Mark Jay Scott McLean v. Bourget's Bike Works, Inc. ( 2005 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs May 28, 2004
MARK JAY SCOTT McLEAN v. BOURGET’S BIKE WORKS, INC.
Appeal from the Circuit Court for Davidson County
No. 01C-2676 Hamilton V. Gayden, Judge
No. M2003-01944-COA-R3-CV - Filed October 7, 2005
This appeal involves a dispute arising from the sale of a used motorcycle. After discovering that the
motorcycle was not new, the purchaser filed suit and then settled with the dealer from whom he had
purchased the motorcycle. Later, the purchaser filed suit against the motorcycle’s manufacturer in
the Circuit Court for Davidson County alleging that the motorcycle’s aluminum frame was defective.
The trial court granted the manufacturer’s summary judgment motion and dismissed the purchaser’s
products liability and Tennessee Consumer Protection Act claims. The purchaser has appealed. We
have determined that the manufacturer was entitled to a summary judgment on grounds other than
those relied upon by the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
WILLIAM C. KOCH , JR., P.J., M.S., delivered the opinion of the court, in which WILLIAM B. CAIN and
PATRICIA J. COTTRELL, JJ., joined.
G. Kline Preston, IV, Nashville, Tennessee, for the appellant, Mark Jay Scott McLean.
Jeffrey M. Beemer and Trajan H. Carney, IV, Nashville, Tennessee, for the appellee, Bourget’s Bike
Works, Inc.
OPINION
I.
In June 1999, Mark Jay Scott McLean1 purchased a Python T6 motorcycle from Custom
Cycle Works (“Custom Cycle”), in Nashville. The motorcycle had been manufactured by Bourget’s
Bike Works, Inc. (“Bourget’s”), a manufacturer of custom and production motorcycles located in
Phoenix, Arizona. Custom Cycle was not an authorized Bourget’s dealer. However, Bobby
Appleton, the owner of Custom Cycle, told Mr. McLean that the motorcycle was a 1999 model and
1
Mr. McLean’s complaint identifies him as “M ark Jay Scott McClain.” However, his later papers identify him
as “M ark J. Scott McLean” or “Scott McLean.” The name “M ark McLean” appears of the bill of sale of the motorcycle
involved in this case. For the purposes of this opinion, we will refer to the appellant as “Mr. McLean.”
that it was “roadworthy” even though it had an aluminum frame and was not designed for long trips.
Mr. McLean paid Custom Cycle $35,260 for the motorcycle based on his belief that it was new.
Mr. McLean began to experience mechanical problems with the motorcycle after he
purchased it. He also discovered that the motorcycle was not new after he saw it on the cover of a
“biker” magazine. When Mr. McLean contacted the prior owner, he learned that the motorcycle was
actually a 1997 Python T6 and that Custom Cycle had purchased it used from a Bourget’s dealer in
Chattanooga.
In December 1999, Mr. McLean sued Custom Cycle and Mr. Appleton in the Circuit Court
for Davidson County. Based on Mr. Appleton’s assertion that the motorcycle was new, Mr. McLean
sought to recover damages for breach of contract, intentional misrepresentation, and violation of the
Tennessee Consumer Protection Act. According to Mr. McLean, in September 2000, while this suit
was pending, the motorcycle’s aluminum frame snapped in two places while it sat unattended. In
June 2001, Mr. McLean settled his claims against Mr. Appleton and Custom Cycle when they
offered to purchase the motorcycle back for $25,000. Mr. McLean turned the motorcycle over to
Custom Cycle after he received his money.
On August 31, 2001, Mr. McLean filed suit against Bourget’s in the Circuit Court for
Davidson County. He asserted that Bourget’s design was negligent because the “weight of the
motorcycle is too great for the frame” and that Bourget’s had violated the Tennessee Consumer
Protection Act because the motorcycle was “not worthy of being called a motorcycle.” Mr. McLean
sought to recover damages “in excess of $15,000.00” for the “economic injuries” he sustained as a
result of purchasing the motorcycle.
