Richard Briggs and Stephanie R. Briggs v. Riversound Limited Partnership, William S. Nix, D/B/A WEN Enterprises, General Partner, and Daryl Wagner

I N THE COURT OF APPEALS

FILED October 2, 1996

Cecil Crowson, Jr. Appellate C ourt Clerk RI CHARD BRI GGS a nd ) KNOX CI RCUI T STEPHANI E R. BRI GGS, ) C. A. NO. 03A01- 9603- CV- 0011 5 ) ) Pl a i nt i f f s - Appe l l a nt s ) ) ) ) ) ) vs . ) HON. DALE C. WORKMAN ) J UDGE ) ) ) ) ) RI VERSOUND LI M TED PARTNERSHI P, ) I REVERSED AND REMANDED W LLI AM S. NI X d/ b/ a W I SN ) ENTERPRI SES, GENERAL PARTNER, ) a n d DARYL WAGNER, ) ) De f e nda nt s - Appe l l e e s )

DAVI D N. GARST, Le wi s , Ki ng, Kr i e g & W l dr op, P. C. , Knoxvi l l e f o r a a pp e l l a nt .

DAVI D E. SM TH, Hodge s , Dought y & Ca r s on, Knoxvi l l e , f or Appe l l e e . I

O P I N I O N

M M r a y, J . c ur

The s i ngl e i s s ue i n t hi s c a s e i s whe t he r a r e mot e pur c ha s e r o f a h o me ma y ma i nt a i n a ne gl i ge nc e a c t i on a ga i ns t t he bui l de r o f t he h o me de s pi t e a l a c k of c ont r a c t ua l pr i vi t y. The t r i a l c o u r t g r a n t e d s umma r y j udgme nt i n f a vor of t he de f e nda nt a nd t hi s a pp e a l

r e s u l t e d. W r e ve r s e t he j udgme nt of t he t r i a l c our t . e

The Pl a i nt i f f s , Dr . a nd M s . r Ri c h a r d M Br i ggs , . pur c ha s e d a

c o n d o mi ni um f r om t he De f e nda nt s , M . a nd M s . Edwa r d S. Al be r s i n r r 1 Apr i l 1 9 93. Da r yl W gne r Cons t r uc t i on Co. bui l t t he home i n 19 8 9 . a

Th e c o n domi ni um wa s a pa r t of a de ve l opme nt by Ri ve r s ound Li mi t e d

Pa r t n e r s hi p, W l l i a m S. Ni x d / b/ a W Ent e r pr i s e s , Ge ne r a l Pa r t ne r . i SN

The Br i g gs ' na me d t he s e pa r t i e s a s de f e nda nt s , a l l e gi ng ne gl i ge n c e i n t h e c ons t r uc t i on a dmi ni s t r a t i on, s upe r vi s i on, i ns pe c t i on a n d a c t ua l c ons t r uc t i on of t h e home . Spe c i f i c a l l y, t he p l a i nt i f f s c l a i m t h a t t he i r home wa s da ma ge d due t o a l e a ky ba s e me nt , wh i c h wa s c a u s e d by be l ow gr a de hol e s i n t he ba s e me nt wa l l s a nd t h e g e ne r a l f a i l ur e of t he c ont r a c t or t o i ns t a l l a de qua t e wa t e r pr oof i n g o f t h e ba s e me nt .

The Ci r c ui t Cour t f or Knox Count y gr a nt e d s umma r y j udgme n t t o

Ri v e r s o und Li mi t e d , WSN a nd Da r yl W gne r a Cons t r uc t i on, f i nd i n g

" t ha t t h e Pl a i nt i f f s ha ve not s t a t e d a c a us e of a c t i on a ga i n s t

1 A s e t t l e me n t a g r e e me n t wa s r e a c h e d wi t h t h e Al b e r s , a n d a v o l u n t a r y n o n s u i t wa s e n t e r e d a g a i n s t Do n Du n c a n , d / b / a Fr o n t i e r Ho me I n s p e c t i o n s , wh o i n s p e c t e d t h e h o me f o r t h e Br i g g s p r i o r t o t h e i r p u r c h a s e .

t he s e de f e nd a n t s b e c a us e t he Cour t f i nds t he y owe d no dut y t o a r e mo t e pur c ha s e r of a bui l di ng t he y c ons t r uc t e d t o e xe r c i s e d u e car e in t he c ons t r uc t i on to pr e ve nt s ubs e que nt da ma ge to or d e t e r i o r a t i on of s a i d pr ope r t y. "

The Br i ggs ' a ppe a l a nd pr e s e nt t h e f ol l owi ng i s s ue f or o u r c o n s i d e r a t i on:

W t he r a n owne r of a r e s i de nc e who l a c ks pr i vi t y he wi t h t he bui l de r t he r e of ma y ma i nt a i n a n a c t i on a ga i ns t t he bui l de r f or ne gl i ge nc e i n t he c ons t r uc t i on of t he r e s i de nc e .

