Regina K. Deal v. Robert C. Tatum

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 19, 2015 Session
REGINA K. DEAL V. ROBERT C. TATUM
Appeal from the Chancery Court for Dickson County
No. 2014-CV-368 Larry J. Wallace, Judge
No. M2015-01078-COA-R3-CV – Filed January 29, 2016
At issue is the ownership of real property. Plaintiff and Defendant divorced in 2001. In
February 2005, they purchased a home as ―tenants in common with right of
survivorship.‖ Seven months later, in September 2005, Defendant transferred his interest
in the property to Plaintiff by quitclaim deed. In March 2009, Plaintiff quitclaimed her
interest in the property to Defendant. Neither quitclaim deed was recorded until a dispute
arose in September 2014 following which Plaintiff commenced this action to set aside the
2009 quitclaim deed based on fraud. Plaintiff contends Defendant fraudulently induced
her into conveying the property by assuring her that he would refinance the property and
give Plaintiff her share of the equity within one year. Defendant insists he purchased the
property outright for $9,000, a payment Plaintiff admits receiving. At trial, Defendant
objected to evidence of a purported oral agreement based on the statute of frauds. The
trial court ruled the defense had been waived and that evidence of an oral agreement was
admissible based on equitable estoppel, an exception to the statute of frauds. At the
conclusion of the trial, the court ordered that Plaintiff‘s name be put back on the deed so
that ―both of you . . . own the property together.‖ Both parties appeal. The trial court
summarized the testimony of the witnesses and discussed some relevant legal principles;
however, it made few findings of fact, and the findings of fact and conclusions of law
identified by the trial court fail to disclose the steps by which the trial court reached its
decision. Although, we do not have a clear understanding of the basis for the trial court‘s
decision, it appears that the trial court‘s ruling was based on equitable estoppel, which is
significant because equitable estoppel is not a basis for affirmative relief. Because
equitable estoppel is not a basis for the relief granted and the trial court did not make
sufficient findings of fact and conclusions of law as required by Tenn. R. Civ. P. 52.01,
we vacate the judgment and remand for the trial court to make findings of fact that
include as much of the subsidiary facts as is necessary to disclose the steps by which the
trial court reached its ultimate conclusion on each factual issue.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Vacated and Remanded
FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the Court, in which
RICHARD R. DINKINS and W. NEAL MCBRAYER, JJ., joined.
Irene R. Haude, Nashville, Tennessee, for the appellant, Robert C. Tatum.
Kirk Vandivort and Andrew E. Ellis, Dickson, Tennessee, for the appellee, Regina K.
Deal.
OPINION
Regina K. Deal (―Plaintiff‖) and Robert C. Tatum (―Defendant‖) divorced in 2001.
They later reconciled and, on February 9, 2005, purchased a home on Hargrove Road in
Dickson, Tennessee, as ―tenants in common with right of survivorship.‖
Contemporaneous with purchasing the property at issue, the parties executed a deed of
trust and note in the original principal amount of $117,161, for which they were jointly
and severally liable.
On September 13, 2005, Defendant transferred his interest in the property to
Plaintiff by quitclaim deed for one dollar, ―cash in hand paid,‖ in an effort to shield the
home from Defendant‘s creditors.1 The only written document pertaining to this
transaction is the quitclaim deed executed by both parties. This quitclaim deed was not
recorded until September 14, 2014.
Sometime in 2006 or 2007, the parties separated for the last time when Defendant
moved from the home. Thereafter, Plaintiff attempted to refinance the property but was
unsuccessful, and, in late 2008, she began preparing the property for sale. Upon learning
of this, Defendant expressed interest in acquiring the property. On March 20, 2009,
Plaintiff quitclaimed her interest in the property to Defendant, and as was the case with
the previous conveyance between the parties, the quitclaim deed is the only
documentation of the parties‘ agreement. The quitclaim deed states that the property was
conveyed in consideration of the sum of one dollar, ―cash in hand paid.‖2 Defendant did
not record his 2009 deed until September 8, 2014.
