Paul J. Myer and Carole A. Myer v. Mark Whitacre, Ginger Whitacre and Fran Haworth, individually and D/B/A Century 21 Haworth Homes

• Court: Court of Appeals of Tennessee
• Decided: July 2, 1997
• Docket: 01A01-9701-CH-00014
• Status: Published

Opinion

PAUL J. MYER and ) CAROLE A. MYER, ) ) Plaintiffs/Appellees, ) ) Appeal No. ) 01-A-01-9701-CH-00014 VS. ) ) Williamson Chancery ) No. 23547 MARK WHITACRE, ) GINGER WHITACRE and FRAN ) HAWORTH, individually and d/b/a CENTURY 21 HAWORTH HOMES, ) ) FILED ) Defendants/Appellants. ) July 2, 1997

Cecil W. Crowson COURT OF APPEALS OF TENNESSEE Appellate Court Clerk MIDDLE SECTION AT NASHVILLE

APPEALED FROM THE CHANCERY COURT OF WILLIAMSON COUNTY AT FRANKLIN, TENNESSEE

THE HONORABLE HENRY DENMARK BELL, JUDGE

HUGH C. HOWSER, JR. 2500 Nashville City Center 511 Union Street Nashville, TN 37219 Attorney for Plaintiffs/Appellees

LISA M. CARSON 306 Court Square Franklin, TN 37064 Attorney for Defendants/Appellants Mark Whitacre and Ginger Whitacre

AFFIRMED AND REMANDED

BEN H. CANTRELL, JUDGE

CONCUR: TODD, P.J., M.S. KOCH, J. OPINION

In this case involving a breach of a real estate contract, the appellant

asserts that the evidence preponderates against the amount of damages found and

the award of prejudgment interest. We affirm the judgment of the trial court.

I.

In July of 1995 the sellers and buyers executed a contract for the sale

of a house and lot at 2021 Lynnwood Drive in Franklin for $935,000. Closing was set

for August 11, 1995. On August 9, 1995 the purchasers notified the sellers that they

would be unable to complete the sale.

The sellers immediately put the property back on the market but were

unable to make a sale until June of 1996, when the property sold for $845,500. In an

action against the purchasers for breach of contract, the chancellor awarded the

sellers $89,500 as general damages for the breach (plus special damages that are not

at issue here). The court also awarded prejudgment interest from the original closing

date of August 11, 1995.

II.

The parties agree that the correct amount of damages for the breach of

a contract for the sale of real estate is the difference between the contract price and

the fair market value of the property as of the date of the breach. Yarbrough v. Stiles,

717 S.W.2d 886 (Tenn. App. 1986); Turner v. Benson, 672 S.W.2d 752 (Tenn. 1984).

-2- The date of the breach is ordinarily the closing date. Id.1 The parties diverge as to

what proof is relevant to the question of the fair market value at the time of the breach.

This record shows that immediately after the sale fell through the sellers

had their agent contact other prospective buyers who had expressed an interest in the

property. None of the prospective buyers responded. The agent advertised the

property and aggressively sought to market it, because the sellers had partially moved

out in order to give possession to the buyers. The agent’s efforts, however, failed to

produce a willing buyer until June of 1996.

The agent testified that in her opinion the value of the house in July or

August of 1995 was in a range of $920,000 to $980,000. She said that when a house

first comes on the market there is a short window of opportunity when buyers compete

for the property, but that when the sale fell through, the excitement was gone and

people were not as interested as they had been.

One of the sellers testified that he thought the $935,000 was a fair price

for the house in the summer of 1995. In fact, within a few days of listing the house for

sale, the sellers received an offer for $900,000.

The buyers contend that what the property sold for ten months later is

irrelevant. Therefore, they argue, the only evidence in the record is that the property

was worth between $920,000 to $980,000. We disagree. We think that what the

property finally sold for is some evidence of its value at the time of the breach. In

Turner v. Benson, 672 S.W.2d 752 (Tenn. 1984), a case where the property sold a

year later for $1,000 more than the previous contract price, the Supreme Court said:

1 It is arguable that the buyers breached the contract when they announced on August 9, 1995 that they wo uld no t com plete th e sa le. But neither party makes an issue of the difference in the two dates.

-3- “[C]onsidering the resale to have taken place only about one year after the breach, and it being an arms-length transaction, rather than a forced sale at auction, we think it reasonable to infer that the fair market value of the plaintiff’s residence at the time of the breach was roughly equivalent to the contract price.”

672 S.W.2d at 755. While the resale price is not conclusive, as the sellers contend,

it is some evidence of the value -- especially where the property has been

aggressively marketed in the intervening months and is sold in an arms-length

transaction.

The chancellor’s finding with respect to the value of the property at the

time of the breach is presumed to be correct, unless the preponderance of the

evidence is otherwise. Rule 13(d), Tenn. R. App. P. We can’t say that the evidence

preponderates against that finding. The evidence is not clear either way. The

testimony of the selling agent and of one of the sellers, while competent, is certainly

not conclusive. Their opinions were based on estimates of value and not on a study

of the market. We therefore affirm the chancellor’s finding of the difference between

the contract price and the value at the date of the breach.

III.

Prejudgment Interest

The chancellor awarded prejudgment interest at 10% per annum on the

net judgment from the date of the breach. The purchasers insist that the sellers did

not ask for prejudgment interest in their complaint and did not specify prejudgment

interest as an element of their damages in answering the purchasers’ interrogatories.

In addition, they assert that the chancellor abused his discretion by awarding

prejudgment interest when there was a genuine controversy over the amount of the

damages.

-4- The award of prejudgment interest in Tennessee is governed by statute.

Tenn. Code Ann. § 47-14-123 provides:

Prejudgment interest, i.e., interest as an element of, or in the nature of, damages, as permitted by the statutory and common laws of the state as of April 1, 1979, may be awarded by courts or juries in accordance with the principles of equity at any rate not in excess of a maximum effective rate of ten percent (10%) per annum ....

The statute allows prejudgment interest as an element of damages “to be allowed in

accordance with the principles of equity.” Schoen v. J.C. Bradford & Co., 667 S.W.2d

97 (Tenn. App. 1984).

With respect to the fact that prejudgment interest was not raised in the

complaint, we find from the record that the issue was in fact tried by consent. See

Rule 15.02 Tenn. R. Civ. P. The record is clear that at the beginning of the trial, the

plaintiffs were asserting the right to collect prejudgment interest. The defendants’ only

objection was on the merits -- not on the fact that the point had not been raised in the

pleadings. We also note that prejudgment interest is not considered special damages

that must be pled specially. Mitchell v. Mitchell, 876 S.W.2d 830 (Tenn. 1994).

We think the question of prejudgment interest was within the discretion

of the chancellor, and we find no abuse of that discretion. See B.F. Myers & Son v.

Evans, 612 S.W.2d 912 (Tenn. App. 1980). If the difference in the contract price and

the value was $89,500 on August 11, 1995, the sellers were deprived of that benefit

from and after that date. In order to be made whole, they should be compensated for

the loss of use of that benefit. We do not think the chancellor abused his discretion.

We affirm the judgment of the trial court and remand the cause to the

Chancery Court of Williamson County for any further proceedings necessary. Tax the

costs on appeal to the appellants.

-5- ________________________________ BEN H. CANTRELL, JUDGE

CONCUR:

_______________________________ HENRY F. TODD, PRESIDING JUDGE MIDDLE SECTION

_______________________________ WILLIAM C. KOCH, JR., JUDGE

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