Circle C Constr., LLC v. Nilsen, M2013-02330-SC-R11-CV

Decision Date07 March 2016
Docket NumberNo. M2013-02330-SC-R11-CV,M2013-02330-SC-R11-CV
Citation484 S.W.3d 914
Parties Circle C Construction, LLC v. D. Sean Nilsen, et al.
CourtTennessee Supreme Court

Donald N. Capparella and Elizabeth N. Sitgreaves, Nashville, Tennessee, for the appellant, Circle C Construction, LLC.

Darrell G. Townsend, Nashville, Tennessee, for the appellees, D. Sean Nilsen, C. Dean Furman, and Furman, Nilsen & Lomond, PLLC.

SHARON G. LEE

, C.J., delivered the opinion of the Court, in which CORNELIA A. CLARK and JEFFREY S. BIVINS, JJ., joined. HOLLY KIRBY, J., filed a separate concurring and dissenting opinion.

OPINION

SHARON G. LEE, C.J.

The issue we address is whether the savings statute applies to save an action that was filed within the extended statute of limitations set by a tolling agreement, was voluntarily nonsuited, and was refiled within one year, but after the extended statute of limitations in the tolling agreement. The trial court granted summary judgment, ruling that the case was not timely filed. The Court of Appeals affirmed, holding that the tolling agreement precluded application of the savings statute. We hold that the party filing the suit complied with the tolling agreement by filing the first suit within the extended statute of limitations set by the agreement. The savings statute applies to save the action; therefore, the refiled suit was timely filed. We reverse the decision of the Court of Appeals and remand this case to the trial court.

I.

Circle C Construction, LLC, ("Circle C") hired D. Sean Nilsen, C. Dean Furman, and the law firm of Furman, Nilsen & Lomond, PLLC, (collectively "Nilsen") to defend it in a suit brought by the United States in federal district court alleging a violation of the False Claims Act, 31 U.S.C. § 3729(a)(1)(B) (2006)

. See United States ex rel. Wall v. Circle Constr., LLC, 700 F.Supp.2d 926 (M.D.Tenn.2010). The federal district court granted the government's motion for summary judgment, finding Circle C liable and awarding damages of $1,661,423.13. Circle C appealed to the United States Court of Appeals for the Sixth Circuit.

In November 2010, after Circle C was advised that it had a potential professional negligence claim against Nilsen, Circle C and Nilsen entered into a written tolling agreement regarding Circle C's claim against Nilsen. In part, the agreement provided that the filing deadline for Circle C's claim would be tolled "so that the statute of limitations [would] not expire" until 120 days after the Sixth Circuit issued its opinion. Under the agreement, Circle C had to file its claim by the expiration of this extended statute of limitations. Circle C filed its claim within the extended statute of limitations but voluntarily nonsuited its action and, relying on the savings statute, refiled within one year of the nonsuit but outside the contractually extended statute of limitations.

The timeline of relevant events is:

March 15, 2010—Judgment entered against Circle C in federal district court.
November 29, 2010—Circle C and Nilsen entered into the tolling agreement.
March 15, 2011—Date of expiration of the one-year statute of limitations for Circle C's claim under Tennessee Code Annotated section 28–3–104 (2000)

, had the statute of limitations not been tolled and extended by the parties' agreement.

September 21, 2011—Circle C filed suit against Nilsen alleging that Nilsen was negligent in its representation of Circle C.

April 16, 2012—Order entered dismissing suit against Nilsen based on Circle C's notice of voluntary nonsuit.

October 1, 2012Sixth Circuit Court of Appeals issued its decision.

January 29, 2013—Date of expiration of the statute of limitations as extended by the parties' agreement to 120 days after issuance of the appellate decision.

April 8, 2013—Circle C refiled suit against Nilsen for professional negligence.

April 16, 2013—Date of expiration of the one-year period following nonsuit permitted by the savings statute.

After Circle C refiled its suit, Nilsen moved for summary judgment, arguing that Circle C's claim was barred because the case was filed after the extended statute of limitations set by the agreement. Circle C responded that the case was timely filed because it was filed within the deadline set by the agreement, was voluntarily dismissed, and was refiled within one year as provided by the savings statute, Tennessee Code Annotated section 28–1–105 (2000)

. The trial court granted Nilsen's motion for summary judgment. Circle C appealed. The Court of Appeals determined that the agreement precluded application of the savings statute, holding that Circle C's claims against Nilsen were barred because the refiled suit had been filed after the filing deadline established in the agreement.

