Court Opinion

ID: 1046538
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:37:03.755518+00
Date Added: 2024-06-11T12:19:22.874101
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                         January 31, 2012 Session

    CITY OF CHATTANOOGA, TENNESSEE, et al., v. HARGREAVES
                   ASSOCIATES, INC., et al.

                 Appeal from the Circuit Court for Hamilton County
                     No. 09C403 Jacqueline S. Bolton, Judge

                No. E2011-01197-COA-R3-CV-FILED-JUNE 21, 2012

                                DISSENTING OPINION

      I respectfully dissent from the majority's Opinion affirming the Trial Court's granting
of summary judgments to all defendants. In my view, the record in this case does not
demonstrate that this case is ripe for summary judgment.

       Regarding the claims against River City, the City of Chattanooga/CDRC alleged that:

       (a)    River City was contractually obligated to oversee the waterfront project and
              was to provide monthly reports regarding same, including any change orders,
              to the City;

       B)     River City breached the contract by failing to schedule construction meetings,
              failing to provide monthly reports to the City, and failing to obtain City
              approval before approving changes to the design (specifically substitution of
              mortar and use of fixtures in reflective pools not consistent with the plans);

       C)     River City acted in excess of its authority; and

       D)     the City was damaged thereby.

       River City filed an Answer, asserting that it kept the City informed regarding the
construction progress and changes, and that all reporting requirements were met/exceeded.
        Hargreaves (architect) filed the first Motion for Summary Judgment, and filed a
Statement of Undisputed Facts, asserting that Hargreaves reported numerous
construction/design problems to River City from October 2004 through June 2005.
Hargreaves filed an affidavit of its employee, Gavin McMillan, who stated that he was the
principal in charge of this project, and that he communicated extensively with River City
regarding the problems Hargreaves encountered. McMillan stated that he sent numerous
memos and emails to all the parties involved, including River City, and attached copies of
those communications. One communication which was relied upon heavily by both the Trial
Court and the majority, was a memo dated 7/30/05 from McMillan to “DEW” which states
that McMillan got a call from Dan Kral (of River City) on the prior day which he
characterizes as a “call for help”, stating that Kral relayed that the fountain was “falling apart
to the point of being inoperable”. There is no actual email or written documentation in the
record regarding this alleged conversation other than this memo, which was not to or from
anyone at River City.

        The other communication which is relied upon by the defendants and the majority
opinion in this case to establish notice is a string of emails that were sent in May 2005,
between Lee Norris, a director with the Chattanooga City Department of Public Works, and
Dan Kral with River City. Norris asked who was responsible for construction defects, stating
that he had walked the waterfront recently and noticed 6-7 issues that needed to be corrected.
Norris later explained in his Affidavit that this memo only concerned minor cosmetic issues
that he noticed, and that he had neither the responsibility nor expertise to identify latent
construction defects, and further that the City had no notice of any actual construction defects
until July 2007.

        The City filed a Response to the Motion for Summary Judgment and the Statement
of Undisputed Facts, and stated the City knew of no construction defects until July 2007.
The City filed an Affidavit of Don Lewis, who stated that he was General Supervisor with
the Parks and Recreation Department of Chattanooga, and that his department took over
management of the project after substantial completion in 2005. Lewis stated that they had
no notice of any material issue with the construction of the project until spring 2007
(although there was some minor issue with niche lighting noted in 2005). The City also filed
an Affidavit of Bob Saylors, Director of the Parks and Recreation Department, who also said
that the City had no notice of material issues in connection with the design/construction of
the project until the spring of 2007. Further, the City filed an Affidavit of Steve Leach, who
stated that he was Administrator of the City of Chattanooga Public Works Department, and
that electrical issues with the Passage were discovered on July 19, 2007, and that prior to this
date, the City nor CDRC had any knowledge of any construction or design defects with the
Project. Leach stated that these issues caused the City to hire TWH Architects to review the
project and identify any problems, and that TWH issued its report detailing the

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construction/design defects in July 2008.

       The City also filed a copy of a letter it received in discovery documents that is dated
August 9, 2007, and is addressed to Gavin McMillan with Hargreaves, from Paul Brock with
River City. This letter states that River City is disappointed with Hargreaves’ response to
issues with the Passage wall, and that a public safety issue had developed after one of the
masonry units from the wall had fallen the prior weekend. Brock states “It has been almost
a year since you came to Chattanooga to advise us regarding the wall and the problems it is
experiencing”, and further alleges that Hargreaves did not properly inform River City of the
design modifications made during construction and the potential consequences thereof.

      River City filed a Motion for Summary Judgment on its own behalf, as did all the
defendants, but River City filed no supporting documentation. Plaintiffs assert that Dan Kral
of River City was scheduled to be deposed as were many other actors in this project, but
summary judgment was granted before depositions took place.

