Matthew Tolliver v. Tellico Village Property Owners Association, Inc. , 579 S.W.3d 8 ( 2019 )

01/07/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
October 17, 2018 Session
MATTHEW TOLLIVER ET AL. v. TELLICO VILLAGE PROPERTY
OWNERS ASSOCIATION, INC.
Appeal from the Circuit Court for Loudon County
No. 2015-CV-182 Michael S. Pemberton, Judge
___________________________________
No. E2018-00090-COA-R3-CV
___________________________________
This litigation finds its genesis in a water pipeline break that caused damage to residential
property. At the time of the break, Joseph and Martha Mosakowski were the title owners
of the damaged property. Matthew Tolliver, who was purchasing the property under a
contract for deed, resided in the home. Mr. Tolliver filed a complaint against Tellico
Village Property Owners Association, Inc. (defendant) alleging negligence and breach of
contract. The Mosakowskis were later joined to the suit as co-plaintiffs. Pursuant to a
court order, the Mosakowskis filed their own complaint, which contained similar factual
allegations and asserted the same causes of action as alleged in Mr. Tolliver’s complaint.
Defendant filed a motion to dismiss the Mosakowskis’ negligence claim. The defendant
also filed a motion for summary judgment on all claims asserted by Mr. Tolliver and the
Mosakowskis. Mr. Tolliver consented to the entry of an agreed order granting summary
judgment to the defendant as to all of his claims.1 The Mosakowskis, however, contested
defendant’s motions. Ultimately, the trial court granted defendant’s motion to dismiss
the Mosakowskis’ negligence claim because the court determined that the statute of
limitations had expired. In a separate order, the court granted the defendant summary
judgment on the Mosakowskis’ breach of contract claim because the court determined
that there was no consideration for the alleged contract. The court denied summary
judgment as to the Mosakowskis’ negligence claim because the court’s order dismissing
that claim rendered the issue moot. The Mosakowskis appeal. We affirm the trial court’s
dismissal of the negligence claim. Although the court erred by dismissing the negligence
claim pursuant to Tenn. R. Civ. P. 12.02(6), we find that ruling to be harmless because
summary judgment was proper under Tenn. R. Civ. P. 56. Finally, we reverse the trial
court’s grant of summary judgment on the breach of contract claim and remand for
further proceedings.
1
Accordingly, Mr. Tolliver chose not to participate in this appeal.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed in Part and Reversed in Part; Case Remanded
CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and JOHN W. MCCLARTY, J., joined.
Thomas M. Leveille, Knoxville, Tennessee, for the appellants, Martha Mosakowski and
Joseph Mosakowski.
Kevin C. Stevens, Knoxville, Tennessee, for the appellee, Tellico Village Property
Owners Association, Inc.
OPINION
I.
The plaintiffs alleged that on July 16, 2014, a water pipeline break caused damage
to their residential property in Tellico Village. As previously noted, Mr. Tolliver resided
in the home. He was in the process of purchasing the property from the Mosakowskis
under a “contract for deed.”
On December 9, 2015, Mr. Tolliver filed a complaint against defendant seeking
damages for the loss of personal and real property. He alleged that defendant was liable
in negligence for failing to properly maintain the water pipeline. Mr. Tolliver also
alleged that defendant was liable for breach of contract. Specifically, Mr. Tolliver
alleged that representatives of defendant promised the Mosakowskis that defendant
would pay for all repairs to the property, a commitment that defendant failed to honor.
Mr. Tolliver claimed to be a third-party beneficiary to this alleged oral contract.
Although Mr. Tolliver’s complaint stated that the Mosakowskis were “necessary
parties,” his complaint did not name them as such. Months later, Mr. Tolliver filed a
motion to amend his complaint, a proposed amended complaint, and a motion to join the
Mosakowskis as parties.2 Mr. Tolliver’s proposed amended complaint did not name the
Mosakowskis as co-plaintiffs. Instead, the amended complaint simply reiterated the
allegation that “the Mosakowskis are necessary parties in order for the Court to give full
relief and Plaintiff moves the Court [to] join them in this case.” On June 13, 2016, the
trial court entered an order providing that
2
Although Mr. Tolliver’s “Motion to Join Third Part[ies]” did not specify which rule of civil
procedure he was invoking, his motion tracks the language of Tenn. R. Civ. P. 19.01, which concerns the
compulsory joinder of necessary parties. Because the Mosakowskis were joined as parties pursuant to
Rule 19.01, we will not consider whether joinder would have been appropriate under Tenn. R. Civ. P.
17.01.
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upon stipulation of the parties, [Mr. Tolliver’s] Motion to
Amend Complaint and Motion to Join Third Part[ies] are
GRANTED. [Mr. Tolliver’s] Amended Complaint is deemed
filed, and counsel for [Mr. Tolliver] shall have a summons
issued and process served upon Joe and Martha Mosakowski
to join them as parties to this action.
(Capitalization in original).
On September 23, 2016, the Mosakowskis were served with a summons and Mr.
Tolliver’s amended complaint. Inexplicably, the summons named the Mosakowskis as
defendants. Accordingly, on May 22, 2017, the Mosakowskis filed a “motion to realign
the parties.” In their motion, the Mosakowskis claimed to hold legal title to the property
in question and sought “to be aligned as Plaintiffs seeking recovery.” The Mosakowskis
were “realigned” as plaintiffs pursuant to an agreed order entered on July 27, 2017.
Shortly thereafter, the trial court entered another agreed order that directed the
Mosakowskis “to file a Complaint in this matter within 14 days from the entry of the
Court’s Order.”
Pursuant to the court’s order, the Mosakowskis filed their own complaint on
August 23, 2017. The pleading was styled as a “complaint” and the caption listed only
“Martha Mosakowski and Joseph Mosakowski” as plaintiffs. However, the complaint
was filed under the same docket number as the civil action initiated by Mr. Tolliver. The
Mosakowskis’ complaint contained the following factual allegations:
1. The Plaintiffs, Martha and Joseph Mosakowski (hereinafter
referred to as “Mosakowskis”), own property upon which
they built and house located at 210 Wahahu [sic] Lane,
Loudon, Tennessee. The Mosakowskis hold legal title to this
property.
2. At all times pertinent hereto, Matthew Tolliver leased the
property with an option to purchase.3
3. The Defendant, Tellco [sic] Village Property Owners
Association (hereinafter referred to as “Tellco [sic] Village
POA”), is an organization created by developers and owners
of Tellco [sic] Village to protect, inspect, repair and maintain
all common areas and public utilities, to include water
3
Although the Mosakowskis’ complaint speaks of a “lease[ ] . . . with an option to purchase,”
they later conceded that Mr. Tolliver was purchasing the property under a “contract for deed.” This is not
significant to the issues presented in this appeal.
-3-
pipelines throughout Telco [sic] Village.
4. On July 16, 2014, a section of the underground water
pipelines referred to above, burst. Several thousand gallons
of water erupted from the ground and flooded the
Mosakowskis’ yard and house causing extensive damages.
