Court Opinion

ID: 1045613
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:28:19.248538+00
Date Added: 2024-06-11T12:40:21.337829
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                           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
affirm.

        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.
                                                OPINION

                                          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
expired.

                                               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
        inspection.

        1
          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.

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                              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
       terms.”

BFS Retail and Commercial Operations LLC v. Smith, 232 S.W.3d 756, 758 (Tenn. Ct. App.
2007) (citations omitted).

                                     IV. DISCUSSION

                                               A.

        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:

                                               -3-
       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
       terms.’

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-
CV, 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,

                                               -4-
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.

                                               B.

       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.
Buckner, 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.
2003).

       In the Russell case, the home inspection agreement contained the following clause:

       BY SIGNING THIS AGREEMENT, CLIENT EXPRESSLY AGREES THAT
       ANY LIABILITY OF HOMETEAM, ITS EMPLOYEES, AGENTS,
       OFFICERS, AND DIRECTORS, SHALL BE LIMITED TO THE LESSER
       OF THE COST TO REPAIR (adjusted for the remaining life of the problem
       item) OR THE AMOUNT OF THE INSPECTION FEE PAID BY CLIENT.

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

                                               -5-
        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
        2
clause. The language is a contractual limitations period, which our court has repeatedly held

        2
           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
                                                                                                     (continued...)

                                                       -6-
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.

                                                   C.

       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
Desgro.

                                                         _________________________________
                                                         JOHN W. MCCLARTY, JUDGE

        2
        (...continued)
unenforceable, the remaining provisions will remain in effect.

                                                   -7-