# FILED May 8, 1996 Cecil W. Crowson Ap pellate Cou rt Clerk DEWEY RICHARD FAR LEY and wi fe, ) PAMELA FARLEY , and ) TOMMY WEST, ) ) Plaintiffs/App ellants, ) ) Appeal No. ) 01-A-01-9510- CV-00429 VS. ) ) Putnam Circuit ) No. J-5507 and J -5511 JAMES CLAY

TON, Indivi dually and ) d/b/a LUV HOMES, CLAYTON ) HOMES, INC ., Indivi dually and d/b/a ) LUV HOMES, a nd CH OF AL, INC., ) Individual ly and d/b/a LUV HOMES, ) ) Defendants/Ap pellees. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SECTION AT NASHVILLE
APPEALE D FRO M THE C IRCU IT COU RT OF P UTNAM COUN TY AT COOKEVILLE, TENN ESSEE THE HONORABLE JOHN TURN BULL, JUDGE

DAVID DAY ROBERT DURH AM 19 South Jefferson Avenue Cookevil le, Tennessee 38501 Attorneys for Plaintiffs/Appell ants Dewey Richard F arley and P amela Farley MARTELIA T. CRAW FORD 310A East Broad St reet Cookevil le, Tennessee 38501 Attorney for Plaintiff /Appellant Tomm y West TOM CO RTS Third Floor, Noel Place 200 Fourth Avenue, North Nashvil le, Tennessee 37219- 8985 Attorney for Defendants/Appellees

AFFIRMED AND REMAN DED

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

## O P I N I O N

This is an action for m isrepre sentations and i nducement of breach of contract relating to the tria l and settlement of a personal inj ury case. The origin al plai ntiffs and a co-defendant have sued the other defendants for misrepres enting or concealing material facts which (1) induced the plaintiff s to settle theiroriginal claim forless than its worth, and (2) induced the def endants’ in surance company not to represent

the other defendant. The Circuit Court of Putnam County granted sum mary judgm ent to t he defend ants. We affirm.

I.

In the summer of 1990 an enti ty know n as Luv Homes operated a mobile home sales lot i n Cookevil le. Tommy W est managed the Cookeville o peration. On August 27, 1990, Dewey R. Farley, who worked for a contr actor hired by Luv

Homes to deliver

one of the trailer

s, was hel ping move t he f urniture out o f th e uni t. Che ryl West, Tommy West’s wife, was hauling the furniture in her El Caminowhic h she o wne d jointly with Tommy West . Mr. Farley was standing in the bed of the vehicle holding some of the furniture upright w hen the truck l urched forwar d, throw ing M r. Farley out and onto the ground. He suff ered severe and permanent inju ries.

Mr. Farley and his wife sued Tommy and Chery l West, Luv Homes, and the alleged owners o f Luv H ome s, includingJames Clay ton indivi dually. The insurance company prov iding coverag e for Luv Homes and its associated enti ties, but did not provid e coverage for Tommy West. Mr. West, after retaininghis own p rivate atto rney, left town and brok e off communication w ith his attor ney and the other defendants. Consequentl y, the plai ntiffs took a default judg ment against hi m. After the trial star

ted in November of 1991, the Lu v Homes/Clayton defendants se ttled their- 3 -

case with theFarle ys for $125,000. The jur y returned a verdic

t against th e Wests for $620,000.

Mr. West resurfaced , and in 1993 he and the F arleys s ued the Luv Homes/Clay

ton insurance ca rrier for fail ing to defend Mr. West in the orig inal action. In September of 1994, all the parties to t hat action compromised thei r claims and the insurance carrier paid the Farl eys $298,502.63in re turn for their relea se of al l cla ims against the insurance company . Tommy West released his cl aims against the insurance company

and the Farley

s released Tommy

West from any further

liabilit y arising out of the 1990 accident
.

On No vember 4, 1994 t he Farleys and Mr. West in separate actions sued the Luv Homes

/Clayton d efendants, allegi ng that they misrepresent ed or suppressed facts during the earlier litig ation tha t caused the Farleys to settle their case against the defendan ts for less that its worth and caused the de fendants’ insurance com pany to br each its obli gation to defend M r. West. The complaint s pecifically charg ed that the defendants neg ligently or intentional ly (1) misrepresent ed or withheld the facts pertaining to Cheryl W est’s employment with the defendants, (2) misrepresented the facts concer ning thelease of the El C amino by the defendants, (3) misrepresent ed facts concerni ng Chery l West’s intoxicati on at the time of the accident, and (4) misr

epresented or s uppressed the fact t hat Tommy W est admitted he and Chery l West were neglig ent in causingthe accident.

