Darrin M. Dixon v. Alan Wayne Chrisco

09/07/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs August 1, 2018
DARRIN M. DIXON, ET AL. v. ALAN WAYNE CHRISCO, ET AL.
Appeal from the Chancery Court for Franklin County
No. 19836 Jeffrey F. Stewart, Judge
___________________________________
No. M2018-00132-COA-R3-CV
___________________________________
Purchasers of real property brought this action against the sellers alleging intentional
misrepresentation, a violation under the Tennessee Residential Property Disclosure Act
(“TRPDA”), and fraudulent concealment. The alleged misrepresentation and violation of
the TRPDA concerned a right-of-way in favor of CSX for a railroad and the amount of
purchaser’s property the right-of-way covered. Purchasers further argued that the sellers
fraudulently concealed the planned construction of a second track of the railroad. The
trial court dismissed the claims for intentional misrepresentation, the violation of the
TRPDA, and negligent misrepresentation but granted judgment in favor of the purchaser
regarding the fraudulent concealment. We affirm in part, as modified, and reverse in
part.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
in Part, as Modified, and Reversed in Part.
BRANDON O. GIBSON, J., delivered the opinion of the court, in which CHARLES D.
SUSANO, JR., J. and RICHARD H. DINKINS, J., joined.
Gregory M. O’Neal, Winchester, Tennessee, for the appellants, Darrin M. Dixon and
Teresa Dixon.
Joseph Eugene Ford, Winchester, Tennessee, for the appellees, Alan Wayne Chrisco and
Teddi K. Chrisco.
OPINION
I. FACTS & PROCEDURAL HISTORY
On October 26, 2013, Darrin Dixon and Teresa Dixon (the “Dixons”) drove past
the home of Teddi Chrisco and Wayne Chrisco (the “Chriscos”). As they were passing
the house, they noticed a for sale sign in the front yard. The Dixons immediately called
the listed real estate agent, Jeannie Pack, to schedule a time to tour the property. Ms.
Pack was able to schedule a tour later the same day. The Chriscos were not present
during the Dixons’ initial tour. At some point during the tour, the Dixons noticed a
railway located at the back of the property. The railway was mostly blocked from sight
by a thick hedgerow of trees and shrubs. After the tour, the Dixons decided to make an
offer for the home. The final purchase price for the property, after negotiations, was
agreed to be $235,000, and both Darrin Dixon and Wayne Chrisco signed the land-sale
contract that night.
As part of the contract, the Chriscos executed a Tennessee Residential Property
Condition Disclosure (“Disclosure Form”).1 Among other things, the Chriscos
represented in the Disclosure Form that there were no “encroachments, easements, or
similar items that may affect [their] ownership interest in the property.” However, this
was not the case. CSX possesses a right-of-way related to the railroad located at the back
of the property. This right-of-way extends 130 feet on both sides of the existing railroad
track. Two months later, on December 20, 2013, the Dixons closed on the property,
signing all relevant closing documents, including a warranty deed to the property.2 The
existence of the right-of-way, as well as the size of the right-of-way, is described in both
1
Under the Tennessee Residential Property Disclosure Act (“TRDPA”), an owner of
residential real property is required to disclose in good faith “material defects known to the
owner” through a Disclosure Form. Tenn. Code Ann. §§ 66-5-201 to -202.
2
The Dixons’ warranty deed expressly mentions the right-of-way seven times.
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the Chriscos’ and the Dixons’ deeds.3 While the Dixons were aware of the railroad right-
of-way, they had no actual knowledge of how far the right-of-way extended onto the
property at the time of purchasing the property.
In February of the following year, the Dixons noticed stakes placed across their
backyard by CSX employees. The stakes were demarcating the boundary of the right-of-
way and crossed over the edge of the pool deck. Concerned at how much of their
backyard was being claimed as part of the right-of-way, Mr. Dixon called Ms. Pack
seeking clarification on the extent of the right-of-way. Ms. Pack then called Mr. Chrisco.
