Daniel D. Hall v. Eagle Rock Development, LLC
E2015-01487-COA-R3-CV
| Tenn. Ct. App. | Jul 31, 2017Background
- Daniel and Julie Hall purchased Lot 25 in the Preserve at English Mountain in June 2006 for $123,000; they later discovered (in 2009) the lot lacked public sewer and was limited to a two‑bedroom septic system.
- Pre‑purchase materials (MLS listings, development guidelines on the website, and visible sewer manholes) represented that sewer service existed or would be available to each lot.
- A seller disclosure signed March 2006 (presented to the Halls at contract signing) indicated no public sewer, but the Halls were not given that disclosure before they executed the purchase contract and closing occurred June 30, 2006.
- The Halls sued in 2012 for misrepresentation, seeking rescission and other relief; trial court found material misrepresentations, rescinded the contract, ordered refund of $123,000, and awarded attorney’s fees under the Tennessee Consumer Protection Act (TCPA) against Blue Ridge Realty, Inc.
- The court declined to pierce the corporate veil to hold individual defendants liable and dismissed them; Eagle Rock Development, LLC and Blue Ridge Realty, Inc. appealed the adverse rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to rescission for misrepresentation about public sewer | Halls: seller/agents represented sewer was available; sewer was material; rescission appropriate | Defendants: Halls had multiple opportunities and years to discover sewer absence; delay/inequity bars rescission | Affirmed: trial court’s factual finding of material misrepresentations supported rescission and refund of purchase price |
| Effect of post‑execution disclosure signed by seller (but presented at contract signing) | Halls: disclosure signed earlier by seller did not cure prior affirmative representations and was not timely disclosed | Defendants: the disclosure negates reliance; buyer’s failure to read bars relief | Held: disclosure executed earlier but not shown to Halls before contracting did not preclude relief given contrary, pervasive representations |
| TCPA claim and award of attorney’s fees against Blue Ridge Realty | Halls: Blue Ridge violated TCPA by failing to disclose agent’s ownership interest and by deceptive acts about sewer; attorney’s fees authorized | Defendants: Blue Ridge was not party to the purchase contract; fees improper against Blue Ridge alone | Held: Court found deceptive acts by Blue Ridge (failure to disclose Joseph’s affiliation and material facts) and awarded reasonable attorney’s fees under TCPA against Blue Ridge |
| Attribution of agent/seller conduct and agency/conflict disclosure | Halls: Joseph’s dual role (seller member and buyer’s designated agent) was undisclosed and misleading | Defendants: no unfair practice; agency status disclosed or irrelevant | Held: Court found likelihood of confusion from nondisclosure of Joseph’s affiliation; this supported TCPA violation and attribution of knowledge to Blue Ridge |
Key Cases Cited
- Issacs v. Bokor, 566 S.W.2d 532 (Tenn. 1978) (rescission is an available equitable remedy for inducement by misrepresentation)
- Mills v. Brown, 568 S.W.2d 100 (Tenn. 1978) (rescission sets aside a transaction and typically requires return of purchase price)
- Fayne v. Vincent, 301 S.W.3d 162 (Tenn. 2009) (whether an act is unfair or deceptive under the TCPA is a question of fact; TCPA should be liberally construed to protect consumers)
- Armbrister v. Armbrister, 414 S.W.3d 685 (Tenn. 2013) (standard of review: trial court findings of fact by bench trial presumed correct; legal conclusions de novo)