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IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE REBOUND CARE CORPORATION, ET AL. v. UNIVERSAL CONSTRUCTORS, INC.
A Direct Appeal from the Chancery Court for Davidson County No. 94-444-I The Honorable Irvin H. Kilcrease, Jr., Chancellor

No. M1999-00868-COA-R3-CV - Decided June 13, 2000

This case involves a dispute under a construction contract between the owner and the contractor. The owner sued the contractor in chancery court, and the contractor's answer, among other things, asserted that plaintiff's claim was subject to arbitration. Neither party demanded arbitration, and the case continued in chancery court with discovery and other proceedings for approximately three years, when the contractor filed a motion to dismiss or for summary judgment premised on the owner's failure to comply with conditions precedent in the contract. Alternatively, the contractor moved to stay the proceedings until plaintiff submitted the claim to arbitration pursuant to the contract. The trial court found that the contract provided for arbitration and that the contractor had not waived its right to arbitration. The court granted the motion for summary judgment to the extent that the proceedings in the case were stayed until the owner's compliance with the conditions precedent in the contract. In compliance with the court's order, the owner submitted the case to arbitration which resulted in an award for the contractor. Subsequently, the trial court granted Universal's motion to confirm the arbitration award and dismissed the owner's complaint with prejudice. The owner has appealed. Tenn.R.App.P. 3, Appeal as of Right; Judgment of the Chancery Court is Vacated in Part, Affirmed in Part and Remanded CRAWFORD , P.J., W.S., delivered the opinion of the court, in which HIGHERS , J., and FARMER , J., joined. Paul C. Ney, Jr., Gregory Mitchell, Nashville, For Appellant Darrell G. Townsend, Derrick C. Smith, Nashville, For Appellee OPINION Plaintiff, Rebound Care Corporation, d/b/a Open Arms Care Corporation (Rebound), appeals

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from the order1 of the chancery court dismissing its complaint against defendant, Universal Constructors, Inc.(Universal). On January 3, 1994, Rebound filed its complaint against Universal.2 The complaint alleges that in 1989 and 1990, Rebound contracted with Universal in four separate contracts for Universal to act as the general contractor for the construction of thirty-two intermediate care facilities and four day program service centers in several areas in Tennessee. The contracts are attached as exhibits to the complaint and incorporated therein. The complaint avers that in July, 1991, Rebound started learning about problems with various parts of the Nashville facility and notified Universal and others of the problems and sought repairs. Further problems developed, and each time Universal was notified of the problems. It was represented to Rebound that the construction was not defective, but that Universal would investigate and recommend solutions. The complaint further avers that because of the many problems, Rebound retained the services of a construction consultant in 1993, and in January, 1994, the consultant completed the investigation and issued his report which detailed construction and design deficiencies. The complaint lists substantial defects that were discovered. The complaint alleges that Universal became aware of numerous, unauthorized deviations, allowed same to exist, and had defects that were, in fact, concealed from Rebound, resulting in misrepresentations and fraud on the part of Universal. The complaint further avers that Universal took actions and made representations that caused Rebound to delay in the filing of the suit. Rebound further alleges that Universal breached its contract by, among other things: a. Failing to construct the Facilities in accordance with the plans and specifications for the project; b. Failing to employ subcontractors with adequate skills and knowledge to execute and perform work on the Facilities in a skillful and workmanlike fashion and otherwise failing to ensure that the work was done in a skillful and workmanlike fashion; c. Failing to correct nonconforming work performed by Universal and by subcontractors under Universal's supervision; and

The order was made final pursuant to Tenn.R.Civ.P. 54.02, since the case against one other defendant is still pending. The original complaint was filed against Universal and David, Stokes, Chilton Collaborative, P.C., an architectural firm. The complaint states that the action is related to a previously filed case in chancery court, Rebound Care Corporation, d/b/a Open Arms Care Corporation versus Barge, Wagonner, Sumner & Cannon, et al. The trial court consolidated the action, and on August 25, 1995, Rebound filed a Consolidated Amended Complaint against Universal and the other named defendants in the two actions. Our references in the Opinion to the complaint and the answer will refer to the Consolidated Amended Complaint and Universal's answer thereto. -22

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d. Failing to identify and bring to Rebound's and/or the Project Architect's attention problems with the site and construction design of one or more Facilities; e. Failing to construct the Facilities in a good faith and reasonable manner and in accordance with industry standards and legal requirements; f. Breaching express warranties; g. Breaching implied warranties of good workmanship and materials and of habitability; h. Failing to oversee and inspect construction of the Facilities in a good faith manner and in accordance with reasonable construction practices; i. Failing to fulfill its duty to remedy the defects made known to it; j. Failing to obtain written or other approval for changes to plans and specifications; k. Failing to give monetary credit to Rebound for labor, material, and other changes resulting in cost reductions; and l. Submitting false and incorrect applications for payment. The complaint further alleges that Universal along with the other defendants were negligent in the work performed which resulted in damages to Rebound. The complaint also avers that Universal was guilty of promissory fraud and fraudulent misrepresentations in commercial transactions in the various particulars set out in the complaint. Rebound also relies upon a violation of the Consumer Protection Act on the part of Universal. Universal's answer to the complaint denies the material allegations against it and joins issue thereon. As an affirmative defense, Universal avers that the contract between the parties provides that any dispute should be submitted to arbitration, and that therefore the complaint should be dismissed. Universal further relies upon the applicable statute of limitations, T.C.A.

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