Joseph Riccardi v. Carl Little Construction Company, Inc

07/26/2021
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 24, 2021 Session
JOSEPH RICCARDI v. CARL LITTLE CONSTRUCTION COMPANY,
INC. ET AL.
Appeal from the Circuit Court for Washington County
No. 33592 Jean A. Stanley, Judge
No. E2020-00678-COA-R3-CV
Plaintiff Joseph Riccardi brought this action for negligent construction of his residence
against Carl Little Construction Company (“Defendant”), builder of the residence, and the
Bridgewater Condominiums Property Owners Association (“Bridgewater POA”). He
alleged that Defendant negligently built the residence on non-compacted fill dirt, causing
structural and cosmetic damages to the residence. Plaintiff alleged that Bridgewater POA
was contractually responsible for repairs to the exterior of the residence. The trial court
granted summary judgment to Defendant based on its finding that the statutes of limitation
and repose had run. The court held that Bridgewater POA was liable for repairs to the
porches and patios of the property, but not the foundation or the cracks in the interior. We
vacate summary judgment against Defendant, finding that Plaintiff presented evidence
sufficient to establish genuine issues of material fact regarding when Plaintiff’s cause of
action accrued and whether Defendant fraudulently concealed the defects in the residence.
We affirm the judgment against Bridgewater POA.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed in Part and Vacated in Part; Case Remanded
KRISTI M. DAVIS, J., delivered the opinion of the Court, in which JOHN W. MCCLARTY and
THOMAS R. FRIERSON, II, JJ., joined.
Thomas C. Jessee, Johnson City, Tennessee, for appellant, Joseph Riccardi.
Christopher D. Owens, Johnson City, Tennessee, for appellee, Carl Little Construction
Company, Inc.
Frank A. Johnstone, Kingsport, Tennessee, for appellee/cross-appellant, Bridgewater
Condominiums Property Owners Association.
OPINION
I. BACKGROUND
Plaintiff purchased the residence on October 26, 2007. The parties do not dispute
that the residence was substantially complete on that date. Shortly after he moved in,
Plaintiff began noticing cracks in the interior of the residence in certain areas. He also
“experienced problems with the upstairs bathroom doors not closing properly.” Plaintiff
testified that for the first couple of years after the sale, Defendant “was very good about
sending the painter, his contractor to constantly repair all the cracks and paint, make it look
real nice and fix the doors.” The cracks kept reoccurring, and Plaintiff further testified that
[a]fter about a year and a half, two years of this, I finally called Mr. Little
and I said, “You have got to come up here. I need you to talk to me about
why I’m getting all these cracks.” So he came and we sat in the living room
and he told me that this is all due to natural settling. He said that, it’s difficult
for a home, and he said that he’s “seen homes continue settling for ten years.”
And so he assured me that these are just, this is just naturally occurring
settling of the home.
Carl Little is the sole shareholder of Defendant, Carl Little Construction Company,
Inc. He testified that he was personally in charge of the day-to-day construction of the
residence and that he was there on the job site each day of construction. Plaintiff stated
that when he asked Mr. Little about the cracks and other observable issues with the
residence, Mr. Little told him “that’s just natural settling, just don’t worry about it. It will
all settle down and you’re not going to have any problems.” Mr. Little reassured Plaintiff
that “it’s typical for a home to be settling like this.” Plaintiff said that Defendant “repaired
the cracks and attempted to adjust the doors until mid-2011,” at which time Mr. Little
“referred me to their drywall company for any future repairs.”
According to Plaintiff, in 2012 the cracks seemed to subside but “reappeared at the
end of 2012.” He testified that “toward 2012 they started to slow down a little bit. So I
actually believed what Mr. Little had said, well, maybe things are starting to settle down
and the house is beginning to settle in and stabilize.” However, in November of 2012,
“cracks began opening up all over the house.” In October of 2013, Plaintiff asked Matt
Means, a homebuilder, to come out and look at his residence. Mr. Means examined the
exterior of the condominium and “shook his head,” saying “you’ve got some problems
[and] you need to see somebody.”
Plaintiff testified that in March of 2014, the following took place:
2
Q: And you’re claiming that Carl Little concealed from you the fact that
those footers and the foundation was poured on un-compacted fill dirt, is that
what you’re saying?
A: He revealed, for the very first time, that, when a question was asked by a
man named Scott Frazier from Master Dry. I called Carl when Master Dry
was out there to take a look at the foundation. And Scott Frazier asked him
about all the fill dirt that was out there. He said, “I’ve seldom seen so much
fill dirt.” And Carl apparently said, “well, yeah, we had to fill in a lot out
there.” And Mr. Frazier from Master Dry asked him about, well, “Do you
have a compaction study, a compaction report for the fill dirt that you placed
here below the footer for the foundation?” And Mr. Little replied to Mr.
Frazier, “I never did a compaction report.” So that was the first time I knew
or had an inkling that there was an issue going on with the actual structural
integrity of the house.
Mr. Little, in his response to Plaintiff’s statement of undisputed material facts, did not
dispute Plaintiff’s assertion that Mr. Little “told Mr. Frazier, in the plaintiff’s presence, that
he had built the plaintiff’s residence on un-compacted fill dirt.”
