FIRST COMMUNITY MORTGAGE, INC. v. APPRAISAL SERVICES GROUP, INC. ET AL.
No. W2020-01246-COA-R3-CV
IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON
September 16, 2021 Session (Filed November 29, 2021)
Appeal from the Chancery Court for Weakley County No. 24599 W. Michael Maloan, Chancellor
A mortgage company appeals the dismissal of its lawsuit against an appraisal company and its employee as barred by the applicable statute of limitations. The appraisal company and its employee urge this Court to affirm the dismissal of the lawsuit and to award them attorney‘s fees under
J.
Brock East and Benjamin Lewis, Murfreesboro, Tennessee, for the appellant, First Community Mortgage, Inc.
Adam P. Nelson and Bradford G. Box, Jackson, Tennessee, for the appellees, Appraisal Services Group, Inc., and Deana L. Miles.
OPINION
I. FACTUAL AND PROCEDURAL HISTORY
On September 12, 2019, Plaintiff/Appellant First Community Mortgage, Inc. (“Appellant“) filed a complaint for damages against various defendants, including Defendant/Appellee Appraisal Services Group, Inc. (“Appraisal Services“) in the Rutherford County Chancery Court.1 Because this case was resolved by a motion to dismiss, we take the facts from the complaint. The complaint alleged that in 2015, property owner Phil D. Finch arranged to refinance real property located in Weakley County, Tennessee. Mr. Finch contracted with Traditional Home Mortgage, Inc. (“Traditional Home Mortgage“) for the refinance. Traditional Home Mortgage hired Appraisal Services to perform appraisal services related to the loan, which they completed in 2015. According to the complaint, however, Appraisal Services negligently failed to discover or disclose the existence of an encroachment issue during their appraisal, whereby improvements on the subject property extended across a property line, encroaching onto a neighboring tract of land.
The alleged negligence was not discovered at the time, and the refinance loan was completed, secured by the underlying real property. Appellant eventually purchased the mortgage from Traditional Home Mortgage. Appellant then sold the mortgage to AmeriHome Mortgage Company, LLC (“AmeriHome Mortgage“). AmeriHome
On June 7, 2019, the underlying property was sold at foreclosure. The foreclosure sale left a deficit of over $100,000.00, borne by Appellant. According to the complaint, Appellant would not have been required to repurchase the property but for the encroachment issues; Appellant would therefore not have suffered any losses as a result of the foreclosure of the property. The complaint further alleged that Appellant‘s damages were the direct and proximate result of Appraisal Services’ negligence in failing to discover or disclose the encroachment issues during the 2015 appraisal. Appellant therefore requested both compensatory and punitive damages, along with interest, attorney‘s fees, and costs.
As is relevant to this appeal, on October 28, 2019, Appraisal Services filed its first motion to dismiss the complaint on the basis of improper venue, lack of subject matter jurisdiction, and failure to state a claim due to the expiration of the applicable statute of limitations,
Appellant responded in opposition to Appraisal Source‘s motion to dismiss on November 18, 2019. Therein, Appellant argued that the trial court had subject matter jurisdiction, and that Rutherford County was a proper venue, but that the case could be transferred to the proper venue if necessary, pursuant to
On December 10, 2019, the Rutherford County Chancery Court entered an order transferring this case to Weakley County Chancery Court (“the trial court“). On or about February 14, 2020, Appellant filed an amended complaint in the trial court, which named Appraisal Source‘s employee, Deana L. Miles (together with Appraisal Services, “Appellees“), as an additional defendant. The amended complaint raised three causes of action: declaratory judgment, negligence, and breach of contract. Appellant did not allege, however, that Appellees breached any contract; the breach of contract allegations concerned other defendants. On February 21, 2020, Appraisal Services filed a reply in further support of its motion to dismiss on the basis of the expiration of the applicable statute of limitations. On April 28, 2020, Appellees filed a joint motion to dismiss the amended complaint on the same basis; the joint motion was accompanied by a memorandum of law. Neither the joint motion to dismiss nor the memorandum of law referenced a request for attorney‘s fees under
II. ISSUES PRESENTED
Appellant raises a single issue in this case: “Whether the trial court erred in granting Appellees’ motion to dismiss the first amended complaint for failure to state a claim upon which relief can be granted pursuant to
III. STANDARD OF REVIEW
The standard of review regarding dismissal at the motion to dismiss stage is well-settled. Under the standard of review applicable to motions to dismiss, review is “limited to an examination of the complaint alone.” PNC Multifamily Capital Institutional Fund XXVI Ltd. P‘ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525, 537 (Tenn. Ct. App. 2012) (citing Wolcotts Fin. Serv., Inc. v. McReynolds, 807 S.W.2d 708, 710 (Tenn. Ct. App. 1990)). “The basis for the motion is that the allegations in the complaint, when considered alone and taken as true, are insufficient to state a claim as a matter of law.” PNC, 387 S.W.3d at 537. In considering such a motion, the court should construe the complaint liberally in favor of the plaintiff, taking all the allegations of fact therein as true. See Cook ex. rel. Uithoven v. Spinnaker‘s of Rivergate, Inc., 878 S.W.2d 934, 938 (Tenn. 1994). However, we are not required to accept as true conclusions of law. Riggs v. Burson, 941 S.W.2d 44, 47-48 (Tenn. 1997). An appellate court should uphold the grant of a motion to dismiss only when it appears that the plaintiff can prove no set of facts in support of a claim that will entitle him or her to relief. Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003). We review the trial court‘s decision on a motion to dismiss de novo without a presumption of correctness. Phillips v. Montgomery Cnty., 442 S.W.3d 233, 237 (Tenn. 2014).
