# FILED Jan. 5, 1996 Cecil Crowson, Jr . Appellate Court Clerk JACK KELLER, ) JORDAN S. KELLER, ) ) Plaintiffs/App ellants, ) ) Appeal No. ) 01-A-01-9505- CV-00212 VS. ) ) Davidson Circuit ) No. 94C-2054 COLGEMS - E MI MUSIC, INC., ) SCREEN GEM S - EMI MU SIC, INC., ) EMI MUSICPUBLISHING, INC., ) ) Defendants/Ap pellees. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SEC TION AT NASHVILLE
APPEALE D FRO M THE C IRCU IT COU RT OF D AVIDSO N COU NTY AT NASHVILLE, TENN ESSEE THE HONORABLE WALTER C. KURTZ, JUDGE

JACK KELLER JORDAN S. KELLER 8282 Collins

road Nashvil le, Tennessee 37221 Pro Se Plainti ffs/Appellants ROBERT L. SULLIV

AN MANATT, PHELPS & P HILLIPS 1233 17th AvenueSout h Nashvil le, Tennessee 37212 Attorney for Defendants/Appellees

AFFIRMED AND REMAN DED

BEN H. CAN TRELL, JUDGE CONCUR: TODD, P.J., M .S. LEW IS, J.- 2 - 

## O P I N I O N

On June 28, 1994, Pla intiff Jac k Kel ler sued the defendants in the Davidson County

Circuit Court claiming a breach of fidu ciary duty by fraudulently failing to disclosethe contents of a c ontrac t amendment signed in 1960. Jordan Keller, to whom a part of the contract r ights had been assigned, j oined his father as plaintiff.

The breach of duty allegedly

was dis covered i n 1988 and the question in this case i s whether the three yea r statute of li mitations or t he six year statut e applies. We hold that the three year statut e app lies, and therefore affirm the trial court's acti on in dismiss ing the compl aint.

Facts

Plai ntiff Jack Keller , a professional songwr iter, sig ned an employment agreementwith Al don Music, In c. on November 5, 1959, to perform vari ous servi ces a s a songw riter, pr

oducer, and performer . The contract c ontained a prov ision, an "Exhibit B" which obligated Aldon "to counsel [Jack Keller] as to con tracts for his professional work . . . to make the professional career of [Kelle r] the success contemplated, both professional ly 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. Exhibi t A would h ave allowed Aldon: "To secure copyright registration and protect ion o f said

works at your

own cost and expense and at your elec

tion, including any and all renewals of copyrig ht to whic h I may hereafter become entitled , a nd to have and to hold said copyrig hts and all ri ghts ofwhatsoever nature thereunder existing, for and during the full terms of all said copy rights and all renewals and exte nsions thereof
. It is hereby agreed that one-half of the genera l advance royalty- 3 - payable to me under parag raph 4(k) of this agreement is in considerati on of the gran t b y me of said renewals of copyrig ht and the rig hts exist ing thereunder ."

In 1960, (the amendment i s not dated, and the exact date is nowhere to be found in the reco rd) Plainti ff Jack Keller s igned an amendment to t he 195 9 agreementeffectively reinstating the provis ions c ontain ed in E xhib it A. Kelle r cla ims that Aldon co-ow ner Don Kir shner told hi m the only effect of the amendmen t would be to enable Kell er to produce ot her artists foran increased r

oyalty rate. Mr. Keller also claims he s igned the amendment on ly after relying on the misstatements of his personal manager

Aldon Music
.
Mr. Keller

alle gedly fir

st discovered the amendment's p rovisi on governi ng copyright renewal rights on July 13, 1988, which he maintains is "when the first composition co pyrig hted under the 1959 agreement

between hims elf and Aldon became subje ct to renewa l." At that t ime EMI Music

Publishing , Inc., ("EMI") which had subsequently

acquired A ldon Music, informed Mr. Keller that he di d not have the right to r enew his copyrig hts.

Issues
The principal issue before thi s Court i s the appropri ate statute of lim ita tions applicable to this action, more specifical ly w hether the three year statut e of limitation for

injuries to personal pr operty f ound in Tenn. Code Ann. § 28-3-105 applies to bar appellants ' claims as the appellees i nsist, or w hether the six year statute found in Tenn. Code Ann. § 28-3-109(c) is more approp riate. Tenn. Code. Ann. § 2 8- 3-105 states:
Property

tort actions - Statutory liabilities. -- The follow ing actions shall be commence d w ithin three (3) years from the accruing of the cause of action:- 4 - (1) Ac tion s fo r inju ries t o per sona l or re al pro pert y; * * * Tenn. Code Ann. §28-3- 109(c) reads in relevant part: Rent - Official mis conduct - Cont ractsnot other wise covered - Title insurance - Demand notes. -- (a) The following actions shall be commence d within six (6) years after the cause of action accrued: (3) Actions on con tracts not othe rwise e xpressl y prov ided for. * * *

