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IN THE SUPREME COURT OF TENNESSEE AT KNOXVILLE
September 1, 2011 Session FEDERAL INSURANCE COMPANY A/S/O ROBERT AND JOANIE EMERSON v. MARTIN EDWARD WINTERS, D/B/A WINTERS ROOFING COMPANY
Appeal by Permission from the Court of Appeals, Eastern Section Circuit Court for Hamilton County No. 09C136 W. Neil Thomas, III, Judge

No. E2009-02065-SC-R11-CV - Filed October 25, 2011

The defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, the defendant hired an independent contractor to make the necessary repairs. While performing the work, the independent contractor caused a fire, resulting in an $871,069.73 insurance claim by the homeowners. As subrogor to the homeowners' rights and claims arising out of the fire, the plaintiff insurance company sued the defendant in both tort and in contract. The defendant filed a motion for summary judgment, asserting that because he had subcontracted the work, he could not be liable. The trial court granted the motion on both the negligence and breach of contract claims. The Court of Appeals reversed, holding that the defendant had a non-delegable contractual duty to perform the roofing services in a careful, skillful, and workmanlike manner. This Court granted the defendant's application for permission to appeal in order to determine the propriety of the claim under the theory of contract. Because the defendant had an implied non-delegable duty to install the roof in a careful, skillful, diligent, and workmanlike manner, the judgment of the Court of Appeals is affirmed. The case is remanded to the trial court for proceedings consistent with this opinion. Tenn. R. App. P. 11; Judgment of the Court of Appeals is Affirmed G ARY R. W ADE, J., delivered the opinion of the Court, in which C ORNELIA A. C LARK, C.J., J ANICE M. H OLDER, W ILLIAM C. K OCH, J R., and S HARON G. L EE, JJ., joined. John Tate Rice, Chattanooga, Tennessee, for the appellants, Martin Edward Winters and Winters Roofing Company. Michael A. Durr, Charlotte, North Carolina, for the appellee, Federal Insurance Company.

OPINION Facts and Procedural History 1 In 2007, Robert and Joanie Emerson (the "Emersons") contacted Martin Winters (the "Defendant"), the owner of Winters Roofing Company, about installing a new roof at the Emersons' home in Hixson. After receiving a proposal from the Defendant, the Emersons entered into an oral agreement, whereby the Defendant agreed to replace the roof for the sum of $17,832. While the subject of insurance was not discussed, Robert Emerson, by his sworn affidavit, claimed that he relied on information provided on the Defendant's website, which included representations that he carried general liability and workers' compensation insurance. During his deposition, the Defendant admitted that his company was not capable of replacing an entire roof. Without informing the Emersons, he subcontracted the job to Terry Monk. A few months after the work was completed, the roof began to leak and developed several areas of standing water. When the Emersons notified him of these issues, the Defendant agreed to take care of the problems and subcontracted the repair work to Bruce Jacobs. Jacobs executed a subcontract with the Defendant, agreeing that "[a]ny and all work will be the responsibility of Bruce Jacobs" and "[a]ny and all leaks/damages caused by work performed . . . will be [his] responsibility to repair or replace." On September 26, 2007, while attempting to make the necessary repairs, Jacobs used a propane torch on a drain cover on the roof. The Defendant was not present at the time. A few hours after Jacobs had completed his work, a fire occurred, causing $871,069.73 in damages to the Emersons' home and personal property. Gary Young, a fire investigator for EFI Global, Inc., concluded that the "fire specifically occurred due to open flame roofing work, which was being conducted by roofer Bruce Jacobs . . . on September 26, 2007." On the date of the fire, the Defendant did not have liability insurance coverage. He informed the Emersons that Jacobs, an independent contractor who was otherwise unable to pay for any of the damages caused by the fire, was also uninsured. On the day after the fire, the Defendant purchased liability insurance from American Safety Insurance Company ("American Safety"). One week later, American Safety received a report that the fire had occurred on October 3, 2007, seven days after the fire took place. After receiving accurate information as to the actual date of the fire, American Safety denied coverage. Later, the Defendant acknowledged in his deposition that it was "possible" that he had informed an insurance investigator that the fire occurred later than it actually did. When asked during his deposition if he claimed October 3 as the date of the fire in an attempt to obtain liability

Because the trial court granted a motion for summary judgment, the facts have been drawn from the pleadings and the documents filed in support of and in opposition to the motion, including the sworn affidavit of Robert Emerson and the sworn deposition testimony of Martin Winters.

