# FILED
July 9, 1997 Cecil W. Crowson MARK E. MILLER, ) ) Plaintiff/Appellant, ) ) VS. ) ) MICHAEL P. S CHRIMPF, RITA K. ) Appeal No. SCHRIMPF , and TENNESSEE ) 01-A-01-9612- CH-00558 TITLE AND TRUST, IN C., ) ) Sumner Chancery Defendants, ) No. 94C-219 ) LINDA H. VAU GHN, d/b/a ) LAKESIDE COLDW ELL BANKER, ) BONNIE CAM PBELL and ) CAMPBELL REALTOR S, INC., ) ) Defendants/Ap pellees. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SECTION AT NASHVILLE APPEALE D FRO M THE C HANC ERY C OURT O F SUM NER C OUNTY AT GALLATIN, TENNESSE E THE HONORABLE TOM E. GRAY , CHANCELLO R
VICKY V. KLE IN L. ANTHONY DEAS 509 Lent z Drive P. O. Box 608 Madison, Tennessee37115 Attorneys for Plaintiff/Appella nt J. RUSSELL FARRAR KRISTI N ELLIS B EREXA 211 Seventh Street North, Sui te 320 Nashvil le, Tennessee 37219 Attorneys for Defendant/Appellee L inda H. Vaugh n d/b/a Lakeside C oldwell Banker LINDA F. BU RNSED SunTrust Center 424 Church Street, Suite 1750 Nashvil le, Tennessee 37219 Attorney for Defenda nt/Appellee Bonnie Cam pbell and Campbell Realtors, Inc.

AFFIR MED I N PART ; REVE RSED I N PART ;

AND REMAN DED

BEN H. CAN TRELL, JUDGE CONCUR: KOCH, J. CAIN, S.J.- 2 - 

## O P I N I O N

The purchaser of a subdivision lot sued his agent and thesellers’ agent because the lot could not be approved for a septic tank. His complaint stated causes of action for fraud, neg ligence, and a violati on of the Tennessee Consumer Protection Act. The Chancery

Court of Sumner C ounty gr ant ed summary judg ment to both agents. We reverse the simple negligence claim as to t he purchaser’ s own ag ent. In all other respects, the judgment is affirmed.

I. Facts

The origin of this problem goes back to 1988 when M ichael P. and R ita K. Schrimpfbought Lot No. 11 in Country side Estates fro m the Arnolds. Because the prope rtywas not connected to a s ewer and the soil did not percolate well, the Schr impfs

also acqui red an easement for a drai n field on the rear 132 feet of Lot No. 12.

In 1990, the Schrimpfs listed the lot for sal e with Li nda H. Vaughn, d/b/a/ Lakeside Coldwel l Banker. Bonn ie Campbell of Ca mpbell Realtor s, Inc. contac

ted Ms. Vaughn on behalf of Mark E. and Sheree P. Miller, who were lookingfor property in that vici nity. After

inspectingthe property , the Mill ers made an offer and the par ties finallyarrived at a sale pric e of $21,000. The contrac t contained the foll owing cont ingen cy: “Thi s sale is cont ingent upon sel ler prov iding for buyer an approved septic letter .” Closi ng was s et for June 28, 1990.

On the appointed day, all parties gathered at the office of Doris Freeman of Tennessee Title Com pany, the clo si ng agent. Before the docum ents were executed, the Miller

s learned that a septic lett er had not been fu rnished. Ms. Vaughn,1 He also sue d the Sc hr im pf s, D or is F re em an , an d T en ne ss ee T itle C om pa ny b ut th e c laim s against these def endants ar e sti ll pendi ng. - 3 - the sellers’ a gent, produced the recorded eas ement and left the room t o make a telephone call. The Millers assumed she was checking with someone about the septic letter , but she did not return w ith any further information. Ms . Campbell tol d the Millers that they did not have to close without the letter. Doris Freeman alleged ly said thatthe easementwas sufficien t to satisfy the septic l etter conting ency, and on t hat
assuran ce, the Millers went t hrough with the closi ng.

Mrs. Miller

died before 1993 , when Mr. Miller put the property back on the market. It was t hen he discovered that, even w ith the easement on Lot 12, the healt h depa rtment woul d not approve the installat ion of a drain fiel d to serve the prop erty. Without an adequate drain field , the property is not asuitable buil ding site.

