Quality Auto Parts Co., Inc. v. Bluff City Buick Co., Inc.

• Decision Date: 07 March 1994
• Citation: 876 S.W.2d 818
• Court: Tennessee Supreme Court
• Parties: QUALITY AUTO PARTS CO., INC., Plaintiff (non-appealing party), v. BLUFF CITY BUICK CO., INC., Milton Schaeffer, and Joseph Schaeffer, Counter-Defendants/Appellants, v. Whitson KIMBROW, Counter-Plaintiff/Appellee.

Page 818

876 S.W.2d 818

QUALITY AUTO PARTS CO., INC., Plaintiff (non-appealing party), v. BLUFF CITY BUICK CO., INC., Milton Schaeffer, and Joseph

Schaeffer, Counter-Defendants/Appellants, v. Whitson KIMBROW, Counter-Plaintiff/Appellee.

Supreme Court of Tennessee,

at Jackson.

March 7, 1994.

Rehearing Denied May 16, 1994.

Gail O. Mathes, Memphis, for appellants.

Joseph Michael Cook, Memphis (Jim Waide, of counsel), Tupelo, MS, for appellee.

OPINION

ANDERSON, Justice.

In this appeal, we are asked to determine whether the discovery rule applies to the six-month statute of limitations for slander, and whether the Tennessee Consumer Protection Act is applicable. We also consider whether a claim has been stated for the tort of intentional interference with prospective economic advantage. For the reasons stated below, we conclude that the discovery rule does not apply to the slander statute of limitations because of the nature of slander and the explicit language of the statute. We also agree that the Tennessee Consumer Protection Act is not applicable and that a claim has not been stated for the tort of intentional interference with prospective economic advantage. Accordingly, we do not address the question of whether the tort should be recognized in this case.

BACKGROUND

This action began when Quality Auto Parts Co., Inc. ("Quality"), filed suit against Bluff City Buick Company, Inc. ("Bluff City") to collect an unpaid account for auto parts. Bluff City responded by filing a third party action against their own employee, Whitson Kimbrow, Jr., and Quality's president, James M. Williams. The action alleged that Williams created "phony" parts invoices from Quality, that were paid by Kimbrow, as parts manager for Bluff City, with Williams and Kimbrow splitting the profits from the conspiracy.

Kimbrow denied the charges and filed a counterclaim for slander, alleging that representatives of Bluff City made defamatory statements about him, including calling him a "thief" and saying that he was "stealing from the company." Kimbrow learned of one statement three and one-half months after it was made, another approximately five months after it was made, and the rest within ten months. All agree the slander action was filed more than six months after "the words were uttered."

Kimbrow's counter-claim also maintained that the statements were a "disparaging of his services or business" and, therefore, violated the Tennessee Consumer Protection Act, Tenn.Code Ann. § 47-18-104(b)(8) (1988 & Supp.1993). In addition, Kimbrow contended that the statements were made with the deliberate intent to interfere with his future business as a parts manager, and therefore, constituted the common-law tort of intentional interference with prospective business relations.

Bluff City filed a motion to dismiss Kimbrow's counter-claim, and the trial court dismissed the counter-claim with prejudice. The trial court concluded that the slander action was time-barred by the expiration of the six-month statute of limitations; ¹ that the consumer protection statute does not apply to an employer/employee relationship; and that Tennessee does not recognize the tort of intentional interference with prospective business relations.

Kimbrow appealed. The Court of Appeals affirmed the trial court's decision dismissing the consumer protection claim and the tort of intentional interference with prospective business relations, but held the slander claim was not time-barred. The Court of Appeals concluded that the six-month statute of limitations did not begin to run until Kimbrow discovered the injury.

Because the trial court has held Kimbrow's complaint legally insufficient by its failure to state a claim, we will take as true all well-pleaded, material factual allegations, and we will construe the complaint liberally in favor of the plaintiff in our discussion of the issues which follows. Dobbs v. Guenther, 846 S.W.2d 270 (Tenn.App.1992).

STATUTE OF LIMITATIONS

We first consider whether the discovery rule applies to the six month statute of limitations for slander. Essential to our analysis is an examination of the origin and purpose of the discovery rule in Tennessee, as well as the history and development of the law of defamation, specifically slander.