5. Upon information and belief, the water pipelines along
Wahahu [sic] Lane have broken on several occasions
previously. Tellco [sic] Village POA has knowledge of the
deteriorating or defective nature of these water pipelines.
6. Representatives of Tellco [sic] Village POA assured the
Mosakowskis that they would pay for damage, but have failed
to follow through with that agreement.
Count I of the complaint alleged that “[a]t all times pertinent hereto, [defendant]
and the Mosakowskis had entered into a contractual agreement,” and that defendant had
breached the same. Count II alleged that defendant was liable in negligence for
breaching its “duty to maintain, repair, service, troubleshoot and generally keep the water
pipelines in good and working order.”
On October 16, 2017, defendant filed a motion to dismiss the Mosakowskis’
negligence claim. First, defendant argued that the Mosakowskis lacked standing to sue.
Defendant also argued that the Mosakowskis’ complaint was filed beyond the three-year
period of the statute of limitations. The Mosakowskis argued that they did have standing
and that their complaint should relate back to the filing of Mr. Tolliver’s original
complaint pursuant to Tenn. R. Civ. P. 15.03.
On October 20, 2017, defendant also filed a motion for summary judgment “on all
claims asserted by the Plaintiffs, Matthew Tolliver, Joe Mosakowski, and Martha
Mosakowski[.]” With respect to the negligence claim, defendant argued that plaintiffs
had not presented sufficient evidence of defendant’s specific duty of care or evidence of
how defendant breached that duty of care. With respect to the breach of contract claim,
defendant argued that plaintiffs failed to present any evidence of consideration for the
alleged oral contract.
After defendant filed its motion for summary judgment, the trial court entered an
agreed order stating that Mr. Tolliver and defendant “have announced to the Court that
they are in agreement that [defendant’s] Motion for Summary Judgment filed on October
20, 2017 should be granted as to Tolliver, and that Tolliver’s remaining claims against
[defendant] for breach of contract and negligence should be dismissed with prejudice.”
The Mosakowskis, however, filed a memorandum of law in opposition to defendant’s
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motion for summary judgment. In their memorandum, the Mosakowskis attempted to
clarify that their breach of contract claim was supported by the breach of an alleged oral
contract as well as defendant’s articles of incorporation and bylaws, which arguably
operate as a written contract. For the first time, the Mosakowskis attached defendant’s
articles of incorporation and bylaws as an exhibit. The Mosakowskis also attached two
reports prepared by defendant’s third-party water loss control company purporting to
show that defendant had prior notice of leaks in the community’s water pipeline system.
After several hearings on defendant’s motions, the trial court contemporaneously
entered two orders. In one order, the court found that the Mosakowskis had standing to
sue; the same order, however, granted defendant’s motion to dismiss the Mosakowskis’
negligence claim because the court determined that the statute of limitations had expired.
The court found that the Mosakowskis’ complaint did not relate back to the filing of Mr.
Tolliver’s original complaint. In the other order, the court granted summary judgment on
the Mosakowskis’ breach of contract claim because the court determined that there was
no evidence of consideration for the alleged oral contract. The court declined to consider
defendant’s articles of incorporation and bylaws as evidence of a breach of contract
because the Mosakowskis’ complaint did not put the defendant on notice of that theory of
recovery. The Mosakowskis appealed.
II.
The Mosakowskis raise the following two issues, which we have restated slightly:
Whether the trial court erred in granting defendant’s motion
to dismiss the negligence claim.
Whether the trial court erred in granting defendant’s motion
for summary judgment on the breach of contract claim.
If we determine that the trial court erred in dismissing the Mosakowskis’
negligence claim on statute of limitations grounds, defendant asks us to consider whether
it was harmless error because the negligence claim would have been dismissed on
summary judgment.4
4
Defendant does not ask us to review the trial court’s ruling on the issue of standing.
Accordingly, we express no opinion on that issue. See Tenn. R. App. P. 13(b) (“Review generally will
extend only to those issues presented for review.”). Although we do have a responsibility to consider
whether the trial court had subject matter jurisdiction, see id., standing is not a jurisdictional prerequisite
to bringing common-law claims such as negligence and breach of contract. See Bowers v. Estate of
Mounger, 542 S.W.3d 470, 480 (Tenn. Ct. App. 2017) (citations omitted).
-5-
III.
We begin by considering whether the trial court erred in granting defendant’s
motion to dismiss the negligence claim on the ground that the statute of limitations had
expired. The Supreme Court has stated that
[a] Tenn. R. Civ. P. 12.02(6) motion tests only the legal
sufficiency of the plaintiff’s complaint, not the strength of the
plaintiff’s proof. Highwoods Props., Inc. v. City of
Memphis, 297 S.W.3d 695, 700 (Tenn. 2009). Thus, courts
ruling on a Tenn. R. Civ. P. 12.02(6) motion “ ‘must construe
the complaint liberally, presuming all factual allegations to be
true and giving the plaintiff the benefit of all reasonable
inferences.’ ” Webb v. Nashville Area Habitat for
Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011) (quoting
Tigg v. Pirelli Tire Corp., 232 S.W.3d 28, 31-32 (Tenn.
2007)). The determination of whether a suit should be
dismissed based on the statute of limitations presents a
question of law which we review de novo with no
presumption of correctness. Fahrner v. SW Mfg., Inc., 48
S.W.3d 141, 144 (Tenn. 2001).
Redwing v. Catholic Bishop for Diocese of Memphis, 363 S.W.3d 436, 455-56 (Tenn.
2012).
In Tennessee, “[a]ctions for injuries to personal or real property” must be
“commenced within three (3) years from the accruing of the cause of action.” Tenn.
Code Ann. § 28-3-105 (2017). Here, it is undisputed that the plaintiffs’ cause of action
accrued on July 16, 2014, the date of the alleged water pipeline break. Thus, plaintiffs
were required to “commence[ ]” their action by July 16, 2017. Mr. Tolliver filed his
original complaint on December 9, 2015; however, the Mosakowskis did not file their
complaint until August 23, 2017, one week after the statute of limitations had expired.
The Mosakowskis argue that their complaint should relate back to filing of Mr.
Tolliver’s original complaint pursuant to Rule 15 of the Tennessee Rules of Civil
Procedure.5 Tenn. R. Civ. P. 15.01 provides, in pertinent part, that “a party may amend
the party’s pleadings . . . by leave of court; and leave shall be freely given when justice so
5
We pause to note that Tenn. R. Civ. P. 17.01 also contains a provision allowing for the relation
back of pleadings that join or substitute “the real party in interest.” Tenn. R. Civ. P. 17.01 (“[S]uch
ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the
name of the real party in interest.”). As discussed in a previous footnote, however, the Mosakowskis
were joined pursuant to Rule 19.01, not Rule 17.01; therefore, we decline to consider whether relation
back would have been appropriate under Rule 17.01.
