Over the summer, the Tennessee Court of Appeals issued an opinion that was important not only in its own right but also because it directly reversed the position taken by the Court in a string of prior cases involving near-identical disputes. See Simpkins v. John Maher Builders, Inc., No, M2021-00487-COA-R3-CV, 2022 WL 1404357 (Tenn. Ct. App. May 4, 2022). More specifically, in Simpkins, the Tennessee Court of Appeals held that both the three-year statute of limitations for injury to real property and the six-year statute of limitations for breach of contract could apply in a single construction defect action.
In Simpkins, the plaintiffs alleged they purchased real property in August 2017 with a newly constructed home built by the defendants. The plaintiffs asserted that the home was improperly built and contained both construction defects and substandard building materials, which caused the home to be infested with mold and other microbial growth. In their complaint, the plaintiffs asserted claims for breach of contract, breach of warranty, fraud, intentional misrepresentation, fraudulent concealment, negligence, and unfair and deceptive business practices.
In response, the defendants filed a motion to dismiss, asserting that the plaintiffs’ claims were barred by the three-year statute of limitations applicable to injuries to real property codified at Tennessee Code Annotated § 28-3-105. Simply stated, the defendants argued that, because the plaintiffs acknowledged in their complaint that they became aware of the mold problems in August 2017, their claims (filed in December 2020) were untimely.
After conducting a hearing on the motion to dismiss, the trial court entered an order in which it concluded that, because the matter concerned alleged damage to the plaintiffs’ real property, the controlling statute of limitations was the three-year statute of limitations for the filing of an action based upon damage to real property.
On appeal, the overarching issue to be addressed by the Tennessee Court of Appeals was whether the trial court erred in determining that the gravamen of the plaintiffs’ claims was for injury to the plaintiffs’ real property and, in turn, dismissing claims filed outside the three-year window.
However, before tackling that issue, the Court of Appeals noted that the procedure for properly identifying the gravamen of a case had been clarified by the Tennessee Supreme Court in Benz-Elliott v. Barrett Enters, LP, 456 S.W.3d 140 (Tenn. 2015). In Benz-Elliott, the Tennessee Supreme Court noted that, in order to ascertain the governing statute of limitations, a court must first consider the legal basis of the claim and then consider the type of injuries for which damages are sought. Further, while acknowledging that identifying the gravamen of the complaint has proven difficult over time, the Tennessee Supreme Court stated:
[O]ur prior decisions have not specifically discussed the reality that, at least since the adoption of the Tennessee Rules of Civil Procedure, parties may assert alternative claims and defenses and request alternative relief in a single complaint, regardless of the consistency of the claims and defenses. Such alternative claims may well be subject to differing statutes of limitations. . . .We agree with the Court of Appeals that, in choosing the applicable statute of limitations, courts must ascertain the gravamen of each claim, not the gravamen of the complaint in its entirety.
Id. at 147-49 (footnote and internal citations omitted).
Relying on the guidance provided by the Tennessee Supreme Court in Benz-Elliott, the Tennessee Court of Appeals acknowledged in Simpkins that it needed to evaluate not only the legal basis for the claims in question but also the type of injuries for which damages were sought.
With regard to the legal basis, the Court of Appeals concluded that the plaintiffs had alleged alternate claims sounding in both tort and breach of contract. Further, with regard to the type of injuries for which damages were sought, the Court of Appeals noted that, in addition to damages for injury to their property, the plaintiffs asserted that they were entitled to damages for monetary losses, including a refund of the purchase price of the home, moving expenses, temporary housing costs, storage costs, medical expenses, loss of revenue from their home-based business, diminution in value of the home, and other losses.
Predicated on its assessment of both the legal basis and the type of injuries for which damages were sought, the Tennessee Court of Appeals concluded that the trial court erroneously found that the gravamen of the plaintiffs’ complaint was solely for damage to real property. Instead, the Tennessee Court of Appeals held that, while some of the plaintiff’s’ claims were subject to the three-year statute of limitations, others, including the plaintiffs’ claims for breach of contract and breach of warranty, were subject to the six-year statute of limitations codified in Tennessee Code Annotated § 28-3-109.
The Tennessee Court of Appeals’ decision in Simpkins is instructive not only because it articulates that Tennessee courts must determine the gravamen of each claim, as opposed to the complaint as a whole, but also because it clarifies that, in construction defect actions, plaintiffs will not be automatically confined to the three-year statute of limitations applicable to claims for injuries to real property.