Plaintiff hired Corum Engineering to inspect the residence and do a structural
evaluation on April 17, 2014. A week later, Corum Engineering issued its report, which
stated in pertinent part:
The basement has drywall cracks and shearing near the rear wall area on the
left side of the home. The drywall cracks appear to be caused by the
excessive settlement of the foundation walls located on the rear right corner
of the home. This area seems to have been placed on fill that may have not
been engineered or compacted during the original construction. This has also
caused several foundation block cracks along the left side of the rear wall
and the left wall. . . . The rear porch is also sinking that may be caused by
putting the porch foundation on non-engineered or compacted fill.
(Numbering and citations to attached photographs in original omitted).
On September 9, 2014, Plaintiff filed his complaint in this lawsuit. As noted, he
alleged that Bridgewater POA was “obligated to repair and/or replace the damage to the
exterior of the plaintiff’s residence.” Bridgewater POA filed a cross-claim against
Defendant for indemnity. After discovery, Defendant moved for summary judgment,
arguing that Plaintiff filed suit after the running of the three-year statute of limitations for
injuries to property, Tenn. Code Ann. § 28-3-105, and the four-year statute of repose for
3
deficient construction, Tenn. Code Ann. § 28-3-202. Plaintiff responded by asserting there
are genuine issues of material fact regarding when his cause of action accrued under the
discovery rule, whether the limitations period should be tolled due to equitable estoppel
and/or fraudulent concealment, and whether the statute of repose was inapplicable due to
Mr. Little’s wrongful concealment of Plaintiff’s cause of action. In a supplemental
response to the summary judgment motion, Plaintiff filed a structural damage evaluation
done by engineer George Cross that observed “very steep ground conditions” along the
rear and left sides of the residence, and noted that “fill soil was placed during the original
construction on the property.” The report stated:
The core No. 1 location encountered two concrete slabs sections under the
basement area of the home. The second concrete encountered did not appear
to be a foundation for an adjacent interior wall. This condition is abnormal
and may indicate that the original floor slab elevation was changed or that
significant downward settlement of the original slab occurred.
The deferential elevations measured in the basement slab indicates that
downward settlement has occurred over time. The settlement is due
primarily to deterioration of the shale/rock fragments that were placed as fill
material within the perimeter foundation walls of the structure and
underneath the basement slab floor. Based on the size of the shale fragments,
little compaction effort appears to have been performed. The soil fill should
have been broken down and compacted during its placement. The
differential elevations recorded may under estimate the total settlement
movement. The downward movements in the basement slab has caused
corresponding downward movement in the main level floor.
It is our opinion that some continued downward movement of the basement
slab will occur over time.
* * *
The rear patio has experienced significant settlement and outward movement
away from the rear foundation wall of the house with a corresponding
downward movement in the wood framed sunroom above. The movement
is due to differential foundation settlement. It appears that poor construction
methods were utilized, including placement of foundations on poorly
compacted fill soil on steep ground conditions.
The engineer’s report concluded that the needed structural repairs “would be expensive and
require significant disturbance of the interior of the structure.”
4
The trial court granted Defendant summary judgment by order entered on November
6, 2017, finding and holding as follows:
It is undisputed that plaintiff noticed damage to the property during the first
year after its purchase in 2007. Plaintiff initially contacted defendant with a
“warranty claim” within the first 2 years of the purchase of the home. It is
undisputed that plaintiff testified that the “root cause” of the issues with the
home was that defendant built the home on uncompacted fill dirt.
Plaintiff argues that Little should be estopped from relying on the statute of
limitations defense under the doctrines of fraudulent concealment or
equitable estoppel. This requires plaintiff to prove that the defendant took
affirmative action to conceal the cause of action and that plaintiff could not
have discovered such cause of action despite exercising reasonable diligence.
Equitable estoppel would toll the running of the statute of limitations where
Little has misled the plaintiff into failing to file his cause of action within the
statutory limitation.
It is undisputed that Little worked on the home at different times over the
years after receiving plaintiff’s complaints. Plaintiff says that by routinely
doing so and repeatedly assuring the plaintiff that the problems that he was
experiencing were the result of natural settling of the property, Little
fraudulently concealed plaintiff’s cause of action and/or caused plaintiff to
believe the problems would be resolved, thus preventing plaintiff from filing
suit.
It is undisputed that Little did tell plaintiff that the cracks were the result of
natural settling and that in 2014 Little said he had built the residence on
uncompacted fill dirt.
Little’s supplemental facts in reply to plaintiff’s response to the Motion for
Summary Judgment were not responded to so far as the Court can find in the
court file. Therefore, such facts are deemed by the Court to be admitted.
Undisputed fact number 26, is that defendant, Carl Little, did not believe the
foundation was built incorrectly.
The material facts are undisputed. On such facts, the Court finds that there
was no affirmative action of concealment on the part of Little. The Court
concludes that the complaint was filed outside the statutes of limitation and
repose and is time barred.
