City of Chattanooga, Tennessee v. Hargreaves Associates, Inc.

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

January 31, 2012 Session

CITY OF CHATTANOOGA, TENNESSEE, ET AL. v. HARGREAVES

ASSOCIATES, INC., ET AL.

Appeal from the Circuit Court for Hamilton County

No. 09C403 Jacqueline S. Bolton, Judge

No. E2011-01197-COA-R3-CV-FILED-JUNE 21, 2012

The plaintiffs in this matter, the city and a redevelopment group, filed this action against the

defendant entities involved in the design and construction of a large municipal project on the

city’s waterfront. Also named as a defendant was the development manager for the project.

The trial court granted summary judgment to the defendants on the basis that the plaintiffs’

lawsuit was barred by the applicable statute of limitations found in Tennessee Code

Annotated section 28-3-105. The plaintiffs appeal. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Affirmed; Case Remanded

J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,

J R., J., joined and H ERSCHEL P. F RANKS, P.J., dissented, filing a dissenting opinion.

Michael A. McMahan, Valerie L. Malueg,, Sam D. Elliott, Wade K. Cannon, and David G.

McDowell, Chattanooga, Tennessee, for the appellants, City of Chattanooga, Tennessee, and

Chattanooga Downtown Redevelopment Corporation.

Marc H. Harwell and Benjamin T. Reese, Chattanooga, Tennessee, for the appellees,

Hargreaves Associates, Inc., Continental Construction Co., The River City Co., NABCO

Electric Co., Inc., Masonry Specialist Corp., Valley Crest Landscape Development, Inc.,

Hobbs Architectural Fountains, and Moffatt & Nichol, Inc.1

1

Pfists Enterprises, Inc. did not move for summary judgment and is not a party to this appeal.

OPINION

I. BACKGROUND

This lawsuit arises out of the Chattanooga 21st Century Waterfront Plan (“the

Project”), a construction project along the Tennessee River in the downtown area. The

Project was constructed in “Packages.” “Package 2” included the construction of “The

Passage.”2 This litigation specifically concerns alleged errors and omissions in the design

and construction of Package 2.

The City of Chattanooga (“the City”) and Chattanooga Downtown Redevelopment

Corporation (“CDRC”), a Tennessee non-profit corporation and instrumentality of the City

(collectively “Chattanooga”), entered into a contract for the provision of architectural

services for the Project with Hargreaves Associates, Inc. (“Hargreaves”), a consulting firm

comprised of landscape architects and planners, on December 2, 2002. CDRC was to

administer the Project on behalf of the City and was designated the “owner” of several

parcels of land in the Project area. Hargreaves was involved in the design and development

of the master plan for the approximately 129 acres of the Project. Hargreaves also was

responsible for reviewing completed surveys and reports, for notifying the development

manager of any noted discrepancies, and for providing “advice on the scope of work for

remaining field work.”

On July 1, 2003, CDRC entered into a Development Management Agreement (“the

Agreement”) with the River City Company (“RiverCity”), a Tennessee non-profit corporation

created in 1986 to implement the Tennessee River Park Master Plan.3 RiverCity’s board of

directors is made up of the Mayors of the City and Hamilton County, the Chairs of the City

Council and the Hamilton County Commission, and other community leaders. In the

Agreement, CDRC, listed as the “owner” in the contract documents, retained RiverCity as

the development manager to “organize, coordinate and provide advice with respect to design,

construction and development of the Project.”

According to Hargreaves, RiverCity was required by contract to notify CDRC of all

2

A reflecting pool and stairway located between the Aquarium and Market Street forms a passage

from First Street down to the Riverfront area at Ross’s Landing.

3

RiverCity notes that its chartered purpose is to assist the City and Hamilton County with economic

development initiatives for downtown Chattanooga.

-2-

relevant issues associated with the Project.4 All contractors, including Hargreaves, were to

use RiverCity – CDRC’s Designated Representative – as a conduit to relay information to

Chattanooga concerning the Project.

On or around November 4, 2003, the drawings for the Package 2 construction, which

included The Passage, were completed and approved by Hargreaves. Construction began

shortly thereafter. Continental Construction Company, Inc. (“Continental”) acted as the

primary construction contractor. The other defendants/third-party defendants, Moffatt &

Nichol, Inc. (“M&N”), Masonry Specialist Corporation (“MSC”), NABCO Electric Co.

(“NABCO”), and Valley Crest Landscape Development, Inc. (“Valley Crest”), performed

various design or construction-related activities on the Project.

Throughout 2004 and 2005, Hargreaves claims that on many occasions, it informed

RiverCity of various construction problems and issues. Hargreaves notified RiverCity of

construction problems via reports it would periodically issue to individuals working on the

Project. According to Hargreaves, specific problems of which RiverCity was made aware

by Hargreaves include the following:

(i) On October 28, 2004, Hargreaves created field report No. 156

regarding observations made on October 27, 2004. Joonyon

Kim and Gavin McMillan of Hargreaves, Mike Winters of

Moffatt & Nichol and Jeff Shelden of Moffatt & Nichol were

on-site and observed that wall #1 “is moving.” They also

“noticed the esplanade is settling on both sides of new parkway

bridge and caused hairline cracks on wall #1 facing the river.”

