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Goot v. Metropolitan Government of Nashville and Davidson County11/9/2005
case. Teeters v. Currey, 518 S.W.2d at 515. It has since been applied to other tort actions, McCroskey v. Bryant Air Conditioning Co., 524 S.W.2d at 491, including legal and dental malpractice claims. Carvell v. Bottoms, 900 S.W.2d 23, 28 (Tenn. 1995) (legal malpractice); Foster v. Harris, 633 S.W.2d at 305 (dental malpractice). However, the Tennessee Supreme Court has declined to apply the discovery rule in cases involving breach of warranty claims governed by Tenn. Code Ann. § 47-2-725 (2001), defamation actions, and claims for conversion of a negotiable instrument absent fraudulent concealment.
The Tennessee Supreme Court has yet to address whether the discovery rule may apply to breach of contract claims and, if so, the circumstances warranting its application. However, this court appears to have endorsed the application of the discovery rule in a breach of contract case involving a lease of real property. McFarlin v. City of Murfreesboro, No. 86-124-II, 1987 WL 17728, at *3 (Tenn. Ct. App. Sept. 30, 1987) (No Tenn. R. App. P. 11 application filed). The property owner leased his property to a city for a landfill. The contract required the city to cover the top of the landfill with soil in accordance with applicable environmental regulations. The city abandoned the landfill, but the owner did not discover for many years that the city had failed to cover the landfill with the amount of soil required by the environmental regulations. The property owner sued the city for breach of contract within one year after discovering the condition but more than six years after the city had abandoned the property. The trial court dismissed the property owner's claim because it was not filed within the six-year statute of limitations in Tenn. Code Ann. § 28-3-109(a)(1) (2000).
This court reversed the order granting the city's motion to dismiss. We framed the issue as follows: "whether late discovery of a contract violation resulting in injury to property may effectively delay the running of the statute." McFarlin v. City of Murfreesboro, 1987 WL 17728, at *3. In the process of overruling the motion to dismiss, "despite the apparent running of the statute of limitations," this court noted:
The resolution of the issue under discussion is not without doubt. It is insisted that no Tennessee authority applies the discovery rule to actions for breach of contract. . . . It is arguable that a party to a contract knows (or should know) his [or her] rights under the contract and should be alert to discover any non-feasance, misfeasance or malfeasance under the contract. While this would ordinarily be the case, in the present situation the opportunity to observe and discover violations was less obvious, for the contract was a lease in which the owner surrendered possession to the lessee for the term of the lease. Moreover, the very nature of the lease contract was such as to enable the lessee to conceal the breach of contract. That is, the contract required the lessee to cover (conceal) the rubbish with a sufficient layer of earth. Once the rubbish was covered, the depth of coverage would not be observable until the passage of time and the operation of the elements caused the deficiency to be visible.
McFarlin v. City of Murfreesboro, 1987 WL 17728, at *4.
We now directly address the application of the discovery rule to breach of contract actions using the criteria fashioned by the Tennessee Supreme Court to determine whether the discovery rule may be invoked with regard to a particular cause of action. Pero's Steak & Spaghetti House v. Lee, 90 S.W.3d at 620; Quality Auto Parts Co. v. Bluff City Buick Co., 876 S.W.2d at 820. We must first consider the language of the specific
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