author: PAUL M. SPINDEN, Judge.

text:
    STRUCTURE AND DESIGN, UNLIMITED, INC., Respondent, v. CONTEMPORARY CONCEPTS BUILDING AND DESIGN, INC., and Ozark Gardens Apartments, L.L.C., Appellants.
    No. WD 63682.
    Missouri Court of Appeals, Western District.
    Dec. 28, 2004.

      Michael Carter, Ronald Carpenter, Camdenton, for Appellant.
    Lewis Z. Bridges, Lake Ozark, for Respondent.
   PAUL M. SPINDEN, Judge.

The parties to this lawsuit are disputing a mechanic’s hen that Structure and Design Unlimited, Inc., attached to an apartment building in Miller- County. As the contractor overseeing the building’s relocation 800 yards to a new tract, Contemporary Concepts Building and Design, Inc., contracted in 2001 with Structure and Design to split the building into three units for the move and to reattach the units after the move. Contemporary Concepts terminated the contract before the project was complete on the ground that Structure and Design breached the contract by overcharging for labor.

After deciding that Structure and Design was over-charging, Contemporary Concepts refused to pay it the final two installments under the contract. Structure and Design filed a mechanic’s hen for $71,059.23 on the building, owned by Ozark Gardens Apartment, L.L.C. Structure and Design also sued Contemporary Concepts, Ozark Garden, Central Bank of the Lake of the Ozarks, which held a mortgage interest in the building, and John Curran, trustee. Structure and Design dismissed its action against Central Bank and Cur-ran, and, after trial, the circuit court entered judgment for Structure and Design but assessed damages at $34,151.23. The circuit court vitiated Structure and Design’s hen on the building because the hen did not contain a “just and true account,” and the circuit court rejected Structure and Design’s request for attorney fees and interest.

Structure and Design appeals. We affirm the portion of the circuit court’s judgment vitiating Structure and Design’s hen. We reverse the circuit court’s judgment and remand for it to enter a proper assessment of damages for breach of contract.

1. “Just and True Account”

The circuit court vitiated Structure and Design’s hen on the ground that the hen did not contain a “just and true account.” For Structure and Design to obtain a hen on the building, Section 429.080, RSMo 2000, required it to file with the circuit court clerk, “within six months after the indebtedness shall have accrued[,] ... a just and true account of the demand due [it] after all just credits have been given[.]” The circuit court concluded that Structure and Design’s hen did not contain a just and true account:

[Structure and Design] included within its lien statement charges for rental property, which are not lienable items. (429.080 RSMo) In addition, the uncon-tradicted testimony at trial was that there were overbilled hours of $4,082.00 that were not related to this ... project (the work was actually done for Prew-itt’s Highway 54 Enterprises); that all hours shown on the lien statement were not correct ([Structure and Design’s employee,] Diana Hamson[,] testified that she just didn’t write in the correct name but put “new laborers” hours under “prior laborers” names[) ]; that [Structure and Design] had agreed not to charge for any work done after September 21, 2008, [sic] and in fact did charge for work performed September 24, 2001-September 28, 2001.

Competent and substantial evidence supports the circuit court’s judgment. In reviewing a decision concerning mechanic’s liens, we are obligated to affirm the circuit court’s judgment “unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law.” Commercial Openings, Inc. v. Mathews, 819 S.W.2d 347, 349 (Mo. banc 1991) (quotation omitted).

The circuit court correctly focused on whether or not Structure and Design’s lien set forth a just and true account of the $71,059.23 that it claimed for the project. Without a just and true account, a lien claimant has no rights. See Sears, Roebuck and Company v. Seven Palms Motor Inn, Inc., 530 S.W.2d 695, 698 (Mo. banc 1975). The General Assembly did not define “just and true,” and the courts have not been exacting in explaining their interpretations of the term. This court’s Eastern District has set out the most definitive definition: “A lien statement may be regarded as just and true if it contains mistakes or errors of omission, as long as those inaccuracies are unintentional and are the result of honest inadvertence, accident, or oversight, and do not result from deliberate intention or design.” Dave Kolb Grading, Inc. v. Lieberman Corporation, 837 S.W.2d 924, 933 (Mo.App.1992). Including nonlienable items does not necessarily vitiate the entire lien so long as the nonlienable items were included by honest mistake and can be separated from the lienable items. Sears, 530 S.W.2d at 698-99. The lienor bears the burden of proving that mistakes or omissions were “due to an honest mistake.” City-Wide Asphalt Company, Inc. v. Industrial Paving, Inc., 838 S.W.2d 480, 482 (Mo.App.1992).

Rental equipment is not subject to a mechanic’s lien. Bush Construction Machinery, Inc. v. Kansas City Factory Outlets, L.L.C., 81 S.W.3d 121, 126 (Mo.App.2002). Structure and Design acknowledges that it wrongly included rental equipment in its mechanic’s lien, but it argues that its lien should be enforced because no one established that it had acted intentionally. Structure and Design misperceives the law. As the mechanic’s lien claimant, Structure and Design had the burden of proving that it included rental equipment by honest mistake. City-Wide Asphalt, 838 S.W.2d at 482. Structure and Design did not produce any evidence that its error resulted from honest inadvertence.

Structure and Design failed to carry its burden. Because substantial evidence supported the circuit court’s determination that Structure and Design’s lien did not contain a just and true account, we affirm that portion of the judgment vitiating Structure and Design’s lien.

2. Damages

Structure and Design next argues that substantial evidence did not support the circuit court’s assessment of only $34,151.23 in damages, rather than granting its prayer for $68,771.23. The circuit court explained that it reduced the award because Structure and Design had charged too much.

First, the circuit court reduced the judgment by $12,903 because Structure and Design had billed laborers at $26 an hour rather than the agreed-upon rate of $23 an hour. Byno Davidson, who was Structure and Design’s lead carpenter during this project and who supervised workers on the job site, testified that, based on his knowledge of the workers’ knowledge and skill levels, several of the workers billed as carpenters were laborers or less skilled than others billed at the carpenter rate. In addition, Structure’s lien claim provided hourly totals billed for each individual worker. This was enough evidence to support the circuit court’s decision.

Next, the circuit court reduced the award by $1,870 for charges related to work Structure and Design did on an unrelated project. This reduction appears to be a mistake. Structure and Design originally prayed for $71,059.23. At trial, Structure and Design acknowledged several billing errors, including $1,870 improperly invoiced and $416 improperly billed for a worker. Structure and Design reduced the amount requested to $68,771.23 to credit Contemporary Concepts for these billing errors. Thus, the circuit court erred by further reducing the $68,771.23 by $1,870.

Third, the circuit court reduced the award by $5,000 because they were for charges for work done the week after the project was terminated. Structure and Design’s brief does not address this reduction, so we do not.

Fourth, the circuit court reduced its judgment by $6,250, the amount that Structure and Design charged for work performed by Lester Pomykala on the project. According to Structure and Design’s time records, Pomykala worked eight hours a day on nearly every day of the project, but Davidson testified that Pomy-kala did only “a little bit of work [on the job site].” Other evidence indicated that Pomykala did not work on the project. Structure and Design contended that this discrepancy resulted from its use of “floating men,” or temporary workers whose names were not added to Structure and Design’s books but who would work when named workers were not present. Structure and Design asserted that it would credit the regular employee with the hours on paper, but it would pay the ■ floating man rather than the named worker. The circuit court, however, was not obligated to believe Structure and Design’s explanation. Evidence supported the circuit court’s decision to reduce Structure and Design’s judgment by amounts charged for Pomykala’s work.

Fifth, the circuit court reduced the judgment by $6,000, the amount charged for worked performed by Michael Strumsky, Structure and Design’s president, when he was not on the job site. The circuit court heard evidence that, although Structure and Design billed for Strumsky’s time at eight hours a day every day of the project, Strumsky was on site for only a few hours each day after the first several weeks. Although Strumsky testified that he worked 60 to 70 hours each week and that he left the job site frequently to pick up materials, the circuit court, as the arbiter of witness credibility, was free to disbelieve this testimony and to believe instead evidence that supported its reducing Strumsky’s billed hours from 601 to 401.

Finally, the circuit court refused to award to Structure and Design $2,597, the cost of renting nonlienable tools and equipment. The circuit court erred. Although Structure and Design cannot get a lien for rental equipment, Contemporary Concepts can still be responsible for Structure and Design’s costs in renting the equipment. “A lien is a charge on property ... for payment or discharge of a debt or duty.” Ford Motor Credit Company v. Allstate Insurance Company, 2 S.W.3d 810, 812 (Mo.App.1999) (emphasis omitted). The lien is separate from, and subsequent to, the question of whether payment is due. Thus, Contemporary Concepts may owe Structure and Design for Structure and Design’s expenses incurred in renting equipment even though Structure and Design cannot obtain a lien for those expenses. Otherwise, the circuit court could not reject the lien and still enter judgment for Structure and Design. Thus, the trial court erred as a matter of law in reducing the judgment by $2,597, the cost of the nonlienable rental equipment.

The circuit court, therefore, erroneously reduced the judgment by $4,467. This amount should be added to Structure and Design’s judgment for a total of $38,618.23. We reverse the portion of the circuit court’s judgment assessing damages and remand so that it can enter the proper amount.