The information or action that was required was for “Arcadis to

visit the site and assess the damage on the wall #1 and provide

repair strategy.”

(ii) On January 7, 2005, Hargreaves issued a memo regarding action

items needed, and reference is made to the Passage wall #1

settling. With respect to the north wall, reference is made to the

control joints being in the wrong places. According to Arcadis

the cracks in the north wall “should not be of concern, but

further observation is required. Epoxy to be injected in cracks.”

4

In its answer to Chattanooga’s complaint, RiverCity noted that for most of the construction period,

former City Mayor – and current United States Senator – Bob Corker was CDRC’s designated contact on

all construction coordination. RiverCity related that it also worked closely with City’s Chief Financial

Officer and the Department of Public Works.

-3-

The punch list also noted that the esplanade was settling on both

sides of the new bridge and such was the responsibility of both

Arcadis and Stein. The settlement was approximately 3/4”.

Hargreaves also noted that the pavers needed to be fixed with

Package 2. Hargreaves recommended that Dan Kral, the Project

representative for River City, get something in writing regarding

such a fix.

(iii) On January 14 and January 28, 2005, Hargreaves issued a

weekly update once again expressing concern about the same

problems as afore-referenced.

(iv) In daily field report #322 dated January 25, 2005, Hargreaves

issued a memo to Kenny Statham of Continental regarding a

concern about water being trapped inside the Passage panels

should flood water or even run-off water from the ceiling panels

migrate behind the dripping wall cladding. In response, Dan

Kral explained that the water would likely migrate “to the

corners where there is a slot approximately 1/8” square [which

would] allow the water to drain through the stiffener and then

down the sheet to the end (of each 8' sheet) to drain out of the

1/4" gap.” On January 26, 2005, Hargreaves responded to Dan

Kral’s assessment of the water infiltration behind the panels of

the Passage concern. Hargreaves specifically wanted to know

whether sediment from a flood would keep the panels from free-

draining.

(v) According to “new RFI No. 62” dated February 1, 2005,

concerning the Passage cladding, Dan Kral was sent a memo by

Kenny Statham of Continental stating that the existing concrete

wall on the east side of the Passage is out of plumb by

approximately 3" and out of alignment in the north/south

direction by approximately 6". He was advised that the masonry

cladding will need to be adjusted in order to cover this wall.

The proposed solution was to make the “top cap 22" wide

instead of 18" wide in order to cover the wall irregularities,” and

he stated that there might be a time change associated with the

proposed fix and perhaps a cost change.

(vi) On February 25, 2005, Hargreaves issued a weekly update once

-4-

again outlining the problems with Package 1 and noting in red

type that the Passage wall #1 was moving. The esplanade was

settling on both sides of the new bridge – dropped 1/4". Pavers

needed to be fixed. Hargreaves also noted in red a concern

about utility enclosure #1 BFP leak with responsibility attributed

to Continental or River City; concern about Passage 150 HP

pump butterfly valve (submittal #115) with responsibility

attributed to River City or Dan Euser; a concern about Passage

wall #2 irregularities with responsibility being attributed to

River City; a concern about a field test response with

responsibility to Valley Crest or Continental; a need to

coordinate utility vaults with responsibility being attributed to

River City; and a concern about Passage wall drainage outlet to

the river with responsibility being attributed to River City.

(vii) On March 1, 2005, Hargreaves prepared a memo regarding the

problems concerning the construction of Passage wall #1.

Hargreaves described the problem as follows:

We specified to fill behind the passage cladding

with latex modified mortar. The idea was to build

it like a stone wall – solid with no air gap so we

are good for flooding and debris impact and

mounting Cherokee art, etc. The subcontractor

has built it so far like a building veneer with air

gap that will withstand wind loads but not much

else. They have suggested filling gap with

Styrofoam sheeting and have weep-holes but

given the extreme variation in the gap because of

the poor concrete wall tolerances a neat fit is not

possible.

Other options include injecting urea-

formaldehyde foam into gap, loose fill with

vermiculite, mortar with perlite for lightweight,

etc.

Why can’t we just fill it with mortar every 4 or so

courses? How do you determine if the load from

the mortar is enough to push the cladding out

-5-

before it dries?

(viii) Following this specific warning from Hargreaves, a number of

memos were exchanged between Moffatt and Nichol,

Continental, Hargreaves, and River City concerning a possible

solution to the problem. River City was told and observed that

the walls had not been properly constructed and was enlisting

the input of Hargreaves and others in an effort to avoid

demolition of the walls and reconstruction.

(ix) On March 11, 2005, Hargreaves issued a weekly update stating

that Passage wall #2 was moving and attributed responsibility to

Arcadis. Hargreaves also noted settlement along both sides of

the new bridge – dropped 3/4". Finally, Hargreaves expressed

continued concern about pavers that needed to be fixed with

regard to Package #2.