Bourget’s responded to Mr. McLean’s complaint with an answer and a multi-faceted motion
for summary judgment. The summary judgment motion asserted (1) that Mr. McLean’s claims were
time-barred, (2) that Mr. McLean had committed spoliation of the evidence by selling the motorcycle
back to Custom Cycle, (3) that Mr. McLean failed to state a products liability claim because he was
seeking only economic damages, and (4) that Mr. McLean had failed to state a Tennessee Consumer
Protection Act claim upon which relief could be granted. The trial court granted Bourget’s motion
on the first two grounds, as well as a third ground not asserted by Bourget’s – that Mr. McLean had
released Bourget’s from liability based on the release he signed when he settled with Mr. Appleton
and Custom Cycle. Mr. McLean has appealed.
II.
STANDARD OF REVIEW
The standards for reviewing summary judgments on appeal are well settled. Summary
judgments are proper in virtually any civil case that can be resolved on the basis of legal issues alone.
Fruge v. Doe, 952 S.W.2d 408, 410 (Tenn. 1997); Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993);
Pendleton v. Mills, 73 S.W.3d 115, 121 (Tenn. Ct. App. 2001). They are not, however, appropriate
when genuine disputes regarding material facts exist. Tenn. R. Civ. P. 56.04. Thus, a summary
judgment should be granted only when the undisputed facts, and the inferences reasonably drawn
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from the undisputed facts, support one conclusion – that the party seeking the summary judgment
is entitled to a judgment as a matter of law. Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d 614,
620 (Tenn. 2002); Webber v. State Farm Mut. Auto. Ins. Co., 49 S.W.3d 265, 269 (Tenn. 2001).
The party seeking a summary judgment bears the burden of demonstrating that no genuine
dispute of material fact exists and that it is entitled to a judgment as a matter of law. Godfrey v. Ruiz,
90 S.W.3d 692, 695 (Tenn. 2002); Shadrick v. Coker, 963 S.W.2d 726, 731 (Tenn. 1998). To be
entitled to a judgment as a matter of law, the moving party must either affirmatively negate an
essential element of the non-moving party’s claim or establish an affirmative defense that
conclusively defeats the non-moving party’s claim. Byrd v. Hall, 847 S.W.2d at 215 n.5; Cherry v.
Williams, 36 S.W.3d 78, 82-83 (Tenn. Ct. App. 2000).
Once the moving party demonstrates that it has satisfied Tenn. R. Civ. P. 56’s requirements,
the non-moving party must demonstrate how these requirements have not been satisfied. Bain v.
Wells, 936 S.W.2d 618, 622 (Tenn. 1997). Mere conclusory generalizations will not suffice.
Cawood v. Davis, 680 S.W.2d 795, 796-97 (Tenn. Ct. App. 1984). The non-moving party must
convince the trial court that there are sufficient factual disputes to warrant a trial (1) by pointing to
evidence either overlooked or ignored by the moving party that creates a factual dispute, (2) by
rehabilitating evidence challenged by the moving party, (3) by producing additional evidence that
creates a material factual dispute, or (4) by submitting an affidavit in accordance with Tenn. R. Civ.
P. 56.07 requesting additional time for discovery. McCarley v. West Quality Food Serv., 960 S.W.2d
585, 588 (Tenn. 1998); Byrd v. Hall, 847 S.W.2d at 215 n.6. A non-moving party that fails to carry
its burden faces summary dismissal of the challenged claim because, as our courts have repeatedly
observed, the “failure of proof concerning an essential element of the cause of action necessarily
renders all other facts immaterial.” Alexander v. Memphis Individual Practice Ass’n, 870 S.W.2d
278, 280 (Tenn. 1993).
A summary judgment is not appropriate when a case’s determinative facts are in dispute.
