Supreme Court Does Not Extend Home Inspector Liability to Third Parties

November 21, 2017

Home inspections are a standard part of the buying process throughout the state, and, in a recent case, the Tennessee Supreme Court determined whether a home inspector’s liability extends to a social guest of the homeowner who was injured when a railing collapsed shortly after purchase.

In 2010, Daniel Uggla purchased a home in Franklin, Tennessee, and during a housewarming party, his guest, Charles Grogan, fell through a second-story deck railing that had been improperly constructed.  Mr. Grogan filed a lawsuit against the home inspector hired by Mr. Uggla to perform a pre-purchase inspection of the residence.  Mr. Grogan claimed that the home inspector should have known the deck railing was constructed with interior finishing nails in violation of building codes, that the inspector failed to perform a test to determine the amount of force the railing could withstand, and that the inspector failed to report the negligent construction.

The home inspector filed a motion for summary judgment to dismiss the case, which the trial court granted after finding the plaintiff did not meet the elements of a negligent misrepresentation claim.  The Court of Appeals affirmed the trial court’s outcome, but differed in its reasoning, choosing to analyze Mr. Grogan’s claim using the common law factors for negligence.  The Court of Appeals found the inspector did not owe the plaintiff a duty of care, a key element in a negligence claim, and the case was properly dismissed.

The Tennessee Supreme Court granted Mr. Grogan permission to appeal.  A majority of the Supreme Court agreed that Mr. Grogan’s complaint alleged both negligent misrepresentation and negligent inspection.  However, the majority determined Mr. Grogan did not meet essential elements of a negligent misrepresentation claim because he had not alleged that the home inspector affirmatively gave false information. Negligent misrepresentation requires an affirmative misstatement, not just a non-disclosure, the Court concluded. In its decision, the Court did not determine whether Restatement (Second) of Torts section 311 on negligent misrepresentation applies in Tennessee.

In addition, the majority of the Court analyzed the plaintiff’s negligent inspection claim under Restatement (Second) of Torts section 324A(Liability to Third Person for Negligent Performance of Undertaking).  Under this analysis, a person’s duty is circumscribed by the scope of the person’s undertaking.  The Court found, based on the statutes and regulations governing home inspections, testimony given in the case, and the agreement between the inspector and homebuyer, that a building codes inspection was not within the scope of work performed by the inspector. The Court also found, based on the agreement between the inspector and homebuyer and Tennessee statutes, that the inspector did not voluntarily assume a duty to third parties like the plaintiff, a guest of the homebuyer.

Justice Holly Kirby filed a separate opinion concurring in part and dissenting in part.  Justice Sharon G. Lee also filed a dissenting opinion, stating that she would reverse dismissal of Mr. Grogan’s lawsuit and allow his tort claims to proceed.

In her opinion, Justice Kirby agreed with the majority’s decision to analyze Mr. Grogan’s negligent inspection claim under Restatement of Torts (Second) section 324A. However, she argued that the lack of a direct relationship does not automatically mean that the home inspector did not have a duty to a guest like Mr. Grogan. She rejected the majority’s characterization of Mr. Grogan’s other claim as one of negligent misrepresentation, stating that it should be viewed as negligent failure to warn, which by definition involves an omission.

Justice Lee, in a dissent, determined the case is one of negligence and the home inspector owed Mr. Grogan a duty of care based on the foreseeability that a homeowner would have guests over and that injury could result if the house was unsafe. Justice Lee also found that as a matter of public policy the general public relies heavily on home inspections and it is reasonable to extend the duty to perform a thorough inspection beyond the purchaser of the home.

To read the majority opinion authored by Justice Roger A. Page, as well as the opinions by Justice Holly Kirby, concurring in part, dissenting in part, and Justice Sharon G. Lee, dissenting, go to the opinions section of TNCourts.gov.