MR Hotels, LLC v. LLW Architects, Inc.
| Decision Date | 28 July 2016 |
| Docket Number | No. M2015-00840-COA-R9-CV,M2015-00840-COA-R9-CV |
| Parties | MR HOTELS, LLC v. LLW ARCHITECTS, INC. ET AL. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Davidson County
Claudia C. Bonnyman, Chancellor
This interlocutory appeal arises out of the design and construction of a six-story hotel. The owner of the hotel sued LLW Architects, Inc. for breach of contract based on an AIA Standard Form of Agreement Between Owner and Architect. The owner also asserted claims for professional liability against LLW and its principal architect, Dell Livingston, alleging the breach of a duty of care in carrying out their professional services. The trial court summarily dismissed all claims against LLW and Mr. Livingston as time barred by the three-year statute of limitations for damage to real property: Tenn. Code Ann. § 28-3-105. Portions of the hotel first opened for business on May 30, 2007, and the hotel was approved for final use and occupancy on June 26, 2007. Plaintiff commenced this action on October 20, 2010. The owner-architect agreement states that the statutes of limitations for "[c]auses of action between the parties to this Agreement" begin to run on "the date of Substantial Completion." The accrual provision also states that "[i]n no event shall such statutes of limitations commence to run any later than the date when the Architect's services are substantially completed." The agreement defines "Substantial Completion" as "the stage of progress of the Work when the Work or designated portion thereof is sufficiently complete . . . so that the Owner can occupy or utilize the Work for its intended use . . . ." The agreement also defines "date of Substantial Completion" as "the date certified by the Architect . . . ." The trial court held that the accrual provisions applied to the individual architect because Plaintiff's claims against him were based on duties specified in the architectural agreement. The trial court also determined that June 1, 2007 was the date of Substantial Completion because the hotel was being used for its intended purpose on that date. We respectfully disagree, having determined that LLW and Mr. Livingston were not entitled to summary judgment because they failed to establish the elements of their affirmative defense based on the statute of limitations. Accordingly, we reverse and remand for further proceedings.
Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court Reversed and Remanded
Christopher S. Dunn, Mark M. Bell, and Joseph L. Watson, Nashville, Tennessee, for the appellant, MR Hotels, LLC.
Vic L. McConnell, Nashville, Tennessee, for the appellees, LLW Architects, Inc. and Dell Livingston.
OPINIONIn July 2005, MR Hotels, LLC ("Plaintiff") and LLW Architects, Inc. ("LLW") entered an agreement ("Architecture Agreement") in which LLW agreed "to provide design and contract administration services" for a six-story hotel with a two-level underground parking garage. Dell Livingston, who is a licensed architect and a principal of LLW, signed the agreement on behalf of LLW. Mr. Livingston was also identified in the agreement as LLW's "Designated Representative."
The Architecture Agreement contains a provision that governs the accrual of causes of action. This provision states:
Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion or the date of issuance of the final Certificate for Payment for acts or failures to act occurring after Substantial Completion. In no event shall such statutes of limitations commence to run any later than the date when the Architect's services are substantially completed.
The Architecture Agreement requires the Architect to "conduct inspections to determine the date or dates of Substantial Completion and the date of final completion . . . ." The Architecture Agreement also states that "[t]erms in this Agreement shall have the same meaning as those in the edition of AIA Document A201, General Conditions of the Contract for Construction, current as of the date of this Agreement."1 Document A201 contains definitions for both "date of Substantial Completion" and "Substantial Completion." The "date of Substantial Completion" means "the date certified by the Architect in accordance with Section 9.8 [of Document A201]." Section 9.8 defines "Substantial Completion" as:
the stage of progress of the Work when the Work or designated portion thereof is sufficiently complete . . . so that the Owner can occupy or utilize the Work for its intended use; provided however, that as a condition precedent to Substantial Completion, the Owner has received all certificates of occupancy and any other permits, approvals, licenses, and other documents from any governmental authority having jurisdiction thereof necessary for the beneficial occupancy of the Project . . . .
(emphasis omitted). According to Section 9.8, when the contractor considers the work to be substantially complete, he or she "shall prepare and submit to the Architect a comprehensive list of items to be completed or corrected prior to final payment." Upon receipt of that list, "the Architect will make an inspection to determine whether the Work . . . is substantially complete." When the Work is substantially complete, the Architect "will prepare a Certificate of Substantial Completion which shall establish the date of Substantial Completion . . . ."
On May 30, 2007, the Metro Department of Codes and Building Safety issued a temporary use and occupancy certificate for the hotel. A portion of the hotel opened for business that same day, but some work was still being conducted. The Department of Codes approved the hotel for final use and occupancy on June 26, 2007. On October 22, 2007, one of LLW's employees sent Plaintiff an email stating that an "AIA Certificate of Substantial Completion" was attached. However, the certificate is not in the record. Plaintiff contends that the Certificate of Substantial Completion was not duly signed by an authorized representative of LLW until after October 22. LLW and Mr. Livingston dispute this contention. More importantly, when or whether a certificate was properly executed is not revealed by this record.
Subsequently, Plaintiff began experiencing cracking and "water infiltration" in the hotel's garage. On October 20, 2010, Plaintiff filed suit against LLW, Mr. Livingston, and others involved in the construction of the hotel.2
In October 2014, LLW and Mr. Livingston moved for summary judgment, arguing that Plaintiff's claims against them were time-barred by the three-year statute of limitations for injuries to real property. See Tenn. Code Ann. § 28-3-105. Plaintiff opposed the motion, arguing that its claims against LLW were timely because, according to the Architecture Agreement, causes of action between them did not accrue until LLW issued the Certificate of Substantial Completion on October 22, 2007. Plaintiff also argued that the accrual provision in the Architecture Agreement did not apply to theclaims against Mr. Livingston because he signed the agreement only on behalf of LLW and was not a party to the contract.
After a hearing, the trial court granted summary judgment in favor of LLW and Mr. Livingston. The trial court found that the provisions of the Architecture Agreement applied to Mr. Livingston because all of the claims against him arose out of the duties he owed by providing services under the Architecture Agreement. The court also determined that the Certificate of Substantial Completion was not a requirement for establishing the date of Substantial Completion. According to the trial court:
[L]ooking at the contractual provisions between the parties, the architect's certificate was not a requirement for the building in reaching its substantial completion. A substantial completion is a matter of fact, and there's a range of dates on which the substantial completion could be had, and most probability [sic], the correct date is June 1, 2007. . . . [T]he architect's certificate merely recognizes [the fact of substantial completion], it does not establish that fact.
Plaintiff filed a motion requesting that the trial court revise its order or grant Plaintiff permission to seek an interlocutory appeal. After another hearing, the trial court revised portions of its order and clarified that fraudulent concealment had not occurred because LLW and Mr. Livingston did not conceal the defects in the parking garage. However, the court did not change its decision that Plaintiff's claims against LLW and Mr. Livingston were time-barred. The trial court granted Plaintiff permission to file an interlocutory appeal, and Plaintiff filed a Tenn. R. App. P. 9 application with this court, which was granted.
This court reviews a trial court's decision on a motion for summary judgment de novo without a presumption of correctness. Rye v. Women's Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997)). Accordingly, this court must make a fresh determination of whether the requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn. 1997). In so doing, we consider the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).
Summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any...
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