FOR PUBLICATION

IN THE SUPREME COURT OF TENNESSEE

AT NASHVILLE

TAMMY R. GANZEVOORT, (

(

Plaintiff-Appellant, (

(

( Sumner Circuit

(

v. ( Hon. Thomas Goodall, Judge

(

( S. Ct. No. 01S01-9602-CV-00040

RICHARD B. RUSSELL, MARTHA T. (

RUSSELL, AND JIM CASSETTY d/b/a (

JIM CASSETTY REALTY, (

(

Defendants-Appellees. (

For Plaintiff-Appellant: For Defendants-Appellees:

Michael W. Edwards John R. Bradley

Hendersonville Hendersonville

O P I N I O N

JUDGMENT OF COURT OF APPEALS

AFFIRMED; JUDGMENT OF TRIAL COURT

REVERSED. REID, J.
This case presents for review the decision of the

Court of Appeals reversing the trial court and dismissing an

action for violation of the Tennessee Consumer Protection

Act brought by the purchaser of residential real property 1

against the seller and the seller’s broker. The judgment of

the Court of Appeals dismissing the suit is affirmed.

I

The subject of this suit is a house and lot located

in Hendersonville, Tennessee, which was purchased by

defendants Richard Russell and Martha Russell in 1969. The

property was occupied as a residence by the Russells until

1991, when Martha Russell moved in connection with their

divorce. Richard Russell and his child continued to occupy 2

the premises until a short time prior to June 3, 1993, the

date on which the property was conveyed to the plaintiff,

Tammy R. Ganzevoort.

In the latter part of 1992, the house and lot were

listed for sale with Jim Cassetty Realty, a real estate

agency owned by the defendant Jim Cassetty, who is a broker,

Tenn. Code Ann. §§ 47-18-101 to 47-18-5002 (1995). 1

The Court of Appeals dismissed the suit against Martha Russell,

2

from which there is no appeal.

-2-
and his wife, Pat Cassetty, who is an agent. The plaintiff

was represented by real estate agent Judy Cassetty. (Judy

Cassetty is not related to Jim and Pat Cassetty.) 

On February 1, 1993, the parties entered into a

contract for the sale of the property for $68,500. The

closing was set for May 31, 1993. The sale was subject to

approval by the United States Department of Housing and Urban

Development of a Federal Housing Authority (F.H.A.) loan. 

F.H.A. required an inspection by a representative of that

agency, an appraisal by an appraiser approved by F.H.A., and

a professional termite inspection. 

The F.H.A. inspection revealed the need for some

minor repairs but did not mention the defects on which this

suit is based. Those repairs were made. 

The real estate appraiser approved by F.H.A.

inspected the property in the process of preparing an

appraisal. During that inspection, he examined the house’s

underpinnings but found no defects in the floor joists or the

subflooring. He only required the purchaser to have

knowledge of a sump pump located beneath the house and that

it be in working condition. A copy of the appraiser’s report

was given to the purchaser on May 12, 1993, several days

-3-
prior to the closing. 

An employee of a pest control company made an

inspection of the house on May 25, 1993. His report showed

there was no evidence of termite infestation or damage. The

termite inspector did, however, find water damage under the

bathroom, which he verbally reported to Jim Cassetty. He

testified:

It wasn’t a problem that I would

normally put on this report simply

because it was the deterioration of

subflooring under the bathroom, under the

main bathroom of the house. And I just

took note of that as I was inspecting it

. . . .

When I went under the bathroom I did

see that the subflooring was damaged, and

it was obviously moisture damage. It

looked to me, and I’ve looked at a few of

them, it looked like a drain type leak. 

It wasn’t dripping water. It looked like

something where maybe when the bathtub --

when the commode was flushed or the

bathtub was drained or the shower drain,

whatever, was getting in there and

damaging the wood.

Since there was no structural

damage, that’s the reason I didn’t put it

on my report. But I did report it to the

Cassetty agency. I do this as a matter

of courtesy. If I find a plumbing leak

or anything like that under a house I’ll

usually tell the agent so they’re aware

of it and they can get it repaired.