Although no writing exists evidencing an agreement other than that stated in the
quitclaim deed, Plaintiff contends that she conveyed the property to Defendant based on
an expressed agreement that he would refinance the property within one year and pay
1
The consideration affidavit signed by Plaintiff states that ―the actual consideration for this
transfer is $-0-.‖
2
The consideration affidavit signed by Defendant states that ―the actual consideration for this
transfer is $-0-.‖
-2-
Plaintiff her share of the equity. Plaintiff also contends that Defendant agreed the deal
would be off if he was unable to refinance the loan within one year and he would destroy
the quitclaim deed, thereby leaving the property in Plaintiff‘s name. Conversely,
Defendant contends that he paid Plaintiff $9,000 contemporaneously with the conveyance
and that he purchased the property from her with ―no strings attached.‖3 Defendant
acknowledges that the parties discussed refinancing the house in Defendant‘s name but
alleges that this conversation took place after Plaintiff had signed the quitclaim deed and
that there were no agreements regarding Defendant subsequently owing Plaintiff money.
Plaintiff admitted receiving the $9,000 payment and retaining the proceeds, but she
insists that it was to reimburse her for the cost of preparing the property for sale and that
it was not consideration for her equity in the property.4
In any event, Defendant never refinanced the debt, and both parties remained
liable on the deed of trust. In September 2014, believing Defendant had destroyed the
2009 deed pursuant to their agreement, Plaintiff prepared to sell the property. Before she
could do so, however, Defendant recorded the 2009 deed. When Plaintiff learned of this,
she commenced this action alleging in pertinent part ―that the only reason she signed the
[2009] deed was to get her equity from the property. Defendant has failed to refinance
and based thereon, Plaintiff alleges and avers that she was fraudulently induced to convey
the property.‖ The affirmative relief requested by Plaintiff in the Complaint reads as
follows: ―That Defendant be required to either pay her, her equity in said property, or that
the Court Order the property sold and she be paid her equity.‖
Defendant filed an answer in which he admitted that the parties jointly purchased
the property in 2005 but denied agreeing to refinance the debt or pay Plaintiff her equity
in consideration for conveying the property to him in 2009. He admitted that he did not
refinance the debt and that Plaintiff remains liable on the debt. Defendant did not assert
any affirmative defenses, and the only relief Defendant sought was to ―dismiss the
Complaint.‖
The case was tried without a jury. At the beginning of trial, Defendant raised an
objection to the admission of evidence regarding the parties‘ purported oral agreement
based on the statute of frauds. The trial court overruled the objection and explained its
rationale in the following exchange:
3
Defendant introduced into evidence a cancelled check of $9,000 dated March 20, 2009, payable
to Plaintiff with a memo notation ―Payment on House in full 924 Hargrove Rd.‖ The cancelled check
reveals that it was endorsed by ―Regina Tatum‖ and negotiated at Regions Bank on March 20, 2009. The
check was written on the account of Ruth and Roger Moore, who are Defendant‘s parents, and it was
signed by Ruth Moore.
4
Plaintiff testified that, in anticipation of putting the house on the market, she purchased a new
HVAC unit for the home and made repairs to the driveway.
-3-
Trial Court: The Court has reviewed the file . . . [Defendant], I don‘t see
anywhere in here where [the statute of frauds] was specifically pled as a
defense in your answer . . .
Counsel for Defendant: No, Your Honor. It‘s just an objection. I‘m going
to object based on [the statute of frauds]. I mean, I had just said, if she
starts into any documents as it relates to anything, it‘s a four corners test.
Trial Court: All right. Pursuant to the—and of course, you can say
continuing objection, that‘s fine.
