Mary Lee Alford v. Earl Ray Lumley ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
November 19, 2003 Session
MARY LEE ALFORD, ET AL. v. EARL RAY LUMLEY, ET AL.
Direct Appeal from the Circuit Court for Dyer County
No. 99-94 Lee Moore, Judge
No. W2002-03051-COA-R3-CV - Filed December 29, 2003
This lawsuit emanates from a 1989 sale of land, which included a portion of land to which the seller
did not have title. Two subsequent assignees of the original buyer filed a cause of action against the
seller, seeking rescission or reformation of the 1989 transaction and alternate relief. The trial court
awarded plaintiffs’ damages and declined to award equitable relief. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; and
Remanded
DAVID R. FARMER , J., delivered the opinion of the court, in which ALAN E. HIGHERS, J. and HOLLY
M. KIRBY , J., joined.
Greg Alford, Dyersburg, Tennessee, for the appellants, Mary Lee Alford, Brad Collins and wife,
Amanda Collins.
Thomas E. Weakley, Dyersburg, Tennessee, for the appellees, Earl Ray Lumley, Robert Lumley and
Earlene Lumley.
OPINION
The record presented for review by this Court consists of the technical record and a statement
of the evidence. The focus of this lawsuit is a thirty foot tract of property which connects Plaintiffs’
property to Richardson Hill Road in Dyer County. On June 12, 1989, Earl Ray Lumley (Earl Ray
Lumley) conveyed property to his cousin, William Paul Campbell (Campbell). The conveyance
included the thirty foot strip of property which provided access to Richardson Hill Road. This strip,
however, was not owned by Earl Ray Lumley but by his uncle, James Lumley, and was mistakenly
included in the conveyance. James Lumley’s deed to his property, including the portion wrongfully
conveyed, had been properly recorded since 1961.
On June 15, 1989, Earl Ray Lumley repurchased a 7.56 acre tract from Campbell. Campbell,
however, retained an easement on the southwest corner of the tract. This easement connected
Campbell’s remaining property to the thirty foot strip, thereby providing access to Richardson Hill
Road. The portion repurchased by Earl Ray Lumley did not include the thirty foot strip. On June
26, 1989, Earl Ray Lumley conveyed the 7.56 acre parcel to his parents, Robert and Earlene Lumley
(hereinafter, Earl Ray Lumley and Robert and Earlene Lumley will be referred to, collectively, as
Lumleys). The Lumleys and Campbells were relatives who frequently crossed each others’ property,
and the question of who owned the thirty foot strip was not a disputed issue between them.
In 1997, Campbell conveyed property, including the thirty foot roadside strip mistakenly
conveyed to him by Earl Ray Lumley, to Greg and Mary Lee Alford (Alfords). Before purchasing
the property, Mr. Alford, a practicing attorney, conducted a title search but failed to discover the
error in title. Alford then entered into negotiations with Brad Collins and Amanda Collins (Collins)
for sale of a fifteen acre tract of the property conveyed to him by Campbell. The parties discovered
the error in the conveyance by Earl Ray Lumley to Campbell during the course of these negotiations.
Alford made written demand on Lumleys to remove the cloud on the title to the thirty foot strip.
Lumleys and Campbell then denied Alford access to the strip and to the corner tract which had been
retained by Campbell in the June 15, 1989, conveyance of the 7.56 acres to Earl Ray Lumley.
Alford asserts that as a result of the error in the conveyance by Earl Ray Lumley to Campbell,
he was required to make significant concessions to Collins, including the grant of an easement for
connection to a roadway and construction of a ramp for access to the road. Alford also agreed with
Collins to pursue, through available legal process, the thirty foot strip and/or damages for breach
against Lumleys, and to assign such to Collins. In May 1999, Mary Lee Alford and Collins
(collectively, Plaintiffs) filed a complaint against Lumleys, seeking specific performance in
accordance with the deed, damages, and other relief. In their amended complaint, filed in December
2000, Plaintiffs prayed for compensatory damages and for the court to order Robert and Earlene
Lumley to reconvey the 7.56 acre tract to Earl Ray Lumley. They also sought other relief as
available in law or equity. Robert and Earlene Lumley answered and counter-complained in January
2001, asserting they had no responsibility for the conveyance from Earl Ray Lumley to Campbell;
that they did not deny Plaintiffs access to the easement on the 7.56 acre tract; and that they did not
own, and thus could not grant, Plaintiffs access to the thirty foot strip. They counter-complained for
damages to their fence, allegedly damaged by Greg Alford, and prayed for attorney’s fees.