IV. DISCUSSION
A.
In support of its contention that the trial court erred in granting Appellees’ motion to dismiss, Appellant essentially makes three alternative arguments: (1) that the statute of limitations relied upon by the trial court,
The parties first disagree regarding whether the statute of limitations relied on by the trial court,
Any action to recover damages against a real estate appraiser arising out of the appraiser‘s real estate appraisal activity shall be brought within one (1) year from a person‘s discovery of the act or omission giving rise to the action, but in no event shall an action to recover damages against a real estate appraiser be brought more than five (5) years after the date the appraisal was conducted.
The trial court ruled that Appellant‘s cause of action accrued in January of 2018 when Appellant was forced to repurchase the loan. Applying
Appellant‘s argument that the trial court incorrectly applied the statute of limitations focuses largely on its claim that to do so is a retroactive impairment of its vested right, discussed infra. Instead, Appellant argues that the six-year statute of limitations under
To resolve this issue, we look to the enabling provision of the 2017 legislation that enacted
Each party relies on only a portion of the statute to support its argument. Appellant contends that because the appraisal was not “conducted on or after” July 1, 2017, the amended statute cannot apply. Appellees omit the portion of the statute that discusses appraisals and relies only on the portion of the statute that applies the amendment to “actions accruing . . . on or after” July 1, 2017. Because there is no dispute that the cause of action accrued at the earliest in January 2018, Appellees contend that the amended language is applicable.
Of course, we cannot omit words from a statute in determining its proper reading. As the Tennessee Supreme Court has explained,
When courts are called upon to construe a statute, their goal is to give
full effect to the General Assembly‘s purpose, stopping just short of exceeding its intended scope. Because the legislative purpose is reflected in a statute‘s language, the courts must always begin with the words that the General Assembly
has chosen. Courts must give these words their natural and ordinary meaning. And because these words are known by the company they keep, courts must also construe these words in the context in which they appear in the statute and in light of the statute‘s general purpose. When a statute‘s text is clear and unambiguous, the courts need not look beyond the statute itself to ascertain its meaning. Statutes, however, are not always clear and unambiguous. Accordingly, when the courts encounter ambiguous statutory text—language that can reasonably have more than one meaning—we must resort to the rules of statutory construction and other external sources to ascertain the General Assembly‘s intent and purpose.
* * *
[T]he courts should endeavor to give effect to the entire statute by harmonizing the conflicting provisions, and by construing each provision consistently and reasonably. The courts should avoid basing their interpretation on a single sentence, phrase, or word, but should instead endeavor to give effect to every clause, phrase, or word in the statute. The courts’ goal is to construe a statute in a way that avoids conflict and facilitates the harmonious operation of the law.
Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 526-27 (Tenn. 2010) (internal citations and footnotes omitted).
