Opinion ID: 1057648
Heading Depth: 3
Heading Rank: 3

Heading: Misrepresentation Claims

Text: The Stanfills also alleged that the Mountains intentionally or negligently misrepresented that they had no knowledge of the underground storage tanks on the Tennessee Residential Property Condition Disclosure form. A claim for intentional misrepresentation has the following six elements: (1) the defendant made a representation of an existing or past fact; (2) the representation was false when made; (3) the representation was in regard to a material fact; (4) the false representation was made either knowingly or without belief in its truth or recklessly; (5) plaintiff reasonably relied on the misrepresented material fact; and (6) plaintiff suffered damage as a result of the misrepresentation. Walker v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301, 311 (Tenn. 2008). The Mountains’ arguments attack element (2), denying knowledge of the underground tanks on the property, and arguing that their statement on the Tennessee Residential Property Condition Disclosure form that they had no knowledge of the tanks was therefore true, and element (6), asserting that the misrepresentation did not cause damages to the Stanfills. We address the arguments regarding these two elements of intentional misrepresentation in turn. 5 W e recognize that it is potentially arguable that the facts that M rs. M ountain lived on the property for years, that the vent pipe was visible, and that Mr. Mountain allegedly spoke of the underground tanks and the vent pipe with his neighbors, provide some circumstantial evidence that Mrs. Mountain may have learned of the existence of the tanks from her husband. But the Stanfills have not alleged nor argued that Mr. Stanfill’s knowledge should be imputed to Mrs. Stanfill, and in the face of her sworn denial by affidavit, we do not believe it is a reasonable inference under these circumstances to presume that Mrs. Stanfill knew of the existence of the underground tanks simply because her husband allegedly did. 8 Regarding the element requiring the plaintiff to demonstrate that the representation was false when made, the Mountains rely on the same evidence as discussed at length in section II(B) above: their sworn denials by affidavit that they had any actual knowledge of the underground tanks at the time of sale. The only alleged misrepresentation by the Mountains in this case is the Mountains’ response to the question on the Tennessee Residential Property Condition Disclosure form “ARE YOU (SELLER) AWARE OF ANY OF THE FOLLOWING ? – Substances, materials, or products which may be an environmental hazard such as, but not limited to: asbestos, radon gas, lead-based paint, fuel or chemical storage tanks, and/or contaminated soil or water on the property,” where the Mountains checked the box “UNKNOWN .” The Mountains argue that because they had no knowledge of the existence of the tanks at the time of sale, this representation was true, and thus the Stanfills cannot demonstrate a required element of their misrepresentation claim – falsity of the statement. The analysis of the “falsity” element of the Stanfills’ intentional misrepresentation claim is the same as in the discussion regarding the “knowledge” element of fraudulent concealment above. As thoroughly discussed above, the Mountains and Mr. Brooks testified by affidavit that they had no knowledge of the existence of the underground fuel storage tanks at the time of sale, thus negating the element of falsity of the alleged misrepresentation. The burden thereby shifted to the Stanfills to provide evidence creating a genuine issue of material fact on whether the Defendants actually did have knowledge of the tanks’ existence at the time of sale. As noted, the Stanfills failed to meet this burden with regard to Mrs. Mountain, but successfully provided evidence creating a genuine factual issue regarding Mr. Mountain’s knowledge. Thus, summary judgment in Mrs. Mountain’s favor was appropriate, but the trial court erred in granting Mr. Mountain summary judgment on the Stanfills’ misrepresentation claims. The Stanfills’ claim against Mr. Brooks is based upon another alleged misrepresentation. The only visible evidence of the underground storage tanks on the property was an old vent pipe coming out of a small square concrete pad in the ground. Mr. Stanfill testified that while Mr. Brooks was showing him the property, Mr. Stanfill asked him what the vent pipe was, and Mr. Brooks told him it was part of an old dairy operation that had