When a contractor orally agrees to renovate a house but fails to reach an agreed upon price, what happens if the contractor is replaced and goes unpaid? Further, what if the homeowner asserts both a breach of contract claim and a negligence claim against the contractor? Can she recover damages for both claims? In a recent Tennessee case, a state court submitted the issues to a jury, and the jury found that both the contractor and the homeowner were at fault. Based on a treble damages clause under state law, the homeowner was entitled to multiplied damages for the contractor’s negligence, so she was able to have her liability offset and recover from the contractor.
The case arose after a homeowner secured the contractor to perform and oversee renovations and home repairs, including painting, carpentry, plumbing, kitchen remodeling, electrical work, ceiling repair, floor refinishing, tiling and carpet removal. The parties reached an oral agreement for the services in August 2011, but by October 2011, the homeowner informed the contractor that his services were no longer needed. In a quick about-face four days later, the homeowner allowed the contractor to finish the services. However, by that time, the contractor had found other work and was unsatisfied that he had not been paid by the homeowner on his latest invoice. The homeowner found a replacement contractor.
In January 2012, the contractor sued the homeowner for breach of contract and failure to pay for services and later added an unjust enrichment claim. The homeowner counterclaimed for breach of contract, negligence and misrepresentation of the costs that were being claimed by the contractor. The homeowner sought treble damages under state law. During the two-day trial, a jury examined the scope of services and found that, although no agreed upon price was reached by the contractor and the homeowner, the scope of work and invoices justified a finding that the anticipated contract was for more than $3,000; therefore, the homeowner could get treble damages under state law. Additionally, the jury found that the homeowner had breached the contract but also that the contractor had performed work negligently though had not misrepresented his claimed costs. On balance and because of the multiplied damages, the homeowner came out on top. The contractor appealed the jury’s verdict.
The state court of appeals honored the jury verdict and explained that the testimony and evidence in the record, including invoices, were enough for the jury to determine the amount of the contract even though the agreement was an oral contract. The state court of appeals also explained that because breach of contract and negligence claims require different showings of evidence, it was possible for the homeowner to have been liable even while the contractor was liable. The lack of a written agreement and informality of the pleadings justified deference to the jury’s verdict.
Time and again, oral agreements like these can lead to disagreements during a project and legal conflicts when projects are completed. The more parties can write out their understandings and specific agreements in the beginning, the more the parties may be able to predict–and limit–their exposure down the road, especially when both act to cause each other injury.
Boyd v. Wachtler, Case No. M2013-01545-COA-R3-CV, 2014 WL 2957256 (Tn. Ct. App. June 26, 2014).