IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

September 19, 2013 Session

SPENCER D. LAND ET AL. v. JOHN L. DIXON ET AL.

Appeal from the Circuit Court for Hamilton County

No. 08C906 W. Jeffrey Hollingsworth, Judge

No. E2012-02341-COA-R3-CV-FILED-NOVEMBER 25, 2013

The plaintiffs – purchasers of a tract of land at auction – brought this action alleging

professional negligence in the conduct of the auction, misrepresentation, and violation of the

Tennessee Consumer Protection Act (“the TCPA”). The trial court dismissed the complaint,

finding that it failed to state a claim upon which relief could be granted. On plaintiffs’ first

appeal, we affirmed the dismissal of the misrepresentation and TCPA claims. Land v.

Dixon, No. E2004-03019-COA-R3-CV, 2005 WL 1618743 (Tenn. Ct. App. E.S., filed July

12, 2005) (“Land I”). We vacated the dismissal of the claim for professional negligence, and

remanded the case for trial of that issue. After remand, the trial court granted the defendants’

motion for partial summary judgment and their subsequent motion in limine, holding that

plaintiffs were precluded, under our holding in Land I, from presenting evidence of the

defendants’ alleged misrepresentations as an aspect of their professional negligence claim.

The jury returned a verdict for the defendants on the professional negligence claim. In this

second appeal, we hold the trial court did not err in its ruling excluding evidence of

misrepresentations and in limiting the negligence claim of the plaintiffs to the conduct of the

defendants in their capacity as auctioneers. We further find no prejudicial error in the trial

court’sjury charge regarding comparative fault and auctioneer discretion. We affirm the trial

court’s judgment based on the jury verdict.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Affirmed; Case Remanded

CHARLES D. SUSANO, JR., P.J., delivered the opinion of the Court, in which D. MICHAEL

SWINEY and THOMAS R. FRIERSON, II, JJ., joined.

Everett L. Hixson, Jr., Phillip E. Fleenor, and Adam U. Holland, Chattanooga, Tennessee,

for the appellants, Spencer D. Land and Action Building and Development, LLC.

James T. Williams and Zachary H. Greene, Chattanooga, Tennessee, for the appellees, John
L. Dixon, John Dixon and Associates, Inc., and Henry B. Glascock dba The Henry B.

Glascock Company.

OPINION

I.

Our opinion in Land I provides the following pertinent factual and procedural

background:

The Plaintiffs, Spencer D. Land and Action Building and

Development, LLC, filed their complaint in this action on June

15, 2004. The facts as set forth in the Plaintiffs’ complaint are

as follows.

On or about April 17, 2004, the Defendants, John L. Dixon,

Henry Glascock, John L. Dixon & Associates, Inc., and The

Glascock Company d/b/a The Henry B. Glascock Company,

conducted an absolute auction of approximately 448 acres of

real property, located near Soddy Daisy, Hamilton County,

Tennessee. Mr. Dixon and Mr. Glascock each personally held

an ownership interest in the property at the time of the auction;

however, neither of them disclosed their ownership interest to

Plaintiffs before or during the auction.

Prior to attending the auction and bidding on the property, Mr.

Land obtained a brochure advertising the property. The

brochure contained an aerial photograph of the property with

lines added to indicate its borders. The photograph indicated

that the property included approximately two acres in a shape

that juts out from the main shape of the property. But this

two-acre tract, described in the complaint as “prime property,”

was not included in the property conveyed at the auction.

The brochure stated in large lettering: “Selling by Order of

Trustee Robert L. Brown.” But there was no “Order” of the

Trustee requiring a sale. The Trustee sold the property at the

choice of the beneficial owners, including the Defendants, and

then utilized himself as closing attorney, his business as title

-2-
insurer, and two beneficiaries of the Trust as auctioneer and real

estate broker.

Before the April 17, 2004 auction began, the Defendants

announced the auction would be conducted according to the

“two-minute rule.” This rule means that once the auctioneers

determine that too much time had passed between bids, that the

auctioneer would announce the start of a two minute period.