once been on the property. The Stanfills allege that Mr. Brooks’ statement that the vent pipe was just “part of the dairy operations” was an intentional or negligent misrepresentation. To succeed on a negligent misrepresentation claim, a plaintiff must establish that: (1) the defendant supplied information to the plaintiff; (2) the information was false; (3) the defendant did not exercise reasonable care in obtaining or communicating the information; and (4) the plaintiffs justifiably relied on the information. Walker, 249 S.W.3d at 311 (quoting Williams v. Berube & Assocs., 26 S.W.3d 640, 645 (Tenn. Ct. App. 2000)). Mr. Brooks’ argument attacks element (1) of the claims for both intentional and negligent misrepresentation. In short, Mr. Brooks testified in his deposition that the alleged conversation between him and Mr. Stanfill regarding the vent pipe never occurred. Thus, as regards the intentional misrepresentation claim, Mr. Brooks argues that the Stanfills cannot prove element (1): that he made the allegedly false representation of an existing or past fact. Regarding the negligent 9 misrepresentation claim, Mr. Brooks argues that the Stanfills cannot prove that he supplied Mr. Stanfill the information that forms the basis of the misrepresentation claim. Mr. Brooks’ deposition testimony does not tend to disprove Mr. Stanfill’s factual assertion regarding the conversation about the vent pipe; it merely creates a genuine issue of material fact by casting doubt on Mr. Stanfill’s factual assertion. Mr. Brooks, therefore, did not shift his summary judgment burden, and thus summary judgment was inappropriate on the Stanfills’ intentional and negligent misrepresentation claims against Mr. Brooks. We now turn to the Defendants’ argument that their proffered evidence negated the element of causation. The great majority of the evidence in the record, and the attention of the courts below, focuses on the question of whether the Stanfills have established the existence of a genuine issue of material fact regarding whether the contamination of the well water with elevated levels of lead and other metals was caused by the presence and proximity of the underground storage tanks. We conclude that the expert testimony presented, examined in the light most favorable to the Stanfills, raises a genuine issue of material fact. To support their motions for summary judgment, both the Mountains and Mr. Brooks presented and relied on the deposition testimony of Dr. Roy Dallas Crowder, a chemist and environmental specialist working for the Tennessee Department of Environment and Conservation. Dr. Crowder reviewed and analyzed the test results of the well water on the property. Dr. Crowder testified that the level of extractable petroleum hydrocarbons (EPH) in the water was .286 millimeters per liter, well above the .1 threshold of concern for drinking water, but below the 1.0 threshold of concern for nondrinking water. Dr. Crowder testified that the elevated level of EPH suggested “a possibility of – not an absolute fact of petroleum contamination, but a possibility.” Dr. Crowder explained that there are naturally occurring sources of EPH other than petroleum contamination. Dr. Crowder testified that the absence of other petroleum-related compounds in the sample caused him to rule out petroleum as a contaminant, stating, “[b]ut then you go down there and you look at them, at the compounds that are in the extractable organics, and none of them are petroleum.” Dr. Crowder further testified regarding his analysis as follows: In the case of Gasoline Range Organics, there’s a – of which there was none detected here – you can go to the volatile analysis and you can look for typical volatile compounds that you’ll see in gasoline and you can look for, again: benzene, toluene, ethyl benzene and xylene, which is called a BTEX; that’s actually another analysis that is petroleum oriented. You can perform a BTEX analysis for those four compounds and you will find those present for gasoline. . . . None of those were detected. There are other compounds that are quite typical of gasoline, there’s methyl tertiary butyl ether, if it’s a later, it’s a more recent production. Naphthalene is something that’s common in gasoline. In fact, naphthalene is used as a marker compound for the UST [underground storage tank] contamination. But there was nothing detected. There are a mixture of benzene isomers, 1,2,4 and 1,3,5 10 trimethylbenzene, is very characteristic of gasoline, but none of these were detected at all. And when I