Articles Posted in Statutes of Repose

In Tennessee, the construction statute of repose begins to run when a project reaches substantial completion, which is when it can be used for its intended purpose. A flaw in the project will not prevent it from being substantially complete for statute of repose purposes, as recently demonstrated in the case of Raby v. Covenant Health, No. E2014-01399-COA-R3-CV (Tenn. Ct. App. June 9, 2015).*

In Raby, plaintiff worked at Methodist Hospital. The emergency room at the hospital was “substantially completed and opened in February of 2006.” Apparently a portion of lead-lined wall was left out when the radiology facilities were built, and plaintiff’s suit alleged that she was accordingly exposed to excessive radiation. In December 2013 a lead-lined wall was constructed, but during the entire time between 2006 and 2013 the facility was in use as intended. Plaintiff filed her suit in January 2014.

The trial court granted summary judgment to defendants based on the construction statute of repose found in Tenn. Code Ann. § 28-3-202 which requires that actions based on the construction of an improvement to real properly be brought within four years “after substantial completion of such an improvement.” The trial court found that the hospital radiology department was substantially completed in March 2006 when it became “available for its intended use as an emergency room.” Accordingly, the trial court held that plaintiff’s claim was untimely under the statute of repose, and the Court of Appeals affirmed.

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In Hayes v. Coopertown’s Mastersweep, Inc., No. W2014-00783-COA-R3-CV (Tenn. Ct. App. April 17, 2015), plaintiffs brought a negligence claim based on the alleged negligent inspection of their fireplace. Two issues were addressed on appeal—whether defendant owed a duty of care to plaintiffs and whether this case fell under the four-year statute of repose applicable to injuries to real property related to deficient design and construction.

In 2000, plaintiffs purchased a house built in 1964 that had a fireplace, which plaintiffs had remodeled by a third party. Part of this remodel included lowering the firebox to be flush with the floor. The remodeled fireplace did not work well, allowing smoke to escape into the den, the upper floors and the attic. Plaintiffs thus hired defendant to inspect the fireplace and determine what was causing the smoke issues. Plaintiffs did not tell defendant about the previous fireplace renovations or that the firebox had been lowered. Defendant performed the inspection requested, and part of the defendant’s work “went beyond the inspection that [plaintiffs] contracted for,” including inspecting beneath the fireplace from the crawlspace and drilling into the fireplace to determine whether any combustible material was coming into contact with the fireplace. Because of the design and construction of the fireplace, however, “there were areas underneath the fireplace that could not be seen or inspected” by defendant. Defendant made certain redesign recommendations based on his inspection, and plaintiffs hired defendant to perform the recommended work. Defendant completed this work on October 8, 2003. Subsequently, on January 17, 2005, plaintiffs’ home was damaged by fire when “wooden floor joists that had been in contact with the firebox ignited from exposure to heat generated by the fireplace,” a problem related to the first remodel done by the unnamed third party.

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Effective July 1, 2014 state law will grant Tennessee lawyers and accountants a five-year statute of repose for malpractice claims. The only exception is for fraudulent concealment by the defendant, in which event the claim must be filed within one year of the date of discovery.

A one year statute of limitations still applies in malpractice cases against lawyers and accountants and the discovery rule is still applicable to those claims.  However, the new statute of repose cuts off the right of the claimant five years after the negligent act or omission occurred (absent fraudulent concealment).

Presumably, the test for fraudulent concealment for accountants and lawyers would be the same as it is for physicians and other health care providers.  Here is the test for health care providers:  a plaintiff must establish that (1) the health care provider took affirmative action to conceal the wrongdoing or remained silent and failed to disclose material facts despite a duty to do so, (2) the plaintiff could not have discovered the wrong despite exercising reasonable care and diligence, (3) the health care provider knew of the facts giving rise to the cause of action and, (4) a concealment, which may consist of the defendant withholding material information, making use of some device to mislead the plaintiff, or simply remaining silent and failing to disclose material facts when there was a duty to speak." Shadrick v. Coker, 963 S.W.2d 726, 736 (Tenn. 1998).

 This case involves the Tennessee Medical Malpractice Act and the application of the three-year statute of repose.  On December 19, 1999, Jessie Bentley suffered severe injuries during labor and delivery by the defendant medical providers.  Suit was not filed until February 1, 2013 and the defendants all immediately moved for dismissal citing the three-year statute of repose and the Calaway decision.  Relying on the Crespo decision, plaintiff defended by arguing application of the statute of repose violated his due process rights and violated the equal protection clause.  The trial court granted the dismissal and the appeal followed. 

