# FILED Oct. 25, 1995 Cecil Crowson, Jr . Appellate Court Clerk TAMMY R. GAN ZEVOORT, ) ) Plaintiff/Appellee, ) ) Appeal No. ) 01-A-01-9502- CV-00038 VS. ) ) Sumner Circuit ) No. 12365-C RICH ARD B. RUSSE LL, MA RTHA T. ) RUSSELL and JIM CASSETTY d/b/a ) JIM CASSE TTY REA LTY, ) ) Defendants/Ap pellants. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SEC TION AT NASHVILLE
APPEALE D FRO M THE C IRCU IT COU RT OF S UMNE R COU NTY AT GALLATIN, TENNESSE E THE HONORABLE THOMAS GOODA LL, JUDGE

MICHAEL W . EDW ARDS 177 East Main S treet Hendersonvi lle, Tennessee 370 75 Attorney for Plaintiff/Appellee JOHN R. BRADLEY ANTHONY D . MILLER 311 East Main S treet, Suite 3 Hendersonvi lle, Tennessee 370 75 Attorney for Defendants/Appellants

REVERSED AN D REMAND ED

BEN H. CAN TRELL, JUDGE CONCUR: TODD, P.J., M .S. INMAN, S. J.- 2 - 

## O P I N I O N The Circuit Court ofSumn er C ounty aw arde d thepur chas er o f a home a judgment against the sellers and their rea l estate agent , for deceptive p ractices as defined in the Tennessee C onsumer Protecti on Act. Because we find th at the evidence preponderates ag ainst a finding that the plaint iff suffered any ascertainable harm from a deceptive act, we r everse.
I.
The plaintiff purchase d a home in Hendersonville, and disco vere d immediately that the ply wood subfloor, the floor joists, and the hardw ood floors under two baths and part of anot her room had e xte nsive water damage. Two leaking commodes and perhaps a leak ing show er as wel l caused the dama ge. The p lai ntiff discovered the problem whe n she removed some old carpet in the room adj acent to the two bathr

ooms, in order to expose the hardwood floor underneath.
The p lainti ff sued the s elle rs an d the ir rea l esta te age nt f or de cept ive practicesunder the Tennessee C onsumer Protection Ac

t, Tenn. Code. Ann. § 47-18- 101, et seq.
At a be nch trial the proof showed that the house was originally purchased by the defendants R ichard B. Ru ssell and M artha T. Russel l in 1969. The Russells later divorced and Mrs. Russell moved out of the house ea rly in 1991. Mr. Russell continued to live in the house with his oldest daughter until January of 1993; the daughter moved out in Apri l of 1993.

Mr. and Mrs. Rus sell offered the house forsale in the l atter part of 1992 and the plaintiff signed a con tra c t to purchase t he house on Februar y 1, 1993 for- 3 -

$68,500. The p lai ntiff applied for a FHA loan, and an FHArepresentati ve inspect ed the house on May 6, 1993. The inspection repor t noted that t he hous e needed some minor repairs; i t did not, however, ci te any water damage to the floor, sub floor, or floor joi sts. The sa me inspector conducted a follow -up inspecti on on May 12, 1993 and issued a clean report.

On May 15, 1993

a pest control company insp ecte d th e house for termites. During the inspection, the inspect or note d some a pparen t water dam age to the subfloori ng under the bathroom. He didn't note it on his report because, in his opinion, it did not

affect the structu ral integrity of the house. He did, however, report it to the sellers' real estate ag ent, who went out to see for hi mself. The agent noti ced the damage to one or more floor joists under the bathr oom, and hired a

carpenter to make the repairs. The carpenter a dded some sheets of ply wood under one of the bathro oms and reinforced th e joists by nailing a dditional members alongside t he damaged ones. All t he ol d wood was dry, even though it had obviously been wet previ ousl y.
Mr. Russell w as aware of therepairs made u nderneath the house, and authorized his ag ent to d educt t he cost from t he proceeds paid to the seller s at the closing. The sellers' agent also not ified the buyer 's agent that a small probl em had been detected and c orre cted . The buyer 's age nt sa ys she relayed the information to the buyer. The buy

er and her ag ent walked through the hous e a few days before the closing, and did not notice any of the damaged areas.

