Sherrard v. Dickson

IN THE COURT OF APPEALS OF TENNESSEE
DR. DONALD SHERRARD and wife
MELANIE SHERRARD,
)
)
FILED
C/A NO. 03A01-9701-CV-00007
)
Plaintiffs-Appellants, ) September 23, 1997
)
) Cecil Crowson, Jr.
v. ) APPEAL AS OF RIGHT FROM ourt Clerk
Appellate C THE
) KNOX COUNTY CIRCUIT COURT
)
)
WALT DICKSON doing business as )
WALT DICKSON CONSTRUCTION COMPANY )
and BOB JONES, )
) HONORABLE HAROLD WIMBERLY,
Defendants-Appellees. ) JUDGE
For Appellants For Appellee Dickson
DOUGLAS L. DUTTON W. NEAL McBRAYER
AMY V. HOLLARS Trabue, Sturdivant & DeWitt
Hodges, Doughty & Carson Nashville, Tennessee
Knoxville, Tennessee
For Appellee Jones
JEFFREY A. WOODS
Robertson, Ingram & Overbey
Knoxville, Tennessee
OPINION
AFFIRMED AND REMANDED Susano, J.
1
This litigation arose out of the sale of a subdivision
lot. The plaintiffs, Dr. Donald Sherrard and his wife, Melanie
Sherrard (“Sherrards”), sued Walt Dickson, doing business as
Dickson Construction Company (“Dickson”) and Bob Jones (“Jones”),
alleging that the defendants breached a contract of sale by
failing to provide a lot suitable for construction of the “house
of [their] choice”; that the defendants misrepresented the nature
and extent of brush and other debris buried on the lot; and that
the defendants violated the Tennessee Consumer Protection Act,
T.C.A. § 47-18-101, et seq., (“the Act”) by failing to disclose
the full extent of such debris. Following a bench trial, the
court found that the Sherrards were entitled to a judgment of
$11,000 against Dickson for breach of contract and negligent
misrepresentation. It also found that Dickson had violated the
Act and that the Sherrards were consequently entitled to
attorney’s fees of $3,500. The trial court dismissed the
Sherrards’ complaint against Jones. The Sherrards and Dickson
each question various aspects of the trial court’s judgment,
raising several issues which in substance present the following
questions for our review:
1. Did the trial court err in finding
Dickson liable for breach of contract and
negligent misrepresentation?
2. Did the trial court err in finding that
Dickson had violated the Tennessee Consumer
Protection Act?
3. Did the trial court err in awarding
actual damages of $11,000 to the Sherrards?
4. Did the trial court abuse its discretion
in awarding the Sherrards a portion of their
attorney’s fees, but no discretionary costs?
2
5. Did the trial court err in dismissing the
Sherrards’ claims against Bob Jones?
I. Facts
On January 20, 1993, the Sherrards and Dickson executed
a contract, by the terms of which the Sherrards agreed to
purchase Lot 22 in the Bennett Place Subdivision. The lot was
owned by Dickson and Jones. Dickson had also owned adjoining Lot
21 at some time in the past. The subject contract contains the
following provision:
Please note that during development of
Bennett Place some brush was buried on the
lot line between [lots] 21 & 22. This brush
is on the lot line and should not affect
construction of the house of your choice on
Lot 22. Have your builder contact us and
we’ll show him exactly.
The Sherrards discussed this provision with Dickson’s wife and
agent, Marty McGinnis-Dickson, with whom the Sherrards had
negotiated the purchase of Lot 22. She informed the Sherrards
that the debris would not interfere with the construction of
their house.
The Sherrards retained Glenard Harrington, a general
contractor, to build their house. The contract between the
Sherrards and Harrington included an allowance of $11,000 for the
construction of the house’s foundation, and provided that the
Sherrards would be responsible for any additional cost.