5
A bench trial took place in 2019 on the issue of Bridgewater POA’s responsibility
to repair the residence. There is no transcript or statement of the evidence regarding this
trial in the record. The trial court entered an order stating as follows in pertinent part:
Section 5 of the Master Deed provides that the Bridgewater Condominium
[Property Owners] Association shall have primary responsibility for the
maintenance and repair of “limited common elements.” The term “limited
common elements” is defined in the same paragraph as the porches, patios
and parking spaces in front of each unit. The patio which is in need of repair
at plaintiff’s home is at the rear of the structure.
Section H of the Bridgewater Condominiums restrictive covenants provides
that the Property Owners Association (POA) shall maintain, manage and
landscape all . . . roofs, common elements, and exteriors of the buildings
located upon the above described properties (including patios, limited
common areas, but excluding windows of units) . . . The restrictive covenants
do not limit the duty to maintain only front facing patios as did the Master
Deed.
* * *
The POA retained engineer George Cross who testified as to the defects and
damage to the residence. . . . Mr. Cross testified that there was a void
underneath the basement slabs which was abnormal.
Mr. Cross stated that it appeared that the developer had brought in offsite soil
to build up the lot. The material used beneath the basement slab was shale
and clay while the material under the patio was native or similar material.
Both areas of fill were put down without breaking the material down and
without sufficiently compacting such material. Mr. Cross testified that where
the outside back patio had shifted, the foundation was not deep enough. He
found that the porch needs structural repairs. In summary, he found that the
back porch is still sitting on unstable ground caused by the independent porch
foundation and that the damage to the inside of the house is caused by the
basement floor slab settling.
* * *
Pursuant to Section 5 of the Master Deed, the POA has the responsibility for
the maintenance and repair of common and limited common elements. This
includes porches and patios whether at the front or the rear of the property,
6
the restrictive covenants having expanded the duty to maintain patios to the
rear. Therefore, the Court finds that to be the obligation and responsibility
of [Bridgewater POA]. The method and costs of repair remain to be
determined.
(Internal citation omitted). Bridgewater POA did not contest the trial court’s ruling on its
liability and attempted to expedite the repairs to the patio areas.
II. ISSUES
Both Plaintiff and Bridgewater POA, as cross-appellant, raise the issue of (1)
whether the trial court erred in granting summary judgment to Defendant on the basis of
the statutes of limitations and repose, despite Defendant’s assurances to Plaintiff that the
residence’s problems were simply the result of “natural settling” and Plaintiff’s reliance
upon those representations. Plaintiff raises the additional issue of (2) whether the trial court
erred in concluding that Bridgewater POA’s duty to repair his residence was limited to the
front and rear porches and patios.
III. STANDARD OF REVIEW
A trial court may grant summary judgment only if the “pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits . . . show
that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04. The propriety of a trial court’s
summary judgment decision presents a question of law, which we review de novo with no
presumption of correctness. Kershaw v. Levy, 583 S.W.3d 544, 547 (Tenn. 2019).
“The moving party has the ultimate burden of persuading the court that there are no
genuine issues of material fact and that the moving party is entitled to judgment as a matter
of law.” Martin v. Norfolk S. Ry., 271 S.W.3d 76, 83 (Tenn. 2008). As our Supreme Court
has instructed,
when the moving party does not bear the burden of proof at trial, the moving
party may satisfy its burden of production either (1) by affirmatively negating
an essential element of the nonmoving party’s claim or (2) by demonstrating
that the nonmoving party’s evidence at the summary judgment stage is
insufficient to establish the nonmoving party’s claim or defense.
Rye v. Women’s Care Ctr. of Memphis, 477 S.W.3d 235, 264 (Tenn. 2015) (emphasis in
original). “[I]f the moving party bears the burden of proof on the challenged claim at trial,
that party must produce at the summary judgment stage evidence that, if uncontroverted at
7
trial, would entitle it to a directed verdict.” TWB Architects, Inc. v. Braxton, LLC, 578
S.W.3d 879, 888 (Tenn. 2019) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986)).
When a party files and properly supports a motion for summary judgment as
provided in Rule 56, “to survive summary judgment, the nonmoving party may not rest
upon the mere allegations or denials of its pleading, but must respond, and by affidavits or
one of the other means provided in Tennessee Rule 56, set forth specific facts . . . showing
that there is a genuine issue for trial.” Rye, 477 S.W.3d at 265 (internal quotation marks
and brackets in original omitted). “Whether the nonmoving party is a plaintiff or a
defendant—and whether or not the nonmoving party bears the burden of proof at trial on
the challenged claim or defense—at the summary judgment stage, ‘[t]he nonmoving party
must demonstrate the existence of specific facts in the record which could lead a rational
trier of fact to find in favor of the nonmoving party.’” TWB Architects, 578 S.W.3d at 889
(quoting Rye, 477 S.W.3d at 265).
In reviewing the trial court’s summary judgment decision, we accept the evidence
presented by the nonmoving party (in this case, Plaintiff) as true; allow all reasonable
inferences in his favor; and “resolve any doubts about the existence of a genuine issue of
material fact in favor of” Plaintiff, the party opposing summary judgment. Id. at 887.
IV. ANALYSIS
A. Statute of Limitations
An action for injuries to personal or real property is governed by Tenn. Code Ann.
