                  IN THE COURT OF APPEALS OF TENNESSEE
                               AT JACKSON
                                  November 16, 2004 Session

       RICK WATKINS and ELLEN WATKINS, Individually and f/u/b
              HOW INSURANCE COMPANY, in Receivership
                                    v.
      TANKERSLEY CONSTRUCTION, INC., O’NEAL TANKERSLEY,
         Individually and d/b/a TANKERSLEY CONSTRUCTION,
        CHARLES WALKER ENTERPRISES, CHARLES WALKER,
      Individually and d/b/a CHARLES WALKER ENTERPRISES, and
                 MUNFORD DEVELOPMENT COMPANY

                     An Appeal from the Circuit Court for Tipton County
                          No. 5245 Joseph H. Walker, III, Judge



                      No. W2004-00869-COA-R3-CV - Filed June 29, 2005


This is a negligent construction case involving a statute of repose. The defendant developer bought
the residential lot in question in 1992. The developer hired the defendant subcontractor to remove
trees and perform the grading work necessary to make the lot suitable for the construction of a house.
In 1993, the developer sold the lot to the defendant construction company, which constructed a house
on the lot. In 1994, the construction company sold the lot and the house to purchasers not party to
this litigation. In 1997, the purchasers sold the house to the plaintiffs in this case. A few weeks after
the plaintiffs moved into the house, they noticed cracks in the walls and abnormal settling of the
house. In April 2000, the plaintiffs filed this lawsuit against the construction company and the
subcontractor for negligent construction of the house and negligent grading of the lot. The
defendants filed motions for summary judgment based on the four-year statute of repose set out in
T.C.A. § 28-3-202. The trial court granted summary judgment in favor of the defendants based on
that statute. The plaintiffs now appeal the trial court’s grant of summary judgment only as to the
defendant subcontractor. We affirm.

     Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed

HOLLY M. KIRBY , J., delivered the opinion of the Court, in which W. FRANK CRAWFORD , P.J.,W.S.,
and ALAN E. HIGHERS, J., joined.
Loys A. “Trey” Jordan, III, and Lisa A. Overall, Memphis, Tennessee, for the appellants, Rick
Watkins and Ellen Watkins, Individually and f/u/b How Insurance Company, in Receivership.

Pam Warnock Green, Memphis, Tennessee, for the appellees, Charles Walker Enterprises, Charles
Walker, Individually and d/b/a Charles Walker Enterprises.

                                                     OPINION

        This case involves the issue of whether the remedy for the wrong committed has been
legislatively precluded. The chronology of events and relevant facts are undisputed. In the fall of
1992, Munford Development Company (“Munford”), a corporation, purchased the residential lot at
issue in Munford, Tennessee. Defendant/Appellee Charles Walker (“Walker”) was a shareholder
and the president of Munford at the time.1 Defendant/Appellee Charles Walker Enterprises (“Walker
Enterprises”) is a sole proprietorship owned by Walker. Walker Enterprises performs bulldozer and
elevation work for construction job sites. Munford paid Walker Enterprises to do dozer and
elevation work on the residential lot, and to fill the land to make it suitable as a building site for a
house. Neither Walker, individually, nor Walker Enterprises ever had any ownership interest in the
lot or the development. On November 5, 1993, Munford sold the lot at issue to Tankersley
Construction, Inc. (“Tankersley Construction”). Tankersley Construction built a house on the lot that
became 130 Kilkenny Drive. The house was substantially completed by March 1994.

        On March 25, 1994, Tankersley sold the lot and house to John and Mary Woods (collectively,
“the Woods”). On February 3, 1997, the Woods sold the lot and house to Plaintiffs/Appellants Rick
and Ellen Watkins (collectively, “the Watkins”).2 The Watkins moved into the house shortly
thereafter.

         On April 12, 1997, only weeks after they moved into the house, the Watkins discovered
structural damage to the house resulting from abnormal settlement. The walls of the house had
significant cracks, which caused leaks and other serious problems. The Watkins began to try to
determine the cause of the structural damage to their home. Finally, they obtained an inspection of
the lot on which the house was built. They found that, when the lot was filled and graded in
preparation for the construction, biodegradable materials such as tree stumps and roots were used
as fill. When this matter began to decay, the house settled unevenly, resulting in the structural
damage.