Once the start of this two minute period is called, if no new bid

is submitted within the two minute period, then the gavel goes

down and the last person submitting a bid prior to the start of the

two minute period is the purchaser of the property.

Land I, 2005 WL 1618743 at *1. In Land I, we observed that plaintiffs’ first complaint

made the following further allegations:

When the auction reached a bid at or about $1,400,000.00, Mr.

Land was the high bidder.

Following Mr. Land’s $1,400,000.00 bid, Mr. Glascock, who

was already in communication with Mr. Louis Card via

telephone, attempted to convince Mr. Card to submit a bid

higher than the bid of Mr. Land. Earlier in the auction, bids had

been submitted on Mr. Card’s behalf.

While Mr. Glascock was on the telephone with Mr. Card, Mr.

Dixon announced the start of the two minute rule. After this

announcement, more than two minutes elapsed. Witnesses to

the auction informed the Defendants that more than two minutes

had passed. The Defendants announced the end of the two

minute period but did not conclude the auction. No bid was

submitted from any other party during the two minutes higher

than that of Mr. Land.

Despite the passage of time, Defendants continued with the

auction, in violation of the announced rules of the auction, and

eventually Mr. Card submitted a higher bid. In order to acquire

the property, it was necessary for Mr. Land to follow Mr. Card’s

bid with a still higher bid.

-3-
Despite having already won the auction when the two minutes

passed, Mr. Land was declared the winner of the auction by the

Defendants when Mr. Land submitted a bid of $1,590,000.00.

At this time, Mr. Land was required to sign Defendants’ form

contract for the purchase of the property.

Defendants charged a buyer’s premium of ten percent (10%) of

the auction price.

Plaintiffs reasonably relied upon the Defendants’ knowledge,

expertise and professional skill as licensed auctioneers and real

estate brokers to properly and forthrightly conduct the auction

and the sale of the real estate in a professional, competent and

lawful manner.

On the same day of the auction, April 17, 2004, the parties

executed a real estate sales contract which listed the purchase

price as $1,749,000 ($1,590,000 plus buyer’s premium of

$159,000). The contract recites that “Purchaser [Plaintiff] has

paid to Auctioneer the sum of $349,800 as earnest money ...” It

is signed by Mr. Land, Robert L. Brown, President of Legal

Title and Escrow, Inc. (holder of legal title to the property and

the seller), and Mr. Dixon as auctioneer.

After the auction, the property was surveyed and the sales price

was adjusted downward based on the actual acreage. As a

result, the sales price was reduced to $1,501,327.29, and the

buyer’s premium was reduced to $150,132.73, for a total sales

price of $1,651,460.02.

The Plaintiffs allege that as a direct and proximate result of the

Defendants’ actions and violations of applicable standards of

care, Plaintiffs “paid $286,627.29 too much for the property”

and “$26,862.73 too much as the buyer’s premium for the

property.”

The Plaintiffs filed their lawsuit at 3:18 PM on June 15, 2004.

It is undisputed that very shortly (within an hour) after the

complaint was filed, the parties closed on the contract of sale of

the real estate and thereby completed the sale.

-4-
On August 10, 2004, the Defendants filed a motion to dismiss

the complaint for failure to state a claim upon which relief can

be granted.

Id., 2005 WL 1618743 at *1-2.

As previously noted, the trial court granted the motion and dismissed the plaintiffs’

action. In Land I, we affirmed the dismissal of the misrepresentation and TCPA claims,

vacated the dismissal of the claim for professional negligence, and remanded the case for

trial of a single issue – whether “[d]efendants, by announcing the two-minute rule and not

following it in an attempt to solicit a higher bid by another bidder, violated the applicable

standard of care for auctioneers and real estate brokers.” Id. at *5. Following remand to the

trial court, plaintiffs’ first complaint was dismissed without prejudice for failure to prosecute.