-6-
requires. . . .” Tenn. R. Civ. P. 15.03 further provides that
[w]henever the claim or defense asserted in amended
pleadings arose out of the conduct, transaction, or occurrence
set forth or attempted to be set forth in the original pleading,
the amendment relates back to the date of the original
pleading. An amendment changing the party or the naming of
the party by or against whom a claim is asserted relates back
if the foregoing provision is satisfied and if, within the period
provided by law for commencing an action or within 120
days after commencement of the action, the party to be
brought in by amendment (1) has received such notice of the
institution of the action that the party will not be prejudiced in
maintaining a defense on the merits, and (2) knew or should
have known that, but for a mistake concerning the identity of
the proper party, the action would have been brought against
the party.
Defendant first argues that the Mosakowskis’ complaint is not an “amended
pleading” within the meaning of Rule 15.03. Instead, defendant contends that the
Mosakowskis’ complaint “was an original pleading meant to initiate the Mosakowskis’
own private cause of action for their own damages . . . .” In support of this argument,
defendant points out that the pleading is labeled as a “complaint” and that Mr. Tolliver is
not referenced as a co-plaintiff in the caption or the body of the pleading.
Defendant’s argument is without merit. The Mosakowskis’ decision to style their
pleading as a “complaint” and their failure to name Mr. Tolliver as a co-plaintiff likely
stems from their desire to comply with the trial court’s instruction “to file a Complaint in
this matter within 14 days from the entry of the Court’s Order.” In any event, “[i]t is well
established that the courts of this state look to the substance rather than the form of
pleadings in determining their nature and effect.” Barrett v. Chesney, No. W2014–
01921–COA–R9–CV, 2015 WL 5679922, at *7 (Tenn. Ct. App., filed Sept. 28, 2015)
(citations omitted). The title of a pleading is not dispositive. Reynolds v. Tognetti, No.
W2010–00320–COA–R3–CV, 2011 WL 761525, *7 (Tenn. Ct. App., filed Mar. 4, 2011)
(“[A] court is not bound by the title of a motion but should give effect to its substance
according to the relief it seeks.”). In addition, “[t]he caption requirement of [Tenn. R.
Civ. P.] 10 is merely for identification purposes, and does not control who is a party in
the action.” Goss v. Hutchins, 751 S.W.2d 821, 824 (Tenn. 1988) (citations omitted).
Considering the substance of the pleading, as well as its procedural context, it
appears to us that the Mosakowskis’ “complaint” was, in reality, an amendment to Mr.
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Tolliver’s existing complaint.6 By agreed order, the Mosakowskis were joined as parties,
and realigned as plaintiffs, in the existing lawsuit. Their “complaint” was also filed under
the same docket number as the existing lawsuit. Accordingly, despite its title and
caption, we conclude that the Mosakowskis’ pleading was, in substance, an amendment
to Mr. Tolliver’s original complaint and was therefore an “amended pleading” within the
meaning of Rule 15.03. Cf. In re Estate of Sutton, No. E2013–00245–COA–R3–CV,
2013 WL 6669385, at *5 (Tenn. Ct. App., filed Dec. 17, 2013), perm. app. denied (Tenn.
2014) (holding that a pleading was not an amendment to an existing complaint, in part,
because the pleading was filed “under a new docket number” and the person filing the
pleading “did not request that she be joined [as a party].”).
The question then becomes whether the Mosakowskis’ amendment should relate
back to the filing of Mr. Tolliver’s original complaint. The first sentence of Rule 15.03
provides that
[w]henever the claim or defense asserted in amended
pleadings arose out of the conduct, transaction, or occurrence
set forth or attempted to be set forth in the original pleading,
the amendment relates back to the date of the original
pleading.
Tenn. R. Civ. P. 15.03. This requirement is easily satisfied. The Mosakowskis’ claims
arise from the same alleged water pipeline break that occurred on July 16, 2014, in
Tellico Village.
The second sentence of Rule 15.03 sets forth additional requirements for the
relation back of “[a]n amendment changing the party or the naming of the party by or
against whom a claim is asserted . . . .” The second sentence of Rule 15.03 applies here
because the pleading under consideration adds the Mosakowskis as additional plaintiffs
(“part[ies] by . . . whom a claim is asserted[.]”). Such amendments only relate back
if the foregoing provision is satisfied and if, within the period
provided by law for commencing an action or within 120
days after commencement of the action, the party to be
brought in by amendment (1) has received such notice of the
6
“[A]n ‘amendment to’ a complaint merely modifies the existing complaint, which remains
before the trial court as modified.” Shell v. Williams, No. M2013–00711–COA–R3–CV, 2014 WL
118376, at *2 n.4 (Tenn. Ct. App., filed Jan. 14, 2014) (citing McBurney v. Aldrich, 816 S.W.2d 30, 33
(Tenn. Ct. App. 1991)). This is distinguished from an “amended complaint,” which “supersedes and
destroys the original complaint as a pleading.” Id. It would be inappropriate to characterize the
Mosakowskis’ pleading as an “amended complaint” because there is no evidence that their filing was
intended to “supplant” the claims of Mr. Tolliver. See id. To the contrary, Mr. Tolliver remained a party
to the lawsuit for three more months.
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institution of the action that the party will not be prejudiced in
maintaining a defense on the merits, and (2) knew or should
have known that, but for a mistake concerning the identity of
the proper party, the action would have been brought against
the party.
Tenn. R. Civ. P. 15.03. These additional requirements seem to be particularly adapted to
the addition and substitution of new defendants. We have consistently held, however,
that Rule 15.03 also permits the relation back of amendments adding or substituting
proper party plaintiffs, even after the expiration of the statute of limitations. See, e.g.,
Lane v. Daniel, No. W2012-01684-COA-R3-CV, 2013 WL 2325620, at *5 (Tenn. Ct.
App., filed May 29, 2013) (“Rule 15.03 expressly allows relation back when the change
is to the party asserting the action[.]”); Biscan v. Brown, No. M2001-02766-COA-R3-
CV, 2003 WL 22955933, at *4 (Tenn. Ct. App., filed Dec. 15, 2003), aff’d, 160 S.W.3d
462 (Tenn. 2005). In such cases, relation back is permitted when (1) “the defendant
received adequate notice of the claim against him”; (2) “the relation back of such
amendment would [not] unfairly prejudice the defendant”; and (3) “there is an ‘identity
of interest’ between the original party plaintiff and the new party plaintiff.” Biscan, 2003
WL 22955933, at *4 (quoting Osborne Enters., Inc. v. City of Chattanooga, 561 S.W.2d
160, 164 (Tenn. Ct. App. 1977)).7
In Osborne, a corporation brought an inverse condemnation action seeking
damages for the loss of air space and the cutting of trees on the property of its wholly-
owned subsidiary. 561 S.W.2d at 162. The trial court allowed the corporation to amend
its complaint to include its wholly-owned subsidiary as a co-plaintiff after the expiration
of the one-year statute of limitations. Id. at 163. On appeal, this Court considered
whether the trial court erred in allowing the amendment to relate back to the
corporation’s original complaint pursuant to Rule 15.03. Id. The Court began by stating
that “Rule 15.03 should be liberally construed and applied. It was designed so cases
would be determined on their merits and not on rigid technicalities.” Id. The Court then
applied the three-part test recited above:
Here, the plaintiffs’ original complaint sufficiently identifies
the property allegedly damaged by defendants so as to
prevent any unfair prejudice to the defendants in bringing in
the new plaintiff who had record title to the land. The
theories of recovery, the type and extent of damage occurring
and the type of recovery sought are clearly apparent from the
7
This three-part test, first articulated by this Court in Osborne, is derived from federal case law
construing Fed. R. Civ. P. 15(c). The test closely mirrors the requirements set forth in the latter portion of
Tenn. R. Civ. P. 15.03. It is more easily applied in cases where an amendment seeks to add or substitute a
plaintiff rather than a defendant.
