Johnson County, Tenn. v. US Gypsum Co.

• Decision Date: 12 December 1983
• Docket Number: No. CIV-2-83-262.,CIV-2-83-262.
• Parties: COUNTY OF JOHNSON, TENNESSEE, acting By and Through its BOARD OF EDUCATION and Superintendent of Schools v. UNITED STATES GYPSUM COMPANY, National Gypsum Company, the Celotex Corporation, and Carey Canada.
• Court: U.S. District Court — Eastern District of Tennessee

580 F. Supp. 284

COUNTY OF JOHNSON, TENNESSEE, acting By and Through its BOARD OF EDUCATION and Superintendent of Schools v. UNITED STATES GYPSUM COMPANY, National Gypsum Company, the Celotex Corporation, and Carey Canada.

No. CIV-2-83-262.

United States District Court, E.D. Tennessee, Northeastern Division.

January 9, 1984.

Report and Recommendation December 12, 1983.

COPYRIGHT MATERIAL OMITTED

W. Mitchell Cramer and Michael Y. Rowland of Rowland & Rowland, P.C., Knoxville Tenn., for plaintiff.

Rebecca O. Gillen, Darryl G. Lowe, Martin L. Ellis, Erma G. Greenwood and John T. Buckingham, Knoxville, Tenn., for defendants.

ORDER

HULL, District Judge.

The report and recommendation of the United States Magistrate is hereby adopted and approved.

Accordingly, it is ORDERED that the motions to dismiss of the defendants U.S. Gypsum, National Gypsum, Celotex, and Carey Canada are GRANTED IN PART and DENIED IN PART. The plaintiff's claims based on the following theories are DISMISSED: (i) warranty; (ii) any action under the Tennessee Consumer's Act; and (iii) nuisance. The plaintiff's "Declaratory Relief Count" is DISMISSED. The defendants' motions to dismiss (i) the negligence claim; (ii) the strict liability in tort claim; (iii) the fraud and misrepresentation claims; and (iv) the demand for punitive damages are DENIED.

REPORT AND RECOMMENDATION

ROBERT P. MURRIAN, United States Magistrate.

This matter was referred to the undersigned United States Magistrate pursuant to 28 U.S.C. § 636(b) and the Rules of this Court for a report and recommendation regarding the disposition by the District Court of the defendants' motions to dismiss for failure to state a claim upon which relief can be granted. Rule 12(b)(6), Federal Rules of Civil Procedure.

This is a civil action for damages and for declaratory relief based on the plaintiff's allegations of negligence, strict liability, fraud and misrepresentation, breach of warranties, unfair and deceptive trade practices and nuisance concerning the sale of asbestos products used in the 1965-1966 construction of Johnson County High School. All of the defendants have moved to dismiss for failure to state a claim upon which relief can be granted on grounds that,

(1) all of the claims made by the plaintiff are barred by the applicable 10-year statute of limitations, T.C.A. § 29-28-103;

(2) the claims are barred by the four-year statute of limitations contained in T.C.A. § 28-3-202;

(3) the fraud and misrepresentation claim is barred by T.C.A. § 28-3-105;

(4) the claim based upon warranty is barred by T.C.A. § 47-2-725;

(5) the plaintiff has failed to state a claim upon which relief can be granted in connection with its warranty theory since privity of contract is not alleged between the plaintiff and any of the defendants, and such is required in order to recover for economic loss;

(6) the claim based upon § 402A of the Restatement 2d of Torts must be dismissed since this is not an action for personal injury or property damage;

(7) the claim based upon negligence does not and cannot allege either property damage or personal injury;

(8) The claim based upon the Tennessee Consumer Protection Act must be dismissed because (i) the facts upon which the plaintiff bases its claim do not state a claim under the Act, (ii) the Act took effect almost 20 years after the events in question here and it is not retroactive, and (iii) the claim is barred by T.C.A. § 47-18-110;

(9) the "Declaratory Relief Count" in the Complaint must be dismissed since the plaintiff seeks indemnity for hypothetical injuries in violation of Article III, § 2 of the United States Constitution;

(10) the claim based on fraud must be dismissed because it is not pleaded with sufficient particularity;

(11) the claim for punitive damages should be dismissed for failure to state a claim upon which relief can be granted;

(12) the nuisance claim should be dismissed for failure to state a claim upon which relief can be granted.

Court File Nos. 16, 17, 18 and 19.