[Tennessee case law] says the statute of frauds is waived if not raised as a
defense in the pleading. . . . The other issue is, of course, the fact that even
if the defense has been pled or an Appeals Court finds that it need not be
specially, the Court is still going to have to hear evidence whether the
theory of equitable estoppel would apply to this situation and be outside the
statute of frauds.
So again, [Defendant], you can say continuing objection as it goes forward.
But anyway, I‘m going to let [Plaintiff] go forward with her testimony with
regards to this issue.
Additionally, Defendant argued that Plaintiff failed to plead fraud with
particularity as required by Rule 9.02 of Tennessee Rules of Civil Procedure; however,
the trial court ruled that paragraph 5 of the complaint discussed fraud with sufficient
particularity to satisfy the rules.5
Following a bench trial, the trial court issued its oral ruling, which reads as
follows:
[Plaintiff] testified first. And basically most of the testimony [between the
parties] . . . was pretty consistent. They were married years ago. They
divorced in 2001; however, they continued to live together. They purchased
the property after the divorce through a swap with some other property.
Both of them were on the deed. Both of them were on the note. . . .
5
Paragraph 5 of the complaint reads: ―Plaintiff alleges and avers that she continues to be liable
for the debt on the property. Further, Plaintiff alleges and avers that the only reason she signed the deed
was to get her equity from the property. Defendant has failed to refinance and based thereon, Plaintiff
alleges and avers that she was fraudulently induced to convey the property.‖
-4-
[Defendant] executed the property to [Plaintiff] solely in her name. . . .
[Plaintiff] testified that . . . once [the property] got in her name, there was
no agreement for her to do anything else with it. And then according to
[Defendant], he moved out in 2006 sometime. Then in 2009, [Plaintiff] was
ready to sell the house because she was getting married. [Defendant] called
her up and said let me buy it, according to her testimony, and I will
refinance it in my name solely. . . .
[Plaintiff] testified that she had spent $9,000 on expenses in trying to get
the house ready to sell, which included a driveway, HVAC, and upkeep . . .
on the home. According to her testimony, [Defendant] agreed that he would
pay her that back. And then the deal went through. . . . [A]ccording to her
testimony, [Defendant] called [Plaintiff] back and said he was unable to
refinance, could he get a year to try to get it worked out.
[Plaintiff] testified that [the parties agreed] they would get an appraisal. He
agreed to pay her equity based on that appraisal. She mentioned some
figures, $30,000, $40,000, that type of thing. Again, she testified that
[Defendant] said he would get it refinanced in a year, or otherwise the deal
would be off on the situation.
Of course, that never happened as far as the refinancing. . . . [Plaintiff]
testified that sometime in September [of 2014] . . . she told [Defendant] that
she was just going to sell the property. And then the deed that was signed
on March 20, 2009, was recorded on September 8, 2014. She testified that
her credit was damaged because of all of this.
...
And then we had [Defendant] testify. Again, [he] reiterated the same facts
for the most part as [Plaintiff], up until the time of March 2009, basically.
And his testimony was that he was going to buy [Plaintiff] out for the
$9,000 . . . He denied that he was supposed to pay her anymore money or
that the refinancing was really part of the deal. He denied that. He claimed
that she ruined his credit also. He did admit though that there were some
discussions occurring about getting the mortgage out of [Plaintiff‘s] name
on the day of the transfer and day of the money, and that the $9,000 was
exchanged too.
In fact, I believe he said it was done—he gave her the check, and then the
conversation [about the refinancing] was around that same time. But he
stated that the $9,000 was for the purchase to buy her out, not for her
expenses. . . .
-5-
There are several issues to cover here. One is the statute of frauds issue . . .
because of the fact that it does involve real estate and there was no written
agreement, [Defendant‘s] attorney raised that.
Of course, the Court already mentioned that on the pleadings [the statute of
frauds is] not mentioned, and there was case law regarding that issue, with
the waiver issue. However, assuming that there is a statute of frauds
argument even, the Court is particularly persuaded by the case of Thornton
v. Marcum . . . In that case, there was also a question about the statute of
frauds. [T]he Court in that case ruled that . . . specific performance was
awarded because of equitable estoppel.