       The Trial Court ruled that River City had notice of construction defects as of the July
29, 2005, “call for help” allegedly made by Dan Kral of River City, and thus that the City had
notice as of that date, rendering the Complaint filed in March of 2009 untimely under the
three year statute of limitations. The Trial Court then granted summary judgment to all
defendants, including River City. The majority opinion affirms that ruling.

        First and foremost, it is important to note the City’s claims against River City were
completely different than the claims against the other defendants. The City alleged claims
of breach of contract and acting outside the proper scope of authority, asserting that River
City failed to keep the City informed regarding design/construction changes and problems
on this Project, and further that River City approved changes to the design without City
approval. These claims are not claims of injury to real property, as were the claims against
the other defendants. Rather, these are strictly breach of contract claims which are subject
to a six year statute of limitations rather than a three year statute of limitations. See Tenn.
Code Ann. §28-3-105 and 109. As such, the claims filed in March 2009 against River City
were timely, and River City was not entitled to a summary judgment. Moreover, as agent of
the City it had a fiduciary duty to the City.

       Regarding the other defendants, however, the statute of limitations is a three year
period which accrues upon discovery, i.e., when the plaintiff has information that would
place a reasonable person on inquiry notice that he may have a cause of action, as the
majority opinion correctly explained. The problem in this case is that there is a dispute
regarding when plaintiffs actually had such information. As stated earlier, Gavin McMillan
of Hargreaves asserted that he reported numerous problems to River City during the project,

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and that after the project was completed, he received a call on July 29, 2005, from Dan Kral,
which he characterized as a “call for help” because the fountain was “falling apart”. While
the fountain was only a part of the entire project, this could still be considered constructive
notice that there were defects requiring further inquiry. The problem is that this is evidence
set forth by a defendant, and on a summary judgment motion, it is the evidence of the
plaintiff or non-movant that is to be accepted as true, with any doubts concerning the
existence of a genuine issue of material fact being resolving in the non-moving party’s favor.
Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76 (Tenn. 2008).

       In contrast, the plaintiffs filed at least three affidavits from City employees who
insisted that the City was unaware of any design/construction defects until at least the spring
of 2007. All of these City employees stated that while they might have seen a few minor
cosmetic-type defects before that time, they were unaware of any major defects until 2007,
and that they didn’t know the extent of the defects until TWH issued its report in 2008.
Further, the City filed a letter that was sent from River City to Hargreaves in 2007, which
impliedly asserts that River City knew of no problems until summer of 2006. Accepting even
the earliest of these dates as the true date of “discovery” of the construction defects, the
Complaint filed in March 2009 would be timely as to all defendants.

        This is a classic example of a genuine issue of material fact regarding the date of
discovery which should preclude summary judgment. Establishment of the date of discovery
is crucial to determining whether the statute of limitations would bar plaintiffs’ claims. The
Trial Court and the majority opinion both rely upon the July 29, 2005, “call for help” as
establishing the date of discovery, when there is countervailing proof filed by the non-
moving party on this issue.

       Further, even if defendant’s proof could/should be accepted as true, the City has
alleged that it is error to impute the knowledge of River City to the City, even though River
City was clearly the City’s agent, because River City allegedly exceeded its scope of
authority.

       In order to determine whether the knowledge of the agent may be imputed to the
principal, it is of “primary importance to ascertain the exact scope and extent of the agency.”
Hurst Boillin Co. v. S.S. Jones & Co., 279 S.W. 392 (Tenn. 1925). These questions are to
be “determined by the trier of fact from all the facts and circumstances in evidence.” Sloan
v. Hall, 673 S.W.2d 548 (Tenn. Ct. App. 1984). Moreover, as appellants point out, there is
case law which holds that the doctrine of apparent authority is modified to accommodate the
public interest when a private party deals with a municipal corporation. Faust v. Metro.
Gov’t of Nashville, 206 S.W.3d 475 (Tenn. Ct. App. 2006). In that case, this Court stated,
“Although a private agent, acting in violation of specific instructions, yet within the scope

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of a general authority, may bind his principal, the rule, as to the effect of a like act of a public
agent, is otherwise.” Id. In this case, there was no determination made regarding the scope
and extent of River City’s agency by the Trial Court.

        Summary judgment was improperly granted in this case based upon the evidence
presented. Plaintiffs’ breach of contract claims against River City were not considered by
the Trial Court, and plaintiff’s affidavits and proof presented at the summary judgment stage
were not taken as true, in violation of proper summary judgment standards. There was
clearly a genuine issue of material fact regarding when plaintiffs discovered their claims. As
such, the Trial Court’s grant of summary judgment should be reversed, and the cause
remanded for further proceedings.

                                                      _________________________________
                                                      HERSCHEL PICKENS FRANKS, P.J.

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