Construction Defect - Under Tennessee law what is required to establish a claim for intentional misrepresentation for a construction defect claim?

Analysis:  The recent Tennessee Court of Appeals decision of Brooke Buttrey v. Holloway's, Inc., No. M2011-01335-COA-R3-CV, 2012 WL 6451802 (Tenn. Ct. App. December 12, 2012) discussed the Tennessee tort of intentional misrepresentation in the context of a construction defect case.  In this case the trial court found there was ample evidence the home was not constructed in a workmanlike manner.  Buttrey at 5.  In fact the defendant did not even appeal this issue to the Tennessee Court of Appeals.  However, the defendant did appeal the trial court's ruling that the defendant was responsible for intentional misrepresentation under Tennessee law.

Under Tennessee law in order to establish a claim for fraudulent or intentional misrepresentation (these two torts have identical elements) the plaintiff must prove the following:

1) the defendant made a representation of an existing or past fact; 2) the representation was false when made; 3) the representation was in regard to a material fact; 4) the false representation was made either knowingly or without belief in its truth or recklessly; 5) the plaintiff reasonably relied on the misrepresented material fact; and 6) the plaintiff suffered damage as a result of the misrepresentation.

Buttrey at 5 (citing Walker v. Sunrise Pontiac – GMC Truck, 249 S.W.3d 301, 311 (Tenn. 2008)).  One of the alleged misrepresentations in this case was testified about by the plaintiff as follows:

Q: When you approached Mr. Holloway about building this home, did he make any representati...

Construction Defect Case - Date of substantial completion for the statute of repose

A recent decision by the Tennessee Court of Appeals in The Counts Co. v. Praters, Inc., E2011-01624-COA-R3-CV, 392 S.W.3d 80 (filed June 22, 2012) discussed the Statute of Repose for construction defect cases.  This opinion can be found at http://www.tsc.state.tn.us/sites/default/files/countscoopn.pdf.  In this case, a contractor, Praters, Inc., installed hardwood flooring at the request of the plaintiff.  A certificate of occupancy was issued on May 15, 2006.  Praters Inc. completed this work and issued a warranty on May 28, 2006.  The hardwood flooring started to show warping soon after the flooring was installed  Approximately one year after the installation (in April or May of 2007) Praters, Inc. resurfaced the floor to try to correct the condition.  Praters, Inc. continued to provide additional advice about the flooring from 2007 through 2010.  This included the assertion by Praters, Inc. that the floor problem would correct itself once the moisture problem was resolved.  Apparently the problem did not resolve.

A lawsuit was not filed against Praters, Inc. until March 21, 2011, almost five years after the installation.  As a result, the issue before the Court was whether the four year Statute of Repose found T.C.A. § 28-3-202 barred this construction defect claim.  The Statute of Repose in T.C.A. § 28-3-202 provides:

All actions to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency, or for injury to the person or for wrongful death arising out of any such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such an improvement within four (4) years after substantial completion of such an improvement.

(emphasis added).  The key dispute between the parties was when the four years, referred to in this statute, begins to run (i.e. the date of substantial completion).  The Appellate Court agreed with the trial court decision and decided the floor installation was “substantially complete” by, at the latest, May 28, 2006.  The fact resurfacing of the floor was completed approximately one year after the installation did not extend the Statute of Repose.  Further, the fact there were continued attempts to correct the floor for several years following the installation also did not extend the Statute of Repose.  The court found that the date of the discovery of the defect and the fact ongoing repairs occurred do not change the date of “substantial completion."

The term "substantial completion" is a defined...