Be c a us e t he t r i a l c our t ba s e d i t s de c i s i on on a que s t i on o f l a w, our s c ope of r e vi e w i s de novo wi t h no pr e s u mpt i on of c or r e c t ne s s f or t he t r i al c our t ' s c onc l us i o n . Ada ms v. De a n

Ro o f i n g Co. , 715 S. W 2d . 341 ( Te nn. Ap p . 1986) ; Bi l l i ngt on v.

Cr o wd e r , 553 S. W 2d 590 ( Te nn. App. 1977) . .

Th e Pl a i nt i f f s ' a r gue t ha t s i nc e t hi s i s a ne gl i ge nc e c l a i m, p r i v i t y i s not r e qui r e d t o ma i nt a i n t hi s a c t i on unde r Te nne s s e e ' s a n t i - p r i vi t y s t a t ut e , c odi f i e d a t Te nne s s e e Code Annot a t e d § 29- 3 4 -1 0 4 , wh i c h s t a t e s :

Pr i vi t y not r e qui r e d. - - I n a l l c a us e s of a c t i on f or p e r s ona l i nj ur y or pr ope r t y da ma ge br ought on a c c ount of n e gl i ge nc e , s t r i c t l i a bi l i t y o r wa r r a nt y, i n c l udi ng

a c t i ons br ought unde r t he pr ovi s i ons of t h e Uni f or m Co mme r c i a l Code , pr i v i t y s ha l l not be a r e qui r e me nt t o ma i nt a i n s a i d a c t i on.

We a gr e e wi t h t he Pl a i nt i f f s ' c ont e nt i on t ha t s i nc e t he y a l l e ge d pr ope r t y da ma ge t o t he i r home a s a r e s ul t of ne gl i ge nc e of t he d e f e nda nt s , pr i vi t y is not r e qui r e d unde r t he s t a t ut e . Al t h o u g h t r a di t i ona l l y t hi s s t a t ut e ha s be e n a s s oc i a t e d wi t h p r o d u c t l i a bi l i t y a c t i ons , i t s pl a i n l a ngua ge i n no wa y l i mi t s i t s a p p l i c a t i on i n a wa y t ha t woul d pr e c l ude i t f r om be i ng a ppl i e d t o s u b s e q u e nt pur c ha s e r s of a r e s i de nc e .

Thi s Cour t ha s pr e vi ous l y a ddr e s s e d t hi s i s s ue in Re d b u d

Co o p e r a t i ve Cor p. v. Cl a yt on, 700 S. W 2d 551 ( Te nn. App. 1985) . . In

Re d b u d, a home owne r ' s a s s oc i a t i on a nd i ndi vi dua l home owne r s s ue d a d e v e l o p e r ove r dr a i na ge pr obl e ms . The Cour t a f f i r me d t he a wa r d o f d a ma g e s a ga i ns t t he de ve l ope r on a ne gl i ge nc e t he or y, e ve n t ho u g h t h e r e c or d s howe d t ha t s ome home owne r s we r e s ubs e que nt pur c ha s e r s a n d t h u s l a c ke d pr i vi t y wi t h t he de ve l ope r . The Cour t f ound t h a t s i nc e t he j udgme nt c oul d be s u s t a i ne d ba s e d upon a ne gl i ge n c e t he o r y , t he a nt i - pr i vi t y s t a t ut e a ppl i e d. I d. a t 559.

Our Supr e me Cour t ha s r e c ogni z e d t he e xi s t e nc e of cer t ai n i mp l i e d wa r r a nt i e s of ne wl y c ons t r uc t e d home s i n Di xon v. Mount a i n

