                    IN THE COURT OF APPEALS OF TENNESSEE         FILED
                                  AT KNOXVILLE                    August 17, 1998

                                                                Cecil Crowson, Jr.
                                                                 Appellate C ourt Clerk




PAUL EDW ARD HEN RY, et ux,                )   C/A NO. 03A01-9804-CH-00121
ELIZABETH ANN HENRY,                       )
                                           )   KNOX CHANCERY
       Plaintiffs-Appellants,              )
                                           )   HON. FREDERICK D. McDONALD,
v.                                         )   CHANCELLOR
                                           )
NOV A, INC .,                              )   AFFIRMED
                                           )   AND
       Defendant-Appellee.                 )   REMANDED




DONALD E. OVERTON and GLENNA W. OVERTON, OVERTON & OVERTON,
Knoxville, for Plaintiffs-Appellants.


BEECHER A. BARTLETT , JR., KRAMER, RAYSON, LEAKE, RODGERS &
MORGA N, Knoxville, for Defendant-Appellee.




                                     O P I N IO N


                                                         Franks, J.


              In this action, plaintiffs sued defendant for “money damages” on the

grounds of “misrepresentation, mutual mistake, breach of warranty and negligence

regarding th e purchas e of a new residence” from def endant. Th e recision of the sale

was also s ought.

              The Chancellor granted defendant summary judgment, stating:

              [T]he plaintiffs have testified by affidavit that about one month after
               closing on September 29, 1993, they noticed a large, swift stream
               flowing through their back yard. Therefore, the Court finds that
               plaintiffs’ cause of action accrued approximately one month after
               Septemb er 29, 1993 , and suit filed b y plaintiffs on M arch 10, 19 97 is
               barred by the statute of limitations.

               Plaintiffs have raised several issues which may be condensed into two

issues for co nsideration. F irst, they insist that the fo ur-year implied warranty

recognized in Dixon v. Mou ntain C ity Con structio n, 632 S.W .2d 538 (T enn. 1982 ), is

applicable to the facts of this case, and that the statute o f limitations do es not bar th eir

action for fraud, misrepresentation, negligence and violation of the Consumer

Protection A ct.

               The record establishes that plaintiffs purchased a newly-constructed

residence from defendant on September 29, 1993. At the time of purchase plaintiffs

received a “new home limited warranty” for a period extending from September 19,

1993 through September 29, 1994. Approximately one month after closing, plaintiffs

noticed a large swift stream flowing through their back yard, and complained to the

defendant about the flooding problem, pursuant to the express warranty. Defendant

made attempts in March and May of 1994 to correct the flooding problem by

constru cting a s wale, b ut the pr operty co ntinued to flood .

               On the authority of Dixon, plaintiffs argu e that they are en titled to rely

on an implied warranty of good workmanship, materials and fitness for habitation,

which would extend for four years. However, the Dixon Court limited implied

warranties to sales “only when the written contract is silent” and held that vendors and

purchasers were free to contract in writing for a warranty upon different terms and

conditions o r to expressly disc laim any wa rranty. In this case, th e written w arranty

provided by defendant to plaintiffs is styled “a new home limited warranty” and the

first paragraph thereof states in bold letters:

               THIS WARRANTY IS IN LIEU OF ANY AND ALL OTHER
               WARRANTIES, WHETHER EXPRESS OR IMPLIED

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              WARRANTIES OF HABITABILITY OR MERCHANTABILITY.

and sets forth the specific matters warrantied, and that it was for a one-year period

from the date of transfer of title or of the owners taking physical possession,

whichever was first. The written one-year express warranty in this case was a part of

the contract of sale. Plaintiffs accepted this warranty at closing, without protest, and

subsequently relied on the warranty in making claims against the seller. The

contractual warranty clearly disclaimed all other warranties, including implied

warranties viable in Dixon. Accordingly, the implied warranty pursuant to T.C.A.

§47-2-725 for a period of four years was rendered inapplicable by the contract of the

parties, which effectively limited the warranties to those expressed in the written

contrac t.

              The grav amen of the comp laint is essentially for m oney dama ges, and it

is alleged that “the fair market value of plaintiffs’ property has either been destroyed

or has a fair market value far less than the purchase price”. The applicable statute of

limitations for actions for injury to real property is T.C.A. §28-3-105, and requires that

such actions must be brought within three years. In Prescott v. Adams, 627 S.W.2d

134 (Tenn. App. 1982) the plaintiff had sued for recovery on theories of fraud,

misrepresentation, negligence, breach of fiduciary duty and breach of implied

warranties and rescission of the contract. The Prescott Court held:

              Since the gravamen of the complaint in this case is for damages to real
              property, we think all of the theories advanced by the plaintiffs are
              govern ed by the three-yea r statute o f limitatio ns. (Em phasis s upplied ).

Id. p. 137.

              Since this action was filed more than three years after the “discovery” of

the damage to plaintiffs’ property, we hold the statute of limitations bars this action,

and the judgment of the Chancery Court is affirmed.

              The cause is remanded with costs of the appeal assessed to appellants.


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                              __________________________
                              Herschel P. Franks, J.


CONCUR:




___________________________
Houston M. Godd ard, P.J.




___________________________
Don T. McM urray, J.




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