§ 28-3-105, which provides that it “shall be commenced within three (3) years from the
accruing of the cause of action.” As the Supreme Court stated in Redwing v. Catholic
Bishop for the Diocese of Memphis, 363 S.W.3d 436, 456 (Tenn. 2012),
A defense predicated on the statute of limitations triggers the consideration
of three components—the length of the limitations period, the accrual of the
cause of action, and the applicability of any relevant tolling doctrines. All of
these elements are inter-related and, therefore, should not be considered in
isolation.
“The concept of accrual relates to the date on which the applicable statute of limitations
begins to run.” Id. at 457. The question of the correct accrual date requires the application
of the discovery rule, which “provides that a cause of action accrues and the statute of
limitations begins to run ‘when the plaintiff knows or in the exercise of reasonable care
and diligence should know that an injury has been sustained as a result of wrongful or
tortious conduct by the defendant.’” Fahrner v. SW Mfg., Inc., 48 S.W.3d 141, 143 (Tenn.
8
2001) (quoting Kohl & Co. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998)). As
we have recently observed,
The discovery rule was adopted as an “equitable exception” to the statute of
limitations due to the unfairness of requiring a plaintiff to sue to vindicate a
non-existent wrong at a time when the injury was unknown and unknowable.
Individual Healthcare Specialists, Inc. v. BlueCross BlueShield of Tenn.,
Inc., 566 S.W.3d 671, 710 (Tenn. 2019). “Under the discovery rule, the
statute of limitations will only begin to run when the plaintiff has actual
knowledge of the claim, or when the plaintiff has actual knowledge of facts
sufficient to put a reasonable person on notice that she has suffered an injury
as a result of wrongful conduct.” Coffey v. Coffey, [578 S.W.3d 10, 22 (Tenn.
Ct. App. 2018)]. The discovery rule is not intended to allow a plaintiff to
delay filing suit until he or she discovers all the facts affecting the merits of
his or her claim. Redwing[,] 363 S.W.3d 436, 459 (Tenn. 2012). Thus, the
limitations period begins to run when the plaintiff “gains information
sufficient to alert a reasonable person of the need to investigate the injury.”
Id. (quotation omitted).
* * *
[F]or purposes of the discovery rule, “whether a plaintiff exercised
reasonable care and diligence in discovering her injury is usually a fact
question for the trier of fact to determine.” Coffey, [578 S.W.3d at 22].
Maddox v. Olshan Foundation Repair & Waterproofing Co. of Nashville, L.P., No. M2018-
00892-COA-R3-CV, 2019 WL 4464816, at *15-16 (Tenn. Ct. App. Sept. 18, 2019).
This action was filed on September 9, 2014, so if it accrued before September 9,
2011, it is time-barred unless the statute of limitations was tolled by the doctrines of
equitable estoppel or fraudulent concealment, as discussed further below. The trial court
made no finding of when Plaintiff’s action accrued. It stated only, “[i]t is undisputed that
plaintiff noticed damage to the property during the first year after its purchase in 2007,”
and “Plaintiff initially contacted defendant with a ‘warranty claim’ within the first 2 years
of the purchase of the home.” It is clear that Plaintiff began seeing cracks and other
problems suggestive of settlement shortly after he moved in, but he also testified that
Defendant was “very good” about fixing them during the first two years or so. As already
noted, Plaintiff said that Defendant “repaired the cracks and attempted to adjust the doors
until mid-2011.” A reasonable trier of fact could determine from the evidence in the record
that Defendant made good on repairing problems and addressing Plaintiff’s warranty claim
complaints during the early years following his purchase, and thus a reasonably diligent
9
homeowner in Plaintiff’s position would have had no reason to know he had an actionable
legal claim then. This is particularly true given Defendant’s undisputed assurances that the
cracks and other issues were only due to normal settling of a newly-constructed house. To
hold that Plaintiff should have immediately sued Defendant rather than asking him to fix
the problems under a warranty claim would be to “penalize” him “for attempting to obtain
compliance with the contract without litigation.” Molin v. Perryman, No. 01A01-9705-
CV-00232, 1998 WL 83737, at *5 (Tenn. Ct. App. Feb. 27, 1998).
Plaintiff testified that the cracks appeared to subside in 2012, giving him reason to
think that Mr. Little’s assurances about natural settling were true. But then in November
2012, more serious problems surfaced, including cracks “opening up all over the house.”
By March of 2014, Plaintiff received an indication that there might be a structural or
foundational problem with the residence, when Mr. Little admitted that it was built on
uncompacted fill dirt. This Court has held on several occasions that
there is ample authority for the proposition that whether a plaintiff
discovered, or in the exercise of reasonable diligence, should have
discovered an injury resulting from a defendant’s act creates a genuine issue
of fact, precluding disposition by summary judgment. Caledonia Leasing
and Equip. Co. v. Armstrong, Allen, Braden, Goodman, McBride & Prewitt,
865 S.W.2d 10, 18 (Tenn. App. 1992); Nat’l Mortgage Co. v. Washington,
744 S.W.2d 574, 580 (Tenn. App. 1987); Gosnell v. Ashland Chem. Inc., 674
S.W.2d 737, 739 (Tenn. App. 1984). As the court stated in National
Mortgage, “Whether any kind of behavior conforms to a legal standard of
reasonable conduct is a mere fact question for the jury, and not a question of
law.” 774 S.W.2d at 580. Similarly, this court stated in Hathaway v. Middle
Tennessee Anesthesiology, P.C., 724 S.W.2d 355 (Tenn. App. 1986), “The
question of whether due diligence under the circumstances required . . . any
other particular form of investigation is properly a question for the trier of
fact after hearing all of the evidence, rather than a question of law to be
determined by summary judgment based upon the . . . record.” Id. at 360.
