Tennessee Business Litigation Law Blog

John Day made an important post this morning on his Day on Torts Blog regarding the effect of the comparative fault joinder statute (T.C.A. 20-1-119) on statutes of limitation and statutes of repose.  The statute allows a plaintiff 90 days following a defendant's allegation of comparative fault against a non-party to add that non-party as an additioanal defendant.  Importantly, 20-1-119 tolls any applicable statutes of limitation, but does not toll statutes of repose.  As John points out, this is an issue that must be considered in every case involving a potential allegation of comparative fault.  Failure to do so could result in the Plaintiff bearing the economic result of any fault assessed against the nonparty.

After three prior appeals, the parties in Orlando Residence, Ltd. v. Nashville Lodging Co. were finally set to try their case before a jury. The only remaining issue? The defendants' statute of limitations defense, which the plaintiff was apparently ready to attack by challenging the defendants' credibility and conduct in litigation. The only problem? The defendants just didn't show up, unbeknownst to either the plaintiff or the trial court until the clerk called the case for trial. In response, the plaintiff moved for dismissal of the defendants' affirmative statute of limitations defense, and the trial court granted the motion. The Western Section Court of Appeals affirmed the trial court's decision.

This legal dispute has been ongoing since the plaintiffs first filed a federal lawsuit in 1986. The first Tennessee Court of Appeals decision in the case was in 1996, when the Court of Appeals reversed a judgment for the plaintiff and remanded for a new trial. The parties went through at least three companion cases in state and federal courts and three state court appeals. After twenty years of litigation, the defendants didn't show up for trial on their own affirmative defense. A not-so-subtle reminder to clients that, no matter how frustrating or drawn out they may find litigation, they cannot simply ignore or sidestep it.

The statute of limitations for conversion under Tennessee law is three years from the accrual of the cause of action. Tenn. Code Ann. sec. 28-3-105.

In Benak v. Alliance Capital Management, the Third Circuit Court of Appeals recently concluded that mutual fund investors had been put on inquiry notice by the media attention surrounding the Enron bankruptcy and that their claims against the mutual fund were therefore barred by the one year statute of limitations.

The Court held that the statute started running on the claims, which pertained to the Mutual Fund’s position in Enron, as soon as the media coverage of Enron’s bankruptcy began. The Court conceded that a mutual fund investor has "less reason to monitor the health of companies in which he or she is invested," and is "less likely to have accurate, contemporaneous information regarding where his or her money is invested." However, based on the level of publicity surrounding Enron, and based on the fact that some media reports specifically mentioned the mutual fund’s holdings in Enron, the Court reasoned that the investors were on inquiry notice and dismissed their claims as untimely.

Read more here.