Does Four Year Statute of Repose in T.C.A. § 28-3-202 Bar Tennessee Construction Defect Claims When Project is Not Complete?

The recent Tennessee Court of Appeals decision of Keith Gillis v. Covenant Health, 2015 WL 3563034 (Tenn. Ct. App. 2015) discussed the four year statute of repose found in T.C.A. § 28-3-202 for construction defect claims.  This statute of repose is a very good way to defeat many construction defect claims in Tennessee.  This particular case dealt with a situation where a radiology facility at Methodist Hospital was allegedly defectively constructed.  Specifically, the walls around the radiology facilities required a certain amount of lead shielding but there was a portion of the walls that did not contain the necessary lead shield to protect individuals from exposure to excessive radiation.  As a result, plaintiffs claimed they were exposed to excessive radiation and therefore they sued the construction company that failed to put in the necessary lead shielding.

Tennessee law is clear that we have a four year statute of repose that bars claims for construction defect cases filed greater than four years from the date of substantial completion (with certain exceptions).  The entire statute found in T.C.A. § 28-3-202 is as follows:

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.

The question therefore, in many cases, centers around how to determine the date of “substantial completion.”  T.C.A. § 28-3-201(2) defines substantial completion as follows:

(2) “Substantial completion” means that degree of completion of a project, improvement, or a specified area or portion thereof (in accordance with the contract documents, as modified by any change orders agreed to by the parties) upon attainment of which the owner can use the same for the purpose for which it was intended; the date of substantial completion may be established by written agreement between the contractor and the owner.

Tennessee Supreme Court Clarifies How to Determine the Applicable Statute of Limitations for a Case (Old Rule was “Gravaman of the Complaint”)

The Tennessee Supreme Court in Brenda Benz-Elliott v. Barrett Enterprises, LP, No. M2013-00270-SC-R11-CV, 2015 WL 294635 (Tenn. 2015) has provided an opinion that attempts to clarify how statute of limitations should be applied for Tennessee cases.  Over the years numerous Tennessee appellate decisions have cited the “gravaman of the complaint” rule in order to determine which statute of limitations applies to a case.  (Benz-Elliott at 7, 8).  In this case, the Tennessee Supreme Court noted that defining exactly what this actually means has proven difficult over time.  If you desire to read a detailed analysis of the historical citations to this rule and the general “fuzziness” in the actual application of this rule, this case provides a lengthy discussion of these issues.  For the purposes of this blog post, however, I am mainly going to address the ultimate conclusion of the Tennessee Supreme Court that is an attempt to clarify confusing pre-existing precedent. 

Ultimately, the Tennessee Supreme Court found that when choosing the appropriate statute of limitations for a case “courts must ascertain the gravaman of each claim, not the gravaman of the complaint in its entirety.”  Benz-Elliott at 8.  The Court then found the court’s should use a specific “two-step approach” test that has previously been discussed in Tennessee decisions in order to determine the gravaman of a claim.  This holding is stated as follows: 

Today we clarify that the two-step approach articulated in Vance and applied in Alexander and Harvest Corp. is the correct framework for courts to employ when ascertaining the gravamen of a claim for the purpose of choosing the applicable statute of limitations. When utilizing this approach, a court must first consider the legal basis of the claim and then consider the type of injuries for which damages are sought. This analysis is necessarily fact-intensive and requires a careful examination of the allegations of the complaint as to each claim for the types of injuries asserted and damages sought. Contract Law and Practice § 12:78, at 595 (2006).

2014 Tennessee Legislature Makes Judgments Permanent if Injury or Death Caused by Criminal Conduct

Analysis:  The Tennessee Legislature made an interesting change to the typical rule in Tennessee that judgments are only good for ten years unless renewed (See T.C.A. § 28-3-110 and Tennessee Rule of Civil Procedure 69.04).  The Tennessee Legislature in the 2014 Tennessee legislative session passed Public Chapter No. 596 which was signed into law by Governor Bill Haslam on March 28, 2014.  This statute essentially allows a party to make a judgment permanent (as opposed to the current law where it expires after 10 years unless renewed) if the injury or death was caused by criminal conduct.  This act applies to any civil judgments that go into effect after July 1, 2014.  Additionally, there is actually a way for this act to apply to judgments entered before July 1, 2014, if a specific procedure is followed.