3. Interest

Structure and Design argues that the circuit court should have awarded it with prejudgment interest because its contract with Contemporary Concepts entitled it to interest on unpaid balances. Prejudgment interest is not a matter of right but “must be based upon either a statute or a contract, either express or implied.” McKinney v. State Farm Mutual Insurance, 123 S.W.3d 242, 246 (Mo.App.2003). In addition, prejudgment interest can be awarded only for liquidated claims. Miller v. Gammon & Sons, Inc., 67 S.W.3d 613, 624 (Mo.App.2001). “To be liquidated, the claim must be ‘fixed and determined or readily ascertainable by computation or a recognized standard.’ ” Id. (quoting J.R. Waymire Company v. Antares Corporation, 975 S.W.2d 243, 248 (Mo.App.1998)). Merely denying liability does not render a claim unliquidated. Lucent Technologies, Inc. v. Mid-West Electronics, Inc., 49 S.W.3d 236, 246 (Mo.App.2001).

Structure and Design’s contract provided for an eighteen percent interest rate on unpaid balances. Because Contemporary Concepts did not pay the final two invoices, it had an outstanding balance, but Contemporary Concepts disputed these amounts on the ground that Structure and Design had over-charged for labor. Disputing a claim does not necessarily render it unliquidated. Id. Structure and Design’s claims were, nevertheless, unliquidated.

Contemporary Concepts is not responsible for prejudgment interest on an indefinite, disputed sum. Structure and Design’s contract did not include a definite sum to be paid. See Watters v. Travel Guard International, 136 S.W.3d 100, 111 (Mo.App.2004) (damages on breach of contract claim were liquidated when contract amount was $2,202 and the defendant had refunded $1,757, leaving the remainder in dispute); R.J.S. Security, Inc. v. Command Security Services, Inc., 101 S.W.3d 1, 14 (Mo.App.2003) (balance due under note was liquidated sum); Miller, 67 S.W.3d at 625 (rental payments due under lease were fixed and ascertainable); J.R. Waymire, 975 S.W.2d at 248 (payments due under listing agreement between vendor and agent were fixed and certain). Each invoice varied depending on the hours worked by Structure and Design’s workers.

Structure and Design should, however, receive prejudgment interest on amounts billed to Contemporary Concepts for materials. Although Structure and Design’s final two invoices were for labor mainly, the final invoice charged $2,652.55 for materials. This sum was liquidated. Contemporary Concepts refused to pay this part of the invoice, too, but did not present any reasons why this portion was invalid. Contemporary Concepts does not argue that the suppliers over-charged or that the materials were not used in the project; therefore, Structure and Design should receive prejudgment interest for material charges occurring before the September 21 project end date. Because three of the material charges occurred after September 21, Structure and Design should receive prejudgment interest on $2,325.50 only. Interest should be calculated from November 1, 2001. On remand, the circuit court can enter an order consistent with this conclusion.

4. Attorney Fees

The circuit court did not abuse its discretion by refusing to award attorney fees. Attorney fees are proper only when a contract or statute provides for the award, or when circumstances and equity require it, “or where the fees are incurred because of participation in collateral litigation.” American Property Maintenance v. Monia, 59 S.W.3d 640, 645 (Mo.App.2001). The circuit court has broad discretion to award attorney fees, and we will reverse its decision ■ only when the circuit court abuses its discretion. Williams v. Finance Plaza, Inc., 78 S.W.3d 175, 184 (Mo.App.2002). We do not discern an abuse of discretion in this case.

Structure and Design argues that it should receive attorney fees under Section 431.180, RSMo 2000, which says that “[t]he court may ... award ... reasonable attorney fees[] to the prevailing party.” This statute merely accords the circuit court with discretion to award attorney fees. Structure and Design has not demonstrated that the circuit court abused its discretion in refusing to award attorney fees; therefore, we affirm its decision.

We affirm that portion of the circuit court’s judgment rejecting Structure and Design’s lien and refusing to grant attorney fees. The circuit court erred in awarding $34,151.23 in damages to Structure and Design on its breach of contract claim, and we reverse that portion of the judgment and remand so the circuit court can increase its award by $4,467. Moreover, the circuit court should have awarded prejudgment interest on $2,325.50 to Structure and Design, and, on remand, the circuit court shall provide for it.

HAROLD L. LOWENSTEIN/ Presiding Judge, and JAMES M. SMART, JR., Judge, concur.


source: Caselaw Access Project

license: Public Domain

text:
    Mark W. HECKADON, Respondent, v. DIRECTOR OF REVENUE, Appellant.
    No. WD 63453.
    Missouri Court of Appeals, Western District.
    Dec. 28, 2004.

      Jeremiah W. (Jay) Nixon, Atty. Gen., Brian Barnhill, Office of Attorney General, Jefferson City, for Appellant.
    John L. Pursley, Butler, for Respondent.
    Before HAROLD L. LOWENSTEIN, Presiding Judge, PAUL M. SPINDEN, Judge, and JAMES M. SMART, JR., Judge.
   ORDER

The Director of Revenue appeals the circuit court’s judgment setting aside the revocation of Mark W. Heckadon’s driving privileges. We affirm. Rule 84.16(b).


text:
    Douglas FERGUSON, Sara Ferguson Sims, Shalin Ferguson, Shelina Ferguson, Sloane Ferguson, and Shawn Ferguson, Appellants, v. GATEWAY INSURANCE COMPANY, Respondent, and Mary Kramer, Noah Kramer, Martha Kramer, Defendants.
    No. WD 63653.
    Missouri Court of Appeals, Western District.
    Dec. 28, 2004.

      John Luther Young, Princeton, for Appellants.
    Brian Todd Goldstein, Kansas City, for Respondent.
   PAUL M. SPINDEN, Judge.

The central issue in this dispute in which Douglas Ferguson and his family have sued Gateway Insurance Company is whether or not a horse-drawn buggy is a “motor vehicle.” Ferguson contends that it is; therefore, Gateway, his insurer, was obligated by its policy’s uninsured motorist provisions to pay for injuries caused when in 2002 the car he was driving hit a horse-drawn buggy. Gateway’s policy restricted uninsured motorist coverage to liability to its insured by the owner or operator of an “uninsured motor vehicle.” The circuit court concluded that Kramer’s horse-drawn buggy was not a motor vehicle and granted summary judgment for Gateway. We affirm.

Pursuant to its policy’s general liability provisions, Gateway paid for repair of damage to Ferguson’s car resulting from the collision, which occurred on February 22, 2002, on a Daviess County highway. The mishap occurred when 16-year-old Mary Kramer caused the horse pulling her buggy to turn left into the path of Ferguson’s car. Gateway refused to pay for injuries to Ferguson’s wife, who was a passenger in the car and who sustained fatal injuries when the crash threw the horse through the car’s windshield. The record indicates that Ferguson had purchased only liability insurance from Gateway' — -not coverage of medical expenses.

Ferguson and his children sued Gateway, Kramer, and Kramer’s parents, who owned the horse and buggy. They alleged wrongful death against the Kramers and breach of the insurance contract against Gateway. While the lawsuit was pending, the Fergusons settled the wrongful death claim with the Kramers, giving them a complete release in return for their payment of $33,500. The circuit court overruled Gateway’s objection to the settlement and approved it. For the remaining two counts, Gateway and the Fergusons filed cross motions for summary judgment, and the court granted Gateway’s motion. The Fergusons appeal.

Our review of the circuit court’s summary judgment is essentially de novo. ITT Commercial Finance Coloration v. Mid-America Marine Supply Corporat ion, 854 S.W.2d 371, 376 (Mo. banc 1993). For summary judgment to be proper, the circuit court must determine that the parties are not disputing any issue of material fact and that the party seeking summary judgment is entitled to judgment as a matter of law. Rule 74.04(c)(6); ITT Commercial Finance, 854 S.W.2d at 377. When we review an appeal of a summary judgment, we view the evidence in a light most favorable to the nonmoving party, and we afford that party the benefit of all reasonable inferences. ITT Commercial Finance, 854 S.W.2d at 382.

In considering the Fergusons’ dispute with Gateway, the circuit court’s obligation was to effectuate the parties’ intention as expressed in their contract, the insurance policy. Butler v. Mitchell-Hugeback, Inc., 895 S.W.2d 15, 21 (Mo. banc 1995). When contract language is clear, we discern intent from the document alone. J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. banc 1973). The circuit court’s duty in parsing the contract’s language was to apply the plain and ordinary meaning of the words used — that is, the meaning that a person of average intelligence, knowledge, and experience would deem reasonable. Farmland Industries, Inc. v. Republic Insurance Company, 941 S.W.2d 505, 508 (Mo. banc 1997). The dictionary is a good source for finding the plain and ordinary meaning of contract language. Shahan v. Shahan, 988 S.W.2d 529, 535 (Mo. banc 1999).

Gateway’s policy obligated it to pay Ferguson “compensatory damages which [Ferguson was] legally entitled to recover from the owner or operator of an 'uninsured motor vehicle.’ ” The policy defined an “uninsured motor vehicle” as a “land motor vehicle or ‘trailer’ of any type” that was not insured.

