465 S.W.3d 574
Tenn. Ct. App.2014Background
- In 2004 CHA purchased White Oak Apartments from members of Azalea Development via a Transfer Agreement; Section 7 incorporated representations from Azalea’s Original Operating Agreement (including compliance with FHA/ADA and qualification under IRC §42(g)).
- The Transfer Agreement contained a three-year Survival Clause limiting the survival of representations, warranties, and indemnities, but excepting claims for fraud or intentional misrepresentation.
- DOJ sued Azalea in 2009 alleging FHA/ADA noncompliance; a 2010 consent order required retrofits.
- CHA sued (Sept. 2010) the individual sellers (John Murphy, Paul Murphy, Adren Greene) and Murphy Development for breach of contract and intentional misrepresentation, alleging the apartments were noncompliant at closing.
- Defendants moved for summary judgment, relying on the Survival Clause to bar breach claims and on affidavits from John and Paul Murphy that any representations were based on architects’/engineers’ statements (negating intent to deceive).
- Trial court granted summary judgment on all claims; appellate court affirmed breach claims and affirmed dismissal of misrepresentation claims as to John and Paul, but reversed as to Greene and Murphy Development for lack of affidavits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Survival Clause shortened the statutory limitations period for breach | Survival clause only limits indemnification scope and does not shorten the 6-year statutory period | Clause creates a 3-year contractual limitations period for claims (requires notice and suit within 3 years) | Court: Clause unambiguously limits filing period to 3 years; breach claims time-barred |
| Whether CHA’s breach of contract claims survive summary judgment | Breach claims valid despite Survival Clause; timely under statutory law | Breach claims untimely under contractually shortened period | Court: Affirmed summary judgment for defendants on breach claims |
| Whether affidavits from John and Paul Murphy were sufficient to negate scienter for intentional misrepresentation | Affidavits are conclusory and insufficient to shift burden | Affidavits identify facts (reliance on architects/engineers) negating intent to deceive | Court: Affidavits sufficient; CHA failed to create genuine dispute as to John and Paul; summary judgment affirmed as to them |
| Whether summary judgment properly entered for Greene and Murphy Development on misrepresentation | Same as to other defendants; summary judgment appropriate | No affidavits from Greene; Murphy Development may be liable via respondeat superior | Court: Reversed as to Greene and Murphy Development; summary judgment improper without defendant affidavit proof |
Key Cases Cited
- Hannan v. Alltel Publ’g Co., 270 S.W.3d 1 (Tenn. 2008) (summary judgment burden-shifting standard)
- Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993) (moving party’s burden on summary judgment)
- Mills v. CSX Transp., Inc., 300 S.W.3d 627 (Tenn. 2009) (evidence to negate essential element on summary judgment)
- Blanchard v. Kellum, 975 S.W.2d 522 (Tenn. 1998) (conclusory affidavit insufficient to shift burden)
- Walker v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301 (Tenn. 2008) (elements of intentional misrepresentation)
- Western Filter Corp. v. Argan, Inc., 540 F.3d 947 (9th Cir. 2008) (strict interpretation of survival clauses under California law)
- State Street Bank & Trust Co. v. Denman Tire Corp., 240 F.3d 83 (1st Cir. 2001) (survival clause can shorten filing period under applicable law)