...
In quoting that case . . . the Court of Appeals has previously recognized, the
purpose of the statute of frauds is not to allow a party to avoid agreements
he or she has made . . . It‘s long been recognized in our courts that strict
application of the statute of frauds can lead to evils as undesirable as those
it was designed to limit or prevent. Consequently, it should not be used to
avoid contracts or to grant a privilege to a person to refuse to perform what
he has agreed to do. In order to prevent such results, our courts have held
that in some circumstances a party is estopped to assert the statute of frauds
to avoid contractual undertakings in the interest of equity and fairness.
Estoppel, based on the principles of equity, may be applied in a number of
situations, including to preclude an assertion of the statute of frauds.
Of course, . . . the Appellate Courts in this state consistently have refused to
enforce an oral contract for the sale of land on the basis of part performance
alone. And it is now a rule of property in this state that part performance of
a parol contract for the sale of land will not take an agreement out of the
statute of frauds.
The harshness of this rule has been mitigated by the application of the
doctrine of equitable estoppel in exceptional cases, where to enforce the
statute of frauds would make it an instrument of hardship and oppression.
The burden of proof, of course, is on the party seeking to invoke equitable
estoppel. There is a compelling reason that the doctrine of equitable
estoppel is necessary. The basis of equitable estoppel is that once a party
acts or refrains from acting in such a way as to indicate an agreement, and
another party reasonably relies on that indication of agreement, the first
party cannot later assert a contrary position.
-6-
So when the Court looks at the evidence, the testimony . . . [Plaintiff] seems
more credible on the discrepancies. The Court is particularly . . . concerned
about this issue with the deed. You know there‘s a real strong
circumstantial evidence there, that when the deed was signed on March 20,
2009, and it wasn‘t recorded until September 8, 2014, approximately five
and a half years later, [this] lends the Court to the theory that [Plaintiff] ‘s
testimony is probably more accurate than [Defendant] ‘s with regard to
their agreement.
So the Court does find that equitable estoppel should apply in this case
towards [Plaintiff‘s] favor. She‘s met her burden of proof on that point.
Both of their names are still on the mortgage. Of course, the Court‘s job is
to attempt to try to get to the truth. The Court believes [Plaintiff‘s]
testimony is more to the truth than [Defendant‘s], at least when they
diverged in 2009 on their testimony. . . .
So the Court is going to order that [Plaintiff‘s] name be put back on the
deed, and both of you all own the property together . . . Court costs will be
split equally.
Defendant appealed and raises the following issues: (1) whether the trial court
erred by holding that the statute of frauds does not apply because of waiver or estoppel;
(2) whether the complaint should be dismissed because Plaintiff failed to establish an
essential element of her case for fraud or failed to plead fraud with particularity; (3)
whether the trial court erred by adding Plaintiff‘s name to the deed; and (4) whether
Defendant is entitled to an award of attorney fees on appeal and for the defense of the
lawsuit in the chancery court. Further, Plaintiff raises the additional issue of whether the
court erred in failing to find a breach of contract or, in the alternative, an invalid contract.
STANDARD OF REVIEW
The factual findings of a trial court are accorded a presumption of correctness, and
this court will not overturn those factual findings unless the evidence preponderates
against them. Phipps v. Phipps, No. E2014-00922-COA-R3-CV, 2015 WL 335843, at * 3
(Tenn. Ct. App. Jan. 27, 2015) (citing Tenn. R. App. P. 13(d), perm. app. denied, (Tenn.
May 15, 2015); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001)). We review legal
issues under ―a pure de novo standard of review, according no deference to the
conclusions of law made by the lower courts.‖ S. Constructors, Inc. v. Loudon Cnty. Bd.
of Educ., 58 S.W.3d 706, 710 (Tenn. 2001).
