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Palazzo v. Harvey

United States District Court, M.D. Tennessee, Nashville Division

May 6, 2019

JOANN PALAZZO, Individually and as Trustee of the JOANN PALAZZO TRUST, Plaintiff,
v.
JAMES STAN HARVEY and DAFFEY HARVEY d/b/a SUN COMPANY BUILDERS and CMW, INC., Defendants.

          MEMORANDUM OPINION

          WAVERLY D. CRENSHAW, JR. CHIEF UNITED STATES DISTRICT JUDGE

         What a difference a day makes. At least it would if James Stan Harvey and Daffey Harvey d/b/a/ Sun Company Builders (collectively “Sun Company”) are correct in their Motion for Summary Judgment (Doc. No. 21) that (1) the horse arena and horse barn/stable commissioned by JoAnn Palazzo “were completed no later than July 31, 2014”; (2) any “suit for property damages relating to the alleged deficient construction had to have been filed by July 31, 2018”; and (3) “[t]his simply did not occur” because “the Complaint was not filed until August 1, 2018.” (Doc. No. 18 at 1, 5). But Sun Company is indisputably wrong on the last point - the Complaint was filed on July 31, 2018. (Doc. No. 1). Palazzo deems this to be a “fatal flaw” because Sun Company “can never unring that bell.” (Doc. No. 26 at 1, 8) (emphasis in original). Her better argument, and the one with which this Court agrees, however, is there are genuine issues of material fact as to when the construction project was completed thus rendering summary judgment inappropriate. This is particularly so because Sun Builders also asserts the arena and stable were completed long before the July 31, 2018, and CMW, Inc. has also filed a Motion for Summary Judgment (Doc. No. 18) raising many of the same arguments advanced by Sun Company, but acknowledging the correct date for the filing of the Complaint.

         I.

         The facts along with the permissible inferences drawn in Palazzo's favor, Stratienko v. Cordis Corp., 429 F.3d 592, 597 (6th Cir. 2005), are these:

         Palazzo lives in Fairfield, Connecticut and is the trustee of the JoAnn Palazzo Trust, which owns Meadowood Farm[1] in Murfreesboro, Tennessee. She engaged CMW to design and oversee the construction of an indoor horse riding arena and barn/stable[2] that were to be built by Sun Company. The agreement with CMW was pursuant to a Design Contract, and a Construction Contract governed the agreement between Palazzo and Sun Company. Both were standard form contracts developed and published by the American Institute of Architects (“AIA”).

         The horse would start with the erection of a pre-engineered metal building (“PEMB”) with a skeleton that contained red, shop-primed structural steel components. That primer was intended as a short-term fix, and not as protection from continued exposure to the elements. Instead, Sun Company was required under the contract to prime and paint the metal.

         The PEMB arrived at Meadowood Farm on or about September 19, 2012, and was stored outside and uncovered until the exterior of the horse arena was erected between January and March of 2013. Even then, according to Palazzo, the metal remained exposed until it was site-primed and painted. This priming and painting started in May 2013, and continuing until the roof was installed sometime in August 2013.

         CMW approved the Sherwin-Williams primer and paint applied by Sun Company to the steel components of the stable. Palazzo claims, however, that the substrate was not prepared in accordance with the manufacturer's instructions, and that the primer and the enamel topcoat made the steel susceptible to mold and mildew. Indeed, Palazzo claims to have discovered discoloration of the structural members of the arena in June 2015, and informed both CMW and Sun Company of her concerns. She also made arrangements for portions of the PEMB to be bleached in 2016 and again in 2017. However, after each bleaching, the discoloration returned within 6 months. To make matters worse, the coating covering the steel began to delaminate, and rust started appearing in November 2017.

         Palazzo told both CMW and Sun Builders about the problems she encountered, but was dissatisfied with their responses. Accordingly, she filed suit in this Court on July 31, 2018, alleging breach of contract and negligence against both Defendants.

         II.

         Because Palazzo seeks to recover damages arising out of improvements to real property, the parties agree[3] that the following statute of repose applies:

Limitation of actions.-All actions to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency, or for injury to the person or for wrongful death arising out of any such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such an improvement within four (4) years after substantial completion of such an improvement.

Tenn. Code Ann. § 28-3-202 (2000). “The legislative purpose behind the statute is to ‘insulate contractors, architects, engineers and the like from liability for their defective construction or design of improvements to realty where either the occurrence giving rise to the cause of action or the injury happens more than four years after the substantial completion of the improvement.'” Cartwright v. Presley, No. E2005-02418-COA-R3CV, 2007 WL 161042, at *3 (Tenn. Ct. App. Jan. 23, 2007) (quoting Argus v. Future Chattanooga Dev. Corp., 358 F.Supp. 246, 251 (E.D. Tenn. 1973).

         By statute, “‘substantial completion' means that degree of completion of a project, improvement, or a specified area or portion thereof (in accordance with the contract documents, as modified by any change orders agreed to by the parties) upon attainment of which the owner can use the same for the purpose for which it was intended; the date of substantial completion may be established by written agreement between the contractor and the owner.” Tenn. Code Ann. § 28-3-201; see also Jenkins v. Southland Capital Corp.,301 S.W.3d 268, 275 (Tenn. Ct. App. 2008) (observing in the context of a residence that “‘substantial completion' occurs when the owner can use the building for its intended use, that of a home, even if some defects remain”). As a consequence, “the dates of injury and discovery do ...


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