City State Bank v. Dean Witter Reynolds, Inc., 948 S.W.2d 729, 735 (Tenn. Ct. App. 1996);
see also Maddox, 2019 WL 4464816, at *16; Coffey, 578 S.W.3d at 21; Palazzo v. Harvey,
380 F.Supp.3d 723, 731 (M.D. Tenn. 2019) (“Ordinarily, the question of whether a plaintiff
knew or should have known that a cause of action existed is a question of fact, inappropriate
for summary judgment.”) (quoting City State Bank); Liggett v. Brentwood Builders, LLC,
No. M2007-00444-COA-R3-CV, 2008 WL 836115, at *5 (Tenn. Ct. App. Mar. 27, 2008)
(“The time of the accrual of the cause of action, as affecting limitations, is frequently a
question of fact to be determined by the jury or trier of fact, as where the evidence is
10
conflicting or subject to different inferences.”) (quoting Prescott v. Adams, 627 S.W.2d
134, 137 (Tenn. Ct. App. 1981)). In Prescott, this Court stated:
The question in the instant case is when should the plaintiffs have reasonably
known that their cause of action existed.
We believe it is inappropriate for the Chancellor to have decided this
question on the basis of a motion for summary judgment. Although the facts
may not have been in dispute, a dispute did exist as to the proper
interpretation of those facts. Summary judgment for the defendant is not
proper where, although the basic facts are not in dispute, parties in good faith
may disagree nevertheless about the inferences to be drawn from the facts.
138 S.W.2d at 138-39. In the present case, Defendant relies upon Liggett, in which the
Court departed from the general principle discussed above and held summary judgment
appropriate because the homeowners’ undisputed knowledge of “significant and pervasive
problems,” defects, and damage was so clear that a trier of fact could only conclude that
they knew or should have known of their cause of action more than three years before filing
suit. 2008 WL 836115, at *5-*6. However, in this case, as in Maddox, Palazzo, City State
Bank, and Prescott, we find that a genuine issue of material fact exists as to when Plaintiff
knew, or in the exercise of reasonable diligence should have known, that his cause of action
existed.
Even if the trier of fact concludes that Plaintiff’s action accrued before September
9, 2011, it may still survive if it is determined that the statute of limitations should be tolled
by application of the doctrine of equitable estoppel or the related concept of fraudulent
concealment, as Plaintiff and Bridgewater POA have alleged. “[T]he doctrine of equitable
estoppel tolls the running of the statute of limitations when the defendant has misled the
plaintiff into failing to file suit within the statutory limitations period.” Redwing, 363
S.W.3d at 460. As the Supreme Court explained in Redwing,
The party invoking the doctrine of equitable estoppel has the burden of proof.
Hardcastle v. Harris, 170 S.W.3d at 85. Thus, whenever a defendant has
made out a prima facie statute of limitations defense, the plaintiff must
demonstrate that the defendant induced him or her to put off filing suit by
identifying specific promises, inducements, suggestions, representations,
assurances, or other similar conduct by the defendant that the defendant
knew, or reasonably should have known, would induce the plaintiff to delay
filing suit. Fahrner v. SW Mfg., Inc., 48 S.W.3d at 145; Hardcastle v. Harris,
170 S.W.3d at 85. The plaintiff “must also demonstrate that [his or her] delay
11
in filing suit was not attributable to [his or her] own lack of diligence.”
Hardcastle v. Harris, 170 S.W.3d at 85.
* * *
In the context of defenses predicated on a statute of limitations, the doctrine
of equitable estoppel always involves allegations that the defendant misled
the plaintiff. Fahrner v. SW Mfg., Inc., 48 S.W.3d at 146. The focus of an
equitable estoppel inquiry “is on the defendant’s conduct and the
reasonableness of the plaintiff’s reliance on that conduct.” Hardcastle v.
Harris, 170 S.W.3d at 85; see also Fahrner v. SW Mfg., Inc., 48 S.W.3d at
146. Determining whether to invoke the doctrine of equitable estoppel to
counter a statute of limitations defense requires the courts to examine the
facts and circumstances of the case to determine whether the defendant’s
conduct is sufficiently unfair or misleading to outweigh the public policy
favoring the enforcement of statutes of limitations. Hardcastle v. Harris,
170 S.W.3d at 85.
Id. at 460, 461 (brackets in original).
In the present case, Plaintiff testified that Defendant fixed the problems that
appeared with the residence for the first couple of years, in accordance with the warranty.
In his answers to interrogatories, Plaintiff stated that “Carl Little Construction repaired the
cracks and attempted to adjust the doors until mid-2011.” In 2010, Mr. Little told Plaintiff
that the problems were all due to naturally occurring settling. Plaintiff testified, and Mr.