 . . . .

-4-
It was obvious there had been a leak

there at some time and that it had

damaged the subflooring, but not the

floor joists themselves. So it wasn’t

structural, and that’s why I didn’t put

it on my report. 

The termite inspector told an employee of the Cassetty

agency, “Look, there’s no problem with . . . termites. . . .

By the way, though, tell Jim that some of the subflooring

under the bathroom has been damaged by water and it looks

like a drain leak because there is no water dripping right

now.”

Apparently, the termite inspection was made while

Jim Cassetty was out of town. Jim Cassetty testified:

Well, I come back from being out of

town and had a report from the Allied

Pest Control that they had inspected the

property and issued the letter but

recommended that the exterior, the

underside of the property under the

bathroom be refurbished, renovated and

strengthened.

I talked to [the termite inspector]

about that. He suggest[ed] laminating or

scabbing -- I understand laminating as

being a plank on each side of the plank -

- or scabbing where you put only one plank

on. I informed [the termite inspector] that

[the carpenter] would do that.

. . . . I went out there and looked at

the area, and then I hired a man name of

Bob Murdock to repair it. Mr. Russell

-5-
was out of town, I contacted him, told

him what the requirement was, told him

that there was going to be some $300 or

so to make the repairs. He authorized

[me] to go ahead and have it fixed, and I

did so.

 . . . .

Well, it looked like an old leak. 

It looked like it was something that had

happened five or 10 years earlier. I

thought it was just precautionary. Until

you start taking up carpet and ripping

back paneling and taking off all of this

protective paper, it wasn’t visible.

The carpenter described the conditions found and

the repairs made:

there was one joist that was in pretty

bad shape. I put a 2 x 10 or a 2 x 12 up

on the block wall on the outside of the

house, ran it back 3 or 4 feet on the

good end of the joist. And then on the

floor up there, it was a little bit

discolored, I brought it around on it. 

It was dry and still firm and intact. I

put some plywood up against that. And

the two joists on both sides of it, I put

splices on them. 

Then I had to kind of put pressure

on it to jack it up to make sure

everything was up tight against the

floor. I went inside to make sure there

was no cracks or anything in the grout on

the tile in the bathroom. Everything was

intact. It was fine. Everything was

dry.

Prior to closing, the seller’s agent told the

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buyer’s agent, according to the testimony of Judy Cassetty

“There was a piece of wood replaced

underneath the house, but don’t worry

about it. It was just a little minor

piece of wood. Jim said underneath the

house everything is fine.” And I did

tell [the plaintiff] that.

I said that there is a clear termite

letter; there was a piece of wood

replaced; they’re saying everything is

fine, he went under it. But we did see

the sawdust out there, and I said, “Well,

that must explain the sawdust.” 

Pat Cassetty’s version of the discussion was:

As I explained it, it was that the

termite fellow had told us that there was

some damage there. He had just -- he

said there was some damage there, and

we’d check it out when we came home. And

Mr. Russell wanted everything to be done

for the house. We did what we thought

was the proper thing to do. The cost we

incurred was put on the closing

statement, so I was telling them that we

found this at the last moment and that we

had corrected and this was the cost.

There is no evidence that Russell had any

information about the defects other than that given him by

Cassetty and the carpenter. Russell authorized the repair

work recommended and agreed that the cost, estimated at $300,

be charged to him at the closing. 

-7-
Even though the plaintiff and her agent looked at

the house several times prior to closing, they apparently did

not see any indication that the bathroom floor was damaged. 

The plaintiff did not discuss the condition of the floors

with the seller prior to closing. The plaintiff testified

that she relied upon her personal inspection, the F.H.A.

report, and the termite letter. She does not claim that she

relied upon any representation made by the seller or the

seller’s agent. 

After all the reports required by F.H.A. had been

filed, that agency issued its approval of the house as

collateral for the plaintiff’s loan. 