In September 1999, Earl Ray Lumley filed a third-party complaint against William Paul
Campbell and the Estate of William Campbell.1 In his third-party complaint, Earl Ray Lumley
asserted that the deed by which he conveyed the disputed property to Campbell had been prepared
by Campbell’s attorney and that he, Earl Ray Lumley, had not realized he was conveying land that
he did not own. Earl Ray Lumley alleged that Campbell knew that Earl Ray Lumley did not own
the thirty foot strip, and that Campbell was at fault for the erroneous conveyance. Campbell
answered in October 1999, denying the allegations and asserting Earl Ray Lumley was bound by his
own actions. Campbell then counter-complained against Earl Ray Lumley, seeking specific
1
The trial court dismissed the action against the Estate of W illiam Campbell for lack of service. W illiam
Campbell was also known as W illiam Paul Campbell.
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performance in accordance with the deed, judgment for damages for breach of warranty, and
attorney’s fees.
A bench trial was held on March 18, 2002, and a hearing on the issue of attorney’s fees
followed on April 19, 2002. The trial court held Plaintiffs were entitled to no relief against Robert
and Earlene Lumley, as it was agreed at trial that there was no dispute over access to the easement
retained by Campbell on the 7.56 acre parcel; that the three year statute of limitations for property
damage had run on Lumleys’ counter-complaint; that Earl Ray Lumley was not entitled to relief on
his third-party complaint against Campbell; and that the action against Campbell’s estate was
dismissed for lack of service. The trial court found Plaintiffs were not entitled to reformation or
rescission of the June 1989 transaction. The trial court awarded Campbell judgment on his third-
party counter-complaint against Earl Ray Lumley for breach of warranty in the amount of $500.
Upon finding Earl Ray Lumley had breached the warranties contained in the June 12, 1989, deed to
Campbell, the court awarded Plaintiffs, as assignees of Campbell, damages. The court awarded
Alford damages of $4,041: $1,400 for construction of a ramp to the roadway, $750 for regrading the
ramp, and mortgage interest due to the delay in the sale to Collins of $1,891. The court awarded
Collins $650 for ramp maintenance costs. The court found that costs incurred by Collins between
their purchase of the property and the date the ramp was complete were not recoverable as Collins
purchased the property with knowledge of the defect in title and was entitled only to those damages
which would have been recoverable by Alford. The court found the proof offered by Alford of
diminution in value of $5,000 was too speculative to warrant diminution damages. The court
awarded Campbell attorney’s fees of $4,625. The court found Plaintiffs were not entitled to
attorney’s fees for Earl Ray Lumley’s breach because no itemized bill was submitted for the court’s
review. Lumleys now appeal to this Court.
Issues Presented
Plaintiffs raise the following issues, slightly restated, for our review:
(1) Whether the trial court erred in limiting Plaintiffs’ recovery to damages
where Plaintiffs are assignees of the original purchaser, and where Alford
discovered the error in the deed after purchase.
(2) Whether the trial court erred in ruling opinion testimony by Plaintiffs
regarding diminution in the value of the property was speculative.
(3) Whether the trial court erred in ruling that a subsequent purchaser/assignee
who purchased the property with knowledge of the dispute is barred from
asserting continuing damages against the original seller where damages
would have been recoverable by his assignor.
(4) Whether the trial court erred in holding Plaintiffs’ attorney’s fees are not
recoverable.
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Lumleys raise two additional issues:
(1) Whether the trial court erred in not dismissing the action as barred by the six-
year statute of limitations for actions for the use and occupation of land for
rent under Tenn. Code Ann. § 28-3-109, or the seven-year statute of
limitations for actions for adverse possession under color of title under Tenn.
Code Ann § 28-2-102.
(2) Whether the trial court erred by not holding the action was barred as
champertous under Tenn. Code Ann. § 66-4-201.
Standard of Review
To the extent these issues involve questions of fact, our review of the trial court's ruling is
de novo with a presumption of correctness. Tenn. R. App. P. 13(d); Sullivan v. Sullivan, 107 S.W.3d
507, 509 (Tenn. Ct. App. 2002). We may not reverse the trial court's factual findings unless they are
contrary to the preponderance of the evidence. Id. at 510. With respect to the court's legal
conclusions, however, our review is de novo with no presumption of correctness. Id. Insofar as the
trial court’s determinations rest upon an assessment of witness credibility, they will not be
overturned absent clear and convincing evidence to the contrary. Wells v. Tennessee Bd. of Regents,
9 S.W.3d 779, 783 (Tenn.1999). A decision to award equitable relief lies within the discretion of
the trial court, and will not be overturned on appeal absent an abuse of that discretion. Early v.