Little did not dispute, that Mr. Little said, “you got a good, well-built house that’s going to
be here for a long time. That’s just natural settling, just don’t worry about it. It will all
settle down and you’re not going to have any problems.” The cracks “appeared to subside”
in 2012 until about November, when they began to reappear throughout the residence.
Plaintiff testified that “I’m not a builder and I’m not a structural engineer and I relied on
Mr. Little’s testimony to me that this is all natural.” Plaintiff’s reliance on Mr. Little’s
reassurances was not disputed by Defendant. Plaintiff stated that homebuilder “Matt
Means discovered that the foundation footer was separating from the foundation in October
2013.”
According to Redwing, “[t]he statute of limitations is tolled for the period during
which the defendant misled the plaintiff.” 363 S.W.3d at 461. “At the point when the
plaintiff knows or should know that the defendant has misled him or her, the original statute
of limitations begins to run anew, and the plaintiff must file his or her claim within the
statutory limitations period.” Id. Under the circumstances presented here, we are of the
opinion that genuine issues exist regarding whether Mr. Little misled Plaintiff, for how
12
long, and when Plaintiff realized or should have realized that Mr. Little’s assurances were
not true. See, e.g., Northeast Knox Util. Dist. v. Stanfort Constr. Co., 206 S.W.3d 454, 461
(Tenn. Ct. App. 2006) (where the “reasonable inferences support more than one reasonable
conclusion[,] a genuine issue of material fact exists as to whether [the defendants] are
equitably estopped from asserting the statute of limitations”). In the Liggett case upon
which Defendant relies, we held that there was no genuine issue of material fact regarding
“whether defendant’s actions lulled the plaintiffs into delaying suit,” 2008 WL 836115 at
*7, but Liggett is distinguishable because in that case we observed that the plaintiffs “have
not pointed to any evidence that Brentwood Builders somehow induced them to delay filing
suit by assuring them that it would take care of the alleged defects.” Id. In this case,
viewing the evidence in the light most favorable to the non-movant Plaintiff, a reasonable
trier of fact could conclude that Mr. Little made such assurances.
Plaintiff also argues that the statute of limitations should be tolled by operation of
the fraudulent concealment doctrine. In Redwing, the Supreme Court stated,
For over a century now, Tennessee’s courts have also held that the doctrine
of fraudulent concealment will toll the running of a statute of limitations. . .
. While the doctrine of fraudulent concealment shares many of the attributes
of the doctrine of equitable estoppel, Tennessee’s courts, like most courts,
have recognized it as a free-standing doctrine.
As it currently exists in Tennessee, the doctrine of fraudulent concealment is
aligned with the discovery rule. Under the fraudulent concealment doctrine,
the statute of limitations is tolled when “the defendant has taken steps to
prevent the plaintiff from discovering he [or she] was injured.” Fahrner v.
SW Mfg., Inc., 48 S.W.3d at 146. While other decisions couch the fraudulent
concealment doctrine in terms of the defendant taking affirmative steps “to
conceal the cause of action,” the reference to “cause of action” in this context
is synonymous with the plaintiff’s injury.
* * *
A claim of fraudulent concealment to toll the running of a statute of
limitations contains four elements. The plaintiff invoking the fraudulent
concealment doctrine must allege and prove: (1) that the defendant
affirmatively concealed the plaintiff’s injury or the identity of the wrongdoer
or failed to disclose material facts regarding the injury or the wrongdoer
despite a duty to do so; (2) that the plaintiff could not have discovered the
injury or the identity of the wrongdoer despite reasonable care and diligence;
(3) that the defendant knew that the plaintiff had been injured and the identity
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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.”
363 S.W.3d at 461-62 (footnotes and internal citations omitted; brackets in original).
Tennessee courts have observed on numerous occasions that “it is rare for summary
judgment to be appropriate when considering an issue of fraud.” Arrington v. Bryant, No.
E2018-02165-COA-R3-CV, 2019 WL 6211256, at *7 (Tenn. Ct. App. Nov. 20, 2019)
(quoting Efird v. Clinic of Plastic & Reconstructive Surgery, P.A., 147 S.W.3d 208, 222
(Tenn. Ct. App. 2003); see also Patel v. Bayliff, 121 S.W.3d 347, 355 (Tenn. Ct. App.
2003) (“insofar as the . . . claims relate to the claim of fraudulent concealment, the grant of
summary judgment is reversed”); Soldano v. Owens-Corning Fiberglass Corp., 696
S.W.2d 887, 890 (Tenn. 1985) (reversing summary judgment on fraudulent concealment
claim); Shadrick v. Coker, 963 S.W.2d 726, 736 (Tenn. 1998) (reversing summary
judgment where “there is evidence sufficient to create a jury issue on all the key elements
of fraudulent concealment”); Prescott, 627 S.W.2d at 138 (finding “sufficient basis on
which the jury could infer that the cause of action had been concealed and makes summary
judgment inappropriate on this issue”); Watts v. Putnam Cnty., 525 S.W.2d 488, 494 (Tenn.