After the sale had been closed, the plaintiff

discovered, upon removing the carpet in the dining area near

the bathroom, that a section of the hardwood floor,

approximately 3 feet by 3 feet in area, was rotten. Further

inspection revealed that water leaking from the shower and

commode had caused extensive damage to the bathroom floor

where the repairs had been made and also to the floor and

floor joists under the adjoining dining area.

An engineer engaged by the plaintiff described the

condition as follows:

-8-
The carpet that had gotten wet in

[the] dining room had been pulled back

and there was a hardwood floor underneath

the carpet. Within 3 or 4 feet of the

wall that hardwood was very badly

damaged, in some cases completely

decomposed; so the damage had been going

on for some time.

There was no evidence, in the

bathroom, of any deterioration at that

time, from looking inside the bathroom;

but going underneath the house in the

crawl space the floor joist had been

damaged by the water. The plywood

subfloor had completely delaminated, the

bonding between the layers of the plywood

were separated.

The floor joists were very wet and

had decayed somewhat; and someone had

gone in at some previous time, I don’t

know when, and tried to repair the floor

joist by splicing four pieces of lumber

onto the sides of the joist.

When asked by the judge whether the F.H.A. inspector should

have discovered this problem, the engineer responded,

. . . The rotted hardwood was covered by

carpet, wall-to-wall carpet, and I’m sure

the floor would have felt a little soft;

but that would have been a pretty

extensive inspection, to go around [and]

poke your fingers along the walls.

The tile in the bathroom is not

cracked, so there wouldn’t have been a

clue in there.

Underneath the house would have been

the only hope of finding this thing, and

even though there was foil paper covering

the plywood, the foil does not cover the

-9-
floor joist, and there was evidence of

water stain and mildew on the joist; that

would have been enough to at least

suspect there was a leakage problem.

Defendant Jim Cassetty estimated the damaged area

could be repaired for not more than $800. The plaintiff’s

expert submitted a bid to repair the damaged portion for

$7,000. 

The trial court made no specific findings of fact. 

It ruled as follows:

The Court is convinced that the

Defendants were guilty of unfair or

deceptive acts or practices and violated

the provisions of T.C.A. § 47-18-

104(b)(27). . . .

The Court of Appeals affirmed the conclusion that

the defendants Russell and Jim Cassetty were guilty of

unfair or deceptive acts. It held that they “engaged in a

deceptive act by, either intentionally or negligently,

covering over a serious defect in the house.” That court

concluded, however, that the deceptive act was not the cause

of any damages and reversed the judgment entered by the trial

court.

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II

The standard of review is stated in Rule 13(d) of

the Tennessee Rules of Appellate Procedure:

Unless otherwise required by statute,

review of findings of fact by the trial

court in civil actions shall be de novo

upon the record of the trial court,

accompanied by a presumption of the

correctness of the finding, unless the

preponderance of the evidence is

otherwise.

When the trial judge has failed to make specific findings of

fact, this Court will review the record to determine the

preponderance of the evidence. See Kemp v. Thurmond, 521

S.W.2d 806, 808 (Tenn. 1975). Furthermore, “the construction

of the statute and application of the law to the facts is a

question of law.” Beare Co. v. Tennessee Dept of Revenue,

858 S.W.2d 906, 907 (Tenn. 1993). The scope of review for

questions of law is de novo upon the record of the chancery

court with no presumption of correctness. Union Carbide

Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993).

III

Resolution of the issues presented requires a

-11-
construction of the Tennessee Consumer Protection Act. In

construing the statute, this Court must ascertain and give

effect to the legislative intent and the ordinary meaning of

the language of the statute. Carson Creek Vacation Resorts,

Inc. v. Dept. of Revenue, 865 S.W.2d 1, 2 (Tenn. 1993). 

Additionally, “[t]he Tennessee Consumer Protection Act is to

be liberally construed to protect consumers and others from

those who engage in deceptive acts or practices.” 

Morris v. Mack’s Used Cars, 824 S.W.2d 538, 540 (Tenn. 1992);

Tenn. Code Ann. § 47-18-102(2) (1995).