-7-
ANALYSIS
At the outset, we must address the sufficiency of the trial court‘s findings of fact
and conclusions of law under Rule 52.01 of the Tennessee Rules of Civil Procedure.
Rule 52.01 requires that ―[i]n all actions tried upon the facts without a jury, the court
shall find the facts specially and shall state separately its conclusions of law and direct
the entry of the appropriate judgment.‖ Tenn. R. Civ. P. 52.01.6 ―We have previously
stated that the requirement of detailed findings of fact and conclusions of law is ‗not a
mere technicality.‘‖ Burnett v. Burnett, No. M2014-00833-COA-R3-CV, 2015 WL
5157489, at *4 (Tenn. Ct. App. Aug. 31, 2015) (quoting In re K.H., No. W2008-01144-
COA-R3-PT, 2009 WL 1362314, at *8 (Tenn. Ct. App. May 15, 2009)), no perm. app.
filed. While there is no bright-line test by which to assess the sufficiency of the trial
court‘s factual findings, the general rule is that ―the findings of fact must include as much
of the subsidiary facts as is necessary to disclose to the reviewing court the steps by
which the trial court reached its ultimate conclusion on each factual issue.‖ In re Estate of
Oakley, No. M2014-00341-COA-R3-CV, 2015 WL 572747, at *11 (Tenn. Ct. App. Feb.
10, 2015) (quoting Lovlace v. Copley, 418 S.W.3d 1, 35 (Tenn. 2013)), no perm. app.
filed.
Findings of fact and conclusions of law that satisfy the Rule 52.01 requirement
serve the following purposes:
First, they facilitate appellate review by giving us ―a clear understanding of
the basis [for] a trial court‘s decision.‖ [Lovlace, 418 S.W.3d at 34] Second,
such findings illustrate precisely which issues the court is deciding so that
the doctrines of collateral estoppel and res judicata may be applied to future
cases. Id. at 35. Third, findings of fact and conclusions of law may
eliminate the need for or limit the scope of an appeal by prompting the trial
court to carefully articulate and apply the facts underlying the decision. Id.
Burnett, 2015 WL 5157489, at *4. Without these findings, appellate courts are ―left to
wonder on what basis the [trial] court reached its ultimate decision.‖ In re M.E.W., No.
M2003-01739-COA-R3-PT, 2004 WL 865840, at *19 (Tenn. Ct. App. April 21, 2004).
For the foregoing reasons, we will now consider whether the trial court‘s findings
of fact provide a clear understanding of the basis for its decision. See Lovlace, 418
S.W.3d at 34. Further, as is the case here, when there are multiple issues, we will
6
Prior to July 1, 2009, trial courts were only required to make specific findings of fact and
conclusions of law ―upon request made by any party prior to the entry of judgment.‖ See Poole v. Union
Planters Bank N.A., 337 S.W.3d 771, 791 (Tenn. Ct. App. 2010) (noting the amendment). However, the
current version of Rule 52.01 requires the court to make these findings regardless of a request by either
party. Id.
-8-
consider whether the findings of fact include as much of the subsidiary facts as is
necessary ―to disclose . . . the steps by which the trial court reached its ultimate
conclusion on each factual issue.‖ In re Estate of Oakley, 2015 WL 572747, at *11
(quoting Lovlace, 418 S.W.3d at 35).
The trial court made a specific finding of fact concerning the credibility of the
parties‘ testimony, stating from the bench: ―[W]hen the Court looks at the evidence, the
testimony . . . [Plaintiff] seems more credible on the discrepancies.‖ This is a significant
finding of fact because we give great weight to a trial court‘s determinations of credibility
and weight of oral testimony. See Estate of Walton v. Young, 950 S.W.2d 956, 959 (Tenn.