reviewed that aspect of it, I said, “Well, there’s no gasoline contamination of this water.” Dr. Crowder concluded with his opinion that he was “100 percent sure there’s no petroleum contamination in that water sample.” Dr. Crowder’s above-cited testimony effectively shifted the burden of production to the nonmoving parties, the Stanfills, by affirmatively negating an essential element of their claim for lead poisoning from the well water – causation. The burden of production then shifted to the Stanfills to show that a genuine issue of material fact exists on the causation issue in order to avoid summary judgment, which the Stanfills did by pointing to the affidavit testimony of geologist Mark Quarles, geologist Christopher Ian Barrett, and other parts of Dr. Crowder’s deposition. Mr. Quarles testified in his affidavit as follows: I am a Registered Professional Geologist . . . with 16 years experience conducting environmental investigations relative to release of contaminants, including petroleum hydrocarbons, to the environment. . . . I have conducted an investigation into the presence of lead and petroleum constituents in a drinking water well6 on the former property owned by Mr. Robin Stanfill[.] ... Dr. Crowder’s interpretation of the September 19, 2002 well water sample and his statement that “there’s no indication here of any petroleum contamination” because volatile organic compounds (VOCs) and semi-volatile organic compounds (SVOCs) were not present in the sample, does not guarantee that the lead in the groundwater was not from a petroleum release. There is more evidence to conclude that the lead originated from a release of leaded gasoline or diesel fuel than from phosphate mining.7 Lead was an added component of gasoline and was also present as a trace metal in diesel fuel. Further, of the six metals that were present in the water sample (barium, chromium, copper, lead, nickel, and zinc), all of the metals have been determined to be present in one or more of the following: crude oil, regular gasoline, diesel fuel, and gasoline/water mixtures obtained from leaking UST [underground storage tank] sites in the United States. 6 W e note that there is no evidence the Stanfills ever used the well for drinking water. The proof is that they used the water to fill their in-ground swimming pool, for irrigation, and other outside farm uses. 7 Dr. Crowder hypothesized that the contamination of the water with lead and other metals was possibly due to the history of phosphate mining in the area. 11 ... Dr. Crowder acknowledged that petroleum hydrocarbons are biodegradable but apparently did not believe that biological processes were the reason that VOCs and SVOCs were not present in the sample collected on September 19, 2002. For a very old release of petroleum hydrocarbons that is in an area of a high groundwater flow rate, it is possible that VOCs and SVOCs would experience biodegradation and dilution because of the potential age of the release and the high flow rates of carbonate (limestone) aquifers. Therefore, biodegradation could in part, explain the absence of VOCs and SVOCs in the sample. . . . Also, lead does not undergo biodegradation. Therefore, it is possible for lead to be present in the soil in the immediate area of an old leaded petroleum release, even though petroleum hydrocarbons are not observed in the same sample. (Emphasis added). Mr. Quarles’ theory, that a very old petroleum release from the underground tanks would continue to yield high lead concentrations but would not yield other chemical signs such as VOCs and SVOCs because of biodegradation over time, is supported by Dr. Crowder’s testimony. Dr. Crowder testified that “Mother Nature will eventually consume hydrocarbons; bacteria will.” Dr. Crowder further testified that [i]f it were gasoline forty years ago, you would probably find some elevated lead because the gasoline would have been leaded. The probabilities of you finding any gasoline components in the soil at forty years is minuscule. At twenty years, very low, but probable. At ten years and less, you’ll see it. (Emphasis added). Christopher Ian Barrett, a geologist also employed by the Tennessee Department of Environment and Conservation, testified in his deposition that “these tanks could have been over fifty years old and the contamination could have gotten down to ground water at ninety feet in depth.” Mr. Barrett testified that he did not know how old the tanks were or the last time they held petroleum, but that the tanks could have been placed in the