The new T.C.A. § 28-3-110(B)(1) provides as follows:

(b)(1) Notwithstanding the provisions of subsection (a), there is no time within which a judgment or decree of a court of record entered on or after July 1, 2014, must be acted upon in the following circumstances:

(A) The judgment is for the injury or death of a person that resulted from the judgment debtor's criminal conduct; and

(B) The judgment debtor is convicted of a crim...

Tennessee Adds Five Year Statute of Repose for Attorney and Accountant Malpractice Claims

Analysis:  The Tennessee legislature recently passed a law that now provides a five year statute of repose for any malpractice claims against accountants or attorneys.  The Tennessee Legislature in the 2014 Tennessee Legislative Session passed Public Chapter No. 618 making this change to existing Tennessee law.  This statute takes effect July 1, 2014 and applies to all acts or omissions of malpractice by accountants or attorneys that occur on or after July 1, 2014. 

T.C.A. § 28-3-104 is modified to add a new subsection (c).  The new subsection in the statute provides as follows:

(c)(1) Actions and suits against licensed public accountants, certified public accountants, or attorneys for malpractice shall be commenced within one (1) year after the cause of action accrued, whether the action or suit is grounded or based in contract or tort.

(2) In no event shall any action or suit against a licensed public accountant, certified public accountant or attorney be brought more than five (5) years after the date on which the act or omission occurred, except where there is fraudulent concealment on the part of the defendant, in which case the action or suit shall be commenced within one (1) year after discovery that the cause of action exists.

As you can see, there is still a one year statute of limitations for suits against accountants and attorneys for malpractice from the date the cause of action accrued (the discovery rule applies in Tennessee to these causes of action so that can extend the statute of limitations well beyond 1 year from the actual act or omission).  However, the new five year statute of repose is now found in subsection (c)(2) which basically provides that once five years passes from the date of the act or omission which constituted malpractice, no claim can be brought against the accountant or attorney. 

In Tennessee One Year Healthcare Liability Action Statute of Limitations is Not Extended by Pre-Suit Notice When Dealing with GTLA Lawsuit

Analysis:  Last year the Tennessee Supreme Court decided another important case that interprets the Governmental Tort Liability Act (“GTLA”) in conjunction with other Tennessee statutes.  In this case the Tennessee Supreme Court found that the 120 day extension of time to file a healthcare liability action (formerly medical malpractice cause of action) when pre-suit notice is provided does not apply to GTLA lawsuits.  The Tennessee Supreme Court in Walton Cunningham v. Williamson County Hospital District et al, 405 S.W.3d 41 (Tenn. 2013) dealt with a medical malpractice claim that was filed 15 months after the claim accrued at the time of the death.  The plaintiffs relied upon T.C.A. § 29-26-121 that provides a 120 day extension of time beyond the one year statute of limitations to file suit after pre-suit notice is provided under the statute.  The pertinent part of T.C.A. § 29-26-121 provides as follows:

(c) When notice is given to a provider as provided in this section, the applicable statutes of limitations and repose shall be extended for a period of one hundred twenty (120) days from the date of expiration of the statute of limitations and statute of repose applicable to that provider...

The question in this case therefore was whether the extension found in T.C.A. § 29-26-121 applies to a GTLA healthcare liability claim (essentially a medical malpractice case against a governmental entity).  The statute of limitations for a GTLA claim is one year as explicitly provided in T.C.A. § 29-20-305(b) which provides as follows:

(b) The action must be commenced within twelve (12) months after the cause of action arises.

As a result, there is a conflict between the SOL of 12 months for a GTLA claim and 12 months + 120 days (with pre-suit notice) in the healthcare liability statute.  The GTLA is a specific statute where the government waives immunity in certain limited circumstances.  However, “because waiver of immunity is in derogation of the common law, any claim for damages brought under the GTLA must be in stri...

