                   IN THE COURT OF APPEALS OF TENNESSEE
                              AT KNOXVILLE
                             Assigned on Briefs February 23, 2015

                    IRENE KESTERSON v. LANNY JONES, ET AL.

                    Appeal from the Chancery Court for Greene County
                     No. 20110247    Hon. Kindall T. Lawson, Judge1


                    No. E2013-02092-COA-R3-CV-FILED-MAY 21, 2015


This appeal concerns three notes executed by the defendants and made payable to the
plaintiff. When the plaintiff filed suit, the defendants filed a motion for summary
judgment, arguing that the statute of limitations for recovery on the notes had passed.
The trial court denied the motion for the summary judgment. Following a bench trial, the
court ruled in favor of the plaintiff, finding that the defendants were estopped from
pleading the statute of limitations as a defense and that they had revived the obligation
after the limtiations period ran. The defendants appeal. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                              Affirmed; Case Remanded

JOHN. W. MCCLARTY, J., delivered the opinion of the Court, in which CHARLES D.
SUSANO, JR., C.J., and D. MICHAEL SWINEY, J., joined.

Roger A. Woolsey, Greeneville, Tennessee, for the appellants, Lanny Jones and Melissa
Sue Jones.

Jerry W. Laughlin, Greeneville, Tennessee, for the appellee, Irene Kesterson.

                                               OPINION

                                          I.       Background

      Over the course of four months, Irene Kesterson (“Plaintiff”) and her late husband,
Willard Kesterson,2 agreed to loan Lanny Jones and Melissa Sue Jones (collectively
“Defendants”) $30,000. Defendants executed three notes, dated March 25, 1996, May

1
    Sitting by interchange.
2
    Mr. Kesterson passed away on March 16, 2006.
15, 1996, and July 8, 1996, payable to Plaintiff and her husband bearing an interest at the
rate of 6 percent. Two of the notes bore a due date of “one year-ninety day notice,” and
the third note bore a due date of “one year or ninety day notice.” Defendants remitted
interest through August 3, 1999. Following Defendants’ failure to remit payment on the
principal, Plaintiff filed suit on August 29, 2011.

        Defendants responded with a motion for summary judgment, arguing that
collection of the notes was barred by the applicable statute of limitations. Plaintiff
responded by asserting that Defendants should be estopped from raising the statute of
limitations as a defense. She alternatively argued that Defendants revived the obligation
beyond the applicable statute of limitations. Plaintiff claimed that in 1999, Defendants
requested to delay payment until they could buy and sell some property. She asserted
that Defendants also repeatedly assured her that they would remit payment as soon as
they were able to pay the debt. She claimed that based upon their agreement and the
repeated assurances, she chose not to take any legal action until filing the complaint at
issue.

       The trial court denied the motion for summary judgment, finding that genuine
issues of material fact remained. The case proceeded to a bench trial. There is no
transcript of the proceeding available for this court’s review. Pursuant to Rule 24 of the
Tennessee Rules of Appellate Procedure, the trial court filed a Statement of the Evidence,
which we recount as follows:

      Plaintiff testified that she and her husband were “great friends” with Defendants
and that they loaned them approximately $30,000. Defendants executed three notes in
recognition of the debt obligation. She asserted that she intended to reserve the right to
demand payment within 90 days.

       Plaintiff recalled that Defendants paid the accumulated interest on the notes in
August 1999 and assured her that they would pay the rest after they bought and sold some
property. She also recalled that Mr. Jones assured her in June 2002 that he would fulfill
the debt obligation when he sold some property. She said that he claimed that he had not
sold the property each time she asked for payment. She stated that she asked for payment
“several times” after her husband passed away in 2006. She asserted that both defendants
advised her that she would receive payment. She acknowledged that they never
specifically discussed her intention to delay filing suit but that she trusted their
assurances that she would eventually receive payment.

      Bill Pearson testified concerning Plaintiff’s reputation for truth in the community.
Following his testimony, the parties stipulated that she was a person of good character.