3
Upon commencement of construction, Harrington and his
sub-contractor discovered debris in several test-holes dug along
the outline of the foundation walls. Harrington notified the
Sherrards and also contacted Dickson regarding the discovery.
After inspecting the site, Dickson informed Harrington that brush
was buried only along the property line between Lots 21 and 22.
He also stated that Harrington should have contacted him prior to
commencing construction so that Dickson could have shown
Harrington the precise location of the brush. Dickson also
suggested placing the house further away, at a distance of 20
feet from the lot line, and modifying the house plans to allow
rear access to the garage.
Harrington continued excavating the foundation area and
experienced several cave-ins that he testified were due to
uncompacted fill dirt on the site. He also discovered a large
brush pit at the left front corner of the house site,
approximately 21 feet from the property line. Dickson admitted
at trial that even had Harrington followed his suggestion to
build the house 20 feet from the lot line, the house nevertheless
would have been situated almost ten feet into the brush pit.
Harrington testified to finding, in addition to the brush pit,
brush and trees buried “all over the lot” and, with the exception
of one section near the front wall of the garage, along the
entire foundation of the house. Furthermore, he discovered
significant amounts of concrete buried along the proposed
location of the back wall of the house.
4
Harrington consulted an engineer, Bob Collignon,
regarding a solution to the problems created by the debris.
After observing debris “throughout the entire location of the
house,” Collignon suggested that Harrington construct higher
foundation walls and wider footings, and that he insert steel
rods for support. He testified that this was the best, least-
expensive method to compensate for the debris. Harrington
subsequently implemented Collignon’s recommendations. The
Sherrards contend that the construction of the house’s foundation
ultimately cost an additional $51,011.06, which amount they paid.
Dickson testified that other than the brush that had
been buried along the lot line during development of the
subdivision, he was unaware of any material buried on Lot 22. He
testified that he knew the buried brush extended as much as 60
feet from the lot line at the front of the lot, and that the
width of the brush pit decreased to approximately 25 feet at the
rear of the lot1. However, Dickson maintained that the brush
should not have interfered with construction of the house, since
the area where it extended to a width of 60 feet was not within
the part of the lot on which a house legally could be
constructed, given the various setback restrictions. Dickson
also contended that the brush pit easily could have been avoided
had Harrington contacted him to determine its exact location
prior to beginning construction.
After taking the matter under advisement for some
period of time, the trial court heard further proof limited to
1
Lot 22 was approximately 95 feet wide along the front of the lot, and
approximately 188 feet wide at the rear.
5
the Sherrards’ attorney’s fees and costs. It then awarded the
Sherrards a judgment of $11,000 against Dickson, finding Dickson
liable for breach of contract and negligent misrepresentation.
Finding that Dickson had also violated the Tennessee Consumer
Protection Act, the trial court awarded the Sherrards $3,500 of
their attorney’s fees of $6,653.93. The court declined, however,
to award treble damages or any discretionary costs to the
Sherrards, and it dismissed the Sherrards’ claims against Jones.
II. Standard of Review
In this non-jury case, our review is de novo upon the
record, with a presumption of correctness as to the trial court’s
factual determinations, unless the preponderance of the evidence
is otherwise. Rule 13(d), T.R.A.P.; Union Carbide Corp. v.
Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993). The trial court’s
conclusions of law, however, are afforded no such presumption.
Campbell v. Florida Steel, 919 S.W.2d 26, 35 (Tenn. 1996);
Presley v. Bennett, 860 S.W.2d 857, 859 (Tenn. 1993).
In this case, the trial court made no findings of fact.
