Utley v. Cullum & Truck Salvage ( 1997 )

IN THE COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
FILED
March 19, 1997
PATRICIA UTLEY, )
) Cecil W. Crowson
Plaintiff/Appellant, ) Appellate Court Clerk
) Davidson Circuit
) No. 94C-1
VS. )
) Appeal No.
) 01A01-9604-CV-00164
DAVID CULLUM and )
TRUCK SALVAGE INC., )
)
Defendants/Appellees. )
APPEAL FROM THE CIRCUIT COURT FOR DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE WALTER C. KURTZ, JUDGE
For the Plaintiff/Appellant: For the Defendants/Appellees:
Frank C. Ingraham Tom Corts
Nashville, Tennessee ORTALE, KELLEY, HERBERT,
& CRAWFORD
Frank J. Scanlon Nashville, Tennessee
Nashville, Tennessee
AFFIRMED AND REMANDED
WILLIAM C. KOCH, JR., JUDGE
OPINION
This appeal involves a dispute concerning the financial responsibility for
cleaning up environmental contamination on leased property. After the lease
expired, the lessor filed suit in the Circuit Court for Davidson County seeking to
recover the expected costs to remediate the contamination. The lessee moved for
summary judgment based on the doctrine of res judicata, asserting that the lessor
could have asserted the claim in an earlier circuit court proceeding. The trial court
granted the summary judgment, and the lessor has appealed. We affirm the
summary dismissal of this complaint.
I.
Truck Salvage, Inc. and several related companies operated a vehicle
salvage business on Hagan Street in Nashville for over fifteen years. They
purchased and sold new and used vehicle parts and supplies and also stored
vehicle bodies, engine parts, tires, wheels, and batteries at the site. Their business
activities generated several types of hazardous waste, including petroleum
products, cleaners and solvents, and other related compounds. Over the years,
Truck Salvage permitted these waste products to contaminate the property.
The environmental contamination problem surfaced in the summer of 1992
when Truck Salvage and Patricia Utley, the property owner, began negotiations
either to renew the lease or to purchase the property. Truck Salvage insisted that
Ms. Utley would be responsible for the environmental cleanup if it purchased the
property, and Ms. Utley responded that this responsibility more properly fell to
Truck Salvage. Ms. Utley retained Environmental Technology Service, Inc.
(“ETS”) to evaluate the property and, in late September 1992, provided Truck
Salvage with ETS’s preliminary findings showing that portions of the property
tested positive for petroleum hydrocarbons. The ETS report did not indicate
which areas, if any, would require remediation under state or federal law.
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The parties’ negotiations concerning the property proved fruitless. Truck
Salvage continued to occupy the property after its lease expired on December 31,
1992. After it decided to vacate the property, Truck Salvage attempted to clean
up the contamination but spilled more diesel fuel and cleaning fluid in the process.
Both Ms. Utley and Truck Salvage retained other environmental
engineering firms to develop recommendations for remediating the contamination.
Ms. Utley obtained two reports - a March 1993 report by Four Seasons Industrial
Services recommending the systematic removal of all contaminated soil on the
property and an August 1993 report by TVG Environmental identifying deep and
extensive contamination in two areas. In April 1993 Truck Salvage received a
report by ERM-Southeast, Inc. recommending three alternatives, including (1)
removing the contaminated soil, (2) covering the contaminated areas with clean
soil, or (3) taking no action in the absence of a regulatory cleanup mandate.
Ms. Utley filed a general sessions suit against Truck Salvage and its
president, David Cullum, in June 1993 seeking to collect past due rent. After Ms.
Utley prevailed, Truck Salvage and Mr. Cullum appealed to circuit court. During
the circuit court proceedings, Ms. Utley requested additional damages for the costs
she incurred in removing the debris left behind when Truck Salvage vacated the
property. Following a bench trial on December 20, 1993, the circuit court found
that Truck Salvage was a holdover tenant and awarded Ms. Utley $1,000 for the
reasonable rental value of the property during the holdover period, $1,500 for
cleanup costs, and $1,000 in attorney’s fees.
