Court Opinion

ID: 1076189
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:17:59.042987+00
Date Added: 2024-06-11T12:41:22.873388
License: Public Domain

WILLIAM H. BUFORD and wife, )
ROSALYN BUFORD,             )
                            )
    Plaintiffs/Appellants,  )
                            )
                                  Appeal No.    FILED
                                  01-A-01-9806-CH-00325
v.                          )                      May 28, 1999
                            )     Davidson Chancery
MARGIE M. CUNNINGHAM,       )     No. 96-2887-I Cecil Crowson, Jr.
                            )                  Appellate Court Clerk
    Defendant/Appellee.     )
                            )

              COURT OF APPEALS OF TENNESSEE

          APPEAL FROM THE CHANCERY COURT FOR
                   DAVIDSON COUNTY
                AT NASHVILLE, TENNESSEE

    THE HONORABLE IRVIN H. KILCREASE, JR., CHANCELLOR

KIRK C. WAITE
Mooreland Mansion
7100 Executive Center Drive
P. O. Box 1966
Brentwood, Tennessee 37024-1966
      ATTORNEY FOR PLAINTIFFS/APPELLANTS

DANIEL L. WISCHHOF
Wischhof & Allen
Glancy Square, Suite 207
110 Glancy Street
Goodlettsville, Tennessee 37072
     ATTORNEY FOR DEFENDANT/APPELLEE

                 REVERSED AND REMANDED

                                   WILLIAM B. CAIN, JUDGE
                               OPINION
         This appeal concerns a suit by appellants against appellee asserting
fraud and misrepresentation in the sale of a house.

         Margie M. Cunningham, a 72 year old widow, owned a house and lot
located at 6036 Cane Ridge Road, Antioch, Davidson County, Tennessee. On
September 18, 1995, she listed her property for sale with Barnes Real Estate
Services through its affiliate broker, Rick Messick. At the time she listed her
property for sale she caused to be completed and signed a Tennessee Residential
Property Condition Disclosure Form as required by Tennessee Code Annotated
section 66-5-201, et seq. Among the questions in this disclosure form was ". .
. are you (seller) aware of any of the following? . . . 10. Flooding, drainage or
grading problems" to which question Mrs. Cunningham responded "no".

         On September 28, 1995, William H. Buford and wife Rosalyn Buford
executed an offer to purchase the property and acknowledged receipt of the
disclosure form.

         In May of 1995, Mrs. Cunningham had been informed by Cook's Pest
Control that there was water under the house. In order to correct the water
problem she had Cook's Pest Control install a vapor barrier under the house.
During the September 1995 negotiations for the purchase of the house, Mr.
Buford noticed water standing on the plastic vapor barrier under the house near
the entrance to the crawl space.

         At this point in their relationship, the terms of the contract between the
parties and the sequence of events leading up to the October 31, 1995 closing
become vital. The offer of Mr. and Mrs. Buford, dated September 28, 1995, was
made on a copy of the "Contract for Sale of Real Estate" which was a printed
form supplemented by handwritten additions thereto as indicated infra. The
pertinent provisions of the offer by the Bufords are as follows:

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      12. CONDITION OF PREMISES: The Seller warrants
      that the * * * improvements, including * * * plumbing
      (including water heater, wells and septic system) * * * shall
      be in good repair and working order when Buyer closes this
      sale. Buyer has the privilege and RESPONSIBILITY to
      inspect these items prior to closing, at Buyer's expense, and
      any repairs required to be made prior to closing shall be
      made by Seller at Seller's expense. CLOSING OF SALE
      CONSTITUTES ACCEPTANCE OF THESE ITEMS BY
      BUYER, AND SELLERS, AGENTS OR BROKERS
      SHALL HAVE NO LIABILITY THEREAFTER.

