## Facts

- Robert E. Valiga hired Robert H. Waddell to build a house under a written contract dated September 12, 1988.
- Waddell signed the contract on behalf of “R.H. Waddell Construction, Inc.” even though no corporate charter had been filed at the time.
- Waddell was a land surveyor with an architecture degree who decided to try contracting; Valiga’s home was the first and only house Waddell ever built.
- John Graves, a tax preparer, helped arrange the deal with Valiga and agreed to assist Waddell because it was not tax season.
- Construction problems arose almost immediately. Valiga complained and was repeatedly told the house would comply with applicable laws and building codes, but the quality did not improve.
- In November 1988, Valiga fired Waddell. The next day, Waddell and Graves executed a written Joint Venture Agreement (JVA) for the purpose of constructing Valiga’s house and “to assure shared liability in the event of a lawsuit” against them; it provided that they would share profits and losses equally.
- Waddell returned to work on the project later in November after making amends with Valiga.
- Someone filed the corporate charter for R.H. Waddell Construction, Inc. in December 1988, after the contract had been signed and after work had begun.
- In February 1989, after Valiga expressed shock about costs, Waddell quit the job before completion.
- Valiga obtained an inspection from the Knox County Department of Code Administration. A March 9, 1989 letter listed numerous deficiencies, including serious structural defects, and ordered construction stopped until a professional evaluation and remediation plan were submitted.
- Waddell purchased building materials from Christmas Lumber Company, Inc. (Christmas Lumber) for the project, but the materials were not paid for.
- On January 10, 1990, Christmas Lumber sued Valiga, Waddell, and others to enforce a materialman’s lien for materials supplied for Valiga’s house.
- On December 2, 1992, Valiga filed a separate action against Waddell and Graves for defective construction; the trial court consolidated Valiga’s case with Christmas Lumber’s lien case.
- Christmas Lumber obtained summary judgment for $17,083 against Waddell personally; Waddell and Graves each paid half.
- Graves sought dismissal from Valiga’s suit, asserting he could not be personally liable because Valiga had contracted only with the corporation; Valiga responded with the JVA.
- Evidence at trial showed Waddell and Graves split the $11,500 contractor’s fee Valiga paid. Graves claimed he only shared profits, but proof showed he worked on the house six to eight hours per day during much of the construction.
- The trial court found Waddell and Graves were joint venturers/partners and entered a personal judgment for Valiga against both for $80,045.79, plus prejudgment interest.
- After judgment, Waddell and Graves moved to amend their answers to add a statute of limitations defense; the trial court denied the motions.

## Issues

1. Whether the trial court erred in finding Waddell and Graves were partners/joint venturers and therefore personally liable to Valiga for defective construction, despite the contract naming “R.H. Waddell Construction, Inc.”
2. Whether the trial court abused its discretion by denying defendants’ post-judgment motions to amend their answers to assert a statute of limitations defense.
3. Whether the trial court abused its discretion by awarding prejudgment interest to Valiga.

## Decision

- Affirmed.
- The evidence supported the finding that Waddell and Graves operated as joint venturers/partners on the project and could be held personally liable to Valiga, notwithstanding the corporate name used in the contract and the later-filed charter.
- The trial court acted within its discretion in refusing to permit a post-judgment amendment to add a statute of limitations defense.
- The prejudgment interest award was within the trial court’s discretion and was affirmed.

## Legal Principles

- A joint venture is treated similarly to a partnership for liability purposes; when parties agree to share profits and losses and act together on a project, they may be personally liable for resulting obligations and damages.
- Partnership/joint-venture status may be shown by written agreement and by conduct, including profit-splitting and substantial participation in the work.
- Use of a corporate label does not automatically shield individuals from personal liability when the corporation was not in legal existence at the time of contracting or when the proof shows the individuals operated the project as a partnership or joint venture.
- Under Tennessee practice, leave to amend pleadings is discretionary; attempts to add an affirmative defense after judgment may be denied, especially where the defense could have been raised earlier.
- Prejudgment interest in Tennessee is an equitable remedy awarded to compensate for loss of use of money; appellate review focuses on whether the trial court abused its discretion.

## Conclusion

The Tennessee Court of Appeals affirmed the judgment holding Waddell and Graves personally liable to Valiga because the proof—especially the written JVA, profit-splitting, and Graves’s hands-on work—supported a joint venture/partnership finding even though the construction contract used a corporate name, and it also upheld the denial of a post-judgment limitations defense and the award of prejudgment interest.


Christmas Lumber Co., Inc. v. Valiga, 99 S.W.3d 585 (2002)