Ten days after the circuit court trial, Ms. Utley filed another suit against
Truck Salvage and Mr. Cullum alleging that they had breached the lease by
contaminating the property with hazardous waste. Truck Salvage and Mr. Cullum
moved for a summary judgment on the ground that all the questions and issues
raised in Ms. Utley’s new suit had already been decided by the circuit court in the
proceeding appealed from general sessions court. The circuit court granted the
summary judgment on the ground that Ms. Utley had filed the general sessions
court suit when she knew or should have known of her claims against Truck
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Salvage and Mr. Cullum for soil and ground water contamination. This appeal
followed.
II.
Appeals from decisions granting summary judgment require the courts to
determine whether the requirements of Tenn. R. Civ. P. 56 have been met.
Hembree v. State, 925 S.W.2d 513, 515 (Tenn. 1996); Cowden v. Sovran Bank /
Central South, 816 S.W.2d 741, 744 (Tenn. 1991). Tenn. R. Civ. P. 56.03
requires parties seeking a summary judgment to demonstrate that there are no
genuine disputes concerning the material facts and that they are entitled to a
judgment as a matter of law. Wyatt v. A-Best Co., 910 S.W.2d 851, 854 (Tenn.
1995); Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn. 1993).
A summary judgment proceeding is an appropriate vehicle for determining
whether the doctrine of res judicata bars a particular action. Byrd v. Hall, 847
S.W.2d 208, 210 (Tenn. 1993); Collins v. Greene County Bank, 916 S.W.2d 941,
945 (Tenn. Ct. App. 1995).
The relevant facts in this case are those relating to the defense that Ms.
Utley’s environmental cleanup claims are barred by the doctrine of res judicata.
There are no material factual disputes concerning the nature and course of the
earlier proceedings in the general sessions and circuit courts. Accordingly, the
controlling question in this case is whether Mr. Cullum and Truck Salvage are
entitled to prevail on their res judicata defense as a matter of law.
III.
Ms. Utley offers two reasons why the doctrine of res judicata should not bar
her later circuit court suit to recover the costs of cleaning up the environmental
contamination after Truck Salvage vacated the property. First, she asserts that her
environmental contamination claim had not accrued when she filed her general
sessions suit because she was unaware of the full extent of the contamination.
Second, she asserts that the monetary limits on general sessions suits precluded
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her from fully and fairly litigating her environmental contamination claim when
her general sessions suit was appealed to circuit court.
A.
Res judicata is a claim preclusion doctrine that promotes finality in
litigation. Moulton v. Ford Motor Co., 533 S.W.2d 295, 296 (Tenn. 1976). It bars
a second suit between the same parties or their privies on the same cause of action
with respect to all issues which were or could have been litigated in the former
suit. Richardson v. Tennessee Bd. of Dentistry, 913 S.W.2d 446, 459 (Tenn.
1995); Goeke v. Woods, 777 S.W.2d 347, 349 (Tenn. 1989).
A prior judgment will not have res judicata effect on rights that have not
accrued or when intervening events have altered the parties’ legal relationships.
White v. White, 876 S.W.2d 837, 839-40 (Tenn. 1994); Henegar v. International
Minerals & Chem. Corp., 209 Tenn. 355, 359, 354 S.W.2d 69, 70-71 (1962).
Parties asserting a res judicata defense must demonstrate that (1) a court of
competent jurisdiction rendered the prior judgment, (2) the prior judgment was
final and on the merits, (3) the same parties or their privies were involved in both
of the proceedings, and (4) both proceedings involved the same cause of action.
Lee v. Hall, 790 S.W.2d 293, 294 (Tenn. Ct. App. 1990).
The prohibition against splitting an indivisible cause of action is a logical
extension of the principles underlying the doctrine of res judicata. Potts v. Celotex
Corp., 796 S.W.2d 678, 682 (Tenn. 1990). Like the doctrine of res judicata, it
shields a defendant from a multiplicity of suits, Stapp v. Andrews, 172 Tenn. 610,
613, 113 S.W.2d 749, 750 (1938), and it applies to both contractual and tort
causes of action. Holland v. Forcum-James Cooperage & Lumber Co., 154 Tenn.
174, 176, 285 S.W. 569, 569 (1926).
The rule against splitting a cause of action prevents plaintiffs from
fragmenting their accrued claims by litigating part of them to final judgment and
then filing a second suit against the same defendant on alternate claims or
theories. American Nat’l Bank & Trust Co. v. Clark, 586 S.W.2d 825, 827 (Tenn.
