary.

                                      3
the existing office area; (3) remodeling of the exterior; and (4)

miscellaneous items, such as pouring concrete slabs, renovating

restrooms, patching the asphalt of the parking lot, and replacing

the exterior lights.    For each renovation phase described, Frost

included a subtotal reflecting the addition of ten percent of the

estimated cost for profit and overhead and 2.5% of the estimated

cost for workers’ compensation and liability insurance.     Every

page is signed by Frost and dated January 20, 1996.    The last

page contains the line: “total projected cost for complete

project: $313,200.”    The trial court found that, at the January

20, 1996, meeting, Frost orally guaranteed that the cost of the

project would not exceed $313,200.

           Frost and his crew began work at the dealership the

following week and continued for several months.    About once a

month, Frost submitted groups of invoices to Mr. Duncan for

payment.   These invoices included the cost of materials and labor

plus the agreed-upon ten percent for overhead and profit and 2.5%

for workers’ compensation and liability insurance.    The record

reflects that Jerry Duncan Ford made four payments to Frost

totaling $134,706.93.    In addition, the dealership paid

$92,857.09 directly to several subcontractors and suppliers.

           By February, 1996, the Duncans began to notice problems

with Frost’s work.    First, there were deviations from the

original plans.   The parties had initially agreed that additional

concrete would be poured on the existing concrete floors in

several areas of the building before tile or carpet was laid.

Frost, however, installed wood strips and plywood instead of

                                  4
concrete in these areas.    As a result, these floors squeaked,

moved, and in some places, swelled.       The plans also called for

the two existing restrooms to be renovated and made wheelchair-

accessible in accordance with the Americans with Disabilities Act

(“ADA”).    However, the restrooms were not renovated in accordance

with the ADA.    Consequently, a unisex restroom, which is ADA

compliant, had to be built between the two existing restrooms.

            The Duncans also experienced problems when changes were

made to the original plans.    In the shop area, the original plans

called for a two-foot drain in the center of the room.       Within

the drain, PVC pipe was to be installed for an exhaust system to

hook up to cars being serviced.       Mr. Duncan decided instead to

install the exhaust system within the concrete that would be

poured for the floor.    The exhaust ports were to be installed 30

feet from the wall on each side of the shop area.       Mr. Duncan

discussed the change in plans with Frost before the concrete was

poured.    However, after the exhaust system was installed, Mr.

Duncan noticed that on one side of the building, the exhaust

ports were only 15 feet from the wall.       Mr. Duncan testified that

the misplacement of the exhaust ports made access to the ports

difficult and time-consuming.

            Other problems developed as well.     A wall in a hallway

was bowed, causing the tile on the floor to be laid out of

square.    Shelving installed in the storage area collapsed due to

inadequate bracing.    Doors were installed to cover an existing

communications system, but were installed in a way that blocked

access to part of the system.    Doors and windows in the parts

                                  5
area were improperly framed.   The existing roof, which had been

re-roofed just months prior to Frost’s work, was damaged when a

support beam was removed from underneath the air conditioner on

the roof, causing the roof to sag and water to collect around the

air conditioner.    The roof of the new service building leaked due

to excessive screws being placed in the metal.   Leaks also

developed in the hallway where the roof of the new service

building connected with the existing roof.   Cracks appeared in

the concrete poured in the service area.   The drain in the newly

constructed wash bay did not have a proper slope.    The wrong type

of carpet was installed in the general storage area and in a

hallway.   The drain installed in the center of the shop area

would not drain properly, and the grate installed over the drain

had to be replaced because it was not strong enough to withstand

the weight of an automobile driving over it.

           As these defects became evident, Mr. Duncan noticed

that Frost was rarely, if ever, on the job site.    Frost admitted

that during the months of March and April, he was spending only

30 minutes to an hour at the dealership, and that he usually

would come by at 6:00 or 6:30 in the morning -- well before the

Duncans got to the dealership –- to discuss the project with his

crew.   In late April, Mr. Duncan went to another of Frost’s job

sites at the Rocky Top Market in Harriman and confronted Frost.

