### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON JA N U A RY 17, 200 7 S es sio n
WATC O, a joint vent ure com prised of Wayne Todd and Wilson Holdings, L P v. P ICKERING E NV IRON MEN TAL CO NS ULT AN TS, INC ., a Tenn essee C or po ra ti on

Direc t Appeal from the Circ uit Court for Sh elby County No. CT-003944-04 John R. Mc Carr oll, Jud ge

No. W2006-00978-C OA-R3-C V - F iled Jun e 5, 2007

Th e p la in ti f f , a r e a l e s tate deve lopment company , conditionally ag ree d to purcha se re al prope rty from a trustee bank if the bank first obtained a satisfac tory “Phase I ” environmental site assessment of the pr op e rt y . T he tr us te e ba nk hir e d th e def

e nd ant e nv ir on me nta l c on su lti ngc omp any to p e rf or m a Phase I environmenta l site assessment. After perf orming an asse ssment, the defe ndant pre pare d a
re po rt in whic h it

re pr e se nte d th a t it

ha d co nf or me d with the a

pp lic a ble pr of e ssi on a l st and ard

in i ts assessment, that it had not detec ted any hazardous materia ls or environmenta l conce rns at the subjec t proper ty du e to cur

rent or pa st uses of the prope rty , that it had not identified any signific ant environmenta l conce rns in the surroundingare a of the subject prope rt y , an d that it did not
rec o m m en d

fu rt h er en v i ro n m en t al re v i ew o f t h e s u b j ec tp ro p er t y

. T h e p l ai n t i ff purcha sed the subjec t proper ty in 1995. During residential de velopment of the subjec t property in 2 004, the plaintiff discovere d the re mains of a municipal g arba g e dump which ha d previously exis ted adjac ent to the subject prope rty , and which ext ended under a portion of the subjec t property . The plaintiff ha d the g arba g e re moved and the la nd filled, and de velopment was del ay ed as a r esult. The plaintiff development c ompany

sued the de fenda

nt environmental c onsulting compa ny , al leg ing pr ofessional neg lige n c e an d

n e g li g e n t m is r e p r e s e n tati o n

. A b e n c h tr ia l w a s h e ld , an d th e tr ia l c o u rt e ntere d jud g me nt i n f

a vo r o f t he de fe nd ant. F or

the fo llo wi ngre 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. , d e li v e r e d th e o p in io n o f th e c o u rt, in w h ic h W. F RAN K C RAW FORD , P.J ., W.S ., and D AVI D R. F ARMER , J ., joined.
Allen T. Malone, R. Porter Fe ild, Memphis, TN, for Appe llant

J . Kevin Walsh, J ames R. New som, I I I , Memphis, TN, for A ppellee-2- OP IN ION

I. F ACT S AND P R OC EDU R A L H I S T ORY

This case involves an environme ntal site assessment of r eal pr operty

. The plaintiff WATCO, a joint venture c omprised of Way ne Todd a

nd Wil son Holding Company , (“ W ATCO” or “Appe llant”) is a r eal e s t ate development company . The de fenda nt, Pickering Environmental Con sult ants , Inc . ( “ Pic ke ri ng ” or “ Ap pe lle e ” ), is a

c omp any

tha t pr ov ide s e nv ir on me nta l si te assessments for

clients involved in commerc ial transac tions. I n 1994, the Amer i ca n S o ciety for Testing and Mate rials (“ ASTM”) de veloped a nd published an industry standard to guide
e nv ir on me nta l pr of

e ssi on a ls i n the ir pe rf

or manc e of “ Pha se I ” e nv ir on me nta l sit e a sse ssm e nts

. Th is standard w as known a s ASTM Practice Standa rd E1527-9 4 (“the ASTM Standard” or “the Standard” ), and it wa s eff ective in 1995.

The re al prope rty

at t he center of

this disput e is a 169 a cre trac t (“the subjec t property”) on Hig hway 70/Summ er A venue ne ar B runswick Road in Shelby County , Tenne ssee. In Dec ember of 1994, Peter Nor flee t signe d a quitclaim dee d convey ing title of the subject prope rty to the Norfle et Charitable Rema inder Uni-T rust. National B ank of Commerc e (“NB C”) ser ved as truste e of the Norfle et Charitable Re mainder U ni-Trust. Fle tcher Haa g a was the trust of

fice r for NB C assigne d to a dmi nis te r t

he a sse ts o f t

he tr us t. A c c or din g to M r. Ha a g a , th e purp os e of thi s tr ust w a s to g e ne rate c a sh fl ow fo r Mr

. No rf le e t and his wi fe thr ou g h th e sa le of the su bje c t pr op e rt

y . Joe l Smi th of VCM, I nc., a r eal e state compa ny , was selected to be the rea l estate ag ent responsible for listing the subject prope rty

.
I n May of 1995, Ke mmons W ilson and Way ne Todd, a cting on behalf of the joint venture WATCO, contra c te d

w it h NB C to purchase the subject prope rty for $880,588.00. WATCO intended to develop a r esidential subdivision on the subject proper ty , which was undevelope d at the time. The purcha se contra ct p ro v i d ed that the sale was c onditional upon a “Phase I Environmental Survey satisfac tory

to Buy er ( at Seller’s e x pense) ,” and Picke ring was selec ted by NB C as the company

that would provide thi s service

. On May 31, 1995, Timothy

McCaff ery , a Picker ing g eolog ist, submi tted

a le tte r a g re e me nt t o M r. Ha a g a wh ic h s tate d th e purp os e of the P has e I env ir onme nta l si te assessment, the sc ope of t h e wo rk t o be per formed, c ompensation of $1,800 to be pa id for perf ormanc e o f t h e environmental site assessment, the pe rfor mance schedule , and the c lient’s responsibilities concer

ning the work to be perf

ormed. The letter a g ree ment rec ited, “The Eng ineer understands the Project t o be an undevelope d, wooded 169 acr e tract of land.” The letter ag ree ment pr ov ide d in

pa rt :

Th e En ginee r’s se rv ic e s li ste d in thi s Sc op e of

Wor k a re in confor mance with the scope of

ASTM P ra ct i ce E 1527 and e x cee d the Prac tice in I tems 2 and 7 of this Scope of Work. No othe r testing for spe cific solids, liquids or ga ses, such a s tank testing, soil boring

and te sti ng , a ir

mon ito ri ng , a sb e sto s t e s t i n g , ra do n te sti ngor ma g ne tic
surv e y is i nc lud e d in

thi s P hase IEn vir on me nta l Sit e As se ssm e nt.-3- Ad dit ion a l te sti ngc an b e pr ov ide d in a futur e Pha se I Istu dy , if require d, and authoriz ed in writing by the C lient. The Scope of Work does not include a

ny wetland investig ation.

I tems 2 and 7 of the le tter ag ree ment stated:

2. Provide a USGS 7.5 min. Topogr aphic Ma p, vicinity

map (stre et map with subje ct prope rty acc urate ly

located) and a site pla

n showing
su bje c t pr op e rt

y and de ta ili ngthe loc a tio ns of any c on c e rn s.

. . . 7. Pr ov ide a

re po rt of the fi nd ing s of the Pha se IEn vir on me nta l Sit e As s essment. A sepa rate letter c ontaining the Eng ineer ’s
re c omm e nd a ti on s r e g ard ingthe su bje c t pr op e rt

y wi ll b e a tta c he d to the re po rt

.
Mr. Haa g a sent a

letter in return on J une 1, in which he indicated NB C’s ag ree ment to the terms and asked that J oel Smith, t he re al estate ag ent, be utilized as the site contac t “to o b t ai n m an y o f the items requeste d.”

Three employ ees of

Pickering conducte d a Phase I environmenta l site assessment of the subject prope rty

in the summ er of 1995: Mr. McCaff rey , who serve d as projec t manag er, w as the primary author of the Phase I repor t, and wa s further

responsible for

rec ords re view and inter

views reg ardingthe subject proper ty ; Jason Ba logh, a summer intern who c onducted site re connaissanc e and inspec tion of the subject prope rty and ac ted under t he super vision of Mr. McCaff

rey ; and Edwar d Powell, an eng ineer who provided se nior revie w of the Phase Irepor t.

Pi c k e r i n g p r o v i d e d N B C t h e c o mp l e t e d P h a s e I r e p o rt i n Ju l y o f 1 9 9 5

. P i c k e r i n g a lso provided WATCO a re vised copy of the re port in Aug ust of 1995, which wa s essentially identical to t he on e pr ov ide d to NB C. T he c ov e r l e tte r a tta c he d to thi s r e po rt

pr ov ide d a s f

oll ow s:

Dea r Mr. Wilson and Mr. Haa g a:

Yo u have r equeste d our opinion with respec t to the exi stence of hazardous mater ials or environme ntal conce rns at the a bove ref ere nced Prope rty (the “ Property”). The attache d opinion is being

ma d e to y o uin

c o n n e c ti o n w it

h th e s a le o f

th e Pr o p e rty

. We
un de rs tand

that y ou wi ll r e ly on thi s o pin ion

fo r s uc h p ur

po se s.

Af te r a re vie w o f t

he Pr op e rt

y and avai labl e re c or d d oc ume nts reg arding s am e, we have not de tected a ny hazardous mater ials or environmenta l conce rns at the Prope rty due to cur

rent or pa st uses of the prope rty i t s el f. No significa nt environmental c oncer ns werePi ck er i n g f i l ed a t h i r d pa r t y c ompl ai n t a g ai n s t N B C, s ee k i n g i n demn i t y u n der t h e t er ms of i t s c on t r ac t f

or 1
the P h a se I a sse ssm e n t. N B C filed a m o tio n to d ism iss the third p a rty c o m p la int b a se d up o n a n a rb itra tio n p ro v isio n in t he co nt ract , whi ch t he t ri al co urt grant ed

. P i ckeri ng t hen am end ed i t s answer t o nam e N B C as a co m p arat i ve t o rt f easor. W A T C O a m e n d ed i t s co m p l aint t o na m e D i ve rsi f i ed Inve st m en t C o ., Inc ., wh i ch t he n he l d t he N o rf l ee t t rust, as a def endan t

. T he t r i al cour t ul t i mat el y di s mi s s ed D i vers i f i ed I nv es t ment Co

. , I nc. f r om t he procee di ng s an d s t r uck P i ckeri ng’ s d ef

ense of co m p arat i ve f

aul t b y N B C , l eavi ng W A T C O and P i ckeri ng as t he sol e p art i es i n t hi s l i t i gat i o n.

-4- identified in the surrounding area which would re prese nt a sig nificant
e n v i r o n m e n t a l c o n c e r

nt o t h e P r o p e rt y.

Fur ther e nvironmental re view of the s ubject P roper ty is theref

ore not
rec ommended at this time. The re port and this letter ha s [si c] been
re vis e d to a dd the name s of oth e r e nti tle s [si c ] wh o ma y re ly on thi s opinion.

The a ccompa

ny ing r eport detailed the eff orts of Pickering in pe rfor ming the Phase I

environmenta l site assessment. Relying on the re p ort, WATCO closed its purchase of the subjec t property on Aug ust 15, 1995.

L oc a te d a dja c e nt t o th e su bje c t pr op e rt

y to t he we st i s F re e man Sm ithPark , w hic h is prese ntly the site of a ba seball par

k, as wa s the ca se at the time of the Phase I assessment in 1995. This property

was, at one time, also owned by Mr. Norfleet and his family ’s trust. Although it wa s un kn ow n b y

e ith e r WA TCO or Pic ke ri ng a t th e tim e of the Pha se Ia sse ssm e nt i n 1 99 5, thi s p ro pe rt y had bee n the site of a residential ga rbag e dump known as “ Craven Roa d landfill.” The dump wa s not an appr oved site by the S helby County g overnme nt, but serve d the communities of B runswick, Bolton, and B arr ettsville from approximately 1955 until it was closed in the late 1970' s. Under two
se pa rate de e ds in 1 98 0 a

nd 19 86 , M r. No rf

le e t and NB C tr ans fe rr e d this pr op e rt y to S he lby County for the use and benef

it of t he Shelby

County Conservation B oard, w hich later develope d Fr eema

n Smit h Park.

