Dismissal partially reversed based on fraudulent concealment.

Where plaintiffs averred that defendant home builders affirmatively told plaintiffs that the utility penetrations in the crawl space of the newly built home purchased by plaintiffs in August 2017 had been sealed with foam, and plaintiffs did not learn until January 2018 after an inspection by a mold remediation company that this statement was untrue, plaintiffs’ claims related to the damage allegedly caused by this failure to seal should not have been dismissed based on the statute of limitations, as plaintiff had put forth enough evidence from which a trier of fact could have found that the statute of limitations on these claims was tolled by fraudulent concealment.

In Simpkins v. John Maher Builders, Inc., No. M2021-00487-COA-R3-CV, 2022 WL 1404357 (Tenn. Ct. App. May 4, 2022), plaintiffs filed this pro se action that revolved around a newly built home they bought in August 2017 that had allegedly developed severe mold issues. Plaintiff asserted various claims against defendants, including breach of contract, fraud, intentional misrepresentation, and negligence, all of which the trial court dismissed as untimely pursuant to the three-year statute of limitations applicable to claims of injuries to real property. (Tenn. Code Ann. § 28-3-105.) On appeal, dismissal was partially reversed.

The evidence showed that plaintiffs first became aware of mold in the crawl space of the home in August 2017, and that they sent letters to defendants notifying them of microbial issues in August, September and November 2017. This suit, however, was not filed until December 2020, more than three years after plaintiff first became aware of the mold. The tort claims in this case were subject to the three-year statute of limitations applicable to injuries to real property, and the Court of Appeals agreed that this limitations period would not be tolled by the discovery rule under the facts here. The Court wrote that “there [could] be no question that Plaintiffs possessed ‘actual knowledge of facts sufficient to put a reasonable person on notice that they had suffered an injury as a result of wrongful conduct’ by Defendants in August, September, and November 2017.” (internal citation omitted). The Court also rejected plaintiffs’ arguments that the limitations period would be tolled by statute, as the statutes cited by plaintiffs applied to commercial property and/or criminal offenses.

Plaintiffs were successful, however, in arguing that the limitations period for a portion of their claims would possibly be tolled by fraudulent concealment. Plaintiffs asserted that defendants told them during the final walkthrough in August 2017 that the utility penetrations had been sealed with foam. After plaintiffs had an inspection by a mold remediation company in January 2018, however, they learned that this was not true. Plaintiffs alleged that this “failure to seal the utility penetrations contributed to the moisture and mold problems in the home,” and they argued that these claims fell within the three-year limitations period because the limitations period was tolled by defendants’ fraudulent concealment.

A plaintiff alleging fraudulent concealment must show:

(1) that the defendant affirmatively concealed the plaintiff’s injury…; (2) that the plaintiff could not have discovered the injury…despite reasonable care and diligence; (3) that the defendant knew that the plaintiff had been injured and the identity of the wrongdoer; and (4) that the defendant concealed material information from the plaintiff by withholding information or making use of some device to mislead the plaintiff in order to exclude suspicion or prevent inquiry.

(internal citation and quotations omitted). Taking the allegations in the complaint as true, the Court found that “a trier of fact could determine that Plaintiffs, in the exercise of reasonable care and diligence, could not have discovered this potential cause of their injury until January 2018 due to Defendants’ attempts to conceal this cause.” Accordingly, the Court ruled that the “claims concerning injury to their property allegedly caused by Defendants’ failure to seal the utility penetrations beneath the home” should not have been dismissed.

In this lengthy opinion, the Court also ruled that plaintiffs’ breach of contract claims were subject to a six-year statute of limitations, and it dealt with various procedural and other arguments from plaintiffs. Ultimately, dismissal of the breach of contract claims and the claims related to the failure to seal were vacated.

This case is an example of fraudulent concealment saving some, but not all, of the claims in a case. Here, the plaintiffs were able to differentiate the claims related to the unsealed utilities and thus able to obtain a partial reversal of the dismissal of their case.

This opinion was released three months after the case was assigned on briefs.

Note:  Chapter 65, Section 10 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.

Day on Torts: Leading Cases in Tennessee Tort Law contains summaries of leading cases on over 500 topics and citations to more than 1500 additional cases.  The 500,000+ word book  (and two others, Tennessee Law of Civil Trial and Compendium of Tennessee Tort Reform Cases) is available by subscription at www.birddoglaw.com and is continually updated as new decisions and statutes impact Tennessee law.  Click on the link to see the book’s Table of Contents.

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