Thus, we first look to the express language of the enacting provision. In this case, the Tennessee General Assembly expressly stated that the act, i.e., the one-year statute of limitations contained in
Based on these requirements, we must conclude that the legislature intended that the newly enacted statute of limitations would apply to both actions accruing on or after July 1, 2017, and appraisals conducted on or after that date. Cf. Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 117 (2012) (stating that the use of the conjunction “and” followed by “two elements in the construction” often “entails an express or implied both before the first element“). To be sure, Appellant provides no argument, supported by legal authority or otherwise, to suggest that this interpretation is incorrect.2 In our view, this interpretation properly takes into account the legislature‘s choice to include consideration of both the
Appellant next contends that even if
On appeal, the plaintiff relied on
[w]hen a cause of action is barred by a statute of limitations, in force at the time the right to sue arose and until the time of limitation expired, [] the right to rely upon the statute as a defense is a vested right that can not be disturbed by subsequent legislation.
Id. (quoting Yancy v. Yancy, 52 Tenn. 353, 362 (Tenn. 1871)). Because the plaintiff‘s claim was already barred by the time that
The situation in this case is clearly not analogous. In Gunter,
Id. at *4; see also Doe v. Sundquist, 2 S.W.3d 919, 923 (Tenn. 1999) (quoting Morris v. Gross, 572 S.W.2d 902, 907 (Tenn. 1978)) (“We have construed [Article I, section 20 of the Tennessee Constitution] as prohibiting laws ‘which take away or impair vested rights acquired under existing laws or create a new obligation, impose a new duty, or attach a new disability in respect of transactions or considerations already passed.‘“); Bryan v. Leach, 85 S.W.3d 136, 143 (Tenn. Ct. App. 2001) (citing Tenn. Const. Art. 1, Sec. 20) (“[W]hen a statute creates a new right, eliminates a vested right, or impairs a contractual obligation, its retrospective application is constitutionally forbidden.“). But at the time that
The Tennessee Supreme Court has explained that a vested right, “although difficult to define with precision, is one ‘which it is proper for the state to recognize and protect and of which [an] individual could not be deprived arbitrarily without injustice.‘” Doe, 2 S.W.3d at 923 (quoting Morris, 572 S.W.2d at 907). In this case, the claims against Appellees sounded in tort.5 The question of what
A vested right of action in tort is a cause of action which has accrued, thereby becoming presently enforceable. See Jones v. Morristown–Hamblen Hosp. Assoc., Inc., 595 S.W.2d 816, 820-21 (Tenn. Ct. App. 1979). Vested rights of action in tort may be classified as constitutionally-protected property interests. “[A] vested right of action is as much property as are tangible things . . . and enjoys the full protection of the due process clauses of the Federal and State Constitutions.” Morris v. Gross, 572 S.W.2d 902, 905 (Tenn. 1978); see also Logan v. Zimmerman Brush Co., 455 U.S. 422, 428, 102 S. Ct. 1148, 71 L.Ed.2d 265 (1982) (“[A] cause of action is a species of property protected by the Fourteenth Amendment‘s Due Process Clause.“).
Mills v. Wong, 155 S.W.3d 916, 921 (Tenn. 2005) (footnote omitted). “A statute of limitation, therefore, may not be given retrospective application so as to bar an accrued right of action, but may bar a cause of action which has not yet accrued or vested.” Jones, 595 S.W.2d 820 (citing 16 C.J.S. Constitutional Law § 254 at p. 1242).
We turn then to the question of when Appellant‘s right of action “accrued.” Cf. Smith v. Tennessee Nat‘l Guard, 551 S.W.3d 702, 709 (Tenn. 2018) (holding that, in determining whether to apply a statute that expressly provides that it applies to actions that
accrued on or after a certain date, “[t]he crucial task . . . is determining when [the plaintiff‘s] [] claim accrued“). According to the Tennessee Supreme Court, tort actions accrue “when, and only when, the force wrongfully put in motion, produces injury.” McCroskey v. Bryant Air Conditioning Co., 524 S.W.2d 487, 489 (Tenn. 1975). Here, the trial court ruled that Appellant‘s cause of action accrued in January 2018 when it was forced to repurchase the mortgage on the subject property. Although Appellant takes issue with this ruling on appeal, it does not in any way assert that its cause of action accrued before July 1, 2017; instead, it asserts that the accrual of the action occurred even later, in 2019. As a result, there is no dispute in this appeal that the cause of action accrued after July 1, 2017. At the time that
Appellants make one final argument: that the trial court erred in ruling that Appellant‘s cause of action accrued in January 2018 when it was forced to buy back the mortgage on the real property, rather than on June 7, 2019, when the foreclosure occurred. Using June 7, 2019, as the accrual date of their cause of action, Appellant contends that its September 12, 2019 initial complaint was timely. According to Appellant, it did not suffer any “identifiable damages” until the June 7, 2019 foreclosure sale when a deficit judgment was entered against Appellant.