1975) (“[t]he existence of either [fraud or wrongful concealment] was for the jury to
determine under proper instructions”); Maddox, 2019 WL 4464816, at *17 (“Whether a
defendant had the present intent to defraud another is a question of fact. . . . Likewise, the
truthfulness or falsity of a statement is a question of fact.”) (quoting Morrison v. Allen, 338
S.W.3d 417, 428 (Tenn. 2011)).
Although when Mr. Little was asked in his deposition about the foundation, he said,
“I thought it was in right,” he also admitted that he “told Mr. Frazier, in the plaintiff’s
presence, that he had built the plaintiff’s residence on un-compacted fill dirt.” Mr. Little
also testified that he “didn’t compact anything.” The engineering reports suggest that the
root cause of the excessive settlement problems was the failure to build the house on
properly compacted fill dirt. This was not a readily observable or discoverable defect
because it was underground below the residence. Nor was the “abnormal” second concrete
slab below the foundation slab, described as “floating” or unattached to the structure, easily
detectable to a reasonably diligent homeowner. Mr. Little further stated as follows:
Q: [W]ere you, yourself personally in charge of the day to day construction
of 256 Bridgewater Court?
A: Yes.
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Q: Okay. Did you have a foreman that was on the job every day or were you
on the job every day?
A: I was on the job.
This testimony raises a reasonable inference that Mr. Little was or should have been aware
of the foundation defects, since he was personally on the job site supervising construction.
The trier of fact could also reasonably conclude from the evidence in the record that Mr.
Little knew his reassurances that the cracks and other problems were due to “normal
settling,” and that Plaintiff had no need to worry because it was a well-built house, were
not true. Because there are genuine issues of material fact regarding when Plaintiff’s cause
of action accrued and whether the doctrines of equitable estoppel or fraudulent
concealment are applicable, we vacate the trial court’s summary judgment on the ground
of the statute of limitations.
B. Statute of Repose
The governing statute of repose, Tenn. Code Ann. § 28-3-202, provides as follows
in pertinent part:
All actions . . . to recover damages for any deficiency in the design, planning,
supervision, observation of construction, or construction of an improvement
to real property, for injury to property, real or personal, arising out of any
such deficiency, . . . must be brought against any person performing or
furnishing the design, planning, supervision, observation of construction, or
construction of the improvement within four (4) years after substantial
completion of an improvement.
Because Plaintiff brought his action nearly seven years after substantial completion,
it would be barred by the statute of repose regardless of when it accrued, unless Plaintiff is
correct that Defendant is precluded from asserting the statute of repose under Tenn. Code
Ann. § 28-3-205(b), which states that “[t]he limitation provided by this part is not available
as a defense to any person who has been guilty of fraud in performing or furnishing the
design, planning, supervision, observation of construction, construction of, or land
surveying, in connection with an improvement, or to any person who wrongfully conceals
any such cause of action.” The Supreme Court observed in Watts that “[i]n legal effect,
fraud or wrongful concealment obliterate the statute and the suit is wholly governed by [the
statute of limitations].” 525 S.W.2d at 494. The Watts Court went on to state,
With respect to the petitioner, Watts, the Court of Appeals held that the
lawsuit was filed more than five years after substantial completion, and ‘was
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not filed within the time allowed by the statute [of repose].’ On the surface
this is correct. Therefore, the suit was barred as to Watts unless, but only
unless, Sec. 28-314 [currently § 28-3-202] et seq. was rendered inoperative
as a result of fraud or wrongful concealment. The existence of either was for
the jury to determine under proper instructions.
Id. (emphasis added); see also Palazzo, 380 F. Supp. 3d at 730 (“In short, exactly which of
the Defendants knew what and when (if anything), and whether either was trying to deceive
Palazzo cannot be resolved on the record before the Court. This alone is enough to deny
summary judgment . . . .”). This Court has on occasion considered the statutory term
“wrongful concealment” as synonymous with “fraudulent concealment.” See Counts Co.
v. Praters, Inc., 392 S.W.3d 80, 86 (Tenn. Ct. App. 2012); Lockwood v. Hughes, No.
M2008-00836-COA-R3-CV, 2009 WL 1162577, at *5 (Tenn. Ct. App. Apr. 28, 2009). In
Lockwood, we held that to establish wrongful concealment under Tenn. Code Ann. § 28-
3-205(b),
a plaintiff is required to prove the following: (1) that the defendant took
affirmative action to conceal the cause of action or remained silent and failed
to disclose material facts despite a duty to do so; (2) the plaintiff could not
have discovered the cause of action despite exercising reasonable care and
diligence; (3) knowledge on the part of the defendant of the facts giving rise
to the cause of action; and (4) concealment of material information from the
plaintiff. Shadrick v. Coker, 963 S.W.2d 726, 735 (Tenn.1998). “The tolling
doctrine of fraudulent concealment does not apply to cases where the court
finds a plaintiff was aware or should have been aware of facts sufficient to
put the plaintiff on notice that a specific injury has been sustained as a result
of another’s negligent or wrongful conduct.” Sommer v. Womick, 2005 WL
1669843, at *4 (Tenn. Ct. App. July 18, 2005) (citing Shadrick, 963 S.W.2d
at 736)).
