Court Opinion

ID: 1073449
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:58:44.476645+00
Date Added: 2024-06-11T11:52:15.539779
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                  FEBRUARY 2000 Session

 J. C. BRADFORD & COMPANY v. SOUTHERN REALTY PARTNERS, a
Tennessee general partnership, and WESTON MANAGEMENT COMPANY

                 Direct Appeal from the Chancery Court for Shelby County
               No. 107359-3;   The Honorable D. J. Alissandratos, Chancellor

                    No. W1999-01617-COA-R3-CV - Filed August 14, 2000

This cause came to be considered by the Court upon a claim for misrepresentation arising from a real
estate transaction. This is the second occasion that the Court has had to address this case. Initially,
this cause was set for trial, and following opening statements, the Chancellor ruled from the bench
in the defendants’ favor. On appeal, this Court remanded the cause to the trial court for further
proceedings consistent with the opinion. On remand, the defendants filed a motion for summary
judgment, renewed a previously filed motion to dismiss and filed a counterclaim for attorneys fees.
The trial court granted the defendants the requested relief. This appeal followed. Upon
consideration of the record, the Court finds that the trial court’s orders granting summary judgment,
dismissing the complaint and awarding attorneys’ fees should be vacated and that the cause should
be remanded to the trial court for further proceedings consistent with this opinion.

   Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Vacated and
                                        Remanded

ALAN E. HIGHERS , J., delivered the opinion of the court, in which CRAWFORD , P.J., and LILLARD ,
J., joined.

Carl H. Langschmidt, Jr., Bobby Leatherman, Memphis, for Appellant

J. Alan Hanover, James R. Newsom, III, Memphis, for Appellee, Southern Realty Partners; Martin
W. Brown, Memphis, for Appellee, Weston Management Company

                                             OPINION

        This is the second occasion that this Court has had to address this case involving allegations
of fraudulent and negligent misrepresentation and violation of the Tennessee Consumer Protection
Act. The Court originally addressed this case in J.C. Bradford & Co. v. Southern Realty Partners,
et al., No. 02A01-9801-CH-00006 (Tenn. Ct. App. Dec. 10, 1998). The plaintiff, J.C. Bradford &
Company (hereinafter, “Bradford”) had appealed to this Court from the trial court’s decree
dismissing its complaint and awarding a judgment on the counterclaims of the defendants, Southern
Realty Partners (hereinafter, “Southern”) and Weston Management Company (hereinafter,
“Weston”). In the interest of judicial economy, the Court will incorporate relevant portions of our
previous opinion in this opinion.

       In late 1993, Bradford began negotiations with Weston, who was acting as agent for
       Southern, to lease a building in Memphis. The agreement in final form required
       Southern to build an office building to fit Bradford's needs in exchange for a ten (10)
       year lease. During the lease negotiations, Bradford agreed to an "expense stop" of
       $4.35 per square foot, and this is the subject of the dispute between the parties.

       An "expense stop" is the maximum amount of the operating expenses that the
       landlord agrees to pay. (Footnote omitted). In this case, the initial proposal required
       Southern to pay all operating expenses up to $4.50 per square foot. Bradford also
       wanted to cap the "expense stop" at a five (5%) percent increase after the first year.
       After lengthy negotiations, Weston would not agree to the cap on taxes, insurance,
       and utilities because it had no control over an increase in these costs. However,
       Weston did agree to a reduction in their management fee and base rent in exchange
       for reducing the "expense stop" to $4.35. This final proposal was accepted by
       Bradford, and according to the lease, if the operating expenses exceeded the "expense
       stop" Bradford would be required to pay the excess.

       This dispute arises out of the negotiations concerning the "expense stop." Southern
       purchased the land upon which the office building in question is located to use as a
       speculative investment. It hired Weston as its agent to find a business to lease the
       land. In late 1993, David Peck (Peck), Weston President and CEO, contacted
       Bradford's Memphis area manager for the purpose of negotiating a build-to-suit
       office building on the land owned by Southern. After Bradford explained to Peck
       that it was interested in a one-story, residential style office building, Peck attempted
       to determine an estimate of the operating expenses for the completed project. He
       obtained information on the operating expenses of twelve other East Memphis office
       complexes, and attempted to adapt those numbers to the type of building that
       Bradford had requested. At that time, neither Bradford nor Weston knew the size nor
       specifications of the yet unplanned building.