1997) (―Because the trial judge is in a better position to weigh and evaluate the credibility
of the witnesses who testify orally, we give great weight to the trial judge‘s findings on
issues involving credibility of witnesses.‖). The trial court also provided a summary of
the parties‘ testimony, much of which is quoted earlier in this opinion.
The credibility finding notwithstanding, the trial court did not make specific
findings of fact concerning several material issues. Furthermore, the trial court‘s
recitation of the parties‘ testimony does not identify the facts the court relied upon in
reaching its ultimate decision, to put Plaintiff‘s name on the deed with that of Defendant.
See In re Estate of Oakley, 2015 WL 572747, at *11; see also Lovlace, 418 S.W.3d at 35.
This omission is significant because a mere summary of testimony will not comply with
Tenn. R. Civ. P. 52.01 if the summary does not provide a clear understanding of the basis
for the trial court‘s decision. See In re C.E.P., No. E2003-02410-COA-R3-PT, 2004 WL
2191040, at *2 (Tenn. Ct. App. Sept. 29, 2004) (―In that judgment [terminating the
father's parental rights], the trial court made very few, if any, findings of fact; instead, the
judgment was replete with summaries of the parties' testimony.‖); see also Tucker v.
State, No. 02C01-9707-CR-00249, 1998 WL 188850, at *2 n.2 (Tenn. Crim. App. April
21, 1998), perm. app. denied, (Tenn. Jan. 11, 1999) (―A summary of testimony does not
constitute findings of fact.‖).
Notably, the trial court did not make any findings or draw any legal conclusions
regarding Plaintiff‘s cause of action, fraudulent inducement. To prevail on a claim of
fraudulent inducement, the party asserting the claim has the burden of proving that the
defendant:
(1) made a false statement concerning a fact material to the transaction; (2)
with knowledge of the statement‘s falsity or utter disregard for its truth; (3)
with the intent of inducing reliance on the statement; (4) the statement was
reasonably relied upon; and (5) an injury resulted from this reliance.
Baugh v. Novak, 340 S.W.3d 372, 388 (Tenn. 2011).
-9-
The essence of fraud is deception. Lopez v. Taylor, 195 S.W.3d 627, 634 (Tenn.
Ct. App. 2005). ―In its most general sense, fraud is a trick or artifice or other use of false
information that induces a person to act in a way that he or she would not otherwise have
acted.‖ Id. (citing Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 301
(Tenn. Ct. App. 2001)). Fraud occurs when a person intentionally misrepresents a
material fact or intentionally produces a false impression in order to mislead another or to
obtain an unfair advantage. Id. (citing Brown v. Birman Managed Care, Inc., 42 S.W.3d
62, 66 (Tenn. 2001)).
In this case, the trial court did not make a specific finding that Defendant ―made a
false statement concerning a fact material‖ regarding the 2009 conveyance, and it did not
state whether Defendant ―fraudulently induced‖ Plaintiff to convey the property to him in
2009. Moreover, the trial court made no findings of fact concerning whether Defendant
made an intentional misrepresentation ―of an existing material fact,‖ and whether
Defendant had ―knowledge of the representation‘s falsity‖ at the time the statement was
made.7 Furthermore, we note that the mere fact that Defendant did not refinance the
property after Plaintiff conveyed it to him in March 2009 does not, standing alone, prove
that he did not have a present intention of refinancing the loan when the statement was
made. See Houghland v. Security Alarms & Servs., Inc., 755 S.W.2d 769, 774 (Tenn.
1988) (―When a promise is made in good faith, and with the expectation of carrying it
out, the fact that it subsequently is broken gives rise to no cause of action, either for
deceit, or for equitable relief. Otherwise any breach of contract would call for such
remedy.‖). We also note that the trial court made no findings concerning the fact that
Defendant paid Plaintiff $9,000 contemporaneous with the March 2009 conveyance,
which Plaintiff endorsed and admits retaining. Whether this was considered by the trial
court is uncertain because the court made no findings concerning the relevance or
significance of the $9,000 payment as it may pertain to the issue of fraud.