After receiving the call, Mr. Chrisco came by the Dixons’ home with a copy of a survey
completed in 2008 showing that the right-of-way extended 130 feet out from the existing
railroad track. Furthermore, the survey showed that part of the pool deck was over the
right-of-way boundary line. Mr. Chrisco had never previously mentioned to the Dixons
that the pool deck extended onto the right-of-way.
The stakes were being placed in preparation for the addition of a second line of
railroad tracks that was to be added to the existing track. Mr. Chrisco had become aware
of the possible expansion prior to listing his house for sale. He was informed by his
neighbor, Barry Tawwater, (a now-retired employee of CSX) that CSX planned to add a
second line of tracks behind both of their houses.4 Mr. Tawwater learned this
3
Mrs. Chrisco filled out the Disclosure Form. Her husband only briefly glanced over the
document. She stated at trial that she had no knowledge of the extent of the easement.
Nevertheless, both she and her husband signed the Disclosure Form.
4
It is unclear exactly when Mr. Chrisco learned of the expansion. Mr. Tawwater testified
that he believed it was two weeks before the Chriscos placed a for sale sign in their yard, while
Mr. Chrisco claimed he learned of the expansion in August of 2013, two months before the
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information from a blueprint he was shown by a supervisor of CSX detailing the planned
expansion. He testified that, while he did not know when the expansion would occur, it
was virtually certain to occur.5 Mr. Chrisco never mentioned the expansion to the
Dixons.
At the time of trial, the second line had been installed along with a railroad spur
behind the Dixons’ house. During the expansion, the entire tree line between the Dixons’
house and the existing railroad was removed. Due to the removal of the tree line and the
closer proximity of passing trains, the noise level emanating from trains increased
dramatically.6 Moreover, the removal of the tree line also reduced the Dixons’ privacy in
their own home, allowing conductors and railroad workers to see directly into the
Dixons’ backyard and home.7
The Dixons filed this lawsuit seeking to rescind the contract or, in the alternative,
recover benefit of the bargain damages for the alleged misrepresentations and failure to
disclose. The original complaint named the Chriscos as defendants.8 The complaint
alleged that the Dixons relied on representations made in the Disclosure Form.
Specifically, the complaint alleged they relied on the representation on the Disclosure
house was listed for sale.
5
Mr. Chrisco testified that Mr. Tawwater told him that no funding for the project had
been appropriated. Mr. Tawwater disputes that he ever discussed funding for the project.
6
Mr. Tawwater estimated that the noise level is five times louder since the destruction of
the tree line.
7
Railroad employees have remarked that they can see what the Dixons are watching on
television.
8
The Dixons filed an amended complaint on March 4, 2016, adding Jeannie Pack and
Swafford’s Property Shop, LLC as additional defendants. However, the trial court dismissed all
claims against both, and neither party is the subject of this appeal.
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Form stating there were “no encroachments, easements, or similar items that would affect
[their] ownership interest in the property.” The complaint further alleged that the
“concrete pad around the swimming pool” and fence were on CSX’s right-of-way and
that the “encroachment” of the swimming pool was known by the Chriscos prior to the
sale. The Dixons claimed the failure to disclose this encroachment was in violation of the
TRPDA. Also, the complaint alleged that the misrepresentations in the Disclosure Form
were made “intentionally, fraudulently, and maliciously” to entice the Dixons into
purchasing the home.
In response, the Chriscos filed an answer. The answer admitted that the Chriscos
made the statement on the Disclosure Form but neither admitted nor denied whether the
Dixons relied on the representation. Moreover, the Chriscos denied in their answer that
there was any “encroachment” or any other title defects, stating that the Dixons received
exactly the amount of acres specified in the deed. Finally, the Chriscos denied making
any misrepresentations to the Dixons.
Subsequently, the Dixons filed another amended complaint. The amended
complaint alleged that the “Defendants” received information related to a planned
expansion of the railroad from “former CSX employees and present CSX employees.”
The Dixons further alleged that this information constituted an “adverse condition” that
was not disclosed to them. Furthermore, the complaint alleged that the Dixons relied on
the “representations” to their detriment and would not have purchased the property had
the information been disclosed.