      13. REPAIRS/HOME INSPECTION. * * * Purchaser
      does (X) desire to have a Professional Inspection of house.
      * * * Sale conditioned upon Purchaser receiving an
      acceptable report from inspector and if purchaser finds the
      report unacceptable then purchaser shall give Seller notice of
      unacceptable conditions and shall give seller opportunity to
      make the necessary repairs or contract becomes null and
      void. 1 * * * SELLERS REPAIRS ON ITEM 12, 13, 22 NOT
      TO EXCEED 1,000.00.
                                  ***

      15. SELLER REPRESENTATIONS. Seller represents, to
      the best of their knowledge, that: * * * (b) The property has
      not been damaged or affected by flood, storm, or run-off. *
      * * The determination by Buyer that any of these matters is
      in fact materially untrue shall entitle Buyer to rescind this
      contract and receive refund of the Earnest Money or to keep
      the contract in force and accept the Property with such
      exceptions. Seller shall have no responsibility for these
      matters after closing.
                                   ***
      21. ENTIRE AGREEMENT. This instrument contains the
      entire agreement between the parties and no addition deletion
      or modification hereto shall be effective unless reduced to
      writing and signed by both parties. There are no oral or other
      collateral conditions, agreements, or representations, all such
      having been incorporated and resolved into this agreement.
      Buyer has not relied on any other oral or written
      representations, and except as otherwise specified herein, this
      property is purchased "AS IS" and neither Seller nor Agent
      makes or implies any warranties as to the condition of the
      premises, except as provided herein.

       Items 22 and 23 are entitled "Miscellaneous" and "Addendum(s)"

1
    This last sentence is handwritten and initialed by "M.C." (Margie Cunningham).

                                       -3-
respectively. Under item 22 "Miscellaneous" appears the following handwritten
provision initialed by Mrs. Cunningham: "Water and moisture problem in crawl
space and under to be corrected."

         Item 23 "ADDENDUM(S)" contains the following handwritten
provision with an arrow reference back to item 22 to wit: "Sellers to correct
water/moisture in crawl space and Buyer to sign at closing acceptance of this
item."   This provision in paragraph 23 is likewise initialed by Margie
Cunningham.

         Mrs. Cunningham signed her acceptance of the Buford offer on
September 29, 1995 with the purchase price being $226,000.

         The record is not completely clear as to exactly when these handwritten
provisions of the contract initialed by Margie Cunningham were put on the
contract, though one would assume the date to have been September 29, 1995.
At any rate, the provisions were clearly in the contract at the time the parties
closed the transaction on October 31, 1995.

         The Bufords engaged The Home Team Inspection Services to inspect
the house pursuant to their contractual right. This inspection was conducted
October 5, 1995, and a written report to the plaintiffs was issued the following
day. This report provided in part:
         GENERAL DESCRIPTION: * * * The home was situated
         on a lightly sloped lot. The general grade around the home
         appeared to be adequate to direct rain water away from the
         foundation. * * *

         FLOOR STRUCTURE: * * * Note: Water was entering the
         front foundation wall where the plumbing and wiring to the
         well penetrate the foundation. This area should be
         seal/pointed and the foundation vents left open so as to allow
         the crawl space to air out. Moisture was also present on the
         concrete blocks under the front porch. This may have been
         the result of the earlier heavy rains from the tropical storm
         Opal.

         CRAWL SPACE: The crawl space was accessible at the
         time of the inspection. The crawl space was not dry at the

                                      -4-
          time of the inspection. The moisture appeared to be the
          result of water entering through the electrical conduit going
          to the well in the front yard. There were no other defects
          observed at the time of the inspection.              * * *
          Recommendation: The electrical conduit should be properly
          sealed and the hole in the foundation wall (for the conduit
          and water supply lines), should be sealed.

          After receiving the report from The Home Team Inspection Service,
Mrs. Cunningham employed a Mr. Nash to do the repairs recommended by the
appellants' inspector. Prior to closing, Mr. Denny, a realtor representing the
Bufords, informed them that the recommended repairs had been accomplished.
Mr. Nash delivered confirming documentation directly to the Bufords. Without
further inquiry or further inspection, the Bufords chose to close the purchase as
scheduled and signed a written form accepting the property in its state at that
time.

          Mr. Buford testified that after the closing on October 31, 1995, prior
to the transfer of possession, he attempted to enter the crawl space under the
house for further inspection. The crawl space door was locked and Mrs.
Cunningham did not have a key. It is admitted by all parties and clearly
established by the undisputed record that finding of fact number 12 by the trial
court is in error. This finding states: "The defendant prevented plaintiffs from
inspecting the crawl space under the house prior to the closing of the
transaction."