Tennessee Statute of Repose Affirmative Defense is Waived if Not Timely Raised

Analysis:  The Tennessee Supreme Court recently decided an important case about the statute of repose that shows the importance of raising this defense in a timely manner.  The Tennessee Supreme Court in Eddie C. Pratcher, Jr. v. Methodist Healthcare Memphis Hospitals, 407 S.W.3d 727 (Tenn. 2013) discussed whether the Tennessee healthcare liability statute of repose (T.C.A. § 29-26-116(a)(3)) is an affirmative defense under Tennessee Rules of Civil Procedure 8.03 and whether it is waived if not raised in a timely manner. 

In the Pratcher case, the patient died following child birth cesarean section complications on December 4, 1999.  On December 1, 2000 her husband filed a Tennessee healthcare liability action (formerly medical malpractice action) against various parties.  There were several amendments to the complaint and the case ultimately proceeded to trial in September of 2006.  At no time throughout the pendency of the case did the defendant assert a statute of repose defense until April 2009 which was two and a half years after the first trial in this case.  At that point the defendant filed a motion to dismiss under the statute of repose defense but still did not attempt to amend its answer to actually add the defense in the answer.  Finally in October of 2010, four years after the trial, this defendant filed a motion to amend the answer to assert the statute of repose defense.  As a result, the Tennessee Supreme Court in this case addressed whether the statute of repose was waived in this context.

The Tennessee Supreme Court at length discussed the interaction between the statute of repose (for a healthcare liability action) and Tennessee Rule of Civil Procedure 8.03.  Specifically, T.C.A. § 29-26-116(a)(1-3) provides as follows:

(a)(1) The statute of limitations in health care liability actions shall be one (1)...

What is the Statute of Limitations for a Tennessee Medical Malpractice Cause of Action (Healthcare Liability Action)?

Analysis:  The statute of limitations for a medical malpractice cause of action (now known as a “healthcare liability action” due to recent changes in the Tennessee statutes) is one year as established by T.C.A. § 29-26-116.  If the alleged injury is not discovered within the one year period then the period of limitations is one year from the date of the discovery of the alleged injury (this is known as the “discovery rule” which is applied to many different statutes of limitations in Tennessee).  However, no cause of action can be brought greater than three years after the date of the negligent act or omission except when there is fraudulent concealment by the defendant.  If there is fraudulent concealment then the case must be commenced within one year after the discovery that the cause of action exists.  This three year time period is considered a statute of repose under Tennessee law and the “discovery rule” does not save a claim from being barred under this statute of repose under the plain language of this statute (unless fraudulent concealment is present as stated in the statute).   

There is one other exception to the limitation time periods identified in this statute - when a foreign object is negligently left in the patient’s body.  In this circumstance the statute of limitations is one year from the time the alleged injury is discovered or should have been discovered.  This exception also applies to the three year statute of repose based on the plain language in the statute.  (See also Bloomer v. Wellmont Holston Valley Medical Center, 299 F.Supp.2d 810 (E.D.Tenn. 2004)).

T.C.A. § 29-26-116(a) in totality provides as follows:

(a)(1) The statute of limitations in health care liability actions shall be one (1) year as set forth in § 28-3-104.

What is the Statute of Limitations and Statute of Repose for a Products Liability Cause of Action in Tennessee?

Analysis:  Under Tennessee law, as a general rule, the statute of limitations for a product liability cause of action is the same as what applies to a personal injury or injury to property cause of action. (See T.C.A. § 29-28-103).  As a result, injuries to the person are subject to a one year statute of limitation for a products liability injury. (See T.C.A. § 28-3-104).  Injuries to personal or real property are governed by the three year statute of limitations found in T.C.A. § 28-3-105.  Regardless, all claims must be brought within 6 years of the date of injury as stated explicitly in T.C.A. § 29-28-103. 