I n Marc h of 200 4 , wh i l e g radinga portion of the subje ct prope rty for the pur

poses of developinga re sidential subdivisi on, contra ctors for WATCO discove red g arba g e burie d 3 to 5 fee t beneath approx i m at el y 2 5 to 30 acr es of the w estern por tion of the subject prope rty . I t was
subs e qu e ntl y

d i s c o v e r e d

t h a tt h i s g ar

b a g e h a d s p i l l e d o n t o t h e s u

b j e c tp r o p e rt y

f r o m t h e f o r m e rl y e xistin g Cr a ve n Ro a d lan df ill , n owF re e man Sm ithPark . WA TCO inc ur re d s ig nif ic ant c os ts i n removingth e g ar

b a g e an d f il li n g th e la

n d , an d it s u f f e r e d d e la y s in c o mp le ti o no f

th e r e s idential subdivision. I t is sti pulated that the r esidential g arba g e wa s not tested for the prese nce of hazardous waste.

On J uly 8, 2004, WATCO filed a complaint in the Shelby County Circuit Court, alleg ing that Pickering brea ched the profe ssional standard of car e by which it was bound in perf orming the 1995 Pha se Ie nv ir on me nta l si te a sse ssm e nt a nd that it mis re pr e se nted c e rt a in f a c ts i n a bu sin e ss transac tion relating to the subject prope rty

. The gra vamen of the complaint was that Picker ing ha d 1 “fa iled to determine a

nd advise WATCO of the exis tence of the disposed solid waste” on the subje ctT h e H o n o ra b le D ’A rm y B a iley p re sid e d o v e r th e p ro c e e d ing s o c c u rr ing p rio r to trial. 2

-5- pr op e rt y and “ fa ile d to de te rm ine and a dv ise WAT CO of the fo rm e r u se of the a djo ini ngpr op e rt

y a s a lon g -t ime g arb a g e dump. ” WAT CO so ug ht dama g e s of no t le ss tha n on e mil lio n d oll ars , re pr e se nti ngc os ts o f r e mov ingthe g arb a g e , inte re st ch arg e s suf fe re d fr om t

he de lay in d e ve lop me nt, and the lost profits from WATCO’s alleg ed loss of use of approximate l y 5 ac res of the subject proper ty for WATCO’s intended r esidential subdivision purposes.

A benc h trial was he ld on Fe bruar y 20-23, 27, 28, and on Ma rch 2, 3, a nd 9, 2006, befor e the Honora ble J ohn R. McCarroll, sitting by intercha ng e. At trial, WATCO and Pickeringeac h called 2 expert witnesses to testify on the subject of Phase Ienvironmenta l site assessments. Testifying on the beha lf of WATCO was Edwar d Wil liams. Pickering offe red the testimony of Wil liam Samford. Both of the se individuals possessed signific ant expertise with the prac tice of Phase Ienvironmenta l assessments, as we ll as with the ASTM St andard

. Bo t h experts ag ree d that the ASTM Standard consisted of four

principal c omponents: reco rds re view, site re connaissanc e, intervie ws, and pr e pa ratio n o f t he re po rt its e lf . B oth e xpe rt s als o a g re e d th a t Ph a se Ie nv ir on me nta l si te a sse ssm e nts did not involve any

subsurfac e investig ation or soil boring s.

Th e AST M Sta

nd ard pr ov ide d in

re le va nt p art : 1.1 Purpose – The pur

pose of this prac tice, as well as Prac tice E 1528, it to define g ood commerc ial and custo m ary prac tice in the Un ite d St a te s o f A me ri c a fo r c on du c tin g an e nviron me nta l si te assessment[] of a pa

rce l of commerc ial rea l e state with respec t to the rang e of c ontaminants within the sco p e of Comprehensive Environmental Respon se, Compensation and L iability Act (C ERC L A) and

pe tr ole um p ro du c ts. As su c h, thi s p ra c tic e is intended to per

mit a user to s atisfy one of the require ments to qualify for the innocent landowne r def ense to CERCL A liability ; that is, the prac tices that constitute “a ll appropriate inquir y i n to the previous
owner ship and uses of the pr operty consistent with good c ommercia l or customar

y prac tice” a s defined in 42 USC § 9601(35)( B)

. . . . 1

. 1

. 1 R ec o gn i z ed E n v i ro n m en t al C o n d i t i o n s

– I nd ef i n i n g a standard of g ood commerc ial and customary prac tice for conducting an envir onmental s ite assessment of a par cel of proper ty , the g oal of the proc es s es es tablished by this practice is to identify rec og nized environmenta l conditions. T h e term re cog nized environmental conditions means the pre sence or likely presen ce of any

hazardous substances or

petroleum produc ts on a proper ty under c onditions t hat indicate a n ex i s t i n g release, a

past rele ase, or

a mater ial threat of a
re le a se of any ha zar do us su bs tanc e s or pe tr ole um pr od ucts int o structure s on the proper

ty or into the g round, g roundwater, or sur fac e water of the prope rty . The ter m includes hazardous s u b s t ance s or-6- pe tr ole um p ro du c ts e ve n und e r co nd iti on s in com pli anc e wi th l aws

. The ter m is not i ntended to include de minimis conditions that g ener ally do not prese nt a material risk of harm to public health or the environment a

nd that g ener ally

would not be the subjec t of an
e nf or c e me nt a c tio n if br ou g ht to the a tte nti on of appr op ri a te g overnme ntal ag encie s. (f oo tno te omi tte d) . O the r n ota ble se c tio ns un de r t

he AST M Sta

nd ard re g ard ingthe sc op e of

a Pha se Ia sse ssm e nt p ro vid e d in

re le va nt p art :

4. 5. 1 U n c e rt a i n t y

n o te l i m i n a t e d

– N o e n v i r o n m e n t a l sit e assessment can wholly

eliminate unce rtainty

reg ardingthe potential for r ecog ni z ed envir onmental conditions in connec tion with a pr op e rt y . Pe rf or manc e of thi s p ra c tice or

E 1 52 8 is int e nd e d to reduc e, but not eliminate, unce rtainty reg arding t h e p o tential for

r e c o g n i z e d e n v i r o n m e n t a l c o n d i t i o n s i nc o n n e c t i o nw i t h a p r o p e rt y, and bo th p ra c tic e s r e c og nize re a so na ble lim its of

tim e and c os t. 4.5.2 Not Ex haustive – Appropriate inquiry does not mean a

n exhaustive assessment of a c lean pr operty . There is a point at which the c os t of

inf or matio n o bta ine d o r t

he tim e requi re d to g a the r i t outweig hs the usefulne ss of the i n fo rmation and, in fa ct, may be a materia l detriment to the order ly completion of transa ctions. One of the p u rp o ses of this prac tice is to identify a bala nce be tween the
c omp e tin g g oa ls o f l imi tin g the c os ts a nd tim e de mand s i nh ere nt i n perf orming an envir onmental site assessment a nd the re duction of
uncer tainty about unknown conditions resulting from additional information.

. . . 4.5.4 Comparison Wi th Subsequent I nquiry – I t should not be conclu d ed or assumed that an inquiry was not appr opriate inquiry
mere ly beca use the inquiry did not identify rec og nized environmental
c on di tio ns in c on ne c tio n w itha pr op e rt y . E nv ir on me nta l si te assessments must be eva luated base d on the re asonable ness of judgme nts ma de at the time a nd under the circ umstances i n wh i ch they wer e made

.
E d wa rd Will iams was WATCO’s e nvironmental consulting expert. Mr. Wil liams, a profe ssional eng ineer , was president of Environmental Testing and C onsulting of the A merica s, an environmenta l f

irm operating in the Memphis a rea since 1998, and he had former ly bee n the president of

E. F. Williams & Associate s, an environme ntal consulting fi rm , fo r 1 8 y ear s. Mr. Willi a ms a lso se rv e d a s c ha ir man f or se ve ra l c omm itt e e s o f t

he En vir on me nta l Co un c il o f M e mph is Ar e a Cha mbe r o f C omm e rce. Mr . Wil liams t e sti fi e d th a t he fi rs t be c a me inv olv e d in the c a se in Marc h of 2004, af

ter WATCO discover ed the bur ied g arba g e on its proper ty

. He testified that the-7-

debris re moved from the pr operty consisted primarily

of re si d en t i al g arba g e. At the r equest of WATCO, Mr. Wi lliams investigated possible sourc es o f t h e garba g e, and he first contac ted an unidentified employ ee of

the Tenne ssee De pa

r tm e nt o f E nv ir o nme nta l C o n s e r

v a tion ( “TDEC” ), who informed Mr. Wil liams that a lthough he could locate no rec ord of a g arba g e dump at that location, that he per sonally

was a war e that ther e had be en a la ndfill in that neig hborhood t hat was known as the Crave n Road landfill. Mr. Will iams testified that he re cog nized the name of this landfill from his prior experience as a c ounty commissioner, and that he next contacted the f ormer d i re ct o r of landfills for Shelby County , David Newsom, who verified M r. Will iams’s knowledg e that Crave n Road L andfill had e x isted at what is pre sently Fr eema n Smit h Park. Mr. Willi am s also revie wed topogr aphica l maps and ae rial photog raphs of this are a and note d its hist ory in the ear ly

1900’s as a site for g rave l mining oper ations. After Mr. Will iams completed his inve stigation, W ATCO aske d him to revie w the Pickering Phase I repor t f rom 1995. Mr. Will iams testified that the re port did not indicate the pr ior exist ence of a la ndfill at Fre eman Smith Park, wh i ch is adjac ent to the subject proper ty . Mr. Will iams was of the opinion that Pickering ’s failure to ide ntify the exist ence of the adjac ent fo rm er la

ndfill or buried g arba g e on the subjec t property in its report evince d a lac k of confor mity with the ASTM S t an d ar d , and that Picker ing’ s failure to interview a dditional persons reg ardingformer

uses of the subjec t property constituted a bre ach of

the profe ssional standard of
car e. Pickering’ s expert, Mr. Samford, wa s a prof essional g eolog ist and vice pre sident of g eoenvir onmental servic es for Virg inia Geotec hnical Servic es, P.C., a compa ny that perf ormed Phase I assessments. Mr. Samfor d was a lso a board member, and later, pr esident of the A ssociation of Soil and Foundation Engine ers ( “ASF E ”)

. Mr. Samford testified that throug h his involvement with the AS FE, he was appointed to the AS TM committee that deve loped the ASTM Standard. Prior to trial, Mr. Samford ha d been a sked to revie w Pickering ’s 1995 report and ex press his opi nions as to whether

the P hase I assessment had been conducted in acc ordanc e with the AS TM Standard a nd the stan d ar d o f c ar e

. I n M ay o f 2 0 0 5 , M r

. Samf o r d p r o v id e d Pi c k e r in g w it h h is w r itte n expert opinion that Pi cke ri n g’s 1995 Phase 1 a ssessment and re port wer e in conf ormanc e with both the ASTM Standard and the professional standard of ca re. Mr . Samford base d his opinion on t he ASTM Standard, ASFE studies, the Pickering repor t, Phase Iassessment re ports prepa red by environmenta l consulting f

irms in 1995 in S helby

County , t he depositions of Jason Balog h and Joel S mith, and
rec ords and maps r elied upon by Pickering in its 1995 P hase I environmenta l site assessment.

I ni t s fi n al j u d gm en ten t er edo nAp ri l 1 9 , 2 0 0 6 , t h e t ri al co u rt i n cl u d edex t en s i v e f i n d i n gs of fa ct and conclusions of law. The pr oof re lied upon by the trial cour

t consisted primarily

of the testimony of the two experts, Mr

. Wil liams a nd Mr. Samford. The court de termined both men to be hig hly qu a lif ie d, we ll i nf

or me d, and c re dib le wi tne sse s on th e iss ue of Pha se Ie nv ir on me nta l si te
a sse ssm e nts . T he c ourt

ult imate ly

ru le d a s f oll ow s:

J UDGMENT

The plaintiff, Watco, has the burden of proving that Pickering did no t c on fo rm wi th the a pp lic a ble pr of e ssi on a l st and ard

of c are in-8- connec tion wit h the Phase 1 Environme ntal Site Assessment
c on du c te d in She lby County , Te nn e sse e in July of 19 95 . B a se d o n a ll of the proof

and applica

ble law, the Court is of the o p i n i o n that pla int if f, Wat c o, did no t carr

y that bur de n. Pic ke ri ngc omp lie d w ith the ASTM Standard. The proof was equally balanc ed as to whethe r or no t Pic ke ri ngha d a du ty to c on du c t fu rt he r int e rv ie ws tha

n th os e called f or in the ASTM Standard.

