David Desgro v. Paul Pack d/b/a Resi Chek ( 2013 )

                               AT KNOXVILLE
                             Assigned on Briefs November 8, 2012
                  DAVID DESGRO v. PAUL PACK d/b/a RESI CHEK
                       Appeal from the Circuit Court for Carter County
                       No. C12376    Hon. Thomas J. Seeley, Jr., Judge
                  No. E2012-00918-COA-R3-CV-FILED-JANUARY 8, 2013
    Plaintiff, David Desgro, alleged that he hired defendant, Paul Pack d/b/a Resi Chek, to
    perform an inspection on a house plaintiff wanted to purchase. After defendant inspected
    the house and reported the house had no major problems, plaintiff purchased the house in
    reliance on defendant’s report. Plaintiff claims that he then discovered multiple serious
    issues with the house, including plumbing problems, insulation and heat pump problems, and
    inadequate floor support. Plaintiff filed suit 13 months after the inspection was completed,
    and defendant moved for summary judgment, claiming that plaintiff’s signed contract with
    defendant provided that plaintiff must file suit on any claims within one year of the date of
    inspection. The trial court found that plaintiff signed such an agreement and that the
    contractual limitations period of one year was reasonable. The trial court granted summary
    judgment to defendant, ruling that plaintiff’s claims were untimely. Plaintiff appeals. We
            Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                                Affirmed; Case Remanded
    J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
    J R., P.J., and D. M ICHAEL S WINEY, J., joined.
    Kathryn J. Dugger-Edwards, Elizabethton, Tennessee, for the appellant, David Desgro.
    John B. McKinnon III, Johnson City, Tennessee, for the appellee, Paul Pack d/b/a Resi Chek.
                                              I. BACKGROUND
           On January 6, 2009, the parties met at the subject home and plaintiff signed 1 an
    agreement that was presented to him by defendant regarding performance of the home
    inspection. This agreement, titled “NACHI Home Inspection Agreement,” provides,
            CLIENT shall have no cause of action against INSPECTOR after one year
            from the date of the inspection.
    The inspection was performed that same day. Plaintiff filed this lawsuit on February 2, 2010,
    more than one year from the date of inspection. The trial court granted summary judgment
    to defendant, finding that the contractual limitation period was reasonable and enforceable.
    The trial court stated that plaintiff “had plenty of time to find any deficiency” because he had
    been living in the home for at least ten months when the contractual limitations period
                                                   II. ISSUES
            We consolidate and restate the issues raised on appeal by plaintiff as follows:
            A. Whether the agreement was an unenforceable contract of adhesion.
            B. Whether the agreement was void as against public policy.
            C. Whether the trial court erred in granting summary judgment based on
            plaintiff’s failure to file this lawsuit within one year from the date of the home
              At the trial court level, plaintiff disputed that he signed the subject agreement, admitting that he
    signed something that day but did not know what it was. Defendant presented the original agreement as an
    exhibit, and testified that it was the document that plaintiff signed. The court was given examples of
    plaintiff’s signature on other documents. The court ultimately found that plaintiff signed the agreement and
    that defendant’s testimony regarding plaintiff’s signature on said document was more credible. Plaintiff has
    not appealed that finding.
                                  III. STANDARD OF REVIEW
           A grant of summary judgment is not presumed correct by this court; rather, this court
    must “make a fresh determination” in each case that the requirements of Tenn. R. Civ. P. 56
    have been satisfied. Watson v. Waters, 
    375 S.W.3d 282
    , 291 (Tenn. Ct. App. 2012). In
    doing so, this court must consider the evidence in the light most favorable to the non-movant
    and draw all reasonable inferences in his favor. Id.
           As this court has previously explained:
           The interpretation and construction of a plain and unambiguous written
           contract is a question of law for determination by the court. It is the duty of
           the court to enforce the contract according to its plain terms, and the language
           used in the contract must be taken and understood in its plain, ordinary and
           popular sense. However, “the cardinal rule for interpretation of contracts is to
           ascertain the intention of the parties and to give effect to that intention as best
           can be done consistent with legal principles.” Courts may determine the
           intention of the parties “by a fair construction of the terms and provisions of
           the contract, by the subject matter to which it has reference, by the
           circumstances of the particular transaction giving rise to the question, and by
           the construction placed on the agreement by the parties in carrying out its
    BFS Retail and Commercial Operations LLC v. Smith, 
    232 S.W.3d 756
    , 758 (Tenn. Ct. App.
    2007) (citations omitted).
                                         IV. DISCUSSION
            Plaintiff argues that the agreement at issue was an unenforceable contract of adhesion
    because it contains unconscionable and oppressive terms. Plaintiff notes that the contract
    provided that if he failed to notify defendant of adverse conditions within 14 days of
    discovery, defendant would be released from all liability. Plaintiff also notes that the
    contract provided that if defendant was negligent, his damages were limited to the amount
    of the inspection fee. Plaintiff asserts that the language limiting his time for bringing a claim
    to one year from the date of the inspection was unconscionable and oppressive.
