Session August 13, 2019
from the Chancery Court for Williamson County No. 46766
Joseph A. Woodruff, Judge.
city appeals from the dismissal of its negligent
misrepresentation claim on the basis of the economic loss
doctrine, arguing that Tennessee law recognizes an exception
to the economic loss doctrine for negligent
misrepresentations. Because we conclude that Tennessee law
does not recognize a negligent misrepresentation exception to
the economic loss doctrine, we affirm the decision of the
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Wearen Hughes, John W. Dawson, IV, and Sarah B. Miller;
Nashville and Shauna R. Billingsley and Tiffani Pope;
Franklin, Tennessee, for the appellant, City of Franklin,
Capparella, Tyler Chance Yarbro, and Vic L. McConnell,
Nashville, Tennessee for the appellant, Smith Seckman Reid,
A. Day and Elizabeth Sitgreaves, Brentwood, Tennessee and
William Earl Touchstone, Houston, Texas, for the appellee,
Hobas Pipe USA, LP.
Steven Stafford, P.J., W.S., delivered the opinion of the
court, in which Arnold B. Goldin, and Carma Dennis McGee,
STEVEN STAFFORD, JUDGE.
Facts and Procedural History
November 17, 2017, the City of Franklin ("the
City") brought suit against defendants W.L. Hailey &
Company ("Hailey"), Smith Seckman Reid, Inc.
("SSR" and together with the City,
"Appellants"), and Hobas Pipe USA, LP
("Hobas"), in the Chancery Court for Williamson
County ("the trial court"). The City alleged,
inter alia, claims for breach of contract,
negligence, breach of warranty, and negligent
misrepresentation. These claims arose out of a construction
project that the City undertook from 2001-2003, in which the
City constructed a sewage line for its residents. The City
retained SSR to design the sewage line project. Following a
bidding process based on the designs created by SSR, Hailey
was awarded the project. Eventually, Hobas was selected to
provide the pipes necessary to convey the sewage from
residents to a treatment facility. The project was
substantially completed in 2003. According to the complaint,
however, the sewage line, known as the Interceptor, failed
beginning in 2017, necessitating emergency repair work
throughout the system. Eventually, flood damage led to
portions of the Interceptor being replaced.
to this appeal, Hobas filed a motion to dismiss on December
20, 2017, wherein Hobas alleged that the gravamen of the
City's claims was for products liability, and that the
ten-year statute of repose applicable to products liability
claims barred the action. At the same time, Hobas filed an
answer to the complaint denying the material allegations
against it and raising a number of affirmative defenses.
City responded to Hobas's motion on January 19, 2018. As
an initial matter, the City denied that its claims against
Hobas should be characterized as a products liability action
because the claims were not cognizable under the Tennessee
Products Liability Act ("the Products Liability
Act" or "the Act"). As such, the City argued
that the Products Liability Act statute of repose did not
apply. To the extent that any statute of limitations was
applicable, however, the City submitted that application
thereof was barred by the doctrine of nullum tempus
occurrit regi. See Hamilton Cty. Bd. of Educ. v.
Asbestospray Corp., 909 S.W.2d 783, 785 (Tenn. 1995),
as clarified on reh'g (Nov. 20, 1995) ("The
common law doctrine of nullum tempus occurit regi,
which is literally translated as "time does not run
against the king," prevents an action brought by the
State from being dismissed due to the expiration of the
statutory period of limitations normally applicable to the
specific type of action.").
January 29, 2018, Hobas filed an amended motion to dismiss.
In addition to its statute of limitations argument, Hobas
raised two additional arguments in support of dismissal: (1)
that the economic loss doctrine prevented a negligent
misrepresentation claim, and (2) there was no privity between
Hobas and the City so as to support a warranty claim.
City of Franklin moved for permission to amend its complaint
on March 8, 2018. The trial court granted the motion by
agreement on March 22, 2018. The amended complaint contained
more specific allegations regarding the alleged negligent
misrepresentation by Hobas, as relevant to this appeal.
Specifically, the amended complaint alleged as follows:
14.As part of its bid for the Project, Hailey presented
options or alternates for the type of pipe to be used in the
Project, including ductile iron pipe and centrifugally cast
fiberglass reinforced polyester pipe.
15. SSR assisted [the City] with evaluation of the pipe
options. The evaluation of centrifugally cast fiberglass
reinforced polyester pipe included pipe manufactured by
16. During this evaluation, Hobas represented that its
fiberglass pipe had an anticipated life of over 100 years.
Hobas also provided information purporting to show that its
fiberglass pipe was acceptable and appropriate for the
Project's design parameters.
17. Based on SSR's evaluation of the options for the
[project] and the information presented by Hobas during that
evaluation, [the City] selected Hobas centrifugally cast
fiberglass reinforced polyester pipe for the [project].