As for conclusions of law, the trial court did not identify a legal basis for the relief
it granted Plaintiff. The legal principles identified by the trial court pertain to the statute
of frauds, equitable estoppel, and the burden of proof. 8 As the trial court correctly noted,
7
The elements of a claim for fraud include: (1) an intentional misrepresentation of an existing
material fact, (2) knowledge of the representation‘s falsity, and (3) injury caused by reasonable reliance
on the misrepresentation. Lopez v. Taylor, 195 S.W.3d 627, 634 (Tenn. Ct. App. 2005) (citations
omitted).
8
We acknowledge that to the extent Plaintiff‘s cause of action is fraud or fraudulent inducement,
the statute of frauds is inapplicable. In re Estate of Nelson, No. W2006-00030-COA-R3-CV, 2007 WL
851265, at *16 (Tenn. Ct. App. Mar. 22, 2007) (―Under Tennessee law, however, the . . . statute of frauds
appl[ies] only in suits for the breach or enforcement of a contract and [is] thus inapplicable to tort
claims.‖); Loew v. Gulf Coast Dev., Inc., No.01-A-019010CH00374, 1991 WL 220576, at *6 (Tenn. Ct.
App. Nov. 1, 1991) (―[N]either the parol evidence rule nor the statute of frauds prevents the use of parol
evidence to prove a fraudulent inducement to enter into a contract claim.‖); Haynes v. Cumberland
(continued…)
- 10 -
the statute of frauds was not raised as an affirmative defense, and such an omission may
constitute a waiver. The trial court went on to note that equitable estoppel, which is an
exception to the statute of frauds, may preclude a party from asserting the statute of
frauds defense. Further, the trial court correctly stated that the burden of proof is on the
party seeking to invoke equitable estoppel. The relevant portion of the trial court‘s
reasoning reads as follows:
So the Court does find that equitable estoppel should apply in this case
towards [Plaintiff] ‘s favor. She‘s met her burden of proof on that point.
Both of their names are still on the mortgage. Of course, the Court‘s job is
to attempt to try to get to the truth. The Court believes [Plaintiff] ‘s
testimony is more to the truth than [Defendant] ‘s, at least when they
diverged in 2009 on their testimony. . . .
So the Court is going to order that [Plaintiff] ‘s name be put back on the
deed, and both of you all own the property together . . . Court costs will be
split equally.
Based on the foregoing, the trial court concluded that the doctrine of equitable
estoppel was applicable to this case; however, this conclusion does not provide a legal
basis for the relief the court granted Plaintiff.
While equitable estoppel ―is a shield a plaintiff can raise against the defense of the
statute of frauds when the defendant has knowingly misrepresented a fact,‖ it is not a
basis for affirmative relief.9 See Seramur v. Life Care Centers of America, Inc., No.
E2008-01364-COA-R3-CV, 2009 WL 890885, at *5 (Tenn. Ct. App. April 2, 2009)
(noting the difference between equitable estoppel and doctrines like promissory
estoppel). Instead, equitable estoppel operates as an exception to the statute of frauds,
allowing a plaintiff to assert a claim under an otherwise unenforceable oral contract in
certain instances. See id. Importantly, equitable estoppel is not a cause of action, and
standing alone it will not entitle the party to affirmative relief. See Laundries, Inc. v.
Coinmach Corp., No. M2011-01336-COA-R3-CV, 2012 WL 982968, at *7 (Tenn. Ct.
Builders, Inc., 546 S.W.2d 228, 231 (Tenn. Ct. App. 1976). Even if Plaintiff stated a claim for breach of
contract or the parties tried the issue by consent, see Tenn. R. Civ. P. 15.02, the trial court did not make
any findings about the existence of a contract or the content of its terms, and it is unclear how enforcing
any of the parties‘ alleged oral agreements would result in both of them owning the property together.