       Based upon his examination of operating expenses of the twelve buildings, Peck sent
       a written proposal to Bradford's Memphis area manager on January 6, 1994. The
       proposal stated, "[m]y best estimate for the operating expenses for the first twelve
       (12) months of occupancy will be $4.50 per square foot." (Footnote omitted). Both
       parties negotiated the terms of the lease, culminating in a final lease signed on March
       28, 1994 that had both a lower base rent and an "expense stop" of $4.35. (Footnote
       omitted). Construction of the office building began on May 16, 1994, and the project
       was completed and Bradford moved in by December 1, 1994.

                                                 -2-
       The first year operating expenses turned out to be $7.05 per square foot. (Footnote
       omitted). Because the operating expenses exceeded the "expense stop" by $2.70,
       Bradford owed Southern an extra $45,900 on the first year lease, and an estimated
       $500,000 over the entire term of the lease. (Footnote omitted).

       After Weston sent it an invoice for the operating expenses exceeding the "expense
       stop," Bradford refused to pay and filed suit against Southern alleging fraud and
       negligent misrepresentation on the part of Peck, as an agent of Southern. Bradford
       claimed that Peck knew or should have known that operating expenses would be
       much higher than his estimation of the "expense stop." Initially, Bradford sought
       reformation of the lease by modifying the "expense stop" to a number much closer
       to actual expenses, and sought damages, and injunctive relief. The complaint also
       requested that Bradford be allowed to deposit the additional rent that was allegedly
       due under the lease into the court until the resolution of all disputes. The Chancellor
       granted Bradford's request that it be allowed to continue to occupy the building and
       permitted it to pay the additional rent into the court clerk's office. However, the trial
       court granted summary judgment on Bradford's prayer for reformation. (Footnote
       omitted). Bradford was allowed to amend the complaint to add a claim under the
       Tennessee Consumer Protection Act (TCPA). Bradford continued, and is presently,
       occupying the office building and paying the base rent to Southern.

       Southern answered Bradford's amended complaint and specifically denied that its
       agent, Weston, made any misrepresentations concerning the "expense stop" and
       further claimed that Bradford did not justifiably rely on Peck's statements concerning
       the estimate of operating expenses. Southern also filed a counterclaim against
       Bradford alleging that it had defaulted by refusing and/or failing to pay the additional
       rent due under the lease. The counterclaim requested the court to award it the
       additional rent, interest, late fees, and attorneys' fees. Following Southern's
       counterclaim, Bradford joined Weston as a party to this lawsuit on November 15,
       1996.

       The parties appeared for trial without a jury on September 22, 1997. At the
       conclusion of rather extensive and somewhat convoluted opening statements, the
       Chancellor ruled from the bench that Bradford's complaint be dismissed, that
       Weston's counter-complaint for attorney fees in its own right be dismissed, and that
       judgment be awarded to Southern on its counter-complaint. Subsequently, after a
       hearing to determine the amount of Southern's attorney fees, the Chancellor entered
       a final decree in accordance with his prior ruling.

J.C. Bradford & Co. v. Southern Realty Partners, et al., No. 02A01-9801-CH-00006 (Tenn. Ct.
App. Dec. 10, 1998).

       Upon consideration of Bradford’s appeal, the Court concluded that a trial court cannot order
the involuntary dismissal of an action at trial upon the sole basis of the opening statements of

                                                 -3-
counsel. Accordingly, the Court vacated the trial court’s judgment and remanded the case for further
proceedings as necessary.