The trial c ourt there by

enter ed judg ment in favor of P i ck er i n g. W ATCO filed a timely notice of appea l to this Court on May 2, 2006.

II. S TA N D A R D O F R EVIEW

We re vie w fin din g s o f f

a c t by the tr ia l c ourt

in c ivi l a c tio ns de novo upon the re cord of the trial court, a ccompa

nied by a pre sumption of corre ctness, unless the preponde ranc e of the evidenc e is otherwise. Te nn. R. App. P

. 13(d) (2006). As explained by this Court i n Cum berland Ban k v. G & S Implement Co ., Inc , 211 S.W .3d 223, 228 (Tenn. Ct. App. 2006):

Reviewingfinding s of fa ct under Tenn. R.App. P. 13(d) requires a n appellate court to we igh the evidenc e to deter mine i n which par

ty ’s fa vo r t he we ig ht o f t

he a g g re g a te d e vid e nc e falls . T he re is a “re asonable probability ” that a proposition is true whe n there is more
e vid e nc e in i ts fa

vo r tha n the re is a g a ins t it. Thus , th e pr e va ili ngpa rt y is the one in whose f

avor the evidentiar

y scale tips, no matter how slightly

. When our revie w involves questions of l aw , n o p re s u mption of corre ctness attac hes to the trial court’s f indings. Se

xto n v . Se v ie r Co unty , 948 S.W .2d 747, 749 (Tenn. Ct. App. 1997).

III

. I SSU ES P R ESENTED On appe al, WATCO presents the f ollowing issues for

our re view:

1. Whether the trial court e rre d in finding that WATCO did not prove, by a pre pondera

nce of the evidence, that Picker ing supplied WATCO with neg lige nt misreprese ntations in it s 1995 Phase I
e nv ir on me nta l si te a sse ssm e nt r e po rt , in wh ic h Pi c ke ri ngstate d th a t it s a c tio ns ha d c on fo rm e d w ith the ASTM Standard.

2. Whether t he trial court erre d in finding that WATCO did not prove, by a prepondera nce of the evidenc e, that Picker ing br eac hed the a p p licable standa rd of c are when it conduc ted a Phase I
e nv ir on me nta l s i t e a sse ssm e nt o f t he su bje c t pr op e rt

y in 1 99 5 a nd pr e pa re d th e c or

re sp on din g re po rt

.
For the following rea sons, we af firm the judg ment of the trial c ourt.-9- IV. D I S CUS S I ON A. Negligent Misrepresentation in a B usin ess Transaction

The Tenness e e Su

p r e me Co u rt h a s r e c o g n iz e d th a t o u r s tate a d o p te d

Se c ti o n5 5 2 o f

the R es t at ement (Second) of Tor ts as the “guiding pr inciple in neg lige nt misreprese ntation actions

a g a in s t o th e r p r o f

e s s io n a ls an d b u s in e s s p e r s ons.” R obinson v. Omer , 952 S.W .2d 423, 426-428 (T en n

. 1 9 9 7 ) ( ci t i n g Bethlehem Steel Corp. v. Erns t & Wh inn ey , 822 S.W

. 2 d 5 92, 595 (Tenn. 19 91 )) . Se c tio n 5 52 pr ov ide s in re le va nt p art : (1 ) O ne wh o, in t

he c ours e of

his bu sin e ss, pr of

e ssi on or e mpl oy me nt,
or in any oth e r t ra ns a c tio n in

wh ic h h e ha s a

pe c un iary

int e re st,
su pp lie s f a lse inf or matio n f or the g uid anc e of oth e rs in t he ir bu sin e ss transac tions, is s ubject to liability for pe cuniar

y loss caused to them by the ir jus tif ia ble re lia nc e up on the inf or matio n, if

he fa ils to exercise r easona

ble ca re or competenc e in ob t ai n ing or communicating the information.
(2 ) E xce pt a s st a te d in Sub se c tio n ( 3) , th e lia bil ity state d in Subsection (1) is limit ed to loss suffe red (a) by the person or one of a limited gr oup of per sons f or whose be nefit and guidance he intends to s up ply the infor

matio n o r k

no ws tha t th e re c ipi e nt i nte nd s to supply it; an d

( b ) thr o u g h r e li an c e u

p o nit in a tr an s a c ti o nth a t he int e nd s th e inf

or matio n to inf

lue nc e or kn ow s th at the r e c ipi e nt s o intends or in a substantially simil ar tra

nsaction.

Robin son , 952 S.W .2d at 427 (c iting R es tatement (Sec ond) of Tor ts, § 552 (1977)). Contrac tual privity is not a prer equisite to liabilit y in tort for neg lige nt misreprese ntation, as long as (1 ) t he defe ndant ac ts in the course of its business, profe ssion, or employ ment, or in a transac tion in which it has a pec u n i ar y i n t er es t, (2) the de fenda nt supplies false information meant to guide others in a business transac tion, (3) t h e defenda nt fails to exercise re asonable car e in obtaining or communicating the information, and ( 4) the plainti ff j u stifiably relies on the inf

ormation. See id. (c i t i n g John Martin Co. v. Morse/Diese l, Inc. , 819 S.W. 2d 42 8, 43 1 (T e nn . 1 99 1) ); see also McRae v. Hagam an , No

. E2 00 4- 00 85 2- CO A- R3- CV , 20 04 Te nn

. Ap p. L EX I S 69 3, a t *1 3- 14 (T e nn . Ct

. App. Oct. 25, 2004)

.
WAT CO a s s ig n s e r

r o r to th e tr ia l c o u rt’ s ju d g me n t in f a v o r o f Pi c k e r in g f

o r th e c la im of
ne g lig e nt m isr e pr e se ntatio n in a bu sin e ss t ra ns a c tio n. WAT CO c on te nd s t hat Pic ke ri ngma de a

fa lse state me nt i n th e 19 95 re po rt wh e n it re pr e se nte d th a t it

ha d c omp lie d w iththe AST M Sta nd ard in perf orming the Phase I environmenta l site assessment of the s ubject property

. WATCO asserts that the evidenc e pre sented at trial clea rly preponde rate s ag ainst the trial cour t’s finding that Pickering ’s repr esentation was ac curate in this reg ard.-10-

I n its final judgment, a fter de tailing the a ctions taken by Pickeringand we ighingthe testimony of t he ex perts at trial, the trial court found that the experts ag ree d that Pickering ’s ac tions
we re in a c c or da

nc e wi th t

he AST M Sta

nd ard . T he tr ia l c ourt ’s fi nd ing wi th whic h WA TCO
ex p re s s es t he most disag ree ment is that their expert, Mr. Wil liams, “testified that Pickeringhad confor med to the re quirements of the AS T M Standard but fe lt that Pi cker ing should have done more.” WATCO argues t hat t his finding was clearly err oneous. WATCO relies upon the te stimony of Mr. W i l l i am s on direc t examination t o contra dict the trial cour t’s finding . WATCO cites the following exchang es in support of its position:

Q. I n y our o pin ion , d id Pic ke ri ngEn vir on me nta l Co ns ult ants [’s ] investigation of the site – its sit e asse ssment s that it carr ied out for WATCO comport with t h e a p p lic able ASTM Standar d that y ou’ve ide ntified as E1527? A. No. Q. That would b e fo r the re asons that y ou have stated in y our t e s t i m o n y? A. Yes.

. . . Q. Ok ay . M r. Willi a ms, ba se d on y our re vie w of the do c ume nts that y ou have re vie we d, y ou ’r e [sic ] sitt inghe re mos t of thi s we e k a nd la st w e e k a

nd lis te nin g to t

he te sti mony

tha t’ s c ome into this case , I ’m g oing to ask y ou if y ou have a n opinion as to whet h er Pi cker ing’ s environmental site a ssessment of Watco’s proper

ty comported with the profe ssional standards that are applicable to environmenta l professionals pra cticing in Shelby County in this reg ion in the y ea r 1 9 95 when they did the assessment. Ye s or no? A. I n my

opinion, no. Q. Okay . I n y our opi nion, same que stion, did t he envir onmental site assessment comport with the ASTM Standar d? A

. No. I t lacke d infor ma ti o n f r o m aperson with g ood knowledg e.

B oth e xpe rt s te sti fi e d th a t the AST M Sta nd ard fo r P ha se Ie nv ir on me nta l si te a sse ssm e nts consisted of four basic components: recor ds review , site rec onnaissance , interviews, a nd prepa ration of the re po rt . WA TCO ha s n ot a lle g e d d e fi c ie nc ie s w ithPic ke ri ng ’s p repa rat ion of the re po rt

. Howeve r, our consideration of this issue require s us to addre ss the remaining three c omponents of the Standard, in lig ht of the ar g uments prese nted by the par ties.-11- 1. Records Revie w
The Standard provided that the objective of the fir st step of the Phase I assessment, re cords revie w, was “ to obtain and rev i ew rec ords that will help identify rec og nized environmental conditions in connection with the prope rty .” The Standard a lso provided:

7.1.4 Reasonable Asce rtainabl e/S tandar d Sources – Ava ilability of
rec ord information varies fr om in formation sourc e to information
source , including g overnme nt jurisdicti ons. The user or environmen t al professional is not obli g ated to identify , obtain, or revie w eve ry

possible rec ord that mig ht exi st with re s pect to a pr op e rt y . I n s te a d, thi s p ra c tic e ide nti fi e s r e c or d in fo rm a tio n th a t sh a ll be revie wed from standard source s, and the user o r environmental pr o f e s s i o n a l i s r e qu i r e d t o r e v i e w o n l y r e c o r d i n f o r m a t i o n t h a t is
rea sonabl y ascertainable from those standa rd sourc es. Recor d information that is rea sonably ascertainable means (1) information that is pu bli c ly a vail a ble , ( 2) inf

or matio n th a t is ob ta ina

ble fr om i ts
source wi t h in rea sonable time and c ost constraints, and (3) information that is prac tically revie wable.

. . . 7. 1. 4. 3 Pr a c tic a lly

Re vie wa ble – Inf or matio n th a t is pr a c tic a lly revie wable me ans that the infor mation is provide d by

the source in a
manner and in a f

o rm t hat, upon examination, y ields information rele vant to the prope rty without the need for ex traordina ry analy sis of irrele vant data. T he for

m of the i n formation shall be such that the
user c an re view the r ecor ds for a limit ed g eographic al are a. Records that cannot be fea sibly

retrie ved by

ref ere nce to the loc ation of the proper ty or a g eog raphic are a in which the prope rty is located a

re not g ener ally prac tically

revie wable.

I n its 1995 re p o rt , P i ckering descr ibed the re cords inquiry it had perf

ormed in the Phase I

a sse ssm e nt:

4. 1 St and ard En vir on me nta l Re c or d So ur c e s, F e de ra l and State

The g eog raphic databa se sea rch of National and State e nvironmental
rec ord s revie w was pr ovided by Vista Environmental Information (e nc los e d in Ap pe nd ix 9 .3 ).

. . No State lis te d la nd fi lls , in c ine rator s, or t ransf er stations wer e li sted as l ocate d within the desig nated se arc h radius.

