King Construction Group, Inc. v. Highlands Residential Services

This appeal concerns the Tennessee Prompt Pay Act, Tenn. Code Ann. § 66-34-101, et seq. (“the PPA”). King Construction Group, Inc. (“King”) sued Highlands Residential Services (“HRS”) in the Chancery Court for Putnam County (“the Trial Court”) for violating the PPA. The parties filed competing motions for summary judgment. The Trial Court ruled in King’s favor, granting an award to King for HRS’s failure to place retained funds in a separate, interest-bearing escrow account as required by the PPA. The Trial Court further awarded King statutory interest and attorney’s fees. HRS appeals, arguing that an amendment to the PPA, which became effective in July 2020 after the parties had entered into their agreement, means that HRS, a public housing agency, did not have to place retainage in an escrow account. We hold that, as HRS first failed to place retained funds in an escrow account before the amendment became effective, the pre-July 2020 version of the PPA applies to this action. We affirm the Trial Court’s award of a penalty to King for HRS’s failure to place retainage in an escrow account. However, we reverse the Trial Court’s award of attorney’s fees to King because the Trial Court made no supporting findings nor is there any evidence of bad faith by HRS. In addition, we vacate the Trial Court in its award of statutory interest to King and remand for the Trial Court to calculate a new award of statutory interest to King at the interest rate specified in the pre-July 2020 version of the PPA. We thus affirm, in part, reverse, in part, and vacate, in part, and this cause is remanded to the Trial Court for further proceedings consistent with this Opinion.