FREDRICO A. DIXON, III
Session Date: March 10, 2015.
Interlocutory Appeal from the Chancery Court for Knox County No. 183583-3 Michael W. Moyers, Chancellor.
Jon G. Roach and Brian R. Bibb, Knoxville, Tennessee, for the appellant, Patricia Grissom.
James B. Johnson, Nashville, Tennessee, for the appellee, Fredrico A. Dixon, III.
Thomas R. Frierson, II, J., delivered the opinion of the court, in which Charles D. Susano, Jr., C.J., and D. Michael Swiney, J., joined.
THOMAS R. FRIERSON, II, JUDGE.
I. Factual and Procedural Background
On June 9, 2008, the plaintiff, Dr. Fredrico A. Dixon, III, entered into a "Purchase and Sale Agreement" ("the Agreement") to purchase improved real property and two adjoining unimproved land parcels from the seller, Elizabeth C. Wright, for the total price of $1, 775, 000. Upon execution of the Agreement, Dr. Dixon deposited earnest money in the amount of $20, 000 with his real estate agent, the defendant, Patricia Grissom, and Realty Executives Associates, Inc. ("Realty Executives"), one of the brokerage companies with which Ms. Grissom was associated. The purchase was conditioned upon Dr. Dixon's ability to obtain a loan financing 100% of the purchase price by the agreed closing date of the transaction. Pursuant to the latest amendment to the Agreement, the closing date was set for June 27, 2008. Dr. Dixon subsequently failed to obtain a loan financing 100% of the purchase price and therefore sought to terminate the Agreement.
In a previous action brought by Ms. Wright against Dr. Dixon, the trial court found that Dr. Dixon's attempted termination of the contract was ineffective and that he therefore breached the contract. Ms. Wright had eventually sold the subject real property for an amount less than the purchase price to which Dr. Dixon had agreed. The trial court awarded Ms. Wright compensatory damages in the amount of $36, 541.55 and attorney's fees in the amount of $43, 280.76. Dr. Dixon appealed, and this Court affirmed the judgment. See Wright v. Dixon, No. E2012-00542-COA-R3-CV, 2012 WL 5954650 (Tenn. Ct. App. Nov. 29, 2012) ("Wright II"); see also Wright v. Dixon, No. E2010-01647-COA-R3-CV, 2011 WL 1648088 (Tenn. Ct. App. May 2, 2011) ("Wright I") (reversing the trial court's initial finding that Dr. Dixon had failed to make reasonable efforts to obtain 100% financing and remanding for a determination of whether Dr. Dixon effectively terminated the contract).
On August 22, 2012, Dr. Dixon filed the instant action, alleging that Ms. Grissom, as his real estate agent, breached her fiduciary duty to him. Dr. Dixon averred that Ms. Grissom failed to timely provide Ms. Wright with written documentation of SunTrust Bank's denial of financing to Dr. Dixon. Regarding the requirement that Dr. Dixon provide such documentation, the Agreement provides in pertinent part:
This Agreement is conditioned upon Buyer's ability to obtain a loan(s) in the principal amount of 100% of the purchase price listed above . . . . In the event Buyer, having acted in good faith and in accordance with the terms below, is unable to obtain financing, Buyer may terminate this [A]greement by providing written notice and a copy of Lender's loan denial letter. Upon termination, Buyer is entitled to a refund of the Earnest Money.
Should Buyer default hereunder, the Earnest Money shall be forfeited as damages to the Seller, and Seller may sue, in contract or tort, for additional damages or specific performance of the Agreement, or both. . . . In the event that any party hereto shall file suit for breach or enforcement of this Agreement . . . the prevailing party shall be entitled to recover all costs of such enforcement, including reasonable attorney's fees.
Time is of the essence of this Agreement.
Except as otherwise provided herein, all notices and demands required or permitted hereunder shall be in writing and delivered either (1) in person, (2) by a prepaid overnight delivery service, (3) by facsimile transmission (FAX), (4) by the United States Postal Service, postage prepaid, registered or certified return receipt requested or (5) Email. NOTICE shall be deemed to have been given as of the date and time it is actually received. Receipt of notice by the real estate licensee or their Broker assisting a party as a client or customer shall be deemed to be notice to that party for all purposes under this Agreement as may be amended, unless otherwise provided in writing.
(Paragraph numbering and headings omitted.)