(x) On March 18, 2005, Hargreaves sent a weekly update stating in

pertinent part the following concerns: settling of the esplanade

on both sides of the new bridge; a need for pavers to be fixed;

SS river jet shrouds; Passage wall filling material below the

100-year flood level; wall #1 west side cladding – continuous

surface . . . .

(xi) On April 1, 2005, Hargreaves issued a weekly update reiterating

the aforesaid problems. Hargreaves again noted that The

Passage wall filling material was below the 100-year flood level

and was a “red level concern.”

(xii) On April 7, 2005, Dan Kral of River City issued a memo to

Hargreaves with copy to Continental that an agreement had been

reached as to the cladding fill between the cladding and the wall.

Masonry Specialists had proposed a fix with an estimated cost

of $36,000 which Dan Kral estimated to more likely cost

$15,000-20,000. Dan Kral stated that he had authorized

Continental to release the work to be done by Masonry

Specialists.

(xiii) Hargreaves’ weekly update of April 8, 2005 reiterated the

concerns as stated in prior weekly updates; listed a concern

-6-

about the Passage vault room vent power connection which was

attributed to Moffatt & Nichol; noted that LAM and DEW were

to conduct a site visit on May 9 and 10; and reported that the

river jet flow straightener remained a problem as did the Passage

150 HP pump butterfly valve and the SS river jet shrouds.

(xiv) On April 29, 2005, Hargreaves sent field notes to Dan Kral

following Hargreaves’ site visit which had occurred on April 28,

and those site notes provide in pertinent part the following:

Confirm what is in Valley Crest’s mortar mix (I

did not see latex and it is typically a wet mix, not

dry). If this dry mix does not get wet to stabilize

cement and then dry to set, then there is going to

be a big efflorescence problem.

More riprap at River Walk West.

How are the shrouds going to be cut & adjusted &

affixed.

Expansion joints in wall cladding are missing.

Live stakes in riprap are too shallow and are all

dead -- replace.

How are Passage uplights in runnel fixed in?

Passage paver edge is not ground and looks crap.

Wall East has moved again 1/4” since last

marked.

(xv) On May 3, 2005, Hargreaves sent a memo to Jay Floyd of

Arcadis with a copy to Dan Kral which stated in pertinent part

as follows with respect to wall #2:

Since Dennis Gowins’ last assessment that the

wall had finished its movement out, it has indeed

moved out about 1/4” at the top intersection with

-7-

the bridge where it was previously marked. This

I have seen.

The word from site is that wall #3 is still settling

and has cracked some cladding over it. This I

have not seen.

As the cladding is continuing going on for the

opening, this is Arcadis’ last chance to do

whatever you need to do before it gets real

expensive to do any further investigation or

remedial action.

(xvi) On June 10, 2005,5 Hargreaves issued a weekly update reporting

in red ink that the wall #2 was moving again and assigned

responsibility to Arcadis and Stein; and Hargreaves once again

reported the settling of both sides of the new bridge and the need

to unblock wall #2 sub-drain. Hargreaves also stated that The

Passage 150 HP pump butterfly valve had still not been

addressed; nor had the SS river jet shrouds installation been

conducted; nor had the jet manifold downsize been addressed;

G1 fixtures near the Passage were damaged; Passage wet mortar

mix was a problem; additional riprap on the corner of the non-

grade river walk needed to be installed; expansion joint on

Passage cladding was a problem; dead live stakes needed to be

replaced; Passage uplights (G6) fixing details were noted; a

Passage paver finish on the exposed side was noted; a Passage

river jet wind sensor was noted.

(xvii) On June 24, 2005, Hargreaves issued a Package 2 punch list

which recommended in pertinent part among other things as

follows: “Fix the water level control; clean & rub algae on wall,

steps & terraces; repair undermined joints at steps adjacent to

runnel; check the wet mortar mix; fix G6 light fixtures; remove

water stain on wall #1 north face and caulk top of the wall;

attend to the SS flashing on the parkway bridge ceilings; clean

the utility vault; complete cladding installation on wall #2; fix

the water sanitizing system; repair damaged cladding on wall

5

The substantial completion date for Package 2 was June 1, 2005.

-8-

#2; SS river jet shrouds installation; install EJ on the wall #2

cladding; paver finish on the exposed side; repair hairline “crack

on terrace sloped walkway; replace dead/live stakes along the

riprap bank; . . . .”

(xviii) Dan Kral contacted Hargreaves on Friday, July 29, 2005 with a

“call for help” because things were falling apart at the Passage

fountain. In response, Hargreaves contacted Dan Euser – the

designer of the water feature – because the Passage fountain was

supposedly falling apart to the point of being inoperable. In

response, Dan Euser scheduled a meeting in Chattanooga for

August 18, 2005.

(xix) On September 6, 2005, Hargreaves contacted Jeff Shelden of

Moffatt & Nichol regarding a solution to the west end bump out

differential settlement, and Jeff Shelden recommended

“remov[ing] the existing slab and inspect[ing] the area adjacent

to the river walk. They should make sure that the filter fabric

and riprap is properly installed to ensure that material is not

being lost at this location. This may require some excavation of

the sub-grade material. . . . Next, the area should be

vibrocompacted and then the slab can be re-installed.” On the

same day, Hargreaves sent the recommendations to Dan Kral.