        On remand, both Southern and Weston filed motions on January 25, 1999, seeking summary
judgment as to all of Bradford’s claims and seeking judgment against Bradford as to Southern’s
counterclaim. Southern also renewed its previously-filed motion to dismiss the same date, and
Weston later joined in the motion. Bradford subsequently filed a motion to recuse or, in the
alternative, for a jury trial, which the trial court denied on February 23, 1999. Ultimately by order
entered March 18, 1999, the trial court granted the defendants’ renewed motion to dismiss and the
defendants’ motion for summary judgment. In addition to dismissing Bradford’s claims, the order
also adjudged Southern’s attorneys’ fees and costs against Bradford as provided for in the lease. The
order reserved the amount of the award for later determination. In addition, the order reserved for
later adjudication the defendants’ entitlement to an award of attorneys’ fees pursuant to the
Tennessee Consumer Protection Act, T.C.A. § 47-18-101 et seq.

        On March 31, 1999, Southern filed a motion for attorneys’ fees and costs pursuant to the
lease and the Tennessee Consumer Protection Act, and Bradford filed a response on April 9, 1999.
 On April 12, 1999, Weston also filed its own motion for attorneys’ fees and costs, to which
Bradford promptly filed a response. Ultimately on May 4, 1999, the trial court entered its “Final
Decree” in which it, inter alia, reiterated its earlier rulings dismissing the complaint and awarding
summary judgment in favor of the defendants. That order also awarded attorneys’ fees of $177,691
to Southern’s counsel, Hanover, Walsh, Jalenak & Blair, PLLC, and the sum of $20,842.50 to
Southern’s counsel, Martin W. Brown. The final decree also awarded $75,672 in attorneys fees to
Brown for his services as Weston’s counsel. In addition, the final decree awarded costs to the
defendants. Following entry of the final decree, Bradford timely filed its notice of appeal on May
28, 1999.

       The parties have raised the following issues for appellate review:

       I. Whether the Chancellor properly granted the defendants’ motion for summary
       judgment as a matter of law;

       II. Whether the Chancellor properly awarded attorneys’ fees to Southern under the
       terms of the lease with Bradford;

       III. Whether the Chancellor properly awarded attorneys’ fees to Southern and
       Weston under the provisions of the Tennessee Consumer Protection Act;

       IV. Whether the amounts of the attorneys’ fees awarded were proper; and

       V. Whether the Chancellor erred in not recusing himself.

        Our role on an appeal from a summary judgment is to determine whether the requirements
of Rule 56 Tenn.R.Civ.P. have been met. Cowden v. Sovran Bank/Central South, 816 S.W.2d 741,

                                                -4-
744 (Tenn. 1991); Mansfield v. Colonial Freight Sys., 862 S.W.2d 527, 530 (Tenn. App. 1993).
We begin our analysis of the issue of summary judgment by noting that a trial court should grant a
motion for summary judgment only if the movant demonstrates that there are no genuine issues of
material fact and that the moving party is entitled to judgment as a matter of law. Rule 56.03
Tenn.R.Civ.P.; Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993). The party moving for summary
judgment bears the burden of demonstrating that no genuine issues of material fact exist. Byrd, 847
S.W.2d at 210. In Byrd, the Tennessee Supreme Court stated:

               Once it is shown by the moving party that there is no genuine issue
               of material fact, the nonmoving party must then demonstrate, by
               affidavits or discovery materials, that there is a genuine, material fact
               dispute to warrant a trial. (Citations omitted). In this regard, Rule
               56.05 provides that the nonmoving party cannot simply rely upon his
               pleadings but must set forth specific facts showing that there is a
               genuine issue of material fact for trial.

Id. at 211. (Emphasis in original).

       No presumption of correctness attaches to the trial court’s judgment, and the task of the
appellate court is confined to reviewing the record to determine whether the requirements of
summary judgment have been met. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995). All
evidence must be viewed in the light most favorable to the non-movant, and all legitimate
conclusions of fact must be drawn in favor of the non-movant. Byrd v. Hall, 847 S.W.2d at 211.

        In such a case, it is imperative that the reviewing court look to the plaintiff’s complaint to
ascertain what is being alleged. The complaint states in pertinent part:

       4. ....Under the provision of the Lease set out above, the “expense stop” is $4.35,
       meaning that Bradford is responsible for all actual operating expenses which exceed
       $4.35 a foot. Thus, Southern made demand upon Bradford for the difference of
       $2.70 per square foot or $45,910.80....