The policy did not define “motor vehicle,” so the circuit court was obligated to apply the plain and ordinary meaning of the term. A motor vehicle is “an automotive vehicle not operated on rails; especially] one with rubber fees for use on highways.” Webster’s ThiRD New International Dictionary of the English Language Unabridged 1476 (1993). “Automotive” means something that “contain[s] within itself the means of propulsion: self-propelling.” Id. at 148. Thus, the plain and ordinary definition of “motor vehicle” is a self-propelled vehicle as opposed to a vehicle propelled by an external power source, such as a buggy pulled by a horse or a wagon pulled by a child. Kramer’s horse-drawn buggy was not a motor vehicle.

Several Missouri statutes pertaining to motor vehicles use the same definition. Missouri’s Vehicle Financial Responsibility Law defines “motor vehicle” as “a self-propelled vehicle which is designed for use upon a highway” and lists several vehicles, all of which are motorized or powered by electricity. Section 303.020(5), RSMo 2000. Section 301.010(64), which relates to registering and licensing motor vehicles, defines “vehicle” as “any mechanical device on wheels, designed primarily for use, or used, on highways, except ... vehicles propelled or drawn by horses or human power.” Numerous cases confirm that self-propulsion is the key ingredient to a motor vehicle. Killian v. State Farm Fire and Casualty Company, 903 S.W.2d 215, 218 (Mo.App.1995) (moped), and State ex. rel. Toastmaster v. Mummert, 857 S.W.2d 869, 871 (Mo.App.1993) (forklift), are two good examples.

The Fergusons assert that two Missouri cases from the 1930s support their argument, but both are inapposite. In Burrus v. Continental Life Insurance Company, 225 Mo.App. 1129, 40 S.W.2d 493, 495 (1930), the court determined that a motorcycle side-car was a “motor driven car” because it was motor-driven, ran on wheels, and was intended for use as transportation. The Burrus court stated that “[a motorcycle side car] is like unto automobiles and horse-drawn vehicles, because they are both vehicles running on wheels, and are primarily intended for transportation.” Id. Seizing on this language, the Fergusons argue that horse-drawn vehicles are motor vehicles. The Burrus court mentioned horse-drawn vehicles, but only because the plaintiff’s insurance policy specifically covered injuries caused “[b]y the wrecking or disablement of any ... horse drawn vehicle in which the Insured is riding or drawn.” Id. at 498. The decision did not turn on a proper definition of “motor vehicle.” The Fergusons also cite Hall v. Federal Life Insurance Company, 71 S.W.2d 762 (Mo.App.1934), for the proposition that horse-drawn vehicles are cars. We acknowledge that a buggy is a “car,” but not all cars are motor vehicles. The dictionary’s definition of “car” includes “a vehicle moving on wheels,” and lists carriages, carts, and wagons as examples. WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY at 334. Moreover, the policy at issue in Hall protected against injuries sustained while the insured rode or drove a “horse-drawn ... car.” 71 S.W.2d at 762.

Because the Kramers’ horse-drawn buggy was not a motor vehicle, the Fergusons are not entitled to uninsured motorist coverage under Gateway’s policy. Thus, judgment as a matter of law was proper.

The Fergusons also assert that the circuit court abused its discretion by not granting them leave to amend their petition. Under Rule 55.33(a), leave of court to amend a pleading “shall be freely given when justice so requires.” The circuit court’s duty was to permit amendment of the pleadings liberally “to permit matters to be pleaded, which were overlooked or unknown when the action was originally filed.” Rhodus v. Wheeler, 927 S.W.2d 433, 436 (Mo.App.1996).

We first brush aside Gateway’s contention that we should not consider the Fer-gusons’ point on the ground that the Fergusons raised it for the first time on appeal. Gateway’s argument is wrong; the Fergusons did not raise the matter for the first time on appeal. Facing Gateway’s motion for summary judgment, the Fergusons asked the circuit court for leave to amend their petition to add Douglas Ferguson as a defendant.

The circuit court did not abuse its discretion in denying the Fergusons leave to amend their petition to add Douglas Ferguson as a defendant while he still was a plaintiff. The circuit court cannot permit a party to sue himself. See Townsend v. Townsend, 708 S.W.2d 646, 647 (Mo. banc 1986) (explaining the prohibition of spouses from suing each other as resting on the reasoning that, because husband and wife are a single unit, allowing spouses to sue would be tantamount to party suing himself or herself).

For these reasons, the circuit court properly granted Gateway’s motion for summary judgment. We affirm.

PATRICIA BRECKENRIDGE, Presiding Judge, and JAMES M. SMART, JR., Judge, concur.


author: PER CURIAM.

text:
    Randall N. COX, Appellant, v. STATE of Missouri, Respondent.
    No. WD 63489.
    Missouri Court of Appeals, Western District.
    Jan. 4, 2005.
    Jeannie M. Willibey, Kansas City, MO, for appellant.
    Deborah Daniels, Jefferson City, MO, for respondent.
    Before SMART, P.J., ELLIS and HARDWICK, JJ.
   ORDER

PER CURIAM.

Randall Cox appeals the denial of his Rule 29.15 Motion without an evidentiary hearing. Upon review of the record, we find no error and affirm the motion court’s judgment. We have provided the parties with a Memorandum explaining the reasons for our decision because a published opinion would have no jurisprudential value.

AFFIRMED. Rule 84.16(b)


author: HERSCHEL PICKENS FRANKS, P.J., E.S.,

text:
    Chris BIRDWELL and wife, Virginia Birdwell, v. David PSIMER and Patty S. Psimer.
    No. E2003-01270-COA-R3-CV.
    Court of Appeals of Tennessee, at Knoxville.
    March 24, 2004 Session.
    May 25, 2004.
    Permission to Appeal Denied by Supreme Court Nov. 29, 2004.

      Raymond C. Conkin, Jr., Kingsport, Tennessee, for Appellants.
    Rick J. Bearfield and Jason W. Blackburn, Johnson City, Tennessee, for Appel-lee.
   OPINION

HERSCHEL PICKENS FRANKS, P.J., E.S.,

delivered the opinion of the court,

In which D. MICHAEL SWINEY, J., and BEN H. CANTRELL, Sp.J., joined.

Action for Judgment on loan was defended on grounds defendant sold note to plaintiffs. The Trial Court held agreements violated statute of frauds and plaintiff failed to prove loan. On appeal, we reverse.

The dispute in this action is over the nature of a transaction between the parties. Plaintiff claims that defendant assigned him a $30,000.00 note as collateral for a $30,000.00 loan, and defendant claims that plaintiff bought the $30,000.00 note at a 10% discount, and gave defendant only $27,000.00. In the complaint, plaintiff stated that payments were made on the loan from November 1, 1996 until June 1, 2000. No further payments had been made since that date, despite demands. Plaintiff sought judgment from the defendants in the amount of $30,268.47 on the loan, principal and interest. Attached to the Complaint was the Promissory Note alleged by the plaintiff to be collateral for the loan. It states that it was executed on October 10, 1996 to defendants by Michael and Susan Medlin. The note states it was for $27,000.00, and then there is a handwritten amendment at the bottom dated October 22, 1996, which states: “There is an additional 3,000.00 added to the above note making the total due 30,000.00.” The handwritten amendment was initialed by the Medlins and the defendants. The note states that payments of $300.00 per month will be made, and a final balloon payment would be due on November 1, 2001. There is an addition to the note at the very bottom which states: “We the undersigned; do hereby acknowledge, and do assign this note, for the sum of $30,000 as collateral for loan from Chris and Virginia Birdwell.” The acknowledgment is signed by David and Patti Psimer, and is dated October 24,1996.

Defendants Answer denied the allegations of the Complaint, and averred that plaintiff agreed to purchase the note for $27,000.00, and that was the substance of the parties’ agreement. In an Amended Answer, defendants pled the statute of frauds as an affirmative defense, stating that the contract could not be performed within one year, and there was no writing sufficiently definite to comply with the statute.

At trial, plaintiff testified that the parties never talked about defendant selling the note to plaintiff. He testified that he gave defendant $30,000.00 on the day he brought the note in, and that he gave the defendant cash, per defendant’s request. He testified that his secretary, Judy Broome, witnessed the transaction. The Medlins took bankruptcy and plaintiff wrote defendants about the matter and a copy of that letter was made an exhibit, which plaintiff testified it read in part, “Unlike most notes that I buy, yours was different because the note is being held as collateral for a personal loan to you and Patty.” He further testified that he told defendant that he was retiring, and had no desire to buy the note or get involved in the transaction with the Medlins.

Plaintiffs secretary, Judy Broome, then testified and essentially corroborated plaintiffs testimony.

Defendant testified that the Medlins wanted to buy one of his houses, but they didn’t have a down payment to qualify for a loan, so he asked plaintiff if he would buy the note, and plaintiff agreed and directed the terms and conditions to be put in the note the Medlins executed. Defendant testified that he took the note to the plaintiff and plaintiff gave him $27,000.00, and that the deal was that plaintiff would buy the note at a 10% discount. He testified that he and plaintiff never discussed a loan.