Mr. Duncan told Frost that Frost had to spend more time at the

site or he would pull Frost’s men off the job.   The following

week, Frost spent over 50 hours at the dealership.   During the

next four weeks, however, he spent no more than six hours per

week at the site.   During the first week of June, Mr. Duncan made

                                  6
several unsuccessful attempts to contact Frost.   On the morning

of June 5, 1996, Frost contacted the dealership several times to

say that he would be there shortly.   When he did not arrive by

that afternoon, Duncan “fired” Frost’s crew.

          At the time of Frost’s termination, the work was only

50 to 60 percent complete, and Jerry Duncan Ford had already

expended $227,564.05 on the renovations and additions.   On June

15, 1996, ten days after his termination, Frost submitted a group

of invoices, totaling $76,237.81, to Jerry Duncan Ford for

payment, but Mr. Duncan refused to pay them.   Among these unpaid

bills was an invoice from Customer Service for the lights that

were installed on the exterior of the dealership in May, 1996.

          On July 24, 1996, Jerry Duncan Ford filed a complaint

against Frost for breach of contract.   On the same day, Frost

filed a complaint against Jerry Duncan Ford, also alleging a

breach of contract.   On April 21, 1997, Customer Service filed a

complaint against Jerry Duncan Ford, Frost, Mr. Duncan, and Judy

Duncan, seeking payment for the exterior light fixtures.   All

three actions were subsequently consolidated for trial, a trial

which extended over seven days of testimony.

          At the conclusion of the proof, the trial court made

findings, including the following:

          Mr. Frost admits that Mr. Duncan was upset
          about the progress and the quality of the
          work being performed in the dealership. He
          says that Mr. Duncan came to where he was
          working on the Rocky Top Market.

                                 7
            He claims that Mr. Duncan had his fist
            clenched and told him to spend more time on
            the job or just get his men off the job.
            Others apparently sent requests for Frost to
            come to the job, but he apparently, other
            than his early morning visits, did not do so.

            Mr. Frost does admit –- does not admit, but
            the Court finds, that the work was not
            progressing properly. The work was
            progressing slowly, and some defective
            workmanship was showing up. Had Mr. Frost
            been on the job more of the time, some of
            this could have been avoided.

            Time sheets clearly show that Mr. Frost,
            after the first few months, spent very little
            time at the dealership. He may have come by
            early in the morning to give instructions for
            the day, but Mr. Frost could have avoided
            much of these problems by giving his personal
            attention to the actual performance of the
            work, and the Court feels that this is not,
            per se, a breach of the contract but is
            related to the plaintiff’s complaint that the
            work was being improperly supervised, was not
            making reasonable progress, and that some
            defects in the workmanship were resulting.

            The trial court held that Jerry Duncan Ford was

entitled to recover $215,826.10, the difference between the

guaranteed maximum price of $313,200 and the total cost expended

by the dealership on the renovations and additions.2           The court

then reduced this amount by $25,000, to reflect work that the

court determined was not reasonably necessary to remedy the

existing problems and for work done in excess of the original

contract.    The trial court also awarded breach of contract

damages to Customer Service against Frost in the amount of

$24,856.53, plus attorney’s fees of $8,285.51. Because Customer

Service had failed to prove the reasonable value of the light

     2
       Duncan hired another crew to fix the defects in the work performed by
Frost Construction and to complete the renovations of the building. The total
cost to complete the renovations was $529,026.10.

                                      8
fixtures in order to establish a claim for quantum meruit, the

trial court dismissed its action against Jerry Duncan Ford and

the Duncans.

                                9
                               II.

         In this non-jury case, our review is de novo upon the

record, with a presumption of correctness as to the trial court’s

factual determinations, unless the preponderance of the evidence

is otherwise.   Rule 13(d), T.R.A.P.; Union Carbide Corp. v.

Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993).   The trial court’s

conclusions of law, however, are accorded no such presumption.

Campbell v. Florida Steel Corp., 919 S.W.2d 26, 35 (Tenn. 1996).

          We also note that the trial court is in the best

position to assess the credibility of the witnesses; therefore,

such determinations are entitled to great weight on appeal.

Massengale v. Massengale, 915 S.W.2d 818, 819 (Tenn.Ct.App.

1995); Bowman v. Bowman, 836 S.W.2d 563, 566 (Tenn.Ct.App. 1991).

In fact, this court has noted that

          on an issue which hinges on witness
          credibility, [the trial court] will not be
          reversed unless, other than the oral
          testimony of the witnesses, there is found in
          the record clear, concrete and convincing
          evidence to the contrary.