Contrary to the position of Hargreaves, it is contended by Chattanooga that issues with

the Project were first brought to the attention of the Administrator of the Public Works

Department for the City around July 19, 2007. According to Chattanooga, prior to a report

involving electrical matters with The Passage, the City and CDRC were unaware of any

material construction or design defects with the Project. After the identification of potential

problems in July 2007, Chattanooga hired TWH Architects, Inc. (“TWH”) to evaluate the

Project and prepare a report regarding the problems. TWH issued its report nearly a year

later on June 27, 2008. Hargreaves observes that the TWH report stressed four main areas

of concern: passage wall defects, defective installation of concrete pavers, electrical defects

and defects in the design and/or construction of the amphitheater and sidewalks resulting in

settling of the amphitheater and the sidewalks – items Hargreaves had previously identified

and raised with RiverCity.

RiverCity relates that it kept Chattanooga and its representatives completely informed

and updated regarding the status of construction matters and substantive changes throughout

the Project. According to RiverCity, Chattanooga gave direct or indirect approval regarding

-9-

all issues raised pertaining to the Project. In fact, RiverCity asserts that “in some instances

the changes at issue were made at the direction of City employees.” RiverCity maintains that

Chattanooga never voiced a claim or concern that the organizational and/or reporting

obligations were not being fulfilled by RiverCity.

After receipt of the TWH report, Chattanooga sent letters to the necessary entities in

an attempt to initiate mediation. When no response was forthcoming to the request for

mediation, Chattanooga filed suit on March 19, 2009, against Hargreaves, Continental, and

RiverCity, alleging several theories of recovery arising out of the design and construction of

portions of the Project.

Hargreaves, in its answer, raised the affirmative defense that the statute of limitations

barred the lawsuit. In November 2010, Hargreaves filed a motion for summary judgment

contending that the cause of action filed by Chattanooga was barred by the applicable statute

of limitations that provides actions such as this one must be filed within three years from the

occurrence of the cause of action. See Tenn. Code Ann. § 28-3-105 (2000). Hargreaves

asserted that Chattanooga had knowledge of the Project’s problems more than three years

prior to the March 2009 filing of the action. MSC, one of the subcontractors on the Project,

filed a separate motion for summary judgment that incorporated Hargreaves’ motion and

added supplemental legal authorities and relied on additional documents produced by

Chattanooga during the course of discovery. All other original defendants and third-party

defendants (except for Pfists Enterprises, Inc.) joined in Hargreaves’ original motion.

Accordingly, the arguments raised by Hargreaves represent all the defendants participating

in this appeal.

A hearing on the motions for summary judgment was held on March 7, 2011. As

Hargreaves argued to the court that RiverCity served as CDRC’s agent with regard to

communications concerning the Project, the trial court reviewed the Agreement between

CDRC, owner, and RiverCity, the development manager, that notes as follows at paragraph

3.3:

[CDRC] shall cause all instructions from [CDRC] to the Project Architect, the

Contractor or other Project consultants or parties providing labor, equipment,

materials or services in connection with the Project to be coordinated through

[RiverCity] to the end of providing consistent instructions and

communications. It is essential to the construction process that [RiverCity] be

the principal point of contact and conduit of all information and instructions

between [CDRC] and such contractors and consultants. Accordingly, [CDRC]

agrees that [RiverCity] shall be [CDRC]’s representative for such purpose and

shall be so designated in the contract with contractors, the Project Architect

-10-

and any other consultants. Where communication through [RiverCity] is not

feasible, [CDRC] will promptly provide [RiverCity] with a written copy of any

written notice given by [CDRC] directly to the parties involved in the Project

or a written summary of any oral communication so given, as applicable.

[CDRC] shall designate [RiverCity] as the party to receive communications

and documents from the other parties involved in the Project. [RiverCity]

agrees to communicate with [CDRC] with respect to any development which

will adversely and materially impact either the Project Schedule or the Project

Cost Budget.

(Emphasis added.). Based on the Agreement, all the defendants asserted that all information

imparted to RiverCity, the designated representative, should be imputed to CDRC.

Counsel for RiverCity noted at the hearing:

We were the owners’ representative. We weren’t engineers, architects or

experts.6 The City of Chattanooga was kept regularly informed regarding

this particular process and, in essence, in some respects we’re kind of puzzled

and continue to be as to why they sued us for what we did on their behalf, but

we agree that summary judgment should be granted on behalf of all the

defendants.

(Emphasis added.). In response to the trial court’s questioning as to whether RiverCity

served as an agent,7 counsel further replied:

[A]ll the contractual documents or otherwise, we’re the owner’s representative

on their behalf pertaining to the contract. It’s specifically in there, so I’m

somewhat puzzled as to some of those arguments on that.

6

RiverCity noted in its answer that it “was not hired to build or design this [P]roject; CDRC entered

into direct contracts with” the other defendants for those purposes. RiverCity stated that CDRC “maintained

full authority over [the other defendants] for design and construction for the [P]roject.”

