### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON O CT O BE R 1 4, 200 3 S es sio n BRI AN & CAN DY CHADWI CK v . CHAD SPENCE
Direc t Appeal from the Circ uit Court for Sh elby County No. CT-007720-01 K ay Robilio, Ju dge

No. W2003-00931-C OA-R3-C V - F iled Fe bruary 11, 2004

This is an action for

damag es arising fr om the purcha se of a residenc e. Purcha ser sue d seller f or fraudulent misrepre sentation and bre ach of contra ct, alleg ing that seller fa iled to disclose exis ting stucco a nd water

damag e, as w ell as termite infe station. Fol l o wi n g a b en ch trial, the lower court e nte re d ju dg me nt i n f

a vo r o f D e fe nd a nt. F or

the fo llo wi ng re a so ns , w e a ff ir m.
Tenn. R. App . P . 3; Appeal as of Right; Judgme nt of th e Circ uit Court Aff irm ed
A L AN E. H I G H ERS , J ., delivere d the opi nion of the c ourt, in which D AVI D R. F ARMER , J ., and H O LLY M. K I RBY , J ., joined.
Ke vinA. Sni de r, Ge rm a nto wn , T N, fo r A pp e lla nts
Har old D. Mang rum, Memphis, TN, for A ppellee
OP IN ION
F acts and P roce dural Hi story
Th is c a se ar is es fr om the sa le of a stu c c o h ou se loc a te d at 25 14 B ro the rw oo d Co ve in Coll i er v i l l e, Tennessee . The initial owner, Cha d Spence ( “De fendant”), moved out of the house, leaving it vacant, in April of 2000. On April 14, 2000, Def endant hire d Sue Reeve s (“Ms. Ree ves”) , a re altor with Century 21 River Oaks, to a ssist him in se lling the house. Due to the well-doc umented problems sometimes a ssociated with stuc co homes, Ms. Re eves a rra ng ed for

Steve Ander son (“Mr. An de rs on ” ), a

ho me in sp ect or, t o e xami ne the ho us e on Ma y 11 , 2 00 0. Af

te r c on du c tin g his e xami natio n, Mr . A nd e rs on c on c lud e d th a t th e stu c c o o n D efen dan t’ s ho us e wa s n ot i ns ta lle d to certification, resulting in some water damag e to the wa lls. Mr. Anderson then dr afte d a re port that contained these observations, as well as an estimate of $34,000 to bring the house up to ce rtification, and g ave the report to Ms. R eeve s. A few day s later, on May 14, a termite inspector fr om Wom ack Ex terminators was broug ht in to ex amine the house for e vidence of termite a ctivity . The inspec tor,-2-

J ames Hun t , found nothing to indicate the pr esenc e of te rmites and dra fted a termite letter to that eff ect.
L ater that summer, a potential buy er made an offe r on the house, c ontinge nt on Defe ndant bring ing the stucco up to c ertification. I n response , Ms. Re eves procur ed the servic es o f a stucco specia list, L ee G allag her ( “Mr. Ga llag her”), t o i n s pect the house and provide an estimate f or the repa irs nece ssary to a chieve certification. Mr. Gallag her inspected the re sidence on Aug ust 10, 2000 a nde sti ma te d th a t it

wo uldc os t $3 2, 73 5 to c on du c t the ne c e ssa ry re pa ir s. Af

te r h e ari ng thi s to ta l, De fe nd a nt t oldMs. Re e ve s th a t he wa s no t pr e pa re d to fu nd su c h r e pa ir s, a ndhe ins truc te d h e r t o c ou nte r w itha n “ a s is ” of fe r. Th e pro sp ect ive bu y e r d e c lin e d th e c ou nte ro ff e r andthe ho us e rema ined on the mar

ket. Ms. Reeve s was then discha rg ed by Def endant a fter the se negotiations wer e unsucce ssful. Following the dischar g e o f Ms . Reeve s, Brian Chadwick ( here inafter “Mr. Chadw ick” or , collectively

with his wife, “Plaintiffs”) learned of the Def endant’ s residenc e throug h a mutual frie nd of the two pa

rties. Mr. Chadwic k visited the house seve ral times and ha d discussions reg arding the property with Defe ndant on some of these occa sions. Defe ndant m aintains that these ne g otiations t o o k p l a c e i n m i d

- A u g u s to f

2 0 0 0 , w h i l e M r
. C h a d w i c k ar g u e s t h a ti tw a s n e ar l y

a m o n t h l a t e r
. It is undisputed that the p ar t i es s i gn ed a contr act of sale for the house, dra fted by