In an amended answer, the Chriscos denied having information that CSX was to
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begin construction on the railway; instead, the Chriscos asserted that they were told of a
proposed plan for expansion but that no funding had taken place. Moreover, they
claimed there was no timeline for the proposed addition of the second line. The Chriscos
also denied that the information constituted an adverse condition. Additionally, the
Chriscos denied having made any representations regarding the railroad expansion and
further allowed that they were under no duty to disclose the information regardless.
After a bench trial, the trial court entered an order in favor of the Dixons regarding
the fraudulent concealment of the railroad expansion, but the court dismissed the claims
concerning representations under the TRPDA and other statements in relation to the
right-of-way. The trial court found that the location and extent of the right-of-way “could
have been revealed by efforts required by a buyer under caveat emptor.” Furthermore,
the trial court reasoned that a disclosure under the TRPDA is “not a warranty and is not a
substitute for inspections.” Moreover, the trial court found the disclaimer notice signed
by the Dixons strongly recommended obtaining a survey, further undermining the
Dixons’ claim. Regarding the concealment of the railroad expansion, the trial court
found that Mr. Chrisco had a duty to disclose his knowledge, as the information was not
public knowledge. The only uncertainty was when the second railroad would be built,
not if a second line would be added. The trial court determined Mr. Chrisco’s failure to
disclose the expansion to be either fraudulent concealment or constructive fraud and
awarded the Dixons $15,000 due to the diminution in value of the property and also
awarded court costs. The Dixons filed a timely notice of appeal.
II. ISSUES PRESENTED
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On appeal, the Dixons raise three separate issues, which are restated as follows:
1. Whether the doctrine of caveat emptor applies to this case;
2. Whether the trial court should have found that the failure to disclose the
boundaries of the right-of-way constituted a violation under the TRPDA or a fraudulent
concealment9; and
3. Whether the trial court assessed adequate damages for the fraudulent concealment
of the expansion of the existing railroad tracks.
For the following reasons, we affirm the decision of the chancery court in part, as
modified, and reverse in part.
III. STANDARD OF REVIEW
Because this case was tried by a trial court without a jury, we will review the
findings of fact “de novo upon the record of the trial court” with a presumption of
correctness, unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d);
Faerber v. Troutman & Troutman, P.C., No. E2016-01378-COA-R3-CV, 2017 WL
2691264, at *2 (Tenn. Ct. App. June 22, 2017). We review the trial court’s conclusions of
law de novo with no presumption of correctness. Holland v. Forrester, No. E2016-
02147-COA-R3-CV, 2017 WL 6405111, at *3 (Tenn. Ct. App. Dec. 15, 2017).
IV. DISCUSSION
A. Caveat Emptor
In concluding that the misrepresentation contained in the Disclosure Form was not
9
The Dixons’ brief framed this issue as a breach of contract action. However, in
substance, the argument was both a TRPDA claim and a fraudulent concealment claim.
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material, the trial court relied on the common law doctrine of caveat emptor. The Dixons
assert that this doctrine does not apply to this case. “[A]s a general principle, the doctrine
of caveat emptor applies to contracts for the sale of land in which the vendor conveys
title, possession, and control over property to a purchaser.” 17 Williston on Contracts §
50:26 (4th ed.) (2018). See Smith v. Tucker, 270 S.W. 66, 69 (Tenn. 1925) (“The rule of
caveat emptor generally applies to sales of land.”). Under the doctrine, “in the absence of
an express agreement, a vendor is not liable to the purchaser or others for the condition of
the land existing at the time of transfer.” 17 Williston on Contracts § 50:26. However,
“[f]raud, when made fully to appear, vitiates all contracts into which it enters.” Hunt v.
Walker, 483 S.W.2d 732, 735 (Tenn. Ct. App. 1971).