On e un de rg ro un d s tor a g e tank (U ST) fa cil it y

wa s id e nti fi e d w ith in the s ea rc h radius around the subject Prope rty . . . Review of the-12- databa se re cord on this fa cility showed that thi s US T fac ility has
re po rt e d a re le a se of pe tr ole um pr od uc ts (LUST fa c ili ty

). Du e to t

his fa c ili ty ’s dis tanc e fr om t he Pr op e rt

y and the pe tr ole um plu me migr ation patterns in the loca l are a, th i s L US T fac ility does not repr esent a

signific ant environme ntal conce rn to the Proper ty

. The unmappa

ble sites within the Vista repor t were revie wed a

nd none of the rec orded sites w ere deter mined to be a s ignif icant environmenta l conce rn to the Subject Property . The TDE C Division of Superf

und in Memphis, TN was conta cted reg ardingany Superfund sit es i n the area of the Property . Mr. Wm [ sic] A. Gebhar t wrote in a letter dated [ ] J une 13, 1995, that there ar e no promulg ated state superfund s ites at t he P roper ty or wit hin a four

mile radius of the pr op e rt y . Ac op y

of TD EC’ s le tte r h a s b e e n e nc los e d a s App e nd ix 9.4.
4.2 Phy sical Setting Sourc e
No unusual or r ecog nized environmental conditions wer e appa r e nt on the To po g ra

ph ic Ma p re vie we d f

or the Sub je c t Pr op e rt

y . A s n ote d in the forme r uses for

the Property , t h e Property had bee n used for g rave l ext rac tion and this a c ti v ity has produc ed an une ven topog raphy relief . No re cog nized environmental conditions wer e appa rent on the Topog raphic Map for

the adjac ent prope rties.

WATCO’s expert Mr. Wil liams testified t hat, i n conductinghis own rec ord sea rch in 2004, he obtained the m inutes from a Shelby County Conservation Board meeting held in 1978 at which the re sid e nti a l la

nd fi ll at iss ue ha d be e n disc us se d. Mr . Wil liams c la ime d th a t Pic ke ri ngc ou ld e a sil y have obta ined this recor d and ther eby discovere d the prior e x istence of the Crave n Road landfill on the a dja c e n tp r o p e rt y

a tF r e e m anS m i t h P ar

k

. H o w e v e r , d

u r i n g c r o s s
- e xam i n a t i o n , M r

. W i l l i a ms admitted that the ref

ere nces to the “B runswick are a” or “B runswick Site” in these minutes did not
su ff ic ie ntl y de sc ri be the loc a tio n o f t he Cr a ve n Ro a d la

nd fi ll s o a s to de e m th e re c or d “ pr a c tic a lly revie wable” for the pur

poses of a

Phase I assessment of the s ubject prope rty . Fur thermore , the minutes from thi s meeting clea rly indicated that the s ite was not even a re cog nized state landfill, as
e vid e nc e d b y

the fo llo wi nge xce rp t:

Th e land fi ll s ite tha

t ha s b e en un der di sc us sio n f or qu ite so me tim e [si c] was neve r a c ontrac t ag ree ment with R. Vance Norfle et. The si te was no t a

state a pp ro ve d s ite and

the She lby

County Ad min ist rat io n d eci dedth at t hi s l and fi ll wou ldbe cl os ed p e rm a ne ntl y up on re c omm e nd a tio n o f M r. Ha rb or , M r. Hay s, Mr . D a vid Newsome , landfill director , and Mr. Price . The landfi l l b ei ng putW A T C O t oo k t he evi dent i ar y depo s i t i on of Joe Smi t h, who i t had ori gi nal l y i nt ended t o cal l as a w i t nes s at 3

t ri al , but who was unavai l ab l e b ecause o f a m ed i cal co nd i t i o n. Joe Sm ith re tire d fro m hi s p o si t i o n as D i rect o r of t he Sani t ar y Lan df

i l l D epar t ment of

Shel by Co un t y i n 1976 , and he t es t i f i ed r ega r di ng hi s knowl edge of t he C r ave n Road l and f i l l

. U nd er cross exam i nat i o n, he t est i f i ed t hat t hrougho ut t he p eri o d of t i m e t hat he had wo rked f o r t he co unt y , he h ad n ev er s ee n a ma p or w r i t t en r ec or d of t h e Cr aven Road l an df i l l , n or w as h e aw ar e of a n y w r i t t en doc u men t at i on sh o w ing the b o u n d a rie s o f t h e fo rm e r d u m p

. -13-

the re wo uld

be take n dow n to Walnut Gr ov e land fi ll site . The He a lth Depa rtment stated that one foot of ea rthen fill would be satisfactory to cover the site.

Mr. Will iams admitted on cross-e x aminati o n that he could not identify any other public re cord of the forme rly

exis ting Cra

ven Road landf

ill. I n questioning Mr . Wil liams, counsel for Picke ring had 3 him identify

within the Standard a listing of “Standar d Environmental Rec ord Source s” fr om which pr of e ssi on a ls w e re a dv ise d to ob ta in re c or ds wh e n c on du c tin g Pha se Ia sse ssm e nts . M r. Willi a ms c on c e de d th a t th e se so ur c e s w e re e xha us te d b y Pic ke ri ngduri ngthe a sse ssm e nt a nd a de qu a te ly descri b ed wi t hin the repor t. Mr. Wil liams also ag ree d that the Vista sy stem utili zed by Pickering and de s cr i b ed i n the re port was a n acc eptable me thod of rec ords re view under the Standard. Mr

. Samford, Picker ing’ s expert on Phase Iassessments, testified that Picker ing’ s eff orts satisf i ed the
rec ords re view compone nt of the ASTM Standard.

2. Site Reconnaissanc e

Acc ording to the ASTM Standard, the objec tive of t he si te reconnaissanc e compone nt of a Phase I assessment was “to obt ain i nformation indi cating the l ikelihood of i dentifying r ecog nized
e n v ir o n me n ta l c o n d it io n s in c o n n e c ti o nw it

h th e p r o p e rty

. ” T h e St an d ar d p r o v id e d in p art: “ 8 .1 Ob se rv a tio n –

On a vis it t o th e pr op e rt

y (t he sit e vis it) , the e nv ir on me nta l pr of e ssi on a l sh a ll v isu a lly and phy sically

observe the pro p er t y

and any structure (s) located on the prope rty to the extent not obstructed by

bodies of water, a djace nt buildings, or other obstacles.”

Mr. B alog h, a Picker ing intern who had just re ceive d a B ache lor of Scienc e deg ree in phy sics from The University

of the South at S ew an ee , p erformed the site r econna issance of the subject proper ty on J une 28, 1995, afte r re ceivingapproximately two wee ks of trainingby Mr. McCaf

fre y and Mr. Powell. Additionally , the project manag er, Mr . McCaff rey later visited surr ounding a rea s of the subjec t property

to follow up on cer

tain finding s repor

ted by Mr. B alog h. I n its P hase I assessment re port to WATCO, P icker ing describe d the actions taken in it s site rec onnaissance and its c or re sp on din g fi nd ing s:
5.1 Hazardous Substance s in Connection with I dentified Use s
The site inspection was pe rfor med on J une 28, 1995 and inc luded a
wa lk o f t

he su bject P roper

ty a c re a g e to d e te rm ine the po ssi ble prese nce of

hazardous mater ials and environme ntal conce rns.-14- No evidenc e of dr

um or containe r storage was appare nt. No mis c e lla ne ou s mai nte na

nc e su bs tanc e s we re ob se rv e d. Th e Pr op e rt y fac ility did not have any

signs of contra ctor use/stora g e/dis p o s al of hazardous mater ials.

N o e n v i r o n m e n t a l p e r

m i t s , T S D f

a c i l i ty nu mb e r s , E P A g e n e r a t o r

ID numbers appe are d to be nec essar y for the ope rations at the subjec t Property

. There was no evidenc e of process c hemicals a nd storag e, battery disposal, or hazardous wa ste/waste oil disposal.

No i ndividuals were available to interview to help de termine a ny p o s s i b l e s o u r c e o f

e n v i r o n m e n t a l c o n c e r

no r a c t i v i t y.

. . . 5.5 I ndication of Solid W aste Disposal

No eviden ce of drums, fr ee liquids, odors, or unusua l depre ss i o n s/ex cava

tions that would indi cate solid waste disposal

a c tiv ity wa s w itn e sse d. Th e Pr op e rt y a pp e ars to h a ve be e n f

or me rl y used for g rave l ext rac tion which produce d uneven top o gra ph and depre ssions in t he we stern 2/3 ar ea of the Property

. At the end of I ndepend en t Road in the subdivision abutti ng the Property ’s southwest corne r, a small pile of rubbish, predominantly wood/brush,
was o b s er v ed. No e vidence of fr ee liquids or conta iners with fre e liquids was found associated with this off-site pile o f ru b b ish. No deleter ious materials or staine d soils were e vident at the Proper ty . An off- site proper

ty at the intersec tion of Br

unswick Road and H ighw ay 70 wa s o bs e rv e d havin g c on str uc tio n d e mol iti on

mate ri a ls f

ill ingin a portion of that Property

. No drums or l iquids or odors[] wer e found associate d with this off-site are a of la ndfilling.

The videota

ped deposition of Mr. B alog h was play ed into the re cord at trial. Mr. Ba logh ha d beg un his employ

ment as a summer

intern with Pickeringin ear ly J une of 1995, a

nd he desc ribed his tr a ini ngby

Mr . M c Ca ff

e ry and Mr . Po we ll a s f

oll ow s: Q. Well, y o u s ay

on the job training . L et’s be mor e spec ific. What kind of on the job tr aining ? And let’s talk about June. Imean – A

. O k ay. Q. – y ou did the site – y ou did the inspection that is the subject of this lawsuit two weeks a fter you went to work f or – A. Th a t is c or

re c t.-15- Q. – Pi c ke ri ng ? An d duri ng that tw o we e k pe ri od do y ou re c a ll any specific training that y ou rec eived to prepa re you for that job of doing such an inspec tion? A

. I v i s i t e d

o t h e r s i t e s t h a tE d

[ P o w e l l ] an d

T i m [ M c C a f

f e r y]
wer e wor king on. And they discussed what they wer e doing at the site. And they basica lly told me what they would look fo r w he n th e y c a me to a site and we re do ing a sit e a sse ssm e nt. You know, what they wer e looking for visually and then, you know, as what they would walk around the property and look for. Q. W h at do y ou rec all they told y ou about what they wer e looking f or? A. Distressed ve g etation or obvious sig ns of dumping. Alot of tim e s a bo ve g ro un d d

ump ingor

a bo ve g ro un d s tor a g e tank s. And distressed ve g etation wou l d b e an important one. A nd then if there we re an y

water on the prope rty

to inspect the

w a t e r f o r d i s c o l o r a t i o n t h a t s e e m e d t o b e o u to f t h e o r d i n ar

y. Q. Duringthat two wee ks pri o r t o J une 27 did y ou g o to more t h ano n e s i t e a l o n g w i t h e i t h e r E d P o w e l l o r

T i m M c C a f

f e r y? A. Iwent to a number of sites. Ica nnot rec all all of them sp e c if ic a lly bu t, ye s, we vis ite d a

numbe r o f s ite s. Pr ob a

bly
on e a da y or so in t ho se tw o w e e ks

. Q. I s th is – and duri ng tho se tw o we e ks e ith e r Ed Pow e ll or Ti m Mc Ca ff e ry wo uld have be e n d oin g an inspe c tio n s imi lar t o what y ou did on J une 27? A. Not at all the sites. Some of the sites we we re t h ere to do some of the sampling, so I was a lso trained in some of the sampling dur ing that time. But, y es, we did do – g o to other sit e s th a t th e y

we re wo rk ingon

fo r s ite a sse ssm e nts

.
Mr. B alog h testified that in perf orming the site rec onnaissance on the subject prope rty on J une 28, 1 9 9 5 , h e w al k edth e la n d t o l o o k fo r s i gn s o f d i s t re s s edv ege t at i o no r a n y d u mp i n g o r a n y

s t o ra ge tanks that might have bee n on the site, and he took photogr aphs of the site. Mr. Ba logh a lso stated that during the site visit, he drove the periphe ry of the site to look at adjac ent propert i es , wh i ch included F ree man Smith P ark, a nd took photogr aphs. In the data forms that Mr. B alog h completed duri nghis sit e vis it, he d e sc ri be d th e top og ra ph y and e le vatio n o f t

he su bje c t pr op e rt

y a s f oll ow s: “Ea s te r n 1 /4 f lat f r o m O li v e r Cr e e k d e p o s it s

