FILED

Jan. 5, 1996

Cecil Crowson, Jr.

Appellate Court Clerk

JACK KELLER, )

JORDAN S. KELLER, )

)

Plaintiffs/Appellants, )

) Appeal No.

) 01-A-01-9505-CV-00212

VS. )

) Davidson Circuit

) No. 94C-2054

COLGEMS - EMI MUSIC, INC., )

SCREEN GEMS - EMI MUSIC, INC., )

EMI MUSIC PUBLISHING, INC., )

)

Defendants/Appellees. )

COURT OF APPEALS OF TENNESSEE

MIDDLE SECTION AT NASHVILLE

APPEALED FROM THE CIRCUIT COURT OF DAVIDSON COUNTY

AT NASHVILLE, TENNESSEE

THE HONORABLE WALTER C. KURTZ, JUDGE

JACK KELLER

JORDAN S. KELLER

8282 Collins road

Nashville, Tennessee 37221

Pro Se Plaintiffs/Appellants

ROBERT L. SULLIVAN

MANATT, PHELPS & PHILLIPS

1233 17th AvenueSouth

Nashville, Tennessee 37212

Attorney for Defendants/Appellees

AFFIRMED AND REMANDED

BEN H. CANTRELL, JUDGE

CONCUR:

TODD, P.J., M.S.

LEWIS, J.
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O P I N I O N

On June 28, 1994, Plaintiff Jack Keller sued the defendants in the

Davidson County Circuit Court claiming a breach of fiduciary duty by fraudulently

failing to disclose the contents of a contract amendment signed in 1960. Jordan

Keller, to whom a part of the contract rights had been assigned, joined his father as

plaintiff. 

The breach of duty allegedly was discovered in 1988 and the question

in this case is whether the three year statute of limitations or the six year statute

applies. We hold that the three year statute applies, and therefore affirm the trial

court's action in dismissing the complaint. 

Facts

Plaintiff Jack Keller, a professional songwriter, signed an employment

agreement with Aldon Music, Inc. on November 5, 1959, to perform various services

as a songwriter, producer, and performer. The contract contained a provision, an

"Exhibit B" which obligated Aldon "to counsel [Jack Keller] as to contracts for his

professional work . . . to make the professional career of [Keller] the success

contemplated, both professionally and financially, and in general . . . endeavor to the

best of [Aldon's] ability to forward the interests of [Keller]. The contract also contained

an "Exhibit A" which was crossed out by the parties. Exhibit A would have allowed

Aldon:

"To secure copyright registration and protection of said

works at your own cost and expense and at your election,

including any and all renewals of copyright to which I may

hereafter become entitled, and to have and to hold said

copyrights and all rights of whatsoever nature thereunder

existing, for and during the full terms of all said copyrights

and all renewals and extensions thereof. It is hereby

agreed that one-half of the general advance royalty
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payable to me under paragraph 4(k) of this agreement is

in consideration of the grant by me of said renewals of

copyright and the rights existing thereunder." 

In 1960, (the amendment is not dated, and the exact date is nowhere

to be found in the record) Plaintiff Jack Keller signed an amendment to the 1959

agreement effectively reinstating the provisions contained in Exhibit A. Keller claims

that Aldon co-owner Don Kirshner told him the only effect of the amendment would

be to enable Keller to produce other artists for an increased royalty rate. Mr. Keller

also claims he signed the amendment only after relying on the misstatements of his

personal manager Aldon Music. 

Mr. Keller allegedly first discovered the amendment's provision

governing copyright renewal rights on July 13, 1988, which he maintains is "when the

first composition copyrighted under the 1959 agreement between himself and Aldon

became subject to renewal." At that time EMI Music Publishing, Inc., ("EMI") which

had subsequently acquired Aldon Music, informed Mr. Keller that he did not have the

right to renew his copyrights. 

Issues

 The principal issue before this Court is the appropriate statute of

limitations applicable to this action, more specifically whether the three year statute

of limitation for injuries to personal property found in Tenn. Code Ann. § 28-3-105

applies to bar appellants' claims as the appellees insist, or whether the six year statute

found in Tenn. Code Ann. § 28-3-109(c) is more appropriate. Tenn. Code. Ann. § 28-

3-105 states:

Property tort actions - Statutory liabilities. -- The following

actions shall be commenced within three (3) years from

the accruing of the cause of action:
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(1) Actions for injuries to personal or real property;

* * * 

Tenn. Code Ann. §28-3-109(c) reads in relevant part: 

covered - Title insurance (a) TheRent following - Official mis actions shall be commence conduct - Cont - Demand notes. -- ractsnot other d within six (6) wise years after

the cause of action accrued:

(3) Actions on contracts not otherwise expressly provided

for.