          The evidence not only preponderates against this finding of the trial
court but indeed, the evidence is conclusive that the effort by Mr. Buford to enter
the crawl space actually occurred after the closing and within the 19 day period
between the closing of the transaction and the time the Bufords actually took
possession of the property.

          After the plaintiffs took possession of the property in November 1995
they discovered water standing on the vapor barrier and under the vapor barrier
in the crawl space.

                                        -5-
           Plaintiffs then employed various contractors to inspect the property,
make estimates and present plans for alleviating the water problem.

           Plaintiffs claim damages in diminution of value of the property of
$15,000.

           The above recitation of fact essentially parallels the finding of the
chancellor except as to the erroneous finding relative to number 12 discussed
above.

           The chancellor made the following conclusions of law:
                  1. The agreement of the parties, in the contract for
           the sale of the property, relating to the correction of the water
           problem under the house is a valid and binding agreement
           among the parties.
                  2. The defendant paid Nash Home Maintenance
           $265.00 to repair the water problem. However, the water
           problem was not corrected.
                  3. The defendant's liability for the correction of the
           water problem, as provided in the contract for the sale of the
           property is not to exceed $1,000.00.
                  4. The incorrect statements made by the defendant
           on the Tennessee Residential Property Condition Disclosure
           form, with respect to the condition of the property as to
           flooding, drainage, or grading problems were effectively
           deleted by the parties agreement in the contract for the
           correction of the water problems.

           Judgment was rendered in favor of the plaintiff in the amount of $1,000
and costs.

           Plaintiffs appealed this limited judgment. The defendants sought
complete reversal of the award, or, in the alternative, credit for the $265 paid to
Nash Home Maintenance in seeking to correct the water problem.

           We respectfully disagree with the chancellor's finding that the
defendant is liable to the plaintiffs in the amount of $1,000 because of the
contract provisions. The suit is for fraud and misrepresentation. The chancellor

                                          -6-
made no findings as to either fraud or misrepresentation, and no finding as to
reasonable reliance.

         An action for fraud requires an intentional misrepresentation of a
material fact, knowledge of the representation's falsity and an injury caused by
reasonable reliance upon the representation. Dobbs v. Guenther, 846 S.W.2d
270, 274 (Tenn. App. 1992).

         In order to prevail in a suit for negligent misrepresentation the plaintiffs
must establish by a preponderance of the evidence that the defendant supplied
information to the plaintiff; the information was false; the defendant did not
exercise reasonable care in obtaining or communicating the information and the
plaintiffs justifiably relied on the information. Merriman v. Smith, 599 S.W.2d
548, 556-57 (Tenn. App. 1979).

         This court has held:
                In order to succeed in any action based upon
         fraudulent or negligent misrepresentation, the plaintiff must
         prove that it relied justifiably on the defendant's statements.
         Graham v. First American National Bank, 594 S.W.2d 723,
         725 (Tenn.Ct.App.1979); Southern States Development Co.
         v. Robinson, 494 S.W.2d 777, 782 (Tenn.Ct.App.1972); and
         Dozier v. Hawthorne Development Co., 262 S.W.2d 705, 709
         (1953).

Lambdin v. Garland, 723 S.W.2d 953, 956 (Tenn. App. 1986).

         Given the true sequence of events and the plain provisions of the
contract between the parties, as a matter of law, plaintiffs cannot now establish
reliance on the assertion by Mrs. Cunningham in the Tennessee Residential
Property Condition Disclosure document that she was not aware of any ". . .
flooding, drainage, or grading problems". The record before this court clearly
shows that plaintiff's were aware of the problems and attempted to provide for
their remedy.

         Plaintiffs then, with full knowledge of the crawl space water problems,

                                        -7-
thus disclosed, and without assurance of complete repair, chose to go ahead with
the closing of their purchase of this house.

          Their voluntary election to close the contract, armed as they were with
knowledge of the crawl space water problem, was an election that is binding
upon them. The record in this case supports neither fraud nor negligent
misrepre-sentation and further shows no reasonable reliance by plaintiffs on any
statements made by the defendant.

          The judgment of the trial court is reversed and the case is dismissed at
the costs of appellants.

                                _______________________________________
                                WILLIAM B. CAIN, JUDGE

CONCUR:

_____________________________________
BEN H. CANTRELL, P.J., M.S.

_____________________________________
WILLIAM C. KOCH, JR., JUDGE

                                       -8-