This, of course, causes some uncertainty as to the basis of the
trial court’s judgment. Kelly v. Kelly, 679 S.W.2d 458, 460 n.1
(Tenn.App. 1984)(citing Fisher v. Fisher, 648 S.W.2d 244, 245
(Tenn. 1983)). As a result, there is nothing in the record to
which the presumption of correctness found in Rule 13(d),
T.R.A.P., can attach. Devorak v. Patterson, 907 S.W.2d 815, 818
(Tenn.App. 1995); Goodman v. Memphis Park Comm’n, 851 S.W.2d 165,
166 (Tenn.App. 1992); Kelly, 679 S.W.2d at 460. We thus review
6
the record de novo and focus on the result reached by the trial
court, mindful of the fact that we are called upon to pass upon
the correctness of that result. Shelter Ins. Companies v. Hann,
921 S.W.2d 194, 202 (Tenn.App. 1995); Kelly, 679 S.W.2d at 460.
We also note that the trial court is in the best
position to assess the credibility of the witnesses; accordingly,
such determinations are entitled to great weight on appeal.
Massengale v. Massengale, 915 S.W.2d 818, 819 (Tenn.App. 1995);
Bowman v. Bowman, 836 S.W.2d 563, 566 (Tenn.App. 1991). Since
the trial judge resolved the issues partially--but not entirely--
in favor of the Sherrards’ position, we must assume that he
determined all issues of credibility in a manner that supports
his result. See Devorak, 907 S.W.2d at 818-19 (finding, despite
an absence of findings of fact, that the trial court had
accredited the testimony of the defendants, given its judgment in
their favor on claims of fraud and misrepresentation).
III. Applicable Law
The Sherrards’ theories of recovery against Dickson
essentially fall into three categories: breach of contract,
misrepresentation, and violation of the Tennessee Consumer
Protection Act, T.C.A. § 47-18-101, et seq.
In order to prevail on a claim of negligent
misrepresentation, a plaintiff must prove that: 1) the defendant
supplied information to the plaintiff; 2) the information was
false; 3) the defendant failed to exercise reasonable care in
7
obtaining or communicating the information; and 4) the plaintiff
justifiably relied upon the information. Hill v. John Banks
Buick, Inc., 875 S.W.2d 667, 670 (Tenn.App. 1993); Atkins v.
Kirkpatrick, 823 S.W.2d 547, 552 (Tenn.App. 1991); Merriman v.
Smith, 599 S.W.2d 548, 556-57 (Tenn.App. 1979). Each of the
foregoing elements must be established by a preponderance of the
evidence. Hill, 875 S.W.2d at 670; Atkins, 823 S.W.2d at 552;
Merriman, 599 S.W.2d at 556-57.
The Tennessee Consumer Protection Act, T.C.A. §47-18-
101, et seq., provides, in pertinent part, that
...the following unfair or deceptive acts or
practices affecting the conduct of any trade
or commerce are declared to be unlawful and
in violation of this part:
* * * *
Engaging in any other act or practice which
is deceptive to the consumer or to any other
person....
T.C.A. § 47-18-104(b)(27). The Act confers a private right of
action on an individual who has been damaged as a result of a
violation of its provisions. Haverlah v. Memphis Aviation, Inc.,
674 S.W.2d 297, 305 (Tenn.App. 1984); Brungard v. Caprice
Records, Inc., 608 S.W.2d 585, 591 (Tenn.App. 1980). Our courts
have recognized that unfair or deceptive acts in the sale of real
estate fall within the ambit of the statute. Steed Realty v.
Oveisi, 823 S.W.2d 195, 198 (Tenn.App. 1991). The Act further
provides that
8
[i]f the court finds that the use or
employment of the unfair or deceptive act or
practice was a willful or knowing violation
of this part, the court may award three (3)
times the actual damages sustained and may
provide such other relief as it considers
necessary and proper.
T.C.A. § 47-18-109(a)(3) (emphasis added). Thus, the Act vests
the trial court with broad discretion in determining whether to
award treble damages or other relief in the event the court finds
a “willful or knowing violation.” Id.; see also Smith v. Scott
Lewis Chevrolet, Inc., 843 S.W.2d 9 (Tenn.App. 1992).