       .........

       7. Bradford avers that Southern, by and through its agent Weston, made
       misrepresentations as to material facts and that Bradford reasonably relied on such
       representations and Bradford will suffer losses and damages as a result of same.
       More specifically, Southern and Weston knew or should have known that an
       “expense stop” of $4.35 was woefully inadequate in Memphis, Tennessee, for a first
       class office building of the type constructed for and leased to Bradford. As such, the
       actual operating expenses of the building for the first year of the Lease exceeded the
       “expense stop” by more than $45,000.00 and over the life of the Lease such expenses

                                                 -5-
       will result in damages and losses to Bradford in an amount estimated to be at least
       $500,000.00.

       ..........

       WHEREFORE, PREMISES CONSIDERED, PLAINTIFF PRAYS:

       ..........

       6. That the Court issue a Declaratory Judgment declaring and defining the rights of
       the parties, specifically finding that plaintiff was induced into signing the Lease by
       misrepresentations by defendant and that the proper “expense stop” under the lease
       should not be $4.35 per square foot but should be a figure which accurately reflects
       the true operating expenses pertaining the property.

       In essence, Bradford asserts that the quoted $4.35 “expense stop” did not represent the
defendants’ true “best estimate”of first year operating expenses. To this end, we look to the Lease
agreement entered into between the parties. The pertinent portions are as follows:

               2.02 Operating Expenses. In the event Lessor’s operating expenses
               for the building of which the leased premises are a part shall, in any
               calendar year during the term of this Lease, exceed the sum of $4.35
               per square foot, Lessee agrees to pay as additional rent such excess
               operating expenses. Lessor may invoice Lessee monthly for the
               estimated operating expenses for each calendar year, which amount
               shall be adjusted each year based upon anticipated operating
               expenses. Within nine months following the close of each calendar
               year, Lessor shall provide Lessee an accounting showing in
               reasonable detail all computations of additional rent due under this
               section. In the event the accounting shows that the total of the
               monthly payments made by Lessee exceeds the amount of additional
               rent due by Lessee under this section, the accounting shall be
               accompanied by a refund. In the event the accounting shows that the
               total of the monthly payments made by Lessee is less than the amount
               of additional rent due by Lessee under this section, the accounting
               shall be accompanied by an invoice for the additional rent.
               Notwithstanding any other provision in this Lease, during the year in
               which the Lease terminates, Lessor, prior to the termination date,
               shall have the option to invoice Lessee for the excess operating
               expenses based upon the previous year’s operating expenses. If this
               Lease shall terminate on a day other than the last day of a calendar
               year, the amount of any additional rent payable by Lessee applicable
               to the year in which such termination shall occur shall be prorated on

                                                -6-
       the ratio that the number of days from commencement to and
       including the termination date bears to 365. Lessee shall have the
       right, at its own expense and within a reasonable time, to audit
       Lessor’s books relevant to the additional rent payable under this
       section. Lessee agrees to pay any additional rent due under this
       section within ten days following receipt of the invoice or accounting
       showing additional rent due. The maximum amount payable by
       Lessee on account of operating expenses (excluding expenditures for
       insurance, taxes, utilities and any other operating expenses not under
       the reasonable control of Lessor) for any year during the term of this
       Lease shall be 105% for any increases in the total operating expenses
       for the immediately preceding year. At all times during the term of
       this lease, Lessee shall pay its full share of the operating expenses
       attributable to taxes, insurance, utilities and any other operating
       expenses not under the reasonable control of Lessor.