However, for a question of fact to exist, reasonable minds must be able to differ over whether some
alleged occurrence or event did or did not happen. Conatser v. Clarksville Coca-Cola Bottling Co.,
920 S.W.2d 646, 647 (Tenn. 1995); Harrison v. S. Ry. Co., 31 Tenn. App. 377, 387, 215 S.W.2d 31,
35 (1948). If reasonable minds could justifiably reach different conclusions based on the evidence
at hand, then a genuine question of fact exists. Louis Dreyfus Corp. v. Austin Co., 868 S.W.2d 649,
656 (Tenn. Ct. App. 1993). If, on the other hand, the evidence and the inferences reasonably drawn
from the evidence would permit a reasonable person to reach only one conclusion, then there are no
material factual disputes, and the question can be disposed of as a matter of law. Godfrey v. Ruiz,
90 S.W.3d at 695; Seavers v. Methodist Med. Ctr. of Oak Ridge, 9 S.W.3d 86, 91 (Tenn. 1999);
Beaudreau v. Gen. Motors Acceptance Corp., 118 S.W.3d 700, 703 (Tenn. Ct. App. 2003).
Summary judgments enjoy no presumption of correctness on appeal. BellSouth Adver. &
Publ’g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn. 2003); Scott v. Ashland Healthcare Ctr., Inc.,
49 S.W.3d 281, 285 (Tenn. 2001). Accordingly, appellate courts must make a fresh determination
that the requirements of Tenn. R. Civ. P. 56 have been satisfied. Hunter v. Brown, 955 S.W.2d 49,
50-51 (Tenn. 1997). We must consider the evidence in the light most favorable to the non-moving
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party, and we must resolve all inferences in the non-moving party’s favor. Godfrey v. Ruiz, 90
S.W.3d at 695; Doe v. HCA Health Servs. of Tenn., Inc., 46 S.W.3d 191, 196 (Tenn. 2001). When
reviewing the evidence, we must determine first whether factual disputes exist. If a factual dispute
exists, we must then determine whether the fact is material to the claim or defense upon which the
summary judgment is predicated and whether the disputed fact creates a genuine issue for trial. Byrd
v. Hall, 847 S.W.2d at 214; Rutherford v. Polar Tank Trailer, Inc., 978 S.W.2d 102, 104 (Tenn. Ct.
App. 1998).
III.
BOURGET ’S STATUTE OF LIMITATIONS DEFENSE
Mr. McLean first argues that the trial court erred by dismissing both his products liability
claim and his Tennessee Consumer Protection Act claim based on the statute of limitations.
Specifically, he asserts that the trial court erred by concluding that he was on notice of the defective
condition of the motorcycle when he filed his complaint against Custom Cycle and Mr. Appleton.
We agree.
Products liability claims and claims under the Tennessee Consumer Protection Act both have
one-year statutes of limitations. Products liability claims must be filed within one year from the date
of the “personal injury, not the negligence or sale of a product.” Tenn. Code Ann. § 28-3-104(b)(1)
(2000). Similarly, claims under the Tennessee Consumer Protection Act must be filed within one
year from the consumer’s discovery of the unlawful act or practice. Tenn. Code Ann. § 47-18-110
(Supp. 2004).
Mr. McLean asserts that he did not discover the defect in the motorcycle’s frame until the
second week of September 2000 when the frame allegedly snapped in half under the weight of the
motorcycle. He filed his complaint against Bourget’s on August 31, 2001. Thus, for the purposes
of Bourget’s statute of limitations defense, the time began to run on Mr. McLean’s claims – to the
extent that he has viable claims2 – in mid-September 2000.
Contrary to the trial court’s conclusion, there is nothing in the record of the earlier suit
against Custom Cycle and Mr. Appleton to indicate that Mr. McLean had been put on notice prior
to September 2000 that the motorcycle’s aluminum frame was defective. Mr. McLean’s earlier
lawsuit was based on the alleged misrepresentations regarding the motorcycle’s age and prior
ownership, as well as its mechanical problems. Mr. McLean made no mention in the prior suit that
the aluminum frame was defective and could not support the weight of the motorcycle. Because Mr.
McLean filed his lawsuit against Bourget’s within one year from discovering the motorcycle’s
alleged defect, the trial court erred by dismissing his products liability and Tennessee Consumer
Protection Act claims on the grounds that they were not timely filed.
2
W e will explain later in the opinion how Mr. McLean has failed to state a claim for relief based on either
products liability or the Tennessee Consumer Protection Act.