       On April 3, 2000, the Watkins filed the instant lawsuit against Munford, Tankersley
Construction, O’Neal Tankersley, individually and d/b/a Tankersley Construction, Walker
Enterprises, and Walker, individually and d/b/a Walker Enterprises, for their negligence in the



       1
            W alker and his wife owned 100% of the stock in Munford.

        2
            The W atkins paid $140,000 for the house and lot.

                                                          -2-
development of the property and the improper grading and filling of the building site.3 The Watkins
asserted in their complaint that, in the filling of the site, the soil impaction was improper, and that
the site was filled with biodegradable materials that had decayed over time. When the fill material
decayed, the complaint alleged, the house on the site began to settle at an abnormal rate. Mrs.
Watkins later filed an affidavit describing the manifestations of the accelerated settlement of the
house. In the affidavit, she said that cracks began to appear all over the home, with new cracks
appearing “[e]ach and every day,” and with the house audibly “cracking as it settles.” She stated that
the abnormal settling of her home had resulted in significant leaks throughout the home, and
necessitated the rebuilding of the front porch, the replacing of supports, and other remedial measures.
In the affidavit, Mrs. Watkins asserted that the damage to the house was caused by the instability of
the lot, and that the house is now unmarketable due to that instability.

       All parties filed motions for summary judgment. The defendants argued that the Watkins’
lawsuit was barred by the four-year statute of repose found in Tennessee Code Annotated § 28-3-
202:

        Limitation of actions.– All actions to recover damages for any deficiency in the
        design, planning, supervision, observation of construction, or construction of an
        improvement to real property, for injury to property, real or personal, arising out of
        any such deficiency, or for injury to the person or for wrongful death arising out of
        any such deficiency, shall be brought against any person performing or furnishing the
        design, planning, supervision, observation of construction, construction of, or land
        surveying in connection with, such an improvement within four (4) years after
        substantial completion of such an improvement.

Tenn. Code Ann. § 28-3-202 (2000). The language in the statute says that it applies to all actions
involving defects “in the design, planning, supervision, observation of construction, or construction
of an improvement to real property.” In addition, the four-year time limitation begins to accrue
“after substantial completion of such an improvement.” Id.

        On December 22, 2003, the trial court held a hearing on defendant Munford’s motion for
summary judgment. On December 30, 2003, the trial court entered an order granting summary
judgment to Munford based on the four-year time limitation set out in Section 28-3-202. On March
1, 2004, the trial court held a hearing on the motions for summary judgment filed by the Watkins,
Tankersley/Tankersley Construction, and Charles Walker/Walker Enterprises (collectively, “Walker
defendants”). At the conclusion of the hearing, the trial court entered an order granting summary
judgment in favor of Tankersley/Tankersley Construction and the Walker defendants, also based on
the four-year statute of repose. The trial court found that the statute of repose was applicable to an
action such as this, in which damages are sought for deficiencies in an improvement to real property
caused by soil instability. The trial court reasoned that, because the house was substantially


        3
           How Insurance Company, in receivership, provided homeowners’ insurance to the W atkins for the residence.
It was included as a plaintiff to protect its right of subrogation in the event of a recovery in the lawsuit.

                                                        -3-
completed in March 1994, and the complaint was filed over six years later in April 2000, the lawsuit
was untimely under the statute’s four-year time limitation. The Watkins now appeal, challenging
only the grant of summary judgment in favor of the Walker defendants.