On cross-examination, defendant admitted his memory was “foggy” and he had trouble remembering things exactly. He admitted he could not remember who was there when the money changed hands, or when the original terms were discussed, or what happened to the original note. Defendant was asked about the writing on the note, and admitted that it mentioned collateral for a loan but he said he did not know what loan it was referring to. He admitted that he signed the acknowledgment, but could not remember if he read what it said, and that he signed the acknowledgment for his wife as well.

The Court entered a Judgment on April 24, 2003, finding that plaintiff failed to prove there was a loan, and that the language contained in the acknowledgment failed to satisfy the requirements of a note and that the statute of frauds applied.

Plaintiff appealed, insisting that the Court erred in finding that the transaction between the parties was unenforceable because it violated the statute of frauds, and the evidence preponderates against the Trial Court’s finding that plaintiff failed to prove the existence of a loan.

The statute of frauds is codified at Tenn. Code Ann. § 29-2-101, and states:

(a) No action shall be brought:
(1) To charge any executor or administrator upon any special promise to answer any debt or damages out of such person’s own estate;
(2) To charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person;
(3) To charge any person upon any agreement made upon consideration of marriage;
(4) Upon any contract for the sale of lands, tenements, or hereditaments, or the making of any lease thereof for a longer term than one (1) year; or
(5) Upon any agreement or contract which is not to be performed within the space of one (1) year from the making of the agreement or contract;
unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person lawfully authorized by such party.

The Trial Court said that even if the transaction was a loan, it ran afoul of the statute of frauds, apparently because it could not be performed within the space of one year, and because the writing was found to be insufficient to meet the requirements of a note.

Case law sets forth the standard by which the time issue must be measured, and that is “that the contract, by express appointment or understanding of the parties, is not to be performed within a year.” Boutwell v. Lewis Bros. Lumber Co., 27 Tenn.App. 460, 182 S.W.2d 1 (Tenn.Ct.App.1944). As we have explained, “it must appear either from the inherent nature of the contract, or from the words or actions of the parties at the time, that such an understanding was a part and parcel of the agreement itself.” Id. “The question is not what the probable, expected, or actual performance of the contract may be, but whether, according to the reasonable interpretation of its terms, it requires that it should not be performed within the year. Unless the court, looking at the contract in view of the surroundings, can say that in no reasonable probability can such agreement be performed within the year, it is its duty to uphold the contract.” Id., quoting 37 C.J.S., Frauds, Statute of, § 53.

Thus, there must be evidence to demonstrate that the parties specifically agreed that the contract absolutely would not be performed within one year for it to run afoul of the statute of frauds. Johnston v. Cincinnati N.O. & T.P. Ry., 146 Tenn. 135, 240 S.W. 429 (1922). It is not sufficient to show that it is not reasonably possible to perform the contract within a year, or that such would probably not be done, or that a certain contingency which would bring it within the year time period did not occur. Id., see also Davidson v. Holtzman, 47 S.W.3d 445 (Tenn.Ct.App.2000); Price v. Mercury Supply Co., Inc., 682 S.W.2d 924 (Tenn.Ct.App.1984).

Moreover, this provision within the statute of frauds is to be construed very narrowly by the courts, since the courts should generally try to give effect to a contract rather than defeat it. See Holtzman and Price. “Accordingly, our courts have declined to construe a contract to require performance over more than one year if to do so would render the contract unenforceable because of the statute of frauds.” Price, at 932.

In this case, there was no proof that the parties agreed that this loan would absolutely not be repaid within one year. The proof was that the parties agreed that the Medlins would send their payments directly to plaintiff in repayment for the loan, but this is not to say that the defendant could not have paid the loan back in full at any time. Thus, this contract does not fall within the ambit of the statute of frauds.

We note that the use of parol evidence in this case would not cause the statute of frauds to be violated. As this Court has explained:

Parol evidence cannot be used to contradict or alter the terms of a written contract that is complete and unambiguous on its face. However, the parol evidence rule does not prevent the introduction and consideration of extraneous evidence to explain an ambiguous contractual provision. Likewise, the use of parol evidence to explain a vague contractual term does not cause an otherwise valid written agreement to run afoul of the Statute of Frauds in Tenn. Code Ann. § 29-2-101 (Supp.1998).

Ingram v. Earthman, 993 S.W.2d 611, 642 (Tenn.Ct.App.1998) (citations omitted). Thus, plaintiffs parol evidence explaining the terms of the agreement was properly-admitted as to the acknowledgment contained on the note.

The Trial Judge acknowledged that the writing at the bottom of the note “does not say it’s a loan from the plaintiff to the defendant”, and concluded that it failed to satisfy the statute of frauds. He then found that plaintiff failed to prove by a preponderance of the evidence that the transaction was a loan. We have concluded that the acknowledgment does not violate the statute of frauds, and there can be no question that “one having the ability and opportunity to inform himself of the contents of a writing before he executes it will not be allowed to avoid it by showing that he was ignorant of its contents or that he failed to read it.” Solomon v. First American Nat. Bank of Nashville, 774 S.W.2d 935, 943 (Tenn.Ct.App.1989). The Trial Court based its decision on the invalidity of the written acknowledgment, and plaintiff could not meet his burden of proof without this evidence. However, omissions in an instrument which might render it non-negotiable or otherwise lacking as a note do not affect the parties’ rights and obligations pursuant to their agreement. See Salmons v. Womack, 1986 WL 4847 (Tenn.Ct.App. April 25, 1986). While the acknowledgment does not set forth the exact terms of the loan agreement, it does serve as corroboration of plaintiffs testimony regarding the oral terms of the loan agreement between the parties. A party who signs an agreement in the absence of fraud is estopped to deny his obligations and is conclusively presumed to know the contents of the agreement and must suffer the consequences. Lockhart v. Moore, 159 S.W.2d 438, 25 Tenn.App. 456 (1941). When the acknowledgment is considered as evidence, the evidence preponderates against the Trial Court’s findings. Tenn. R.App. P. 13(d).

Accordingly, we reverse the Judgment of the Trial Court and remand for the entry of a Judgment for amount owing on the loan in accordance with plaintiffs testimony as to the payments made and the remaining amount of the loan.

The cost of the appeal is assessed to defendants.


author: CHARLES D. SUSANO, JR., J.,

text:
    Robert L. “Larry” CARRIER v. SPEEDWAY MOTORSPORTS, INC., et al.
    Court of Appeals of Tennessee, Eastern Section, at Knoxville.
    Oct. 16, 2003 Session.
    May 27, 2004.
    Permission to Appeal Denied by Supreme Court Dec. 6, 2004.

      Cecil W. Laws, Kingsport, Tennessee, for the appellant, Robert L. “Larry” Carrier.
    Dwight E. Tarwater and Travis Graham, Knoxville, Tennessee, for the appellees, Speedway Motorsports, Inc. and Bristol Motor Speedway, Inc.
   OPINION

CHARLES D. SUSANO, JR., J.,

delivered the opinion of the court,

in which HERSCHEL P. FRANKS, P.J., E.S., and WILLIAM H. INMAN, SR. J., joined.

This case involves a dispute as to exactly what property was leased to the plaintiff, Robert L. “Larry” Carrier. In January, 1996, the plaintiff and his family sold their 100% stock ownership interest in National Raceways, Inc., to the defendant, Speedway Motorsports, Inc. (“SMI”). National Raceways, Inc., operated the well-known Bristol Motor Speedway (“the Speedway”). In conjunction with the sale, the parties executed a lease agreement, wherein SMI leased back a portion of the Speedway’s property to the plaintiff. The plaintiff filed suit against SMI and Bristol Motor Speedway, Inc., the new corporate name of National Raceways, Inc., claiming that the defendants had breached the lease by interfering with the plaintiffs leasehold interest. Specifically, the plaintiff claims that the lease covers a 15.54 acre parcel of land lying adjacent to the grandstand at the racetrack. The defendants answered, denying that they had breached the lease and asserting that the subject matter of the lease is limited to three buildings on the 15.54 acre tract rather than to the entire tract. The defendants also filed a counterclaim for an unpaid debt. Following a bench trial, the court found in favor of the plaintiff, concluding that the lease involves the entire parcel of land rather than just the three buildings. It ultimately awarded the plaintiff damages of $2,401,728. The trial court dismissed the defendants’ counterclaim. From this judgment, both sides appeal. We affirm the dismissal of the counterclaim, but reverse the trial court’s judgment in favor of the plaintiff on the original complaint. That complaint is dismissed at the plaintiffs costs.

I.

In the early 1960s, the plaintiff opened the Speedway in Sullivan County. While the Speedway had various owners over the next several years, the plaintiff reacquired the property in the mid-1980s and continued to own and operate the Speedway through his family corporation, National Raceways, Inc., over the next ten years. The plaintiff, his wife, Shirley Carrier, and his two sons, Mark Carrier and Andy Carrier, were the sole shareholders of National Raceways, Inc. In addition to conducting two NASCAR-sanctioned races at the Speedway each year, National Raceways, Inc., facilitated professional boxing matches in a boxing arena on the property. The Speedway’s real property consists of more than 100 acres of land. The 15.54 acre tract at issue in this case is located within the 100 acres.

