                      IN THE COURT OF APPEALS OF TENNESSEE
                                 AT KNOXVILLE
                                             July 9, 2001 Session

  PERO’S STEAK AND SPAGHETTI HOUSE, et al. v. ELIZABETH JEAN
                      HINKLE LEE, et al.

                           Appeal from the Circuit Court for Knox County
                        Nos. 3-541-96 and 3-544-96  Dale C. Workman, Judge

                                          FILED OCTOBER 8, 2001

                                       No. E2001-00254-COA-R3-CV




CHARLES D. SUSANO, JR., J., dissenting.



         I cannot concur in the majority’s holding that summary judgment is appropriate in these
consolidated cases. The majority’s holding is bottomed on its determination that, even if the
plaintiffs’ causes of action accrued in 1995 or 1996 (pre-June 1 of that year), those actions had to
be filed before June 1, 1996, in order to avoid the bar of the statute of limitations. I believe (1) that
the date of the accrual of these causes of action is critical; (2) that, based upon the material now
before us, there is a factual dispute as to when the causes of action accrued, with dates in 1992 and
1995 – and maybe dates in other time frames – being possibilities; (3) that, assuming the trier of fact
finds that the causes of action accrued less than three years prior to the plaintiffs’ filings of their
complaints,1 the applicable three-year statute of limitations is T.C.A. § 28-3-105 (2000), with the
computation of time under it being impacted by the discovery rule,2 see Pacific Properties v. Home
Federal Bank, F.S.B., C/A No. 03A01-9410-CH-00393, 1995 WL 59112, at *4 (Tenn. Ct. App.
E.S., filed February 14, 1995); and (4) that, if the foregoing assumption turns out to be true, these
causes of action are not time-barred. The crux of my disagreement with the majority is this:
assuming the trier of fact determines, under the discovery rule, that the subject causes of action
accrued in 1995 or later, but prior to June 1, 1996, I do not believe – as the majority does – that
T.C.A. § 47-3-118(g) (1996), a statute of limitations first effective on June 1, 1996, can be
constitutionally applied to those causes of action so as to bar suits filed on August 29, 1996 and
August 30, 1996.


       1
            Pero’s complaint was filed August 29, 1996; Louis Inn’s complaint was filed August 30, 1996.

        2
            Stone v. Hinds, 541 S.W.2d 598 , 599 (Tenn. Ct. App. 1976).
        Before I expound upon my belief that summary judgment is inappropriate in these cases, I
want to express my agreement with the majority that T.C.A. § 47-3-118(g), being a part of the UCC,
should be construed in harmony with the decisions of those other UCC jurisdictions – a clear
majority – which have held that the discovery rule is not implicated in an analysis involving this
particular statute of limitations, absent fraudulent concealment on the part of the defendant asserting
the limitations defense. My disagreement with the majority as it pertains to this statute is that I do
not believe that it can be applied to a cause of action that accrued before its effective date of June
1, 1996.

         Generally speaking, the ascertainment of the date of the accrual of a cause of action is the
first step in any statute of limitations analysis. This is because, again generally speaking, the period
of limitations does not begin to run until the cause of action has accrued. See McCroskey v. Bryant
Air Conditioning Co., 524 S.W.2d 487, 491 (Tenn. 1975); Wyatt v. A-Best Produsts Co., 924
S.W.2d 98, 103 (Tenn. Ct. App. 1995).

         We have previously held that “[t]he phrase ‘from the accruing of the cause of action,’ as set
forth in T.C.A. § 28-3-105,3 ‘means from the time when the plaintiff knew or reasonably should have
known that a cause of action existed.’” Pacific Properties, 1995 WL 59112 at *4 (citing Stone v.
Hinds, 541 S.W.2d 598, 599 (Tenn. Ct. App. 1976)). In Pacific Properties, we held that an alleged
conversion of a certificate of deposit was governed by the three-year statute of limitations for
conversion under T.C.A. § 28-3-105 and that there was a dispute in the record as to when the
plaintiff’s managing partner “knew or reasonably should have known” about the alleged conversion
and that the dispute meant it was unclear as to whether the three-year statute of limitations, i.e.,
T.C.A. § 28-3-105, had expired before suit was brought. Id. Because of this, we reversed the trial
court’s grant of summary judgment and remanded for further proceedings. Id. at *5.