In Hunt, for instance, the plaintiffs alleged that a home purchased from the
defendant had been substantially damaged by termites, the hot water heater was
defective, and the wiring in the house was dangerous. Id. at 734. The plaintiffs claimed
that each of these conditions was concealed from them by the defendants. Id. The trial
court determined that, among other things, the defects were known and concealed by the
defendants prior to the sale of the house. Id. On appeal, the defendants argued that the
trial court erred by not applying the doctrine of caveat emptor to uphold the contract
despite the fraudulent concealment. Id. at 735. This court disagreed with defendant’s
contention, holding that the presence of fraud voided the contract. Id. In voiding the
contract, the presence of fraud overrode the doctrine of caveat emptor. Id.
Similarly, the Dixons claim that the fraudulent concealment of the
“encroachment” would void the contract irrespective of caveat emptor. The Dixons are
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correct in their assertion that caveat emptor does not apply to their fraudulent
concealment claim; therefore their claim is not barred by the doctrine. We now address
the merits of the fraudulent concealment claim.
B. Fraudulent Concealment –Location of the Right-of-Way
On appeal, the Dixons argue that the Chriscos fraudulently concealed the
“encroachment” of the Chriscos’ “boundary line” onto CSX’s right-of-way. The Dixons
also argue that the nondisclosure of the right-of-way on the Disclosure Form violates the
TRPDA. “This Court recognizes two actionable types of concealment: where the
concealment constitutes a trick or contrivance and when there is a duty to disclose.”
Odom v. Oliver, 310 S.W.3d 344, 349 (Tenn. Ct. App. 2009). “A party commits
fraudulent concealment for failing to disclose a known fact or condition where he had a
duty to disclose and another party reasonably relies upon the resulting misrepresentation,
thereby suffering injury.” Id. For a plaintiff to establish a claim for fraudulent
concealment, the plaintiff must show “(1) the defendant had knowledge of a material
existing fact or condition, and that (2) the defendant had a duty to disclose the fact or
condition.” Pitz v. Woodruff, No. M2003-01849-COA-R3-CV, 2004 WL 2951979, at *8
(Tenn. Ct. App. Dec. 17, 2004) (citing Lonning v. Jim Walker Homes, Inc., 725 S.W.2d
682, 685 (Tenn. Ct. App. 1986)). For the sale of real property, a fact is considered to be
material where it is one of “‘controlling importance in determining the desirability and
value of th[e] residence.”’ Patel v. Bayliff, 121 S.W.3d 347, 353 (Tenn. Ct. App. 2004)
(quoting Simmons v. Evans, 206 S.W.2d 295, 296 (Tenn. 1947)). Moreover, a defendant
has a duty to disclose a material fact “unless ordinary diligence would have revealed the
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undisclosed fact.” Lonning, 725 S.W.2d at 685 (citing Simmons, 206 S.W.2d at 296)).
“[T]here is no duty to disclose a material fact or condition if it was apparent through
‘common observation’ or if it would have been discoverable through the exercise of
ordinary diligence.” Pitz, 2004 WL 2951979, at *8 (citing Simmons, 206 S.W.2d at 297;
Patel, 121 S.W.3d at 353).
The trial court determined under the common law doctrine of caveat emptor that
the Dixons were required to investigate the CSX right-of-way, as the railroad tracks were
in plain view and the width of the right-of-way was a matter of public record. Because
the Dixons failed to inquire further into the acreage of the right-of-way and failed to
obtain a survey of the land, the trial court dismissed the claim.
This issue turns on whether the dimensions of the right-of-way were discoverable
through the exercise of ordinary diligence or apparent through “common observation.”
The Dixons contend that while CSX’s right-of-way was a matter of public record, the
extent of the “encroachment” was not. A right-of-way10 is a material fact, as it clearly
affects the value and desirability of land. See Daniels v. Basch, No. M2004-01844-COA-
R3-CV, 2005 WL 2860177, at *3 (Tenn. Ct. App. Oct. 27, 2005) (“Clearly an easement
is a material fact as it [a]ffects the desirability and value of the residential property.”).