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1979); National Cordova Corp. v. City of Memphis, 214 Tenn. 371, 380, 380
S.W.2d 793, 797 (1964). It also prevents plaintiffs from recovering less than the
full amount of their accrued damages in one suit and then filing a second suit
against the same defendant on the same cause of action to recover the remainder
of their damages. Massengill v. Scott, 738 S.W.2d 629, 631 (Tenn. 1987);
Hawkins v. Dawn, 208 Tenn. 544, 548, 347 S.W.2d 480, 481-82 (1961).
Accordingly, parties suing for breach of contract must include in their complaint
all breaches that have occurred when the suit is filed. Matheny v. Preston Hotel
Co., 140 Tenn. 41, 48-49, 203 S.W. 327, 328 (1918).
B.
Ms. Utley asserts that her environmental contamination claim had not
accrued when she filed her general sessions action because she did not know the
full extent of the damage. We find this argument flawed for three reasons. First,
a breach of contract claim accrues when the contract is breached, Greene v.
THGC, Inc., 915 S.W.2d 809, 810 (Tenn. Ct. App. 1995), even if the plaintiff is
unaware of the full extent of its injuries caused by the breach. See Wyatt v. A-Best
Co., 910 S.W.2d at 855. Second, the undisputed proof demonstrates that Ms.
Utley knew there was a serious contamination problem when she filed her general
sessions suit. By that time, she had received reports from two environmental
engineering firms concluding that the property had been contaminated and
recommending the systematic removal of all contaminated soil on the property.
Third, Ms. Utley had an opportunity to amend her complaint after the case was
appealed to the circuit court to reflect the damages described in the TVG
Environmental report but failed to do so.
Truck Salvage breached the lease agreement by allowing hazardous waste
to contaminate the property and by failing to clean up the contaminants before it
vacated the property. Thus, when Ms. Utley filed her claim in general sessions
court, Truck Salvage had not only breached the payment terms of the lease but
also the requirements relating to the maintenance and condition of the premises.
She had also received two reports from her environmental engineers stating
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clearly that she was faced with a significant contamination problem. She elected
to bring only part of her breach of contract claims in general sessions court, even
though the information in her possession would have supported filing suit in
circuit court for all her accrued breach of contract claims.
C.
Ms. Utley also insists that she did not have a full and fair opportunity to
litigate her environmental contamination claim in the first circuit court proceeding
because the monetary damage limits on cases appealed from general sessions
court prevented her from seeking all of her damages. This claim is likewise not
well-taken for two reasons. First, the adoption of Tenn. R. Civ. P. 15 in 1970
permitted parties in cases appealed from general sessions court to amend their
pleadings to seek damages beyond the general sessions court’s jurisdictional
limits. Ware v. Meharry Medical College, 898 S.W.2d 181, 186 (Tenn. 1995).1
Second, Ms. Utley split her contract cause of action against Truck Salvage and
Mr. Cullum in June 1993 when she filed her suit in general sessions court. While
she could relinquish part of her contract claim in order to bring her suit within the
general sessions court’s monetary limits, the general sessions and circuit court
judgments barred her later action based on the relinquished claims. See Carraway
v. Burton, 23 Tenn. (4 Humph.) 108, 111 (1843) (holding that a plaintiff may
relinquish part of a contract claim in order to give a justice of the peace
jurisdiction to hear the claim but that a judgment by the justice of the peace will
bar the plaintiff’s later suit on the relinquished claim).
D.
1
The first circuit court proceeding in this case occurred before the Tennessee Supreme
Court’s Ware decision. We are not, however, applying Ware retroactively to this case because
Ware simply announced a legal principle that had been in place since 1970 when the Tennessee
Rules of Civil Procedure were adopted.
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The action Ms. Utley commenced in circuit court involves the same parties
as the prior general sessions action that was appealed to circuit court. It also
involves contract claims that could and should have been raised in the earlier
proceeding. Accordingly, the circuit court’s January 5, 1994 judgment is res
judicata on the claims Ms. Utley sought to raise in this case.
IV.
We affirm the judgment and remand the case to the trial court for whatever
further proceedings may be appropriate. We also tax the costs of this appeal to
Patricia Utley and her surety for which execution, if necessary, may issue.
____________________________
WILLIAM C. KOCH, JR., JUDGE
CONCUR:
________________________________
HENRY F. TODD, P.J., M.S.
________________________________
BEN H. CANTRELL, JUDGE
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