Tennessee Valley Kaolin Corp. v. Perry, 526 S.W.2d 488, 490

(Tenn.Ct.App. 1974).

                               III.

          The first issue raised by Frost is that the trial court

erred in admitting parol evidence to vary the terms of the

                                10
written contract between Frost and Jerry Duncan Ford.   The trial

court, in its oral remarks after closing argument, made a

specific finding that the contract between the parties consisted

of the floorplan and the four-page estimate (“estimate” or

“Exhibit 8") drafted by Frost.   Later in its remarks, the trial

court referred only to the estimate as the written contract.    The

trial court stated that

          [o]n the face of the writing, there is
          nothing ambiguous about it. It is clear and
          unambiguous. The figures set out were
          plainly estimates or projected costs. The
          written contract purports to contain all of
          the terms upon which the work was to be
          performed by the defendant Frost.

                          *      *     *

          However, in this case both parties, all
          parties have offered without objection, and I
          want to repeat that because I think it’s
          important, without objection, extensive
          parole [sic] evidence bearing directly upon
          the terms of the contract, some of which have
          the effect of adding additional and
          conflicting terms to the contract, Exhibit
          No. 8.

          In other words, this case was tried as if the
          parole [sic] evidence rule was not applicable
          with oral testimony being elicited from all
          parties about conversations and consequently
          agreements which tend to vary the plain and
          unambiguous language of Exhibit No. 8.

          The evidence then as submitted to the Court
          raises no issue about the application of the
          parole [sic] evidence rule and simply leaves
          it to the Court to weigh the evidence,
          including the oral testimony, for the purpose
          of determining the agreement of the parties.

The trial court proceeded to examine the testimony concerning the

agreement between the parties and in so doing determined that

                                 11
Frost had guaranteed that the cost of the project would not

exceed $313,200.

            In order to determine whether the testimony regarding

Frost’s alleged guarantee was properly admitted, we must first

determine whether the parol evidence rule applies to the facts of

this case.

            The parole evidence rule provides that extraneous

evidence is not admissible to alter, vary or qualify the terms of

an unambiguous written contract.      GRW Enterprises, Inc. v. Davis,

797 S.W.2d 606, 610 (Tenn.Ct.App. 1990).     Thus, the rule does not

exclude parol evidence where the agreement between the parties is

itself an oral contract.

            We find that the four-page estimate is just that, an

estimate.    Significantly, each page is signed by Frost, but none

of the four pages are signed by or on behalf of Jerry Duncan

Ford, or the Duncans or any of the three of them.      While the

four-page estimate is clearly an offer by Frost to undertake the

subject project, there is nothing in the document to indicate an

acceptance by anyone.    Therefore, we find that the four-page

estimate is only a part of the contract between the parties.       A

contract that is partly in writing and partly oral is treated as

an oral contract.    Myers v. Taylor, 64 S.W. 719, 720 (Tenn.

1901).   In such a case, both the writing and the parol testimony

are competent evidence of the entire agreement of the parties.

Id.   It is evident from the parol testimony presented at trial

that essential terms of the parties’ agreement -- such as Jerry

                                 12
Duncan Ford’s acceptance; the date of commencement of work; the

method of paying for and selecting materials; the anticipated

date of substantial completion; the method for making change

orders and the like –- were not reduced to writing.             The estimate

merely lists the areas of the dealership to be renovated, the new

areas to be constructed, and the projected cost for each phase of

the work.    If in fact the estimate constituted the “written

contract” between the parties, the contract would fail for a lack

of definiteness because it does not sufficiently define the

essential terms of the parties’ understandings.            See Peoples Bank

of Elk Valley v. ConAgra Poultry Co., 832 S.W.2d 550, 553

(Tenn.Ct.App. 1991). The testimony presented to the trial court

was properly admitted, not because the parties waived application

of the parol evidence rule,3 but because the testimony concerned

the formation of the parties’ oral contract and the terms

thereof.

            Having determined that the testimony regarding the

parties’ agreement was properly considered by the trial court, we

now address Frost’s argument that the evidence preponderates

against the trial court’s finding of a guaranteed price.              Frost

contends that the evidence preponderates against a finding of a

guaranteed price because (1) his version of the conversation is

corroborated by the “written contract”; and (2) the parties’

conduct was not consistent with a contract for a guaranteed

maximum price.

