Economic Loss Doctrine - Does the economic loss doctrine apply in Tennessee?

Construction Defect – When can the Tennessee Consumer Protection Act be applied in a construction defect case?

Analysis:  The recent Tennessee Court of Appeals decision of Dan C. Ray v. Sadler Homes, Inc., No. M2011-01605-COA-R3-CV, 2012 WL 2150752 (Tenn. Ct. App. 2012) involved a construction defect case concerning the sale of a new home.  Soon after the plaintiffs purchased the home they started to experience hollow spots in the hardwood floors, leaking from the air conditioning, and uneven sagging flooring. Ray at 1.  After the defendant, Sadler Homes, Inc., was advised of the problems, Sadler Homes discovered that a load bearing beam was left off the construction plans and was not installed during construction.  Ray at 1.  Additionally, the home had been “stretched” from the construction plans “meaning the home was somewhat wider and longer and had more square footage than specified in the construction plans.”  Ray at 1.

After several repairs were conducted, the defendant refused to continue to conduct more repairs despite the fact the homeowner continued to experience more problems. Ray at 1. Sadler Homes’ representative testified that the plaintiff’s “were never going to be satisfied” which is one of the reasons he stopped making repairs. Ray at 2.  As a result, the case went to trial and the trial court found there was a breach of contract, breach of warranty and a knowing violation of the Tennessee Consumer Protect Act “based upon evidence that the house was built by an experienced contractor who stretched the house and left out a load bearing beam.”  Ray at 2.  The trial court found total damages of $90,000.00 based on diminution in value and also awarded additional attorney’s fee damages under the Tennessee Consumer Protection Act.

A prior blog post discussed when a diminution in value award is appropriate as damages in a construction defect case.  The second issue dealt with in this case was whether the trial court’s finding of a violation of the Tennessee Consumer Protection Act was appropriate.  The trial court used the “catch all provision” of the act found in T.C.A. § 47-18-104(b)(27) which makes it a violation of the act for “engaging in any other act or practice which is deceptive to the consumer or to any other person.”  Although the trial court record was not very clear, the appellate court noted it looked like the trial court found there was a deceptive act due to the omission of a load bearing beam and the fact the home was “stretched” from the original construction plans. 

The appellate court found that in order to recover damages under the Tennessee Consumer Protection Act a plaintif...

Malicious Prosecution - What are the elements for a malicious prosecution claim in Tennessee?

Analysis:  The recent Tennessee Supreme Court decision of Elliot H. Himmelfarb, M.D. et al. v. Tracy R. Allain, No. M2010-02401-SC-S10-CV, 2012 WL 3667440 (Tenn. 2012) discussed the elements for a malicious prosecution claim under Tennessee Law.  This case also addressed whether a lawsuit that is terminated by a voluntary dismissal (nonsuit) without prejudice satisfies one of the requirements for a malicious prosecution claim. 

In this case, Tracy Allain filed a lawsuit asserting a medical malpractice claim against Dr. Elliot Himmelfarb and Dr. Douglas York for an allegedly faulty heart catheterization procedure.  Mr. Allain subsequently filed a notice of voluntary dismissal of the complaint, dismissing the case without prejudice under Tennessee Rule of Civil Procedure 41.01.  One year later, Dr. Himmelfarb and Dr. York filed a complaint against Mr. Allain asserting the prior lawsuit against them constituted malicious prosecution under Tennessee law.  Himmelfarb at 1. 

In order to proceed with a claim for malicious prosecution the plaintiff must establish three elements.  These elements are: (1) the prior lawsuit was initiated against the plaintiff without probable cause; (2) the prior lawsuit was brought with malice; and (3) the prior lawsuit was terminated in favor of the plaintiff.  Himmelfarb at 2 (citing Christian v. Lapidus, 833 S.W.2d 71, 73 (Tenn. 1992)).  Under element number (3), requiring the termination of the prior lawsuit in favor of the plaintiff, the termination of the lawsuit must “address the merits of the suit rather than terminating the suit on procedural or technical grounds”.  Himmelfarb at 2 (citing Parrish v. Marquis, 172 S.W.3d 526, 531 (Tenn. 2005)).  As a result, the Tennessee Supreme Court in this case addressed whether a voluntary nonsuit was a termination in favor of the plaintiff “on the merits” in order to support a malicious prosecution claim.