The Lease also defines “Operating Expenses” as:

       2.03 Definition of Operating Expenses. The term “operating
       expenses” includes all expenses incurred by Lessor with respect to the
       maintenance and operation of the building of which the leased
       premises are a part, including, but not limited to, the following:
       maintenance, repair and replacement costs; electricity, fuel, water,
       sewer, gas and other utility charges; security, window washing and
       janitorial services; trash and snow removal; landscaping and pest
       control; management fees (not to exceed 4% of gross annual rental),
       wages and benefits payable to employees of Lessor whose duties are
       directly connected with the operation and maintenance of the
       building; all services, supplies, repairs, replacements or other
       expenses for maintaining and operating the building including
       parking; the cost, including interest, amortized over its useful life, of
       any capital improvement made to the building by Lessor after the date
       of this Lease which is required under any governmental law or
       regulation that was not applicable to the building at the time it was
       constructed; the cost, including interest, amortized over its useful life,
       of installation, of any device or other equipment which improves the
       operating efficiency of any system within the leased premises and
       thereby reduces operating expenses; all other expenses which would
       generally be regarded as operating and maintenance expenses which
       would reasonably be amortized over a period not to exceed five years;
       all real property taxes and installments of special assessments,
       including dues and assessments by means of deed restrictions and/or
       owners’ associations which accrue against the building during the
       term of this Lease; and all insurance premiums Lessor is required to

                                          -7-
               pay or deems necessary to pay, including public liability insurance,
               with respect to the building. The term operating expenses does not
               include the following: repairs, restoration or other work occasioned
               by fire, wind, the elements or other casualty; income and franchise
               taxes of Lessor; leasing commissions and advertising expenses;
               interest or principal payments on any mortgage or other indebtedness
               of Lessor; compensation paid to any employee of Lessor above the
               grade of property manager; any depreciation allowance or expense;
               capital expenditures; or operating expenses which are the
               responsibility of Lessee.

       It is self-evident that the term “operating expenses” encompassed virtually every reasonably
conceivable expense which might accrue in regard to the operation of the commercial building at
issue. The operating expenses contemplated above were first included in the March 8, 1994,
proposal presented to and accepted by Bradford. That proposal stated in relevant part:

                    REVISED PROPOSAL FOR J.C. BRADFORD & CO.

       LOCATION:              The proposed office building will be
                              located on an approximate 1.9 acre
                              site on the west side of Massey Road
                              approximately one block north of the
                              intersection of Poplar Avenue and
                              Massey Road

       FACILITY:              The proposed building will be an
                              attractive single story office structure
                              containing a total of approximately
                              17,626 gross square feet and 17,004
                              useable square feet. Pricing and
                              design has been predicated on
                              preliminary plans and specifications
                              furnished by Bradford’s architectural
                              firm (Johnson, Johnson, Crabtree) and
                              revisions made by Weston Design,
                              Inc. (See attached floor plan, site plan
                              and outline specifications marked as
                              Exhibit A & B, respectively.)

       ..........

       REAL ESTATE            Lessee will be responsible for all
       TAXES &                operating expense increases (excluding capital

                                                -8-
OPERATING    expenditures) based on an “expense
EXPENSES:    stop” of $4.35 PSF for the entire lease
             term. This is the best estimate of the
             building’s total operating expenses
             during the first twelve (12) month
             period of occupancy. Normal utility
             charges are included in the rental rate
             based upon normal hours of operation
             from 7:00 AM to 5:30 PM Monday
             through Friday and 7:00 AM to 1:00
             PM Saturday.

             Lessor will provide five day per week
             janitorial service according to normal
             janitorial service schedules for Class
             A office buildings. Lessor will also
             assume the responsibility for
             maintaining the building according to
             the general provisions of the enclosed
             lease form ODS-186.

             Lessor will agree to a cap of 5% per
             annum (non-cumulative) for the total
             of those expenses under its reasonable
             control. For example, insurance, taxes
             and utility charges will be excluded
             from the 5% cap. Management fees
             will be capped at 4% of the gross
             annual income.

..........

INTERIOR     The general pricing has been based on the finish
FINISHES:    schedule and floor plans previously
             furnished by Bradford’s architectural
             firm (Johnson, Johnson, Crabtree)
             revised by Weston Design, Inc. (See
             floor plan, site plan and outline
             specifications attached to the original
             of this proposal as Exhibit A & B,
             respectively).