The Act was enacted “to protect consumers and

legitimate business enterprises from those who engage in

unfair or deceptive acts or practices in the conduct of any

trade or commerce . . ., [t]o encourage and promote the

development of fair consumer practices; [and] . . . [t]o

declare and to provide for civil legal means for maintaining

ethical standards of dealing between persons engaged in

business and the consuming public to the end that good faith

dealings between buyers and sellers at all levels of commerce

be had in this state . . .” Tenn. Code Ann. § 47-18-102.

The Act authorizes a private cause of action:

Any person who suffers an ascertainable loss

-12-
of money or property, real, personal, or

mixed, or any other article, commodity, or

thing of value wherever situated, as a result

of the use or employment by another person of

an unfair or deceptive act or practice

declared to be unlawful by this part, may

bring an action individually to recover

actual damages. 

Tenn. Code Ann. § 47-18-109(a)(1) (1995). 

This Court has discussed issues under the Act in

only three cases. In Morris v. Mack’s Used Cars, 824 S.W.2d

538 (Tenn. 1992), the seller sold the purchaser a truck, “as

is.” The seller knew it was a reconstructed vehicle. Being

reconstructed reduced the vehicle’s fair market value 30 to

50 percent. The seller’s defense was that the disclaimer

contained in the bill of sale protected it from liability

under the Act. This Court ruled that the Uniform Commercial

Code (U.C.C.) imposes an obligation of good faith in the

performance of every contract which may not be disclaimed,

and that disclaimers permitted by Tenn. Code Ann. § 47-2-316

do not defeat separate causes of action under the Consumer

Protection Act. Id. at 539. The court stated:

To allow the seller here to avoid

liability for unfair or deceptive acts or

practices by disclaiming contractual

warranties under the U.C.C. would

contravene the broad remedial intent of

the Consumer Protection Act.

-13-
Id. at 540. 

In Quality Auto Parts Co. v. Bluff City Buick Co.,

876 S.W.2d 818, 819 (Tenn. 1994), the Court concluded that it

did not need to reach the issue of whether consumer

protection laws apply to disputes arising in the context of

employer-employee relationships. The Court found that the

alleged false statements about the plaintiff did not

disparage the quality of the plaintiff’s services and

therefore would not support a claim under the Act.

In Pursell v. First American National Bank, 937

S.W.2d 838, 839 (Tenn. 1996), the Court found that the

defendant bank’s breach of an agreement to return property in

a repossession dispute, did not form the basis of an action

under the Act because the actions of the bank did not affect

the conduct of any “trade or commerce.” The Court noted,

This holding is confined to the

facts and circumstances of this case, and

we do not, by this Opinion, generally

exempt banking activities from the

Tennessee Consumer Protection Act.

Id. at 842. 

-14-
The Act is applicable to the transaction in this

case. The plaintiff is a consumer as defined in the Act, the

purchase of real property is covered by the Act, and the

property was offered for sale by a realtor in the course of

the real estate trade. The term “consumer” is defined in the

Act, and in pertinent part states, “‘Consumer’ means any

natural person who seeks or acquires by purchase . . . any

. . . property . . . . real, personal or mixed . . . .” 

Tenn. Code Ann. § 47-18-103(2)(1995). The Act defines

“trade” and “commerce” in pertinent part, as follows: 

“‘Trade,’ ‘commerce,’ or ‘consumer transaction’ means the

. . . offering for sale . . . of any . . . property . . . .

real, personal, or mixed . . . .” Tenn. Code Ann. § 47-18-

103(9)(1995). Consequently, the complaint states a cause of

action against the defendant Jim Cassetty. 

However, whether the Act is applicable to the sale

by the defendant Russell, who is not generally engaged in the

sale of real property, is less clear. Two of the stated

purposes of the Act are to maintain “ethical standards of

dealing between persons engaged in business and the consuming

public,” and to protect consumers and legitimate business

enterprises from those who engage in unfair or deceptive acts

or practices in the conduct of any trade or commerce.” Tenn.