The Tennessee Supreme Court noted the majority of jurisdictions have found that a prior voluntary nonsuit should be deemed a termination “on the merits” in order to support a malicious prosecution claim.  Himmelfarb at 3.  Interestingly, the Tennessee Supreme Court...

Products Liability - Fungal meningitis outbreak in Tennessee raises numerous legal liability questions

The United States Center for Disease Control and Prevention reported on October 12, 2012 that 170 people have contracted fungal meningitis due to the recent outbreak resulting in 14 deaths so far.  See CDC outbreak information.  ABC News and other media outlets have reported that the fungal meningitis outbreak may have been caused by spinal injections of methylprednisolone acetate for back pain.  See ABC News article.  Tennessee, more than any other state, has been most affected by the outbreak where there are 49 cases of fungal meningitis that have been reported including six that have been fatal.  See ABC News article.  According to ABC News "meningitis affects the membranous lining of the brain and spinal cord. Early symptoms of fungal meningitis, such as headache, fever, dizziness, nausea, sensitivity to light, stiff neck, weakness or numbness, slurred speech and pain, redness or swelling at the injection site can take more than a month to appear." See ABC News article.

As a result of the outbreak that is growing by the day, significant questions must be addressed pertaining to potential liability for manufacturers, sellers, distributors, medical providers and physicians for this outbreak in Tennessee.  The main cause of action in any litigation under Tennessee law would most likely be a products liability action under T.C.A. § 29-28-101 - 29-28-108.  The "Tennessee Products Liability Act of 1978" is codified at T.C.A. § 29-28-102.

Under T.C.A. § 29-28-102 a Tennessee "Product Liability Action" is defined as follows:

“Product liability action” for purposes of this chapter includes all actions brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging or labeling of any product. “Product liability action” includes, but is not limited to, all actions based upon the following theories: strict liability in tort; negligence; breach of warranty, express or implied; breach of or failure to discharge a duty to warn or instruct, whether negligent, or innocent; misrepresentation, concealment, or nondisclosure, whether negligent, or innocent; or under any other substantive legal theory in tort or contract whatsoever;

Defamation of Character – “Libel” and “false light invasion of privacy” claims under Tennessee Law

Brief Summary:  Libel is a recognized claim under Tennessee law and truth is a defense to a libel claim.  False light invasion of privacy is a recognized claim under Tennessee law where truth is not a defense.  As a result, one can be held liable for making a statement that gives an offensive impression about another in a false light even if the statement is technically true.

Analysis:  The recent Tennessee Court of Appeals decision of Daniel B. Eisenstein v. WTVF-TV, News Channel 5 Network, LLC, M2011-02208-COA-R3-CV, 2012 WL 3090307 (Tenn. Ct. App. July 30, 2012) provided a great discussion on the torts of libel and false light invasion of privacy.  This is an interesting case that has received some media attention due to the subject matter.  Specifically, Davidson County General Sessions Court Judge Daniel Eisenstein brought a claim against News Channel 5 Network in Nashville, Tennessee asserting that News Channel 5 committed libel and false light invasion of privacy in two news stories that were completed in 2010 and 2011. Eisenstein at 1.  This case is certainly interesting reading, however, the details of the case are not important for this post.  I would, however, encourage anyone who is interested in these types of claims to read the full lengthy opinion. 