In mid-January, 1996, Bruton Smith, Chief Executive Officer of SMI, contacted the plaintiff and inquired about purchasing the Speedway. The plaintiff offered to sell the common stock of National Raceways, Inc., to Smith for a price of $20,000,000, net of taxes.

On Friday, January 19, 1996, Smith traveled to Bristol, along with William R. Brooks, Chief Financial Officer of SMI, and Fred T. Lowrance, SMI’s attorney. They met with the plaintiff and the plaintiffs attorney, A.D. Jones, Jr., at the offices of the plaintiff’s accountants, Dent K. Burk Associates, P.C. (“the Burk offices”). At the meeting, SMI, through attorney Lowrance, presented a one-page stock purchase agreement that he had prepared at SMI’s request. The parties negotiated over the terms of that agreement, and their negotiations included a discussion regarding the leasing back to the plaintiff of the boxing arena located near the racetrack. No final agreement was reached at this meeting.

Throughout the weekend, the attorneys, Lowrance and Jones, continued to negotiate and exchange proposals. On Monday morning, January 22, 1996, Jones, on behalf of the plaintiff, faxed another proposal to Lowrance. That afternoon, Smith and Brooks of SMI, along with Lowrance, returned to Bristol, and the parties once again met at the Burk offices. After the plaintiff received a competing offer for the Speedway from a third party, the plaintiff was informed by SMI that his price was satisfactory and that SMI had already deposited $20,000,000 into the plaintiffs bank account. The parties then reviewed both the stock purchase agreement (“the sales agreement”) and the lease. Later that same afternoon — January 22, 1996 — the parties left the Burk offices and traveled to the Speedway premises, where they executed the sales agreement and the lease. The sales agreement provides, in pertinent part, as follows:

LEASE OF BOXING ARENA AND GARAGE:
Buyer hereby leases to Robert L. “Larry” Carrier for five (5) years from the date of this agreement at a rental rate of One Dollar ($1.00) per year, payable by Robert L. “Larry” Carrier to Buyer by no later than January 31 of each year, the boxing arena, adjacent trailer and 2-bay garage shown as area A on Exhibit 1 attached hereto. Robert L. “Larry” Carrier shall have the option to extend the lease of the boxing arena, adjacent trailer and garage for an additional five (5) years at a rental rate of One Dollar ($1.00) per year....
Buyer and Seller shall have the right to use the area around the boxing arena, adjacent trailer and garage for parking at all times. Robert L. “Larry” Carrier, his heirs or assigns, hereby indemnifies and holds Buyer harmless against any liability, loss or damage (reasonable wear and tear excepted) incurred as a result of his use of the boxing arena, adjacent trailer or garage arising out of any event or activity held at the boxing arena, adjacent trailer or garage.

(Capitalization, underlining and bold type in original; paragraph numbering omitted). Not included in the sale is a 72 acre campground next to the Speedway’s property that the plaintiff retained and continued to operate. The campground was used by patrons of racing events hosted at the Speedway.

The pertinent provisions of the lease are as follows:

[SMI] does hereby let and lease unto [the plaintiff] ... for a period of five (5) years, commencing on the 1st day of January, 1996, and ending on the 1st day of January, 2001, certain property located in the Fourth (4th) Civil District of Sullivan County, Tennessee currently owned by National Raceways, Inc. and commonly known as “Bristol Boxing Arena[”], adjacent mobile home and adjoining “2-bay” storage building currently used by Mark Carrier for garage purposes along with adjacent parking facilities and all existing rights of way or easements for ingress and egress related thereto as more particularly shown as area A on Exhibit 1 attached hereto.
[The plaintiff] shall have the option to extend the lease of the above-described property for an additional five (5) years at a rental rate of One Dollar ($1.00) per year....

(Underlining in original). The boxing arena was used by the plaintiffs son, Mark Carrier, a one-time professional boxer. The son’s trainer lived in the double wide trailer, and the garage was used to store Mark Carrier’s race cars.

The critical issue in this case is whether the subject matter of the lease is the boxing arena, the trailer, and the garage, or the entire 15.54 acre parcel of land on which those structures are located. The 15.54 acre parcel of land has a shape similar to a bow-tie, and the parties often referred to it as the “bow-tie parcel.” The tax map utilized by the parties is attached as Appendix A to this opinion. While there is a sharp dispute between the two sides as to whether the boundary fines of the 15.54 acre parcel were highlighted in yellow on the tax map at the time the sales agreement and lease were executed, it is undisputed that the document attached as Appendix A did contain, at that time, the roughly-drawn outlines of the three buildings as shown on the appendix.

Two months after the closing — during the weekend of March 30, 1996-SMI conducted its first NASCAR race at the Speedway. Immediately following the race, SMI embarked upon a construction project to enlarge and enhance the existing Speedway facilities — a project that would not be finally completed until May, 1997. The project included the construction of sky boxes, grandstands, loading docks, and restrooms, on the premises of the Speedway, specifically on the 15.54 acre parcel of land in dispute in this case. In May, 1996, the plaintiff offered to sell his leasehold interest to the defendants for $728,000. In pertinent part, the plaintiffs letter of May 4, 1996, to SMI’s CEO Smith made the following proposal:

Jeff Byrd has asked me to give a price on fore-going [sic] my 10 year agreement on vacating the Bristol Sports Arena, Wes Ramey’s double-wide modular home and Mark’s [sic] Carrier drag racing facility.
I have used replacement figures in calculating a fair price to get this accomplished.
The Bristol Sports Arena would cost $750,000 to replace not counting land that I would have to come up with to rebuild such a facility.
Wes Ramey’s trailer could be replaced for $30,000 although I don’t have a location for it; Mark Carrier’s garage cost $48,000 to build.
The total for vacating the three buildings is as follows:
Bristol Sports Arena $650,000
Wes Ramey’s residence , $ 30,000
Mark Carrier Racing Facility $ 48,000
TOTAL: $728,000
I would like to have $728,000 to vacate the agreement.

As can be seen, the letter makes no reference to the 15.54 acre tract of land. Significantly, subsequent correspondence— some four letters — from the plaintiff or his representative to SMI also refer to one or more of the structures specifically mentioned in the sales agreement and lease. However, none of this correspondence refers to the 15.54 acre tract as being the subject of the lease.

In December, 1996, the plaintiff wrote to SMI’s CEO Smith that construction work around the boxing arena was obstructing the parking area around the arena, thus requiring the plaintiff to hold his boxing events elsewhere. Byrd, on behalf of the Speedway, responded that the Speedway believed that it “had satisfied every request that [the plaintiff] and [the plaintiffs general manager] had made” with respect to parking issues, but that the Speedway would continue to make sure “that the roads and lots are in good shape for all [the plaintiffs] events at the boxing arena.” On December 18, 1996, the plaintiffs attorney, Jones, in one of the four letters referenced in the preceding paragraph of this opinion, notified Smith that the plaintiff considered the defendants to be in breach of the lease due to the “on going [sic] construction work on [the Speedway] property adjacent to the [boxing arena].” In this letter to SMI’s Smith, attorney Jones referred to “the lease agreement of Bristol Sports Arena.” Again, there was no reference to the lease as being of the 15.54 acre tract.

The defendants’ construction project alluded to earlier in this opinion included the addition of 38,000 seats and 25 sky boxes. The resulting structure was partially located on the 15.54 acre parcel in dispute. Almost five years after the construction project was completed, the plaintiff, on February 10, 2002, filed the instant action, claiming that the defendants had breached the lease agreement by utilizing, and constructing improvements upon, the 15.54 acre parcel of land which the plaintiff claimed he had leased from the defendants. The defendants answered, denying that they had breached the lease. In addition, the defendants counterclaimed for damages of approximately $175,000, relating to a debt they asserted the plaintiff never repaid.

The case proceeded to trial in late May and early June, 2002. Numerous witnesses testified over the course of the six-day trial. The plaintiff did not testify. Beginning sometime in 1996, he began to suffer from Alzheimer’s disease. By the time of the trial, the disease had progressed to a point where he was unable to testify. Apparently, the plaintiff was never deposed, presumably for this same reason.

The crucial testimony at trial centered upon one of several copies of the tax map, Appendix A to this opinion. This particular copy was attached to one of the four originals of the lease. The tax map in question had yellow highlighting tracing over the lines of the 15.54 acre “bow-tie” piece of property. It was not labeled as “Exhibit 1.” Copies of the same tax map attached to the other three originals of the lease agreements and all of the originals of the sales agreement were apparently not highlighted and were all labeled as “Exhibit 1.”

The first witness to testify at trial was the plaintiffs attorney, Jones. With respect to the sales agreement and the lease, both of which were executed on January 22, 1996, Jones explained that four originals of each document were signed by the parties and that one original of both the sales agreement and the lease was on bond paper, while the other three originals of each document were on more of a copy type paper. When Jones arrived for the closing, he had the tax map attached to both of the bond-paper originals. It clearly showed the 15.54 acre parcel of land, among other things. (See Appendix A). Because the map did not show any structural improvements to the land, the parties — prior to the closing — had drawn three boxes on the map within the bow-tie parcel and indicated that the boxes represented the “sports arena” (also known as the boxing arena), the “trailer” and the “garage.” At the closing, SMI’s attorney, Lowrance, told Jones that the tax map needed to be labeled as “Exhibit 1,” since it was referred to in that manner in both the sales agreement and the lease. Jones then removed the tax map from the bond-paper sales agreement, marked it as Exhibit 1, and made several photocopies of that map. He then reattached that map to the bond-paper sales agreement and attached the photocopies to the three original copy-paper sales agreements and the three original copy-paper lease agreements. Because the original bond-paper lease agreement already had a tax map attached to it, Jones did not remove it and replace it with a photocopied tax map. This, as Jones explained at trial, is the reason why the tax map attached to the bond-paper original lease is not labeled as Exhibit 1.