Mr. Chadwick’ s mortg ag e compa ny , dated Au g us t 23 , 2 00 0, wi th no re a l e state a g e nt i nv olv e d inthe c on tr a c t. Howeve r, the parties disag ree as to w hen the contra ct was actua lly signe d, notwiths t an d i n g t he e ff e c tiv e date of

the c on tr a c t. D e fe nd a nt c on te nd s th a t th e c on tr a c t wa s sig ne d o n A ug us t 23 , w hil e Mr . Ch a dw ic k maint a ins that th e con tr a c t w a s a c tua lly e xec ute d inSe pte mbe r andba c kd a te d to Au g us t 23 . T his dis a g re e me nt o ve r the date of sig nin g is ine xtri c ably tie d to a re la te d is su e : th e ro le play e d inthe se e ve nts by

a se c on d r e a lto r h ir e d by De fe nd a nt, a ft e r the e ff e c tiv e date of

the c on tr a c t. The pa rties ag ree that, on September 7, 2000, D efe ndant hired Chet Whit sitt (“Mr. Whits itt”) of Cry e-L eike Rea ltors to lis t the property at issue. Def

endant arg ues that he proc ured Mr . Whit sitt’s service afte r th e d at e t he contr act wa s actua lly signe d and that he did so be cause Mr. Chadwick expressed doubt as to his ability to qualify for a mortg ag e and c lose on the prope rty . Mr. Chadwick, howeve r, maintains that Mr. Whitsi tt was involved in these procee dings prior to the ac tual signing of the c ontrac t, which was in late September, beca use Def endant had no contra ct on his house as of early September and was, naturally , in need of a re alt o r’ s service s. Mr. Chadwick a rg ues that the parties rea ched an ag ree ment without the aid of Mr. Whit sitt, who g rac efully ag ree d to ste p out of the way so that the parties would not be c harg ed a c ommissi on. Mr. Chadwick f urther c ontends that the contra ct was ba ckdate d, to a date befor e Mr. Whit sitt’s involvement, as a pr eca ution ag ainst any leg al difficulties that mig ht arise f rom the abse nce of

a commission in the contrac t.
Th e Pla int if

fs arg ue that, i n th e c ou rs e of e va luatin g the ho us e prior to sig nin g the c on tr a c t, they relied upon a fly er prepa red by Mr. Whit sitt on behalf of Def endant. The fly er boldly

stated that the ho us e wa s “ stu c c o in sp e c te d” a ndthat th ere was a c ur re nt t e rm ite c on tr a c t on the ho us e wi th Womack Ex terminators. Mr. Chadwick maintains that these repre sentations led him to believe that the house wa s stucco ce rtified and without termites. The rec ord indicate s that the house wa s, indeed, stu c c o insp e c te d, tho ug h it wa s not stu c c o ce rt if ie d. I t is a lso un dis pu te d th a t th e re wa s n o te rm ite-3-

contra ct on the house, only a termite letter by Womack Ex terminators stating that the house showe d no visible signs of termite damag e as of May 14, 2000. Def

endant arg ues that any mistakes in the fl y e r ar e ir

re le va nt, be c aus e the Pla int if fs c ou ld n ot h a ve re lie d u po n th e m in sig nin g the c on tr a c t. This is because the contra ct was sig ned on Aug ust 23, more than two wee ks prior to the cr eation of the fly er.
Th e Pla int if

fs didno t c los e on the ho us e un til Decem ber 29 , 2 00 0. Th e re c or d s ho ws , howeve r, that De fendant allowed the Plaintiffs to move into the r esidenc e roug hly a month befor e c los ing . D uring that ti me , th e Pla int if fs ha d u nf e tte re d a c c e ss t o th e e nti re ho us e a nd the op po rtun ity to have a profe ssional inspection of the re sidence for any faults. The P laintiffs chose not to have a n inspection perf

ormed. Af

ter the c losing wa s completed, bu t b ef ore the Plaintiffs’ funds wer e d i s b u r s e d , a

s e c o n d t e r m i t e l e t t e r w a s o b t a i n e d t h a t d e c l ar e d t h e h o u s e f r e e o f v i s i b l e t e r m i t e a c t i v i t y.
I n April of 2001, the Plaintiffs experience d an explosion of termite activity in their reside nce. This termite infestation alleg edly prompted t he P laintiffs to investigate the over all condition of the house. It was only

at this time, acc ording to the Plaintiffs, that they learned of the stucco a nd water damag e to the house. O n Dec ember 28, 2001, the Plaintiffs filed suit ag ainst D ef endant, a lleg ing misrepre sentation and brea ch of contra ct. Specifica lly , the Plaintiffs alleg ed that: Def endant f ailed to provide them with a prope rty disclosure stateme nt as requir ed by the T en nessee Residential Property Di s cl o s ure A ct; Def endant withheld mate rial fa cts by failing to disclose the exist ence of the Ga ll agher report; a ndDe fe nd a nt a ff ir ma tiv e ly

