First Tennessee Bank Case Summary

Facts: In March of 2007 the plaintiffs began construction on a new home, which was financed through First Tennessee Bank as a construction loan. The plaintiffs claim that they entered into a verbal contract with First Tennessee Bank, which stated that the bank would refinance their construction loan at the end of its term to permanent financing. Upon completion of the construction loan the bank declined to provide permanent financing to the plaintiff, thus causing (along with a few other factors) the plaintiffs to go into foreclosure and further more bankruptcy. Five years later (2012) the plaintiffs filed a suit against First Tennessee Bank for breach of contract.

Issue: The Tennessee Court of Appeals reviewed whether the trial court correctly

In this two-step approach the legal basis of the claim must first be ascertained by the court, followed by consideration of the injuries received by the plaintiff. In relation to the case above, the legal basis of the claim is that there was a breach of contract, which resulted in financial losses to the plaintiffs. The court held this claim to be valid breach of contract claim. The second part of the two-step approach, looked at the types of injuries received. In this case, savings and financial injury resulting in bankruptcy was the result of the defendant’s breach of contract by not providing permeant financing.
The Appellate Court’s decision was influenced by a Supreme Court ruling in Benz–Elliott v. Barrett Enterprises, LP, where the court also used the two-step approach to decide that a financial injury was incurred by Elliott as a result of a loss of property value due to a breach of contract. These cases were similar in that injury to property did occur, which would have a statute of limitations of three years, but both courts held through the two-step approach that the nature of the injuries received were more financial, thus making the applicable statute of limitation seven