The defendants answered each complaint. They did not plead r e s judicatabut did plead the releases ent ered in the prior actions as aff irmative defenses. Subs eque ntly, the defendants moved for summary j udgment and rais ed the additional defense of wit ness immu nity. The plaintiffs joi ned issue on the defenses rais ed in the motion. The trial judge granted sum mary judgment to all defenda nts.- 4 - II. Tommy West

We affirm the judgme nt in Tommy West’s case because hehad specific knowledge concerningthe truth of all of the facts alleg edly misrepresented or suppressed, and by obtaining a judgmen t to enforce the insurance contract, hehas obtained all therelief to w hich he is ent itled.

An essential requirement of any action f or fraud, deceit, fa ilure t o disclose or negli gent or

innocent misrepresentations is detrimental reliance on a false premise. See Shwab v. Walte rs , 147 Tenn . 638, 251 S.W. 42 (1922); Tartera v. Palumbo , 224 Tenn. 262, 453 S.W.2d 780 (1970); Williams v. Van Hersh , 578 S.W.2d 373 (Tenn. App. 1978); Doz ier v. Hawthor

ne Developm ent

Co. , 37 Tenn. App. 279, 262 S.W .2d 705 (1953). “Fraud involves deception and i f one knows the truth, and is not deceive d, he is not defrauded.” Freeman v . Citiz ens National

Bank , 167 Tenn. 399 at 409, 70 S.W .2d 25 at 29 (1934).

Mr. West was the agent of theClayton defendants. He ran the operation in Cookeville and was the person through w hom the Clayton defendants were charged with know ledge that C heryl West was dru nk, that she was an employee of Luv Homes, or that the El Camino was leased to the Clayton de fendants. He was surelythe best witness to th e fa ct th at he had a dmit ted l iabi lity. Since Mr. West was not deceived by any of the defendants, he cannot sue them for fraud and deceit
.

We are also conv inced that he cannot now s ue the other defendants for inducing the insurance compan y to deny coverag e in the orig inal action by the Farleys. The undisputed facts show that Mr. West joined the Farleys in an action to enforce the insurance c ont ract. That acti on ended in an agr eed judgment for the Farleys and a complete re lease of any l iability on the part of Mr . West.- 5 - Althou gh a party to

a contract may

successfullyprosecute an ac tion to enforce it and stil l maintain an ac tion against

third parti es for inducingthe breach, the law permits only

one recover

y, and any

payments made by

the one who br

eached the contract must be cr edited to the one who induced the breach. TSC Industries, Inc.
v. Tomlin , 743 S.W.2d 169 (Tenn. App. 1987). In t his case, Mr. West does no t allege how he has suffered any damages beyond the judgment awarded to the Farleys in the original action. T ha t judgment has now been complet ely discharged and Mr. W est has obtained a rel ease from all li ability. Therefore, the undis puted facts show that a n essential el ement of his cause of action is missing from this case. See Hart v. First National Bank of Memphis , 690 S.W .2d 536 (Tenn. App . 1985).

III. Th e F ar le ys

The Farleys

allege that because the Clayton def endants misrepresented or suppressed certain material facts in the original litigation, they (the Farleys) were induced to settle thei r claims for far less than their actual worth. The def endants rely on the re leas e sign ed by t he Fa rleys i n the origin al ac tion and a rgue i n the alte rnat ive that any separ

ate cause of action was barred by the w itness immunity doctrine.

a. The Release

In addition to l anguage rel easing the C layton defendants f rom all liabilit y arising ou t of th e accide nt on Au gust 27, 1990, t he relea se conta ined th e follo wing:

R elea sors elect to and do a ssume all ri sks for claim s heretofore or hereafter arising , known or unknown, ass erte d against R eleasees in the above-descr ibed- 6 - litigati on and R eleasors ex pressly include w ithin the scop e of this Release all such claims. Releasors warrant

thatno promise or inducement has been offered or

made except as herein set forth; that this Release is executed w ithout reli ance on any statementor representation by R eleasees or by a ny agents or representative s of Releasees, and Relea sors hereby acknowled ge and assume all risk , chance, or hazard that t heir injur ies or damages may be or become permanent, progress ive, gr eater, or more extensive than is now k nown or anti cipated.