They filed a second complaint on July 25, 2008. Plaintiffs’ second complaint contained the

same allegations of misrepresentation, albeit repackaged in an attempt to place them under

the rubric of the plaintiffs’ professional negligence claim, which states as follows:

Defendants violated the standards by which reasonable real

estate brokers handle real estate sales, including sales via

auction, including but not limited to violations of T.C.A. § 62-

13-101, et seq. and Tenn. R. and Regs. 1260.2.01, et seq. Such

violations include, but are not limited to: (a) failure of the

Defendants to disclose their personal ownership interest in the

property in a timely manner; (b) misleadingly describing the

property being sold; (c) misrepresenting the circumstances under

which the property was being placed for auction; and, (d) failing

to deal with Plaintiffs forthrightly and honestly as to the issue of

the portion of the property which is affected by the proposed

hiking trail.

(Italics in original.)

Defendants filed a motion for partial summary judgment “to the extent that

[plaintiffs’] cause of action is based on [d]efendants’ alleged misrepresentations, failure to

disclose their prior ownership interests in the property prior to the auction, and failure to

tape-record the entire auction.” Defendants also filed two motions in limine that are at issue

on this appeal. In the first motion, defendants asked the trial court for an order “excluding

from trial any testimony, evidence, or argument that [d]efendants misleadingly described the

property, misrepresented the ownership of the property, misrepresented the circumstances

under which the property was being auctioned, and misrepresented the status of a portion of

-5-
the property affected by a proposed hiking trail.” In the second motion, they requested an

order “excluding from trial any testimony or other evidence pertaining to the standard of care

for real estate brokers or [d]efendants’ conduct as real estate brokers.” The trial court

granted the motion for partial summary judgment and both motions in limine.

The case was tried before a jury on June 13, 14, and 15, 2012. After the close of

proof, the trial court instructed the jury regarding comparative fault. The trial court also

instructed the jury that “[p]rofessionals, such as auctioneers, are allowed reasonable

discretion in the performance of their duties.” The jury found that defendants were not at

fault. The trial court entered a judgment for defendants in accordance with the jury verdict.

Plaintiffs timely filed a notice of appeal.

II.

Plaintiffs have raised the following issues:

1. Whether the trial court erred in granting defendants’ motion

for partial summary judgment and motion in limine, thereby

excluding evidence of defendants’ alleged misrepresentations;

2. Whether the trial court erred in granting defendants’ motion

in limine and excluding evidence pertaining to the standard of

care for real estate brokers or defendants’ conduct as real estate

brokers;

3. Whether the trial court erred in instructing the jury on

comparative fault; and

4. Whether the trial court erred in its jury charge regarding the

exercise of professional auctioneer discretion.

III.

We first address the trial court’s grant of partial summary judgment for defendants on

the claims based on misrepresentation. We review a trial court’s order granting summary

judgment de novo with no presumption of correctness. Martin v. Norfolk S. Ry. Co., 271

S.W.3d 76, 84 (Tenn. 2008). A party is entitled to summary judgment if “there is no genuine

issue as to any material fact and . . . the moving party is entitled to judgment as a matter of

law.” Tenn. R. Civ. P. 56.04.

-6-
The trial court correctly observed that it was duty bound, by the “law of the case”

doctrine, to follow and apply this Court’s disposition of the issues presented in Land I. See

Gray’s Disposal Co. v. Metro. Gov’t of Nashville, 318 S.W.3d 342, 348 (Tenn. 2010);

Memphis Publ’g Co. v. Tenn. Petroleum Underground Storage Tank Bd., 975 S.W.2d 303,

306 (Tenn. 1998). In Land I, we stated the following:

As the trial court correctly noted, it is clear that Plaintiffs were

aware of every alleged misrepresentation prior to closing on the

real estate contract. By that time, Plaintiffs knew of the

Defendants’ ownership interest in the property; that the two

acres depicted in the advertising brochure were not included in

the sale; that the property had been voluntarily placed for sale by

auction, and not as a result of financial distress on the sellers’

part as conceivably suggested by the brochure; and that the

assertion, earlier made, that a portion of the property along a

boundary line had been sold to the State of Tennessee for the

purpose of constructing a hiking trail was untrue.