The trial court received into evidence the highlighted copy of the tax map. It was offered by the plaintiff and appeared for the first time at the trial. The highlighting traced over a black line that set out the tax assessor’s boundary lines of the bow-tie parcel. It is obvious from the nature of the document that this black boundary line was already on the tax map before these parties began their negotiations in this matter. Similar black boundary lines are shown on the tax map as designating other parcels of property for tax purposes.

The plaintiffs attorney, Jones, testified that, on Friday, January 19, 1996, when the parties first met at the Burk offices to discuss the sale of the Speedway, he un-. rolled a large tax map and pointed out the various parcels of land that were being discussed. Among these parcels, Jones stated, was the 15.54 acre bow-tie parcel that contained the boxing arena and other pertinent buildings. Jones testified that he traced his finger around the perimeter of this parcel. The parties designated this as “A” on the tax map for ease of reference, since at that time there were discussions pertaining to other parcels of land as well. Jones stated that, to him, “A” meant the entire 15.54 acre parcel and not just the buildings at issue. In addition, Jones stated that, when the parties referred to the lease of the boxing arena or sports arena, that was just a “shorthand” term for the entire 15.54 acre parcel.

As to the actual signing of the sales agreement and the lease at closing, Jones explained that he and the plaintiff were in one room, and that SMI’s Smith was in another room. The documents were taken back and forth between the rooms for signatures, so Jones and the plaintiff did not actually witness Smith signing the documents.

Jones was questioned extensively about the highlighting on the recently-produced, and admitted-into-evidence tax map. Jones testified that he believed the tax map attached to the original bond-paper lease was highlighted when the parties signed it, but he “can’t be 100 percent sure.” However, the defendants pointed out that, in his deposition, Jones stated that he didn’t “recall whether or not it was actually highlighted on the original lease” prior to signing, whereas at trial, Jones stated that he “believe[dj” it was highlighted before signing.

The defendants also questioned attorney Jones about drawing the boxes to represent the buddings on the tax map. Jones admitted that, as an attorney, he was aware that when drawing up a lease, the buildings on the leased property are included in that lease unless they are excepted out. However, Jones stated that the buildings were drawn on the map to indicate their placement because they were located very close to the property line of the bow-tie parcel.

The next witness to testify was the plaintiffs son, Mark Carrier. Mark Carrier claimed that, on the day the sales agreement and the lease were signed, he specifically asked attorney Jones about the boxing arena and one of the other buildings. He testified that Jones took out the highlighted tax map and traced his finger over the highlighted boundary to show him what was being leased back to the plaintiff. The witness testified that the lease had not yet been signed at that time and that he did not sign the lease, as he was not a party to that agreement. He also admitted that the sales agreement he signed that day did not have a highlighted tax map attached to it.

Brooks, SMI’s CFO, testified next. He stated unequivocally that it was his understanding that SMI was leasing only the boxing arena, trailer, and garage back to the plaintiff, not the entire 15.54 acre parcel of land. He further testified that he never saw the large tax map that Jones stated he showed the participants at their initial meeting on January 19, 1996, and that he does not remember seeing any highlighting on the tax map attached to the original bond-paper lease when Smith, SMI’s CEO, signed that document on January 22, 1996. Smith testified similarly, stating that he never saw a highlighted map and that he only leased the boxing arena, the garage, and the trailer to the plaintiff. Smith also testified that he “never, ever leased any land to [the plaintiff] or any of his family.”

The plaintiffs former business partner, Ron Scalf, testified that he was present on the day the agreements were signed and that he assisted Jones in photocopying the tax map for attachment to the documents. Scalf s testimony with respect to the highlighting was nothing if not conflicting. At trial, Scalf stated that he “would guess eight to 10” copies of the tax map were highlighted in yellow. In his deposition, Scalf stated that Jones highlighted the map while they were in the copy room, but that he “[didn’t] remember” how many copies were highlighted. He then stated in his deposition that his copy of the tax map and the plaintiffs copy were both highlighted.

Among the other witnesses to testify was Byrd, vice president and general manager of the defendant, Bristol Motor Speedway, Inc. Byrd testified that the plaintiff only “had the right to use the [three] buildings.” Finally, SMI’s attorney, Lowrance, testified. He stated that he reviewed the sales agreement and the lease before Smith signed them and that the documents Smith signed at the closing did not have any yellow highlighting on them. He further stated that “A” referred only to the three buildings, not the entire bow-tie parcel of land. Lowrance testified that if the plaintiff had actually leased the land,

it would have said “X parcel of land” by some tax reference, by acreage, by deed reference or at least, “We’re leasing a parcel of land.” Some reference to a land — parcel of land, a tract of land of some sort.

Finally, Lowrance disputes that Jones ever took out a large tax map at the initial Friday meeting and pointed out parcels of land.

At the conclusion of the trial, the trial court took the case under advisement. It filed its 15-page memorandum opinion on October 11, 2002. After analyzing the facts of the case in light of applicable Tennessee contract law, the court made the following ruling:

Based upon the foregoing analysis, this Court concludes that the parties’ stock purchase agreement and separate lease agreement executed contemporaneously with commonality of parties, purpose and transaction should be construed together as one contract. As the provisions of the lease agreement explain in greater detail the specific rights, liabilities and obligations between the parties respecting the leasehold interest, such provisions shall be given effect.
The language of the lease contract executed by [the plaintiff] and [SMI] on January 22, 1996 is clear and unambiguous and therefore, should be construed as written. This Court shall apply to those words used their ordinary meaning and neither party shall be favored in their construction. With respect to the location of the leased premises, the lease agreement specifically identifies the leasehold property as the “Bristol Boxing Arena, adjacent mobile home and adjoining two bay storage building currently used by Mark Carrier for garage purposes along with adjacent parking facilities” as particularly shown by area “A” on Exhibit 1 attached thereto. The evidence preponderates in favor of a finding that the original lease agreement has an attached copy of the respective tax map showing area “A” as encompassing a 15.54 acre tract, the perimeter boundary of which is highlighted in yellow. The original stock purchase agreement contains an attached Exhibit 1 designating the same area “A” by means of a dark solid line along the perimeter boundary. This Court concludes that the original lease agreement introduced as Trial Exhibit 243-A establishes the location of the leased premises as being 15.5[4] acres improved by a sports arena, trailer, garage and parking lot facilities and as depicted by survey introduced as Trial Exhibit 230, a copy of which is attached to this Opinion as Attachment A.

(Footnote omitted). The trial court went on to find that the defendants had breached the lease agreement. The court awarded the plaintiff “exclusive possession of the leased premises for the duration of the extended term of the lease.” The court then awarded compensatory damages to the plaintiff in the amount of $1,199,655, plus prejudgment interest of $172,071, for a total award of damages of $1,371,726. The trial court denied the plaintiffs additional claims for relief, including a claim for punitive damages. Finally, the court dismissed the defendants’ counterclaim. Both sides appeal and raise issues.

II.

In this non-jury case, our review is de novo upon the record of the proceedings below; but the record comes to us with a presumption of correctness as to the trial court’s factual determinations that we must honor unless the evidence preponderates otherwise. Tenn. R.App. P. 13(d); Wright v. City of Knoxville, 898 S.W.2d 177, 181 (Tenn.1995); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.1993). Our de novo review of the trial court’s conclusions of law is not burdened with a presumption of correctness. Id.

III.

The interpretation of a contract is a matter of law. Rapp Const. Co. v. Jay Realty Co., 809 S.W.2d 490, 491 (Tenn.Ct.App.1991) (citation omitted). When a court construes a contract, it looks to the parties’ intention as expressed in the words used by the parties. Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn.1975). Those words should be given their usual and ordinary meaning. Id. “[T]he circumstances in which the words are used is [sic] always relevant, and usually indispensable.” Higgins v. Oil, Chem. & Atomic Workers Int’l Union, 811 S.W.2d 875, 879 (Tenn.1991) (quoting New York Trust Co. v. Island Oil and Transp. Corp., 34 F.2d 655, 656 (2nd Cir.1929)). “[T]he interpretation placed upon a contract by the parties thereto, as shown by their acts, will be adopted by the court and that to this end not only the acts but the declarations of the parties may be considered.” Hamblen County v. City of Morristown, 656 S.W.2d 381, 335 (Tenn.1983) (citations omitted). A contract is ambiguous when it may be “fairly ... understood in more ways than one.” Rogers v. First Tenn. Bank Nat’l Assoc., 738 S.W.2d 635, 637 (Tenn.Ct.App.1987) (quoting Empress Health and Beauty Spa, Inc. v. Turner, 503 S.W.2d 188, 190-91 (Tenn.1973)).