-9-
complaint. There is a definite identity of interest between the
original plaintiff and the new plaintiff in that East Ridge is
pled to be a wholly owned subsidiary of Osborne.
Consequently, the three primary considerations in
determining whether the amended complaint relates back to
the original complaint have been sufficiently satisfied to
allow the amendment. Although the defendant must now
defend a claim which was thought the mere passage of time
had barred, statutes of limitations do not afford such an
automatic insulation from suit by such a mechanical
procedure. We find the trial judge did not err in allowing the
amendment to relate back to the filing of the original
complaint.
Id. at 164.
We now consider the present case in light of the three-pronged test articulated by
the Osborne Court. The first prong of the test is whether “the defendant received
adequate notice of the claim against him.” Id. at 164. With respect to this part of the
test, the Osborne Court noted:
Not only must the adversary have notice about the operational
facts, but it must have had fair notice that a legal claim
existed in, and was in effect being asserted by, the party
belatedly brought in.
Id. (quoting Williams v. United States, 405 F.2d 234, 236-38 (5th Cir. 1968)).
Here, Mr. Tolliver’s complaint clearly put defendant on notice of the alleged water
pipeline break – the common set of operational facts giving rising to the Mosakowskis’
claims. The defendant also had notice “that a legal claim existed in” the Mosakowskis
because Mr. Tolliver’s complaint alleged that the Mosakowskis held legal title to the
property and that they were necessary parties to the lawsuit. Defendant even consented
to the entry of an agreed order joining the Mosakowskis as parties. Defendant argues,
however, that it did not have notice that “a legal claim . . . was in effect being asserted
by” the Mosakowskis until the filing of their amendment. We disagree. Defendant had
notice that the Mosakowskis would eventually assert a claim against it as early as May
25, 2016, when defendant orally stipulated that the Mosakowskis should be joined as
parties. If there was any doubt about whether the Mosakowskis would actually “assert”
their legal claims, that doubt was eliminated on May 22, 2017, when the Mosakowskis
filed a motion “to be aligned as Plaintiffs seeking recovery.”8 It is true that the
8
Defendant points out that this motion did not include an attached pleading that affirmatively set
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Mosakowskis waited several months before actually filing their amendment to Mr.
Tolliver’s complaint, “[b]ut neither limitations nor laches affords such an automatic
insulation in so mechanical a way.” Williams, 405 F.2d at 238. Thus, the first prong of
the test is satisfied.
The second prong of the Osborne test is whether “the relation back of such
amendment would unfairly prejudice the defendant.” 561 S.W.2d at 164. Defendant
complains that the Mosakowskis’ amendment was filed three months prior to trial and
after the close of discovery. As a result, defendant claims that it “was foreclosed from
being able to conduct discovery on the Mosakowskis’ newly-asserted claims.” We are
not persuaded that the timing of the Mosakowskis’ amendment prejudiced defendant. As
in Osborne, Mr. Tolliver’s “original complaint sufficiently identifies the property
allegedly damaged by defendant[] so as to prevent any unfair prejudice to the defendant[]
in bringing in the new plaintiff who had record title to the land.” Also like Osborne, the
Mosakowskis’ amendment alleged identical “theories of recovery” – negligence and
breach of contract. The Mosakowskis’ amendment did not allege materially different
facts or allege any additional damages. Defendant could not have been prejudiced by the
relation back of an amendment that merely re-alleged the same facts, the same causes of
action, and the same damages. Consequently, the second prong of the Osborne test is
satisfied.
The third prong of the Osborne test is whether “there is an ‘identity of interest’
between the original party plaintiff and the new party plaintiff.” 561 S.W.2d at 164. “An
identity of interest exists when the plaintiff sought to be added is so closely identified
with the original plaintiff that permitting the new party to enter will not be prejudicial to
the defendant.” Lane, 2013 WL 2325620, at *12. Again, we perceive no reason why the
joinder of the Mosakowskis or the relation back of their amendment would prejudice
defendant in any way. Mr. Tolliver and the Mosakowskis both have an interest in the
same parcel of real property. Under our precedents, the Mosakowskis, as record title
owners, are entitled to all damages arising out of a meritorious claim and must hold any
damages in excess of their interest in trust for the benefit of Mr. Tolliver, the equitable
owner. See Parker v. Tennessee Farmers Mut. Ins. Co., No. 141, 1988 WL 138923, at
*1 (Tenn. Ct. App., filed Dec. 30, 1988).9 Thus, the plaintiffs’ interests (as against
defendant) are virtually indistinguishable.
forth the Mosakowskis’ specific causes of action. Although that is true, the motion nevertheless
confirmed that “a legal claim . . . was in effect being asserted by” the Mosakowskis. See Osborne, 561
S.W.2d at 164.
9
We recognize that Parker involved an insured seller’s claim against the seller’s insurance
company. Nevertheless, we think the principles articulated in that case are equally applicable when a
record title owner brings an action against other third-party defendants. Defendant admitted as much in
its November 13, 2017 motion for judgment on the pleadings.
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For the foregoing reasons, we conclude that the Mosakowskis’ amendment
should have related back to the filing of Mr. Tolliver’s original complaint pursuant to
Tenn. R. Civ. P. 15.03. Accordingly, the trial court erred in granting defendant’s motion
to dismiss the Mosakowskis’ negligence claim on the ground that it was time-barred.
IV.
We now turn to defendant’s alternative argument that the trial court’s dismissal of
the negligence claim under Tenn. R. Civ. P. 12.02(6) was harmless error.10 Defendant
recites the general rule that
[a] final judgment from which relief is available and
otherwise appropriate shall not be set aside unless,
considering the whole record, error involving a substantial
right more probably than not affected the judgment or would
result in prejudice to the judicial process.
Tenn. R. App. P. 36(b). Consistent with this rule, our courts have long held that “if the
[t]rial [j]udge reached the right result for the wrong reason, there is no reversible error.”
Shutt v. Blount, 249 S.W.2d 904, 907 (Tenn. 1952) (citations omitted).