. We s te r n 3 /4 ma n
- ma d e d e p r e s s io n s f

r om gr avel extraction.” Mr. B alog h also repor ted the pre sence of hea lthy veg etation, under story , and dec iduous t re es o nt h e we s t ern p o rt i o n o f th e si t e. On t h e ch ec k l i s t o f “O n -S i t e C h ar ac t er i s t i cs , ” M r. Ba l o gh i n d i ca t edt h at t h er e w as n o “e v i d en ce o f l an d fi l l , p as to r o n go i n g ac t i v i t y

. ” H o we v er , M r. Ba l o gh did re po rt “ land fi ll/ buri a l a c tiv ity” a s a con dit ion of c on c e rn on an a dja c e nt r e sid e nti a l pr op e rt y to the southwest of the su b

j ec t property , wher e he note d that a “r esident own[ed] land on which he . . . allow[ed] bui lding mate rials to be dumped.” Mr. B alog h made ha ndwritt en notes on a-16-

topogr aphic map at the l ocation of I ndepende nt Road, descr ibing these building mater ials as 12 1- g allon paint drums and anothe r much lar g er dr um. Mr. Ba logh f

urther de scribed this debr is to Mr. McCaff ery afte r his site visit. Mr. McCaff ery revie wed Mr. Ba logh’ s finding s and photog raphs, a nd he testified that he persona lly visited the adjac ent I ndepende nt Roa d dump site to “double-che ck” Mr . B a log h’ s f

ind ing s and fo un d noth ing of e nv ir on me nta l con c e rn

. Mr . McC a ff e ry te sti fi e d th a t, during this limit ed vis it, he did not see any evidenc e of a recog nized environmental condition on the subject prope rty

or on adja cent pr operties.

Mr. Will iams, WATCO’s ex pert, testified that one site visit would be sufficient to satis fy the site rec onnaissanc e component of the ASTM Standard. Mr. Williams ag ree d that the Standard pr ov ide d a s f

oll ow s r e g ard ingthe ide nti fi c a tio n o f s oli d w a ste on a sit e vis it:

8.4.4.4 Solid Waste – To the ex tent visually or phy sically observe d or identified fr om the interviews or rec ords re view, ar eas that are appar ently

filled or g rade d by non-natura l cause s (or filled by fill of unknown orig in) sug g esting trash or o t her solid waste disposal, or
mou nd s o r d e pr e ssi on s su g g e sti ngtr a shor oth e r s oli d w a ste dis po sa l, sh a ll b e de sc ri be d in

the re po rt

. Also during cross-e x amination, counsel for Pickeringquoted Mr. Willi ams’s prior de position t e s t i m o n y o nt h i s i s s u e an d qu e s t i o n e d

t h e w i t n e s s r e g ar d i n g i t s a c c u r a c y: [“] Question: I ’m talking about on t h e b asis of y our re view of the

site rec o nnaissance that was done in this case. Was there any indication of a rec og nized environmental condition that y ou believe should have bee n repor ted that wasn’t ba sed upon site re connaissanc e? An sw e r: Ido n’t see any thi ngin t

his that ba se d o n s ite

r e c o n n a is s an c e w o u ld

h a v e tr ig g e r e d

th a t i nan d

of itself.[”]

. . . “Que stion: L et’ s s pecif ically focus on site re connaissanc e as contemplated by

the standar d. That’s whe re I am rig ht now. I ’ll cer

tainly discuss interviews with y ou, but let’s focus on site re conna issance. B ased upon y o u r revie w in connec tion with thi s case and the formulation o f y o ur opinion, is there a ny thing in the site rec onnaissance that was d o n e by Pickeringthat should have noted a

rec og nized environmental
c on dit ion in t he re po rt ? Answer : I t doesn’t appe ar so to me. Question: So if Ihad wa lked the si t e or if y ou had wa lked the

s i t e , w o u l d

yo u h a v e b e e na

b l e t o i d e n t i f

y a-17- rec og nized environmental condition based upon what y ou note today

from site re connaissanc e alone ? Answer : Alone, I

don’t believe so. Q u e s ti o n : Were th e r e an y s ig n s to y o u r

k n o w le d g e o nthe Fr eema n Smit h Park t hat would have indicated it was a for mer c ounty

dump? Answer : Not that it would have indicate d it was a for mer c ounty dump, bu t it c e rt a inl y wo uld have ind ic a te d it
was a county park, a nd that the contact with the
conser vation board w ould probably lead to fur

ther information.” [By Mr. Walsh ] I s that an ac curate re ading of y our the [sic] t e s t i m o n y? A. Yes, it is.

Mr. Will iams testified that at the time of this deposition, he had not see n the color photog raphs of the c on str uc tio n d e br is f

ro m th e a dja c e nt p ro pe rt

y on I nd e pe nd e nt R oa d, wh ic h he c la ime d w ou ld have pe rs ua de d h im to “ e xplor e [] a little fu rt he r int o tho se bu sh e s to se e if the re wa s so me thi nge lse the re of th e s a m e n a t

u r e

. ” H o w e v e r , i ti s c l e ar t h a tt h i s c o n s t r

u c t i o nd e b r i s w a s l o c a t e d w e ll
so ut he a st o f F re e man Sm ithPark , th e sit e of the Cr a ve n Ro a d la

nd fi ll. Th e re c or d s up po rt s a finding , and the pa

rties appe ar to a g ree , that these materia ls w ere not r emnants of the Craven Road landfill, whi ch h ad been c losed since the 1970’ s. Nothing in the r ecor d sug g ests that further investigation of the construction debr is on I ndepende nt Road would have r esulted in the discover y of the unre lated g arba g e from Craven Road landfill, which was buried severa l fee t underg round.

Mr. Samford, Picker ing’ s expert, testified that it was ac cepta ble pra ctice unde r the ASTM Standard to allow Mr

. Balog h to conduct the site re connaissanc e, bec ause it wa s clea r that he ha d been unde r t he supervision of Mr. McCaff ery , who was a qualified pr oject mana g er. Mr . Samford noted that Mr. B al o gh h ad b een give n the limited assignment of visually inspecting the subject proper ty for the possibility

of a pr esenc e of ha zar d o u s m at eria ls, and that he ha d perf ormed

a de qu a te ly . M r. Samf

or d a lso no te d th a t ot

he rs wh o h a d w a lke d the s it e on pr e vio us oc c a sio ns , including WATCO’s e ng ineer Mr. Dickinson and pr operty co-ow ner Mr . Todd, had re ported similar conditions to those found by Mr. Ba logh a nd ref lected in the Phase Irepor t. Both Mr. Willi ams and Mr. Samford a g ree d that the topog raphic al m ap utiliz ed by Mr. B alog h on the site visit did not ind ic a te unnatur a l f

ill ingof the su bje c t pr op e rt

y a t the loc a tio n w he re buri e d g arb a g e wa s f ound in 2004, and that the state ments in the repor t conce rning p rior g rave l ext rac tion and the uneve n topogr aphy

wer e ac curate. 3. I nterview s

Th e int e rv ie w c omp on e nt o f P ha se Ia sses sme nts un de r t he Stand ard

c on sis te d o f b oth “Interview s Wit h Owner s and Occ upants” and “Interview s Wit h L ocal Gover nment Offic ials.” For the forme r ty

pe of interview, section 9.5 dictated that a “key site manag er” be identified by the owner-18-

to be made available for an interview: “9.5.1 Key Site Ma nag er – Prior to the site visit, t he owne r should be asked to identify a person with g ood knowledg e of the uses and phy sical cha rac teristics of the proper

ty (the key

site manag er) .” The term “ke y site manag er” is defined by the Standard a s “the pe rson identified by

the owner

of a pr operty as having good knowledg e of the us es and phy sical char acte ristics of the prope rty .”
Pickeringmaintains that J oel Smith fulfill ed the r o l e of ke y site manag er in this particula r Phase 1 assessment. After NB C, the ostensible owner of the prope rty

as trustee , contac ted Pickering reg ardingobtaining the assessme n t, Mr. McCaff rey , on the beha lf of Picker ing, se nt a letter ag ree ment to Mr. Haa g a, the NB C trust officer , in which Mr. McCaf fre y reque sted “[c]ontacts at the sit e or the name s, a dd

re sse s and ph on e numbe rs of pe rs on s w ho are kn ow le dg e a ble a bo ut t he sit e i n cl uding pa st and curr ent uses, envir onmental re ports, hazardous wa ste ac tiviti es or r egulatory actions.” I

n re s p o n s e on June 1, 1995, Mr. Haa g a sent a letter ba ck to Pickeringstating the fo l l o wi n g: “T h i s w i l l re tu rn t o y o uan ex ec u t edl et t er agr ee m en tfo r y o u r s erv i ce i np er fo rm i n g a Pha se Isit e a sse ssm e nt on the su bje c t pr op e rt

y

. I wo uld a

pp re c ia te y our c on ta c tin g Joel Smit h w ith VCM I nc. to obtain many of the items re quested.” Mr. Haa g a fur ther provide d the addr ess of Mr. Smit h.

At t ri al , M r. S m i t h t es t i fi edt h at , p ri o r t o l i s t i n g t h e s u b j ec t p ro p er t y

fo r s al e w i t h M r. Ha aga in 1995, he and his real estate c ompany had conside red de veloping the prope rty in 1994, but had ultimately

abandone d the idea. Mr . Smit h recalled visiting the pr operty approximately

10 or 12 times. He testified that whe n he wa lked the prope rty , he saw no evidenc e of dumping or signific ant filling of the land. He describe d the t opog raphy of t he western two-thirds of t he prope rty as “tre ed, and some gullies, and just a rolling g round.” Mr . Smit h testified that, once while visiting the subjec t proper ty with Mr. Norfle et, he ha d been inf ormed of the proper

ty ’s history

of g rave l mining operations. Mr. Sm ith also said that Mr. Norfle et had never told him that there had bee n a dump on the adjac ent prope rty , or that there was g arba g e buried beneath the s ubject property . Mr. McCaf fer y testified that in the cour se of his interview with J oel Smith, he asked Mr. Smith “what he knew about the prope rty in te r

ms o f it s c u r

r e n t an d p r io r u s e s , ” an d th a t M r

. Sm it h h a d in f o r me d h im that the subject prope rty had been t he si te of g rave l mining in the ea rly 1900’s. Mr. McCaf

fer y testified that the finding s of Mr. B alog h from the site re connaissanc e we re c onsistent with thi s prior use:

Q. All righ t

. No w, wh at d id y ou do in the course of y our – of this int ervie w with Mr. Smith? What did y ou ask him? What
wa s y our –

wh a t di d you

a sk him ? A. Ia sk e d him w hat he kn e w a bo ut t he pr op e rt

y in t e rm s o f i ts
curr ent and prior uses and, you know, whethe r there wer e any e nv ir on me nta l li e ns or pen din g thr e a te ne d li tig a tio n a g a ins t it. Some of

the items that are in our data f orm, Iwould have run down throug h them: Whether there wer e any notices fr om any g o v er n m en t al ag encie s reg ardingviolations of environmenta l l aws; whether he ha d any hazardous – any-19- g e ote c hn ic a l st

ud ie s o r s ite – p ri or

sit e a sse ssm e nts or

re po rt s on it that w ou ld h e lp u s.