In Tennessee the appl icable statuteof limitations is determined according to the grav

amen of the complaint

rather than i ts designati on as an action for tort or

contract. Pera v. Kroger, 674 S.W.2d 715, 719 (Tenn. 1984). I n determining the gravamen, or real pur pose of an action, t he c ourt 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 Birmi ngham v. C

hesapeake & Ohio R

ailway Co., 37 S.E. 17 (Va. 1900).
Thus, regardless of whether a comp laint sounds in contract, if the suit seeks to reco ve r damages for injuries to the plaintif f's property, the applicable limitationsperiod is t hree years as found in Tenn. Code Ann. § 28-3-105. Alexander
v. Thir d National Ba nk

, 1994 W.L. 424287, *3 (Tenn. App. 1994). An "injury to prop erty" need not be physical however, just as an i njury tothe person is not limited to bodilyinjury
. Id. Also, actions for damages res ulting from the breach of contract to a builder of re al property are c onsidered actions for damag es to property even where they

have sued i n contract. Id.

The Second Amended Complai nt alleges fraud, and breach of fiduciary duty with regard to the1960 amendment. The appell ants insist that they hav e been- 5 -

deprived of th e ri ght

to recap tur e 100 % of t hei r copyri ghts after the fir st 28 year copyrig ht period. They

contend that

they, and not Aldon Music, would have been the owners of the renewal rights in the copyrig hts before the amendment was signed. Whether the loss of these renewal r ights is actionable as an injury to "personal prop erty" under the tort statute of limitations, or more appropriately as econo mic damage to one's "po cketbook" is the foremost issue in this appeal
.

In Vance v. Schulder the owner of 10%of the stock of a corporati on filed suit alleging that one of the defendant dir ectors had fraudu lently re presented that there had been an offer to p urchase the corporation for $360,000, but that t he offer had been for $708,000 and that the plaint iff had been induced to sell his interest for $36,000 and suffered damage in the amou n t of $34,800 be cause of this fiducia ry bre ach
. 547 S.W.2d 927 (Tenn. 1977). In apply ing the three year statute of limitations, the Supreme Cour t stated that it

was "impor

tant to d ist inguish this transaction from the more typic al situation where cor porate direct ors or officers with inside information purchase or sell stockdetrimentally to stockholder

s at larg e." Id. at 931. Those more typical fiduciary breaches the Court reasone d, are "quasicontractual i n nature" and thus t he six year statute would be applicab le. Id.

As in this case, the plaintif f in Van ce alleged damag es resultin g from breach of a fiduciary

duty caused by a face to face misrepresent ation whic h induced a financial los s. In Vance the property rights were in shares

of stock, in thi s instant case, copyr ight renewals. The Court in Vance determined that the gravamen of the action was tortious, specifica l ly fraud in the inducement of a contr act. Id. As the appellants do in this case, the pla intiff in Vance argued that t he monetary, non physical loss suffered cannot be an " 'injury to property ' in the clas sic tort s ense of the word." Id. at 932. As the Court stated howev er, "[t]his ar

gument is predicated upon a narrow definition of the word 'injury' as use d in the prop erty acti ons three y ear- 6 -

statute, and the notion that torts, in t he classic sense, resul t only in physical damage." Id.

The Court concl uded tha t the e cono mic los s su stai ned b y th e pl aint iff from the fraud was an " ' injury to personal pr operty' " a s stated in Tenn. C ode Ann. § 28-305, the predecessor to today's

Tenn Code Ann. § 28-3-10 5. Altho ugh the Court conceded the ques tion was a close one, it

applied the three year statute.

In 1980 the Court o f Appeals d ecided a case w hich dealt w ith the interpl ay between the thr ee and six year statutes of l imitations i n Tennessee. In Harvest Corpora tion v. Ernst & Whinney , the plaintiff cl aimed that the defendant partnership failed to audit t he inventor y of a company prof essional ly, causi ng the plai ntiff to pay an exces sive price for the corporate stock of such company. 610 S.W.2d 727 (Tenn. App. 1980) . The Court hel d tha t such action was for ordinary moneydamages resul ting from breach ofcontract, and thus, the applicable statute of limitationswas the s ix yea r statute for co ntract cases rather than the three -ye ar statute for actions in volvi ng injury to real o r pers ona l prop erty. The Court noted t hat althou gh the gravamen of the complaint was that t he defendants overs tated the value of the corporati on in ques tion, the "gener al tenor" of the compl aint was t hat the defendants attempted to perform the contract in an unprofessional ma nner and more impo rtan tly, th e property being audited was not the plaint iffs at the ti

me of breac

h. 610 S.W.2d at 731.

