Wilhoite v. Proffitt

• Court: Court of Appeals of Tennessee
• Decided: June 26, 1998
• Docket: 03A01-9801-CH-00004
• Status: Published

Opinion

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE FILED June 26, 1998

DAV ID A. W ILHO ITE, S R., ET UX., Cecil Crowson, Jr. ) C/A NO. 03A01-9801-CH-00004 Appellate C ourt Clerk ) Plaintiffs-Appellants, ) COCKE CHANCERY ) v. ) HON . CHE STER S. RA INW ATE R, JR., ) CHANCELLOR NINA B. PR OFF ITT, E T AL ., ) ) AFFIRMED AND Defendants-Appellees. ) REMANDED

JAMES M . CRAIN, Knoxv ille, for Plaintiffs-Appellants.

CLYDE A. DUNN, Newport, JAMES McSWEEN and FRED HOLT, McSWEEN & McSWEEN , Newport, and JAMES RIPLEY, SHARP & RIPLEY, Sevierville, for Defendants-Appellees.

O P I N IO N

Franks, J.

In this action plaintiffs sought rescission of the purchase of a motel or

damages, based upon alleged fraudulent misrepresentations during negotiations for the

purchase. Plaintiffs sued the owners, a real estate firm, Barbara’s Real Estate, and the

Trustee. On September 8, 1994, plaintiffs agreed to purchase the property and

received a deed to the property on September 13, 1994. They elected not to make any

payments on their loan an d the prop erty was fore closed in N ovembe r, 1995. Th is

action was filed prior to foreclosure on February 7, 1995.

Defendant Barbara’s Realty filed a motion for summary judgment which

was ultimately granted by the Trial Judge. The gravamen of plaintiffs’ complaint was

that when they first contacted a representative of Barbara’s Realty on July 22, 1994,

they were advised by the representative that there would be new highway construction, making the highway “coming by the motel” into four lanes which would be completed

in two to three years. The existing highway at that time comprised two lanes. After

the sale was consummated, plaintiffs contacted the State Highway Department and

determined that while there were plans to build a four lane highway in the vicinity, the

planned h ighway did n ot go by the m otel.

Barbara’s Real Estate essentially argued in their motion that the

representations did not constitute actionable fraud, citing Oak Ridge Precision v. First

Tennessee Bank, 835 S.W.2d 25 (Tenn. App. 1992). We agree for reasons hereinafter

set forth.

Subsequent to the grant of the summary judgment, plaintiffs amended

their complaint to state that they had inquired of Barbara’s representative about the

financial records of the motel, in order that they could judge the profitability of the

operation, and they were advised that the motel had been “shut down for the

proceeding two years” and consequently there were no records available, when in fact

the motel had been in operation. After the trial, the Chancellor, without a jury, found

that the evidence did not “sustain fraud” on the part of the defendants. The Judge

said:

This Court finds that the plaintiffs have wholly failed to sustain or show by a preponderance of the evidence, any evidence of fraud on the part of these defendants or any one of these defendants. The manner was handled completely above board. The parties had available to them any and all knowledge that a reasonable and responsible person would seek, and had the me ans of obtaining it if they had so see n fit, and they can’t come in a t a later date an d seek to h ave som ething set asid e because , in retrospect, it app ears to be an unwise d ecision on th eir part.

The evid ence doe s not prepo nderate ag ainst the Ch ancellor’s fin ding, T.R .A.P. Rule

13(d).

We note that the real estate agent allegedly making the representations

to plainti ff w as Tom G ools by, an d pla intif f testified tha t he c onta cted Mr. Goo lsby,

2 and plaintiff further characterized Mr. Goolsby as “our real estate agent”.1 He further

elaborated:

[W]e authorized him to present the offer and negotiate the transaction for the mo tel.

The record demonstrates that plaintiffs essentially made no independent investigation

or checks on the motel property prior to purchase. Plaintiff David Wilhoite explained:

I’ve gone through a lot of real estate transactions in California, and I had done research and had been very successful at buying and selling real estate, and alw ays made m oney. But as I w as making preparation s to come home, I pretty much let my guard down thinking I was dealing with go od han dshak e peop le. . . .

As to plaintiffs’ contention that the agent fraudulently misrepresented that the motel

had not been in operation in the last two years, the record establishes that plaintiff

could have readily ascertained the motel had, in fact, been in operation. Moreover, the

evidence preponderates that this statement was not an inducement to plaintiffs’

purchasing the motel. As for the representation as to the location of a new four lane

highwa y, the record also shows th at this inform ation could have bee n readily

ascertained by plaintiff, wh ich was d emonstra ted by the fact th at the plaintiff readily

obtaine d infor mation as to the location shortly af ter purc hasing the mo tel.

We believe the Rule set forth in Winste ad v. F irst Ten nessee Bank , N.A.,

Mem phis, 709 S.W.2d 627 (Tenn. App. 1986) controls. There, this Court said:

[W]here the mean s of inform ation are at ha nd and eq ually accessible to both parties, so that with ord inary prudenc e or diligenc e, they might rely on their own judgment, generally they must be presumed to have done so, or, if they have not informed themselves, they must abide the consequences of their own inattention and carelessness. Unless the representations are such as are calculated to lull the suspicions of a careful m an into a co mplete relian ce thereon , it is not comm only held, in the absence of special circumstances, that, where the means of knowledge are readily available, and the vendor or purchaser as the case may be, has the opportunity by investigation or inspection to discover the truth with respect to matters concealed or misrepresented, without

The multiple listing agent for the sale of the motel was ERA Pioneer Realty of Sevierville.

3 prevention or hindrance by the other party, of which opportunity he is or should be aware, and where he nevertheless fails to exercise that opportunity and to discover the truth, he cannot, thereafter assail the validity of the co ntract for fra ud, misrepr esentation o r concealm ent with respec t to matte rs whic h shou ld have been a scertain ed. . . .

709 S.W.2d at 633.

We affirm the Chancellor’s finding that plaintiffs failed to establish

actiona ble frau d by a pre ponde rance o f the ev idence .

We have considered all issues raised by the plaintiffs, find them to be

without merit, and affirm the judgment of the Trial Court and remand with costs of the

appeal assessed to appellants.

__________________________ Herschel P. Franks, J.

CONCUR:

___________________________ Don T. McM urray, J.

___________________________ Charles D. Susano, Jr., J.