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        Mr. Jones testified that he borrowed money from Plaintiff and her husband. He
admitted that he last remitted payment in August 1999. He acknowledged that he told
Plaintiff he would remit payment when he sold some property that he purchased in 2000.
He admitted that he sold the aforementioned property in 2011. He asserted that she did
not request payment before 2006 and that his promise to pay occurred before 2010. He
later stated that he did not believe that he owed her any more money and that he never
promised to pay her anything. He explained that he never decided that he would not
remit payment but that he thought he “might try” to remit payment if he had the money.

       Mrs. Jones testified that Plaintiff did not ask for payment until after 2006, at which
time she advised her that she did not have money. She said that she never promised to
pay but admitted that Mr. Jones stated that he “might try” to pay when the property sold.

       Following the hearing, the trial court held that Defendants were estopped from
asserting a statute of limitations defense based upon their statements to Plaintiff since
June 2006. The court also held that Defendants’ statements revived the obligation and
that Plaintiff timely filed suit “from when the statements occurred.” The trial court
awarded Plaintiff a judgment in the amount of $53,700, plus reasonable attorney fees.
This timely appeal followed the denial of post-trial motions.

                                        II.     ISSUES

       We consolidate and restate the issues raised on appeal as follows:

       A.     Whether the trial court erred in finding that Defendants were
       estopped from asserting a statute of limitations defense.

       B.      Whether the trial court erred in finding that Defendants revived their
       debt obligation and that Plaintiff filed her complaint within the applicable
       statute of limitations measured from when the revival of the debt occurred.

                             III.   STANDARD OF REVIEW

       After a bench trial, we review a trial court’s findings of fact de novo with a
presumption of correctness unless the preponderance of the evidence is otherwise. Tenn.
R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). Because the trial
court is in the best position to observe witnesses and evaluate their demeanor, we afford
great deference to a trial court’s credibility determinations. Hughes v. Metro. Govt. of
Nashville and Davidson Cnty., 340 S.W.3d 352, 360 (Tenn. 2011). We review questions
of law de novo with no presumption of correctness. Whaley v. Perkins, 197 S.W.3d 665,
670 (Tenn. 2006).
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                                    IV.    DISCUSSION

                                          A. & B.

        Defendants argue that they should not have been equitably estopped from
asserting a statute of limitations defense and that they did not revive their obligation.
They claim that the notes were subject to a six-year statute of limitations pursuant to
Tennessee Code Annotated sections 47-3-108 and 47-3-118 but that their interest
payments extended the limitations period to August 3, 2005. They assert that Mr. Jones
was the only party that may have acknowledged the debt following the last interest
payment but that he never induced Plaintiff to refrain from filing suit. They claim that
his acknowledgement did not occur until June 2006, beyond the applicable limitations
period, and that his statements were insufficient to constitute a revival of the obligation.
Plaintiff responds that the notes were subject to a ten-year statute of limitations pursuant
to Tennessee Code Annotated sections 47-3-108 and 28-3-109. She argues that the
promise to repay was made in August 1999, well before Defendants’ claimed six-year
limitations period, and that both defendants made additional promises since that time.

        Our Supreme Court addressed the doctrine of equitable estoppel in Redwing v.
Catholic Bishop for Diocese of Memphis, 363 S.W.3d 436 (Tenn. 2012). The Court
stated, in pertinent part,

       The doctrine of equitable estoppel arises from the equitable maxim that no
       person may take advantage of his or her own wrong. In the context of a
       defense predicated on a statute of limitations, the doctrine of equitable
       estoppel tolls the running of the statute of limitations when the defendant
       has misled the plaintiff into failing to file suit within the statutory
       limitations period. Fahrner v. SW Mfg., Inc., [48 S.W.3d 141, 145 (Tenn.
       2001)]; Ingram v. Earthman, 993 S.W.2d 611, 633 (Tenn. Ct. App. 1998).
       When the doctrine of equitable estoppel is applicable, it prevents a
       defendant from asserting what could be an otherwise valid statute of
       limitations defense. Hardcastle v. Harris, 170 S.W.3d 67, 84 (Tenn. Ct.
       App. 2004).