7

“Agency in its broadest sense includes every relation in which one person acts for or represents

another.” Kerney v. Aetna Cas. & Surety Co., 648 S.W.2d 247, 252 (Tenn. Ct. App. 1982) (quoting Howard

v. Haven, 281 S.W.2d 480, 485 (Tenn. 1955)). “Whether an agency has been created is to be determined by

the relations of the parties as they in fact exist under their agreements or acts. If relations exist which will

constitute agency, it will be an agency, whether the parties understood it to be or not.” Id. at 252-53 (quoting

Smith v. Tennessee Coach Co., 194 S.W.2d 867, 869 (Tenn. 1946)).

-11-

The trial court granted the motions for summary judgment of all original defendants

and third-party defendants on March 8, 2011. The court found that the relationship of the

City and CDRC with RiverCity was defined by the Agreement. The court’s memorandum

opinion and order provided as follows:

This case arises out of a dispute regarding a construction project on the

Chattanooga river front. The Plaintiff entered into an agreement with River

City Company for the management and coordination of design, construction

and development of the project. Based upon this agreement, River City was

to act as the contact point and agent of the City. As the project proceeded,

problems arose. These problems were repeatedly documented and noted to the

parties involved. The problems were so apparent that even an individual who

is not a construction expert, Lee Norris, took notice of several defects and

relayed these problems via email on May 2, 2005, to the appropriate parties.

Despite the problems, the Certificate of Substantial Completion was issued on

June 1, 2005. After the Substantial Completion date, similar problems

continued as evidenced by an email sent slightly over a month later, on July 29,

2005. An email was sent from an employee of River City, and in the words of

the employee, the email was a “call for help” because things were “falling

apart.” This lawsuit was not commenced until March 1[9], 2009. The parties

agree that the applicable statute of limitations for construction defects is three

(3) years.

It is this Court’s opinion, based upon the pleadings and the attached support,

the Plaintiff had notice at least by July 29, 2005, of a cognizable claim against

another party. The Plaintiff failed to timely file within the appropriate

statutory time period, and accordingly this Court lacks jurisdiction to hear this

case. The Defendants’ Motions for Summary Judgment are GRANTED.

The trial court made the memorandum opinion and order the final judgment of the court

pursuant to Rule 54.02 of the Tennessee Rules of Civil Procedure on April 25, 2011. This

appeal followed.

II. ISSUES

The issues raised by Chattanooga are as follows:

1. Whether the trial court erred in granting summary judgment against

-12-

Chattanooga as to all claims as a result of finding that the applicable statute of

limitations for each of the claims began running at least by July 29, 2005.

2. Whether the trial court erred in granting summary judgment against

Chattanooga as to the claims instead of granting additional time pursuant to

Rule 56.07 of the Tennessee Rules of Civil Procedure8 to complete written

discovery and take depositions.

III. STANDARD OF REVIEW

Summary judgment is appropriate if the “pleadings, depositions, answers to

interrogatories, and admissions on file, together with affidavits, if any, show there are no

genuine issues as to any material facts and that the moving party is entitled to judgment as

a matter of law.” Tenn. R. Civ. P. 56.03. In Hannan v. Alltel Publ’g Co., 270 S.W.3d 1

(Tenn. 2008)9 and Martin v. Norfolk Southern Ry. Co., 271 S.W.3d 76 (Tenn. 2008), the

Court held that to be successful on a motion for summary judgment, a moving party must

8

“Tenn. R. Civ. P. 56.07 is intended to serve as an additional safeguard against an improvident or

premature grant of summary judgment. While it insures that a diligent party is given a reasonable

opportunity to prepare its case, it is not invoked to aid parties who have been lazy or dilatory.” Kenyon v.

Handal, 122 S.W.3d 743, 753 n. 7 (Tenn. Ct. App. 2003).

9

The recent legislation regarding Hannan does not affect this case because this matter was filed in

2009. See Burress v. City of Franklin, 809 F.Supp.2d 795, 817 n. 7 (M.D. Tenn. 2011) (“[T]he Tennessee

General Assembly has legislatively overruled . . . Hannan, but the new statute[ ] only appl[ies] to cases filed

on or after . . . July 1, 2011 . . . . Tenn. SB 1114/HB 158 (to be codified at Tenn.Code Ann. § 20–16–101),

setting forth new summary judgment standard).” Tennessee Code Annotated section 20-16-101 specifically

provides as follows:

20-16-101. Burden of proof in summary judgment motions.

In motions for summary judgment in any civil action in Tennessee, the moving party who

does not bear the burden of proof at trial shall prevail on its motion for summary judgment

if it:

(1) Submits affirmative evidence that negates an essential element of the

nonmoving party’s claim; or

(2) Demonstrates to the court that the nonmoving party’s evidence is

insufficient to establish an essential element of the nonmoving party’s

claim.

Acts 2011, ch. 498, § 3. July 1, 2011.

-13-

either (1) affirmatively negate an essential element of the non-moving party’s claim, or (2)

show that the non-moving party cannot prove an essential element of the claim at trial. Once

the moving party has satisfied this burden, the non-moving party must then demonstrate with

evidence beyond the pleadings that issues of fact exist that must go to trial. Byrd v. Hall, 847

S.W.2d 208, 211 (Tenn. 1993).