Code Ann. §§ 47-18-102(2) & (4) (1995) (emphasis added). 

-15-
Although this language does not explicitly exclude from the

Act sellers not in the business of selling property as owners

or brokers, a reasonable construction is that they are not

included.3

Some consumer protection acts found in other

jurisdictions, clearly apply only to persons who regularly

solicit or engage in consumer transactions. See e.g. Iadanza

v. Mather, 820 F. Supp. 1371, 1381 (D. Utah 1993). The

majority of jurisdictions in which real estate sales are

governed by the act, have held that persons making an

isolated sale of their home are not covered by the Act.

A number of state courts have ruled

that, even where real estate sales are

generally covered, the isolated sale of

real estate by a nonmerchant is not

covered. This should be viewed as an

attempt to keep consumer-to-consumer

sales transactions outside the [unfair

and deceptive acts and practices]

statute’s scope, and not an attempt to

exclude all real estate practices from

the state’s coverage. In particular,

even though a court may dismiss the

homeowner as a ... defendant, the case

against the homeowner’s realtor and

termite inspector should go forward.

Although the Court later in this opinion relies upon the decision

3

of the District Court in Klotz v. Underwood, 563 F. Supp. 335, 337 (E.D.

Tenn. 1982), aff’d, 709 F.2d 1504 (6th Cir. 1983), we reach a different

conclusion on this issue.

-16-
Jonathan Sheldon, Unfair and Deceptive Acts and Practices, 51

(3d ed. 1991) (footnotes omitted); see Jackson v. Manasquan

Sav. Bank, 638 A.2d 165, 170 (N.J. Super. L. 1993); Bhatti v.

Buckland, 400 S.E.2d 440, 444 (N.C. 1991) (“Assuming that a

‘homeowner’s exception’ exists, its application is limited to

an individual involved in the sale of his or her own

residence.”); Robertson v. Boyd, 363 S.E.2d 672, 676 (N.C.

App. 1988)(“private parties engaged in the sale of a

residence, were not involved in trade or commerce and cannot

be held liable under the statute . . . [realty company and

termite inspector] were engaged in trade or commerce within

the meaning” of the statute); DiBernardo v. Mosley, 502 A.2d

1166, 1168 (N.J. Super. A.D. 1986) (“the Act was intended as

a response only to the public harm resulting from ‘the

deception, misrepresentation and unconscionable practices

engaged in by professional sellers seeking mass distribution

of many types of consumer goods’ . . . and not to the

isolated sale of a single family residence by its owner”);

Young v. Joyce, 351 A.2d 857, 860 (Del. Supr. 1975)(“we do

not belive that the isolated sale of real estate by its owner

. . . constitutes the conduct of trade or commerce”). The

conclusion is that the Act is not applicable to the seller in

this case. 

The next question is whether the evidence supports

-17-
the trial court’s conclusion that the defendant Cassetty

committed an unfair or deceptive act or practice within the

meaning of the Act. The claim in this case is based on the

following provisions of the Act:

. . . 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:

(27) Engaging in any other act or

practice which is deceptive to the

consumer . . . .

Tenn. Code Ann. § 47-18-104(b) (1995). The Act does not

define the terms “unfair” and “deceptive,” and the Court has

not heretofore defined these terms. 

The Act states that in determining the statute’s

intended meaning the court should look to opinions concerning

a similar provision in the Federal Trade Commission Act. 

4

Tenn. Code Ann. § 47-18-115 (1995). The federal courts have

noted that the terms “unfair” and “deceptive” are incapable

of close definition:

It is important to note the generality of

See 15 U.S.C. §45(a)(1)(1973)(“Unfair methods of competition in

4

commerce, and unfair or deceptive acts or practices in commerce, are

declared unlawful.”).

-18-
these standards of illegality; the

proscriptions in §5 are flexible, “to be

defined with particularity by the myriad

of cases from the field of business.”