Armed with this knowledge, Plaintiffs chose to close on the

contract anyway, almost immediately after filing the complaint

in this case. In Winstead v. First Tennessee Bank N.A.,

Memphis, 709 S.W.2d 627 (Tenn. Ct. App. 1986), this [C]ourt

stated as follows:

If one who is in possession of all material facts,

either actually or constructively, proceeds with a

purchase of realty, notwithstanding such

knowledge, such a person cannot thereafter

recover on the basis of fraud, misrepresentation,

or concealment of the information to which all

parties had equal access.

Winstead, 709 S.W.2d at 633. We are of the opinion that this

principle applies to preclude Plaintiffs from seeking recovery

based on the misrepresentations alleged in the complaint, and

we affirm the trial court’s ruling in this regard.

Land I, 2005 WL 1618743 at *4 (emphasis added).

-7-
Plaintiffs, while recognizing that this Court “dismissed their separate claim for the

stand-alone tort of misrepresentation,” argue that “[defendants] [b]y not affirmatively

disclosing that they were the owners of the property they were auctioning, by not acting

honestly and in good faith, and by engaging in self-dealing by auctioning their own property

without both disclosing their interests and obtaining the written consent of all parties to that

self-dealing, [they] violated Tennessee Code Annotated § 62-13-403.” Plaintiffs argue that

1

these alleged violations establish negligence perse by defendants. However, even assuming,

without deciding, that the plaintiffs’ negligence per se argument has merit, their claim would

still fail because it is based on misrepresentations and failure to disclose that cannot be the

cause of plaintiffs’ alleged injury. We made this point clear in dismissing plaintiffs’ TCPA

claim in Land I, stating:

Plaintiffs’ cause of action under the [TCPA] must similarly fail,

because, among other reasons, it rests on the same allegations of

misrepresentation. The Act provides that “[a]ny person who

suffers an ascertainable loss . . . 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 damages.” Tenn. Code Ann. §

47-18-109(a)(1) [emphasis added]. The phrase “as a result of”

requires a showing by a plaintiff that the alleged violations

caused his or her injury. Under the circumstances of this case,

where Plaintiffs voluntarily elected to close on the contract for

sale of the property with full knowledge of the alleged

misrepresentations and of the truth regarding the property,

Tenn. Code. Ann. § 62-13-403(2009) provides, in pertinent part, as follows: 1

A licensee who provides real estate services in a real estate transaction

shall owe all parties to the transaction the following duties . . .

(1) Diligently exercise reasonable skill and care in providing servicesto all

parties to the transaction;

(2) Disclose to each party to the transaction any adverse facts of which the

licensee has actual notice or knowledge;

* * *

(4) Provide services to each party to the transaction with honesty and good

faith;

* * *

(7)(A) Not engage in self-dealing nor act on behalf of licensee’simmediate

family or on behalf of any other individual, organization or business entity

in which the licensee has a personal interest without prior disclosure of the

interest and the timely written consent of all parties to the transaction[.]

-8-
Plaintiffs cannot show the required causative link between the

misrepresentations and their alleged injury.

Land I, 2005 WL 1618743 at *4 (first italics in original; second italics added). We hold that

the trial court did not err in granting defendants partial summary judgment based on its

application of the law of the case as established in Land I. It follows that the trial court

correctly granted defendants’ motion in limine to exclude evidence of alleged

misrepresentations by defendants prior to the auction.

IV.

Plaintiffs argue that the trial court erred in granting defendants’ motion in limine to

exclude evidence pertaining to the standard of care for real estate brokers or defendants’

conduct as real estate brokers. “Generally, the admissibility of evidence is within the sound

discretion of the trial court.” Mercer v. Vanderbilt Univ., 134 S.W.3d 121, 131 (Tenn.