Mr. Mille r sue d the two agents for fraud, negligent misrepresentat ions, and violati on of the Tennessee Consumer Protection Ac

t. 1

II. Fraud

The essential el ement of a claim for fraud i s an intent to deceive. Wilder
v. Tennessee Far

mers M utual Ins. Co. , 912 S.W.2d 722, 726 (Tenn. App. 1995). We do not think any

trier of fact cou ld infer that ei ther of the agents intended to de ceive the Millers . Aside from the questi on of whether any representati ons atall wer e made bythese defenda nts at the closing -- which we will address in t he next section of this opinion -- there i s no proof that anyone at the closing knew that th e easement on Lot 12 would not allow the Millers to g et a s epti c ta nk pe rmi t. I f a party thi nks he is st ating the truth, he is

not liable for fraud even thoug h the statement turns out to beentirely false. Wynne v. Allen , 66 Tenn. 312, 316 (Tenn. 1874). He may be liable under- 4 -

some other theory , Haynes v. Cumberland Builders, Inc. , 546 S.W.2d 228 (Tenn. App. 1976), but actual frau d cannot be maintain ed under such circumstances.

III. Negligence a. Negligent Misrepresentations

“One who, in the course of his bu siness, profess ion, or employ ment, or during a transaction in which he had a pecuniary interest, supp lies false information forthe guidance of oth ers in theirbusiness tr ansactions, i s subject to l iability for pecuniaryloss caused to them by their jus tif iable reliance upon such inf ormation, if he fails to exercise reasonable care or compe tence in obtainingor communicating the information.” Hayne s v. Cumberland Builders, Inc. , 546 S.W.2d 228 at 232 (Tenn. App. 1976); Jasper Aviation, Inc. v. McCollum Aviation, Inc. , 497 S.W.2d 240 (Tenn. 1972).

An essential element of this ca use of acti on is the supplying of false information f or the guidance of others.

In this case, the causeof action is g rounded on the alleg ation that either
or both of the agents supp lied the Millers with the information that the easementon Lot 12 would all ow a septi c tank to be install ed on the property . We can find no proof to that effect. Ms. Vau ghn produced the easement but made no statements asto its suf fici ency. When she left the room, the M illers th ought she was making a t elephone call tryingto locate the s eptic letter

. She did not retur n, and that is t he last weknow of her in conne ction with the closi ng. Thus, we ca nnot find whereshe supplied any erroneous informat ion to the Millers.

The same is tru e with resp ect t o the Mille rs’ own agent, Ms. Campbell. She was pres ent during t he entire time of the closing, but she advised theMillers that- 5 -

they did not have to close because the contract had not been fulfilled. Ther e is no prooffrom which we could infer that Ms. Campbell suppl ied the erroneou s information that induced the Millers to close the transa ction without getting the septic letter.
b. Breach of Duty

The plaintiff also alleges t hat the two ag ents breached a dut y ofcare by failing to con firm th at hav ing t he ease me nt made getting a septic lett er a matter of
course. A breach of a duty owed to theplain tiff is at the core of a negli genceclai m. Hastings v. Smith , 223 Tenn. 142, 443 S.W .2d 436 (1969).

As to Ms. Vaughn, we do not think she owed such a duty to the Millers. Her duty was to her cli ents. She did not have a duty

to the Mill ers to assure them that the contract had been fulfilled.

It is a closer

questi on w ith re spec t to Ms . Cam pbe ll, th e Mill ers’ o wn agent. Did she have a duty to s peak up when her clients were told that the easement satisfied the s e p t i cl e t t e r c o n t i n g e n c y ? We are not prepared to say that as a matter of law she had no duty in this instance. Although s he had advised her clients that they did not have to c lose, and we are satisfied that she did not know the lot could not be built upon, would a reasonably prudent real estate agent from the area stand by

when
someo ne else mad e a r e p r e s e n t a t i o n t o h e r c l i e n t s t h a t n e g a t e d h e r a d v i c e ? We think the plai ntiff is entitled to a trial on that point.

IV. The Co nsumer Protection A ct- 6 - The Co n sumer Protecti on Act makes decept ive acts or practices unlawful, Tenn. Code Ann. § 47- 18-104(a). It also gives a privat e cause of action to anyone harmed by an un fair or decepti ve act or practice. Tenn. Code Ann. § 47-18- 109.
We have already noted that neither of these defendants had an intent to deceive theMillers . While, for the purpose of the Cons umer Protectio n Act, the dece ptive acts or pra ctices do not have to bewilful or knowing , Smith v. Scott Lewis Chevrolet, Inc. , 843 S.W .2d 9 (Ten n. Ap p. 19 92), we do n ot think any trier of fact could find that these defendants engaged in a deceptive a ct or practi ce. They did not represent

anything ; they did n ot act in conce rt with anyone makingany representations. The most that can be said is that Ms. Campbell did not speak up when she arguably had a duty to do so.

The judgment as to Ms. Campbell on the sim ple negligence claim is reversed. As to all other claims the lower court’s judgment is affirmed . The cause is remanded to the Chancery Court of Sumne r County for further proceedings in accordance with this opinion. Tax the costs on appeal one-f ourth to Ms. Campbell and three-fourths to the appellant.

________________________________ BEN H. CAN TRELL, JUDGE
CONCUR:

_______________________________ WILLIAM C. KOCH, JR., J UDGE

_______________________________ WILLIAM B. CAIN, SPECIAL JU DGE