78. Hobas acted in the course of its business and with a
pecuniary interest in its presentation and sale of its
fiberglass pipe for use in the Project.
79. Hobas supplied faulty information to [the City] regarding
the anticipated life of its fiberglass pipe.
80. Hobas also supplied faulty information to [the City]
regarding the stiffness of the pipe, which testing shows was
below the specified stiffness, including that indicated on
81. Hobas failed to exercise reasonable care in obtaining
and/or communicating information about the anticipated life
of its pipe and the stiffness of its pipe.
82. To the extent the information provided by Hobas
purporting to show that its fiberglass pipe was acceptable
and appropriate for the Project's was faulty, Hobas
failed to exercise reasonable care.
83.In choosing Hobas pipe, [the City] justifiably expected
Hobas to supply to the project participants information that
was not faulty and relied upon what turned out to be faulty
information provided by Hobas.
84. Faulty information from Hobas proximately caused or
contributed to the Interceptor failures and resulting damages
to [the City].
85.[The City] has suffered, and continues to suffer, damages
as a result of Hobas' negligent misrepresentations in an
amount to be proven at trial and consisting of damages to,
and costs to repair (including replacing), some of the pipe.
City thereafter responded to Hobas's amended motion to
dismiss, arguing that Tennessee law recognizes an exception
to the economic loss doctrine for claims of negligent
misrepresentation, citing John Martin Co. v.
Morse/Diesel, Inc., 819 S.W.2d 428 (Tenn. 1991). Hobas
later responded in opposition, arguing that John
Martin was not controlling.
trial court held a hearing on the motion to dismiss on March
22, 2018, and entered its memorandum and order granting the
motion on May 18, 2018. Therein, the trial court found that
(1) the City had not asserted a products liability claim, but
that if it had, the ten-year statute of repose would have
applied; (2) the breach of warranty claims could not survive
because there was no contract between the parties; and (3)
that the economic loss doctrine barred the City's
negligent misrepresentation claim. The parties later joined
in asking the trial court designate its ruling as final
pursuant to Rule 54.02 of the Tennessee Rules of Civil
Procedure, which the trial court did on July 24, 2018. The
City thereafter timely appealed to this Court.
appeal involves a single issue: Whether the trial court erred
in ruling that the economic loss doctrine barred the
City's claim of negligent misrepresentation against
Standard of Review
case was resolved on a motion to dismiss. In considering a
motion to dismiss, courts "'construe the complaint
liberally, presuming all factual allegations to be true and
giving the plaintiff the benefit of all reasonable
inferences.'" Webb v. Nashville Area Habitat for
Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011)
(quoting Tigg v. Pirelli Tire Corp., 232 S.W.3d 28,
31-32 (Tenn. 2007)). A motion to dismiss should be granted
only where the plaintiff "'can prove no set of facts
in support of the claim that would entitle the plaintiff to
relief.'" Id. (quoting Crews v. Buckman
Labs. Int'l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002)).
Our review of the trial court's decision to grant
Hobas's motion to dismiss is de novo with no presumption
of correctness. Id.
sole issue presented in this appeal involves whether the
trial court correctly concluded that the City's claim
that it was harmed by Hobas's negligent
misrepresentations concerning the pipe was barred by the
economic loss doctrine. Tennessee officially recognized and
adopted the economic loss doctrine at issue in this case in
Lincoln General Insurance Co. v. Detroit Diesel
Corp., 293 S.W.3d 487 (Tenn. 2009). "The economic
loss doctrine is implicated in products liability cases when
a defective product damages itself without causing personal
injury or damage to other property." Id. at
489. This doctrine generally "precludes recovery in tort
when a product damages itself without causing personal injury
or damage to other property." Id. Generally,
the purpose of the doctrine is to avoid the "collision
between warranty and contract on the one hand and the torts
of strict liability, negligence, fraud and misrepresentation
on the other." Trinity Indus., Inc. v. McKinnon
Bridge Co., Inc., 77 S.W.3d 159, 171 (Tenn. Ct. App.
2001) (quoting James J. White & Robert S. Summers,
Uniform Commercial Code § 10-5, 580 (4th ed.
the doctrine takes many forms throughout the United States,
see Milan Supply Chain Sols. Inc. v. Navistar Inc.,
No. W2018-00084-COA-R3-CV, 2019 WL 3812483, at *4 (Tenn. Ct.
App. Aug. 14, 2019) (discussing "lack of uniformity in
the approaches taken"), the question in this case is
whether the doctrine adopted by the Tennessee Supreme Court
bars the particular claims in this case. Hobas contends that
the doctrine indeed bars the City's tort claims because
it is undisputed for purposes of appeal that the sole damage
that occurred in this case was to the Interceptor system