Defendant argues that if the trial court had not dismissed the Mosakowskis’
negligence claim pursuant to Rule 12.02(6), it would have granted defendant’s then-
pending motion for summary judgment on that claim. Defendant cites cases from other
jurisdictions which have held that a trial court’s premature dismissal for failure to state a
claim is harmless error when summary judgment would have otherwise been appropriate.
See, e.g., Amasia Acoustics, LLC v. GN Hearing Care Corp., No. A08–0139, 2008 WL
5137087, at *5 (Minn. Ct. App., filed Dec. 9, 2008). The parties have not cited, and we
have not identified, any Tennessee cases applying the harmless error doctrine in this way.
Nevertheless, we agree that premature dismissal under Rule 12.02(6) is harmless error if,
at the time of the trial court’s ruling, (1) there was a pending motion for summary
judgment, (2) the non-moving party had a full and fair opportunity to respond, and (3)
summary judgment is appropriate as a matter of law.
Here, defendant filed a motion for summary judgment shortly after filing its
motion to dismiss. The Mosakowskis submitted a response in opposition to defendant’s
motion that included additional discovery materials purporting to establish the existence
of genuine issues of material fact. The trial court also held a hearing on the motion for
summary judgment. Accordingly, if summary judgment was appropriate as a matter of
10
At the outset of our discussion, we note that counsel for the Mosakowskis did not submit a
reply-brief, and thus did not provide a written response to defendant’s arguments relating to this issue.
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law, then the trial court’s dismissal of the negligence claim pursuant to Rule 12.02(6) was
harmless error.
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, 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 Supreme Court has ruled that
“when the moving party does not bear the burden of proof at trial,” as is the case here,
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 Center of Memphis, MPLLC, 477 S.W.3d 235, 264 (Tenn. 2015).
Once the moving party has satisfied its burden of production, in order to survive
summary judgment, the non-moving party
may not rest upon the mere allegations or denials of the
adverse party’s pleading, but his or her response, by affidavits
or as otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue for trial.
Tenn. R. Civ. P. 56.06. This may be accomplished by:
(1) pointing to evidence establishing material factual disputes
that were over-looked or ignored by the moving party; (2)
rehabilitating the evidence attacked by the moving party; (3)
producing additional evidence establishing the existence of a
genuine issue for trial; or (4) submitting an affidavit
explaining the necessity for further discovery pursuant to
Tenn. R. Civ. P., Rule 56.06.
Martin v. Norfolk Southern Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008) (quoting
McCarley v. W. Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998)).
Here, in order to prevail on their negligence claim, the Mosakowskis “must
establish the following essential elements: ‘(1) a duty of care owed by defendant to
plaintiff; (2) conduct below the applicable standard of care that amounts to a breach of
that duty; (3) an injury or loss; (4) cause in fact; and (5) proximate, or legal, cause.’ ”
Grogan v. Uggla, 535 S.W.3d 864, 871 (Tenn. 2017) (quoting Giggers v. Memphis
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Hous. Auth., 277 S.W.3d 359, 364 (Tenn. 2009)). Defendant argues that summary
judgment is appropriate because there is no genuine issue of material fact and because
defendant has “demonstrat[ed] that the nonmoving party’s evidence at the summary
judgment stage is insufficient to establish the nonmoving party’s claim or defense.” See
Rye, 477 S.W.3d at 264. Specifically, defendant argues that the Mosakowskis failed to
present sufficient evidence of (1) the applicable standard of care and (2) evidence of
conduct amounting to a breach of that standard of care.
The Mosakowskis’ amendment alleged that defendant “owed a duty to maintain,
repair, service, troubleshoot and generally keep the water pipelines in good and working
order.” Defendant argues, however, that the foregoing allegation is insufficient evidence
of defendant’s duty of care. According to defendant, the Mosakowskis were required to
identify an individual who could provide expert testimony regarding defendant’s specific
duty of care as an entity entrusted with maintaining a water distribution system.
Generally, “[t]he standard of care which a party must follow is a question of law to
be decided ‘based on evidence and mixed considerations of logic, common sense, and
public policy.’ ” Crumley v. City of Smyrna, No. 01A01-9607-CV-00316, 1997 WL
24849, at *4 (Tenn. Ct. App., filed Jan. 24, 1997) (quoting Allen v. Baggett, 905 S.W.2d
190, 191 (Tenn. Ct. App. 1995)). However, when negligence is not “obvious and readily
understandable by an average layperson, expert testimony will be required to demonstrate
the applicable standard of care and breach of that standard.” Barkes v. River Park
Hosp., Inc., 328 S.W.3d 829, 833 n.2 (Tenn. Ct. App. 2010) (citations omitted). Expert
testimony is often required in cases involving professional liability, such as medical
malpractice and legal malpractice, because such cases often “require[ ] scientific or
technical analysis or discussion.” Martin v. Sizemore, 78 S.W.3d 249, 273 (Tenn. Ct.
App. 2001) (citing Seavers v. Methodist Med. Ctr., 9 S.W.3d 86, 92 (Tenn. 1999)).
Whether expert testimony is required to establish a water distributor’s applicable
duty of care and breach of the same appears to be a matter of first impression in this state.
Previous Tennessee cases involving negligence claims against water distributors have not
squarely addressed this issue. See generally Gibson Greetings, Inc. v. Associated
Warehouses, Inc., No. 02A01-9204-CV-00116, 1993 WL 188299 (Tenn. Ct. App., filed
June 3, 1993); Graham v. Greeneville Water & Light System, No. 136, 1990 WL 6373
(Tenn. Ct. App., filed Jan. 31, 1990); Summit Hill Associates v. Knoxville Utilities Bd.,
667 S.W.2d 91 (Tenn. Ct. App. 1983). Defendant, however, directs our attention to cases
from four states and the District of Columbia in which courts have held that expert
testimony is required to demonstrate a water distributor’s applicable standard of care.
The Utah Supreme Court recently considered a case extremely similar to the case
at bar. Jenkins v. Jordan Valley Water Conservancy Dist., 321 P.3d 1049, 1053 n.7
(Utah 2013). In Jenkins, a water pipeline ruptured causing damage to plaintiffs’ home.
Id. at 1050. The plaintiff homeowners brought a negligence action against the water
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conservatory district that was responsible for operation of the water pipeline. Id. at 1050.
After the close of discovery, the defendant moved for summary judgment, arguing that
“the plaintiff homeowners could not prevail on their negligence claim because they had
failed to designate an expert to testify regarding the applicable standard of care.” Id. The
trial court granted the motion for summary judgment on that ground. Id. “The court of
appeals reversed, concluding that expert testimony was unnecessary because the
[defendant] itself had previously determined that the pipeline should be replaced . . . .”
Id. The Utah Supreme Court reversed the decision of the court of appeals and held that
the trial court correctly dismissed the case on summary judgment. Id.
In so holding, the Utah Supreme Court explained:
An internal determination that a pipeline should be replaced
does not establish a tort law duty to do so. Internal decisions
may be made for any number of reasons—convenience,
caution, maximization of budget, mistake—having little to do
with the standard of care. . . .