. . . Q. Did y ou become awa re a s a re sult of y our interview with Mr. Smit h of the pre sence of burie d g arba g e on the subjec t p r o p e rt y? A. No, I

did not. Q. The site re connaissanc e indicate d – what we re the phy sical cha r a c te ristics of the we stern two-thirds of this prope rty based upon y our o wn observation and the site rec onnaissance by M r

. B a l o g [ s i c ] ? A. As repor

ted by Mr. B alog [si c] and evident by the topog raphy that th e gro u nd was he avily – the topog raphy

was ve ry undulating or

hilly , heavily

incised with, y ou know g ullies

and g e ne ra lly no t le ve l. Q. All rig ht. Was it tree d? Or c lear ed? A. And as was evident in the ae rial photog raphs a nd from Jason [Balog h], t h er e we re ve ry strong , mature de ciduous tree s as
w e ll a s a v e r y h e a lt h y u n d e r s to r

y o f v e g e tati o nc o v e r in g the g round. Q. Ba sed upon – did y ou become awa re of g rave l ext rac tion – a history of g rave l ext rac tion in the early 1900' s – A. Yes, I

did; and Inoted as such. Q. – as a r esult of y our phone inter view with Mr. Smith? A. Yes, he did tell me that. Q. Ba sed upon the infor mation that y ou rec eived r eg ardingthe proper ty from M r. S mith as part of the te lephone inter view,
was there any

thing in the site rec onnaissance that was done by Pickeringthat was inconsist en t wi th what y ou had lea rned from the inter

view? A. No t h i n g. Q. Was there a

ny thing in the r ecor ds that y ou revie wed a s part of this phase 1 e nvironmental site assessment that wa s inc o n s is te n t w it

h th e in f o r mati o nth a t w a s p r o v id e d in the interview w ith Mr. Smi th? A. Nothing w as inconsistent with what he told me.
WATCO’s positi on at trial wa s that rea l estate ag ent J oel Smit h did not, in fa ct, qualify as
a p e r s o nw i t h g o o d

kn o w l e d g e o f

t h e u s e s an d p h ys i c a l c h ar a c t e r i s t i c s o f t h e s u b j e c tp r o p e rt y, there fore he could not have been c onsi d er ed a “k ey site manag er” for the pur poses of the A STMA d d i t i o nal l y , W A T C O em p hasi zes t he f act t hat Jo el Sm i t h was t he son o f t he C E O of P i ckeri ng, i m p l y i ng 4

t hat be cause o f t hese f

am i l i al co nnect i o ns, M r. Sm i t h had t he ass ess m ent “ rus hed ” i n ord er t o f aci l i t at e a cl ean rep o rt and o bt ai n a co mm i s s i on o n t he s al e o f t he propert y

. T he t r i al cour t addres s ed t hi s ci r cums t ant i al ev i dence i n i t s f i nal

o rder, and f

o und t hi s co ncl usi o n imp rob ab l e und er t he p roo f p res ent ed a t t ri al

. “ W here t he t ri al judge has s een and heard

w it ness es, especial l y where i ss ues of credibi l i t y and wei ght of o ral t est i m o ny are i nvo l ved , on revi ew c o n sid e ra b le def er enc e mus t s t i l l b e a ccor ded t o t hos e c i r cums t anc es

. ” T o w n se n d v . S ta te , 826 S. W

. 2d 434, 437 ( T en n

. 1992) (quo t i ng H um phrey v. D avi d W i t her s po on, I nc. , 734 S. W

. 2d 315, 315 ( T en n

. 1987) )

. Con s i der i n g t h e abs en ce of evi d ence suggest i ng t hat ei t her Sm i t h or P i ckeri ng had know le d g e o f C raven R o ad l and f i l l at t he t i m e o f

t he

e n v iro n m e n ta l sit e a sse ssm e n t i n 1 9 9 5 , w e a g re e w ith the trial c o u rt’s d ism issa l o f t h is a rg u m e n t.
-20- Standard. WATCO relies upon the t rial t estimony of i ts expert, Mr. W illiams, for the notion that

4 Pickeringwas oblig ated unde r the Standar d to conduct intervie ws of additional per sons who might have had g ood knowledg e of the subject prope rty , such as f ormer owner Mr . Norfle et or a djoining pr op e rt y owners

. How e ve r, on

c ro ss e xami natio n, Mr . Wil liams a pp e are d to ba c ktr a c k o n th is position:
Q

. An d th e re is n o r equ ire me nt t ha t st a te s int e rv ie ws wi th

adjoi ning ow ners, doe s it? Any wher e in the standa

rd,
c or re c t? A

. N o

. I w o u l d s ay t h a t o u r a p p r o a c h h a s b e e n u t i l i z e d b y a person with g ood knowledg e. Q. I s t h e answe r is [si c] that the standard doe s not require int e rv ie ws wi th a djo ini ngow ne rs ? A. I t does not specific ally require it. Q. Al l r ig ht. No w the re ’s no requ ir e me nt i n A STM E1 52 7 to interview f

ormer owners of the subject prope rty in [ the] 1994 version, is there ? A. You re ally hit upon an int ere sting twist . I t cer tainly does not appea r t o make mention of former owners, y et, obviously that
wo u l d b e am i g h t y i m p o rt an tp o i n ti f y o uwe re b u i l d i n g a history of the usag e of the proper ty

. Q. But with re spect to intervie ws, the standar d does not

any wh e re re qu ir e an int e rv ie w wi th a fo rm e r ow ne r, do e s it ? A. Idon’t see a

n item t h at spec ifically

identifies a r equire ment for a n interview w ith a former owner

. Both e x perts ther efor e ag ree d that the A S TM Standard did not requir e intervie ws with adjoining landowner s or form er o wners. Pickering ’s expert, Mr. Samford, te stified that Mr. McCaf fre y ’s phone intervie w with Mr. Smith s atisfied the ASTM Standa rd. Mr. Samfor d testified that interview s with adjoining owne rs was not re quired unde r the Stand ard for seve ral re asons, including confide ntiality

conce rns re lated to the sale of the proper ty . Mr. Samford a lso testified that Pickering ha d n o k no wl e dg e of Mr . N or fl e e t’ s f or me r o wn e rs hip of

the su bje c t pr op e rt

y , a nd that no thi ngin Pickering ’s file re fer ence d Mr. Norf leet.-21-

A l t h o u g h t h e S t an d ar d

d i r e c t e d t h e e n v i r o n m e n t a l p r o f

e s s i o n a l t o m a k e t h e i n i t i a l i n qu i r y, it clear ly allocate d the task of identifying a person with “g ood knowledg e of the uses and phy sical char acte ristics of the proper ty ” to the owner of the proper ty , which in this case was NB C as trustee. As a wi tne ss at tr ia l, M r. Ha a g a , w ho wa s th e tr us t of fi c e r r e sp on sib le fo r t

he pr op e rt

y a t th e tim e of the sit e a sse ssm e nt, re sp on de d to qu e sti on ingon thi s is su e a s f

oll ow s: Q. Okay . Did y ou at any t i m e i n struct or indicate to Pickering that it should only look to J oel S mith as a pe rson to interview
c o n c e r n i n g t h e p r i o r

u s e s o f t h e p r o p e rt y? A. I ’d have to say , y es. You know, the onl y person I indicated.

Withre g ard

to t his iss ue , th e tr ia l c ourt

fo un d a s f

oll ow s:
The l e tt e r a g r e e me n t p r o v id e d th a t Pi c k e r in g w o u ld c h ar g e a f e e of $1,800 for perf

orming the [environmental site assessment]. I t rec ited that t h e NBC Trust Depar tment had advised Picke ring that the Property was a n undevelope d, wooded 169 a cre trac t of land. The let ter agreemen t pro vi dedth at, amo ng it s re sp on si bi li ti es, th e NBC Trust Depa

rtment was to provide Pickeringwith “Contact (s ) at the site or the name s, addre sses and phone numbers of pe rsons who we re kn ow le dg e a

ble a bo ut t he sit e inc lud ingpa st a nd curr e nt u se s, environmenta l reports, ha z ar dous waste a ctivities or regulatory actions.” May

31, 1995 letter at p. 4. The per son identified by the NB C Trust Depar

tment for this purpose wa s J oel Smith.

The e vidence does not preponde rate ag ainst these finding s by the trial cour

t. Pickering ’s cr oss-examination of Mr. Wil liams reg ardinghis own f a mi li a r it y w it h th e a c tions taken by Pickeringand t h e sufficiency of the intervie w under the ASTM Standard e licited inc on sis te nt r e sp on se s f

ro m WA TCO ’s e xpe rt : Q. All rig ht

. W el l , let’s talk about the inter view issue, thoug h. At the time of y our deposition, y ou didn’t know that Mr. Mc Ca ff re y ha d e ve n in te rv ie we d Joe l Smi th, c or re c t? A. Th a t’ s r ig ht.

. . . Q. Have y ou since be come awar e of w hat Mr. Joel S mith – what information Mr. J oel Smith provided to Mr. McCaffr ey as part of the interview? A. Appar ently

passed a long the information that there had bee n gra v el m i n i n g. Q. Did y ou revie w the Pickeri n g rec ords re lating to the interview?-22- A. Ar e y ou

ta lki nga bo ut t he fo rm s th e y

ha d f ill e d o ut? Q. J ust any

thing. Any

thing in conne ction with the interview. You have n’t rea d Mr. McCaf fre y ’s deposition? A. Istill haven’ t rea d McCaff rey ’s deposition.

. . . Q. The repor

t. Y es. All r ight. But with respec t to the interview iss ue, whe n Itook y our deposition y ou wer e unaw are of the fac t that Mr. Smith had been intervie wed. And I asked you about that. And did y ou not a dmit to me that by interviewing Mr . Sm ith th a t Pic ke ri ngha d me t pa rt of the sta nd ard wi th
re sp e c t to int e rv ie ws ? Do y ou re me mbe r t

hat? A. I ’m havingtrouble re calling it, but I would conce de that that would meet par

t of the standar d. Q. Be cause in this case, what we have – A. Th e pr ob le m is that Mr. Smit h is ob vio us ly

so me on e wh o d id not have g ood knowledg e. Q. You don’t know what knowledg e he ha d, do y ou? A. Well, j u d gi n g by

what has tra

nspired, it appea

rs he did not have g ood knowledg e. Q. Th a t’ s b a se d o n h ind sig ht, is i t no t? A

. By an d la

r g e it ’ s b a s e d o n r e v ie w in g th e mate r ia ls th a t have been pr oduced. Q. You have n ’t reviewed the infor mation pertaining to Mr. Smit h ’ s kn o w le d g e , h a v e y o u ? Y o u h a v e n ’ t r e v ie w ed the do c ume nts pe rt a ini ngto what, i f a nyth in g , M r. Smit

h specific ally

told Mr. McCaffr ey , have you? A. Ihave not se en those, no.

. . . Q. Now, NB C Ba

nk as t rustee desig nated Mr. J oel S mith as the
c on ta c t w ithinf

or matio n a bo ut t he sit e , c or

re c t? A. That’s my

understanding

. Q. NB C B ank

a s tr us te e did no t pro vid e the name of anyon e e lse including Pet er Norfle et as someone to contact with re g ards to i nf or matio n o n th e sit e , c or

re c t? A. Th a t’ s w hat I

un de rs tand . Y e s. This testimony

further undermines WATCO’s conte ntion that Pi cker ing w as re quired to conduc t additional interviews unde r the ASTM S tandar d. We believe that it was a ppropriate for Picker ing to r e ly up on NB C’ s des ig natio n of Joel Smit h as the lon e c on ta c t re g ard ing the pr op e rt y , an d th a t it
wa s r e a so na

ble fo r t he m to inf

e r t hat he wa s to be c on sid e re d the ke y sit e mana g e r, i.e ., a pe rs on wi th g ood knowledg e of the uses and phy sical cha rac teristics of the subjec t proper ty , for the purposes of confor ming to this component of the A STM St andar d.-23-

As for th e s e c o n d

p art o f th e in te r v ie w c o mp o n e n t o f

th e A ST M St an d ar d , r e qu ir ing int e rv ie ws wi th l oc a l g ov e rnme nt o ff ic ia ls, se c tio n 1 0 o f t

he Sta nd ard pr ov ide d in

re le va nt p art : 10.1 Obj ec t i v e – The objec tive of interview s with local g overnme nt officials is t o obtain information indicating rec og nized environmenta l conditions in connection with the proper ty

.