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IV.
THE SPOLIATION OF THE EVIDENCE DEFENSE
Mr. McLean also takes issue with the trial court’s decision to summarily dismiss his
complaint because he had sold the motorcycle back to Custom Cycle before he filed suit against
Bourget’s. He insists that the record does not substantiate a spoliation of the evidence claim because
it contains no evidence that he sold the motorcycle back to Custom Cycle for the purpose of
concealing or destroying the evidence. We agree.
The doctrine of spoliation of evidence permits a court to draw a negative inference against
a party who has intentionally, and for an improper purpose, destroyed, mutilated, lost, altered, or
concealed evidence. Bronson v. Umphries, 138 S.W.3d 844, 854 (Tenn. Ct. App. 2003);
Leatherwood v. Wadley, 121 S.W.3d 682, 703 (Tenn. Ct. App. 2003); Foley v. St. Thomas Hosp.,
906 S.W.2d 448, 453-54 (Tenn. Ct. App. 1995). This inference is rebuttable and arises only when
the spoliation occurs in circumstances indicating fraud and a desire to suppress the truth. It does not
arise when the destruction was a matter of routine with no fraudulent intent.
As we understand Bourget’s argument, it is asserting that Mr. McLean’s sale of the
motorcycle back to Custom Cycle has undermined its ability to defend against the products liability
claim. Specifically, Bourget’s asserts that the sale of the motorcycle deprives it of an opportunity
to have its own expert examine the motorcycle to determine whether it was altered after it left the
defendant’s control.
The absence of the motorcycle may very well complicate both the prosecution and defense
of the products liability claim, but it does not completely prevent litigating the claim. Any difficulty
of this sort does not rise to the level of spoliation without evidence that the party responsible for the
evidence intentionally destroyed it or put it beyond the reach of the parties or the court to suppress
the truth. Bourget’s offered no evidence that Mr. McLean sold the motorcycle back to Custom Cycle
in order to place it beyond Bourget’s reach. Accordingly, the trial court erred by drawing the
inference at the summary judgment stage that the motorcycle’s frame, had it been available, would
have provided evidence favorable to Bourget’s claim that the frame had been altered after the
motorcycle left the manufacturer’s control.
V.
THE RELEASE SIGNED IN THE EARLIER LITIGATION
As a final matter, Mr. McLean argues that the trial court erred by concluding that the release
he signed in the earlier litigation with Custom Cycle was broad enough to cover his claims against
Bourget’s. We have determined that the trial court erred both procedurally and substantively when
it granted the summary judgment on this ground.
While trial courts may grant summary judgments to non-moving parties, they must exercise
this power with meticulous care. Thomas v. Transp. Ins. Co., 532 S.W.2d 263, 266 (Tenn. 1976).
Such decisions should be made only when the trial court is satisfied that the party opposing the
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summary judgment has been given notice and has been given a reasonable opportunity to respond
to all the issues being considered by the court. March Group, Inc. v. Bellar, 908 S.W.2d 956, 959
(Tenn. Ct. App. 1995).3 This record contains no indication that Mr. McLean was on notice that the
trial court was considering granting a summary judgment on a ground not contained in Bourget’s
motion. Accordingly, the summary judgment is procedurally defective because Mr. McLean was
not given a reasonable opportunity to demonstrate why the release did not provide a basis for a
summary judgment.
In addition, the trial court misread the terms of the release between Mr. McLean and Custom
Cycle. The release defined the parties to be released as follows “all persons or entities which may
be liable through” Mr. Appleton and Custom Cycle. If Bourget’s is liable to Mr. McLean, it is not
“through” Custom Cycle. Custom Cycle was never an authorized agent or dealer of Bourget’s and
the record contains no evidence that the two entities were associated in any other way. There was
no vertical privity between Custom Cycle and Bourget’s when Custom Cycle signed the release.
Because the release of liability does not concern Bourget’s in any way, the trial court erred by
granting summary judgment on that ground.
VI.
