About one year ago, we wrote about the Tennessee Supreme Court’s decision to grant cert in Benz-Elliott v. Barrett Enterprises, LP, 2013 Lexis 1038 (Tenn. December 11, 2013). You can read that article here.
In this real estate case, the Tennessee Court of Appeals held that although Plaintiff’s claims were stated as a breach of contract, “[t]he gravamen of an action, not whether it is brought in the form of an action in tort or an action for breach of contract, will determine the appropriate statute of limitations.” Because Plaintiff’s damages were for diminution in value of property, the Court reasoned the lawsuit was barred by the three-year statute of limitations for injury to property.
The Tennessee Supreme Court disagreed. In a detailed opinion, the Court noted the definition of “gravamen” has shifted over time. “[E]arly decisions of this Court focused exclusively upon the type of injuries for which damages were sought and described the legal basis of the action as ‘immaterial’”. Some of those decisions also seemed to hold that a complaint alleging more than one count has to be reduced to a single “gravaman” (a term the Court seems to have coined in this decision as the more singular of the already-singular “gravamen” to refer to the unified focal point of a complaint).
The Supreme Court noted such a method of reasoning is impossible in modern practice in light of Tennessee Rules of Civil Procedure 8.01, 8.05, 18.01, and 18.02, which permit alternative, inconsistent claims and defenses. Each claim is entitled to a determination of its own gravamen. In determining the gravamen of each claim, a court must consider both “the basis of the claim and the type of injuries for which damages are sought.”
In our previous article on this case, we noted the Court of Appeals’ decision was peculiar because it was based primarily on the fact that the plaintiff was awarded only money damages for a reduction in the value of her property. But the trial court only awarded money damages because specific performance was impractical. Under the Court of Appeals’ reasoning, a crafty defendant could determine the applicable statute of limitations by taking actions to make specific performance impossible. The Supreme Court noted this issue as it reached its conclusion:
Specific performance, which Ms. Elliott sought, is available solely for breach of contract claims. The trial court refused to order it here because BE had constructed detention ponds in the area where the sixty-foot strip of property would need to be located. The trial court instead awarded Ms. Elliott money damages for the diminution in value to her remaining property resulting from the lack of the contractually guaranteed access road. This injury is financial only, involving no injury to the real property itself. Although diminution in value damages may be recovered for both tort and contract claims, the diminution in value damages Ms. Elliott sought to recover flowed directly from her breach of contract claim. Thus, because the legal basis of the claim is breach of contract and the damages sought and awarded are for breach of contract, we conclude that Ms. Elliott’s breach of contract claim is governed by the six-year statute of limitations.
The Court of Appeals had previously ruled the three-year statute for damage to property applied and pretermitted other appellate issues in this case. The Supreme Court therefore reversed on the statute of limitations issue and remanded to the Court of Appeals for consideration of the other appellate issues. Today’s decision significantly clarifies the standards to be applied in determining the gravamen of a claim. If the legal basis for a claim is breach of contract and the damages claimed flow from that alleged breach, the contract statute applies. Still, it is very likely that Court of Appeals cases in the coming years will continue to shape, stretch, and reshape the “gravamen” analysis.