Instead, the critical issue is whether the applicable standard of
care required the District to replace the pipeline near the
Jenkins home. . . . And we cannot see how the Jenkinses
could show that it did without expert testimony.
Id. at 1051-52. The court proceeded to explain why expert testimony was necessary to
establish the applicable standard of care:
Lay persons are not well equipped to decide whether a cast-
iron pipe has gotten so old that it requires replacement. Such
pipes have no pre-determined lifespan. According to expert
testimony offered in other cases, the useful life of a cast-iron
pipe may vary widely, depending on a range of factors such
as soil conditions, burial depth, and the extent of any earth
movement in the area. See, e.g., I.M. of Atl. City v. District
of Columbia, 356 F. Supp. 487, 489-90 (D.D.C. 1973)
(providing substantial discussion, based on expert testimony,
about the indeterminate lifespan of cast-iron pipes and the
many factors that bear on this matter); Grace & Co. v. City of
Los Angeles, 168 F. Supp. 344, 346, 348–49 (S.D. Cal. 1958)
(explaining that one segment of cast-iron pipe might require
replacement, whereas another one installed at the same time
might not).
* * *
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Physical indicators of pipeline degradation are equally
inadequate to the task of indicating that a pipeline had
reached the state of requiring replacement. Breakage history,
for example, would indicate only that a particular pipe had an
imperfection. But that would shed little light on whether the
applicable standard of care required replacement.
A history of breakage is not a mandate for replacement.
Often the prudent response will be repair, not outright
replacement. And the repair/replace decision is inherently
complex and case-specific, requiring the detail necessary to
perform the cost-benefit calculus and the sophistication
necessary to interpret it.
In the absence of expert assistance, jurors would not likely
possess the information or understanding necessary to make
such assessments. . . . They would not likely know, for
example, the background rate of “normal” breakages, and
thus would have no non-speculative benchmark against which
to assess any breakage history. Nor would they have any
meaningful way to assess whether or to what extent past
breakages portended future ones, or called for replacement
rather than repair.
Id. at 1052-53 (footnotes omitted).
As defendant observes, courts in other jurisdictions have reached the same
conclusion for similar reasons. See Dist. of Columbia v. Arnold & Porter, 756 A.2d 427,
429, 434 (D.D.C. 2000) (holding “that expert testimony is required to establish the
national standard of care for the operation and maintenance of a municipal water system
and the handling of leaks in that system” because such activities “are not subjects within
the common knowledge of jurors”); Frankenmuth Ins. v. City of Hickory, 760 S.E.2d 98
(N.C. Ct. App. 2014).
In Frankenmuth Insurance, a water pipe leading to a sprinkler system ruptured,
causing property damage. 760 S.E.2d at 99. Plaintiff filed a negligence claim against the
city responsible for operating the municipal water system. Id. The trial court granted
summary judgment for the city. Id. The court of appeals affirmed because plaintiff
failed to present expert testimony establishing the defendant’s applicable standard of
care. Id. at 100. According to the court
the alleged wrongdoing of defendant here required the
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exercise of professional judgment regarding a ‘reasonable’
level of water pressure in a municipal water system, the skill
needed to install a ‘loop’ system, and the expertise to install
or recommend installing a pressure-relieving device at the
terminal ends of the system. Because these claims could not
be properly evaluated with the “common knowledge and
experience” of the jury, plaintiff bore the burden of producing
expert testimony to establish the proper standard of care to
which defendant should have been held.
Id. at 102. Courts in Virginia and California have also held that plaintiffs must present
expert testimony of a water distributor’s applicable standard of care. Flaherty v. Legum
& Norman Realty, Inc., No. 1:05-1492, 2007 WL 4694346, at *14 (E.D. Va., filed Jan.
4, 2007) (wrongful death action involving an allegation that decedent was poisoned by
water supplied by defendant); Harris v. 3075 Wilshire, LLC, B223826, 2014 WL
881161, at *4 (Cal. Ct. App., filed Mar. 6, 2014) (premise liability action involving an
allegation that plaintiff became sick after being exposed to bacteria from water supplied
by defendant).
Recognizing that the aforementioned cases merely serve as persuasive authority,
we fully adopt their position that a plaintiff must ordinarily present expert testimony of a
water distributor’s applicable duty of care in order to survive summary judgment.11 In
this case, the Mosakowskis simply alleged a general “duty to maintain, repair, service,
troubleshoot and generally keep the water pipelines in good and working order.”
Defendant, in its motion for summary judgment, properly observed that the Mosakowskis
had failed to present expert testimony regarding defendant’s applicable standard of care
or breach of that duty. In their response to defendant’s motion for summary judgment,
the Mosakowskis should have
(1) point[ed] to evidence establishing material factual
disputes that were over-looked or ignored by the moving
party; (2) rehabilitat[ed] the evidence attacked by the moving
party; (3) produc[ed] additional evidence establishing the
existence of a genuine issue for trial; or (4) submit[ed] an
affidavit explaining the necessity for further discovery
pursuant to Tenn. R. Civ. P., Rule 56.06.
Martin, 271 S.W.3d at 84.
11
“In so concluding, we need not foreclose the possibility of a future case in which the breakage
rate of a pipeline is so extensive and frequent, and so resistant to repair, that a res-ipsa-loquitur-style
inference could be made—one suggesting that the standard of care would necessarily call for
replacement, even without expert testimony. But this is not such a case.” Jenkins, 321 P.3d at 1053 n.7.
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The Mosakowskis attempted to produce additional evidence establishing the
existence of a genuine issue for trial by attaching two reports from defendant’s water loss
control company purporting to show that defendant was on notice of leaks in its water
system. Defendant argues that one of these reports is irrelevant because it was published
after the alleged water pipeline break in 2014. Defendant argues that the other report is
inadmissible hearsay and therefore should not be considered at the summary judgment
stage. See Green v. Green, 293 S.W.3d 493, 513 (Tenn. 2009). We do not reach the
questions raised by defendant because even if the reports were admissible in evidence,
they do not, standing alone, explain the precise scope of defendant’s legal duty of care,
nor do they specifically explain what defendant did or failed to do to satisfy its legal duty.
See Jenkins, 321 P.3d at 1050 (holding that plaintiff failed to identify sufficient evidence
of defendant’s legal duty and breach, despite the fact that an “annual assessment” had
identified the faulty water pipeline “as a candidate for replacement”).
The Mosakowskis also had the option of submitting an affidavit explaining the
necessity of further discovery. Martin, 271 S.W.3d at 84. Yet, the record contains no
evidence that the Mosakowskis requested an extension of time to identify a potential
expert witness.
In light of the foregoing analysis, we hold that summary judgment on the
negligence claim was appropriate because the Mosakowskis’ evidence at the summary
judgment stage was insufficient to establish defendant’s applicable duty of care and
breach of that duty. Accordingly, the trial court’s dismissal of the Mosakowskis’
negligence claim pursuant to Tenn. R. Civ. P. 12.02(6) was harmless error.
V.