mis re pr e se nte d th e c on dit ionof the ho us e bo th in oral statements a nd in the fly er prepar ed by Mr. W hitsit t. Def endant r esponded that: he discussed the problems listed in the Gallag her r eport with Mr. Chadwick, who said he w ould attend to the problems af

ter the sa le; the Pla i n t i ffs never r elied upon the f ly er pr epar ed by

Mr. Whits itt; t he Plaintiffs themselves had the c ontrac t drafte d with the “as is” c laus e, wi thout any repr esentations reg arding the condition of the p roperty ; and the selling price of the house w as lower ed to ac count for the stuc co and water damag e the Plaintiffs would be inheriting. Afte r conduc ting a bench trial from January

13-15, 2003, t he trial c ourt found that De fendant had neither misrepre sented the condition of the prope rty nor breache d the parties’ contra ct of sale . The Plaintiffs then timely filed the instant appea l challeng ing the judgme nt of the trial court.
Issues
The Plaintiffs ra ise the following issues for our c onsideration:
I

. Whether the trial c ourt err ed in fa iling to find that the De fendant v i o l at ed the Te nn e sse e Re sid e nti a l Pr op e rt y Di sc los ur e Ac t. I I

. Whe the r the tr ia l c ou rt e rr e d in faili ng to fi nd that the De fe nd ant frau dule ntl y mis re pr e se nte d th e true c on dit ionof the pr op e rt y a t issu e a nd

/or br e a c he d th e pa

rt ie s’ c o n tr a c to f

s a l e f o r t h e p r o p e r t y. I I I

. Whe the r the tr ia l c ou rt e rr e d in fi nd in g th a t th e Pla int if fs faile d to de mon str a te a sc e rt a ina ble da ma g e s.-4- Stand ard of Review
This c ase w as tried by

the lower court sitting without a jury . We, theref ore, r eview the trial court’s c onclusions of law unde r a de novo standard, w ith no presumption of correc tness. Kendrick v. Shoem ake , 90 S.W .3d 566, 569 (Tenn. 2002). Wit h respe ct to the trial court’s finding s of fa ct, our re vie w i s de novo upon the re cord, w i t h a p resumpti on of cor rec tness unless the evidenc e pr e po nd e rate s o the rw ise . T e nn . R. Ap p. P. 1 3( d) ; Kendrick , 90 S.W .3d at 569.
Law a nd A nal ys is
I. Tennessee Residential P roperty Disclosure Ac t
We will first address the Plaintiffs’ c ontention that the lower court err ed in failing to find that the Def endant v i o l ated the Tennesse e Residential Property Disclosure A ct (“ TRPDA”). The TRPDA, enumerated in Tenn. Code Ann. § 66-5-201 to - 210 (2003), require s an owne r of r esidential property to provide a property

disclosure stateme nt to a purcha ser. Te nn. Code Ann. § 66-5- 202(1). This disclaimer statement must include notice of any materia l defe cts in the property of which the o w n e r is a w are. Id

. T h e T R PDA does allow a n owner to issue, in the alternative, a disclaimer statement stating that the owner makes no re prese ntations or war ranties a s to the conditi o n of the property . Tenn. Code Ann. § 66-5-202( 2). Howeve r, a disclaimer statement is allowed only wher e the purc haser

waives the disclosure stateme nt describe d above. Id

. I n th e pr e se nt c a se , it is un dis pu te d that th e De fe nd a nt f a ile d to pr ov ide the Pla int if fs wi th a re sidential property

disclosure stateme nt. I t is likewise undisputed that the Plaintiffs never w aived the ir ri g ht t o s uc h a

dis c los ur e state me nt. Ne ve rthe le ss, the tr ia l c ou rt didno t e rr

wh e n it faile d to specific ally

addre s s t h i s v i o lation of the TRPDA. This is because such a violation cr eate s no independe nt cause of ac tion on behalf of the purcha ser. Tenn. Code Ann. § 66-5-208( b). I nstead, an owne r who fails to provide a disclosure state ment is simply “subjec t to any other c ause of

action a va ila ble in l a w o r eq uity a g a ins t an ow ne r fo r misr e pr e se ntatio n or fa ilu re to d isc los e ma te ri a l f a c ts reg arding the subject prope rty .” Id . T he De fe nd a nt’ s v iol a tio n of the TRP DAin the ins ta nt c a se is, the re fo re , s ub su me d w ith in the ov e ra ll c la ims of mis re pr e se ntatio n a nd brea ch o f c on tr a c t. Ac c or din g ly , w he n th e tr ia l c ou rt dis po se d of tho se tw o caus e s of ac tio n in it s o rd e r, it n e c e ssa ri ly disposed of the TRPDA violation, as well. The lower c ourt had no duty to separatel y ad d re ss the TRPDA violation as part of its order

.