Summary judgment is inappropriate when the facts lead to more than one reasonable

conclusion. Seavers v. Methodist Med. Ctr. of Oak Ridge, 9 S.W.3d 86, 91 (Tenn. 1999).

Summary judgment must be overruled “if there is doubt as to whether or not . . . [a] genuine

issue remains for trial.” Buddy Lee Attractions, Inc. v. William Morris Agency, Inc., 13

S.W.3d 343, 347 (Tenn. Ct. App. 1999).

IV. DISCUSSION

Hargreaves asserts it was required to report any problems with the Project to

RiverCity. In turn, RiverCity was required by contract to act as a conduit for passing these

communications along to CDRC, who had hired RiverCity to be its “eyes and ears” with

respect to the development of the Project. Pursuant to the Agreement, RiverCity was “to

organize, coordinate, and provide advice with respect to design, construction and

development of the Project.” In particular, RiverCity’s “Development Services” are detailed

as follows:

2.2.7 Construction Meetings. Schedule and conduct meetings to discuss

construction procedures, progress and scheduling with Contractor and the

Project Architect. As deemed necessary, [RiverCity] shall prepare minutes of

such meetings and promptly distribute such meeting minutes to [CDRC] and

the meeting attendees or direct the Contractor or Project Manager Architect to

prepare and distribute such minutes, as appropriate.

***

2.2.10 Punch List. Coordinate with the Project Architect in its review of the

Project to enable the Project Architect to determine the date of substantial

completion. At the substantial completion by the Contractor of the Project

work, monitor the Project Architect in its inspection of the Project and

preparation of a detailed “Punch List” specifying any items which require

completion, installation or repair.

***

-14-

2.3 Reporting. [RiverCity] shall furnish to [CDRC] monthly reports

containing (i) a status of construction; (ii) a comparison of the Project Budget

to construction costs incurred through the date of the report and a comparison

of the Project Schedule to the work actually completed through the date of the

report; (iii) a summary of change orders made during the month covered by the

report; and (iv) any revision to the Project Schedule and/or Project Cost

Budget made during the month covered by the report.

Additionally, the contract entered into between Hargreaves and CDRC – AIA Document

B141-1997 – states as follows in Section 1.2.2.3:

[CDRC]’s Designated Representative identified in Paragraph 1.1.3 shall be

authorized to act on [CDRC]’s behalf with respect to the Project. [CDRC]

or [CDRC]’s Designated Representative shall render decisions in a timely

manner pertaining to documents submitted by the Architect in order to avoid

unreasonable delay in the orderly and sequential progress of the Architect’s

services.

(Emphasis added.). Paragraph 1.1.3 lists RiverCity as the Owner’s Designated

Representative.

RiverCity clearly had a duty to report to CDRC and was authorized to act on CDRC’s

behalf. Accordingly, Hargreaves and the other defendants/third-party defendants were

entitled to rely upon RiverCity’s knowledge and notice. See Am. Jur.2d Agency § 274

(2010). All that RiverCity knew concerning the problems with the Project must be imputed

to CDRC.

In the instant matter, the applicable statute of limitations is Tennessee Code Annotated

section 28-3-105(1) (2000), pursuant to which actions for injuries to personal or real property

shall be commenced within “three (3) years from the accruing of the cause of action.”

Hargreaves asserts that between October of 2004 and no later than September 6, 2005,

CDRC, through RiverCity, knew of the alleged property damage on the Project in light of the

many reports distributed to RiverCity by Hargreaves. RiverCity acknowledges that it

“regularly kept CDRC and the City of Chattanooga and its representatives completely aware

and updated regarding the status of construction and substantive changes.” Hargreaves

argues that Chattanooga also knew of the problems through internal discussions with

employees concerning the Project. Despite having such knowledge, Chattanooga waited

until 2008 to have an architect review the issues, and then waited another year – March 19,

2009 – to file a complaint for damages. Hargreaves argues that Chattanooga must be found

-15-

to have known of the problems before March 19, 2006 – three years prior to the filing of the

complaint.

It is argued by Chattanooga that the cause of action did not accrue before March 19,

2006, because the information imparted by Hargreaves to RiverCity in late 2004 and

throughout 2005, concerned only “minor corrective work.” The Chattanooga entities rely on

the affidavit of expert Vance Travis of TWH, who claims that “all items listed in the

[Hargreaves] Affidavit . . . are ‘punch list’ items.” According to Mr. Travis, “the ‘punch

list’ becomes a part of the certificate of substantial completion[; i]n the construction industry

a punch list is defined as the architect’s list of work to be corrected or performed by the

contractor prior to completion of the contract for construction.” It is stressed by Chattanooga

that Mr. McMillan of Hargreaves also categorized these problems as ‘punch list’ items.

Therefore, according to Chattanooga, items described as “punch list” did not provide notice

that the problems could not be corrected prior to the completion of the Project; such “punch

list” items could not be considered significant enough to constitute breach of the

construction contract and would not have started the clock running on the applicable statute

of limitations.