IV. The Sherrards’ Claims against Dickson
Our review of the record persuades us that the proof
supports the trial court’s finding of a negligent
misrepresentation by Dickson. It is obvious that Dickson
supplied information to the plaintiffs when he stated in the
contract that brush was buried “on the lot line” between Lots 21
and 22. Furthermore, Dickson represented that the brush “should
not affect construction of the house of [the Sherrards’]
choice...” As to the second element of a negligent
misrepresentation, the information furnished by Dickson
ultimately proved to be false. It is clear from the testimony of
all witnesses, including Dickson, that there was brush buried in
locations so far from the property line that it could not
reasonably be considered “on the lot line”. Harrington testified
that in the construction industry, the words “on the lot line”
connote an area within the city-mandated setback, i.e.,
approximately ten feet. The proof indicates that the brush pit
9
extended along the property line and ranged in width from 25 to
60 feet from the lot line. In addition, the statement in the
contract that the brush should not affect construction of the
house of the Sherrards’ choice proved to be false. Obviously,
the brush pit did interfere significantly with the construction
of the Sherrards’ house, leading to increased time, effort and
expense in building the foundation.
The third and fourth elements of a negligent
misrepresentation claim are also present. The proof indicates
that Dickson did not exercise reasonable care in communicating
information about the buried material to the Sherrards. Despite
Dickson’s knowledge of the size of the brush pit, he nevertheless
represented twice in the contract that the brush was buried only
“on the lot line.” Finally, it was Dickson, not the Sherrards,
who had reason to know the full extent of the material buried in
the brush pit. Thus, the Sherrards’ reliance upon his
representations was entirely reasonable. Therefore, we find that
each of the four elements of negligent misrepresentation was
established in this case by a preponderance of the evidence. See
Hill, 875 S.W.2d at 670; Atkins, 823 S.W.2d at 552; and Merriman,
599 S.W.2d at 556-57.
Dickson contends that the Sherrards’ reliance on the
representation that the brush “should not affect construction”
was unreasonable, given their failure to follow the contract’s
suggestion to have their builder contact Dickson to learn the
exact location of the brush. We disagree. Regardless of whether
the Sherrards should or should not have inquired into the exact
10
location of the brush, the contract statements under review
constitute misrepresentations. We cannot ignore the existence or
the consequences of these misrepresentations simply because of
the contract’s subsequent solicitation of further discussion.
Given the foregoing, we find that the evidence does not
preponderate against the trial court’s decision that Dickson is
liable for negligent misrepresentation. In view of our
disposition of this issue, and the fact that the trial court
found Dickson liable for both “breach of contract and negligent
misrepresentation” without further explanation, we deem it
unnecessary to address the question of whether the contract was
breached. In this case, the damages to which the Sherrards would
be entitled are the same under both theories.
Dickson also argues that the trial court erred in
finding him liable for violating the Act. The Sherrards, in
turn, argue that the trial court correctly found that Dickson had
violated the Act, but they insist that the court should have
adjudged such violations to be knowing or willful, thus rendering
Dickson potentially liable for treble damages, as well as the
full amount of their attorney’s fees and discretionary costs.
Again, we find no error on the part of the trial court.
The record supports a finding of negligent -- not intentional --
misrepresentation on the part of Dickson. There was proof which,
if believed, supports the trial court’s implicit finding that
Dickson had no intent to deceive the Sherrards. For example,
Dickson testified that he had no knowledge of, nor was he
11
responsible for, any buried debris on the lot other than that
which was contained in the brush pit. This testimony was
obviously accredited by the trial court, see Devorak, 907 S.W.2d
at 819, in view of the fact that it failed to find a knowing or
willful violation of the Act or award treble damages and costs to
the Sherrards. As noted earlier, the trial court was in the best
position to assess the credibility of the witnesses2, and such
determinations are entitled to great weight on this appeal.