II. F raudul ent Misre presentat ion an d Breach of Contract
We w ill next c onsider the Plaintiffs’ assertion that the trial court er red in failing to find that the Def endant f raudule ntly

misre prese nted the true condition of the prope rty at issue and/or br eac hed t h e p ar t i e s ’ c o n tr a c to f

s a l e f o r t h e p r o p e r t y.-5- A. F raudul ent Misre presentat ion The Plaintiffs alleg e that the De fendant misreprese nted the true condition of the prope rty by failing to disclose the wate r and stucc o damag e, as w ell as possible t er m ite damag e, that wa s re ve a le d ine xpe rt

re po rt s p ri or

to the sa le . In o rd e r f

or thi s a lle g e d mi sr e pr e se ntatio n to c on sti tut e fr aud , th e mis re pr e se ntatio n: “ (1 ) mus t ha ve be e n a re pr e se ntatio n a s to a n e xistin g fa c t; ( 2) mus t hav e been fal se; (3 ) mus t ha ve be e n r e lie d u po n; and(4 ) mus t ha ve be e n s o mate ri a l th a t it determined the conduct of the parties se eking relief .” Atkins v. Kirkpatrick , 823 S.W .2d 547, 552 (T en n
. C t

. Ap p
. 1 9 9 1 ) ( ci t i n g Dozier v. Hawthorne De v. Co. , 262 S.W .2d 705, 709 (Tenn. Ct. App. 1953))

. At t ri al, the parties hotlycontested w hether Def endant disclosed material information on the condition of the prope rty , such as the $32,750 stuc co re pair estimate g iven in the Gallag her r eport in early Aug ust of 2000. They also contested whether the Plaintiffs relied upon the repr esentations in the Whit sitt f

ly e r that the pr op e rty wa s “ stu c c o ins pe c te d” a ndun de r a c ur re nt t e rm ite c on tr a c t.
Du e to this c on fl ic t ov e r the fa c ts un de rl y ing the c a se , the tr ia l c ou rt ’s ru lin g is n e c e ssa ri ly predic ated upon its assessment of th e cr ed i bilityof testimony prese nted at trial. Reg arding a trial c ou rt ’s a sse ssm e nt o f c re dib ili ty , th is C ou rt ha s h e ld that:
When the resolution of the issues in a c ase de pends upon the truthfulne ss of wi tne sse s, the tr ia l jud g e , wh o ha s the op po rtun ity to o bs e rv e the wi tne sse s in the ir ma nn e r and demea no r w hil e te sti fying , is in a fa r b e tte r p os iti on than th is C ou rt to decide those issues. See M cCaleb v. Saturn Corp. , 910 S.W .2d 412, 41 5 (Tenn. 19 95 ); W hit a ke r v. W

hitaker , 957 S.W .2d 834, 837 (Tenn. Ct. App. 1997). T he we ig ht, faith , a ndc re dit

to b e g ive n to a ny wi tne ss’ s te sti mon y lie s in the fi rs t instance w ith the trier of fac t, and the cr edibilityacc orded w ill be give n g reat weig ht by the appe llate court. See id., I n re Estate of W

alton v. Y oung , 950 S.W .2d 956, 959 (Tenn. 1997)

. Mach

. Sa les Co., In c . v . D iam on dc ut F ore str y Pr od ., LLC , 1 0 2 S. W. 3 d 6 3 8 , 6 4 3 ( T e n n
. Ct

. A p p. 2002). The trial court was prese nted wit h cre dible testimony to support a finding that the Plaintiffs wer e not only

provided suff

icient notice of the property ’s condition by Def endant, but also a ffor ded a mpl e op po rtun ity

to h a ve the ir

ow n in sp e c tio n p e rf

orme d. I n li ght of the imp orta nc e of wi tne ss cre dibilit y

in this case, and our

defe renc e to t he trial court’s assessment there of, we cannot sa y that the lower court c ommitt ed er

ror whe n it found that the Plaintiffs failed to establish thei r cl aim of fraudulent misrepre sentation.
B. Breach of Contract
I n their brief

, the Plaintiffs alleg e that the tria l court er red in failing to find that the Def endant br e a c he d th e pa

rt ie s’ c on tr a c t of sa le fo r the pr op e rt y a t iss ue
. Ho we ve r, the Pla int if fs the n f a il t o pr ov ide a ny

sp e c if ic arg ume nt or c a se la w in sup po rt of thi s con te nti on
. I ns te a d, the y a ve r that “ the se same misrepr esentations and/or nondisclosures [that alleg edly g ive rise to the f

ra u d u l ent-6-

mis re pr e se ntatio n c la im] a re a br e a c h o f the pa

rt ie s a g re e me nt .