10
The Dixons asserted at trial that CSX’s interest in the land was not an easement but a “charter
right-of-way.” However, a right-of-way is an easement. Nashville, C & S.L. Ry. v. Bell, 39
S.W.2d 1026, 1028 (Tenn. 1931) (“A ‘right of way’ in its legal and generally accepted meaning
in reference to a railroad company’s interest in land is a mere easement for railroad purposes in
the lands of others; and therefore, as a general rule, where land obtained by purchase or
agreement is conveyed by an instrument which purports to convey a right of way only, it does
not convey title to the land itself, but the railroad company acquires a mere easement in the land
for right of way purposes, leaving the fee subject to such servitude in the owner.”) (quotation
omitted).
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However, while the right-of-way does constitute a material fact, the Chriscos had no duty
to disclose it because it was apparent through common observation, and its extent was
discoverable through the exercise of ordinary diligence. Compare Daniels, 2005 WL
2860177, at *3 (holding that a seller had no duty to disclose a TVA easement when TVA
wires ran across the property, and a survey and the buyer’s own observation “plainly
showed the existence of an easement at the back of the property”).
“It is well settled that if a purchaser of real property has notice or with ordinary
diligence should have had notice of a problem with the real estate, the purchaser cannot
attack the validity of the contract for fraud, misrepresentation, or concealment of that
problem.” Daniels, 2005 WL 2860177, at *5 (citing Winstead v. First Tennessee Bank
N.A., Memphis, 709 S.W.2d 627, 631 (Tenn. Ct. App. 1986)). “If one who is in
possession of all material facts, either actually or constructively, proceeds with a
purchase of realty, notwithstanding such knowledge, such a person cannot thereafter
recover on the basis of fraud, misrepresentation, or concealment of the information to
which all parties had equal access.” Winstead, 709 S.W.2d at 633.
[W]here the means of information are at hand and equally accessible to
both parties so that, with ordinary prudence or diligence, they might rely on
their own judgment, generally they must be presumed to have done so, or,
if they have not informed themselves, they must abide the consequences of
their own inattention and carelessness. Unless the representations are such
as are calculated to lull the suspicions of a careful man into a complete
reliance thereon, it is commonly held, in the absence of special
circumstances, that, where the means of knowledge are readily available,
and the vendor or purchaser, as the case may be, has the opportunity by
investigation or inspection to discover the truth with respect to matters
concealed or misrepresented, without prevention or hindrance by the other
party, of which opportunity he is or should be aware, and where he
nevertheless fails to exercise that opportunity and to discover the truth, he
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cannot thereafter assail the validity of the contract for fraud,
misrepresentation or concealment with respect to matters which should
have been ascertained, particularly where the sources of information are
furnished and attention directed to them, as, for example, where the source
of accurate information is indicated or referred to in the contract.
Id. (quoting Pakrul v. Barnes, 631 S.W.2d 436, 438 (Tenn. Ct. App. 1981)).
Both Mr. and Mrs. Dixon testified that they were aware of the railroad adjacent to
the back of the property prior to closing. However, they made no efforts to discover the
boundaries of the right-of-way by looking at prior deeds, conducting a survey, or
obtaining a title opinion. The Dixons did not read the Chriscos’ deed, which made an
explicit reference to not only the right-of-way itself but also the dimensions of the right-
of-way. The Dixons did, however, read their own deed at closing. While their deed also
contained multiple explicit references to the scope of the right-of-way, they still failed to
ascertain the boundaries of the right-of-way. A right-of-way that is properly recorded
provides sufficient notice to purchasers of land. Butler v. Pitts, No. W2015-01124-COA-
R3-CV, 2016 WL 561078, at *4 (Tenn. Ct. App. Feb. 12, 2016). Both deeds expressly
delineate the size of the easement as 130 feet on both sides of the railway, thereby
providing notice and imputing the Dixons with knowledge of the extent of the easement.
Additionally, the Dixons made the decision to not obtain a survey of the property
despite language in the contract advising the buyer to hire a surveyor.11 Mr. Dixon
11
The language in the land-sale contract stated “Survey Work and Flood Certifications
are the best means of identifying boundary lines and/or encroachments and easements or flood
zone classifications. Buyer may obtain a Mortgage Inspection or Boundary Line Survey and
Flood Zone Certifications.” The Disclosure Form further warned that “[the form] is not a
warranty or a substitute for any professional inspections or warranties that the purchasers may
wish to obtain.” See also Tenn. Code Ann. § 66-5-201 (“The disclosure statement referenced in
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testified that he did not obtain a survey because he was relying on the “good faith” of the
Chriscos. However, “[g]enerally, a party dealing on equal terms with another is not
justified in relying upon representations where the means of knowledge are readily within
its reach.” Solomon v. First Am. Nat’l Bank of Nashville, 774 S.W.2d 935, 943 (Tenn.