      3
       As to whether an objection to inadmissible parol evidence is necessary
to raise the parol evidence rule, see Tri-Cities Forlift Co. v. Conasauga
River Lumber Co., 700 S.W.2d 548, 549 (Tenn.Ct.App. 1985).

                                      13
          The trial court was presented with the testimony of Mr.

Duncan, Judy Duncan, and Frost regarding their discussions on

January 20, 1996, the date on which the parties’ basic agreement

was struck.   The parties each testified to their version of the

conversation that ensued when Frost presented the Duncans with

the estimate for $313,200.   Mr. Duncan testified as follows:

          I asked Roy, I said, Roy, can you build this
          building the way we want it here for this
          amount of money? He said, yes, I can.

          I said, we didn’t anticipate spending this
          much money. And I told him, I said, but
          things always run a little more than what you
          anticipate. And he said yes. And I said I
          wanted to spend $300,000 on doing the
          building.

          He said, Jerry, he said, I don’t think I can
          do that for 300,000, but I’ll tell you what I
          will do. He said, I’ll try to get you out
          for 300,000, but I will guarantee you that it
          will not exceed 313,200.

          And I said at that point, I said to him, now,
          Roy, I said, how are you going to do the
          buying and so on and so forth? He said, you
          all can buy anywhere you want to as long as
          we agree on it. He said, I’ll give Judy
          budgeted amounts to spend in certain areas.
          And I said, well, I understand that.

          And he said again that he would build a
          building that we would be proud of. And I
          said, are you sure you can build this
          building for three-thirteen-two? Oh, yes, he
          said, I try to figure my jobs a little high;
          I’d rather come in a little high as to come
          in low and then have to go up on the person.

          And at that time I said to him, I said, well,
          Roy, sign this right here. And we were
          sitting at the bar at the house.

Judy Duncan then testified as follows:

          Q:   Okay. Going back to the discussions
          that you and Mr. Duncan had with Mr. Frost on

                                14
January the 20th, was there any discussion as
to the contract price, the entire contract
price?

A:   Yes, very much so, because Jerry and I
had talked privately about what we felt like
we could do. And when Mr. Frost came back
with the price that was somewhat over 311 or
312,000 or 300 or 311,000 or whatever, Jerry
kept reiterating –- and I said to him –- I
said to Mr. Frost the same thing, that we
really wanted to stretch that out for the
300,000. And Mr. Frost replied to me that
“When I am doing a project contract, writing
out a project and figuring a project
contract, I always figure those high because
I always like to come in low on my contracts.
That has just always been my technique.” So
he said, “I feel like that we have room here
that we can very well come in within the
300,000 or below that.” So, then, I talked
to him about lighting. And –-

Q:   Wait. Was there in that price, that
$313,200, was there any discussion about the
supervision of the job and, if so, can you
describe the substance of those
conversations?

               *    *        *

A:   What Mr. Frost said to us over and over
and reiterated to us is that he took great
pride in his work, that he was in a position
that he could be on our job continually
because he did not have another job at that
time, and that he would see to it that
everything was done as he knew we wanted it
to be done, that we were –- he knew we were
particular and we had certain things in mind,
he wanted to adhere to those, and he also
wanted to see that the best work was done.
So he promised us at that time and upon
signing that contract, that he would be on
the job daily overseeing.

Q:   Was there any agreement as to the
completion date of the contract?

A:   Yes. Mr. Frost told us that he would be
finished by June 1st. And jerry [sic] said,
“Now, this is going to effect [sic] our
business because, you know, when you tear up,
it’s hard to do business around that and it’s
costing you money on a daily basis.” And so
Jerry was emphatic about that because of
possibility of losing business. So, because

                        15
          of that, Roy said, “I can guarantee you that
          I can complete all of this work by June 1st.”

Later, Judy Duncan was again questioned about the contract price:

          Q:   And can you tell the Court again the
          total contract, because I think that was
          confusing you a few minutes ago. What was
          the contract amount?

          A:   $313,000 and –- 213,200.

          Q:   In thinking back, Ms. Duncan, to that
          afternoon when you were going over those
          figures and discussing that contract price,
          were the words “guaranteed” ever mentioned to
          you that day in regard to that contract and
          that price?

