One Year Statute of Limitations Bars Misrepresentation Claims

In Sakaan v. FedEx Corporation, Inc., No. W2016-00648-COA-R3-CV (Tenn. Ct. App. Dec. 21, 2016), the Court of Appeals affirmed dismissal of a misrepresentation claim based on the statute of limitations.

Plaintiff had previously been employed by defendant FedEx, and had been presented with a severance package as part of a cost-cutting initiative by the company. Before signing the severance agreement, plaintiff asked about how it would affect his ability to work on FedEx projects that were staffed by third-party vendors, and he “allege[d] he was assured that his acceptance of the severance agreement would not prohibit him from working on FedEx projects sourced through a third-party vendor.” Plaintiff signed the agreement in March 2013, officially left his employment in November 2013, and was hired by a company that contracted with FedEx. In his role with this new company, he attended a meeting at FedEx on December 19, 2013. When members of the FedEx legal team recognized him, they had him removed from the premises, and “he has not worked on a FedEx project since that time.”

Plaintiff filed suit on April 21, 2015, making claims for intentional and negligent misrepresentation. After filing their answers, defendants moved for judgment on the pleadings based on the statute of limitations, which the trial court granted. The trial court determined that the one-year statute of limitations found in Tenn. Code Ann. § 28-3-104(a)(1) applied to this matter, and that the claims were thus time-barred. The Court of Appeals affirmed.

On appeal, plaintiff argued several theories as grounds for reversal, all of which were rejected. First, plaintiff asserted that defendants had waived their right to assert a statute of limitations defense. In his complaint, plaintiff had stated that his “action was brought within the applicable statutes of limitation and repose for such actions in the State of Tennessee.” When responding to this numbered paragraph, the defendants’ answers stated that “they admitted the allegation there ‘upon information and belief.’” The Court, however, found that these admissions were inadvertent, as later in the answers the defendants stated that plaintiff was “barred from pursuing any actions…which are outside the applicable statutes of limitations.”

The Court reasoned that, despite the inadvertent admissions in the answers, defendants had not waived their statute of limitations defenses. The Court noted that Tennessee law provides that “when the allegations of a complaint are admitted, the subject matter thereof is removed as an issue, no proof is necessary, and it becomes conclusive on the parties,” but that “this principle extends to admissions in pleadings regarding issues of fact.” (internal citations and quotation omitted). Here, the Court found that plaintiff’s statement in the complaint that his filing was timely “amounted to nothing more than a legal conclusion, the determination of which would properly rest with the trial court.” Further, the Court noted that “even when a party has failed to properly plead the [affirmative] defense, a waiver will not result if the opposing party has been given sufficient notice of it.” Regarding the instant case, the Court stated:

We fail to see how the Defendants waived their right to rely on a statute of limitations defense in this case. Moreover, we fail to discern any reasonable basis for concluding that [plaintiff] has been prejudiced. Although the Defendants’ answers arguably created some initial ambiguity as to their respective positions on the timeliness of [plaintiff’s] claims, the answers did nonetheless assert a statute of limitations defense. …[T]he defense was outlined in detail in the Defendants’ motion for judgment on the pleadings and the accompanying memorandum, both of which were filed less than a month after the last answers in this case were submitted. This is not a case where the Defendants attempted to assert an affirmative defense on the eve of trial or failed to apprise [plaintiff] of their basis for the defense….Under the facts presented, he cannot reasonably claim any prejudice.

Next, plaintiff argued that the motion for judgment on the pleadings was not ripe for consideration. The Court of Appeals quickly rejected this argument, noting that all answers had been filed, and there were no counterclaims, cross-claims or third-party complaints. The Court further held that plaintiff’s apparent suggestion that “further discovery was needed before he could respond” to the motion “lack[ed] merit.”

Third, plaintiff argued that the trial court should have used a motion for summary judgment standard, as it considered matters outside the pleadings. The Court also rejected this argument, noting that the trial judge specifically said in his oral ruling that he had “carefully looked at the complaint,” and that the record did not support a finding that matters outside the pleadings were considered.

Finally, plaintiff argued that the trial court applied the wrong statute of limitations. In determining which statute of limitations to apply to a claim, “courts must ascertain the gravamen of each claim,” which means they should “consider both the legal basis of the claim and the injury for which damages are sought.” (internal citations and quotations omitted). In his brief, plaintiff argued that the six-year statute of limitations applicable to breach of contract actions might apply, which the Court quickly rejected. The Court stated that the “complaint did not allege that any contract had been breached, nor did he seek any relief that would be specifically tailored to such claims. Rather, the complaint sought to recover compensatory damages allegedly sustained by [plaintiff] due to the Defendants’ tortious conduct.”  Once again, it is the gravamen of the complaint that controls, not necessarily legal theories advanced to avoid a statute of limitations defense.

Next, the Court looked at plaintiff’s argument that three-year statute of limitations found in Tenn. Code Ann. § 28-3-105(1) should have been applied. This statue addresses “actions for injuries to personal or real property,” whereas the one-year statute of limitations imposed by the trial court applies to an injury to one’s person. Here, the Court found that plaintiff was making a claim for injury to his person, and that the one-year statute of limitations was correctly applied. The Court stated:

The allegations in the complaint are indicative of a tort to the person, not a tort involving an injury to a property interest. Indeed, whereas [plaintiff] seeks to recover for a loss of earning capacity, there is no allegation that he had any type of property right to continue working on FedEx projects. …[T]here are no allegations reflecting that a vested contractual or property interest of [plaintiff’s] had been damaged.

Accordingly, the dismissal was affirmed.

Though fairly simple, this case has a few take-away lessons. First, of course, is to be careful to file claims within the statute of limitations. Failure to do so can be fatal. Second, though, is a reminder to be extremely careful when drafting pleadings. Here, the defendants mistakenly admitted a paragraph regarding timeliness of the claim. Luckily for them, they included the statute of limitations defense later in their answers and were deemed not to have waived the issue.  At the end of the day, no harm and thus no foul, but I am sure the lawyer who signed off on the answer had a few sleepless nights.