Traffic Citations Can Extend the Statute of Limitations for Personal Injury Actions to Two Years in Tennessee

On January 28, 2021, the Tennessee Court of Appeals issued a ruling in the case of Reginald M. Younger v. Kibreab Kidane Okbahhanes, No. E202000429COAR10CV, 2021 WL 289332 (Tenn. Ct. App. Jan. 28, 2021). The Court held the one-year statute of limitations for personal injury actions under Tenn. Code Ann. § 28-3-104(a)(1) can be extended to two years pursuant to Tenn. Code Ann. § 28-3-104(a)(2).

Tenn. Code Ann. § 28-3-104(a) reads as follows:

(a)(1) Except as provided in subdivision (a)(2), the following actions shall be commenced within one (1) year after the cause of action accrued:

    1.  Actions for libel, injuries to the person, false imprisonment, malicious prosecution, or breach of marriage promise;
    2. Civil actions for compensatory or punitive damages, or both, brought under the federal civil rights statutes; and
    3. Actions for statutory penalties.

(2) A cause of action listed in subdivision (a)(1) shall be commenced within two (2) years after the cause of action accrued, if:

    1. Criminal charges are brought against any person alleged to have caused or contributed to the injury;
    2. The conduct, transaction, or occurrence that gives rise to the cause of action for civil damages is the subject of a criminal prosecution commenced within one (1) year by:
      1. A law enforcement officer;
      2. A district attorney general; or
      3. A grand jury; and
    3. The cause of action is brought by the person injured by the criminal conduct against the party prosecuted for such conduct.

(3) This subsection (a) shall be strictly construed.

Younger relates to a traffic collision that occurred in September 2017 in Roane County, Tennessee. Defendant Okbahhanes was issued a traffic citation for (1) failure to exercise due care, (2) violation of financial responsibility law [i.e., proof of insurance], and (2) failure to carry registration documents. In October 2017 Okbahhanes paid a fine relating to the charge of failure to exercise due care; the remaining charges were dismissed in November 2017.

In April 2019, Younger filed an action against Okbahhanes, alleging that the action was timely pursuant to Tenn. Code Ann. § 28-3-104(a)(2). Okbahhanes filed an answer denying the allegations against him and pleading an affirmative defense that the action was time-barred. Okbahhanes later filed a motion for summary judgment, arguing that the one-year statute of limitations under Tenn. Code Ann. § 28-3-104(a)(1) applied. The trial court denied the motion for summary judgment, finding that the traffic citation for failure to exercise due care was related to the conduct that gave rise to the action; that the citation was a criminal charge; that the citation commenced a prosecution; and that Younger was allegedly injured by Okbahhanes’ criminal conduct.

Okbahhanes appealed the trial court’s order to the Tennessee Court of Appeals, which affirmed the trial court’s ruling. The Court of Appeals held that in construing Tenn. Code Ann. § 28-3-104(a)(2), the plain meaning of a statute’s words must be applied. Baker v. State, 417 S.W.3d 428, 433 (Tenn. 2013). When a statute’s language is clear and unambiguous, the statute is enforced as written. Frazier v. State, 495 S.W.3d 246, 249 (Tenn. 2016).

Tennessee law is clear that a violation of Tenn. Code Ann. § 55-8-136 for failure to exercise due care is a Class C misdemeanor and, therefore, a crime. The Court of Appeals held that the language of Tenn. Code Ann. § 28-3-104(a)(2) is clear and ambiguous. As such, the Court of Appeals held that the traffic citation issued to Okbahhanes for failure to exercise due care is a criminal charge, and a criminal prosecution by a law enforcement officer, such that Tenn. Code Ann. § 28-3-104(a)(2) acted to extend the statute of limitations to two years.

The statutes contained in Tenn. Code Ann. § 55-8-101 et seq. constitute the Rules of the Road when it comes to operating motor vehicles in the State of Tennessee. Such violations include obeying stop signs and traffic lights, driving on the wrong side of the road, maintaining a safe distance, signaling, etc. Tenn. Code Ann. § 55-8-103 states that it is a Class C misdemeanor for any person to violate the Rules of the Road. Violation of the financial responsibility and registration laws contained in Younger are also Class C misdemeanors.

A number of questions remain unanswered with regard to Tenn. Code Ann. § 28-3-104(a)(2), and it may yet come before the Court of Appeals again under different facts. The Court of Appeals did not discuss in detail Okbahhanes’ violation of the financial responsibility and vehicle registration laws, which were dismissed prior to the lawsuit being filed. Although they are Class C misdemeanors, it stands to reason that violation of those laws was not conduct, a transaction, or an occurrence that caused the underlying collision or gave rise to Younger’s cause of action. If Okbahhanes had been cited with those paperwork violations, but not failure to exercise due care, would the statute of limitations have been extended to two years?

Other questions arise in the area of premises liability. Violation of a state building code is a Class B misdemeanor. Tenn. Code Ann. 68-120-108. Violation of county building codes is a Class C misdemeanor. Tenn. Code Ann. 5-20-105(b)(1). Suppose, for example, that a person is injured due to alleged improper design or construction in violation of a building code or ordinance. If the person responsible for the violation is later cited by the authorities and sued by the injured person, would the statute of limitations be extended to two years under Tenn. Code Ann. § 28-3-104(a)(2).

Okbahhanes has until March 1, 2021, to appeal the Order of the Court of Appeals.