GENERAL      This quotation for lease is predicated

                              -9-
       PRICING                 on preliminary plans, finish schedule
                               and design criteria furnished by J.C.
                               Bradford’s architectural firm
                               (Johnson, Johnson, Crabtree) and
                               revisions made thereto by Weston
                               Design, Inc.      This is a turnkey
                               quotation that includes all land,
                               building, architectural and engineering
                               fees (excluding interior floor plans to
                               be furnished by Bradford’s
                               architectural firm), interim interest,
                               landscaping and irrigation system,
                               legal and closing fees, soil studies,
                               surveys, Phase I environmental study,
                               site development and loan fees.

       ..........

       SUMMARY:                It should be expressly understood that
                               this proposal is predicated on the
                               current design criteria, finish schedule
                               and floor plans previously furnished
                               by Bradford as well as the execution
                               of a mutually satisfactory lease
                               agreement using Weston’s standard
                               lease form with approved deviations
                               therefrom. The proposal is also
                               subject to the receipt and approval of
                               Bradford’s current financial
                               information. In this regard, we remain
                               totally receptive to changes and will
                               respond accordingly....

        It appears to the Court that the crux of the lawsuit is whether David Peck’s quotation of $4.35
contained in the March 8, 1994, proposal was truly the “best estimate” of projected operating
expenses for the proposed building for its first year of operation. Whether actual operating expenses
proved to be significantly more than that projected, whether the difference between actual and
projected costs was comprised of increased taxes and utilities, whether the 5% cap applied to the
estimate and whether Bradford is ultimately liable for the increased expenses are not issues that are
before this Court at this time. Simply stated, at this stage of the proceedings, the case turns on a
determination of whether $4.35 was truly the “best estimate” of operating costs which the defendants
could have provided to Bradford. For the reasons that follow, we conclude that there is, at the least,
a genuine question of material fact which precludes summary judgment.

                                                 -10-
       The appellants cite this Court’s opinion in Annaco, Inc. v. Corbin, No. 02A01-9804-CH-
00111 (Tenn. Ct. App. Dec. 31, 1998), perm. app. denied (Tenn. May 10, 1999), which sets forth
the elements that one must prove to sustain a claim for misrepresentation. The Court stated:

                In an action for fraudulent misrepresentation, a plaintiff must show:
                (1) that the defendant made a representation of an existing or past
                fact; (2) that the representation was false; (3) that the representation
                related to a material fact; (4) that the representation was made either
                knowingly, recklessly, or without belief in its truth; (5) that the
                plaintiff acted reasonably in relying on the representation; and (6) that
                the plaintiff suffered damage as a result of the misrepresentation.
                Metropolitan Gov’t. v. McKinney, 852 S.W.2d 233, 237 (Tenn. Ct.
                App. 1993).

        In our analysis, the Court will address the foregoing elements.

        1. Did the defendants make a representation of an existing or past fact?

        The defendants assert that Peck’s March 8, 1994, proposal setting forth operating costs of
$4.35 per square foot was merely an opinion or an estimate and can in no way be construed as a
representation of a past or existing fact. We respectfully disagree. The Court is well aware of the
fact that the $4.35 expense stop was an estimate of the first year’s operating expenses, and the Court
is aware of the fact that the 5% expense cap did not apply to taxes, utilities and insurance premiums
as those were items over which the parties had no control. Moreover, we agree with the appellees
that the mere fact that actual operating expenses proved to be more than $4.35 is not, per se,
actionable. In fact the probability that actual expenses would exceed the expense stop is implicit,
if not explicitly stated, in the terms of the proposal and resulting Lease.

        We, however, are not concerned about whether the $4.35 estimate proved to be correct at the
end of the first year of operation. In fact, the Lease anticipates that it will not be correct and that the
Lessee will pay overages. What we are concerned with is whether the $4.35 estimate was truly the
“best estimate” that the defendants could propose in March 1994. That estimate is based upon
calculations taken from historical data and is, in our opinion, an existing fact as of the time the
estimate is made - regardless of whether it proves to be true in the future. Moreover, the March 8,
1994, proposal stated that it included such items as land, building, architectural and engineering fees,
interim interest, landscaping and irrigation systems, legal and closing fees, as well as soil studies,
surveys and the like. Given the breadth of the analysis and the access to the building’s plans, it can
hardly be said that the estimate was a mere shot in the dark. Moreover, the Court finds the appellees’
suggestion that the estimate was a mere matter of opinion is somewhat disingenuous in light of the
fact that they have sought to use the “best estimate” as both sword and shield. It is undeniable that
the $4.35 estimate is incorporated into the very terms of the lease contract and is, itself, the very
basis used for the calculation of damages, annual increases in operating expenses, and application
of the expense cap.