THE OTHER GROUNDS FOR BOURGET ’S’ SUMMARY JUDGMENT MOTION
Even though we have determined that the trial court’s reasons for granting Bourget’s motion
for summary judgment were flawed, we have determined that the trial court reached the correct result
because the remaining two grounds in Bourget’s’ motion were well-taken.4
A.
Mr. McLean’s Products Liability Claim
Mr. McLean sought only damages for economic loss when he sued Bourget’s. Accordingly,
Bourget’s requested a summary dismissal of Mr. McLean’s products liability claim5 on the ground
that purely economic damages were not recoverable in a products liability action. This defense was
well-taken. Mr. McLean’s products liability claim founders on the rocks of the economic loss rule.
The economic loss rule is a judicially created principle that requires parties to live by their
contracts rather than to pursue tort actions for purely economic losses arising out of the contract.
3
W e noted favorably the United States Court of Appeals for the Sixth Circuit’s opinion stating that non-moving
parties should be provided at least ten days notice before entering a summary judgment on grounds not included in the
summary judgment motion. March Group, Inc. v. Bellar, 908 S.W .2d at 959.
4
The Court of Appeals may affirm a judgment on different grounds than those relied on by the trial court when
the trial court reached the correct result. Continental Cas. Co. v. Smith, 720 S.W .2d 48, 50 (Tenn. 1986); Arnold v. City
of Chattanooga, 19 S.W .3d 779, 789 (Tenn. Ct. App. 1999); Allen v. National Bank of Newport, 839 S.W .2d 763, 765
(Tenn. Ct. App. 1992); Clark v. Metropolitan Gov’t, 827 S.W .2d 312, 317 (Tenn. Ct. App. 1991).
5
Mr. McLean’s claim regarding the negligent design of the motorcycle’s frame is by definition a products
liability claim. Tenn. Code Ann. § 29-28-102(6) (2000).
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The rule comes into play when the purchaser of a product sustains economic loss without personal
injury or damage to property other than the product itself.6 In that circumstance, the purchaser must
seek a remedy in contract, not in tort.7 Ritter v. Custom Chemicides, Inc., 912 S.W.2d 128, 133
(Tenn. 1995); Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159, 171 (Tenn. Ct. App.
2001). Thus, when a purchaser’s expectations in a sale are frustrated because a product does not
work properly, the purchaser’s remedies are limited to those prescribed by the law of contract. See,
e.g., Palmetto Linen Servs., Inc. v. U.N.X., Inc., 205 F.3d 126, 128 (4th Cir. 2000); Neibarger v.
Universal Coops., Inc., 486 N.W.2d 612, 615 (Mich. 1992).
Economic losses can take two forms – direct economic losses and consequential economic
losses attributable to the product. Restatement (Third) of Torts: Products Liability § 21 cmt. d, at
294-95; 3 Johns. D. Lee & Barry H. Lindahl, Modern Tort Law: Liability & Litigation § 27:21 (rev. ed.
2002). Direct economic losses relate to the product itself and include costs of repairing or replacing
the product or the diminution in the product’s value because it is of an inferior quality or does not
work for the general purposes for which it was manufactured and sold. See, e.g., Moorman Mfg. Co.
v. Nat’l Tank Co., 435 N.E.2d 443, 449 (Ill. 1982); Messer Griesheim Indus., Inc. v. Cryotech of
Kingsport, Inc., 131 S.W.3d 457, 465 (Tenn. Ct. App. 2003); Tietsworth v. Harley-Davidson, Inc.,
677 N.W.2d 233, 241-42 (Wis. 2004). Consequential economic losses include all other economic
losses attributable to the product itself such as the loss of profits resulting from an inability to use
the defective product. See, e.g., Bank of America v. Musselman, 240 F. Supp. 2d 547, 554 (E.D. Va.
2003); Casa Clara Condo. Ass’n v. Charley Toppino & Sons, Inc., 620 So. 2d 1244, 1246 (Fla.
1993); Prent Corp. v. Martek Holdings, Inc., 618 N.W.2d 201, 206 (Wis. Ct. App. 2000).