We granted Circle C's application for permission to appeal to decide whether the savings statute applies to save Circle C's action that was filed within the extended statute of limitations established by the tolling agreement, was voluntarily nonsuited, and refiled within the one-year period allowed by the savings statute, but after the extended statute of limitations established by the tolling agreement.

II.

This appeal arises from a grant of summary judgment, which we review de novo with no presumption of correctness. Rye v. Women's Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 250–51 (Tenn.2015)

(citing Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997) ). Questions of contract and statutory interpretation are questions of law, which we review de novo without a presumption of correctness. Gleaves v. Checker Cab Transit Corp., 15 S.W.3d 799, 802 (Tenn.2000) (holding that the construction of a statute is a question of law); Hamblen Cnty. v. City of Morristown, 656 S.W.2d 331, 335–36 (Tenn.1983) (holding that the interpretation of a written contract is a question of law rather than a question of fact).

Circle C argues that it complied with the terms of the agreement by filing suit before the expiration of the statute of limitations as extended 120 days by the tolling agreement. Circle C submits that the terms of the agreement did not prejudice its rights to assert claims, including the right to avail itself of the savings statute. Nilsen responds that the parties contractually agreed to a deadline for filing the negligence claim. According to Nilsen, Circle C's second suit was filed too late, as the filing deadline in the agreement was mandatory and not subject to any exceptions, including the savings statute. Nilsen relies on the contractual language that if Circle C "desires to assert claims for professional negligence, it must do so on or before the Termination Date," which was defined as 120 days after the Sixth Circuit issued its decision. The current suit was refiled after this date.

In interpreting a tolling agreement, we look to its provisions to determine its scope and effect. See Tenn–Fla Partners v. Shelton, 233 S.W.3d 825, 829 (Tenn.Ct.App.2007)

. We must ascertain and give effect to the parties' intentions in entering into the agreement based on the plain meaning of the agreement's language. Id. ; see also Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn.2009) ; Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 889–90 (Tenn.2002) (quoting Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn.1999) ).

The tolling agreement provides in part:

WHEREAS, [Circle C] believes the deadline for [Circle C] to file legal action against [Nilsen] for professional negligence is March 15, 2011, the date the federal Court entered Judgment against Circle C. Construction, LLC ("Filing Deadline");
WHEREAS, the Parties desire to extend the Filing Deadline without prejudicing [Circle C's] rights to assert claims and without waiving or releasing in any manner any defenses of any kind that [Nilsen] or any other potential party defendant may have to those claims as of the date of this Agreement; and
WHEREAS, the Parties understand that Circle C Construction, LLC desires to wait for the decision from the U.S. Court of Appeals before it decides whether to sue defendants for legal malpractice, the determination of which shall be solely that of Circle C Construction, LLC.
THEREFORE, in consideration of the mutual promises stated in this Agreement, the Parties agree as follows:
1. The Parties agree that the Filing Deadline shall be tolled so that the statute of limitations will not expire until a period of One Hundred Twenty (120) days after the United States Court of Appeals [for] the 6th Circuit has issued an opinion resolving all issues raised in the United States of America, ex rel. Brian Wall versus Circle C Construction, LLC, Appeal No. 10–5645 ("Termination Date"). If [Circle C] desires to assert claims for professional negligence, it must do so on or before the Termination Date.

(Emphasis added).

Circle C relies on the italicized portion of the recital—"the Parties desire to extend the Filing Deadline without prejudicing [Circle C's] rights to assert claims"—to support its argument that the savings statute applies to its refiled claim. Nilsen argues that because this provision is in the recital clause, it has no significance. Recitals do not ordinarily form a part of the material agreement between the parties, but they do commonly indicate the underlying purposes and motivations of the parties. See Ross v. Ross, 233 A.D. 626, 253 N.Y.S. 871, 882 (1931)

; see also 17A Am.Jur.2d Contracts § 383 (2015). Recitals should be reconciled, whenever possible, with the operative clauses of the contract and be given effect as any other contractual provision. See Ingalls Iron Works Co. v. Ingalls, 256 Ala. 124, 53 So.2d 847, 849 (1951) ; see also 17A Am.Jur.2d Contracts § 383 (2015). The operative language in the contract outlines what the parties must do to perform under the contract; the recitals explain why the parties require a contractual obligation to perform. See Ingalls, 53 So.2d at 858 (holding that a right-to-purchase option upon retirement did not apply because...

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