Massengale v. Massengale, 915 S.W.2d 818, 819 (Tenn.App. 1995);
Bowman v. Bowman, 836 S.W.2d 563, 566 (Tenn.App. 1991). We
therefore find that the evidence does not preponderate against
the trial court’s failure to find that Dickson’s actions were
willful or knowing.
We believe, however, that Dickson’s actions did fall
within the range of “unfair or deceptive” conduct prohibited by
the Act, T.C.A. § 47-18-101, et seq. Specifically, Dickson’s
misrepresentations regarding the location and extent of the
brush, and its potential impact upon construction, were
“deceptive to the consumer,” as proscribed by T.C.A. § 47-18-
104(b)(27). This court has recognized that the Act contemplates
not only intentional conduct, but also negligent conduct. Smith
v. Scott Lewis Chevrolet, Inc., 843 S.W.2d 9, 13 (Tenn.App.
1992). In fact, in most cases brought under the Act, a
2
We disagree with the Sherrards’ contention that the trial court’s
failure to find a knowing or willful violation of the Act was not based upon
its assessment of the credibility of the witnesses. It is clear that the
trial court must have accredited Dickson’s testimony that he was unaware of
debris buried in areas other than in the brush pit. See Devorak, 907 S.W.2d
at 819. Likewise, the trial court apparently gave some credence to Dickson’s
testimony to the effect that the brush pit’s extension to widths up to 60 feet
from the lot line at some points was inconsequential because it did so only in
areas on which the house could not legally be constructed. Id.
12
plaintiff’s recovery is limited to actual damages and reasonable
attorney’s fees. Brungard v. Caprice Records, Inc., 608 S.W.2d
585, 591 (Tenn.App. 1980). Since the proof does not preponderate
against the conclusion that Dickson’s misrepresentations were
unintentional, the trial court did not err in finding Dickson
liable for negligent, deceptive conduct that violated the Act.
The decision to award treble damages under the Act
rests within the trial court’s broad discretion. See T.C.A. §
47-18-109(a)(3)(“...[i]f the court finds... a willful or knowing
violation of this part, the court may award three (3) times the
actual damages...”) (emphasis added); Smith, 843 S.W.2d at 12.
That discretion does not come into play until the court has found
a “willful or knowing violation.”
The Sherrards rely on the unreported case of Brandon
v. Dennis A. Winnett d/b/a Winnett Home Builders, Inc.3, for the
proposition that double damages may be awarded in the case of
negligent misrepresentation. Brandon is inapposite. There the
trial court made a specific finding that the defendant willfully
violated the Act. There is no such finding in this case. In any
event, a decision to award more than actual damages under the Act
lies within the sound discretion of the trial court, and depends
upon the facts of each case. T.C.A. § 47-18-109(a)(3). In this
case, we find no absue of discretion in the trial court’s
decision not to multiply the damages.
3
C/A No. 01A01-9411-CH-00592, 1995 WL 444385 (Tenn.App., W.S., filed
July 28, 1995, Highers, J.)
13
By the same token, the trial court is vested with broad
discretion in the allowance of attorney’s fees and other costs
under the Act. See T.C.A. § 47-18-109(a)(3)(“...[the trial
court] may provide such other relief as it considers necessary
and proper.”)(emphasis added); Haverlah v. Memphis Aviation,
Inc., 674 S.W.2d 297, 306 (Tenn.App. 1984). Furthermore, Rule
54.04 of the Tennessee Rules of Civil Procedure provides that
costs of the type sought by the Sherrards “are allowable only in
the court’s discretion.” Id. We find nothing in the record to
indicate that the trial court abused its discretion regarding
attorney’s fees and other discretionary costs.
As an additional matter, the Sherrards take issue with
the amount of damages awarded by the trial court. They contend
that the proof established that they suffered a pecuniary loss of
$51,011.06 as a proximate result of Dickson’s misrepresentations,
and that the evidence therefore preponderates against the trial
court’s award of $11,000.