. . .” De sp ite thi s pau c ity of su pp ort, we wi ll, ne ve rthe le ss, e xplor e the Pla int if fs ’ c la im.
This Court has held t hat “[ t] he essential elements of any brea ch of contra ct claim include (1) the e xiste nc e of

a n e nf or c e able c on tr a c t; ( 2) no np e rf orma nc e a mou nti ng to a

br e a c h o f the c on tr a c t, and (3) damag es caused by the bre ach of

the contra ct.” Craft v. Fo rkl i f t S ys., Inc. , No. M2002- 0 0 0 4 0

- C O A

- R 3 -C V, 2 0 0 3 W L 2 1 6 4 2 7 6 7 , at * 2 (T en n
. C t

. Ap p
. J u l y 1 4 , 2 0 0 3 ) ( q u o t i n g Custom Built Homes v. G.S. H

insen Co., Inc. , 1998 W.L 960287, at *3 (Te nn. Ct. App. Fe b. 2, 1998) (c iting LifeCare Ct rs. of Am., Inc. v. Charles Town Assocs. L td. P’ship, LPIMC, Inc. , 7 9 F .3 d 4 96 , 5 14 (6 th Cir. 1996))). In the instant case , it is undi sputed that a c ontrac t of sale f or the prope rty

exis ts. The issue, then, is whether

Def endant c ommitt ed some a ct that qualifies a s nonperf ormanc e amounting to a breac h of t he contract. The P laintiffs arg ument is gr ounded upon the theory that Def endant’ s alleg ed fa ilure to disclose the e x isting dama g e to the prope rty somehow violates the c ontrac t of sale. This theory

nece ssarily

implies that the contra ct contains some gua rante e re g arding the condition of the pr op e rty

a t th e tim e of

the sa le . T he plain l a ng ua g e of the c on tr a c t, h ow e ve r, do e s n ot c on ta in a ny su c h pro vis ion

. To the c on tr ary , th e c on tr a c t st a te s th a t th e pr op e rt y “ sh a ll b e c on ve y e d ‘ AS I S’ with no warr anty

whatsoeve r as to Property condit i o n
. ” S uch a c lause is valid and e nforc eable , absent a showing that the contra ct was obta ined by some form of f

raudule n t misrepre sentation or conce alment. See, e .g., Edmondson v. Coates , No. 01-A- 01-9109-CH000324, 1992 W L 108717, at * 8 (T en n
. C t

. Ap p
. M ay

2 2 , 1 9 9 2 ) ( ci t i n g Simmons v. Ev ans , 206 S.W .2d 295, 296 (Tenn. 1947) ). As the Pla int if

fs we re un su c c e ssf

ul o n th e ir

c la ims of

mis re pr e se ntat iona ndc on c e a lme nt, it inesca pably follows that the “a s is” clause of the c ontrac t is valid and enfor cea ble. Ther efor e, the ri sk of los s oc c a sio ne d by virtue of the c on dit ion of the pr op e rt y is sh if te d to the Pla int if

fs , w ho se claim for br eac h of co n trac t must fail. See M emphis Zane May Assocs. v. Prude ntial Ins. Co. of A me r ica , N o
. 0 2 A 0 1

- 9 2 0 8

- CH

- 0 0 2 3 3 , 1 9 9 4 WL 5 7 7 4 4 9 , a t * 3 ( T e n n
. Ct

. A p p
. O c t. 2 1 , 1 9 9 4) (c i t i n g Atkins v. Kirkpatrick , 823 S.W .2d 547, 554 (Tenn. Ct. App. 1991))

. Our holding on the Plaintiffs’ claims of misrepre sentation and bre ach of contra ct pre clude an aw ard of

damag es. As such, we decline to addre ss the Plaintiffs’ final issue on appe al, conc erning the a sc e rt a inm e nt o f d a ma g e s. Conclusion
For the fore g oing r easons, we aff irm the j udg ment of t he lower court. Costs of this appea l are taxed to the Appellants, Brian and Candy Chadwick, and their surety , for which execution may i s s u e i f n e c e s s ar y.

___________________________________ ALAN E. HI GHERS, J UDGE