The discovery rule was first announced in Teeters v. Currey, 518 S.W.2d 512, 515 (Tenn.1974), a medical malpractice case. It provides that the statute of limitations begins to run when the injury is discovered, or in the exercise of reasonable care and diligence, the injury should have been discovered. The rule responds to the unfairness of "requiring that he [a plaintiff] sue to vindicate a non-existent wrong, at a time when injury is unknown and unknowable." Id. at 515. Since its announcement in Teeters, the discovery rule has been applied to various tort actions including products liability, legal malpractice, and dental malpractice actions. Chambers v. Dillow, 713 S.W.2d 896 (Tenn.1986); Foster v. Harris, 633 S.W.2d 304 (Tenn.1982); McCroskey v. Bryant Air Conditioning Co., 524 S.W.2d 487 (Tenn.1975).

In contrast to the rationale for the discovery rule are the policy reasons for the development of statutes of limitations to ensure fairness to the defendant by preventing undue delay in bringing suits on claims, and by preserving evidence so that facts are not obscured by the lapse of time or the defective memory or death of a witness. Potts v. Celotex Corp., 796 S.W.2d 678, 681 (Tenn.1990); Teeters, 518 S.W.2d at 515; see generally Developments in the Law: Statutes of Limitations, 63 Harv.L.Rev. 1176, 1185 (1950). When determining whether to apply the discovery rule, this court considers the specific statutory language at issue, and balances the policies furthered by application of the discovery rule against the legitimate policies upon which statutes of limitations are based. Potts, 796 S.W.2d at 684.

Also necessary to our decision is an understanding of the development of the law of defamation, which includes both slander and libel. A libel action involves written defamation and a slander action involves spoken defamation. The basis for an action for defamation, whether it be slander or libel, is that the defamation has resulted in an injury to the person's character and reputation. Little Stores v. Isenberg, 26 Tenn.App. 357, 172 S.W.2d 13, 16 (1943). Historically, however, a distinction has been drawn between the two types of defamation. Libel was criminal in its origin ... while slander was never criminal in itself, and could become so only when the words amounted to some other offense, such as sedition, blasphemy, or a breach of the peace. When the two at last met in the common law courts, they tended to become separate rather than united; and since libel was already established as the greater wrong, greater responsibility attached to it.

Prosser and Keeton on Torts § 112 at 785 (West 5th ed. 1984 & Supp.1988) (hereinafter referred to as "Prosser, § _ at __"). In Tennessee, the distinction establishing libel as the greater wrong was said to be "founded in the deliberate malignity displayed by reducing the offensive matter to writing." Williams v. Karnes, 23 Tenn. 9, 11 (1843).

The historical distinction discussed above is evident in Tennessee's current statutes of limitations on slander and libel. Actions for slander must "be commenced within six (6) months after the words are uttered," Tenn.Code Ann. § 28-3-103 (1980); while, in contrast, a plaintiff bringing an action for libel has one year from the time "the cause of action accrued." Tenn.Code Ann. § 28-3-104 (1980 and Supp.1993). The difference in the time limitations implicitly recognizes the degree of wrong between the two torts.

Other jurisdictions generally hold that a cause of action for defamation, whether libel or slander, accrues and the statute of limitations begins to run on the date of publication of the defamatory material. Publication is a term of art meaning the communication of defamatory matter to a third person. In the case of slander, "publication" occurs when the defamatory matter is spoken. Little Stores, 172 S.W.2d at 16; see also Applewhite v. Memphis State University, 495 S.W.2d 190, 192-93 (Tenn.1973). Tennessee has codified that general rule in the slander statute of limitations by explicitly providing that the time period begins to run when the slanderous words are uttered.

The great majority of courts in other jurisdictions have held that the discovery rule does not alter the general rule that the time period begins to run when the words are uttered. ² Moreover, in most cases, the courts went even further and declined to apply the discovery rule to "accrual" language in the statute of limitations for slander, as opposed to the more explicit language in the Tennessee slander statute. ³

We conclude that the rationale for declining to apply the discovery rule to defamation statutes of limitations is persuasive. Typical situations in which the discovery rule has been applied involved distinct and usually physical injuries developing long after the defendant's negligent conduct occurred, and after the statute of limitations expired. In contrast, the injury to character and reputation upon which a slander action is based develops and is complete at the moment the slanderous words are uttered. Moreover, the policies upon which statutes of limitations are based, i.e., preventing stale claims and preserving evidence, are especially applicable to slander actions because of the intangible nature of the evidence, spoken words, and of the injury itself, damage to character and reputation. Kelley v. Rinkle, 532 S.W.2d 947, 949 (Tex.1976). Finally, as the federal district court recognized in Heller v. Smither, supra, the language of Tennessee's slander statute of limitations sets forth "a positive and distinct event that triggers the running of the limitations period--the utterance of the alleged defamatory...