Next, we turn to the issue of whether the trial court erred in granting defendant’s
motion for summary judgment with respect to the Mosakowskis’ breach of contract
claim. We articulated the rules and burden-shifting framework applicable to motions for
summary judgment in Part IV of this opinion. Because those rules also apply here, we
proceed with our de novo review of the trial court’s decision.
In order to make a prima facie case for a breach of contract claim, a plaintiff must
allege: “(1) the existence of an enforceable contract, (2) nonperformance amounting to a
breach of the contract, and (3) damages caused by the breach of the contract.” C & W
Asset Acquisition, LLC v. Oggs, 230 S.W.3d 671, 676-77 (Tenn. Ct. App. 2007) (quoting
ARC LifeMed, Inc., v. AMC–Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005)).
Defendant argues that it carried its burden of production by affirmatively negating
the first essential element of the Mosakowskis’ breach of contract claim. Specifically,
defendant argues that even if one of its representatives told the Mosakowskis that
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defendant would pay for all repairs, such a promise was not supported by consideration,
which is a prerequisite for the existence of an enforceable contract. See Campbell v.
Matlock, 749 S.W.2d 748, 751 (Tenn. Ct. App. 1987).
In their response to defendant’s motion for summary judgment, the Mosakowskis
asserted that their breach of contract claim
is not only based on the assurance from [defendant] that they
would pay for damages to the Mosakowskis’ property, but
also on the fact that the Plaintiffs entered into a contractual
agreement with [defendant] when they purchased their lot,
which obligates the Plaintiffs to pay assessments and
obligates [defendant] to maintain the waterlines and sewer
lines within the community, and also to promote the health,
safety and welfare of the residents[.]
For the first time, the Mosakowskis attached defendant’s articles of incorporation and
bylaws as an exhibit. They also attached their deed to the property as well as a two-page
excerpt from a deposition in which Jeff Gaglee, a representative of defendant, made
statements about defendant’s articles of incorporation and bylaws.
The trial court granted defendant’s motion for summary judgment. The court
determined that there was no enforceable contract between the parties because there was
no consideration for the oral promise made by defendant’s representatives to the
Mosakowskis. The court declined to consider defendant’s articles of incorporation and
bylaws as evidence of a breach of contract for the following reasons:
Tennessee is a notice pleading state; however, even under that
liberal pleading standard it would be impossible for the Court
to conclude that the Defendant – or anybody else, for that
matter – was or had any notice of an alleged breach of
contract claim related to the articles of incorporation.
We will first address whether the trial court erred in refusing to consider the
defendant’s articles of incorporation and bylaws as evidence of a breach of contract. As
an initial matter, the trial court correctly observed that Tennessee is a notice pleading
state. “[T]echnical forms in pleadings are not now required[.]” Randolph v. Meduri,
416 S.W.3d 378, 384 (Tenn. Ct. App. 2011) (quoting Am. Lead Pencil Co. v. Nashville,
C. & St. L. Ry., 134 S.W. 613, 615 (Tenn. 1911)). Nevertheless, “Tennessee courts have
long adhered to the principle that a party’s proof must correspond with the allegations set
forth in the pleadings.” Id. (citations omitted).
The policy underpinning this rule is that “since the purpose of
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pleadings is to give notice to all concerned regarding what
may be adjudicated, a judgment beyond the scope of the
pleadings is beyond the notice given the parties and thus
should not be enforced.”
Id. (quoting Brown v. Brown, 281 S.W.2d 492, 497 (Tenn. 1955)).
Accordingly, we have held that “a trial court may exclude proof of an issue not
fairly within the scope of the pleadings upon the objection of the adverse party.” Id. at
385 (citations omitted). In making that determination, the court “should only exclude
proof that materially varies from the pleadings because only a material variance defeats a
party’s right to recover.” Id. (citing McCray v. Hughes, 385 S.W.2d 124, 126 (Tenn. Ct.
App. 1964)). We have explained that “[a] variance between the pleadings and the proof
is material only where an adverse party is misled to his or her prejudice.” Id. (citations
omitted). Application of the rule in this manner serves the purpose of preventing unfair
surprise. Id.
Here, neither Mr. Tolliver’s Amended Complaint nor the Mosakowskis’
amendment directly mentions a written contract or the defendant’s articles of
incorporation and bylaws. Although the pleadings assert a “breach of contract” claim,
the only factual allegations that support such a claim are the alleged conversations
between defendant’s representatives and the Mosakowskis. After reviewing the record, it
is clear that the first time the defendant’s articles of incorporation were directly
mentioned was in the Mosakowskis’ response to the defendant’s motion for summary
judgment.
In our view, the Mosakowskis’ proof of the defendant’s articles of incorporation
and bylaws materially varies from the allegations made in their pleading. This case was
commenced on December 9, 2015 when Mr. Tolliver filed his original complaint. There
was no indication that any of the plaintiffs were alleging breach of a written contract until
almost two years later when the Mosakowskis filed their response to defendant’s motion
for summary judgment. This came after the close of discovery and approximately one
month before trial. Such short notice of an entirely new theory of recovery would
certainly prejudice defendant.
In Town of Franklin v. Hermitage Engineering Company, this Court noted that
“where one brings a suit on a written contract he cannot recover on proof of a verbal
contract, or where one sues on an express contract he cannot recover on an implied
contract, on account of variance in the pleading and proof.” 1930 WL 1717, at *5 (Tenn.
Ct. App., filed Jun 11, 1930), perm. app. denied (Tenn. 1931). The proper method of
introducing a new theory of recovery arising from the same cause of action is to amend
one’s complaint. See id. at *5-6; Blackburn & McCune, PLLC v. Pre-Paid Legal
Services, Inc., 398 S.W.3d 630, 661 (Tenn. Ct. App. 2010) (“[A] plaintiff may not raise a
- 20 -
new theory of recovery for the first time in response to the defendants’ motion for
summary judgment. Rather, the proper procedure would have been to seek to the amend
the complaint . . . .”).
In a last ditch effort to save their new theory of recovery, the Mosakowskis
observe that paragraph three of their amendment includes language nearly identical to the
defendant’s articles of incorporation. We are not persuaded that such an indirect and
tangential reference to the articles of incorporation was sufficient to put defendant on
notice that the Mosakowskis were alleging breach of a written contract. Moreover, Tenn.
R. Civ. P. 10.03 provides:
Whenever a claim or defense is founded upon a written
instrument other than a policy of insurance, a copy of such
instrument or the pertinent parts thereof shall be attached to
the pleading as an exhibit unless the instrument is (1) a matter
of public record in the county in which the action is
commenced and its location in the record is set forth in the
pleading; (2) in the possession of the adverse party and this
fact is stated in the pleading; (3) inaccessible to the pleader or
is of such nature that attaching the instrument would be
unnecessary or impracticable and this fact is stated in the
pleading, together with the reason therefor. Every exhibit so
attached or referred to under (1) and (2) shall be a part of the
pleading for all purposes.