The Court of Appeals began its analysis with the proposition that vested rights of action in tort are constitutionally protected property interests and thus they are protected by both the due process and equal protection clauses of the Constitution.  Next, the Court turned to the Calaway decision, 193 S.W. 3d 509 (Tenn. 2005), in which the Tennessee Supreme Court held that a "plaintiff’s minority does not toll the medical malpractice statute of repose".   In short, the Calaway Court reasoned that to allow disability or minority to toll the statute of repose would defeat the very purpose of the statute.  However, the Court was mindful of those plaintiffs and lawyers who had relied upon prior decisions and ruled the statute of repose would only have prospective application to cases commenced after December 9, 2005. 

The Court of Appeals also found the plaintiff’s reliance on the Crespo decision was misplaced.  In Crespo, approximately one year after the birth of their minor child, the parents hired counsel to pursue a medical malpractice claim.  Relying on prior precedent, the malpractice investigation proceeded at a "relatively leisurely pace, which was perfectly reasonable given the clearly stated law at the time."  Four years after the birth, as the plaintiff’s were awaiting responses to requests for medical records and were preparing to file suit, the Calaway decision was rendered and Crespo’s case was instantly gone.  Under those circumstances, the Court of Appeals found the Crespos had been denied due process and their right to equal protection were violated.  

The Tennessee Bar Association has published the most recent edition of the Tennessee Bar Journal, which includes my latest article "Protecting Yourself From Statutes of Repose."  

The article discusses the impact of statutes of repose on tort recoveries in cases involving comparative fault and gives tips to lawyers on how to avoid adverse consequences of statutes of repose.

Ironically, and in the very same edition of the Tennessee Bar Journal in which I criticize statute of repose, the Tennessee Bar Association announces that it has decided to ask the Tennessee General Assembly to grant one to lawyers.  From the TBA President:

Tennessee has a ten-year statute of repose that bars most products liability claims ten years after the product at issue was sold to the first user or consumer.  Unlike a statute of limitation, a statute of repose can bar a claim even before plaintiff was injured.

The United States Court of Appeals for the Sixth Circuit recently applied the ten year statute of repose to bar a claim arising in Tennessee for losses caused by a defect in a car owned by a Tennessee consumer.  It was undisputed that the car had been sold to the first user or consumer more than ten years before the incident giving rise to the claim.  However, the plaintiff’s lawyers sought to avoid the statute of repose by filing suit against the manufacturer of the car in Michigan, the home state of the manufacturer of the vehicle.

In Standard Fire Ins. Co. v. Ford Motor Co., No. 12-1583  (6th Cir. July 24, 2013), the court held that the claim was governed by Tennessee law and that the Tennessee statute of repose barred the claim. The opinion undertakes an extensive review of Michigan’s conflict of law principles in tort claims.

The Western Section of the Tennessee Court of Appeals has held that the construction statute of repose is not tolled for minors.  By five years after a home or building is substantially completed, all bets are off. Even if the roof collapses on toddler in a crib, the contractors, architects, etc. are immune from suit.
Plaintiffs sued for injuries to a minor when a sink shattered. The trial court granted Defendants, the general contractor who constructed the building and the plumbing subcontractor who installed the sink, summary judgment based on the statute of repose for improvements to real
property.   A statute of repose grants immunity to its beneficiaries because of the mere passage of time from some event.  Practically speaking, it means that a person can lose his or her right to receive compensation for negligent acts or events before he or she is even injured,

The Tennessee Court of Appeals has held that the savings statute trumps the products liability statute of repose.

In  Maino v. The Southern Company, Inc., d/b/a The Southern Company, et al., W2007-00225-COA-R9-CV  (Tenn. Ct. App. NOv. 19, 2007) the Western Section of the Court of Appeals held that a products liability case brought  under the savings statute was permitted to proceed even though the statute of repose expired during the savings period.

The Court said that "[p]ermitting a plaintiff to refile an action that originally was filed within the statute of limitations and ten-year statute of repose, non-suited, and refiled within the one-year period  permitted by the savings statute does not frustrate the legislative intent of achieving a degree of  predictability for the purposes of setting product liability insurance premiums. Unlike mental incompetency, the extension of time under the savings statute is neither unpredictable nor without limitation. Additionally, no surprise or hardship is worked on a defendant or its insurance carrier where actual notice of an asserted claim is had within the statutory period. On the other hand, the purpose and spirit of the longstanding savings statute is realized."