                                                  -11-
       2. Was the representation false?
       3. Did the representation relate to a material fact?
       4. Was the representation was made either knowingly, recklessly, or without belief in
       its truth?

        Under the rationale of Byrd, 847 S.W.2d at 211, a fact is material if it "must be decided in
order to resolve the substantive claim or defense at which the motion is directed." See also,
Hembree v. State, 925 S.W.2d 513 (Tenn. 1996). Under the foregoing definition, it is without
question that the representation of $4.35 as the “best estimate” is a material fact in this controversy.
Both the proposal and the Lease contained that figure, and the defendants assert that damages are
to be calculated based on an expense stop of that amount. This Court cannot, at this stage of the
proceedings, determine whether the representation was false and whether it was made “either
knowingly, recklessly, or without belief in its truth.” Nonetheless, we can conclude that the
foregoing are genuine questions of material fact that preclude summary judgment and mandate
further inquiry.

        Both the proposal presented by Peck and accepted by Bradford and the Lease contained an
expense stop of $4.35, meaning that Bradford would be responsible for any accrued operating
expenses during the first year of operation that exceeded the expense stop. In fact, the $4.35 expense
stop was purported to be “the best estimate of the building’s total operating expenses during the first
twelve (12) month period of occupancy.” Ultimate operating expenses during the first year of
operation proved to be $7.05 per square foot, meaning that Bradford is potentially liable for
additional operating expenses of $2.70 per square foot. The defendants assert that the overages
“consist of additional taxes and utility charges in excess of [Peck’s] estimate.” That may well prove
to be the case.

         The record, however, suggests that the estimate of operating expenses may have exceeded
the amount quoted. Peck analyzed the historical data on twelve buildings in the same market in
arriving at his estimate. In response to interrogatories proffered by Bradford, Weston admitted that
the average “Operating Expenses” for the twelve buildings used in its calculation for 1992 was $5.27
per square foot and in 1993 was $6.31 per square foot. Moreover, in Weston’s calculation summary
submitted to establish its estimate of the $4.35 in operating expenses, Weston allotted $1.00 per
square foot in annual utility expenses, when in fact, utility expenses for the twelve allegedly
comparable buildings averaged $1.61 in 1992 and $1.72 in 1993. Weston even admitted that for
the five years prior to 1994, it had not owned, leased, managed or operated any office building where
utility expenses were $1.00 per square foot or less. The record further contains the handwritten notes
of Al Andrews, a Southern partner, taken at a February 9, 1994, meeting. In his deposition,
Andrews testified, in explaining his notes, that the defendants had estimated operating expenses to
be $5.25, and the notes also contained an instruction to cut the operating expenses to $4.50. It is
apparent that the $4.50 figure was later reduced by $0.15 to $4.35. However, in light of the
foregoing, the Court is forced to conclude that there is a dispute as to whether $4.35 was truly the
“best estimate” of the first year’s operating expenses, a material fact, so as to preclude summary
judgment. Therefore, it is imperative that the finder of fact delve into the method and manner in
which the defendants arrived at $4.35 as their best estimate.

                                                 -12-
       (5) Did the plaintiff act reasonably in relying on the representation:

        In relying upon Annaco, the appellees attack the fifth element, namely the reasonableness
of Bradford’s reliance on the representation regarding operating expenses. Generally, the
reasonableness of one’s reliance on an alleged misrepresentation is a question of fact not appropriate
for summary judgment, so long as it can be shown that the reliance was reasonable. Id. Factors
relevant to the determination of the reasonableness of a plaintiff’s reliance on a misrepresentation
include (1) the plaintiff’s business expertise and sophistication; (2) the existence of longstanding
business or personal relationships between the parties; (3) the availability of the relevant
information; (4) the existence of a fiduciary relationship; (5) the concealment of the fraud; (6) the
opportunity to discover the fraud; (7) which party initiated the transaction; and (8) the specificity of
the misrepresentation. Annaco, supra. See also, City State Bank, et al. v. Dean Winter Reynolds,
Inc., 948 S.W.2d 729, 737 (Tenn. Ct. App. 1996), perm. app. denied (Tenn. April 14, 1997).