Federal Trade Comm. v. Colgate-Palmolive Co., 380 U.S. 374,

384-85, 85 S. Ct. 1035, 1042, 13 L. Ed. 904(1965) (quoting

Federal Trade Comm. v. Motion Picture Advertising Service

Co., 344 U.S. 392, 394, 73 S. Ct. 361, 363, 97 L. Ed. 426

(1953)). Without limiting the broad scope of the Act, the

following definitions found in decisions from other

jurisdictions clearly are applicable to this case. The

Supreme Court of Vermont has held that “a ‘deceptive act or

practice’ is a material representation, practice or omission

likely to mislead a reasonable consumer.” Bisson v. Ward,

628 A.2d 1256, 1261 (Vt. 1993). A similar definition is

found in Connor v. Merrill Lynch Realty, Inc., 581 N.E.2d

196, 202 (Ill. App. 1991): “a deceptive practice is the

concealment, suppression or omission of any material fact,

with intent that others rely upon the concealment,

suppression or omission of such material fact.” 

In Klotz v. Underwood, 563 F. Supp. 335 (E.D. Tenn.

1982), aff’d, 709 F.2d 1504 (6th Cir. 1983), the subject of

the sale was an old house to which later additions had been

made. Subsequent to the sale, the purchasers discovered, by

-19-
removing a portion of a wall, water damage to members and

appurtenances of the house. The District Court held that the

Tennessee Consumer Protection Act imposes no liability where

the seller had no knowledge of the hidden defects and where

an inspection by the purchaser would reveal the same

information known by the seller.

Brokers, agents and other professional sellers of

real property have knowledge and information superior both in

quantity and quality to that of an average residential

purchaser regarding factors and conditions that affect the

value of the property they are offering for sale. They are

obligated by the Act to exercise good faith in disclosing to

prospective purchasers material facts affecting the value of

the property known to them and not known to or reasonably

ascertainable by a prospective purchaser. The extent of this

duty, however, will be determined by the facts and

circumstances of each situation, including the property and

the parties, and the generally accepted professional

standards in the trade. The Act does not impose strict

liability. Nor does it impose upon realtors duties beyond

those which are generally accepted in the business as good

practice. The provisions of Tenn. Code Ann. §§ 66-5-201 to

66-5-210 (Supp. 1996) (residential property disclosures),

though not determinative, may be relevant in cases arising

-20-
after its enactment in 1994. Likewise, the provisions of the

Real Estate Brokers License Act, Tenn. Code Ann. §§ 62-13-101

to 62-13-322 (1990 & Supp. 1996), may also be relevant in

determining good practice. 

Tested by this standard, the evidence does not show

that the defendant realtor is guilty of unfair or deceptive

acts. The realtor undertook to bring the house within F.H.A.

requirements. Other small deficiencies noted by the F.H.A.

inspector were repaired. When advised by the termite

inspector of the damage under the bathroom, the realtor

engaged a carpenter and instructed him, with the owner’s

approval, to repair the damage found. This repair was made

known to the purchaser’s agent, although she apparently took

little note of it. None of the parties were aware that the

water damage had extended to the dining area. That damage

was not noted by the F.H.A. inspector or the independent

appraiser, both of whom inspected the premises. Even the

expert employed by the plaintiff testified that finding the

damage would have required one to “poke your fingers along

the walls,” and that there was no “clue” to the damage in the

bathroom. He stated that only under the house was there

enough indication to suspect a leakage problem. The damage

was essentially hidden from all inspections except that which

occurred after the sale with the removal of the floor

-21-
covering in the affected area. Apparently, none of the

several persons whose professional duty was to examine the

premises felt that removal of the carpeting was appropriate. 

Those persons included the F.H.A. inspector, the independent

appraiser, the termite inspector, and three realtors. 

The conclusion is that the evidence preponderates

against the finding that the defendant Cassetty is guilty of

an unfair or deceptive act within the meaning of the Act.

For these reasons, the judgment of the Court of

Appeals reversing the trial court is affirmed and the case is

remanded to the Circuit Court of Sumner County.

Costs on appeal are taxed to the plaintiff.

___________________________

REID, J.

Concur:

Birch, C.J., and Drowota, J.

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