Ct. App. 1989). Here, the Dixons were not justified in relying on the Disclosure Form, as
obtaining a survey would have revealed the boundaries of their property in relation to the
right-of-way.
Because the Dixons could have easily discovered the extent of the right-of-way by
either reading the deeds or obtaining a survey, they did not reasonably rely on the
Disclosure Form, as the extent of the easement was discoverable through the exercise of
ordinary diligence.12 Therefore, the trial court’s decision is affirmed as modified to
reflect that the doctrine of caveat emptor is inapplicable.
C. Benefit of the Bargain Damages – Expansion of the Railway
Finally, the Dixons maintain that the damages assessed by the trial court were
inadequate. The trial court awarded $15,000 in damages based on the diminution in
value of the real estate. The damages section of this opinion is not related to the
fraudulent concealment claim addressed in Section IV(b) above, which concerns the
§ 66-5-202 is not a warranty of any kind by a seller and is not a substitute for inspections either
by the individual purchasers or by a professional home inspector.)
12
In regards to the claim under the TRPDA, much of the same reasoning as the
fraudulent concealment claim applies. An owner will not be liable where a buyer was aware of
the defect at closing or occupancy, whichever occurs earlier. Tenn. Code Ann. § 66-5-208(a)(1).
Because the Dixons were aware of the right-of-way by their observation of the railroad, as well
as receiving notice through the Chriscos’ deed and their own deed, the Chriscos are not liable
under the TRPDA.
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alleged fraudulent concealment of the extent of CSX’s right-of-way. Instead, our
analysis here is only related to the fraudulent concealment of the construction of the
second line of railroad tracks—a completely separate claim.
The trial court’s basis for awarding $15,000 in damages is unclear. The court
stated:
[i]n determining the range of damages, I have taken into consideration the range of
different opinions as to the value of the property at the time of the transaction, the
determination by the Dixons to remain on the property rather than seek rescission,
the testimony of the Chriscos, that they would accept the property back and move
into it, in setting the damages in this case from all of which I find the damages to
be $15,000 for the diminution in value of the real estate value as a result of the
misrepresentation.
The damage award appears to be in line with the testimony of the Dixons’ expert, Tom
Lynch, who testified that there was a total reduction in the value of the property of
$75,000, including an adjustment of $15,000 as a result of “the encroachment of the pool
on the CSX property.” However, this reduction in value for the “encroachment” seems
only to relate to the dismissed fraudulent concealment claim discussed in Section IV(b),
not the fraudulent concealment of the second line of tracks, as the second line of tracks
do not pass over the pool. Moreover, it is unclear from Mr. Lynch’s testimony (or the
testimony of the Chriscos’ expert, Craig Brady) how much of the diminution in value of
the property at the time of their respective appraisals was related to the installation of the
second line of railroad tracks. Nevertheless, because we affirmed the dismissal of the
fraudulent concealment claim in relation to the extent of the right-of-way in Section
IV(b) of this opinion, we will examine whether the damages awarded are adequate as if
the damages were awarded solely based on the fraudulent concealment of the railroad
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tracks.
The Dixons contend that the trial court should have awarded $75,000 in
compensatory damages in addition to attorney’s fees. While not spelled out in the
Dixons’ brief to this court, the requested damages appear to originate from the difference
in value between the purchase price of $235,000 and the appraised value given by the
plaintiff’s expert, Tom Lynch of $160,000. “[A] party may be held liable for damages
caused by his failure to disclose material facts to the same extent that a party may be
liable for damages caused by fraudulent or negligent misrepresentations.” Macon Cty.