        On appeal, the Watkins argue that the trial court erred in ruling as a matter of law that the
grading and filling of their property constituted the “construction of an improvement to real
property,” thus subjecting their cause of action to the four-year time limitation in Section 28-3-202.
They concede that, if the grading work performed by the Walker defendants constitutes the
construction of an improvement to real property, then their suit is time barred. Therefore, the sole
issue in this appeal is whether the trial court erred in finding that the Walker defendants’ actions
constituted the construction of an improvement to real property, and the resulting conclusion that
Section 28-3-202 governs the Watkins’ claims.4

         We review the trial court’s grant of summary judgment de novo with no presumption of
correctness. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997). Summary judgment is
appropriate where “the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04. This case
presents an issue of statutory interpretation, which is also reviewed de novo. Honsa v. Tombigbee
Transp. Corp., 141 S.W.3d 540, 542 (Tenn. 2004). In construing a statute, we must “ascertain and
give effect to the legislative intent without unduly restricting or expanding a statute’s coverage
beyond its intended scope.” Id. (quoting Houghton v. Aramark Educ. Res., Inc., 90 S.W.3d 676,
678 (Tenn. 2002) (quoting Owens v. State, 908 S.W.2d 923, 926 (Tenn.1995))). Legislative intent
can be determined “from the natural and ordinary meaning of the statutory language within the
context of the entire statute without any forced or subtle construction that would extend or limit the
statute's meaning.” Id. (quoting State v. Flemming, 19 S.W.3d 195, 197 (Tenn.2000)). Where the
language is clear and unambiguous, we must apply the statute as written. Id.; see also Limbaugh
v. Coffee Med. Ctr., 59 S.W.3d 73, 83 (Tenn. 2001).

        The trial court cited several cases in support of its decision that the grading, filling, and
preparation of a site for construction is the “construction of an improvement to real property” within
the meaning of Section 28-3-202. The trial court noted Lonning v. Jim Walter Homes, Inc., 725
S.W.2d 682 (Tenn. Ct. App. 1986), in which the plaintiffs sued the builder for fraudulently
concealing the fact that the soil in the lot on which their house was to be built would not
“percolate.”5 The Lonning court held that the plaintiffs’ lawsuit resulted from the construction of
an improvement to real property and, therefore, the time limitation in Section 28-3-202 was
applicable. Lonning, 725 S.W.2d at 685. The trial court below also relied on Williams v.
Thompson, 443 S.W.2d 447 (Tenn. 1969), in which the Tennessee Supreme Court held that an
action for damages to residential property, including damages for the settling of the foundation and


        4
            In the trial court below, the W atkins maintained no allegations of fraud.

        5
            “Percolation” is the process by which sewage is disseminated into the soil. Lonning, 725 S.W .2d at 683 n.1.

                                                            -4-
sinking of the house into the ground, was governed by the three-year statute of limitations applicable
to actions for injuries to real property, rather than by the six-year statute of limitations governing
contracts. The Williams court held that determining the applicable statute of limitations depended
on the “subject matter of the controversy” and not on the remedial procedure. Williams, 443 S.W.2d
at 449.

        The trial court also cited Memphis Light Gas & Water v. T.L. James & Co., No. 52, 1986
WL 11588 (Tenn. Ct. App. Oct. 17, 1986) (“MLG&W”). In that case, the Tennessee Department
of Transportation hired a contractor to construct a segment of an interstate highway. A provision
in the contract required the contractor to obtain material for the construction of the roadbed from
specified “borrow pits.” Borrow pit No. 6 was designated as the source for a particular segment of
the road bed. The contractor hired a subcontractor to dredge the borrow pits. After this dredging
was completed, the subcontractor was no longer involved with the project. The project was
completed in April 1978. At that time, borrow pit No. 6 was serving as a reservoir to retain surface
water drained to surrounding areas. MLG&W, 1986 WL 11588, at *1. In December 1982, the
Memphis utility company, Memphis Light, Gas & Water (“MLG&W”), discovered that a water main
had collapsed and separated in the vicinity of borrow pit No. 6. In July 1984, MLG&W filed suit
against the contractor and the subcontractor, alleging that negligence in the dredging resulted in
damages to the water main. Id. at *1.