           An adhesion contract has been defined as:
           a standardized contract form offered to consumers of goods and services on
           essentially a ‘take it or leave it’ basis, without affording the consumer a
           realistic opportunity to bargain and under such conditions that the consumer
           cannot obtain the desired product or service except by acquiescing to the form
           of the contract . . .. Courts generally agree that ‘[t]he distinctive feature of a
           contract of adhesion is that the weaker party has no realistic choice as to its
    Buraczynski v. Eyring, 
    919 S.W.2d 314
    , 320 (Tenn. 1996) (citations omitted). The
    agreement at issue in this case is a standard form contract that leaves the consumer with little
    or no choice as to its terms. However, plaintiff did not prove that defendant would not have
    performed the service if he did not sign the contract. Plaintiff also did not question the terms
    of the agreement and was not told that he had to sign it to procure the home inspection.
    Further, he could have sought the service from another provider if he did not agree to the
    terms of the agreement. As such, the contract is not an adhesion contract. See, e.g., Pyburn
    v. Bill Heard Chevrolet, 
    63 S.W.3d 351
    , 359-360 (Tenn. Ct. App. 2001) (holding that the
    contract was not an adhesion contract where plaintiff was not required to sign the document,
    when there was no evidence that plaintiff questioned defendant about the contents of the
    document, and when plaintiff could have bought a van elsewhere if he did not want to sign
    the contract); Estate of Mooring v. Kindred Nursing Centers, No. W2007-02875-COA-R3-
    2009 WL 130184
    , *5(Tenn. Ct. App. Jan. 20, 2009) (holding that the arbitration
    agreement was not an adhesion contract where proof showed that patient would have been
    admitted to nursing home even if patient refused to sign arbitration agreement); Wilson
    Pharmacy, Inc. v. General Computer Corp., No. E2000-00733-COA-R3-CV, 
    2000 WL 1421561
    , *3 (Tenn. Ct. App. Sep. 21, 2000) (holding that statements by plaintiff that he did
    not know of any other computer corporation which would provide a comparable service or
    that he was offered a standardized contract “on a take-it-or-leave-it basis” were insufficient
    to show a contract of adhesion).
            In Buraczynski, the Court was confronted with the question of whether to enforce
    certain arbitration agreements between a physician and his patients. The Court determined
    that the agreements were adhesion contracts because (1) the agreements were “standardized
    form contracts” prepared by the party with superior knowledge of the subject matter -
    provision of medical services, (2) the agreements were admittedly offered to the patients on
    a ‘take it or leave it’ basis, (3) if patients refused to sign the agreements, the physician would
    have discontinued their medical care, and (4) while the patients “could have refused to sign
    the arbitration agreements and sought out another physician in the area, that action would
    have terminated the physician-patient relationship (ordinarily one of trust) and interrupted
    the course of the patient’s treatment.” Buraczynski, 919 S.W.2d at 320. The Court ultimately
    enforced the arbitration agreements because the terms were not unconscionable, oppressive,
    or outside the reasonable expectations of the parties. Id.
            In this case, the agreement at issue is not an adhesion contract because it was not
    shown that plaintiff had to “take it or leave it” or that he was forced to acquiesce to the terms
    of the agreement to get the service he desired. Plaintiff did not question the terms of the
    agreement, did not attempt to bargain with the defendant regarding the agreement, and there
    was no proof that defendant told plaintiff he had to sign the document to obtain the service.
    Plaintiff stated that he contacted defendant at the recommendation of his realtor, but plaintiff
    likely could have obtained the service from someone else because plaintiff did not show that
    defendant was the only home inspector in the area. Accordingly, we do not need to examine
    the contract’s provisions to determine their reasonableness because the agreement at issue
    is not a contract of adhesion. See Estate of Mooring, 
    2009 WL 130184
     at *6.
           Plaintiff also argues that the trial court erred in failing to hold that the “exculpatory”
    clause was void as against public policy. Our Supreme Court has held that an exculpatory
    clause in a contract is unenforceable when it affects the public interest. See Crawford v.
    839 S.W.2d 754
    , 758-759 (Tenn. 1992) (finding an exculpatory clause in a
    residential lease contract to be contrary to public policy); Olson v. Molzen, 
    558 S.W.2d 429
    432 (Tenn. 1977) (holding an exculpatory clause in a contract for medical treatment is
    contrary to public policy). Home inspections have been deemed by this court to be a “service
    of great importance to the public,” and the exculpatory clauses contained in home inspection
    agreements have been determined to affect the public interest as well. Carey v. Merritt, 
    148 S.W.3d 912
    , 918 (Tenn. Ct. App. 2004); Russell v. Bray, 
    116 S.W.3d 1
    , 8 (Tenn. Ct. App.