We find that the amount of damages awarded by the trial
court was appropriate and within the range established by the
testimony at trial. It appears to us that the amount of $11,000
represents the proportion of the increased expenditure that the
court found was applicable to brush that was buried “off the
property line,” for which Dickson was found to be responsible.
As noted earlier, the trial court obviously found that there was
no proof that Dickson was responsible for, or knowledgeable
about, brush and other debris buried in other locations on the
lot. On the contrary, the court’s decision indicates that it
14
found Dickson responsible only for the material buried in the
brush pit and, therefore, culpable only for a portion of the
brush that actually interfered with the construction of the
house. In other words, the trial court did not find Dickson
responsible for the costs incurred by the Sherrards as a result
of the subsurface material of which Dickson was not aware. Thus,
we find no error in the decision of the trial court to limit its
award of damages to $11,000.
Given the foregoing, we conclude that the trial court
correctly decided all issues pertaining to the Sherrards’ claims
against Dickson.
V. Dismissal of the Sherrards’ Claims against Jones
As a final matter, the Sherrards argue that the trial
court erred in dismissing their complaint against Jones. They
contend that a partnership existed between Dickson and Jones, and
that Dickson’s actions therefore should be imputed to Jones,
rendering Jones jointly and severally liable for Dickson’s breach
of contract, misrepresentation, and violation of the Consumer
Protection Act. Jones, on the other hand, argues that he and
Dickson were merely co-owners of the property, and that the facts
do not establish the existence of a partnership.
The burden of proof regarding a partnership rests on
the party alleging its existence -- in this case, the Sherrards.
Pettes v. Yukon, 912 S.W.2d 709, 715 (Tenn.App. 1995); Mullins v.
Evans, 308 S.W.2d 494, 498 (Tenn.App. 1957); Badger v. Boyd, 65
15
S.W.2d 601, 608 (Tenn.App. 1933). In assessing whether a
partnership exists, “no one fact or circumstances [sic] is a
conclusive test, but each case must be decided upon a
consideration of the totality of all relevant facts.” Pettes,
912 S.W.2d at 715 (citing Roberts v. Lebanon Appliance Service,
779 S.W.2d 793, 795 (Tenn. 1989)). Furthermore,
the existence of a partnership may be implied
from the circumstances where it appears that
the individuals involved have entered into a
business relationship for profit, combining
their property, labor, skill, experience, or
money.
Pettes, 912 S.W.2d at 715 (quoting Bass v. Bass, 814 S.W.2d 38,
41 (Tenn. 1991)).
After reviewing the record, we have concluded that the
proof does not establish the existence of a partnership between
Jones and Dickson. It is apparent that Jones was simply a co-
owner or tenant in common with Dickson. The mere fact that Jones
was entitled to 30% of the profits realized from the sale of Lot
22 did not necessarily create a partnership between Dickson and
Jones. T.C.A. § 61-1-106(2) provides that
[j]oint tenancy, tenancy in common, tenancy
by the entireties, joint property, common
property, or part ownership does not of
itself establish a partnership, whether such
coowners do or do not share any profits made
by the use of the property.
Id. In view of this provision, and the fact that Jones was
involved in the development or sale of Lot 22 only to the extent
16
that he owned an interest in the property, we find that, “under
the totality of all relevant facts,” Pettes, 912 S.W.2d at 715,
no partnership existed between Dickson and Jones such as to make
him liable for damages in this case. Thus, the trial court
properly dismissed the Sherrards’ complaint against Jones.
VI. Conclusion
It results that the judgment of the trial court is in
all respects affirmed. Costs on appeal are assessed one-half to
the Sherrards and one-half to Dickson. This case is remanded to
the trial court for enforcement of the trial court’s judgment and
collection of costs assessed below, all pursuant to applicable
law.
__________________________
Charles D. Susano, Jr., J.
CONCUR:
_________________________
Don T. McMurray, J.
_________________________
William H. Inman, Sr.J.
17