As the Tennessee Supreme Court has explained,
Under the current discovery rule, a cause of action accrues and the statute of limitations begins to run not only when the plaintiff has actual knowledge
of a claim, but also when the plaintiff has actual knowledge of facts sufficient to put a reasonable person on notice that he [or she] has suffered an injury as a result of wrongful conduct.
Redwing v. Cath. Bishop for Diocese of Memphis, 363 S.W.3d 436, 459 (Tenn. 2012) (quoting Carvell v. Bottoms, 900 S.W.2d 23, 29 (Tenn. 1995) (quotation marks omitted). Moreover, as Appellant correctly points out, a cause of action does not accrue “until a judicial remedy is available.” Wyatt v. A-Best, Co., 910 S.W.2d 851, 855 (Tenn. 1995). “A judicial remedy is available when (1) a breach of a legally recognized duty owed to [a] plaintiff by [a] defendant (2) causes [a] plaintiff legally cognizable damage.” Id. Appellant‘s argument implicates the second element, i.e., legally cognizable damage, also known as “an actual injury.” See John Kohl & Co. P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998) (noting that in the context of malpractice actions “the discovery rule is composed of two distinct elements: (1) the plaintiff must suffer legally cognizable damage—an actual injury—as a result of the defendant‘s wrongful or negligent conduct, and (2) the plaintiff must have known or in the exercise of reasonable diligence should
have known that this injury was caused by the defendant‘s wrongful or negligent conduct“).
An actual injury does not necessarily mean money damages:
An actual injury occurs when there is the loss of a legal right, remedy or interest, or the imposition of a liability. An actual injury may also take the form of the plaintiff being forced to take some action or otherwise suffer “some actual inconvenience,” such as incurring an expense, as a result of the defendant‘s negligent or wrongful act. However, the injury element is not met if it is contingent upon a third party‘s actions or amounts to a mere possibility.
Kohl, 977 S.W.2d at 532 (citations omitted). As a result, “[a] plaintiff is not entitled to delay filing until all injurious effects or consequences of the actionable wrong are actually known.” Wyatt, 910 S.W.2d at 855.
Applying this rule, we have held that plaintiffs suffered actual injuries when they were required to respond to an IRS request for information, Kohl, 977 S.W.2d at 532, when a wife was required to defend a petition to terminate her alimony, Honeycutt v. Wilkes, No. W2007-00185-COA-R3-CV, 2007 WL 2200285 (Tenn. Ct. App. Aug. 2, 2007), and when the party was forced to incur the time and expense of responding to the opposing party‘s motion for summary judgment, Cardiac Anesthesia Servs., PLLC v. Jones, 385 S.W.3d 530, 543 (Tenn. Ct. App. 2012).
In this case, the facts alleged in the complaint, even viewed in the light most favorable to Appellant, demonstrate that Appellant was “forced to take some action” as a result of Appellees’ alleged negligence in January 2018, when AmeriHome requested that Appellant repurchase the mortgage. At this time, the damages to Appellant were not fully realized because the property had not yet been foreclosed. But Appellant at that time suffered an actual injury as a result of Appellees’ alleged negligence. The trial court did not err in concluding that Appellant‘s cause of action accrued in January 2018, more than one year prior to the filing of the complaint. As a result, the trial court did not err in dismissing this case on the basis of the expiration of the
B.
As a final matter, Appellees assert that they are entitled to attorney‘s fees
[I]n a civil proceeding, where a trial court grants a motion to dismiss pursuant to Rule 12 of the Tennessee Rules of Civil Procedure for failure to state a
claim upon which relief may be granted, the court shall award the party or parties against whom the dismissed claims were pending at the time the successful motion to dismiss was granted the costs and reasonable and necessary attorney‘s fees incurred in the proceedings as a consequence of the dismissed claims by that party or parties. The awarded costs and fees shall be paid by the party or parties whose claim or claims were dismissed as a result of the granted motion to dismiss.