* * *

In Tennessee the applicable statute of limitations is determined

according to the gravamen of the complaint rather than its designation as an action

for tort or contract. Pera v. Kroger, 674 S.W.2d 715, 719 (Tenn. 1984). In

determining the gravamen, or real purpose of an action, the court must look to the

basis for which damages are sought. Bland v. Smith, 197 Tenn. 683, 277 S.W.2d 377

(1955). Another way of stating this principle is "[t]he limitation is not determined by

the form of the action but by its object." Bodne v. Austin, 156 Tenn. 156, 2 S.W.2d

100 (1928), quoting Birmingham v. Chesapeake & Ohio Railway Co., 37 S.E. 17 (Va.

1900). 

Thus, regardless of whether a complaint sounds in contract, if the suit

seeks to recover damages for injuries to the plaintiff's property, the applicable

limitations period is three years as found in Tenn. Code Ann. § 28-3-105. Alexander

v. Third National Bank, 1994 W.L. 424287, *3 (Tenn. App. 1994). An "injury to

property" need not be physical however, just as an injury to the person is not limited

to bodily injury. Id. Also, actions for damages resulting from the breach of contract

to a builder of real property are considered actions for damages to property even

where they have sued in contract. Id.

The Second Amended Complaint alleges fraud, and breach of fiduciary

duty with regard to the 1960 amendment. The appellants insist that they have been
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deprived of the right to recapture 100% of their copyrights after the first 28 year

copyright period. They contend that they, and not Aldon Music, would have been the

owners of the renewal rights in the copyrights before the amendment was signed.

Whether the loss of these renewal rights is actionable as an injury to "personal

property" under the tort statute of limitations, or more appropriately as economic

damage to one's "pocketbook" is the foremost issue in this appeal. 

In Vance v. Schulder the owner of 10% of the stock of a corporation filed

suit alleging that one of the defendant directors had fraudulently represented that

there had been an offer to purchase the corporation for $360,000, but that the offer

had been for $708,000 and that the plaintiff had been induced to sell his interest for

$36,000 and suffered damage in the amount of $34,800 because of this fiduciary

breach. 547 S.W.2d 927 (Tenn. 1977). In applying the three year statute of

limitations, the Supreme Court stated that it was "important to distinguish this

transaction from the more typical situation where corporate directors or officers with

inside information purchase or sell stock detrimentally to stockholders at large." Id.

at 931. Those more typical fiduciary breaches the Court reasoned, are "quasicontractual in nature" and thus the six year statute would be applicable. Id. 

As in this case, the plaintiff in Vance alleged damages resulting from

breach of a fiduciary duty caused by a face to face misrepresentation which induced

a financial loss. In Vance the property rights were in shares of stock, in this instant

case, copyright renewals. The Court in Vance determined that the gravamen of the

action was tortious, specifically fraud in the inducement of a contract. Id. As the

appellants do in this case, the plaintiff in Vance argued that the monetary, nonphysical loss suffered cannot be an " 'injury to property' in the classic tort sense of the

word." Id. at 932. As the Court stated however, "[t]his argument is predicated upon

a narrow definition of the word 'injury' as used in the property actions three year
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statute, and the notion that torts, in the classic sense, result only in physical damage."

Id.

The Court concluded that the economic loss sustained by the plaintiff

from the fraud was an " 'injury to personal property' " as stated in Tenn. Code Ann. §

28-305, the predecessor to today's Tenn Code Ann. § 28-3-105. Although the Court

conceded the question was a close one, it applied the three year statute. 

In 1980 the Court of Appeals decided a case which dealt with the

interplay between the three and six year statutes of limitations in Tennessee. In

Harvest Corporation v. Ernst & Whinney, the plaintiff claimed that the defendant

partnership failed to audit the inventory of a company professionally, causing the

plaintiff to pay an excessive price for the corporate stock of such company. 610

S.W.2d 727 (Tenn. App. 1980). The Court held that such action was for ordinary

money damages resulting from breach of contract, and thus, the applicable statute of

limitations was the six year statute for contract cases rather than the three-year

statute for actions involving injury to real or personal property. The Court noted that

although the gravamen of the complaint was that the defendants overstated the value

of the corporation in question, the "general tenor" of the complaint was that the

defendants attempted to perform the contract in an unprofessional manner and more

importantly, the property being audited was not the plaintiffs at the time of breach.