ground in “possibly the [19]30s,” and that his “best guess” was that the tanks were placed in the ground “somewhere around the World War II time.” Thus, viewing the expert testimony in the light most favorable to the Stanfills, and drawing reasonable inferences therefrom in their favor, we believe a reasonable trier of fact could conclude that the contamination of the well water by elevated lead levels was caused by a very old release of leaded petroleum from the underground fuel storage tanks. Furthermore, even if we did not disagree with the lower courts’ conclusion that the Stanfills’ evidence was insufficient to create a genuine issue of material fact as to whether the contamination of the well water was caused by the underground storage tanks (“USTs”), summary judgment would 12 still have been improper on the Stanfills’ claim for other damages resulting from the concealment or nondisclosure of the existence of the USTs. As already noted, the Stanfills have produced testimony of the Mountains’ neighbors from which a reasonable trier of fact could conclude that Mr. Mountain knew of the existence of the USTs. The presence of the old USTs on the property created a significant financial and environmental liability and reduced the property value, as noted by Mr. Barrett, who testified that “[a]nybody who purchased this property knowing there was an environmental risk, opened themselves up to a lot of money having to be spent to make the State approve the site for any future sale.” The cost estimates given to Mr. Stanfill by an environmental contractor were in the range of $5,000 – $7,000 for UST removal; $8,000 – $14,000 for well abandonment and installation; and $50,000 – $350,000 for groundwater remediation. Mr. Barrett testified that he thought these cost estimates were reasonable. Thus, even if the Stanfills are ultimately unsuccessful on their claim for damages resulting from the well water contamination, a reasonable trier of fact could still conclude that they suffered financial damages that were caused by the nondisclosure of the existence of the USTs. Accordingly, summary judgment was inappropriate on the Stanfills’ claims regarding the USTs. The Stanfills alleged that the lead-based paint in the house and/or the dangerously elevated lead levels in their well water caused their daughters’ lead poisoning. The trial court found that “[t]here is no proof as to damages caused by lead-based paint. Therefore, claims of misrepresentations regarding the Lead-Based Paint Disclosure form are immaterial.” We do not agree. Although the Defendants vehemently disputed causation regarding the elevated lead levels in the well water, they did not present any evidence negating causation regarding the lead paint found in the house, nor did they present a lack of causation argument regarding the lead-based paint in the house. The Defendants presented neither argument nor evidence tending to negate the element of damages as regards the lead paint in the house. Thus, the trial court had no basis to grant summary judgment on either causation or damages as regards the Stanfills’ lead paint claims. Regarding the elevated levels of lead in the well water, Dr. Crowder testified that “[i]f someone were continuously exposed to it [the well water], if they swam in it, swallowed it occasionally or something of that nature, I wouldn’t doubt that it could contribute” to elevated blood-lead levels. (Emphasis added). Furthermore, the Stanfills presented evidence of significant damages resulting from the elevated blood-lead levels and lead poisoning of their children. The Stanfills alleged, among other things, that their younger daughter, who was approximately 18 months old in the summer of 2000, required hospitalization and treatment for anemia caused by the lead poisoning. The potential for serious injury to young children from lead poisoning is indicated by the Lead Warning Statement required by 42 U.S.C. § 4852d(a)(3), which provides, among other things, that “[l]ead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory.” In addition to the alleged damages to the Stanfills’ health, the cost estimate range for lead paint removal and renovation was $7,000 to $20,000. The environmental testing of the house revealed the presence of lead-based paint. At the 13 summary judgment stage, the Stanfills, as nonmovants, are entitled to all reasonable inferences from the evidence in their favor. Accordingly, the Stanfills are entitled to the entirely reasonable inference that the presence of lead-based paint in the house