. . . 10.5 Who S hould Be I nterview ed 10.5.1 L ocal Gover

nment Offic ials – A rea sonab l e attempt shall be made to inter

view at least one staff member of any one of the fo llo wi ngty

pe s o f l oc a l g ov e rnme nt a g e nc ie s: 1 0

. 5

. 1

. 1 L o c a l f

i r e d e p art m e n tt h a ts e r

v e s t h e p r o p e rt y, 10 .5 .1 .2 L oc a l he a ltha g e nc y or loc a l/r e g ion a l off

ic e of state health ag ency

servingthe ar ea in whic h the prope rty is located, or 10.5.1.3 L ocal ag ency or local/re g ional office of state a g ency having juri s diction over ha zardous waste disposal or othe r environmenta l matters in the area in which the property is located.

Wit h reg ard to this component, Mr. Mc Caffr ey testified that he c alled the loca l office of the Tenne ss ee De p ar t m en to f E n v i ro n m en tan d C o n s erv at i o n , Di v i sion of Superfund ( “TDEC” ), and tha t he sent a follow-up letter

o n J une 9, 1995, re questing any information re lating to ha zardous substances on the subject prope rty or any site in the vicinity . The loca l office of TDEC responde d by letter that the subjec t property was not on the State’s list for kn o wn o r suspec ted re lease s of hazardous substance s and/or petr oleum substances a nd that there were no such prope rties on the State’s list withi n a four -mile radius of the subject prope rty . Additionally , while rev i ewingaer ial photogr aphs of the subject proper ty , Mr. McCaff

rey interviewe d employ ees at the local of fice of the USDA Soil Conservation Ser vice and lear

ned that this ag ency

was una war e of a ny environmenta l pr ob le m w iththe su

bje c t pr op e rt

y

. Th e se e ff

or ts we re do c ume nte d in th e fi na l r e po rt su bmi tte d to WATCO prior to its closing on the subject proper ty

. Both experts a g ree d that these a g encie s were
a pp ro pr ia te so urc e s o f k

no wl e dg e a

ble g ov e rnme nt o ff

ic ia ls, and

that th e se int e rv ie ws te c hn ic a lly satisfied the ASTM Standard.

After a thoroug h revie w of the A STM St andar d, the Phase I environmenta l assessment re port prepa red by Pickering in 1995, a

nd the testimony of witnesses and exhibits offe red at trial, we find that the evidence d o es n o t preponde rate ag ainst the trial cour t’s finding that Pickering confor med to the ASTM Standa

rd in its Phase I environmenta l site assessment of the subjec t property in 1995. WATCO failed to establish, by a pre pondera

nce of the e v i d en ce, that Pickering had supplied WATCO with false information in i ts Phase Ienvironmenta l site assessment repor t. We therefor e aff irm the judg ment enter ed by the trial cour

t in favor of

Pickeringon the claim of ne g lige nt misrepre sentation in a business transa ction.-24- B. B re ac h of

the Pr of essiona l Sta nda rd

of Care

WAT CO fu

rt he r a lle g e s th a t th e tr ia l c ourt e rr on e ou sly

ru le d in fa vo r o f P ic ke ri ngwh e n it held that WATCO had not established, by a prepondera nce of the evidenc e, that Picker ing br eac hed the applica

ble standar d of ca

re for environmenta l pr ofessionals conducting Phase 1 environme ntal site assessments in She lby County , Tenne ssee or

simil ar c ommuniti es in 1995. The tria l court sp e c if ic a lly fo un d a s f

oll ow s:

A s tand ard

of c are or du ty wa s e sta bli sh e d b y

the le tte r a g re e me nt, Ex hibit 7, i.e., that the wor k would be “in c onformanc e with the scope of the ASTM Pra ctice E 1527". That duty was n o t brea ched
acc ording to both ex perts. The P laintiff ar g ues that in addition to the ASTM St andar d, the def endant, Picker ing, w as bound b y a duty which excee ded the ASTM Standa rd and re quired the de fenda nt Pickering , to conduct additional interviews not ca lled for by the ASTM Standard. By not do ingthe add it ion a l in te rv ie ws , Pl a int if f a rgue s th a t de fe nd ant, Pic ke ri ng , b reac he d th e a pp lic a ble pr of e ssi on a l st and ard

of c are in
connec tion with the Phase 1 Environmental Site Assessment conducte d in Shelby

County , Tenne ssee in Jul y of 1995. Pic ke ri ngargue s th a t it c on fo rm e d to the sta nd ard of c are in
c on ne c tio n w iththe Pha se 1 E nv ir on me nta l Sit e As sess me nt i n S hel by Co un ty , T e nn e sse e in Jul y of 19 95 . T he sta

nd ard of c are in
connec tion with the Phase 1 Environmental Site A ssessment conducte d by

Pickeringin Shelby County , Tenne ssee in July of 1995, in Defe ndant’s opinion, included both the ASTM Standard a nd the Shelby County standard. D efe nd an t s ay s that both the ASTM Standard a

nd the Shelby

County Standard we re c omplied with by Pickeringin that Pickering comp l i ed with the ASTM Standard and there was no duty

to c onduct additional interviews not conte mplated by the ASTM Standard.

The trial court f

ound that Pickering complied with the ASTM Standard a nd that “[t] he proof
was e qually

balanc ed as to whether or not Pickering had a duty to conduct fur

ther intervie ws than those ca lled for in the ASTM Standard.” The latter finding is the m ain focus of our review of the
c ourt ’s jud g me nt in favo r of Pic ke ri ngon

WAT CO ’s c la im f

or pr of e ssi on a l ne g lig e nc e . We mus t consider whet h er the evidenc e pre ponderates in support of a f inding that the sta

ndard of car e for environmenta l professionals c onducting Phase 1 asse ssments in S helby County or similar
c omm un iti e s r e qu ir e d mo re tho ro ug h e ff or ts t ha n thos e e xer

te d by Pic ke ri ngin 1 99 5 w ithre g ard to the interviewcomponent of a Phase 1 environme ntal site assessment.

I n a neg lige nce a ction, the plaintiff mus t establish, by a prepondera nce of the evidenc e, the following elements in orde r to preva il: (1) a duty of a c are owed by the defendant to t he plaintiff; (2)-25-

c on du c t f a lli ngbe low

that st and ard

of c are a mou

nti ngto a br e a c h o f t

hat duty ; (3) an injury

or los s; (4) c ausation in fa ct ; an d (5 ) proxi mate, or le g al ca use. Wo od

v . N e wman, H

ay es & D ixo n Ins

. Agency , 9 0 5 S

. W

. 2 d 5 5 9 , 5 6 2 (T en n

. 1 9 9 5 ) ( c i t i n g Bradsh aw v. Daniel , 854 S.W .2d 865, 869 (T e nn . 1 99 3) ). Pr of

e ssi on a ls a

re jud g e d a c c or din g to t he sta nd ard of c are re qu ir e d by

the ir p ro fe s s i o n. Je nning

s v . Ca se , 1 0 S. W.3 d 6 25 , 6 27 -2 8 ( Te nn . Ct . App . 1 99 9) . T e nn e sse e c ourt s have a d o p te d

th e “ s a me o r

s im il ar c o mm u n it y ” s ta n d ar d o f c ar e w it h r e s p e c t t o p r o f

e s sional neg lige nce. Martin v. B arge, Waggon er, S um ner & Can non , 894 S.W .2d 750, 751 (Tenn. Ct. App. 1994) (c i t i n g Doo ley

v . Ev e re tt , 8 05 S.W. 2d

38 0, 38 4- 85 (T e nn . Ct . App . 1 99 0) ); se e als o Re state me nt ( Se c on d) of

To rt s, § 299 (A ) (1 96 5) (“ Un le ss he re pr e se nts that he ha s a gr e a te r o r l e ss sk ill or kn ow le dg e , o ne wh o und e rt a ke s to re nd e r s e rv ic e s in the pr a c tic e of

a pr of e ssi on or tr a de is require d to exercise the skill and knowledge normally possessed by members of t hat profession or trade in good sta

nding in similar communities.”).

Al tho ug h WAT CO ’s tw o the or ie s of re c ov e ry are c los e ly re late d, we no te the su btle distinction i n this case that is to be made be tween the applicable standard of car e, which de fined the scope of duty as to WATCO’s claim for pr ofessional ne g lige nce, and the ASTM Standar d, which was de veloped a s an industry g uide for en v i ronmental prof essionals conduc ting Phase 1 environmenta l a ssessments, and which has alre ady been addre ssed reg arding WATCO’s claim for neg lige n t m is r e p r e s e n tati o n

. T h e tr ia l c o u rt s p e c if ic a ll y f o u n d th a t b o th M r

. Wi ll ia

ms an d M r. Samford ag ree d that the ASTM sta ndard “wa s a g uideline to be used, but was not exclusive.” F or e xamp le, in h is t e sti mony on dir e c t e xami natio n, WAT CO ’s e xpe rt Mr . Wil liams r e sp on de d to qu e sti on inga s f

oll ow s: Q. Would y ou state y ou r familiarity with something c alled AST M st and ard

wh ic h is de sig nate d E 15 27 re lativ e to P ha se 1 e nv ir on me nta l si te a sse ssm e nts ? A. The Ame rica

n Society of Testing Mater ials adopted in 1994 that pa rt ic ula r sta nd ard a s the sta

nd ard fo r e nv ir on me nta l si te
a sse ssm e nts

.

. . . Q. Does that doc ument incorporat e a guideline that was

a pp lic a ble in 1 99 5 to e nv ir on me nta l si te a sse ssm e nts in Shelby County , in y our opinion? A. I t does – y es, i t does. But Ishould say with gr eat e mphasis on the word guideline. Q

. O k ay. A. This is not a regulation. I t’s a guidance document – Q. Okay

. A. – for pr ofessionals in that field. I t does not require that they rig idly adher e to it, but on the other h an d it’s pretty much a standard that’s to be utiliz ed.-26- Q. I s th e g uid e – d oe s th e a dh e re nc e to thi s g uid e de pe nd to s ome de g re e on the c ir c ums tanc e s r e pr esente d o n a c a se -b y -c a se ba sis in e nv ir on me nta l si te a sse ssm e nts ? A. Iwo uld

say tha t w ou ld b e an a

pp ro pr iate wa

y to d e sc ri be it. I t cer tainly should be utiliz ed with the circum stance s of the individual property

in mind. Q. Mr. Will iams, y ou have conducte d site assessments in Shelby Coun ty , y o u ’ v e te s ti f

ie d

. H a v e y o ur an g e d

b e y o n d Sh elby County in y our pra ctice? A

. Y e s

. We h a v e d o n e th e m i nD e tr o it , Ja c k s o n v il le , F lo r id a, I ndianapolis. Q. Ge t ov e r i nto Ar

ka ns a s a nd Mis sis sip pi? A. We d o qu ite a

fe w i n e a ste rn

Ar ka ns a s, no rt h M iss iss ipp i. That’s ve ry

common. Q. I n all these locations, in y our experienc e is ASTM E1527 the applicable g uide that’s used in those other locations as we ll as S h e l b y C o u n t y? A. Well, in 1995 – short answe r i s, y es. But in 1995 there may have be en more varia

nce.

. . . Q. And the ‘94 ve rsion i s t h e s t andar d that is applicable f or Phase 1 E SA ’ s o r

e n v ir o n me n ta l s it e a s s e s s me n ts th a t w e re do ne in 1 99 5, c or

re c t? A. I t w a s th e g uid anc e that w a s b e ingus e d at th a t time . Q uit e fr ank ly , I do n’ t be lie ve that mo st o f t he con su lta

nts in Memphis were rig idly

adher ing to it.
Mr. Samford, Picker ing’ s expert, testified:

A. There ’s a f

undamental distinction tha t y o u need to make betwee n the AST M S t an dard a nd standard of

car e. The
s t an d ar d i s a p r o s p e c t i v e d o c u m e n t [ , ] i t ’ s s o m e t h i n g t h a ts ays thi s i s t h e w ay y o u s h o u l d d o i t

. T h e s t an d ar d o f c ar e is
re tr os pe c tiv e [,] y ou c an only de te rm ine the sta nd ard of c are in hin ds ight

. You h a ve to l oo k b a c k a nd se e wh a t pe op le actua lly did

. S o to the extent that people comply with the standard a nd do the things that the standard sug g ests then the standard ma

y be conside red in hindsig ht the standard of ca re at the time. B ut y ou can’ t sa y that whateve r is done tomorrow is goingto be the standa

rd of c are beca

use y ou don’t know what that’s g oing to be

.