610 S.W.2d at 731.

The Court in Harvest Corporation, quoted the following from Bland v.

Smith, a 1955 Tennessee Supreme Court case: 

 "It will be found that the weight of authority to be (sic) in

Tennessee and elsewhere that regardless of whether the

suit is based on tort or on contract the Court must look to

the plaintiff's declaration to see whether or not he is suing

for damages arising out of a contract or for damages
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arising out of tort. . . . " 277 S.W.2d 377, 380 (Tenn.

1955). Id. at 729.

 From this precedent the Harvest Corporation Court then observed that the

major criterion in determining the gravamen of the action is the kind of damage

alleged. Id. at 729. The inquiry into the kind of damage alleged "is utilized regardless

of whether the cause of action sounds in tort or contract." Prescott v. Adams, 627

S.W.2d 134, 137 (Tenn. App. 1981). The Harvest Corporation Court then examined

two different types of lawsuits to demonstrate the principle enunciated in Bland v.

Smith. First, the Court viewed medical malpractice cases and noted that "although

the claim may arise in contract by virtue of the doctor-patient relationship, the

damages sustained are to the person . . . and are governed by the one year statute

of limitations and not the general contract statute of limitations." Harvest Corp. at 729.

Second, the Court examined legal malpractice cases which it concluded are "neither

to the person nor property of the claimant but are to the client's "pocketbook." Id. The

Court based this statement of law on a 1966 Supreme Court legal malpractice action,

where an attorney failed to file suit before the running of the statute of limitations. The

Supreme Court characterized the suit as one based on the "failure to carry out

contractual duties and not against one for doing some wrong to the person."

Hillhouse v. McDowell, 219 Tenn. 362, 410 S.W.2d 162, 163 (1966). The Kellers

argue that their damages are analogous to purely economic or "pocketbook" damages

found in legal malpractice cases. 

Later in its opinion the Harvest Corporation Court stated:

". . . suits for fraud, deceit, or conspiracy, whether they

arise incident to a contract or not are actions in tort and

must be governed by the applicable tort statute of

limitations. At bar, neither fraud, deceit nor conspiracy

are charged and no facts which could possibly constitute

such have been pled. 
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With the foregoing general principles in mind, we

examine the pleadings in this case in order to determine

the nature of plaintiff's cause of action look to the

damages alleged." Id. at 730, 731. 

The Court eventually determined that the damages sought by the

plaintiff were the "ordinary money damages that result from a breach of contract." Id.

at 730. The Court stated that the complaint essentially stated that the defendants did

not advise the plaintiffs of the inventory's true value as required by the contract, and

that result led directly to the damages alleged. 

 

Conclusion

In Tennessee we determine the gravamen of the complaint by looking

to the basis for which damages are sought. Bland v. Smith, 197 Tenn. 683, 277

S.W.2d 377 (1955). The basis of the appellants' damages are tortious in nature,

specifically breach of fiduciary duty, and fraudulent misrepresentation. The Harvest

Corporation Court instructs us to look at the act which created the damages to

determine the statute of limitation regardless of whether a contract existed between

the parties. In Vance v. Schulder, the Supreme Court concluded that the phrase

"injury to property" in the three year statute of limitations was not to be narrowly

confined to tangible property damaged in a physical manner only. Taking the view of

personal property suggested by the Vance decision we believe the renewal rights

must be considered "property." Therefore, the three year statute of limitations

governs this suit. 

We conclude that an economic loss, as in the case before us, which is

a consequence of property damage is within the three year statute found in Tenn.

Code Ann. § 28-3-105. Thus the decision of the trial court is affirmed. Costs on

appeal are taxed to the appellants and the case is remanded for any proceedings

consistent with this opinion.
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_________________________________

BEN H. CANTRELL, JUDGE

CONCUR:

_______________________________

HENRY F. TODD, PRESIDING JUDGE

MIDDLE SECTION

_______________________________

SAMUEL L. LEWIS, JUDGE