        If the trier of fact in the instant case accepts as true the facts underlying the plaintiffs’ theory
of this case, the accrual of the causes of action, under the rationale of Pacific Properties, did not
occur until 1995 at the earliest. In my judgment, a reasonable jury could conclude that the plaintiffs’
quantum of knowledge prior to 1995 was not sufficient to put a reasonable person on notice that
there had been a conversion by the Bank. Construing the evidence in this summary judgment
analysis as we must – in the light most favorable to the plaintiffs – I find a genuine dispute as to
when the plaintiffs knew or reasonably should have known about the alleged conversion.




        3
            T.C.A. § 28 -3-105 provide s, in pertinent part, as follows:

                    The following actions shall be commenced within three (3) years from the accruing
                    of the cause of action:

                                                            *    *    *

                    (2) Action s for...convers ion of perso nal prope rty....

                                                                -2-
       In 1995 through 1996, but prior to June 1, 1996 – during which time frame the plaintiffs’
causes of action arguably accrued – the applicable statute of limitations was T.C.A. § 28-3-105. The
new statute – T.C.A. § 47-3-118(g) – while passed in June, 1995, was not effective until June 1,
1996. Thus, if the plaintiffs’ causes of action accrued in 1995 or in 1996, but prior to June 1, 1996,
they accrued prior to the effective date of the new statute.

       As a general proposition, a litigant has a vested right in the statute of limitations in effect and
applicable to its cause of action on the date that the cause of action accrues. See Tenn. Const. Art.
I, § 20; Watts v. Putnam Co., 525 S.W.2d 488, 492 (Tenn. 1975); Wyatt, 924 S.W.2d at 103.

        The majority relies upon the case of Pacific Eastern Corp. v. Gulf Life Holding Co., 902
S.W.2d 946 (Tenn. Ct. App. 1995), for the proposition that a change in the applicable statute of
limitations “that shortens an existing statute of limitations cannot extinguish a cause of action that
has already accrued without giving the plaintiff a reasonable opportunity to bring suit after the
effective date” of the new statute. Id. at 956. While I agree that Pacific Eastern Corp. stands for
this proposition, I do not agree that the principle enunciated in that case is implicated by the facts
of the instant case.

         In the case before us, it is clear to me that the new statute “shortened” the period of
limitations. This is because the applicable period was changed from a span of three years with the
discovery rule to a three-year period without the discovery rule. As pertinent to my dissent, the
change in the period of limitations is significant in at least two respects. First, the new statute does
not expressly provide that the accrual of a cause of action subject to its terms would occur at the time
of the conversion and not when the conversion was discovered or should have been discovered. In
fact, it was not until the majority interpreted the statute in the more restrictive manner in this very
case – and, again, I agree with that interpretation – that one was put on notice that there had been,
in effect, a shortening of the period within which an aggrieved party could file suit.

        The second important aspect of the new statute is that there is no express statement in the
statute putting a person on notice that the claimant has a certain period of time to bring suit after the
effective date of the new statute of limitations. I do not believe the one-year delay in the effective
date of the statute satisfies the requirement that before a new shortened period of limitations can be
applied to an accrued cause of action, the new statute must put a claimant on notice that the claimant
has a specified period of time within which to file suit. In my judgment, this requirement could have
been met – but was not – had the new statute provided that all causes of action accruing prior to the
effective date of the statute had to be filed on or before a reasonable specified date in the future. In
my judgment, this is the type of provision contemplated by cases such as Pacific Eastern Corp.

        I would reverse the grant of summary judgment and remand for further proceedings. I
believe we should let the jury decide the critical facts impacting the accrual issue. Regardless of how
the jury resolves this issue, I believe the applicable period of limitations is T.C.A. § 28-3-105 since
no one in this case contends that the causes of action barred by the trial court’s judgment accrued on
or after June 1, 1996.


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      _______________________________
      CHARLES D. SUSANO, JR., JUDGE




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