IV.

In our judgment, the dispositive issue on this appeal is whether the evidence preponderates against the following finding of fact by the trial court:

[T]he original lease agreement introduced as Trial Exhibit 243-A establishes the location of the leased premises as being 15.5[4] acres improved by a sports arena, trailer, garage and parking lot facilities....

We hold that the evidence does so preponderate.

Y.

The trial court determined that the lease — -by “clear and unambiguous” language — was for the entire 15.54 acre tract. For this reason, it did not consider the evidence supporting the defendants’ theory that the lease only pertains to the three buildings specifically mentioned in both the lease and the sales agreement. We hold that the trial court erred in its determination that the lease was without ambiguity. We do not understand how it can be stated that the language of the lease “clear[ly] and unambiguous[ly]” pertains to a 15.54 acre tract when that document fails to specifically refer to the 15.54 acres. On the contrary, we hold that the subject matter of the lease, on its face, is clearly ambiguous. The language of the sales agreement and the lease raise many questions. We find ambiguity in the reference to “area A”; in the specific identification of the boxing arena, the double wide trailer, and the garage; in the reservation of parking; in the highlighting of one of the tax maps in yellow; and in the failure to refer to the 15.54 acre parcel in the language of the sales agreement or the lease. Hence, we conclude that the trial court erred in failing to consider the other evidence showing the intent of the parties as to the subject matter of the lease. In our de novo review, we will examine all of the evidence in an attempt to ascertain the preponderance of the evidence in this case. This is our obligation in a case where the trial court fails to make a factual finding based upon all of the relevant evidence offered by the parties. See Crabtree v. Crabtree, 16 S.W.3d 356, 360 (Tenn.2000).

VI.

Our analysis of the record in the instant case reveals to us that the greater weight of the evidence favors a finding that the parties intended a lease of only the boxing arena, the garage, and the trailer, and not the entire 15.54 acre parcel of land. Turning first to the plain language of the lease, it provides that the lease addresses “certain property located in the Fourth (4th) Civil District of Sullivan County, Tennessee currently owned by National Raceways, Inc. and commonly known as ‘Bristol Boxing Arenaf], adjacent mobile home and adjoining ‘2-bay’ storage building.” There is no mention of the 15.54 acre parcel of land, or indeed of any particular parcel of land; instead, the lease specifically mentions the three buildings. In the sales agreement, the language selected by the parties provides that the plaintiff is leasing “the boxing arena, adjacent trailer and 2-bay garage shown as area A on Exhibit 1 attached hereto.” We disagree with the plaintiffs interpretation of “A” as encompassing the entire bow-tie parcel of land. The sales agreement goes on to mention that the plaintiff has the option to extend the lease of “the boxing arena, adjacent trailer and garage.” In the next paragraph of the sales agreement, which discusses parking and contains a hold harmless provision, the boxing arena, trailer, and garage are specifically mentioned three times. Again, there is no mention of the 15.54 acre parcel of land.

Furthermore, in examining how the parties operated under the lease and the sales agreement, it is clear to us that the parties only intended the lease of the three buildings. The trial testimony revealed that the defendants maintained all of the 15.54 acre parcel, with the exception of the three buildings leased to the plaintiff; that the defendants placed hospitality tents on the bow-tie parcel during NASCAR races, without objection from the plaintiff; that the defendants demolished several buildings and built others on the bow-tie parcel, without objection from the plaintiff; that various letters from the plaintiff and from his attorney, Jones, to SMI’s Smith and to general manager Byrd referred to the three buildings as being leased, rather than the entire parcel of land; that the plaintiff asked the defendants for permission to expand the garage; and that the plaintiff never fenced in or otherwise marked the boundary of the bow-tie parcel. All of this evidence signifies to us that the parties contemplated the lease of the three buildings only.

While the trial testimony of the various witnesses conflicts sharply over this matter, we find that the greater weight of the testimony favors the interpretation of the lease as one involving only the three buildings. Smith, Brooks, Byrd, and Lowrance all testified that the lease was for the buildings. Smith testified with absolute certainty that he did not lease any land to the plaintiff. The plaintiff, on the other hand, relies primarily upon the yellow highlighted boundary line and his interpretation of the meaning of “area A” to support his position that the entire parcel of land was leased. We are not persuaded by this testimony. The yellow highlighted map did not surface until trial. It was the only one with highlighting offered at trial. Furthermore, the highlighting is only drawn over a black boundary line — a line to which we attach no significance. That boundary line only serves to designate the parcel of land for tax purposes; it was not drawn by the parties or their agents. Finally, we note that the plaintiffs attorney, Jones, acknowledged the obvious — that a regular lease of land includes any improvements to the land, unless such improvements are specifically excepted. There would have been no reason to specifically name the three buildings in the lease or sketch them on Exhibit 1 if the lease had indeed been for the entire 15.54 acre parcel of land. Furthermore, there would have been no reason to reserve parking. Why would one reserve parking on property already leased to it? The question answers itself.

We understand that the trial court interpreted the language of the lease as encompassing the entire parcel of land. With all due respect to the trial court, we hold that the evidence preponderates against this finding. The preponderance of the evidence is that the language of the lease contemplates only the lease of the three buildings, since those buildings are specifically mentioned.

VII.

In view of our holding above, only one issue remains for our consideration. The defendants argue that the trial court erred in dismissing their counterclaim for an unpaid account receivable owed by the plaintiff in the amount of $175,028.46. The trial court found that this debt “arose from an agreement entered into between [the plaintiff] and [Carl RJ Moore on December 31, 1994.” The plaintiff entered into evidence a release dated January 17, 1996, which was executed by Moore and states that the debt had been satisfied and was discharged. The trial court found that the release “satisfied and discharged any indebtedness owed by [the plaintiff] and/or National Raceways, Inc.” and therefore held that the defendants were not entitled to a $175,028.46 judgment against the plaintiff. After reviewing the record, we cannot say that the evidence preponderates against the trial court’s finding. Accordingly, we affirm the dismissal of the defendants’ counterclaim.

VIII.

The judgment of the trial court is affirmed in part and reversed in part. The original complaint is hereby dismissed. Exercising our discretion, we tax the costs on appeal and at the trial level to the appellant, Robert L. “Larry” Carrier. This case is remanded for collection of the trial court’s costs.

      . Since the plaintiff filed his notice of appeal first, he was designated as the appellant.

      . Apparently, the lease was executed so it could be recorded separate and apart from the terms pertaining to the sale of the common stock of National Raceways, Inc.

      . At two places on the tax map, there can be found the designation "B.” See Appendix A.

      . At one place in the record, this figure is reflected as $1,199,657.

      . This award was subsequently increased to $2,401,728.

      . The plaintiff contends that the trial court did consider this evidence. He points to the reference in the court’s memorandum opinion in which the court, as a preamble, recites that it "considered the testimony of witnesses and parties, the evidence admitted and the record as a whole.” We disagree with the plaintiff's contention. The trial court found that the language of the lease was unambiguous. If this be the case, it would be improper to consider extrinsic evidence explaining the terms of the lease. We assume, and believe, the trial court, based on its finding of no unambiguity, followed the law and did not consider the extrinsic evidence.


text:
    Waynell C. BURNETTE v. Teddy SUNDEEN, et al.
    Court of Appeals of Tennessee, Eastern Section, at Knoxville.
    March 23, 2004 Session.
    May 4, 2004.
    Permission to Appeal Denied by Supreme Court Dec. 6, 2004.
    Gary M. Kellar and R. Kreis White, Brentwood, Tennessee, for the appellants, Teddy Sundeen and Elhame Dauti.
    Linda G. Shown, Alcoa, Tennessee, for the appellee, Waynell C. Burnette.
   OPINION

CHARLES D. SUSANO, JR., J.,

delivered the opinion of the court,

in which HERSCHEL P. FRANKS, P.J., (E.S.), and WILLIAM H. INMAN, SR., J., joined.

In this litigation arising out of an automobile accident, Waynell C. Burnette (“the plaintiff”) filed a motion asking the trial court to sanction Teddy Sundeen and El-hame Dauti (“the defendants”) for a discovery abuse. Acting under the authority of Tenn. R. Civ. P. 37.02, the court entered a judgment by default against both defendants and, in the same order, awarded the plaintiff damages of $100,000. The defendants appeal, contending that they were not afforded proper notice of the plaintiffs intention to raise the issue of damages at the hearing on the motion for sanctions. We vacate so much of the trial court’s order as awards the plaintiff unliquidated damages of $100,000.

I.

In her complaint, the plaintiff alleged, inter alia, that Ms. Dauti was guilty of negligence that resulted in her striking the plaintiffs vehicle in the rear. The plaintiff sued both defendants, claiming personal injuries. She alleged Mr. Sun-deen owned the car that was involved in the accident and that he had given Ms. Dauti permission to drive it. As a result of the accident, the plaintiff allegedly “suffered[ ] severe, painful, permanent and disabling injuries.” She averred that she “has likewise incurred, and will continue to incur, extensive expenses for the reasonable and necessary treatment of [her injuries].”