The Court in Harvest Cor poration, quoted the follow ing fr om Bland v. Smith , a 1955 Tennessee Supreme Court case:

"It wil l be found thatthe weight of authority to be (sic) in Tennessee and elsewhere that regar dless of wheth er

the suit is based on tort or

on contract th e Court must l ook to the plaintiff's decl aration to see whet her or not he is suing fordam ag es arising out of a contract or for damages- 7 - arising out of tort. . . . " 277 S.W.2d 377 , 3 80 (Tenn. 1955). Id. at 729.
From this pr

ecedent the Harvest Cor poration Cou rt then o bserved that the major criterion in deter mining th e gravamen of the action is the kind of dam age alleged. Id. at 729. The inqui ry into t he kind of damage al leged "is ut ilized regardless o f whether th e cause of action s ounds in tort o r contract." Prescott v. Adams, 62 7 S.W.2d 134, 137 (Tenn. App. 1 981). The Harvest Cor poration Court then examined two different types of lawsuits to d emonstrate the principl e enunciated in Bland v. Smith. First, the Court viewed medica l malpra ctice cas es and n oted th at "alt hough the claim may a rise i n cont ract by v irtue of the doctor-patient rel ationship, the damages sustai ned are to the per son . . . and are governe d by the one year statute of limitations

and not the gener

al contract statute of limit ations." Harvest Cor p. at 729. Second, the Court examined legal malpractice cases whic h it concluded are "neither to the person nor property o f the claimant but are to the client's "pocketbook." Id. The Court based this statement of law on a 1966 Supreme Co urt legal malpractice action , where an attorney

failed to file sui t before the running of the s tatute of limitati ons. The SupremeCourt chara cterized the suit as one based on the "failure to carry out co ntractual duties and not ag ainst one for doing some wrong to the per son." Hillhouse

v. McDowell

, 219 Tenn. 362, 410 S.W.2d 162, 163 (1966). The Kelle rs argue that their damag es are analog ous to purely economic or "poc ketbook" damages found in legal mal practice cas es.

Later in its

opinion the Harvest Cor poration Court stated:

"
. . . suits for fraud, deceit, or conspiracy , whether t hey arise in cident to a contract or not are act ions in tort and must be governed by the applicable tort st at ute of limitations. At bar, neither f raud , deceit nor conspiracy are charged and no

facts which c ould possibly constitute such have been pled.- 8 - With the foregoing general pr inciples i n m in d, we examine the pleadings in this case in order to determine the nature of plaintif f's c ause of action look to the damages alleg ed." Id. at 730, 731.

The Court ev entually det ermined that the damages s ought by t he plai ntiff were the "ordinary money damages that result from a breach of contract." Id. at 730. The Court stat ed that the complai nt essentiall y stated that the defendants did not advise theplaintiffs of the inventory's true value as r equired by

the contract, and that result l ed directly

to the damages al leged.

Conclusion

In Tennessee we det ermine the gr avamen of the complaint by looking t o the basi s for whic h damages are s ought. Bland v. Smith, 197 Tenn. 683, 277 S.W.2d 377 (1 95 5)

. The basis of the appell ants' damages ar e tortious i n nature, specifically breach of fiduciary d uty, and fraudul ent misrepres entation. The Harvest Corporation Court instr ucts us to loo k at the act w hich created t he damag es t o determine the statute of limit ation regar dless ofwhether a contract ex isted betw een the parties. In Vance v. Schulder, the Supreme Cour t concluded that t he phrase "injuryto proper ty" in the three year statute of limitation s was not to be narrowly confined to tangibleproperty damaged in a phy

sical manner

only. Taki ng the vi ew of personal property suggested by the Vance decision we be lieve the renewal r ights must be considered "property." T h erefore, the three year statut e of limitations governs this suit.

We conclude that an econo mic loss, as i n the case before us, which is a consequen ce of property damage is w ithin the thr ee year statute found in Tenn
. Code Ann. § 28-3-105. Thus the d ecision of the trial c ourt is affirmed. Costs on appe al a re taxed to the app ellants and the case is rem anded for any pr oceedi ngs consistent w ith this opi nion.- 9 - _________________________________ BEN H. CAN TRELL, JUDGE

CONCUR:

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SEC TION

_______________________________ SAMUEL L. LEWIS, JUDGE