The case is Reginald M. Younger v. Kibreab Kidane Okbahhanes, No. E202000429COAR10CV, 2021 WL 289332 (Tenn. Ct. App. Jan. 28, 2021)

Excess Insurer U.S. Fire Insurance Co. Urges Fifth Circuit to Affirm District Court Finding that Faulty Work Award is Not Covered Under Excess Policy

U.S. Fire Insurance Co. (“U.S. Fire”) is requesting that the Fifth Circuit Court of Appeals  affirm a district court’s ruling that an $8 million arbitration award for repairs necessitated by faulty construction is not covered under its excess liability policy.  U.S. Fire Insurance Co. (“U.S. Fire”) is requesting that the Fifth Circuit Court of Appeals  affirm a district court’s ruling that an $8 million arbitration award for repairs necessitated by faulty construction is not covered under its excess liability policy.

The insurance coverage dispute arises out of the alleged deficient construction of a courthouse in Zapata County, Texas, by Satterfield & Pontikes Construction, Inc. (“S&P”).  Arbitration of the underlying claims resulted in an $8 million judgment against S&P, allocated as follows: $6,072,000.00 in compensatory damages; $1,500,000 in attorneys’ fees; $430,458 in pre-judgment interest; and $29,909.74 in arbitration fees.  S&P sought contractual indemnity from each of its subcontractors and ultimately obtained $4,492,500 in settlements with their subcontractors.

S&P then sought coverage from its primary commercial general liability insurer, American Guarantee & Liability insurance Company (“AGLIC”), and its umbrella liability insurer, U.S. Fire, for the remaining balance of the judgment.  U.S. Fire refused to pay any portion of the remaining judgment on the ground that applying non-covered amounts under the excess policy to the subcontractor settlements was improper.  U.S. Fire’s excess policy contained a “Fungi and Bacteria Exclusion,” and the excess insurer took the position that after subtracting the attorney’s fees, arbitration fees, prejudgment interest, and portions of the award attributed to mold remediation, there remained $3,240,000 of potentially covered claims – less than the subcontractor settlements plus the underlying coverage limits.

S&P, AGLIC, and Amerisure then sued U.S. Fire in the United States District Court for the Southern District of Texas.  In its June 1, 2017 order granting U.S. Fire’s motion for summary judgment, the district court held that no loss reaches the excess layer of insurance.  The district court reasoned that the subcontractor settlements were structured as “undifferentiated general releases” and failed to allocate the settlement money between covered and non-covered damages under the excess policy.  The court concluded that “allocating the settlement money it received only to uncovered harms” and then pursuing reimbursement from the excess carrier was an attempt to “manufacture a covered loss.”  In so holding, the court noted that Texas courts “generally put the burden on the insured to identify the portion of a liability or loss that was produced by a covered condition.”

On November 6,  2017, S&P and Amerisure appealed to the Fifth Circuit Court of Appeals.  They argue that there is no basis in the U.S. Fire policy to apply its terms, conditions and exclusions to reduce the amount of the subcontractor settlements, as those settlements were made pursuant to indemnification obligations arising out of S&P’s subcontracts and were not the product of insurance coverage for S&P.  Additionally, S&P contends that it was not required to allocate between covered and non-covered damages in the subcontractor settlements.   In its reply brief filed on January 5, 2018, U.S. Fire urged the Fifth Circuit to affirm summary judgment.

The appeal remains pending.  However, this dispute is an important reminder to contractors and insurers alike to 1) carefully consider the terms of a settlement agreement and 2) determine whether the jurisdiction in which any dispute of the agreement’s terms would be litigated requires identification of the portion of a liability or loss that was produced by a covered condition.  Does anyone else think that this sounds a good bit like the recent D.R. Horton v. Builder First Source decision in South Carolina? D.R. Horton, Inc. v. Builders FirstSource – Se. Grp., LLC, No. 5529, 2018 S.C. App. LEXIS 2, at *13 (Ct. App. Jan. 10, 2018).

The case is Satterfield & Pontikes Construction, Inc. and Amerisure Mutual Ins. Co. v. U.S. Fire Ins. Co., Case Number 17-20513, in the United States Court of Appeals for the Fifth Circuit.  We will follow the case and update this blog post after the Fifth Circuit’s decision.

Summary Judgment Affirmed (AGAIN!) in Long Grove Case!

For those of you that have been following along, in Long Grove, the original apartment Developer (and its affiliated general contractor and architect) prevailed against the POA in the Developer’s attempt to disclaim liability to downstream purchasers as part of the sale of an apartment complex to a Condo Converter Developer.  The original Developer had bargained for and received warranty disclaimers on behalf of itself and all “affiliates” when it sold the apartment complex to the Condo Converter Developer.  The disclaimers were incorporated into the master deed, thereby putting downstream purchasers on notice.  The circuit court granted summary judgment in favor of the Developer (and its affiliates), finding 1) the Developer did not put the condos into the stream of commerce because they were not intended to be converted at the time of design; 2) because the disclaimers of warranties were incorporated into the master deed, subsequent buyers were effectively put on notice; and 3) the Developer effectively and permissibly transferred its liability to the Condo Converter Developer, such that the POA’s recourse was against the Condo Converter Developer rather than the original Developer.

The Court of Appeals affirmed in a two-paragraph, per curiam opinion:  Long Grove at Seaside Farms, LLC v. Long Grove Prop. Owners’ Ass’n, No. 2015-UP-377, 2015 S.C. App. Unpub. LEXIS 457 (S.C. Ct. App. July 29, 2015).  The Supreme Court heard the appeal several months ago, but has now decided it should never have accepted the case and dismissed the writ as “improvidently granted.”  Thus, the case is effectively ended as to the original Developer and its affiliates.