. . .-27- Q. You don’t know what the sta ndard of car e wa s in Virg inia but y ou do know what it was in Shelby C o u nty wher e y ou’ve

n e v e r e v e np r a c t i c e d

. Is t h a tyo u r t e s t i m o n y?

. . . A. No, it can be cause Idid an i n v es t iga tion of the standar d of
car e in Shelby County , Tenne ssee. And, a ctually , Imay have done one in c onnection with these othe r ca s es. I don’t
re m e mb e r

t h e d a t e s o nt h e s e , b u ti f Ih a d a P h a s e 1 sit e assessme n t case in Virg inia in 1995 Iwould have looke d at the sta nd ard of c are a t t hat p oin t, a lso . B ut I sp e c if ic a lly loo ke d at w hat th e sta

nd ard of pr a c tic e he re wa s in

19 95 wi th respe ct to this case. So, y es. Q

. O k ay. A. I do know what the s tandar d of care here is even thoug h I ’ve
never p rac ticed in the ar ea. A nd my opinion is not jaded by my own per sonal pref

ere nces. It’s what people did. Q. [By t h e C o urt] L et me see , for my purposes of understanding , if Ican c larify what y ou’re saying. A s lawy ers we approach the va rious issues that we’r e talki n g ab out including standa rd of c are by

defining things such a s duty , brea ch of duty , et ce tera

. A. Yes, sir. Q. The duty to do or not do whateve r someone should or shouldn’t have done in ‘95 i s whateve r i t is. W hether the y br e a c h th a t duty

is th e qu e sti on

that I have to de c ide. S o are y ou

saying– it

so un ds lik e to m e y ou’re more say

ing in the pr ospect of r etrospec tive discussion – y ou’re saying whether somebody

did or fa ile d to do so me thi ngIdo n’ t kn owun til it’ s a c tua lly happene d. I s that rig ht? The duty stay s the same. A. The duty

stay s the same, but it’s t em p er ed by what people ty pically , commonly

do – Q. Ye ah. Th a t mi g ht b e a pa rt of it. A. – prac ticing in the sa me ar ea a t the same time. Q. Right. Ther e may be two bases as I understand as far
as y o u r t estimony . I t can be what people in the community

are doing and it’s then g ot to be analy zed in light of the standard that was put i nto effe ct in 1994 and cle arly

was in ef fec t in 1995. A. Yes. Q. B oth

of tho se fa c tor s h a ve to b e loo ke d at? A. Yes, sir.-28-

Mr. Samford’ s testimony is consistent with his charac terization of the standar d of ca re f or Phase I assessments in the for

mal study and re port that he pre pare d in May of 2005:

The Standard of Car e is t hat le ve l of

c are and dil ig e nc e or din ari ly employ ed by

the ave rag e firm pr acticing in the same g eog raphic are a
and a t t he sam e tim e . A“ sta nd ard ” su c h a s A STM E1 52 7 o nly become s the “standa

rd of c are ” if it is embra ced as the ordinar y way things are done. An ASTM sta ndard pr actice by

definition includes flexibi lity in the way

the pra ctice is a p p l i ed to any g iven situation. Consequently , application of the s tandar d prac tice will vary betwee n consultants prac ticing in diff ere nt are as and at differ ent times.

. . . Since 1987, one of

the ong oing e ffor

ts of [t he Association of Soil and Foundation Engine ers] has bee n to develop an unde rstanding of the Standard of Ca

re f or environme ntal site assessment s . . . I n 2000, ASFE published its most compre hensive a ssessment of the Sta nd ar d of Care for Environmental Site Asse ssments. This study repor ted the
re su lt s o f a r e v i e w o f

a p p r o xi m a t e l y

1 5 0 P h a s e 1 r e p o rt s

. F ir ms submitt ing r eports included me mbers of at least 5 p rofe ssional org anizations repre senting moret han 20,000 Phase 1 ESA repor ts per y e ar. Th is A SF E s tud

y ma de a pa rt ic ula r n ote of wh e the r t he re po rt s attempted to conf

orm to the ASTM Standard Prac tice E1527, a nd

a lso , mo re imp or

tantl y , w he the r t

he y a c tua lly did str ic tly c on fo rm to thi s sta nd ard pr a c tic e

. Th e stu dy fo un d that 73 % of th e pr op os a ls st at ed that they

would confor

m to the ASTM standard E1527; and, not a s ingle repor

t actua lly was in strict conf

ormanc e to the standa

rd. This study

clea rly indicates that the Standa

rd of Car e and the ASTM E1527 standar d prac tice ar e not equivalent.
We believe that the totality of both experts’ testimony in this case supports the trial court’ s fi nd ingthat th e AST M Sta nd ard and the sta nd ard of c are we re no t e qu iva le nt at th e tim e of the Pha se 1 assessment by

Pickeringin 1995. “Customary conduct, while not conclusive or c ontrolling, may be c on sid e re d a s f

ur nis hin g a sta nd ard ize d g a

ug e and a s o ne c ir c ums tanc e to be we ig he d a lon g wi th all o t h er s i n deter

mining whe ther or not or dinary car e has be en exerc ised.” Hame s v . St ate , 808 S

. W

. 2 d 4 1 , 4 5 -4 6 (T en n

. 1 9 9 1 ) ( ci t i n g Bry an v . Hu bb ard , 3 2 T en n

. App. 648, 225 S.W.2d 282 (Tenn. A pp. 1949)). There fore , for the purposes of our revie w of the trial court’s judg ment in favor of Pic ke ri ngas to pr of

e ssi on a l ne g lig e nc e , w e do no t li mit our f oc us to P ic ke ri ng ’s a c tio ns wi th reg ard to the A STM St andar d itself, but also consider the para meters of the s tandar d of care in actual prac tice by

environmenta l professionals in Shelby County or s i m i l ar communiti es in 1995, consideringthe expert testimony and proof

at trial.

Mr. Will iams admitted that he had not c onducted a formal study of the standa

rd of c are for Shelby County and similar communities in 1995, but that his opinions were ba sed upon his y ear s of-29-

e xpe r i e n c e w i t h o t h e r e n v i r o n m e n t a l c o n s u l t i n g f i r m s , i n c l u d i n g h i s o w n f

i r m , E

. F

. W i lli a ms & Ass o ci at es

. W h en aske d for his opinion as to whether Pickeringcomplied with the profe ssional
s t an d ar d o f c ar e f o r c o n d u c t i n g e n v i r o n m e n t a l s i t e a s s e s s m e n t s i n 1 9 9 5 i nS h e l b y C o u n t y, WATCO’s expert Mr. Wi lliams responded:

Well, it’s my opinion that they have br eac hed the standa rd in that they should have made some eff ort to find a knowl ed geable person that they could interviewwho knew something about the past uses of the land ar ound this sit e be cause once the y knew that ther e had be en g ra ve l mi nin g , there are too many little te ll- ta le ind ic a tio ns that it
occur red r ight on up to the boundar y somewher e ar ound the Fr eema n Smit h Park. And y ou’ve g ot le vel g round there and so something has filled it, and y ou need to find somebody who can tell y ou something about why

it was filled.

For r e a s o n s a lr e a dy d is c u s s e d , w e f in d th a t th e r e c o r d b e f

o r e th is Co u rt d o e s n o t s u p p o rt Mr. Wil liams’s char acte rization of the subject prope rty as “level.” The testim ony of var ious witnesses at t rial established that the subject prope rty was hilly and uneve n. I t is unclear what other ba ses Mr. Wil liams relied upon in formulatinghis opinion that additional interviews were war rante d under the standard of

car e.

P i ck er i n g ’s expert, Mr. Samford, a lso testified reg ardingthe standar d of ca re f or environmenta l site assessments in Shelby County and similar communities in 1995. Mr. Samford testified that in conductinghis study , he re viewed six environmental site assessments that had be en conducte d by other environmenta l pr ofessionals in Shelby County in 1995 in order “ to ge t an idea of what other firms in the ar ea wer e doing at that time this study was done .” Af

ter re viewing the Pickeringrepor

t, he conc luded that Pickering ’s Phase 1 environmenta l site a ssessment confor med to the standard of car e. Mr. Samford r elated his unde rstanding that J oel Smith had been identified as the sole c ontact for information reg arding the s ubject prope rty , and that he ha d provided Picker ing with information reg ardingits prior uses. Mr. Samford w ent on to expl ain that eve n if NB C had provided Picker ing w ith contact information f or the prior

owner , Mr. Norf

leet, the standa

rd of c are would not have required Pickering to interview him in this situation. Mr. S amford e x plained that the inf or ma tio n pr ov ide d by Mr

. Smith re g ard ing g ra ve l min ing in the 19 00 ’s on the su bje c t pr op e rt

y was c onsistent with the topogra phy of the land at the time of the 1995 site re connaissanc e: Ag ain, the information that y ou g ot from somebody repr esentingthe
owner was that ther e wa s g rave l mining on the site, and y ou can se e from that topog raphic map and f rom y our site re connaissance that there had bee n g rave l mining on the site. That wa sn’t in question. And there ’s no evidenc e looking at the site, or lo o k i n g at the topogr aphy , or any information that y ou g ot that a ny thing ha ppened betwee n the g rave l mining stopping a nd not. Tree s had g rown up,-30- the y we re matur e , the y , y ou kn ow , re fl e c te d that the sit e ha d b e e n ju st
va c ant.

. . . You walk the site, you don’t see any evidenc e of dumping , y ou don’t
see a ny – in a situation like this y ou don’t eve n have trai l s and, y ou know, g rave l or dirt roads r unning thr oug h the prope rty . So there’s no method of somebody

g etting into the pr operty

to dump. I f y ou had an unknown r oad lea ding to a barr en sp o t i n t h e middle of the prope rt y y ou would have a differ ent level of

conce rn. Then you would start t h i nking, g ee, some body has bee n using this site for
so me thi ngsin c e the g ra ve l mi nin g fo r oth e r k ind s o f p ur po se s. There ’s none of

this on thi s site.

Mr. Samford f

urther opine d that, based u p o n h i s re view of othe r environme ntal site assessment rep o rt s fr o m Shelby

County in 1995, the standard of car e did not require Pickeringto interview adjoining pr operty

owner s or prior owne rs. One of these re ports was a

1995 Phase 1 environme ntal site assessment report conducte d by E.F. W illiams & Associates, Mr. Wil liams’s company . When asked a bout that particular

assessment, Mr. Samfor d indicated that no in t erviews with an owner , former owner , or adjoining owner wer e re flec ted in the E.F . Wil liams & Assoc iates re port.

The e vidence in t h e re co rd does not preponde rate ag ainst the trial cour t’s finding that the
e vid e nc e wa s e qu a lly

ba lanc e d a s to wh e the r t he sta nd ard of c are fo r P has e 1 e nv ir on me nta l si te
a sse ssm e nts pe rf

or me d in She lby County or sim ila r c omm un iti e s in 19 95 re qu ir e d Pi c ke ri ngto conduct f urther inter

views than those called for in the ASTM Standard. Ther efor e, WATCO failed to establish, by

a pre pondera

nce of the evidenc e, that Picker ing br eac hed the applicable standard of
car e whe n it perfor

med a Phase 1 environmenta l site assessment of the subjec t property in 1995. Acc ording ly , the trial cour t’s judgme nt in favor of Pickeringon the claim for profe ssional neg lige nce is affirme d.

V. C ONCL US I ON

For the fore g oing r easons, the judg ment of the trial court in favor of Picker ing E nvironmental Consultants, I nc., is aff

irmed. Costs are a ssess ed aga i n st Appellant, WATCO, a joint venture comprised of

Way ne Todd a nd Wil son Holdings, L P, and it s surety , for which execution may issue if nec essar

y

.

___________________________________ AL AN E. HI GHERS, J UDGE