          A:   Yes. More than once Mr.    Frost said that
          he would guarantee us that it   would not
          exceed this 313,200, but that   he would do his
          best, his very best, and felt   very confident
          that he would be able to stay   within the
          $300,000 range.

          Q:   Is that contract signed?

          A:   Yes, each page, because Jerry and I
          asked that he sign each page of the contract
          –-

          Q:   Is Roy Frost’s signature –-

          A:   –-- and date it. Yes.    And he dated –-
          and he dated the page also.

Roy Frost testified as follows:

          A:   Jerry said, well, I’d like to get by for
          300,000 if I could, and I told him –-

          Q:   Do you know where he derived the figure
          of 300,000 in that discussion?

          A:   That is the first I ever heard of
          300,000. I never heard of it, but he said, I
          would like to –- I would like to get by with
          $300,000 if I could. I said, well, the only
          thing that I can tell you is that we’ll go to

                                  16
          work like we agreed upon because we talked
          about a cost-plus fee basis. He would pay my
          labor bills from timecards, and they could be
          furnished if they were needed.

                         *    *        *

          [Jerry Duncan] could control the cost. They
          could help control the cost, and we’ll spend
          whatever money that they wanted to spend, and
          when we got to the $300,000, we would either
          quit –- quit at any time they wanted to quit.

          Q:   Was there ever a discussion by you and
          Mr. Duncan or his wife when you took this
          construction cost estimate up there to their
          home that you would do this work for the
          specified sum of three hundred thirteen
          thousand 200 some odd dollars?

          A:   I never heard of that figure until it
          come up to lawsuit time. I never heard that.

          Q:   As a specified sum?

          A:   As a specified sum, never had any idea.

          Q:   Did you at that meeting ever guarantee
          either one of them that you would do this
          renovated project for the specified sum of
          three hundred thirteen thousand and 200 some
          odd dollars?

          A:   No. I did not. The only thing that was
          agreed upon at this time when we started that
          job I was asked the question about when I
          could start, and I told him we’d start it
          immediately. Jerry and I discussed about his
          dealership having to be open and first one
          thing and another and the difficulty it would
          be and things like that.

          I told him that we could start immediately on
          the project and that we would work around all
          that we could and that once we started that
          project that Frost Construction Company, not
          Roy Frost, would never leave that job. I
          said Frost Construction Company will not quit
          on this job. We will not stop this job until
          we are completed.

After hearing this conflicting testimony, the trial court

resolved the factual issue of the alleged guarantee in favor of

the Duncans, finding that Frost’s testimony was not credible:

                                  17
          I had no way of resolving any of this dispute
          about the guaranteed maximum, because I had
          the Duncans saying one thing, at least in
          part, and I had Mr. Frost swearing to the
          exact opposite. But Mr. Frost, on the 4th
          day, endured what can only be described as a
          rigorous if not a grueling cross-examination
          in which he did very badly, I will have to
          say for Mr. Frost.

          The testimony appeared quite often to be very
          deceptive, to be not credible on many
          fronts...

                         *    *        *

          [A]t the conclusion of his cross-examination,
          I had lost confidence in what he was telling
          me.

          He denied that Mr. Duncan ever told him that
          he, Mr. Duncan, wanted to know what the
          building was going to cost him. Well, I just
          don’t believe that. I believe Mr. Duncan did
          want to know what the building was going to
          cost him. I think that he asked him, and I
          think Mr. Frost made some statements in that
          regard.

Frost argues that the trial court’s determination of his

credibility was in error because his version of the events of

January 20, 1996, is, according to Frost, corroborated by the

estimate, which does not mention a guaranteed price.        While it

can be argued that the failure of the four-page estimate to

mention the concept of a guarantee is consistent with Frost’s

testimony, the trial court nonetheless found his testimony “to be

very deceptive” and not worthy of belief.        The determination of a

witness’ credibility is for the trial court and such

determinations “will not be disturbed on appeal unless real

evidence compels a contrary conclusion.”         McReynolds v. Cherokee

Ins. Co., 815 S.W.2d 208, 210 (Tenn.Ct.App. 1991).         The four-page

estimate’s silence on the question of a guarantee is not enough

“to compel[] a contrary conclusion.”       Id.    Thus, we will not

                                  18
disturb the trial court’s finding that Frost guaranteed that the

cost of the renovations and additions would not exceed $313,200.