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coverage for the claims arising out of the fire, he declined to answer, invoking his right to remain silent under the Fifth Amendment. On January 15, 2009, Chubb National Insurance Company, as subrogor to the Emersons' rights and claims arising out of the fire, filed suit against the Defendant, seeking $871,069.73 in damages for the amount paid to the Emersons under their insurance policy. After informal discovery revealed that Federal Insurance Company ("Federal") held subrogation rights, the complaint was amended to substitute Federal as plaintiff. In the amended complaint, Federal asserted both negligence and breach of contract as alternative theories of recovery against the Defendant. Federal contended that the Defendant's contract with the Emersons included an implied obligation to complete the roofing work "skillfully, carefully, diligently, and in a workmanlike manner." Federal claimed that the Defendant was liable for the fire damages because the Emersons never released him from his contractual duties. In response, the Defendant filed a motion for summary judgment, alleging that Federal "ha[d] sued the wrong party." Because the Defendant did not participate in the repair work of September 26, 2007, had subcontracted the work out to Jacobs, and was neither at the job site nor supervised Jacobs' work, he denied liability. The trial court granted the Defendant's motion for summary judgment on both the negligence and breach of contract claims. As to the negligence claim, the trial court held that the Defendant could not be liable for the negligent acts of a subcontractor absent evidence that he was negligent in hiring the subcontractor or in the supervision of the work performed. The trial court ruled that recovery under a theory of contract was not available because damages were not foreseeable. The Court of Appeals reversed, holding as follows: [D]efendant had a non-delegable duty to see that the work he was contractually obligated to perform was done in a careful, skillful, and workmanlike manner. The summary judgment was not appropriate, based solely on the fact that the work in question was performed by a sub-contractor. . . . [S]ince [D]efendant ultimately had the duty to make sure that the work on the roof was done in a careful, skillful, and workmanlike manner, and it was shown that it was not, summary judgment was not appropriate. Fed. Ins. Co. v. Winters, No. E2009-02065-COA-R3-CV, 2010 WL 4065609, at *5 (Tenn. Ct. App. Oct. 18, 2010).

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We granted the Defendant's application for permission to appeal to determine whether the Defendant, as the contractor, had the implied duty under contract to perform the roofing services carefully, skillfully, diligently, and in a workmanlike manner, and if so, whether this duty was delegable to a subcontractor. Federal no longer seeks recovery against the Defendant based upon a theory of negligence. Standard of Review Contractual interpretation is a matter of law. Hamblen Cnty. v. City of Morristown, 656 S.W.2d 331, 335-36 (Tenn. 1983). Likewise, our review of a trial court's entry of summary judgment is a question of law. Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn. 1997). In consequence, appellate courts attach no presumption of correctness to the decision of the trial court and must review the record de novo to determine whether the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been satisfied. In re Estate of Davis, 308 S.W.3d 832, 837 (Tenn. 2010). A court should grant a party's motion for summary judgment only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn. 1993). The movant bears the ultimate burden of persuading the court "that there are no disputed, material facts creating a genuine issue for trial . . . and that he is entitled to judgment as a matter of law." Byrd, 847 S.W.2d at 215. If the motion for summary judgment is properly supported, then the burden shifts to the non-moving party to show that a genuine issue of material fact exists. Id. At the summary judgment phase, "it is not the role of a trial or appellate court to weigh the evidence or substitute its judgment for that of the trier of fact." Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 87 (Tenn. 2008) (citing Byrd, 847 S.W.2d at 211). Analysis I. Implied Duty to Perform Skillfully, Carefully, Diligently, and in a Workmanlike Manner Since neither Federal nor the Defendant dispute the existence of a contract, the initial question is whether the Defendant breached its terms, express or implied. Federal contends that the Defendant breached its implied responsibility, while the Defendant argues that no such implied responsibility existed on his part. In a breach of contract action, claimants must prove the existence of a valid and enforceable contract, a deficiency in the performance amounting to a breach, and damages caused by the breach. ARC LifeMed, Inc. v. AMC-Tenn., Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005). In addition to the explicit terms, contracts may be accompanied by implied duties, which can result in a breach. See, e.g., Aetna Cas. & Sur. Co. v. Gilreath, 625 S.W.2d 269, 275 (Tenn. 1981) (explaining that the absence of an express contractual duty did not preclude the existence of an implied duty); German v. Ford, 300 S.W.3d 692, 708-09 (Tenn. -4-

Ct. App. 2009) (imposing an implied duty of good faith and fair dealing). Recently, in Bowling v. Jones, 300 S.W.3d 288, 291 (Tenn. Ct. App. 2008), the Court of Appeals made the following observation regarding the implied duties encompassed in construction contracts: Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, failure to perform a building contract in a workmanlike manner constitutes a breach of the contract. (quoting 13 Am. Jur. 2d Building and Construction Contracts

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