caused or significantly contributed to the lead poisoning of their children. Summary judgment was therefore inappropriate on the Stanfills’ claim related to the hazardous defect of lead-based paint in the house. D. Residential Lead-Based Paint Hazard Reduction Act Claims The Stanfills alleged that at closing, the Mountains and Mr. Brooks failed to provide the Stanfills with a lead hazard information pamphlet and a lead warning statement pursuant to 42 U.S.C. § 4852d, the Residential Lead-Based Paint Hazard Reduction Act (“RLPHRA”). This federal statute requires that the seller of a house built before 19788 must provide the buyer a lead hazard information pamphlet, disclose the presence of any known lead-based paint hazard in the house, permit the buyer to conduct a risk assessment or inspection for lead-based paint hazards, and provide the buyer a Lead Warning statement. 42 U.S.C. § 4852d(a)(1) & (2). The RLPHRA further requires a real estate agent who has contracted with a seller to “ensure compliance with the requirements of this section,” 42 U.S.C. § 4852d(a)(4), and creates a private civil cause of action for violation of the Act. 42 U.S.C. § 4852d(b). The Mountains moved for summary judgment and in support thereof testified by affidavit that they “executed a Tennessee Residual [sic: Residential] Property Disclosure and a Lead-Based Paint Disclosure, for delivery to the Plaintiffs.” They also filed a Tennessee Residential Property Disclosure and a Lead Paint Disclosure form. The Lead Paint Disclosure form contains the warning statement required by 42 U.S.C. § 4852d and a “seller’s disclosure” section indicating that the “[s]eller has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.” Below the seller’s disclosure section is a “purchaser’s acknowledgment” section with three statements, each beside a blank for the purchaser to initial. The blanks beside the statements “Purchaser has received copies of all information listed above” and “Purchaser has received the pamphlet Protect Your Family from Lead in Your Home” are empty. Beside the statement “Purchaser has (check one below): . . .Waived the opportunity to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards” are the initials “RAS.” Mr. Brooks, in support of his motion for summary judgment on the Stanfills’ RLPHRA claim, similarly relied on the Tennessee Residential Property Disclosure and Lead Paint Disclosure forms. A close inspection of the evidence presented and relied upon by the Defendants reveals that 8 The house at issue here was constructed before 1978. 14 they did not successfully negate an element of the Stanfills’ lead paint disclosure RLPHRA claim. The Stanfills alleged and testified that they were not provided the required lead paint disclosure information at closing. Although the Defendants’ presentation of the proof and arguments are carefully crafted to create the inference that they provided the lead hazard information pamphlet and Lead Warning statement, none of the Defendants testified that they actually did provide the documents at or prior to closing. The Mountains testified only that they “executed a . . . Lead-Based Paint Disclosure, for delivery to the Plaintiffs,” not that there was an actual delivery. The record contains no testimony of Mr. Brooks, either by affidavit or deposition, pertaining to the required lead disclosure forms. The evidence presented in the record is insufficient to negate an element of the Stanfills’ RLPHRA claim, and therefore the trial court erred in granting the Defendants summary judgment on this claim. Moreover, had we found that the Defendants shifted their burden, summary judgment would still be inappropriate because the Stanfills identified in the record genuine issues of material fact on this claim. Specifically, both Mr. and Mrs. Stanfill testified that the Defendants did not provide them with the lead-based paint hazard documents required by the RLPHRA, and Mrs. Stanfill testified that the initials on the Lead Paint Disclosure form waiving the right to have the property inspected were not hers. Additionally, the real estate sale contract executed by the parties contains a provision that states “ATTACHMENTS: The following forms have been executed and are attached to this Contract.” The box beside “Lead Base Paint Disclosure - Homes built prior to 1978” is unchecked. This conflicting evidence creates a genuine issue of material fact as to whether the Defendants provided the Stanfills with the required lead disclosure and warning statements. Accordingly, summary