        Bradford was, at all times relevant hereto, a large and sophisticated investment company with
numerous branches. However, we know of no precedent that would suggest that such status is
indicative of expertise in the area of real estate development. While, there is no proof of other
longstanding business relationships between Southern, Weston and Bradford, that alone would not
be sufficient to support a finding of no reasonable reliance. As to the third element, we agree that
any enterprise seeking office space would have access to a plethora of information regarding the
Memphis market. While it is true that one in possession of all material facts regarding a purchase
of realty cannot recover on the basis of fraud or misrepresentation, Winstead v. First Tenn. Bank
NA,, Memphis, 709 S.W.2d 627, 633 (Tenn. Ct. App. 1986), there has been no showing that
Bradford even had access to, much less knowledge of, the relevant information used by defendants
to prepare the proposal. In fact, the information used by Weston to calculate the expense appears
to have been proprietary information relating specifically to twelve buildings under its management,
development or lease, and as such, may not have been information generally available Bradford.

        As to the elements relating to concealment of fraud and opportunity to discover the fraud,
we cannot, at this time and upon this record, determine that there was fraud. What does appear from
the record is that there was a fiduciary relationship between Bradford and the appellees such that the
appellees were cloaked with a duty to act with honesty, candor and fair dealing. Youngblood v.
Wall, 815 S.W.2d 512, 516 (Tenn. Ct. App. 1991). Finally, it is readily apparent that Weston
solicited Bradford on Southern’s behalf, and there can be no dispute regarding the specificity of the
estimate; it is literally quoted to the penny.

        6. Whether the plaintiff suffered damages as a result of the misrepresentation:

        Bradford may well be responsible for some amount of overage - namely the difference
between the $7.05 in actual operating expenses and the true “best estimate” of operating expenses
as it existed in March 1994, when the proposal was made. However, that difference is not the
“damages” in the case. “Damages” in this case, if proved, are to be based on the difference between
what the true “best estimate” would have been at the time of Peck’s representation and $4.35. We

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stress that this Court cannot determine at this juncture whether there was even misrepresentation or
even damages. Nonetheless, the potential for damages exists.

        In light of the foregoing analysis, we conclude that the trial court erred in dismissing the case.
Accordingly, we vacate the orders of the trial court dismissing the case and granting summary
judgment in favor of the defendants. Because the trial court’s orders awarding attorneys’ fees and
costs are predicated on the validity of the foregoing orders of dismissal, we likewise vacate those
orders and remand this cause to the trial court for a hearing on the merits consistent with this
Opinion. We will not rule on the issue of attorneys’ fees as such would be tantamount to an advisory
opinion.

        As one of the issues on appeal, Bradford contends that the trial court erred in denying its
motion for the court to recuse itself. As noted by the Court in Dunlap v. Dunlap, 996 S.W.2d 803,
813 (Tenn. Ct. App. 1998), perm. app. denied (Tenn. June 14, 1999), a trial court’s decision
regarding a motion to recuse itself is a matter of discretion. While we have determined that the trial
court erred in dismissing the cause and awarding attorneys’ fees and costs, we do not find that such
a ruling is a demonstration of bias or prejudice so as to warrant recusal.

                                              Conclusion

        Upon consideration of the record, the Court finds that the trial court’s orders granting
summary judgment, dismissing the complaint and awarding attorneys’ fees should be vacated and
the case should be remanded to the trial court for further proceedings consistent with this opinion.
Costs on appeal are taxed one-half to Southern Realty Partners and one-half to Weston Management
Company, for which execution may issue if necessary.

                                                         ___________________________________
                                                         ALAN E. HIGHERS, JUDGE

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