           Frost contends that the parties did not act in a manner

consistent with a contract for a fixed price because (1) Frost

was paid on a cost-plus basis; and (2) because Jerry Duncan Ford,

allegedly without Frost’s knowledge, paid $92,857.09 directly to

suppliers and subcontractors.   Frost argues that if the contract

had been for a fixed price, he would have exercised stricter

control over such expenditures.

           We find that the parties’ actions were not inconsistent

with a guaranteed maximum price.       There is no dispute that the

parties agreed that the work would be performed on a cost-plus

basis; however, the parties also agreed -- as found by the trial

court -- that the total cost, including the “plus” additions,

would not exceed $313,200.    Thus, although the work was paid for

on a cost-plus basis, the evidence preponderates that the parties

were operating under a guaranteed maximum budget.      Denton

testified that he heard Frost say that the project was within

budget.    Both Mr. Duncan and Judy Duncan testified that before

selecting any supplies, they would ask Frost whether they were

within the budget, and that Frost always replied in the

affirmative.   Steve Kirkham, the owner of the Rocky Top Market

where Frost was also working at the time, testified that he heard

Frost mention that he was below budget on the Jerry Duncan Ford

project.   We find that the existence of this budget is not

inconsistent with a guaranteed maximum price.

                                  19
           Moreover, the fact that Jerry Duncan Ford bought

supplies or paid some suppliers directly for their services does

not contradict a finding of a guaranteed price.    First, the

evidence preponderates that the parties had agreed that Jerry

Duncan Ford could purchase materials directly so long as Frost

approved of such purchases.    Both Duncans testified that they

sought and obtained Frost’s approval before making any purchases.

As for the direct payment of suppliers, Jerry Duncan testified

that he had to pay some suppliers because they were due payment

when the supplies arrived on the site, and Frost was not there to

pay for them.    Thus, we find Frost’s argument on this point to be

without merit.

                                  IV.

           Frost next argues that because Jerry Duncan Ford made

the first material breach of contract by failing to give Frost

notice of the defects in the construction and an opportunity to

cure, the trial court erred in awarding damages to Jerry Duncan

Ford.   Frost claims that he is entitled to damages arising from

Jerry Duncan Ford’s breach.

           Generally speaking, notice and an opportunity to cure

must be given before a party may terminate a contract for faulty

performance.     McClain v. Kimbrough Constr. Co., 806 S.W.2d 194,

198 (Tenn.Ct.App. 1990).     Failure to give such notice constitutes

a material breach of the contract and entitles the party, who was

denied the opportunity to cure, to an award of damages.     Id. at

199.

                                  20
          Frost and several members of his crew, including the

supervisor of the project, Michael Frost, testified that, with

few exceptions, they did not receive any complaints about the

quality of the work.   The defendant Frost testified that a

complaint was made about a door being out of square, but it was

immediately corrected.   He also stated that “some statement was

made” concerning the wrong kind of carpet being installed in the

storage area, but that it was not a “big deal.”    Frost testified

that “bubbles”, which appeared in some of the areas covered by

the wood strips and plywood, were also corrected.

          The Duncans testified, on the other hand, that they

made several complaints throughout the course of the

construction.   The Duncans complained to Frost about cracks in

the concrete in the service area.    They complained to Michael

Frost about the drain backing up in the shop area.    Mr. Duncan

called Frost’s attention to water collecting on the roof around

the air conditioner.   An employee of Jerry Duncan Ford testified

that he pointed out to Michael Frost that the exhaust ports were

being installed too close to the wall.    The Duncans complained

about the interior painting in several areas of the dealership.

Also, the metal roof began leaking while Frost’s crew was still

on the job, and thus would have been an obvious defect that

needed correction.

          The record further shows that Frost received notice

approximately one month prior to his termination that the Duncans

were very dissatisfied with his performance.    In late April,

1996, Mr. Duncan confronted Frost at the Rocky Top Market.    Mr.

                                21
Duncan told Frost that he would pull Frost’s men off the job

unless Frost returned to the job site.   This confrontation

notified Frost of Mr. Duncan’s dissatisfaction with the

progression of the work and Mr. Duncan’s belief that Frost’s lack

of attendance was contributing to the defective workmanship.