The only reference to the release in the Farleys’ initial brief is a statem ent that the releas e is “ineffective in the face of misre presentation.” We ta k e thatas a statement of th e familiar ru le that a rel eas e may be set as ide if it was procured by fraudulent

misrepresent ations. Brundige v. R ailroad , 112 Tenn. 526, 81 S

. W. 1248 (1903); Crigger v. Mutual Benefi

t Health & Acc

ident Associa tion , 17 Tenn. App. 636, 69 S.W .2d 907 (1933). The misrepresentat ions must rel ate to material facts, Chattanooga Ry & Light Co . V . G la ze , 146 Tenn. 49, 239 S.W. 394 (1921), and reliance on the misrepres entationsmust be justifie d. Evans v. Til lett Bros. C

onst. Co., Inc. , 545 S.W .2d 8 (Tenn. App. 19 76).

In this case thealleged misrepresentations relateto the ver y issues that were being tri ed in the or iginal ac tion. We think, as a matter of law, that a release executed under such circumstances canno t be set aside for fraud . Parties to a lawsuit cannotjustifiably

rely on the representati ons of the advers e parties w hen success on the merits req uires proof that the representations were false. For thesame reasons thata judgment may

not be set asid e because of the “falsi ty of the internal evidence on which i t was pro cured,” see Thomas v. Dockery , 33 Tenn. App. 695 at 703 , 232 S.W.2d 594 at598 (1950), a r elease procured by

that same internal evidence shou ld also be immune from an at tack based on fraud.
b. The Separate Action for Fraud and Deceit- 7 - The Farleys

maintain that therelease has nothing to dowith their cause of action for fraud and deceit; that they h ave alleged a s eparate and disti nct cause of action. But, even i f we view the matter

in that lig ht, thesame considerati ons dictate t hat the cause of action does not exi st. As a matter of law one par

ty to a laws ui t represented by counsel, cannot justifia bly rel y on the int ernal evi dence presented by the opposite parties.
c. Witness Immunity

What we have previously said in thi s section of theopinion is, perhaps, just another way of statin g the wi tness immunity doctrine. As

we stated i n Buckner v. Carlton , 623 S.W .2d 102 at 108 (1981):

The general r ule is that te stimony g iven in a judicial procee ding, if pertinent ther eto, is protec

ted by an absolute privilege even though given maliciouslyand with knowledge of its falsity . And accordi ng ly, i t is also th e general rule that nocivil action for damage s lies for false testimony

or for subornati on of false testimony or for cons pira cy to gi ve or p rocu re fa lse te stim ony. See 31 A.L.R. 3d, False Testimony-Civil Conspiracy , § 1423 at § 2.

The Farleys argue, however, that the defend ants’ representations were either a part of a larg er conspirac y or were made prior

to the orig inal action. As to the larger conspiracy

theory, we think

this case i s just lik

e Buckner v. Carlton

where the plai ntiff alleged that

the defendant was out to “get” him and maliciously damage his reputation in the community . Nevert heless, we held that the defendant “committed no overt acts separate a n d apart from the false testimony, t he false statements t o investig ators and the con spiratoria l convers ations . . . .” 623 S.W.2d at 108. In this case all of the allegatio ns of misconduct relate to the defendants’ alleged pur pose to defeat the Far leys’ c laims. Thus, the facts alleged do not bring this case w ithin the large r con spira cy exce ptio n to wit ness immu nity.As to the assertion th at at least some of the false statements made by the defendant s were prior to the original action, we think that al l of the statements come within the privi lege. If they were not made in co nnection wi th the litigat ion over the Farleys ’ claims, t hey woul d be irrelev ant. Othe rwis e, they come w ithin the privil ege.

The ju dgment of the tria l court is affirmed and the cause i s reman de d to the Circuit Court of Putnam Count y for any further proceedi ngs necessar y. Tax the costs on appeal to the app ellants.

_______________________________ BEN H. CAN TRELL, JUDGE CONCUR:

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SECTION

_______________________________ SAMUEL L. LEWIS, JUDGE