In Hinman v. ValleyCrest Landscaping Dev., Inc., the Sixth Circuit Court of Appeals affirmed the United States District Court, for the Middle District of Tennessee, Nashville Division’s grant of summary judgment to a Third-Party Defendant based on the statute of repose. 89 F.4th 572, 573 (6th Cir. 2024). The underlying claim stemmed from alleged faulty construction of a residential pool.

In March 2015, Jere Hinman (“Ms. Hinman”) hired BrightView Landscape Development, Inc. (“BrightView”), to design and build a pool at her residence. BrightView subcontracted with Georgia Gunite and Pool Company, Inc. (“GGPC”) to install plumbing and spray shotcrete for the pool shell. The subcontract included an indemnity provision. The pool was substantially completed as of September 2015. Thereafter, Ms. Hinman discovered a leak in the pool. The leak resulted from GGPC’s failure to install a part. In April 2016, GGPC and BrightView returned to Ms. Hinman’s home and installed a retrofitted part.

In 2019, Ms. Hinman filed suit against BrightView for allegedly defective construction of the pool based on the late-installed part. BrightView believed GGPC was liable for any damages it might have to Ms. Hinman based on the indemnification clause in the parties’ subcontract. However, BrightView waited more than two years after the suit was filed to file its third-party complaint against GGPC. Further, BrightView’s third-party complaint against GGPC was filed nearly six years after substantial completion of the pool.

GGPC moved for summary judgment based on Tennessee’s statute of repose for actions alleging defective improvements to real estate. See Tenn. Code. § 28-3-202 (requiring actions be brought within four years after substantial completion of an improvement). In response, BrightView characterized its claim against GGPC as “contractual in nature” and argued the Tennessee repose statute does not apply to contract actions. The Middle District of Tennessee granted summary judgment for GGPC, concluding the Tennessee Supreme Court would interpret the Tennessee statute of repose to include BrightView’s claim.

BrightView appealed. BrightView argued the federal district court erred in concluding the Tennessee Supreme Court would interpret the statute of repose as preventing BrightView’s third-party action against GGPC, and the Sixth Circuit Court of Appeals reviewed the summary judgment decision de novo.

There was no dispute the pool was substantially completed as of September 2015, and BrightView did not file its third-party complaint until September 2021. Thus, there was no dispute the claim was barred if the statute of repose applied. The sole question before the Sixth Circuit Court of Appeals was whether § 28-3-202 applies to bar a claim premised upon contractual indemnity.

Because the claims were brought in federal district court based on diversity jurisdiction, the federal court was bound by the forum state’s highest state court. However, the Tennessee Supreme Court had not expressly considered whether contractual indemnity claims were subject to the statute of repose. Due to the absence of controlling authority from the Tennessee Supreme Court, the Sixth Circuit Court of Appeals was tasked with deciding the case as it believed the Tennessee Supreme Court would.  

The Court highlighted that the courts that had considered the issue, both federal and state, held that indemnity claims are subject to § 28-3-202. The Sixth Circuit Court of Appeals was also mindful of the Tennessee Supreme Court’s broad view of the legislative intent behind the statute. The Sixth Circuit Court of Appeals was not persuaded that § 28-3-202 distinguishes between claims based on contractual indemnity rather than common law indemnity. It was persuaded that the Tennessee Supreme Court would extend the statute of repose to apply to contractual indemnity claims. Because the statute of repose applied, it was undisputed the claim was initiated more than four years after substantial completion of the pool. Thus, the Sixth Circuit Court of Appeals affirmed the district court’s grant of summary judgment.

The Sixth Circuit Court of Appeals’ decision in Hinman is a reminder of the interplay between statutes of limitation and statutes of repose. As was the case in Hinman, the statute of repose (which ran from the date of substantial completion) expired prior to the expiration of the statute of limitations (which accrued upon breach of the contract). Contractors with claims under Tennessee Law should remain cognizant of the statute of repose and its application to contractual claims, such as those based on indemnity provisions in subcontracts.