9
―[W]hile equitable estoppel has been a defense to the statute of frauds, promissory estoppel is
not recognized as an exception to the statute of frauds. Thus, promissory estoppel is a sword, based on the
failure to deliver on a promise, while equitable estoppel is a shield a plaintiff can raise against the defense
of the statute of frauds when the defendant has knowingly misrepresented a fact.‖ Seramur v. Life Care
Centers of Am., Inc., No. E2008-01364-COA-R3-CV, 2009 WL 890885, at *5 (Tenn. Ct. App. Apr. 2,
2009) (internal citation omitted).
- 11 -
App. Mar. 20, 2012) (―Although Coinmach set forth equitable estoppel as a claim
entitling it to relief, the law in Tennessee is clear that equitable estoppel is available to
protect a right but not to create one.‖). Once a party demonstrates that equitable estoppel
applies, it must continue with its case and prove the elements of a cause of action –
breach of contract, promissory estoppel, fraud, etc. – entitling it to the relief it seeks.
An example may be helpful. In Thornton v. Marcum, the plaintiff brought an
action for specific performance based on an oral contract for the sale of land. No. E2007-
01326-COA-R3-CV, 2008 WL 836368, at *1 (Tenn. Ct. App. Mar. 31, 2008). Although
the statute of frauds would ordinarily prevent the plaintiff from enforcing that agreement,
the trial court found that equitable estoppel applied and granted the plaintiff the remedy
of specific performance of the parties‘ oral agreement. See id. at *1, 4. (―The Trial Court
then observed that the Statute of Frauds would apply, but that the equitable estoppel
exception would also apply, such that the parties’ agreement should be enforced despite
the fact the writing was never signed.‖ (emphasis added)). This court affirmed. See id. at
*4. The doctrine of equitable estoppel allowed the plaintiff in Thornton to bring suit to
enforce an oral contract for the sale of land. See id. at *2-3. However, the plaintiff was
only entitled to specific performance because of the agreement that the defendants agreed
existed. See id. at *1, 3. Equitable estoppel allowed the trial court to enforce the
agreement notwithstanding the statute of frauds, but the agreement itself was the basis for
the relief the plaintiff was granted. See id. at *1, *3-4.
For the reasons identified above, the findings of fact and conclusions of law
identified by the trial court do not disclose the steps by which the trial court reached its
ultimate decision to put Plaintiff‘s name on the deed along with Defendant. See Lovlace,
418 S.W.3d at 34. This is particularly significant due to the fact Plaintiff only sought to
set aside the 2009 quitclaim deed based on fraud. As noted earlier, Plaintiff was the sole
owner of the property prior to executing the 2009 quitclaim deed to Defendant.
Therefore, if the court had granted Plaintiff the relief she sought, the court would have set
aside the 2009 quitclaim deed based on fraud, and she would be the sole owner of the
property, not a co-owner with Defendant, which is the result of the trial court‘s judgment.
Alternatively, if the trial court had denied the relief sought by Plaintiff, then Defendant
would retain sole ownership of the property based on the 2009 quitclaim deed, which is
the relief Defendant sought.
When a trial court‘s factual findings fail to satisfy the Rule 52.01 mandate, we
may conduct a de novo review of the record to determine where the preponderance of the
evidence lies or remand the case to the trial court with directions to issue sufficient
findings and conclusions. Lovlace, 418 S.W.3d at 36. In this case we believe the better
course is to remand.
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Therefore, we vacate the judgment and remand to the trial court to make findings
of fact and to state conclusions of law concerning the issues, claims, and defenses the
trial court deems relevant and to render judgment as the trial court deems appropriate.
IN CONCLUSION
The judgment of the trial court is vacated, and this matter is remanded for further
proceedings consistent with this opinion. Costs of appeal are assessed against the parties
equally.
______________________________
FRANK G. CLEMENT, JR., JUDGE
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