2004). “When arriving at a determination to admit or exclude even that evidence which is

considered relevant trial courts are generally accorded a wide degree of latitude and will only

be overturned on appeal where there is a showing of abuse of discretion.” Otis v. Cambridge

Mut. Fire Ins. Co., 850 S.W.2d 439, 442 (Tenn. 1992).

In Land I, we clearly delineated the scope of the issue remanded to the trial court:

Plaintiffs argue that the essence of their complaint is that the

Defendants, by announcing the two-minute rule and not

following it in an attempt to solicit a higher bid by another

bidder, violated the applicable standard of care for auctioneers

and real estate brokers. Plaintiffs assert that they are not

attempting to enforce a contract at the lower bid level of $1.4

million, but instead alleging that but for the tortious misconduct

of Defendants, a contract for that amount would have been

created, and they would have been able to purchase the property

for a lesser amount.

* * *

A real estate broker who breaches the duty to act honestly and

in good faith, and with reasonable skill and care, is potentially

liable to a party injured by such a breach. Similarly, an

auctioneer whose conduct falls below the applicable standard of

-9-
care for his or her profession is liable to a party injured by the

breach of duty.

* * *

Plaintiffs make only one negligence allegation that bears any

logical relation to the damages which Plaintiffs seek – i.e., the

differential between the two bids and corresponding buyer’s

premiums. This is the allegation that Defendants violated the

applicable standard of care by failing “to conduct the auction in

accordance with the express terms of the auction, specifically

violating the two-minute rule for the submission of bids.” If

Defendants violated the two-minute rule in the manner

described by Plaintiffs, an assertion which Defendants

vigorously deny, Plaintiffs conceivably could assert this

violation resulted in denying them the benefit of the bargain

based on their lower bid of $1.4 million.

Land I, 2005 WL 1618743 at *5-6 (internal citations omitted; italics in original). Thus, the

issue sent back for the jury was plaintiffs’ claim that defendants violated the applicable

standard of care by failing to conduct the auction in accordance with the express terms of the

auction, specifically violating the two-minute rule for the submission of bids.

Following our remand, plaintiffs identified one expert they would call regarding the

applicable standard of care and whether defendants breached it – William Stephenson, the

owner of Stephenson Realty and Auction Company. Mr. Stephenson testified as follows in

his deposition:

Q: Mr. Stephenson, one thing I want to get clear on, you’ve

referenced in this response the applicable standard of care that

auctioneers and Realtors should utilize. And I want to be clear

about the capacities in which the defendants, these gentlemen,

who were acting in the capacity of Realtors versus auctioneers.

And are you saying in your response to Interrogatory Number A

that they were acting as Realtors and auctioneers or just

auctioneers or –

A: No.

Q: Can you clarify that?

-10-
A: As auctioneers only. I know in Tennessee, in order to

auction real property, you have to also have your real estate

license. But when it is sold at auction, you are under the

confines of the auctioneer statute.

Q: Just so I’m clear. You’re not rendering any opinions as to the

defendants in regard to their conduct as licensed Realtors, but

rather their capacity as auctioneers?

A: Correct.

* * *

Q: So, I mean, really, just to put it very simply, this is an

auctioneer negligence case. It’s not a realty negligence case. Is

that a fair characterization?

A: Yes.

Plaintiffs presented no expert testimony on the applicable standard of care for real estate

brokers. As seen by the quote above, plaintiffs’ sole expert declined to testify that

defendants’ actions in conducting the auction implicated or violated the standard of care for

real estate brokers. Moreover, it is apparent that all of the claims for professional real estate

broker negligence, as opposed to auctioneer negligence, are based upon the same allegations

of misrepresentation and failure to disclose that were dismissed in Land I. We hold that the

trial court did not err in granting defendants’ motion in limine to exclude evidence regarding

the standard of care for real estate brokers or defendants’ conduct as real estate brokers.

V.

