Academic journal article The University of Memphis Law Review

The Weakest Link: Application of the Property Damage Statute of Limitation to Tort Claims for Purely Economic Damages

Academic journal article The University of Memphis Law Review

The Weakest Link: Application of the Property Damage Statute of Limitation to Tort Claims for Purely Economic Damages

Article excerpt

I. INTRODUCTION

There are numerous Tennessee statutes dealing with the limitations periods for particular claims, and with the exception of the ten-year "catchall" statute,1 not one of them applies to a tort claim for purely economic damages. What are casually referred to as the tort statutes of limitations are, by their very language, personal injury and property damage limitations periods.2 The personal injury statute of limitations, found at section 28-3-104 of the Tennessee Code, sets forth a detailed list of personal tort actions covered by its one-year limitations period. Although courts have expanded the perception of "injuries to the person" beyond a physical injury to the body,3 it is the property damage statute of limitations that has been more broadly interpreted.4 In its entirety, the property damage statute of limitations states as follows:

28-3-105. Property tort actions - Statutory liabilities. The following actions shall be commenced within three (3) years from the accruing of the cause of action:

(1) Actions for injuries to personal or real property;

(2) Actions for the detention or conversion of personal property; and

(3) Civil actions based upon the alleged violation of any federal or state statute creating monetary liability for personal services rendered, or liquidated damages or other recovery therefore, when no other time of limitation is fixed by the statute creating such liability.5

The question then presents itself, what happens if you have a tort claim, but no personal injury or property damage? This is illustrated by a construction case, where various contractors have direct contracts with the owner of the project, but not with each other. Your client, Alpha Contractor, successfully bid on a contract to perform site preparation work for an airport expansion project. Alpha Contractor's bid was based on the bid documents, which included engineering and geotechnical reports. The project involved several other contractors and sub-contractors, including the Engineer that supervised the day-to-day operations. Alpha Contractor has a lengthy contract with the Owner of the project, with multiple references to the authority of the Engineer over Alpha Contractor.

Alpha Contractor comes to you after completion of the project, complaining that it was required to perform unexpected additional work for which it was not adequately paid. The extra work appears to be related to errors in the geotechnical reports, unreasonable requirements imposed by the Engineer, and sloppy work performed by other contractors. Alpha Contractor's damages

are confined to fair payment for work performed, plus interest and the costs of litigation. None of Alpha Contractor's property was damaged, and there does not seem to be any basis for punitive damages. Additionally, although Alpha Contractor lost millions on this job, it is a successful company and the impact on its bottom line was negligible.

You note that there are several theories of liability that can be asserted. The most obvious is a breach of contract action against the Owner, including claims of fraudulent inducement, breach of warranty, breach of duty of good faith and fair dealing, respondeat superior, and bad faith. In addition, Alpha Contractor has claims against the Engineer and other contractors based on negligence, negligent misrepresentation, and possibly its status as a third party beneficiary of their contracts with the Owner. The strongest claims appear to be those based on negligent misrepresentation against the Engineer and the professional firms that prepared the reports and surveys upon which Alpha Contractor relied in devising its bid for the project.

Everything looks good for Alpha Contractor's suit until you start looking at the timeline of events. Alpha Contractor has waited five years to come to you.6 The contract claims are safely within the six-year window of the contract statute of limitations,7 but the tort claims may be precluded if the three-year tort statute of limitations applies. …

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