Sixteen-Year-Old Misrepresentation Claim Time-Barred

Where plaintiff could have discovered fire damage to her home by simply moving the refrigerator or looking in the HVAC return, the statute of limitations on her misrepresentation claims was not tolled under the discovery rule of the doctrine of fraudulent concealment.

In Eldridge v. Savage, No. M2016-01373-COA-R3-CV (Tenn. Ct. App. Nov. 29, 2017), plaintiff purchased a home from defendant in 1994. At the time, defendant told plaintiff that the home had been damaged by a fire started by the previous occupants, and plaintiff noticed “that the home’s kitchen cabinets were caramel color due to being heat scorched, and observed that the home had at least one burnt floor joist in the basement.” Plaintiff also had the home inspected by a professional home inspector at the time of the purchase.

After living in the home for 16 years, one of plaintiff’s children developed respiratory issues, which eventually led doctors to recommend that plaintiff clean the home with bleach in case environmental conditions were causing the child’s issues. During this cleaning, plaintiff discovered that the home had “extensive fire damage behind the refrigerator, behind the cabinets, in the walls, and charred flooring was also discovered beneath the linoleum that [defendant] installed.” Plaintiff further found that “the HVAC return was filled with soot.”

In 2010, plaintiff filed suit against defendant seller for intentional and negligent misrepresentation, among other claims. The trial court granted defendant’s motion for summary judgment on the basis that the claims were time barred, and the Court of Appeals affirmed.

The Court first noted that in was undisputed that the statutes of limitation would have all expired had they began to run when plaintiff purchased the home in 1994. The issue, then, was whether the limitations period was tolled by either the discovery rule of the fraudulent concealment doctrine.

Under the discovery rule, the time for a lawsuit to be filed does not begin to run “until the plaintiff knows, of in the exercise of reasonable care and diligence, should know that an injury has been sustained.” (internal citation omitted). Pursuant to this tolling doctrine, discovery of the cause of action occurs “when the plaintiff becomes aware of facts sufficient to put a reasonable person on notice that he or she has suffered an injury as a result of the defendant’s wrongful conduct.” (internal citation omitted). “[T]he discovery rule does not allow the plaintiff to delay filing suit until she knows the full extent of her damages[.]” (internal citation omitted).

Here, plaintiff “had actual knowledge that the house was damaged in a fire prior to purchasing the home,” and she observed some visible fire damage. Defendant seller had told plaintiff that the previous occupant set a fire in three places. In addition, “the record reveals how easy it was for [plaintiff] and her husband to subsequently discovery the ‘extent’ of the damage,” as the extensive damage was at least partially found by moving the refrigerator and looking into the HVAC return. Based on these facts, the Court held that plaintiff “was not only aware of facts sufficient to put a reasonable person on notice that she had suffered an injury when she acquired the home…, but she also could have easily discovered additional facts sufficient to put a reasonable person on notice that she had suffered an injury by acquiring the fire damaged property[.]” Accordingly, the discovery rule did not toll the statute of limitations.

Next, plaintiff argued that defendant’s fraudulent concealment of the damage should operate to toll the statute of limitations. “Generally, a plaintiff seeking to establish fraudulent concealment must prove that the defendant took affirmative action to conceal the cause of action and that the plaintiff could not have discovered the cause of action despite reasonable diligence.” (internal citation omitted). In this case, plaintiff could not meet this second prong for the same reasons she could not rely on the discovery rule—based on the information she was given at the time of the purchase as well as the ease with which she eventually discovered the additional damage.

Because neither the discovery rule nor the fraudulent concealment doctrine tolled the statute of limitations, plaintiff’s claims were time barred and summary judgment for defendant was affirmed.

Filing suit for misrepresentations that allegedly occurred sixteen years ago will almost always be an uphill battle.