Tenn. R. Civ. P. 10.03. Thus, when a plaintiff seeks to recover on a theory that the
defendant breached a written contract, the rules of civil procedure require a heightened
pleading standard; the plaintiff must attach the written instrument unless certain
exceptions apply. Here, the only potentially relevant exception would be (2). This
exception, however, does not apply. Although defendant would have certainly been in
possession of its own articles of incorporation and bylaws, that fact was not “stated in the
pleading.” See id. For all of the foregoing reasons, we conclude that the trial court did
not err in refusing to consider the defendant’s articles of incorporation and bylaws as
evidence of breach of contract.
We now turn to the alleged oral contract. The Mosakowskis’ amendment stated
that “[r]epresentatives of [defendant] assured the Mosakowskis that they would pay for
damage, but have failed to follow through with that agreement.” The Mosakowskis also
point to Mr. Tolliver’s deposition, in which he stated: “To the best of my knowledge,
everybody I talked to said, you know, they’re going to fix it; it will be no problem. You
know, they’ll take care of everything.” On appeal, the Mosakowskis insist that the
alleged statements by defendant’s representatives are evidence of defendant’s “pure
acceptance of responsibility.” The Mosakowskis claim that these statements are
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admissible into evidence pursuant to Tenn. R. Evid. 803(1.2) (admissions by party-
opponent). According to the Mosakowskis, these alleged statements “raise a genuine
issue of material fact as to liability” and “[a] trier [of] fact could determine that the
statements constitute admissions by the Defendant.”
The Mosakowskis’ focus on the rules of evidence is misplaced. Although the
admissibility of evidence is a threshold issue at the summary judgment stage, the ultimate
issue is not whether the statements are admissible or even whether a jury could interpret
those statements as defendant’s “pure acceptance of responsibility.” Rather, the issue is
whether defendant’s alleged statements, if true, created an enforceable contract supported
by consideration.
“[C]onsideration exists when the promisee does something that it is under no legal
obligation to do or refrains from doing something which it has a legal right to do.”
Brown Oil Co., Inc. v. Johnson, 689 S.W.2d 149, 151 (Tenn. 1985). The dispositive
issue in this case is whether the Mosakowskis refrained from making repairs to their
home and delayed pursuing legal action against defendant in exchange for defendant’s
alleged assurances that it would pay for the repairs. See Palmer v. Dehn, 198 S.W.2d
827, 828 (Tenn. Ct. App. 1946) (“An agreement to forbear, for a time, proceedings at law
or in equity, to enforce a well-founded claim, is a valid consideration for a promise.”).
Defendant submitted an affidavit from its finance director which vigorously
denied that any of defendant’s representatives had ever asked the Mosakowskis to refrain
from making necessary repairs or from pursuing legal action against defendant. The
finance director also claimed that the Mosakowskis never promised to refrain from
making repairs or from pursuing legal action. Based on this evidence, the trial court
concluded that the Mosakowskis never agreed to give up anything in exchange for
defendant’s alleged promises.
In our view, the trial court erred in making that determination at the summary
judgment stage. We have held that “[w]here the proof is undisputed and where no
conflicting inferences may be drawn, the question of whether an act or forbearance
constitutes consideration for a contract is a question of law.” Cochran v. Robinhood
Lane Baptist Church, No. W2004-01866-COA-R3-CV, 2005 WL 3527627, at *2 (Tenn.
Ct. App., filed Dec. 27, 2005) (quoting Bratton v. Bratton, 136 S.W.3d 595, 601 (Tenn.
2004)). Here, however, a jury could draw conflicting inferences about whether the
parties’ conversations and subsequent conduct constituted an agreement that the
Mosakowskis would refrain from making further repairs or pursuing legal action against
defendant.
In Palmer v. Dehn, a mechanic was injured and lost two fingers while servicing a
vehicle. 198 S.W.2d 827, 828 (Tenn. Ct. App. 1946). On the way to the hospital, the
defendant allegedly exclaimed: “I am awful sorry this happened, but don’t worry a
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minute. I will see you are compensated for the loss of your finger, take care of your
expenses for the loss of your finger, and all.” Id. at 599. The defendant later argued that
there was no consideration for this alleged oral contract. Id. This Court held otherwise:
In the instant case the jury was justified in inferring that the
promisee accepted this promise if it were performed within a
reasonable time; that in foregoing his right of action for a
reasonable time was a good consideration moving to the
promisor; they were clearly justified in inferring that the basis
of the promise of the promisor was for forbearance in
bringing suit. By forbearing he might have readily born a
detriment. The promisor might easily have gained a benefit
by such a forbearance.
Thus, the Court held that a jury could infer that the plaintiff agreed to refrain from
bringing suit, even though the plaintiff never explicitly stated that he would do so. See
id.; see also Davis Longsworth Elec., Inc. v. Morris, No. 692, 1987 WL 18063, at *2
(Tenn. Ct. App., filed Oct. 9, 1987) (“[A]n agreement to forbear may be implied from
conduct of the parties. ‘[A]ctual forbearance may be evidence from which . . . an
agreement to forbear may be implied.’ ”) (citation omitted), perm. app. denied (Tenn.
1987); FDIC v. Crabtree, No. 86-14-II, 1986 WL 5323, at *3 (Tenn. Ct. App., filed May
7, 1986) (“Courts sometimes find consideration by implying a promise from the act of
forbearance.”). This Court’s decision in Palmer has been cited and relied upon in
numerous other cases. See, e.g., De Bord v. Brown, 217 S.W.2d 772, 774 (Tenn. 1948)
(finding sufficient evidence of forbearance when the at-fault driver promised another
driver that “her car would be taken care of”); FDIC, 1986 WL 5323, at *3 (finding that
summary judgment was inappropriate because a fact-finder should determine whether
forbearance served as consideration for defendant’s guaranty).
Accordingly, we conclude that the trial court erred in dismissing the breach of
contract claim on summary judgment. There is a genuine issue of material fact as to
whether the conversations and conduct of the parties implies an agreement that the
Mosakowskis would refrain from making repairs or from taking legal action against
defendant in exchange for defendant’s assurances that it would pay for all repairs.12
12
We note that if an oral contract was, in fact, formed, the statute of frauds would not bar its
enforcement because it was possible for defendant to complete performance within one year. See Tenn.
Code Ann. § 29-2-101(a)(5) (2012); Boutwell v. Lewis Bros. Lumber Co., 182 S.W.2d 1, 2 (Tenn. Ct.
App. 1944) (“The mere fact that the contract might continue for more than a year does not bring it within
the statute . . . . Nor is improbability of performance sufficient if the contract is susceptible of being
performed within the year[.]” (citations omitted)).
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VI.
The judgment of the trial court is affirmed in part and reversed in part. Costs on
appeal are taxed fifty percent (50%) to the appellants Mosakowski and fifty percent
(50%) to the appellee, Tellico Village Property Owners Association, Inc. The case is
remanded, pursuant to applicable law, for further proceedings consistent with this
opinion.
_______________________________
CHARLES D. SUSANO, JR., JUDGE
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