The economic loss rule applies to consumer transactions. Tennessee Farmers Mut. Ins. Co.
v. Ford Motor Co., No. W2001-00046-COA-R3-CV, 2002 WL 1332492, at *4 (Tenn. Ct. App. June
17, 2002) (No Tenn. R. App. P. 11 application filed). Here, Mr. McLean, according to the plain
language of his complaint, is seeking to recover damages only for economic loss – chiefly the
diminished value of the motorcycle because of its allegedly defective aluminum frame. He has not
alleged that the failure of the frame caused personal injury or damaged any property other than the
motorcycle itself. In the absence of any allegations or evidence of personal injury or damage to
property other than the motorcycle, Bourget’s was entitled as a matter of law to a judgment
dismissing Mr. McLean’s products liability claim.
6
Tenn. Code Ann. § 29-28-102(6) (2000) defines a “product liability action” as “all actions brought for or on
account of personal injury, death, or property damage . . . .”
7
The Restatement explains limiting claims for purely economic loss to contract remedies by pointing out that
“products liability law lies at the boundary between tort and contract. Some categories of loss, including those often
referred to as ‘pure economic loss,’ are more appropriately assigned to contract law and the remedies set forth in Articles
2 and 2A of the Uniform Commercial Code. W hen the Code governs a claim, its provisions regarding such issues as
statutes of limitation, privity, notice of claim, and disclaimer ordinarily govern the litigation.” Restatement (Third) of
Torts: Products Liability § 21 cmt. a, at 293 (1998).
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B.
Mr. McLean’s Tennessee Consumer Protection Act Claim
Mr. McLean also alleged that Bourget’s violated the Tennessee Consumer Protection Act
simply by placing its motorcycle into the stream of commerce. He insists that Bourget’s committed
an unfair or deceptive act or practice by calling its 1997 Python T6 a motorcycle because it was “not
worthy of being called a motorcycle.” Despite its rhetorical intensity, we find little merit in this
claim.
The Tennessee Consumer Protection Act was enacted to “protect consumers and legitimate
enterprises from those who engage in unfair or deceptive acts or practices in the conduct of any trade
or commerce in part or wholly within this state . . . .” Tenn. Code Ann. § 47-18-102(2) (2001).
Liability under the Act is premised on the commission of an unfair or deceptive act. McDonald’s
Corp. v. Shop at Home, Inc., 82 F. Supp. 2d 801, 817 (M.D. Tenn. 2000). Thus, a plaintiff will not
succeed with a claim under the Act without an allegation and proof that the defendant committed an
unfair or deceptive act. Hamer v. Harris, No. M2002-00220-COA-R3-CV, 2002 WL 31469213, at
*1-2 (Tenn. Ct. App. Nov. 6, 2002) perm. app denied (Tenn. Feb. 18, 2003).
Claims under the Tennessee Consumer Protection Act must be pleaded with the same
particularity that Tenn. R. Civ. P. 9.02 requires of common-law fraud claims. Harvey v. Ford Motor
Credit Co., 8 S.W.3d 273, 275 (Tenn. Ct. App. 1999); Humphries v. West End Terrace, Inc., 795
S.W.2d 128, 131-32 (Tenn. Ct. App. 1990). Mr. McLean’s complaint falls far short of this standard.
Neither his complaint nor his response to Bourget’s summary judgment motion contain any specific
factual allegation or assertion that Bourget’s made any representations to him, either directly or
through advertising, regarding the Python T6. All the representations regarding the motorcycle were
made by Mr. Appleton who, though an agent of Custom Cycle, was not an agent of Bourget’s. In
the absence of specific allegations that Bourget’s had committed an unfair or deceptive practice,
Bourget’s was entitled to a dismissal of Mr. McLean’s Tennessee Consumer Protection Act claim
as a matter of law.
VII.
We affirm the summary judgment dismissing Mr. McLean’s complaint against Bourget’s and
remand the case to the trial court for any further proceedings consistent with this opinion that may
be required. We tax the costs of this appeal to Mark Jay Scott McLean and his surety for which
execution, if necessary, may issue.
______________________________
WILLIAM C. KOCH, JR., P.J., M.S.
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