Although the instant action is separate from Wright v. Dixon, the factual and procedural background summarized in Wright II highlights the question at issue here. In relevant part, this Court summarized:
On remand [from Wright I], the parties and the court focused on whether the Seller received written notice of termination. The Seller testified that she did not receive a one-page fax dated June 27, 2008 ("the Alleged Fax"), which the Buyer's agent, Patricia Grissom ("the Agent"), claimed to have sent to the Seller's office fax machine. The Alleged Fax contains a handwritten note stating:
Elizabeth, The Dixon[s] are withdrawing from the . . . Agreement due to their financing falling through. Please see the Denial letter attached from SunTrust.
The Seller testified that, when she is absent from the office, faxes received during normal business hours are placed by administrative help in her physical office mailbox. Faxes received after office hours "would be sitting on the fax machine." The Seller did not arrive back in Knoxville from her family vacation until late Friday night. The Seller waited until early Saturday morning, June 28, to go to the office. There was no fax from the Agent either in her office mailbox or on the fax machine. On July 2, 2008, the Seller did receive a copy of the denial of credit document under a fax cover sheet misdated July 1, 2008. The Seller testified that the first time she saw the Alleged Fax was after the first trial.
The Agent testified that she called the Seller on June 27 and informed her that the Buyer had not been able to obtain financing and that he was terminating the Agreement. She also asked her assistant, Tessa Moore, to send the Seller a fax dated June 27, 2008, as well as the letter from SunTrust denying financing. The Agent's "personal" file contained the Alleged Fax, with a handwritten confirmation by Tessa Moore that it was sent. The Agent testified that, when the Seller said that she did not receive the Alleged Fax she resent the denial of financing document on either July 1 or July 2. On cross-examination the Agent admitted that she had received a subpoena to appear at the first trial and bring with her all documents pertaining to the termination. The documents she produced at the first trial did not include the Alleged Fax. The Agent testified that she met with the Buyer's attorney before trial and gave him the office file. According to the Agent, it was after the first trial that she searched her personal files and found the Alleged Fax. The Agent testified that it was after the first trial that she realized the Seller was claiming that she did not receive the Alleged Fax. This prompted her to search her personal files.
Wright II, 2012 WL 5954650 at *2 (italicized emphasis in original). In affirming the trial court's ruling, this Court determined that the evidence did not preponderate against "the trial court's finding that the termination document was not received on the closing date." Id. at *4. This Court further noted: "We agree with the trial court that, in a transaction involving a million dollar piece of property, it is "inconceivable' that if the fax had truly gone through, the Agent would not have provided the machine printed confirmation of transmission." Id.
Although Dr. Dixon filed his complaint against Ms. Grissom on August 22, 2012, it is undisputed that summons were not issued upon Ms. Grissom and the other defendants until January 7, 2013. The other defendants originally included Realty Executives and another brokerage entity, Debbie Elliott Sexton, LLC f/k/a Debbie Elliott and Associates ("Debbie Elliott"). All of the defendants filed one motion for summary judgment on September 5, 2013. Following a hearing, the trial court granted summary judgment in favor of Realty Executives and Debbie Elliott upon its determinations that Ms. Grissom was an independent contractor and that the other defendants were not vicariously liable for her actions. The trial court entered an order to this effect on December 20, 2013. Realty Executive Associates and Debbie Elliott are not parties to this appeal.
Ms. Grissom argued in her motion for summary judgment that Dr. Dixon's claim against her was barred by the applicable statute of limitations. It is undisputed that the three-year statute of limitations provided by Tennessee Code Annotated § 28-3-105(1) (Supp. 2014) for injuries to personal property applies to Dr. Dixon's claim for breach of fiduciary duty against Ms. Grissom. At the close of the December 2013 hearing, the trial court reserved ruling on Ms. Grissom's motion for summary judgment and requested briefing from the parties on the issue of whether and when knowledge of Ms. Grissom's alleged failure to terminate the contract could be imputed to Dr. Dixon and thus commence the running of the statute of limitations pursuant to the discovery rule. See PNC Multifamily Capital Institutional Fund XXVI Ltd. P'ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525, 544 (Tenn. Ct. App. 2012) ("Under the discovery rule, a cause of action accrues when the plaintiff knows or in the exercise of reasonable care and diligence should know that an injury has been sustained as a result of wrongful or tortious conduct by the defendant.").
In its remarks voiced upon the conclusion of the December 2013 hearing, the trial court identified three events as possibly ...