Hargreaves responds that the easiest way to refute the contentions of Chattanooga is

to compare the observations and recommendations provided by Mr. McMillan of Hargreaves

in 2005 with the observations and recommendations provided by Mr. Travis in the 2008

TWH Report. The TWH Report, in its executive summary, provides as follows:

Part One-Demolition, Reconstruction, Electrical and Plumbing

Wall Repair – We recommend the East, West, and North walls to be

demolished down to the 100 year flood line. Any existing open cavities

between the remaining veneer and concrete retaining walls should be grouted

solid. The block walls would be rebuilt with a full bed of mortar. Precast

concrete coping units will replace existing cap blocks. Included will be the

addition of through-wall flashing and weeps at the 100 year flood line

sufficient to equalize pressure in a flood event greater than the 100 flood year

elevation, and provide drainage at controlled locations to hopefully minimize

the existing wall staining by efflorescence. The West stepped walls adjacent

to the Aquarium would be repaired and receive precast concrete copings.

Remediation work will occur at the bridge to separate the veneer from the

bridge vibration and movement. Demolition and reconstruction will require

the removal and re-installation of all art work cutouts and probably the round

wall medallions on the West side.

-16-

Paving Repair – We recommend the complete removal of all paving units on

the sand beds within the water feature. The extent would include the runnel

adjacent to the Aquarium, all stepped landings leading down to and including

the pool bottom. Demolition and reconstruction will require the removal and

re-installation of the water spider at the pool bottom.

Electrical/Plumbing Repair – We recommend the complete removal of all

niche light fixtures, housings, and junction boxes from the paving areas, along

with the overhead fixtures below the bridge. All existing electrical panels

would receive proper weatherproof housings, and the pump room equipment

located in the vault at the upper end may need adjustments for proper

clearances. New lighting would be provided and attached to a lighting truss

located along the walkway adjacent to the Market Street Bridge. This truss

would be the target of an arts grant for a cladding appropriate to the

philosophy of The Passage.

In comparison, the observations and recommendations of Hargreaves to RiverCity provide

as follows:

1) On October 28, 2004, Hargreaves reported to RiverCity that wall #1 is

moving. It is also noted that the esplanade is settling on both sides of new

parkway bridge and causing hairline cracks on wall #1 facing the river.

Hargreaves recommended that Arcadis get involved to provide a repair

strategy.

2) On January 7, 14, and 28, 2005, Hargreaves reported to RiverCity that the

Passage wall number one was settling, control joints were in the wrong place,

and the pavers needed to be fixed.

3) On January 25, 2005, Hargreaves reported to RiverCity the concern about

water migrating into or being trapped behind wall cladding in the Passage.

4) On February 1, 2005, Continental reported to RiverCity that the concrete

wall on the east side of the Passage was serpentine as it was out of plumb by

three inches and out of alignment by six inches. Continental said that the

masonry cladding would have to be changed from the design. (Hargreaves

designed a straight, solid wall with no air gaps rather than a wall with veneer

cladding affixed to a serpentine-like structure).

5) On February 25, 2005, Hargreaves reported to RiverCity that the Passage

-17-

wall was moving, the esplanade on both sides of the bridge was settling, and

the pavers needed to be fixed. Hargreaves also noted a concern about the

utility enclosures having to do with the electrical system.

6) On March 1, 2005, Hargreaves presented a detailed memo to RiverCity

about the problems at the Passage and the possibility of demolition of one of

the moving walls and the need for new construction.

7) On March 11, 2005, Hargreaves reported movement of Wall #2, a 3/4" drop

on both sides of the new bridge, and a problem with the Package 2 pavers.

8) On March 18, 2005, Hargreaves reported to RiverCity again that the pavers

needed to be fixed and that the Passage wall filling material was below the 100

year flood level.

9) On April 1, 2005, Hargreaves reported that the filling material was below

the 100 year flood level, and it was a red level concern.

10) On April 8, 2005, Hargreaves reported to RiverCity its concerns about the

Passage vault room vent power connection.

11) On April 29, 2005, Hargreaves reported to RiverCity its concerns about the

mortar mix behind the veneer that attaches to the wall with specific reference

to a possible big efflorescence problem. Hargreaves also noted the need to

build a concrete wall because of weeping concerns. Hargreaves reported that

expansion joints were missing in the wall. Hargreaves reported that the East

Wall had moved another 1/4". Hargreaves reported concern about how some

of the lighting in the Passage at the runnels had been done.

12) On May 3, 2005, Hargreaves reported that Wall #2 was moving and had

cracked cladding on it and that it was the last chance to do whatever needed

to be done before remedial action is necessary. Also reported that Wall #3 was

settling with associated damage to cladding.

13) On June 10, 2005, Hargreaves reported to RiverCity that Wall #2 was

moving again, that there was settling on both sides of the new bridge, that

there was a problem with the mortar for the pavers, and that the expansion

joints for the cladding were missing.

14) On September 6, 2005, Hargreaves reported to RiverCity problems

-18-

regarding the bump-out terrace differential settlement.

