Opinion ID: 1057648
Heading Depth: 3
Heading Rank: 2

Heading: Fraudulent Concealment Claims

Text: The Stanfills’ claims regarding the mold infestation and underground fuel storage tanks4 are grounded in the theory of fraudulent concealment. This Court has observed that “[t]he tort of fraudulent concealment is committed when a party who has a duty to disclose a known fact or condition fails to do so, and another party reasonably relies upon the resulting misrepresentation, thereby suffering injury.” Chrisman v. Hill Home Dev., Inc., 978 S.W.2d 535, 538-39 (Tenn. 1998) (emphasis added); accord Simmons v. Evans, 206 S.W.2d 295, 296 (Tenn. 1947). The Chrisman Court recognized that “an essential element of the tort” is knowledge – in the case of a house sale, the buyer must show, among other things, that the seller had knowledge of the defective condition. Chrisman, 978 S.W.2d at 539. Both Mr. Brooks and the Mountains presented evidence that negated the element of knowledge regarding the mold infestation of the house, thus shifting the burden to the Stanfills to respond with evidence creating a genuine issue of material fact on the mold claims, which the Stanfills failed to do in this case. Regarding the claim that the Defendants fraudulently concealed the existence of the old underground storage tanks, both Mr. Brooks and the Mountains again presented evidence that negated the element of knowledge, thus shifting the burden to the Stanfills to respond with evidence creating a genuine issue of material fact. The Stanfills presented evidence that successfully creates a genuine issue of material fact as to whether Mr. Mountain had knowledge of the tanks, but the evidence was insufficient to create a genuine issue of material fact regarding whether Mrs. Mountain and Mr. Brooks knew of the tanks.
To support his motion for summary judgment, Mr. Brooks filed a sworn affidavit stating as follows: “[a]t the time of sale, I had no actual knowledge of the presence of any type of mold in the residence or any of the other buildings located on the property.” In response, the Stanfills admitted that it was undisputed that Mr. Brooks had no actual knowledge of the presence of mold in the residence at the time of sale. Therefore, the trial court was correct in granting summary judgment to Mr. Brooks on this issue. See Robinson v. Currey, 153 S.W.3d 32, 38 (Tenn. Ct. App. 2004) (affirming summary judgment where the “Defendants affirmatively negated an essential element of Plaintiffs’ claim, that the alleged ‘material defects [mold and water damage] [were] known to the 4 As further discussed below, the Stanfills’ claims regarding the underground fuel storage tanks also sound in misrepresentation, as they alleged that the Defendants intentionally or negligently misrepresented that they did not know of the existence of the underground tanks on their Tennessee Residential Property Condition Disclosure form provided to the Stanfills. 5 owner’”) (second set of brackets in original) (quoting Tenn. Code Ann. § 66-5-202 (2003). To support their motion for summary judgment, Mr. and Mrs. Mountain each filed a sworn affidavit stating the following: “[a]t the time of sale, I had no actual knowledge of the presence of any type of mold in the residence or any of the other buildings located on the property.” The Mountains’ testimony effectively negated the element of knowledge, shifting the burden to the Stanfills to provide evidence creating a genuine issue of material fact on their fraudulent concealment of the mold claim. The Stanfills relied on the deposition testimony of Mrs. Stanfill and the environmental test results report indicating a toxic mold infestation in the house. Mrs. Stanfill testified in her deposition that after they moved into the house, “we started noticing black spots coming up out of the ceiling, and it was in the ceiling in the bathrooms and in the laundry room.” Mrs. Stanfill testified that it was “a few months” after they had been in the house that they started noticing the black spots, and that “I had never noticed them before, not before we bought the home. They had just started coming up out of the ceiling, coming through the paint.” The Stanfills did not provide sufficient evidence to contradict the Mountains’ assertion that they were unaware of mold in the house or to create a genuine issue of material fact as to whether the Mountains knew of the existence of mold in the residence. As noted, Mrs. Stanfill testified that they did not observe the black spots of mold on the ceiling until several months after they moved in. There is no