           In the Russell case, the home inspection agreement contained the following clause:
           OF THE COST TO REPAIR (adjusted for the remaining life of the problem
    Id. at 3. Similarly, in Carey, the agreement stated:
           [t]his company assumes no liability and shall not be liable for any mistakes,
           omissions, or errors in judgement of an employee beyond the cost of the report.
           This limitation of liability shall include and apply to all consequential
            damages, bodily injury and property damage of any nature.
    Carey, 148 S.W.3d at 914. In both cases, the exculpatory clauses were held to be void as
    against public policy and unenforceable.
           In this case, plaintiff argues that the clause stating that plaintiff “shall have no cause
    of action against INSPECTOR after one year from the date of inspection” is also an
    exculpatory clause which should be held to be void as against public policy. Defendant
    argues that this is not an exculpatory clause, but rather a contractual limitation on the time
    period for filing suit, which the courts of this State have consistently upheld.
            Tennessee has long-recognized the “well-established general rule that in the absence
    of a prohibitory statute, a contract provision is valid which limits the time for bringing suit,
    if a reasonable period of time is provided, and that the general statutes of limitations are not
    prohibitory of such contractual provisions.” State v. Evans, 
    334 S.W.2d 337
    , 342 (Tenn. Ct.
    App. 1959). As this court has previously explained:
            Tennessee courts, however, have consistently upheld contractual periods of
            limitations that reduce the statutory period for filing suit. See, e.g., Guthrie v.
            Connecticut Indemnity Ass’n, 
    49 S.W. 829
    , 830 (Tenn. 1899) (holding that
            insurance policy’s limitation for bringing suit was valid); Tullahoma Concrete
            Pipe Co. v. Gillespie Constr. Co. & U.S. Fidelity & Guar. Co., 
    405 S.W.2d 657
    , 664 (Tenn. Ct. App. 1966) (holding that provision in contract that suit
            must be brought within one year after sub-contractor ceased work on project
            was valid); Das v. State Farm Fire & Cas. Co., 
    713 S.W.2d 318
    , 324 (Tenn.
            Ct. App. 1986) (holding that dismissal of plaintiffs’ suit was justified by their
            failure to sue within one year after insurance company’s first denial of
            liability); Hill v. Home Ins. Co., 
    125 S.W.2d 189
    , 192 (Tenn. Ct. App. 1938)
            (holding that contractual limitation requiring suit on fire policy to be
            commenced within one year after date of loss was valid and enforceable).
    Fortune v. Unum Life Ins. Co. of America, 
    360 S.W.3d 390
    , 398 (Tenn. Ct. App. 2010).
           In this case, the language plaintiff complains of is not an unenforceable exculpatory
    clause. The language is a contractual limitations period, which our court has repeatedly held
               While the agreement does contain an unenforceable exculpatory clause limiting defendant’s
    liability, similar to the clauses in Russell and Carey, this clause was not the basis for the trial court’s ruling,
    as the trial court held that it was unenforceable. The agreement states that if any provision is found to be
    to be enforceable so long as the period is reasonable. The provision does not exculpate
    defendant from most or all liability, but rather limits the time period within which plaintiff
    can file suit against defendant. Thus, plaintiff’s argument in this regard is without merit.
           Finally, plaintiff argues that the trial court erred in granting summary judgment based
    on the unreasonable contractual limitations period. Plaintiff does not argue that one year was
    an unreasonable time period; rather, he argues that the one-year period should have began
    on the date that plaintiff purchased the home instead of the date of the inspection. Plaintiff
    purchased the home on February 10, 2009; thus, his suit would have been timely if the claim
    accrued on the purchase date, rather than the inspection date.
            This court has upheld one year contractual limitations periods in many instances, and
    that time period is not invalid simply because it commenced on a date prior to plaintiff taking
    possession of the house. Plaintiff admits that he moved into the house about one week after
    purchasing it and that he “began to discover problems with the house” after moving in. The
    trial court found that plaintiff had approximately 11 months after moving into the house to
    discover problems and file suit within the contractual limitations period. Plaintiff signed the
    subject agreement and agreed to the contractual limitations period, and it is reasonable. The
    trial court properly upheld the contractual limitations period and granted summary judgment
    to defendant because plaintiff’s suit was untimely.
                                            V. CONCLUSION
          The judgment of the trial court is affirmed, and the case is remanded for such further
    proceedings as may be necessary. Costs of the appeal are taxed to the appellant, David
                                                             JOHN W. MCCLARTY, JUDGE
    unenforceable, the remaining provisions will remain in effect.