The plaintiff test ifi ed that she did not rely on any statements made by the sellers or theiragent. She relied o n the FHA ins pections, the te rmite inspect ion and her own per

sonal observations, in dec iding the hous e was in g ood condition. The closing t ook place on June 3, 1993.- 4 - II.
The Consumer Prot ection Act makes unf air or dece ptive acts unlawful, Tenn. Code Ann. § 47-18-1 04(a) . Th e Act lists certain spec ific deceptive acts and then adds a broad category: "Engaging in any other act or practice which is dece ptive to the consumer or

to any other pe rson." Tenn. Code Ann. § 47-18 -104(b)(27) . The plai ntiff relies on t he quoted secti on as the basis forher claim against the sellers and their agent.
The Consumer Prot ection Act does apply to transacti ons in real estate, Steed Realty v. O ne is i

, 823 S.W.2d 195 (Tenn. App. 1991), and thedeceptive a cts or practices do not have to b e wilful or knowing
. Smith

v. Scott Lewis

Chevrolet, Inc. , 843 S.W.2d 9 (Tenn. App. 1992); Haverlah v. Memphis Aviation, Inc. , 674 S.W.2d 297 (Tenn. App. 1984). But does the plainti ff have to rely on the deceptive act or prac tice? If so, the plaintiff cann ot recover in this case because she testifie d that she did not rely on any acts of thed efendants, and the alleg edly decepti ve act took place after the date of the agreement.

The parties have not provi ded any authori ty on the relianceissue under the Consumer Prot ection Act and we have not been ab le to find an answer in the Tennessee cases. We are persuaded, however , that relian ce is nota part ofthe cause of action, simply because the Act does not requi re it. Tenn. Code Ann. § 47- 18-109 gives

a person w ho has suffered an ascer tainable los s a cause of action to recover the actual damag es caused by the deceptive act or p ractice. I t does not mention reliance, an d t he whole te nor of the act makes it clear th at the technical requirements

of a cause of action for fraud and deceit are not a part of the cause of action under the act.

We turn next to the question of whether the de fendants w ere guilt y of- 5 -

a deceptive a ct. The tr ial judge did not make a finding of the defendan ts' specific acts. He found simply that "the defend ants were guilty of unfair or decepti ve acts or practices and violated the provis ions of T.C.A. § 47- 18-104(a)(27) ."

With respect toMrs. Russell, we think that finding is clearly erroneous. She had no part in t he events that occurred between the executi on of the contract and the closing. She had n ot live d in t he ho use f or ove r two years, and there is no pr oof that she had any knowledge of the water damage. The fact that her real es tate agent mayhave acted dec eptively should not be i mputed to her. There is no proof that s he authorized the agent to act for her in any way , except i n selling the house. Therefore, the action aga inst her shoul d be dismissed.

As to Mr. Rus sell and the real estate agent, we think a conclusion could be drawn (as the trial j udge did) that they eng aged in a decept ive act by , either intenti onal ly

or negli gently, covering over a ser ious defect in the house. Such a findin g, however , does not automatically impos e liabilit yo n the defendants. The statute also requi res that the de ceptive act affect the "conduct of any trade or commerce." Tenn. Code Ann. § 47-18 -104(b). We have difficulty finding from the record in this case how the decep tive act affected the trade. The cont ract had been signed, t he FHA insp ection had been made, a nd the loan had been app roved; the sellers had a clear termite letter, and the closing was only a few days away. If Mr. Russell and t he ag ent h ad do ne no thin g, the tran sact ion wo uld u ndo ubte dly h av e closed. Therefore, we do not think it ca n be argued that the deceptive act affected the trade.
For the same reasons, we are also convinced that the proof fails t o establish how the pla intiff wasdamaged by t he deceptive act. The only proof in the record concerns the cost of repairs. B ut the deceptive act did not cause the harm to the structure, nor did it cause the transac tion to close. Therefore, we find that the- 6 -

plai ntiff failed to show

that she had an ascertaina ble loss as a result of t he de cept ive act. See Tenn. Code Ann. § 47-18-109.

The judgment of the court below is reversed and the cause is remanded to the Circui t Court of Su mner Cou nty for any p roceed ingsthat may bec ome necessary . Tax the cos ts on appeal to th e appellee.

_ ______________________ _____ _ BEN H. CAN TRELL, JUDGE
CONCUR:

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SEC TION

_______________________________ WILLIAM H. INMAN, SENIO R JUDGE