       In MLG&W, both the contractor and the subcontractor filed motions for summary judgment
based on the four-year statute of repose in Section 28-3-202. MLG&W challenged the motions,
arguing that dredging in borrow pit No. 6 was not “an improvement to real property” within the
meaning of the statute. The trial court held that, because the excavation of the borrow pit was a part
of improvement to real property, it “was therefore itself an improvement to real property within the
meaning of Sec. 28-3-202 . . . .” Id. at *2. The appellate court agreed and determined that the term
“improvement” should be given its usual and ordinary meaning. The court defined the term as
follows:

       Improvement. A valuable addition made to property (usually real estate) or an
       amelioration in its condition, amounting to more than mere repairs or replacement,
       costing labor or capital, and intended to enhance its value, beauty or utility or to
       adapt it for new or further purposes. . . . [emphasis added]

Id. at *3. The appellate court noted that the excavation of borrow pit No. 6 was not only a part of
a construction project but, as a drainage pond, borrow pit No. 6 was itself an improvement. The
appellate court cited with approval Embree v. American Cont’l Corp., 684 P.2d 951 (Colo. Ct. App.
1984), wherein it was held that the grading of a lot was an “improvement to real property.” Id. at
*4. The appellate court reasoned, “[I]t is untenable to contend that dirt placed onto a highway right-
of-way to construct and build up the roadbed for the highway would not be an improvement to real
property.” Id.




                                                 -5-
        On appeal, the Walker defendants note that the instant case involves the removal of trees, the
grading of land, and the replacement of fill dirt, all as part of the construction of a house. They argue
that, under the reasoning in MLG&W, their actions constituted “an improvement to real property”
within the meaning of Section 28-3-202. The Watkins contend, however, that this case is
distinguishable from those cited by the trial court, because “filling” land is not the “construction of
an improvement” for purposes of the statute. They differentiate the situation in MLG&W because,
in MLG&W, the land was turned into something useful by the addition of the drainage system. It
did not involve “merely pushing dirt around or removal of trees.” The Watkins assert that the plain
language of Section 28-3-202 contemplates the addition of an actual structure to the property.
Because the instant case did not involve such an addition, they argue, the grading work performed
is not governed the time limitation in Section 28-3-202.

         As the Watkins note, MLG&W is distinguishable from the instant case in that the dredging
work performed by the subcontractor involved not only the dredging of land, but also the building
up of the roadbed and, as a result, the construction of a drainage pool. The court in that case,
however, did not base its conclusion solely on the fact that the dredging work resulted in an addition
to the land. Rather, the MLG&W court explained that the subcontractor’s work adapted the land for
the purpose of constructing the highway. Indeed, the definition of “improvement” adopted by the
court provides that an “improvement” can be an addition or an amelioration in the condition of the
land “intended to enhance its . . . utility or to adapt it for new or further purposes.” MLG&W, 1986
WL 11588, at *3. In this case, it is undisputed that the removing of trees and the grading of the lot
in question was intended to enhance the utility of the property, or to adapt it so that it would be a
suitable site for the building of a house. The grading of the land performed by the Walker defendants
was necessary to ready the land for construction. We agree with the reasoning in Embree, cited in
MLG&W and decided on similar facts, where the Colorado court noted that “grading is essential and
integral to the construction and completion of a house and is, therefore, part of the improvements
to the real property.” Embree, 684 P.2d at 952. Thus, we must affirm the trial court’s finding that
the removal of trees, grading, and fill work performed by the Walker defendants constituted an
improvement to the real property.

        Clearly, application of the four-year statute of repose in this case results in a disquieting
outcome, since the damages alleged are unlikely to surface within the time limitation for bringing
suit. The Watkins submitted evidence that the abnormal settling of their house was due to the fact
that the lot had been filled with biodegradable materials, such as tree stumps and roots, when the lot
was developed, and that the biodegradable material decayed over time and ultimately resulted in the
house settling unevenly. Assuming the truth of these allegations, which we must at this point, then
it is most likely that the damage to the house would not be discoverable until the four-year time
limitation had run, leaving the Watkins with no recourse against any negligent party. Nevertheless,
where the statute is clear, we must apply it as written, even if the result is harsh.6 As such, we must
find that the Watkins’ lawsuit is barred under Tennessee Code Annotated § 28-3-202.



        6
            This situation is likely to recur and should be addressed by our Legislature.

                                                            -6-
      The decision of the trial court is affirmed. Costs on appeal are to be taxed to Appellants Rick
Watkins and Ellen Watkins, and their surety, for which execution may issue, if necessary.




                                                      ___________________________________
                                                      HOLLY M. KIRBY, JUDGE




                                                -7-