There is a broad category of torts in Tennessee referred to as defamation.  Defamation includes libel, slander, false light invasion of privacy and other causes of action.  Libel is simply a form of the broader category of defamation.  Generally, libel involves a written defamation.  Eisenstein at 1.  News broadcasts "should be considered libel; particularly if they are based on written scripts."  Eisenstein at 1. (quoting Ali v. Moore, 984 S.W.2d 224, 227 (Tenn. Ct. App. 1998)). 

In order to establish a prima facia case of defamation (usually slander or libel) the plaintiff must prove the following elements:

Construction Defect – When can diminution in value be used as damages in a construction defect case?

Brief Summary:  Diminution in value can be appropriate damages in a construction defect case under Tennessee Law depending on the facts of the case.  This is especially true when the defendant fails to introduce evidence showing the feasibility or cost of repairs to fix the defect in question.

Analysis:  The recent Tennessee Court of Appeals decision of Dan C. Ray v. Sadler Homes, Inc., No. M2011-01605-COA-R3-CV, 2012 WL 2150752 (Tenn. Ct. App. 2012) involved a construction defect case about the sale of a new home.  Soon after the plaintiffs purchased the home they started to have hollow spots in the hardwood floors, leaking from the air conditioning, and uneven sagging flooring. Ray at 1.  After the defendant, Sadler Homes, Inc., was advised of the problems, Sadler Homes discovered that a load bearing beam was left off the construction plans and was not installed during construction.  Ray at 1.  Additionally, the home had been “stretched” from the construction plans “meaning the home was somewhat wider and longer and had more square footage than specified in the construction plans.”  Ray at 1.

After several repairs were conducted, the defendants refused to continue to conduct more repairs despite the fact the homeowner continued to experience more problems. Ray at 1. Sadler Homes’ representative testified that the plaintiff’s “were never going to be satisfied” which is one of the reasons he stopped making repairs. Ray at 2.  As a result, the case went to trial and the trial court found there was a breach of contract, breach of warranty and a knowing violation of the Tennessee Consumer Protect Act “based upon evidence that the house was built by an experienced contractor who stretched the house and left out a load bearing beam.”  Ray at 2.  The trial court found total damages of $90,000.00 based on diminution in value and also awarded additional attorney’s fee damages under the Tennessee Consumer Protection Act.

Sadler Homes contended an award based on diminution in value was inappropriate in this case.  Sadler Homes requested that the court find instead that the appropriate damages should be the cost to repair.  The Tennessee Court of Appeals found the following: 

Tennessee Consumer Protection Act – The Tennessee Consumer Protection Act was amended to prevent punitive damages under the Act (after an award of treble damages).

The Tennessee tort reform bill of 2011 added a provision in the Tennessee Consumer Protection Act that explicitly prevents an award for punitive or exemplary damages beyond the treble damages found in the Act (T.C.A. § 47-18-101 – T.C.A. § 47-18-130).  This change went into effect with the adoption of Public Chapter No. 510 and applies to all actions that accrue on or after October 1, 2011.

T.C.A. § 47-18-109 (a)(3) now provides as follows:

(3) If the court finds that the use or employment of the unfair or deceptive act or practice was a willful or knowing violation of this part, the court may award three (3) times the actual damages sustained and may provide such other relief as it considers necessary and proper, except that the court may not award exemplary or punitive damages for the same unfair or deceptive practice.

(emphasis added and shows language added to statute).  The change made by Public Chapter No. 510 was the legislature added the last phrase in T.C.A. § 47-18-109(a)(3) providing "except that the court may not award exemplary or punitive damages for the same unfair or deceptive practice."  This addition to the statute expressly confirmed that exemplary or punitive damages could not be assessed for violation of the Tennessee Consumer Protect Act when treble damages are assessed under T.C.A. § 47-18-109(a)(3). 

Public Chapter No. 510 also added T.C.A. § 47-18-109(g) which provides that "no class action lawsuit may be brought to recover damages for an unfair or deceptive act or practice declared to be unlawful by this part."  As a result, this new addition to the Tennessee Consumer Protection Act bars any civil class action lawsuits under the Tennessee Consumer Protection Act.