Street, 241 S.W.2d 531, 536 (Tenn. 1951).
Analysis
We first dispense with Lumleys’ assertion that the trial court erred by not dismissing
Plaintiffs’ action as champertous and barred by the statute of limitations. This action was based
on breach of warranty. Thus, we do not believe Tenn. Code Ann. § 28-3-109 or § 28-2-102 are
applicable. Further, Alford clearly had an interest in the subject matter of this litigation, and
adverse possession is not an element of this lawsuit. Lumleys’ issues are without merit.
The decision to award the equitable relief of rescission or reformation of a contract or
deed lies within the sound discretion of the trial court. Early v. Street, 241 S.W.2d 531, 536
(Tenn. 1951). Plaintiffs assert the trial court erred not in exercising its discretion in refusing to
award equitable relief, but in holding that, as a matter of law, Plaintiffs, as assignees, were not
entitled to equitable relief.
We disagree with Plaintiffs’ interpretation of the trial court’s judgment. The trial court
held simply that Plaintiffs, assignees, were not entitled to reformation or rescission of the June
1989 transaction. We do not read the judgment as holding that as a mater of law Plaintiffs were
not entitled to equitable relief because they are assignees. We read the court’s judgment as an
exercise of the discretion of the court in refusing to award equitable relief. We accordingly find
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it unnecessary to address the issue of whether, as a matter of law, Plaintiffs, as assignees, may
seek rescission of the 1989 transaction between Campbell and Lumley.
We agree with the trial court that this case warranted neither rescission nor reformation of
the 1989 transaction between Earl Ray Lumley and Campbell. As an initial matter, we note that
Mr. Alford conducted a title search of the property and failed to discover the error in title or
James Lumley’s properly recorded deed. We agree with the trial court that Alford had
constructive notice of the cloud on the title to this strip. Additionally, Collins had actual
knowledge of the defect in title. Moreover, we fail to perceive how Plaintiffs would benefit from
rescission or reformation of the 1989 Earl Ray Lumley-Campbell transaction. Notwithstanding
rescission or reformation, Plaintiffs still would have no access to the thirty foot strip giving
access to Richardson Hill Road. That strip would remain the property of James Lumley. Alford
and Collins have constructed homes on the property conveyed by Campbell to Alford, and
undisputedly have alternate road access. Thus monetary damages are an adequate remedy in this
case. We accordingly affirm the determination of the trial court that equitable relief was not the
appropriate remedy under these facts.
We next address Plaintiffs’ contention that the trial court erred by refusing to award
damages for diminution in value upon finding the evidence too speculative. The evidence
regarding diminution in value contained in the statement of evidence before this Court consists
only of statements by Greg Alford and Amanda Collins. Mr. Alford testified that the fair market
value of the Alford property at the time of trial would have been $180,000 with the easement
across the thirty foot strip to Richardson Hill Road, and was $175,000 without the easement.
Amanda Collins testified that the value of the Collins’ property at the time of trial would have
been $295,000 with a level driveway on the thirty foot strip giving access to Richardson Hill
Road, and that it was $285,000 without it. There is no further proof of value before this Court,
thus the determination of diminution in value rests on witness credibility. In light of the
deference afforded the trial court on matters of credibility, we accordingly affirm the trial court’s
determination that this proof is too speculative to warrant an award of damages.
Plaintiffs further submit the trial court erred in not awarding Collins continuing damages.
The trial court awarded Alford $1,400 for construction of a ramp from Collins property to the
roadway, and $750 for additional work to regrade the ramp. The court awarded Collins $650 for
costs incurred in purchasing an attachment for the driveway and maintaining the ramp after
construction. There is no proof in the statement of evidence before this Court regarding
additional continuing damages, thus we cannot say the evidence preponderates against the
judgment of the trial court. We accordingly affirm the damage award.
We turn finally to Plaintiffs’ assertion that the trial court erred by not awarding their
attorney’s fees. The judgment of the trial court reads: “the original plaintiffs’ request for attorney
fees of $2,500.00 is denied in that no itemized bill was presented for review.” This issue
accordingly is without merit.
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Conclusion
In light of the foregoing, the judgment of the trial court is affirmed in all respects. Costs
of this appeal are taxed to Appellants, Mary Lee Alford, Brad Collins and Amanda Collins, and
to their surety, for which execution may issue if necessary.
___________________________________
DAVID R. FARMER, JUDGE
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