Although Frost returned to the job site the next week, his

attendance declined thereafter.    By June, 1996, Duncan was still

faced with numerous defects in the construction that were

unresolved; also, Frost was not appearing on the job site.    It

was at this point that Mr. Duncan told Frost’s crew to leave the

job site.

            We find that the evidence does not preponderate against

a finding that both notice and an opportunity to cure were

provided to Frost prior to the termination of the contract.

Again, the trial court was presented with conflicting testimony

from the parties.   Although the trial court did not specifically

address the issue of notice in its opinion, the court did discuss

at length the credibility of the witnesses.   The trial court

clearly gave little credence to Frost’s testimony, which was

severely discredited on cross-examination.    Thus, we cannot say

that the evidence preponderates against a finding that Frost and

his crew were provided sufficient notice and an opportunity to

cure the defects that arose during the construction.

                                  V.

            Customer Service appeals the dismissal of its claim for

damages against Jerry Duncan Ford and the Duncans, arguing that

                                  22
an express contract for the exterior light fixtures existed

between the parties.    In the alternative, Customer Service argues

that it should recover quantum meruit because an implied contract

existed between the parties.    In support of both arguments,

Customer Service contends that Mr. Duncan, acting on behalf of

Jerry Duncan Ford, ordered the light fixtures for which Customer

Service was not paid.

            We find that the trial court correctly dismissed

Customer Service’s claim.    The evidence overwhelmingly indicates

that an express contract for the exterior lights existed between

Frost and Customer Service.    Mike Edwards, co-owner and vice-

president of Customer Service, testified that Frost initially

ordered the exterior light fixtures.    The next day, Frost called

and cancelled the order.    One week later, a meeting occurred

between Edwards, Frost, Mr. Duncan, and the electrical

subcontractor for the purpose of selecting exterior light

fixtures.    Although at that meeting Duncan selected the type of

fixtures to be installed, it was Frost who later called Edwards

and placed the order.    Moreover, the manner in which Customer

Service had been paid prior to the submission of the June 15,

1996, invoice also reflects an express contract between Frost and

Customer Service.    Helen Neal, an employee of Jerry Duncan Ford,

testified that the Customer Service invoices were billed to

Frost.   Frost would then turn in the invoices, including a charge

for the “plus” additions, to Jerry Duncan Ford.    A check would

then be issued payable to Frost to cover the amount of the

invoice as well as the percentages added for the “plus” items.

                                 23
Thus, the parties’ conduct demonstrates that an express contract

existed between Frost and Customer Service.

          Customer Service’s argument that it should recover

against Jerry Duncan Ford or the Duncans on an implied contract

theory is also without merit.     An implied contract or quantum

meruit action is an equitable remedy that allows a party who has

provided goods and services to recover the reasonable value of

those goods and services if the following five factors are met:

          (1) there must be no existing, enforceable
          contract between the parties covering the
          same subject 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
          parties involved 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.

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

1995)(citations omitted).    A recovery for quantum meruit is

limited to the actual value of the goods or services received,

not the contract price.     Id.   Thus, a party seeking quantum

meruit must prove the reasonable value of the goods or services.

Id. at 428; Bokor v. Holder, 722 S.W.2d 676, 681 (Tenn.Ct.App.

1986).

                                   24
            Customer Service presented no proof concerning the

reasonable value of the fixtures.       Counsel attempted to elicit

testimony in regard to the contract price of the fixtures, but

made no attempt to establish the fixtures’ reasonable value.

Customer Service argues that the trial court “thwarted” its

attempt to prove reasonable value; however, we find no merit in

this claim.     The trial court merely sustained an objection made

to repetitive questions asked by Customer Service’s counsel

concerning the contract price for the fixtures.       The record shows

no attempt by Customer Service to establish the reasonable value

of the goods.    Thus, the trial court correctly dismissed Customer

Service’s implied contract claim against Jerry Duncan Ford and

the Duncans.

                                  VI.

            The judgment of the trial court is in all respects

affirmed.    Costs on appeal are taxed to the appellants.    This

case is remanded to the trial court for enforcement of that

court’s judgment and for collection of costs assessed below, all

pursuant to applicable law.

                                        __________________________
                                        Charles D. Susano, Jr., J.

CONCUR:

______________________
Herschel P. Franks, J.

                                  25
______________________
D. Michael Swiney, J.

                         26