There is also a statute of repose found in T.C.A. § 29-28-103.  This statute states the following (see the highlighted portion of the statute for the statute of repose language):

(a) Any action against a manufacturer or seller of a product for injury to person or property caused by its defective or unreasonably dangerous condition must be brought within the period fixed by §§ 28-3-104, 28-3-105, 28-3-202 and 47-2-725, but notwithstanding any exceptions to these provisions, it must be brought within six (6) years of the date of injury, in any event, the action must be brought within ten (10) years from the date on which the product was first purchased for use or consumption, or within one (1) year after the expiration of the anticipated life of the product, whichever is the shorter, except in the case of injury to minors whose action must be brought within a period of one (1) year after attaining the age of majority, whichever occurs sooner.

As a result, the outer limit for a products liability cause of action (the statute of repose) is ten years after the product was first purchased or within one year of the expiration of the anticipated life of the product – whichever is shorter.  There is one exception to the statute...

How are Tennessee Statutes of Limitations Applied when the Claimant is a Minor or Incompetent Person?

Analysis:  Statutes of limitations under Tennessee law are generally governed by Tennessee statute.  A specific time period is outlined in the statute within which a cause of action must be filed after a specific event.  However, there are certain exceptions to the statute of limitations in Tennessee.  One such exception is when the person experiences “incapacity”.   T.C.A. § 28-1-106 provides that if an individual, at the time a cause of action accrues, is under 18 years of age or is adjudicated incompetent then the statute of limitations is tolled (or put on hold) under their “legal rights” are restored.  For someone who is a minor, their “legal rights” are restored at the age of 18.  Their 18^th birthday begins the time period for the original statute of limitations for the cause of action.  For example, if a 15 year old minor is injured in an automobile accident, the one year statute of limitations for the personal injury action begins to run on their 18^th birthday so they would have one year to file the cause of action from the date of their 18^th birthday.   However, if the statute of limitations is greater than three years then they are limited to only three years from the date of their 18^th birthday (the date of the restoration of their “legal rights”). 

For an individual who is adjudicated incompetent at the time the cause of action accrued, the statute of limitations begins to run from the date their “legal rights are restored” (that would be the date they became competent again).  They can therefore commence the cause of action within the original statute of limitations from the date their legal rights are restored.  They also have the same three year cap for any statute of limitations period that exceeds three years.  T.C.A. § 28-1-106 in its entirety provides as follows:

If the person entitled to commence an action is, at the time the cause of action accrued, either under eighteen (18) years of age, or adjudicated incompetent, such person, or such person's representatives and privies, as the case may be, may commence the action, after legal rights are restored, within the time of limitation for the particular cause of action, unless it exceeds three (3) years, and in that case within three (3) years from restoration of legal rights.

Construction Defect – Four year statute of repose from date of substantial completion

has a four year statute of repose for construction defect claims, with some exceptions.  A statute of repose bars a claim after a date certain and is different from a statute of limitations.  A statute of limitations generally bars a claim a certain amount of time after the cause of action accrues.  A statute of repose, however, generally bars a claim after a certain time period passes from an event other then the time the cause of action accrues. (See Wyatt v. A-Best Products Co., 924 S.W.2d 98, 102 (Tenn. Ct. App 1995) for a good discussion on the differences between the two).  The Tennessee Court of Appeals has stated that “because a statute of repose sets the triggering event as something other than accrual, it can have the effect of barring a plaintiff's claim before it accrues, most typically before the plaintiff becomes aware of his or her injury.”  Wyatt at 102. 

The statute of repose for construction defect claims is found in T.C.A. § 28-3-201 – T.C.A. § 28-3-205.  This statute has some nuances that need to be considered in all cases involving construction defects.  T.C.A. § 28-3-202 is the operative statute and provides as follows:

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).  As a result, there is a four year statute of repose which prevents a lawsuit for construction defect claims (as defined in the statute) unless the cause of action is commenced within four years after substantial completion of the improvement.  

As a result, the definition of “substantial completion” is very important to determine when the four year time period begins to run.