Ci t y Co n s t r uc t i on Co . , 632 S. W 2d 538 ( Te nn. . 1982) . The Cou r t

l i mi t e d t hos e wa r r a nt i e s t o t he i ni t i a l pur c ha s e r s a nd l i mi t e d t o a c t i o n s on a n i mpl i e d wa r r a nt y t he or y. Thi s c a s e , howe ve r , i s no t a wa r r a nt y c a s e but i s ba s e d upon ne gl i ge nc e . I n vi e w of t he a n t i -p r i vi t y s t a t ut e s e t a bout a bove , we s e e no r e a s on pr i vi t y s houl d b e

r e q u i r e d t o ma i nt a i n a n a c t i on f or ne gl i ge nc e . W hol d t h a t e a

s u b s e q u e nt pur c ha s e r ma y ma i nt a i n a ne gl i ge nc e a c t i on a ga i ns t t h o s e who c on s t r uc t e d a r e s i de nc e , i f t he de f e c t s c l a i me d t o ha ve c a us e d t he i n j ur y a r e l a t e nt one s , not known or r e a s ona bl y di s c ove r a bl e t o e i t he r t he pr e vi ous own e r s or oc c upi e r s , or t he s ubs e qu e n t pur c ha s e r . Si nc e pr e vi ous owne r s ma y c a us e da ma ge t ha t a s ub s e -que nt p ur c ha s e r mi ght mi s t a ke nl y a t t r i but e to t he bui l de r , or wo r s e n a c ondi t i on c a us e d by t he bui l de r , we be l i e ve i t onl y f a i r to r e qui r e l ack of knowl e dge by t he pr e vi ous owne r f or t he s u b s e q u e nt pur c ha s e r s t o s t a t e a c l a i m f or ne gl i ge nc e a s t o t h e bui l de r .

W do not be l i e ve t ha t our de c i s i on t oda y a nd t ha t i n Re d b u d e

c ont r a di c t s in a ny wa y t he Di xon case. Al t hough a c l a i m of n e g l i g e nc e i n t he c ons t r u c t i on of a home i s s i mi l a r t o a cl ai m u n d e r a n i mpl i e d wa r r a nt y, t he r e a r e di f f e r e nc e s t ha t di s t i ngu i s h t h e t wo . The Supr e me Cour t of Col or a do di s c us s e d t he di f f e r e n c e s

b e t we e n t he t wo t he or i e s i n Cos mopol i t a n Home s , I nc . v. W l l e r , 6 6 3 e

P. 2 d 1 0 41 ( Col o. 1983) ( e n ba nc ) :

Some ove r l a p i n e l e me nt s of pr oof of s uc h a c t i o n s ma y oc c ur , but t he s c ope of dut y di f f e r s a nd t he ba s i s f o r l i a bi l i t y i s d i s t i ngui s ha bl e . The i mpl i e d wa r r a nt y o f ha bi t a bi l i t y a nd f i t ne s s a r i s e s f r om t he c ont r a c t ua l r e l a t i on be t we e n t he bui l de r a nd t he pur c ha s e r . Pr oof of a de f e c t due t o i mpr ope r c ons t r uc t i on, de s i g n , o r p r e pa r a t i on i s s uf f i c i e nt t o e s t a bl i s h l i a bi l i t y i n t he b u i l de r - ve ndor . Ne gl i ge nc e , howe ve r , r e qui r e s t ha t a b u i l de r or c ont r a c t or be he l d t o a s t a nda r d of r e a s ona bl e c a r e i n t he c onduc t of i t s dut i e s t o t he f or e s e e a bl e u s e r s of t he p r o pe r t y. . . . Ne gl i ge nc e i n t or t mus t e s t a bl i s h de f e c t s i n wor kma ns hi p, s upe r vi s i on, or de s i gn a s a r e s pons i bi l i t y of t he i ndi vi dua l de f e nda nt . Pr oof o f de f e c t a l one i s n ot e nough t o e s t a bl i s h t he c l a i m. Fo r e s e e a bi l i t y l i mi t s t he s c ope of t he dut y, a nd t he p a s s a ge of t i me f ol l o wi ng c ons t r uc t i on ma ke s c a us a t i on d i f f i c ul t t o pr ove .

W l l e r a t 1045 ( c i t a t i ons omi t t e d) . e

W a l s o f i nd a mpl e s uppor t e f or our de c i s i on f r om nume r o u s

o t h e r j ur i s di c t i ons . Se e Br own v. Fowl e r , 279 N. W 2d 907 ( S. D. .

1979) ( s ubs e que nt pur c ha s e r s ma y s t at e a c l a i m f or ne gl i ge n c e a ga i n s t a bui l de r , a l t hough i mpl i e d wa r r a nt i e s do not e xt e nd be y o n d

t he fi rst p ur c ha s e r ) ; W i ght r v. Cr e a t i ve Cor p. , 4 9 8 P. 2d 1 1 7 9

