Sherrard v. Dickson

• Court: Court of Appeals of Tennessee
• Decided: September 23, 1997
• Docket: 03A01-9701-CV-00007
• Status: Published

Opinion

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.