Appellees argue on appeal that this statute provides for an award of attorney‘s fees incurred on appeal and that this request is properly directed to this Court.6
Again, this issue requires that we construe a statute. In so doing, we keep in mind the requirement that “[t]he text of the statute is of primary importance, and the words must be given their natural and ordinary meaning in the context in which they appear and in light of the statute‘s general purpose.” Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012). To be sure,
Because the statute is silent as to both the award of attorney‘s fees incurred on appeal and its overall aims, we turn to its legislative history. See State v. McNack, 356 S.W.3d 906, 909 (Tenn. 2011) (“When the statutory language is silent as to the issue at hand, the ‘objective and spirit behind the legislation’ may be determinative.“) (quoting Lipscomb v. Doe, 32 S.W.3d 840, 845 (Tenn. 2000) (“Where the language of the statute does not speak to the precise issue, courts should give consideration to the purpose, objective and spirit behind the legislation.“) (quotation marks omitted)); see also In re Baby, 447 S.W.3d 807, 836 (Tenn. 2014) (holding that legislative silence as to the applicability of other statutory procedures created an ambiguity in the statute and resorting to the legislative history of the statute). The legislative history of
Instead, during the March 28, 2012 meeting of the House Judiciary Committee, the sponsor of the House bill, Vance Dennis, stated that the purpose of the bill was not to be a “broad loser pays policy,” but was to provide discouragement against “truly frivolous lawsuits.” Representative Dennis further explained that the provision “only deals with costs associated with the answering of the complaint and filing your motion to dismiss.” When asked whether this provision constituted a penalty, Representative Dennis agreed: “It is a penalty, essentially.” But Representative Dennis repeatedly cautioned that the provision was intended to be “limited in scope.” A witness invited to testify about the purpose of the provision by Representative Dennis, Ross Booher, an attorney from law firm Bass, Berry & Sims, further explained that the provision was “very, very narrowly drawn.” Other legislative hearings echoed that the purpose of the bill was “very limited” and only involved the fees incurred in responding to the complaint and filing the motion to dismiss. For example, during the April 24, 2012 House Session Legislative Day, Representative Dennis stated that the bill was a “limited means to address the filing of frivolous lawsuits” that is “very limited in scope.”
We begin with determining whether
To the extent that
Construing
When it appears to any reviewing court that the appeal from any court of record was frivolous or taken solely for delay, the court may, either upon motion of a party or of its own motion, award just
damages against the appellant, which may include, but need not be limited to, costs, interest on the judgment, and expenses incurred by the appellee as a result of the appeal.
See also Young v. Barrow, 130 S.W.3d 59, 66 (Tenn. Ct. App. 2003) (noting that this section was enacted in 1975). Thus, Tennessee law already provides a statute that meets the very same purpose as
In Tennessee, “the Legislature is presumed to have knowledge of its prior enactments and to know the state of the law at the time it passes legislation.” Wilson v. Johnson Cty., 879 S.W.2d 807, 810 (Tenn. 1994). Thus, the Tennessee General Assembly is presumed to know that another statute already provided for attorney‘s fees in the context of a frivolous appeal. Certainly, the statutes are not identical.
A frivolous appeal is one that is devoid of merit or has no reasonable chance of success. Robinson v. Currey, 153 S.W.3d 32, 42 (Tenn. Ct. App. 2004). This court has previously indicated that when an appeal requires the court to decide an issue of first impression, the appeal will often not be deemed frivolous. See Gekas v. Seton Corp., No. M2006-00454-COA-R3-CV, 2008 WL 836399, at *12 (Tenn. Ct. App. Mar. 28, 2008) (“Insofar as this appeal required us to decide a question of first impression, i.e., the proper standard for evaluating a hospital‘s compliance with its bylaws, we do not believe this appeal was frivolous, and we accordingly decline to award attorney fees.“). Although Appellant did not meet the express requirements of
V. CONCLUSION
The judgment of the Weakley County Chancery Court is affirmed, and this cause is remanded for further proceedings as are necessary and consistent with this Opinion. Costs are assessed against Appellant First Community Mortgage, Inc., for which execution may issue if necessary.
J. STEVEN STAFFORD, JUDGE
Notes
Notwithstanding any other law or rule of court to the contrary, when an original civil action, an appeal from the judgment of a court of general sessions, or a petition for review of a final decision in a contested case under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, is filed in a state or county court of record or a general sessions court and such court determines that it lacks jurisdiction, the court shall, if it is in the interest of justice, transfer the action or appeal to any other such court in which the action or appeal could have been brought at the time it was originally filed. Upon such a transfer, the action or appeal shall proceed as if it had been originally filed in the court to which it is transferred on the date upon which it was actually filed in the court from which it was transferred.
On its face, Donovan‘s holding somewhat conflicts with our holding that