( Co l o . App. 1972) ( s ubs e que nt pur c ha s e r s c oul d ma i nt a i n a c t i on f o r n e g l i g e nc e , but not i mpl i e d wa r r a nt y of me r c ha nt a bi l i t y) ; Cobur n v . Le n o x Home s , I nc . , 173 Conn. 567, 378 A. 2d 599 ( 1977) ( s ubs e qu e n t pur c ha s e r s ma y s t a t e a c l a i m i n ne gl i ge nc e f or l a t e nt de f e c t s , a l t h o u g h t he i mpl i e d wa r r a nt y doe s not e xt e nd t o t he m) ; Pa r l i a me nt Towe r s Condomi ni um v. Pa r l i a me nt Hous e Re a l t y, I nc . , 377 So. 2d 9 7 6 ( Fl a . Ap p. 1979) ( pr i vi t y no t r e qui r e d f or ne gl i ge nc e a c t i on a ga i n s t *7 bui l de r or a r c hi t e c t , bu t is r e qui r e d f or br e a c h of i mpl i e d wa r r a n t y) ; Na va j o Ci r c l e , I nc . v. De ve l opme nt Conc e pt s Cor p. , 3 7 3 So . 2 d 6 89 ( Fl a . App. 1979) ( l a c k of pr i vi t y doe s not a f f e c t a t o r t c l a i m s o l ong a s t he p l a i n t i f f c a n e s t a bl i s h t he e xi s t e nc e of a d u t y ) ; Si mmons v. Owe ns , 3 63 So. 2d 142 ( Fl a . App. 1978) ( s ubs e que n t p u r c h a s e r c a n ma i nt a i n ne gl i ge nc e a c t i on a ga i ns t bui l de r f or l a t e n t

d e f e c t s not di s c ove r a bl e by r e a s ona b l e i ns pe c t i on) ; M Donough v . c

W a l e n, h 313 N. E. 2 d 435 (M ss. a 1974) ( bui l de r / c ont r a c t or ma y be

l i a b l e f or i nj ur i e s or da ma ge c a us e d by hi s ne gl i ge nc e t o pe r s o n wi t h wh o m he ha s no c ont r a c t ua l r e l a t i ons hi p) ; Ke ye s v. Guy Ba i l e y

Home s , I nc . , 439 So. 2d 670 (M ss. i 1983) ( bui l de r / ve ndor ma y b e

l i a b l e on ba s i s of ne gl i ge nc e or br e a c h of i mpl i e d wa r r a nt y t o

s u b s e q u e nt pur c ha s e r s de s pi t e l a c k of pr i vi t y) ; Le i gh v. W ds wor t h, a

3 6 1 P. 2 d 849 ( Okl a . 1961) ( l a c k of pr i vi t y doe s not ba r r e c ov e r y a ga i n s t bui l de r f or c ondi t i ons i mme di a t e l y da nge r ous ) ; Te r l i nd e v . Ne e l y, 275 S. C. 395, 271 S. E. 2 d 768 ( 1980) ( s ubs e que nt pur c ha s e r s ma y a s s e r t a c l a i m f or l a t e nt de f e c t s unde r e i t he r i mpl i e d wa r r a nt y o r n e g l i ge nc e t he or i e s ) ; Moxl e y v. La r i me e Bui l de r s , I nc . , 600 P. 2 d

7 3 3 ( W o. 1979) ( s ubs e que nt pur c ha s e r s ma y s ue f or br e a c h of i mpl i e d y

wa r r a nt y a s we l l a s s t a t e a c l a i m i n ne gl i ge nc e ) .

W do not e be l i e ve t h a t pe r mi t t i ng a c t i ons a ga i ns t bui l de r s

b a s e d o n ne gl i ge nc e wi l l s ubj e c t t he m t o undue ha r ds hi ps . The t he Ge n e r a l As s e mbl y ha s i mpos e d a f our ye a r s t a t ut e of l i mi t a t i on o n *8 ma i nt a i ni ng a c t i ons a ga i ns t de ve l ope r s . Te n n. Code Ann. § 28 - 3 -202. Thi s l i mi t a t i on woul d a ppl y t o c l a i ms ba s e d on ne gl i ge n c e s u c h a s t ha t p r e s e nt e d i n t hi s c a s e .