Livestock Mkt., Inc. v. Ky. State Bank, Inc., 724 S.W.2d 343, 349 (Tenn. Ct. App. 1986).
“In an action for damages caused by fraudulent misrepresentation, the proper measure of
the plaintiffs’ general damages is the benefit of the bargain rule.” Haynes v. Cumberland
Builders, Inc., 546 S.W.2d 228, 233 (Tenn. Ct. App. 1976). The benefit of the bargain
rule allows recovery of “the difference between the actual value of the property []
received [a]t the time of the making of the contract and the value that the property would
have possessed if [the defendants’] representations had been true.” Id. “The measure of
damages and the fixing of the value of the property are to be determined at the time of the
transaction.” Id.
Here, there is no issue in relying on the purchase price to prove the value of the
property at the time of the transaction if the representations had been true, but it is not
evidence of the actual diminished value of the property at the time of this particular
transaction (i.e., with the planned expansion). See Flatford v. Williams, Knox Chancery,
C.A. No. 1201, 1989 WL 4419, at *2 (Tenn. Ct. App. Jan. 24, 1989). Neither party
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offered any evidence of the actual value of the property at the time of the transaction.
Instead, both parties presented appraisals showing the purported market value of the
property around two years after the transaction took place.13 “The plaintiff has the
burden of proving both values applied in the formula which measures his general
damages, the actual value of the property at the time of the contract and the value of the
property if it had been as it was represented to him.” Haynes, 546 S.W.2d at 233-34.
Evidence of appraisals two years later will not suffice as evidence of the actual value of
the property at the time of the transaction under the benefit of the bargain rule. See
Flatford, 1989 WL 4419, at *2 (holding that the plaintiffs “failed to carry [their] burden”
under the benefit of the bargain rule where the plaintiffs produced evidence of a sale of
the house five years after the plaintiff’s purchase of the home); Haynes, 546 S.W.2d at
233 (stating that evidence presented of the value of the house at the time of trial does not
constitute the correct measure of damages under the benefit of the bargain rule). See also
In re Sallee, 286 F.3d 878, 901 (6th Cir. 2002) (affirming the district court’s holding
under Kentucky law that “[t]he Bankruptcy Court’s award . . . was clearly erroneous as it
not only gave the Sallees the benefit of the bargain but also compensated them for
economic changes affecting the value of the laundromat, independent of fraud” where the
13
Ms. Pack also testified to the value of the home. First, she testified that, in 2013, the
range of value for the home was between $225,000 to $235,000. By 2017, she asserted that the
value of the home had risen to a range of $235,000 to $245,000 with a $238,000 median price.
However, this testimony does not meet the benefit of the bargain rule. The first appraisal value
given for the house does not represent the actual value, as Ms. Pack did not take into account the
fraudulent concealment of the second line of railroad tracks. The appraisal given at the time of
trial also does not suffice because evidence of the actual value must be measured at the time of
the transaction, not four years after the purchase of the house in 2017. See Haynes, 546 S.W.2d
at 233.
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value of the laundromat four years later was used). There are a countless number of
market factors that could have affected the value of the property in the intervening two
years, making the appraisals an unreliable indicator of the value of the home at the time
of the transaction. Flatford, 1989 WL 4419, at *2 (“Variables too numerous to mention
can cause fluctuations in the price of realty over a five-year period”).
The burden of proving damages rests with the Dixons. Id. “Without proof of
damages, there can be no award of damages.” Id. (citing Inman v. Union Planters Nat’l
Bank, 634 S.W.2d 270, 272 (Tenn. Ct. App. 1982)). Because the Dixons have provided
no proof of the actual value of the house at the time of the transaction taking into account
the concealment of the second track, the judgment of the trial court is reversed.
V. CONCLUSION
For the aforementioned reasons, the decision of the chancery court is hereby
affirmed in part, as modified, and reversed in part. Costs of this appeal are taxed equally
to the appellants, Darrin M. Dixon and Teresa Dixon, and to the appellees, Alan Wayne
Chrisco and Teddi K. Chrisco, for which execution may issue if necessary.
_________________________________
BRANDON O. GIBSON, JUDGE
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