judgment was not appropriate on this issue. E. Tennessee Consumer Protection Act Claims The Stanfills alleged that the Mountains and Mr. Brooks violated the Tennessee Consumer Protection Act of 1977 (“TCPA”), Tenn. Code Ann. § 47-18-101-125 (2001), for unfair or deceptive acts or practices in concealing the defects in the property, including the underground fuel storage tanks. The TCPA is inapplicable to sellers who are “not in the business of selling property as owners or brokers.” Ganzevoort v. Russell, 949 S.W.2d 293, 298 (Tenn. 1997). Although the Mountains argued in their memorandum supporting their motion for summary judgment and their appellate brief that the TCPA does not apply to them because they were not generally engaged in the business of selling real property, they did not support this assertion by affidavit or in their deposition testimony. As we have stated, a summary judgment movant bears the initial burden of presenting evidence that either affirmatively negates an essential element of the nonmoving party’s claim, or shows that the nonmoving party cannot prove an essential element of the claim at trial. Hannan, 270 S.W.3d at 5, 7. “If the moving party fails to make this showing, then ‘the non-movant’s burden to produce either supporting affidavits or discovery materials is not triggered and the motion for 15 summary judgment fails.’” Martin, 271 S.W.3d at 83 (quoting McCarley v. W. Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998)). The Mountains did not affirmatively negate an essential element of the Stanfills’ TCPA claim or show that the Stanfills cannot prove an essential element of their TCPA claim at trial, and thus summary judgment was inappropriate. The TCPA is applicable to professional sellers of real estate such as Mr. Brooks. See Ganzevoort, 949 S.W.2d at 299. As previously noted, the Stanfills testified that as Mr. Brooks was showing him the property, Mr. Stanfill asked Mr. Brooks what the vent pipe was, and Mr. Brooks told him it was part of an old dairy operation that had once been on the property. In Ganzevoort, we observed that professional sellers of real property are obligated by the TCPA “to exercise good faith in disclosing to prospective purchasers material facts affecting the value of the property known to them and not known to or reasonably ascertainable by a prospective purchaser.” Id.; see also Staggs v. Sells, 86 S.W.3d 219, 223 (Tenn. Ct. App. 2001) (noting that “‘[b]efore a seller makes a representation, he is required to exercise reasonable care to make sure it is correct’”) (quoting Akbari v. Horn, 641 S.W.2d 506, 508 (Tenn. Ct. App. 1982)). As we have observed, the presence of the old underground fuel storage tanks – potentially a significant environmental and financial liability – was definitely a material fact affecting the value of the property, and the tanks’ presence was not readily ascertainable to a prospective purchaser. When Mr. Stanfill asked Mr. Brooks what the vent pipe was, Mr. Brooks gave an answer that was at best incomplete and misleading, and possibly completely false.9 The deposition testimony of Mr. Stanfill created a genuine issue of material fact as to whether Mr. Brooks violated a duty as a realtor representing the sellers10 to ensure that his representations regarding the property were correct or to make a good-faith inquiry as to what the vent pipe actually was in order to fully and accurately answer Mr. Stanfill’s question about it. A reasonable jury could reach the conclusion that Mr. Brooks violated his duty as a realtor, and is liable under the TCPA for “unfair or deceptive acts or practices” proscribed by the Act. Tenn. Code Ann. § 47-18-104(a). Accordingly, summary judgment in favor of Mr. Brooks on the Stanfills’ TCPA claim was not appropriate. F. Discretionary Costs The trial court awarded discretionary costs in the amount of $8,780.54 to Mr. Brooks and $8,676.75 to the Mountains. In light of our holding vacating summary judgment in part, the award 9 There is no indication in the record as to whether the underground storage tanks actually were a part of the old dairy operation, or unrelated to the dairy operation. 10 Although Mr. Brooks described his role as a facilitator, he also testified in his deposition that “Mr. and Mrs. Mountain hired my firm to sell their property,” that he showed the property for the Mountains to prospective buyers, and that he had a contract with the Mountains to receive a five percent commission on the sale price of the property. 16 of discretionary costs is also vacated.11