I t s houl d be e mpha s i z e d t ha t our de c i s i on i s pr e di c a t e d u p o n

t hi s b e i ng a n a c t i on f or ne gl i ge nc e . W do not e a d d r e s s whe t h e r

r e mo t e pur c ha s e r s ha ve a c a us e of a c t i on a ga i ns t de ve l ope r s un d e r a ny o t h e r t he or y, a nd e mpha s i z e t ha t unde r t he Di xon c a s e onl y t h e i ni t i a l p ur c ha s e r ma y ma i n t a i n a n a c t i on unde r a n i mpl i e d wa r r a n t y t he or y. Nor do we a ddr e s s t he a de qua c y of Pl a i nt i f f s ' pr o o f r e g a r d i ng t he a l l e ge d ne gl i ge nc e of t he de f e nda nt s . Howe v e r , s u mma r y j udgme nt i s onl y t o be r e nde r e d by a t r i a l c our t whe n i t i s s h o wn t ha t " t he r e i s n o g e nui ne i s s ue a s t o a ny ma t e r i a l f a c t a nd t ha t t h e movi ng pa r t y i s e nt i t l e d t o j udgme nt a s a ma t t e r of l a w. " T. R. C. P. 56. 03. I n r ul i ng on a mot i on f or s umma r y j u d g me nt , t h e t r i a l c o ur t a nd t he Cour t of Ap p e a l s mus t c ons i de r t he ma t t e r i n t he s a me ma nne r a s a mot i on f or a di r e c t e d ve r di c t ma de a t t he c l os e of t he pl a i nt i f f ' s pr oof , i . e. , al l t he e vi de nc e mus t be v i e we d i n t he l i ght mos t f a v o r a bl e t o t he oppone nt of t he mot i o n a nd a l l l e gi t i ma t e c onc l us i ons of f a c t mus t be dr a wn i n f a vor o f t he o p p one nt . It is onl y whe n t he r e is no di s put e d i s s ue of ma t e r i a l f act t ha t a s umma r y j udgme nt s houl d be gr a nt e d by t h e t r i al c our t a nd s us t a i ne d by t he Cour t of Appe a l s . Gr a v e s v.

An c h o r W r e Cor p. i of Te nne s s e e , 692 S. W 2d 42 0 ( Te nn. App. . 198 5 ) ;

Be n n e t t v. M d- Sout h Te r mi na l s Cor p. , i 660 S. W 2d 799 ( Te nn. Ap p . .

1983) . Summa r y j udgme nt is ge ne r a l l y i na ppr opr i a t e in a t or t

a c t i on. Bowma n v. He na r d, 547 S. W 2d 527 ( Te nn. 1977) . . Si nc e we

c o n c l u d e t ha t t he p l a i nt i f f wa s e nt i t l e d t o ma i nt a i n a n a c t i on a ga i n s t t he de f e n d a n t s , i t f ol l ows t ha t s umma r y j udgme nt wa s n o t a p p r o p r i a t e i n t hi s c a s e .

W r e ve r s e t he j udgme nt e of t he t r i a l c our t a nd r e ma nd t h e

c a us e t o t he t r i a l c our t f or s uc h ot he r a nd f ur t he r a c t i on t ha t ma y b e r e q u i r e d i n c onf or mi t y wi t h t h i s o pi ni on. Cos t s a r e t a xe d t o t h e a pp e l l e e s .

___________________________ _ _ _ Don T. M M r a y, J . c ur

CONCUR:

_ _ _ _ _ _ _ ____________________________ Ho u s t o n M Godda r d, Pr e s i di ng J udge .

_ _ _ _ _ _ _ ____________________________ Ch a r l e s D. Sus a no, J r . , J udge

I N THE COURT OF APPEALS

RI CHARD BRI GGS a nd ) KNOX CI RCUI T STEPHANI E R. BRI GGS, ) C. A. NO. 03A01- 9603- CV- 0011 5 ) ) Pl a i nt i f f s - Appe l l a nt s ) ) ) ) ) ) vs . ) HON. DALE C. WORKMAN ) J UDGE ) ) ) ) ) RI VERSOUND LI M TED PARTNERSHI P, ) I REVERSED AND REMANDED W LLI AM S. NI X d/ b/ a W I SN ) ENTERPRI SES, GENERAL PARTNER, ) a n d DARYL WAGNER, ) ) De f e nda nt s - Appe l l e e s )

ORDER

Thi s a pp e a l c a me on t o be he a r d upon t he r e c or d f r om t h e Ci r c u i t Cour t of Knox Count y, br i e f s a nd a r gume nt of c ouns e l . Up o n c o n s i d e r a t i on t he r e of , t hi s Cour t i s of t he opi ni on t ha t t he r e wa s r e v e r s i bl e e r r or i n t he t r i a l c our t .

W r e ve r s e t he j udgme nt e of t he t r i a l c our t a nd r e ma nd t h e

c a us e t o t he t r i a l c our t f or s uc h ot he r a nd f ur t he r a c t i on t ha t ma y *11 b e r e q u i r e d i n c onf or mi t y wi t h t hi s opi n i o n . Cos t s a r e t a xe d t o t h e a pp e l l e e s .

PER CURI AM