The plaintiff alleges these facts. In or about 1965-1966 the plaintiff constructed Johnson County High School. As a part of this construction acoustical plaster and ceiling plaster products containing high levels of asbestos were applied onto the ceilings of classrooms, halls, bandrooms, theatres, administrative offices and other rooms throughout the school. Those products were allegedly mined, manufactured and sold by the defendants. Subsequently, the plaintiff learned that, as a result of normal wear, aging, abrasion, vibration, and impacts involving the ceilings occasioned by the normal and expected use of the building, asbestos particles, dust and fibers were being released into the air inside the school building, making it imminently dangerous to human health. Asbestos fiber, it is alleged, is a cause of numerous lung diseases, including mesothelioma, lung cancer, asbestosis, and other diseases harmful to various bodily functions. The plaintiff claims that at the time of the sale of the products in 1966 or before, the defendants knew or should have known of the harmful characteristics of their products. Upon discovering the dangerous conditions created by the asbestos at Johnson County High School, the plaintiff instituted a program to alleviate the problem through removal of the asbestos products. During that removal process the plaintiff transported students to other facilities. The complaint in this action was filed in state court on August 16, 1983. On August 31, 1983, it was properly removed to this Court. On October 12, 1983, before a responsive pleading was served, the plaintiff amended its complaint, as of right, to allege misrepresentation pursuant to 402B, Restatement of Torts, Second, and to allege property damage caused to its ceiling, to its carpeting and to other parts of its property.

(1) The defendants argue that all of the plaintiff's claims are barred by the applicable ten-year statute of limitations, T.C.A. § 28-1-103. Initially, the plaintiff's argument must be considered that it is protected from the running of any statute of limitations by T.C.A. § 28-1-113, which provides as follows:

The provisions of this title with regard to statutes of limitation do not apply to actions brought by the state of Tennessee, unless otherwise provided.

The plaintiff argues that in operating the school system it is exercising a governmental function as an arm of the state government. As such, the plaintiff argues that it is entitled to the same protection from statutes of limitation as is the state itself.

Whether or not the various statutes of limitation involved in this case apply depends upon whether or not Johnson County, in maintaining the school was acting in a governmental capacity for the benefit of the general public. See Jennings v. Davidson County, 208 Tenn. 134, 344 S.W.2d 359 (1961). The rule is stated clearly in Jennings as follows:

The statute of limitations does not run against the sovereign or the state, or against a county, when seeking to enforce a demand arising out of, or dependent upon, the exercise of its governmental functions as an arm of the state. Citing Central Hospital for Insane v. Adams, 134 Tenn. 429, 183 S.W. 1032; Nelson v. Loudon County, 176 Tenn. 632, 144 S.W.2d 791. But the statute does run against a county or municipality in respect of its claims or rights which are of a private or corporate nature and in which only its local citizens are interested, as distinguished from a public or governmental matter in which all the people of the state are interested. Citing Shelby County v. Bickford, 102 Tenn. 395, 52 S.W. 772; Hamblen County v. Cain, 115 Tenn. 279, 89 S.W. 103; City of Knoxville v. Gervin, 169 Tenn. 532, 89 S.W.2d 348.

Jennings, supra, 344 S.W.2d at 361-362. Examples of cases where statutes of limitation would run against a municipality or county are found in Hamblen County, supra (action by county to recover witness and other fees left uncalled for in possession of former county clerk) and Shelby County v. Bickford, 102 Tenn. 395, 52 S.W. 772 (1899) (action by county to recover against its grantor on covenant against encumbrances). Obviously, in neither Hamblen nor Shelby County were the claims on behalf of the state or with regard to a matter of interest to all of the people of the state. Cases where the Tennessee Supreme Court has refused to apply a statute of limitations to a county or municipality where their action arose out of the performance of a governmental function include Jennings, supra (county brought action against estate of pauper for hospital services rendered over a long period of time), Nelson, supra (county brought action to recover fine which would be paid into the state coffers), Memphis v. Looney, 9 Baxt. 130 (1877) (action by city to enforce tax lien) and Elliot v. Williamson, 11 Lea 38 (1883) (county action to enforce taxes).

Though there are no Tennessee cases addressing the issue, the undersigned is of the opinion that Tennessee would not provide immunity from the running of statutes of limitation for tort or contract actions arising out of the maintenance of the physical plant of a local school system by county officials. Several factors compel this result. First, the overwhelming weight of authority in other jurisdictions indicates that local school districts are not immune from the running of statutes of limitation. See, e.g., Clarke v. School Dist., 84 Ark. 516, 106 S.W. 677 (1905); School Dist. v. Joint School Dist., 156 Okl. 5, 9 P.2d 771 (1932); Hatcher v. State, 125 Tex. 84, 81 S.W.2d 499 (1935). See generally Annot., 98 A.L.R. 1221. If the Tennessee courts were to find a county immune from statutes of limitation with respect to a tort or contract claim arising out of construction work performed on a local school house, it would certainly be a novel interpretation. Research of the issue indicates that it would be the first decision of its kind in the United States....