In their July 17, 2002, answer, the defendants admitted that Ms. Dauti was “negligent in failing to keep a proper lookout ahead” and in rear-ending the plaintiffs vehicle. The defendants also admitted that the ear was titled and registered to Mr. Sundeen; however, they claimed that the car was “in reality” Ms. Dauti’s. On the day they filed their answer, the defendants also filed interrogatories and a motion for production of documents. A week later, the plaintiff signed a document authorizing the defendants’ attorney to obtain the plaintiffs medical, hospital, and employment records. On December 30, 2002, the trial court entered the parties’ agreed order for the release of those records.

Nearly three months later, on March 26, 2003, the plaintiff filed a motion to set aside the agreed order on the ground that “[d]efendant’s [sic] counsel has obtained medical records of plaintiff and has not furnished such records to counsel of record as ordered by this Court.” That same day, the plaintiff filed a revocation of her written authorization permitting the defendants’ attorney to obtain her records. On April 8, 2003, the trial court granted the plaintiffs motion to set aside the agreed order on the ground that “[t]he record reflects that defendants have obtained records of the plaintiff for which plaintiffs counsel avers that such records were obtained under the Agreed Order and have not been furnished to plaintiffs counsel within ten days of obtaining such records and have not been furnished to plaintiffs counsel_” Approximately two weeks later, the plaintiff filed a motion for sanctions pursuant to Tenn. R. Civ. P. 37.02. The motion was prompted by the failure of the defendants to furnish copies of the records to the plaintiff as they had been ordered to do by the court. The motion for sanctions provides, in pertinent part, as follows:

COMES NOW the Plaintiff, Waynell Burnette, pursuant to Rule 37.02 of the Tennessee Rules of Civil Procedure, and moves this Honorable Court for any and all relief to which she is entitled, including but not limited to judgment by default, for the defendants failure to obey the lawful orders of this Honorable Court.
NOTICE OF HEARING
THIS HEARING IS SET BEFORE THE HONORABLE JUDGE W. DALE YOUNG ON MAY 5, 2003 AT 9:00a.m. IN THE BLOUNT COUNTY CIRCUIT COURT AT MARY-VILLE.
THIS IS THE ONLY NOTICE YOU WILL RECEIVE.

(Capitalization and underlining in original).

The trial court held a hearing on the plaintiff’s motion for sanctions. Following the hearing, the trial court entered an order, which states, in pertinent part, that the “judgment by default, in the amount of [$100,000] is GRANTED.” (Capitalization and bold in original). The granting of the default judgment and the assessment of damages of $100,000 all occurred as a result of the May 5, 2003, hearing.

II.

The defendants present the following issue for our review:

Whether the Court erred by sanctioning the defendants by granting a default judgment on unliquidated damages in the amount of $100,000.00 without ordering a writ of inquiry or a hearing on damages.

Since the material facts impacting the trial court’s decision are undisputed, our de novo review is one of law on the record below with no presumption of correctness attaching to the trial court’s decision. Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710 (Tenn.2001).

III.

Tenn. R. Civ. P. 37.02 provides, in pertinent part, that

[i]f a deponent; party; an officer, director, or managing agent of a party ... fads to obey an order to provide or permit discovery ..., the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:
(C) An order ... rendering a judgment by default against the disobedient party;
In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order or the attorney advising the party or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.

The sanctions addressed in Tenn. R. Civ. P. 37.02 “serve a three-fold purpose: (1) to secure a party’s compliance with the discovery rules, (2) to deter other litigants from violating the discovery rules, and (3) to punish parties who violate the discovery rules.” Mansfield v. Mansfield, No. 01A019412CH0058, 1995 WL 643329, at *5 (Tenn. Ct.App. M.S., filed Nov. 3, 1995) (citing Electronic Data Sys. Corp. v. Tyson, 862 S.W.2d 728, 735 (Tex.Ct.App.1993)). Monetary sanctions also fulfill the “additional purpose of providing compensation for the expenses caused by the inappropriate conduct.” Mansfield, 1995 WL 643329, at *5 (citing Carlucci v. Piper Aircraft Corp., 775 F.2d 1440, 1453 (11th Cir.1985)). Such monetary sanctions are required to be

related directly to the particular type of abuse involved in the case and must not be excessive. The punishment, in other words, must fit the crime and must be visited upon the criminal.

Mansfield, 1995 WL 643329, at *6.

When a default judgment is entered against a defendant, he or she “impliedly confesses all of the material allegations of fact contained in the plaintiffs declaration except the amount of the plaintiff’s unliquidated damages.” Adkisson v. Huffman, 225 Tenn. 362, 469 S.W.2d 368, 375 (1971) (emphasis added); see also Patterson v. Rockwell Int’l, 665 S.W.2d 96,101 (Tenn.1984). A defendant against whom a default judgment has been entered “may introduce evidence ... on the question of damages.” Adkisson, 469 S.W.2d at 374 (citation omitted); see also Patterson, 665 S.W.2d at 101.

Tenn. R. Civ. P. 55.01 provides, in pertinent part, that

[i]f, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages ... the court may conduct such hearings ... as it deems necessary and proper and shall accord a right to a trial by jury to the parties when and as required by statute.

The official comment to Tenn. R. Civ. P. 55 is instructive:

This Rule adopts the substance of previous Tennessee procedure, including [TenmCode Ann.] § 25-108. It adds a precautionary provision as to infants and incompetent persons in certain cases and requires written notice when a party has appeared in the cause.

TenmCode Ann. § 25-108 (repealed 1972), the predecessor legislative enactment to Tenn. R. Civ. P. 55, provided that

[i]f the defendant fail to appear and defend at the time prescribed by law, judgment by default may be taken against him. In such case, the judgment is final if the amount of the plaintiffs claim can be ascertained by simple calculation from the papers; when the amount cannot be thus readily ascertained, the damages will be assessed by a jury impaneled at the same term for the purpose.

Thus, under TenmCode Ann. § 25-108, a trial court was required to hold a hearing when the plaintiffs claimed damages were not readily ascertainable “by simple calculation.” Obviously, such is the case in this lawsuit, involving, as it does, unliquidated damages.

IV.

The issue before us raises a single and narrow question: Did the plaintiffs motion and accompanying notice advise the defendants that the plaintiff intended to present evidence of her unliquidated damages and seek an award of those damages at the noticed hearing on May 5, 2003? The defendants claim that the motion and notice did not advise them of this intention. They do not contest the entry of the judgment by default; but they do contend that the .trial court was without authority, under the notice, to award a specific amount of damages for the plaintiffs injuries “■without conducting a writ of inquiry or a hearing on damages.”

The plaintiff argues that the defendants “cannot be afforded relief on this issue because the record discloses that the [plaintiff] complied with procedural safeguards and specifically, the record shows that [plaintiff] gave [defendants] undisputed notice of the hearing wherein damages were awarded.” The plaintiff claims that, pursuant to the contents of the motion for sanctions, “it can be fairly said that [defendants] were given notice of the time and place of the hearing wherein the trial court entered a final decree upon determining [plaintiffs] damages.” Citing Tenn. R. Civ. P. 55.01, the plaintiff contends that “[t]he rules of civil procedure make it clear that it is within the trial court’s discretion to determine from the evidence before it whether or not it is necessary to take a further account of the damages and to order such further hearings as it deems necessary.”

V.

“A fundamental requirement of due process is notice and an opportunity to be heard.” Phillips v. State Bd. of Regents, 863 S.W.2d 45, 50 (Tenn.1993). Procedural due process is a right guaranteed by the federal and state Constitutions. Redd v. Tenn. Dep’t of Safety, 895 S.W.2d 332, 334 (Tenn.1995).

The plaintiffs motion is expressly one for sanctions under Tenn. R. Civ. P. 37.02. The motion clearly recites what the plaintiff intends to seek at the May 5, 2003, hearing:

[P]ursuant to Rule 37.02 of the Tennessee Rules of Civil Procedure ... any and all relief to which she is entitled, including but not limited to judgment by default....

It is likewise clear that the reason for the plaintiffs request is “the defendant’s failure to obey the lawful orders of this Honorable Court.” This motion put the defendants on notice that the plaintiff intended to seek such relief as is provided for in Tenn. R. Civ. P. 37.02. While such relief includes “judgment by default” and “reasonable expenses, including attorney’s fees, caused by the failure [to obey a discovery order],” it clearly does not include an award of unliquidated damages in an automobile case.

We hold the trial court erred, as a matter of law, in considering the issue of damages under the notice accompanying the plaintiffs motion. That notice, reasonably construed, did not advise the defendants that the issue of unliquidated damages would be addressed on May 5, 2003. We reject the plaintiffs suggestion that a hearing was not required under Tenn. R. Civ. P. 55.01. Such an interpretation and application of the rule does not comport with procedural due process.

VI.

The order of the trial court awarding Waynell C. Burnette damages in the amount of $100,000 is hereby vacated. In all other respects, including the judgment by default, the trial court’s order is affirmed. This case is remanded to the trial court for further proceedings consistent with this opinion. Costs on appeal are taxed to the appellee, Waynell C. Bur-nette.

      . On October 16, 2002, attorneys Gary M. Kellar and R. Kreis White were substituted as counsel for the defendants in place of their previous counsel.

      . The agreed order provides that copies of the records secured pursuant to the order would be furnished to all parties.