evidence that the black mold spots were present or visible at or before the time of sale of the residence. Mrs. Stanfill stated in her deposition that she didn’t know whether the Mountains knew there was a mold problem in the house, and that when the Stanfills “were talking with the neighbors about the issues with the house,” none of the neighbors mentioned that there had been a mold problem in the house. When asked whether there was “any evidence that [the Mountains] were trying to conceal the presence of mold,” Mrs. Stanfill replied, “not that I know of.” Finally, Mrs. Stanfill testified further as follows: Q: I think you also said that the actual presence of mold in the house was not something you felt like Mr. and Mrs. Mountain knew about at the time y’all contracted for the sale? A: The mold being visible? Q: Right. A: No. As is evident from the above, the Stanfills offered no facts, merely allegations, supporting their contention that the Mountains fraudulently concealed the mold. The evidence in the record is insufficient to create a genuine issue of material fact regarding whether the Mountains knew of the presence of mold in the house. Therefore, the trial court was correct in granting the Mountains summary judgment on the claim of fraudulent concealment of the toxic mold infestation, because the Mountains, by their affidavit testimony, successfully negated the essential element of knowledge 6 of the alleged defect at the time of sale.
The Stanfills alleged that the Mountains knew of and failed to disclose the existence of the underground fuel storage tanks in close proximity to their well. In support of their motion for summary judgment, the Mountains again attacked the element of knowledge, relying upon their identical affidavits, in which they each stated that “[a]t the time of sale, I had no actual knowledge of the presence of underground storage tanks on the property.” In 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,” the Mountains checked the box “UNKNOWN .” To meet their burden of establishing a genuine issue of material fact, the Stanfills produced the deposition testimony of two of the Mountains’ neighbors, who stated that Mr. Mountain knew and told them of the underground storage tanks. John McGlasson, the Mountains’ next-door neighbor, testified as follows: John [Mountain] and I were standing out talking in his driveway one day and he asked me if I had seen his well house, and I said, “No, I didn’t know you had one.” So we started walking over there, and as we were walking in that direction, there was a concrete block, I don’t know, maybe a foot square, maybe bigger, with a pipe sticking up out of it. And I kind of tapped it with my foot, and I said, “Is this part of it?” And John replied, “No, that’s some old tanks.” Similarly, Perry Sanford Bodine, another neighbor, testified that Mr. Mountain told him on two occasions that there was an old tank in the ground. Mr. Bodine stated colorfully that he “would swear it on ten Bibles” that John Mountain knew there were tanks in the ground. Thus, in this case there is a genuine issue of material fact as to whether Mr. Mountain knew the underground storage tanks were on his property at the time of sale, and whether the statement on the Tennessee Residential Property Condition Disclosure form that it was “unknown” whether he was aware of “fuel or chemical storage tanks” was falsely made. Accordingly, summary judgment in Mr. Mountain’s favor was inappropriate. 7 However, the Stanfills did not produce sufficient evidence5 suggesting that Mrs. Mountain knew of the existence of the underground tanks. Mr. Bodine stated, “I don’t have knowledge of Melony [Mountain] knowing about the tank, I’ve never discussed that with her.” Thus, the trial court correctly granted summary judgment in Mrs. Mountain’s favor on this issue. To support his motion for summary judgment on the claims of fraudulent concealment of the underground storage tanks, Mr. Brooks testified in his affidavit that he had no knowledge of the underground storage tanks at the time of sale, thus effectively negating the knowledge element of the claim and shifting the burden to the Stanfills to provide or identify evidence creating a genuine issue of material fact. The Stanfills produced no evidence, circumstantial or otherwise, demonstrating or raising a reasonable inference that Mr. Brooks actually knew of the underground tanks prior to closing. Thus, the trial court correctly granted summary judgment in favor of Mr. Brooks on the Plaintiffs’ claim of fraudulent concealment of the underground fuel storage tanks.