2009 WL 1162577, at *5.
In the case of Jenkins v. Brown, No. M2005-02022-COA-R3-CV, 2007 WL
4372166, at *1 (Tenn. Ct. App. Dec. 14, 2007), the plaintiff homeowners “discovered that
the house had been constructed on improperly compacted fill and other debris.” According
to the Jenkins Court,
The Jenkinses’ theory of recovery against Mr. Wright was that he had
fraudulently concealed from the Browns that the house had been constructed
on improperly compacted fill material and that the nail-popping and the
cracking in the interior and exterior walls were caused by settling resulting
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from the poorly compacted fill under the house. Mr. Brown testified that
when problems first appeared, Mr. Wright assured him that there were no
serious problems with the house and that the house had been constructed on
“original dirt.” Mr. Wright admitted that he did not tell the Browns that
portions of the lot had been filled in or that he had moved the original location
of the house after uncovering some fill material. However, he insisted that
the house had been properly sited and properly constructed. The jury
specifically determined that Mr. Wright “did engage in fraud, as defined by
the Court, as intentional or reckless misrepresentation or misrepresentation
by concealment.”
2007 WL 437216, at *11. After reviewing the record of the proof submitted to the jury in
Jenkins, we
concluded that it contains sufficient material evidence to support the jury’s
conclusion that Mr. Wright had committed “fraud” with regard to his
dealings with the Browns by concealing the extent to which fill material had
been used on the lot and by asserting that the house had been constructed on
“original dirt.” This conduct amounts to “fraud ... in performing the ...
construction of” the house for the purpose of Tenn. Code Ann. § 28-3-205(b).
Therefore, Mr. Wright was not entitled to assert the four-year statute of
repose in Tenn. Code Ann. § 28-3-202 in this case.
Id. at *12. The allegations against Defendant in the present case are quite similar to those
in Jenkins, which were found by a jury in that case to constitute fraud or wrongful
concealment and affirmed by this Court.
Moreover, much of our discussion in part IV(A) above regarding Plaintiff’s
assertions of fraudulent concealment is directly pertinent to the analysis of fraud or
wrongful concealment in the context of the statute of repose. We will not reproduce that
analysis here, but we reiterate our conclusion that the issues of Defendant’s knowledge and
intent to defraud or wrongfully conceal the cause of action are for the jury to decide, as is
the issue of whether Plaintiff exercised reasonable care and diligence under the
circumstances.
C. Bridgewater POA’s Liability for Repairs
In his complaint, Plaintiff alleged that “Bridgewater is obligated to repair and/or
replace the damage to the exterior of the plaintiff’s residence.” (Emphasis added). On
appeal, he asserts that the trial court erred in not finding Bridgewater POA responsible for
all of the damages to his residence, including “the defects and damage to the foundation of
17
the residence, the floating slab, and the cracks in the interior of the residence.” Plaintiff
never amended his complaint to include a claim for damage to parts of his residence other
than the exterior.
As already noted, the trial court conducted a bench trial on Bridgewater POA’s
liability, but no transcript or statement of the evidence is included in the record.
Consequently, it is impossible to tell if the issue of damages to the interior of the residence
was tried by implied consent. Plaintiff does not argue that it was. The trial court’s order
finding Bridgewater POA responsible for repairs to the front and rear porches and patios
does not address the issue of interior damages. “It is well settled that, in the absence of a
transcript or statement of the evidence, there is a conclusive presumption that there was
sufficient evidence before the Trial Court to support its judgment and this Court must
therefore affirm the judgment.” PNC Multifamily Cap. Institutional Fund XXVI Ltd. P’ship
v. Mabry, 402 S.W.3d 654, 661 (Tenn. Ct. App. 2012) (quoting Outdoor Management LLC
v. Thomas, 249 S.W.3d 368, 377 (Tenn. Ct. App. 2007)).
It is true, as Plaintiff argues, that the record contains the Master Deed, bylaws, and
restrictive covenants of the Bridgewater POA, but there is no provision in those documents
that supports the conclusion that Bridgewater POA is responsible for interior damages to
Plaintiff’s residence. As the trial court found,
Section 5 of the Master Deed provides that the Bridgewater Condominium
[Property Owners] Association shall have primary responsibility for the
maintenance and repair of “limited common elements.” The term “limited
common elements” is defined in the same paragraph as the porches, patios
and parking spaces in front of each unit. The patio which is in need of repair
at plaintiff’s home is at the rear of the structure.
Section H of the Bridgewater Condominiums restrictive covenants provides
that the Property Owners Association (POA) shall maintain, manage and
landscape all . . . roofs, common elements, and exteriors of the buildings
located upon the above described properties (including patios, limited
common areas, but excluding windows of units) . . . The restrictive covenants
do not limit the duty to maintain only front facing patios as did the Master
Deed.
(Emphasis added). The trial court did not err in its judgment addressing Bridgewater
POA’s responsibility.
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V. CONCLUSION
The summary judgment in favor of Defendant is vacated. The judgment of the trial
court regarding Bridgewater POA’s responsibility is affirmed. The case is remanded for
such further action as may be necessary, consistent with this opinion. Costs on appeal are
assessed to the appellee, Carl Little Construction Company, Inc., for which execution may
issue, if necessary.
______________________________________
KRISTI M. DAVIS, JUDGE
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