Plaintiffs next argue that the trial court erred in instructing the jury on comparative

fault. The trial court included a comparative fault instruction in the jury charge in

accordance with the defendants’ allegation that plaintiffs failed to act as reasonable

purchasers of real estate by proceeding to closing without raising their objections to the

manner in which the auction sale was conducted. Plaintiffs take no issue with the substance

of the jury instruction, but argue that the Supreme Court’s opinion in Mercer, 134 S.W.3d

121 (Tenn. 2004), should be construed as holding that “comparative fault is not to be

considered in a professional negligence case.” Defendants respond that Mercer’s holding

“that fault may not be assessed against a patient in a medical malpractice action in which

a patient’s negligent conduct provides only the occasion for the medical attention, care, or

-11-
treatment which is the basis for the action,” id. at 125 (emphasis added), should not be

extrapolated beyond the medical malpractice context to apply to all professional negligence

actions.

We need not reach the issue of Mercer’s applicability in this case because, even

assuming arguendo that the trial court erred in instructing the jury on comparative fault, it

would not have been reversible error. Reversal for error in a jury instruction “is only

warranted . . . if the trial court’s error ‘more probably than not affected the judgment or

would result in prejudice to the judicial process.’ ” Troup v. Fischer Steel Corp., 236

S.W.3d 143, 149 (Tenn. 2007) (quoting Tenn. R. App. P. 36(b)). The verdict form asked the

jury to answer the question “[d]o you find that the Defendants were at fault in this matter,”

and they answered “No.” If the jury had answered “Yes,” they were further instructed to

answer whether the plaintiffs were at fault, and to assign percentage of fault. Because the

jury found no fault on the part of defendants, they did not reach the comparative fault

analysis. Consequently, the comparative fault instruction did not affect the judgment or

prejudice the judicial process, and thus even if it had been error, it would not constitute a

ground for reversal.

VI.

Finally, plaintiffs argue that the trial court erred in instructing the jury regarding the

exercise of professional auctioneer discretion. The trial court’s jury instruction states, in

pertinent part, that “[p]rofessionals, such as auctioneers, are allowed reasonable discretion

in the performance of their duties. Auctioneers have discretion in the conduct of the sale and

acceptance of bids.” Plaintiffs’ auctioneering expert, Mr. Stephenson, testified at trial as

follows on this point:

Q: Now, you would agree, sir, that the auctioneer is in total and

complete control of the auction; correct?

A: Yes, sir.

Q: The auctioneer has discretion to make various decisions on

how the auction is to be conducted, correct?

A: Yes, sir.

Q: He determines when the auction starts and ends, right?

A: Yes, sir.

-12-
* * *

Q: Now, the goal of an auction is to get the highest price for the

property, is it not?

A: Yes.

Q: Okay. Now, and you have the discretion to allow a bidder

more time to bid, do you not?

A: Yes, you do.

* * *

Q: Mr. Glascock had discretion knowing what he knew about

Mr. Card, knowing what he knew about his financial

wherewithal and whether he was a legitimate bidder or not, he

had the discretion whether or not to allow more time to bid;

correct?

A: He did.

Q: And so, really, what we’re here about today is whether Mr.

Glascock and Mr. Dixon properly exercised their discretion;

correct?

A: Yes.

Defendants presented the testimony of two other auction experts who testified similarly to

plaintiffs’ expert regarding auctioneer discretion in conducting an auction sale. Plaintiffs

have cited no legal authority suggesting that the trial court’s instruction was erroneous as a

matter of law. See generally 7 Am. Jur. 2d Auctions and Auctioneers § 32 (“An auctioneer

is possessed of a large measure of discretion in the conduct of the sale and the acceptance of

bids”). We hold the trial court did not err in its jury instruction regarding auctioneer

discretion.

-13-
VII.

The judgment of the trial court is affirmed. Costs on appeal are assessed to the

appellants, Spencer D. Land and Action Building and Development, LLC. This case is

remanded to the trial court for collection of costs below, pursuant to applicable law.

__________________________________________

CHARLES D. SUSANO, JR., PRESIDING JUDGE

-14-