Harakas Constr., Inc. v. Metro Gov't of Nashville, 2018 Tenn. App. LEXIS 45 (Tenn. App. January 29, 2018)
BK Partners LLC (BK) sought to build a condominium complex in Davidson County. This required an upgrade to the existing public sewer system. Therefore BK and the Metropolitan Government of Nashville and Davidson County (Metro) entered into an agreement whereby Metro agreed to contribute $200,000 to the cost of the sewer upgrade with BK responsible for the actual construction. BK hired Harakas Construction, Inc. (Harakas) to upgrade the system (the Project). Metro was not a party to that contract (the Contract).
Harakas encountered unforeseen soil conditions, which resulted in two change orders that increased the Contract amount. Under the Contract, Metro was not required to authorize change orders; nevertheless, Metro was involved in the discussions. Harakas performed the extra work and achieved substantial completion. However, after a defect was discovered in the upgraded system, Metro refused to fund the Project. When BK failed to pay Harakas, Harakas sued both Metro and BK. Against Metro, Harakas claimed promissory estoppel and unjust enrichment. The trial court granted Metro summary judgment based on sovereign immunity.