Obviously, the majority of the problems identified by Mr. McMillan of Hargreaves – the

walls, the pavers, the mortar, the cladding, the expansion joints, the esplanade (sidewalks),

wall filling below the 100 year flood level, problems with efflorescence – likewise are

addressed in the TWH Report in a consistent fashion. The contentions of Chattanooga that

the problems identified by Hargreaves in 2004 and 2005 were minor punch list items

necessitating simple corrective measures must be disregarded. Descriptions of items

involving terms such as “demolition” and “reconstruction” simply cannot be considered

punch list items requiring “minor corrective work.”

Hargreaves further notes that emails produced by Chattanooga during written

discovery reveal that City employees were discussing the construction defects and property

damage among themselves and with employees of RiverCity during May 2005. According

to Hargreaves, these documents reveal an awareness of the damage and apparent construction

defects more than three years before the lawsuit was filed. Specifically, on May 2, 2005, Lee

Norris, Director, City Wide Services, Department of Public Works, City of Chattanooga, sent

an email to Dan Kral of RiverCity asking:

Who is responsible for correcting construction defects?

That same day, he was informed that

CDRC has been the city[’]s eyes and ears on all projects including

infrastructure. They are responsible for the final walkthrough and getting

punch list items corrected. Obviously, the contractor is responsible for fixing

problems during the warranty period and after that it is US.

Later that same day, Mr. Norris replied,

If we don’t have someone involved in the final checkout phase, I see long term

issues. I walked the waterfront Sunday for a short while and easily identified

6-7 issues that will need to be corrected.

Mr. Kral further responded to Mr. Norris,

As I am sure you saw in my other email. Construction defects and/or damage

as a result of construction is covered in all of our contracts.

Hargreaves further contends that the affidavits of Don Lewis, General Supervisor of the

-19-

River Front Park for the Parks and Recreation Department of the City of Chattanooga, and

Bob Saylors, the Director of Parks for the Parks and Recreation Department of the City of

Chattanooga, reveal that Chattanooga had notice of problems with the electrical circuits for

the niche lights along the west wall of The Passage in 2005.

“Accrual” in a property damages action under Tennessee Code Annotated section 28-

3-105(1) occurs upon discovery. Damron v. Media Gen., Inc., 3 S.W.3d 510, 512 (Tenn. Ct.

App. 1999). A statute of limitations will not be tolled in cases where the plaintiff has

information that would place a reasonable person on inquiry notice that he may have a cause

of action. See Estate of Morris v. Morris, 329 S.W.3d 779, 783 (Tenn. Ct. App. 2009). In

Northeast Knox. Util. Dist. v. Stanfort Constr. Co., 206 S.W.3d 454, 460-461 (Tenn. Ct. App.

2006), we held that “[a]ccrual did not require Stanfort to actually know the specific type of

legal claim it had, and its lack of knowledge concerning the specific nature of the defendants’

alleged tortious conduct is irrelevant for purposes of determining when the cause of action

accrued.”

Chattanooga had constructive and actual knowledge of the construction defects and

damage regarding the Project. The evidence supports the determination of the trial court that

Chattanooga had notice of a cognizable claim against another party at least three years prior

to the filing of the complaint and failed to timely file this lawsuit within the statute of

limitations period codified at Tennessee Code Annotated section 28-3-105. As the facts are

not in dispute and clearly show that a cause of action has accrued and that the statute of

limitations has run, summary judgment may be entered. Osborne Enter., Inc. v. City of

Chattanooga, 561 S.W.2d 160, 165 (Tenn. Ct. App. 1977). The trial court did not abuse its

discretion in refraining from granting additional time for discovery.10 Hargreaves’ motion

for summary judgment was filed one year and eight months after the complaint was filed.

As the statute of limitations defense was raised in Hargreaves’s original answer, Chattanooga

had been aware of the issue since June 1, 2009. Hargreaves had responded to the written

discovery requests six months prior to the filing of the motion and 10 months prior to the

hearing on the motion. Chattanooga had 10 months to review the documents. The date for

the oral argument on the summary judgment motion was agreed upon 45 days prior to the

hearing. Chattanooga had ample time to conduct discovery. Hargreaves and the other

defendants and third-party defendants were entitled to judgment as a matter of law.

10

Counsel for Chattanooga did not request depositions of representatives of Hargreaves or RiverCity

or anyone else. They did not file a motion for discovery or a motion to continue the hearing. Instead, they

waited until the day of the agreed upon hearing date to argue the issue that consideration of the summary

judgment motion was premature. As noted by defendants, waiting until the day of the hearing on a motion

for summary judgment to seek additional time is usually too late. See Harden v. Danek Medical, Inc., 985

S.W.2d 449, 453-54 (Tenn. Ct. App. 1998).

-20-

V. CONCLUSION

The judgment of the trial court is affirmed and the cause remanded for collection of

costs below. Costs on appeal are taxed to the appellants, the City of Chattanooga, Tennessee,

and Chattanooga Downtown Redevelopment Corporation.

_________________________________

JOHN W. McCLARTY, JUDGE

-21-