       The party invoking the doctrine of equitable estoppel has the burden of
       proof. [Id.] at 85. Thus, whenever a defendant has made out a prima facie
       statute of limitations defense, the plaintiff must demonstrate that the
       defendant induced him or her to put off filing suit by identifying specific
       promises, inducements, suggestions, representations, assurances, or other
       similar conduct by the defendant that the defendant knew, or reasonably
       should have known, would induce the plaintiff to delay filing suit.
                                            -4-
        [Fahrner], 48 S.W.3d at 145; [Harris], 170 S.W.3d at 85. The plaintiff
        “must also demonstrate that [his or her] delay in filing suit was not
        attributable to [his or her] own lack of diligence.” [Harris], 170 S.W.3d at
        85.

                                             ***

        Plaintiffs asserting equitable estoppel must have acted diligently in
        pursuing their claims both before and after the defendant induced them to
        refrain from filing suit. The statute of limitations is tolled for the period
        during which the defendant misled the plaintiff. [Fahrner, 48 S.W.3d at
        146]; Lusk v. Consolidated Aluminum Corp., 655 S.W.2d 917, 920-21
        (Tenn. 1983). The plaintiff must demonstrate that suit was timely filed
        after the plaintiff knew or, in the exercise of reasonable diligence, should
        have known that the conduct giving rise to the equitable estoppel claim had
        ceased to be operational. See [Ingram, 993 S.W.2d at 633.] At the point
        when the plaintiff knows or should know that the defendant has misled him
        or her, the original statute of limitations begins to run anew, and the
        plaintiff must file his or her claim within the statutory limitations period.
        [Fahrner, 48 S.W.3d at 146.]

Redwing, 363 S.W.3d at 460 (footnote omitted). “Similarly, a defendant may revive a
plaintiff’s remedy that had been barred by the running of a statute of limitations either by
expressly promising to pay the debt or by acknowledging the debt and expressing a
willingness to pay it.” Ingram, 993 S.W.3d at 633-34 (internal citations and footnotes
omitted). In such cases,

        The expression of willingness to pay the debt that must accompany the
        acknowledgment of the debt may be implied from the defendant’s words or
        acts but, in whatever form, the words or acts must amount to a recognition
        of the continuing obligation. Persons who successfully establish the revival
        exception to a statute of limitations defense must file suit with the
        applicable limitations period measured from when the conduct constituting
        the revival occurred.

Id. at 634.

      Here, Plaintiff identified specific promises and assurances to repay when
Defendants were able to sell property. These promises occurred in 1999,3 2002, and
3
 The land had not been purchased at that time. Plaintiff claimed in her affidavit that in 1999, Defendants
advised her of their plan to purchase and then sell property. The property was purchased in 2000.
                                                     -5-
thereafter, well before the expiration of the six-year statute of limitations claimed by
Defendants. Plaintiff promptly filed suit when Defendants failed to fulfill their obligation
to her after selling the aforementioned property. Relative to the revival of the debt
obligation, Plaintiff also testified that both defendants offered repeated assurances before
and after the claimed limitations period that they would repay the debt. As evidenced by
the trial court’s ruling, the court resolved any issues regarding the credibility of the
witnesses in Plaintiff’s favor. Hughes, 340 S.W.3d at 360. With these considerations in
mind, we conclude that the trial court did not err in determining that Defendants were
estopped from asserting the statute of limitations as a defense and that they had revived
their obligation to Plaintiff.

                                   V.     CONCLUSION


   The judgment of the trial court is affirmed, and the case is remanded for such further
proceedings as may be necessary. Costs of the appeal are taxed equally to the appellants,
Lanny Jones and Melissa Sue Jones.


                                                  _________________________________
                                                  JOHN W. McCLARTY, JUDGE




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