*1 Tammy GANZEVOORT, R.
Plaintiff-Appellant, RUSSELL, Richard B. Russell, Martha T. Cassetty and Jim d/b/a Realty, Defendants-Appellees. Supreme Tennessee, Court of
at Nashville. May 1997. Denying Order Rehearing Aug. Edwards, Hendersonville,
Michael W. for Plaintiff-Appellant. Bradley, Hendersonville, R.
John for De- fendants-Appellees.
OPINION
REID, Judge. presents This case review the decision Appeals reversing of the Court of the trial dismissing court and an action for violation of the Tennessee Consumer Protection Act1 brought by of residential real property against the seller and the seller’s judgment Ap- broker. The peals dismissing the suit is affirmed. §§ 1. Tenn.Code Ann. 47-18-101 to 47-18-5002 *2 no evi- report there was His showed
I damage. termite infestation dence of subject a lot of suit is house and did, however, water find termite Hendersonville, Tennessee, which located in bathroom, he ver- the which damage under purchased by Richard Rus- was defendants Cassetty. He testified: bally reported to Jim prop- sell and 1969. The Martha Russell by a erty occupied as residence the was normal- problem a that I would It wasn’t Martha until when Russell Russells simply it report because was ly put on this with their divorce.2 moved in connection subflooring under the of the deterioration Russell and his child continued to Richard of the the main bathroom under premises prior until time occupy the a short I just I note of that as And took house. 3, 1993, prop- which the the date on June inspecting it.... was plaintiff, Tammy R. erty conveyed was I I went under bathroom When Ganzevoort. subflooring damaged, and that the was see of the house and lot part In latter damage. It obviously it moisture was Cassetty Realty, for with Jim were listed sale me, at few looked a of and I’ve looked to a defendant agency real estate owned them, type It it like a drain leak. looked wife, broker, his Cassetty, is a Jim who and looked like dripping water. It wasn’t Cassetty, agent. is Pat who an maybe when the bath- something where Judy represented by agent real estate was the commode was flushed tub —when Cassetty. Cassetty (Judy is related shower was drained or the the bathtub Cassetty.) and Pat Jim drain, whatever, getting was there 1, 1993, February parties damaging the On entered wood. property of a contract for the sale
into damage, no structural there was Since $68,500. closing May set for was my on put I didn’t it that’s the reason subject to approval sale 1993. The was report Cassetty I it to the report. But did Housing Department United States courtesy. as matter of agency. I do this a Development Hous- of a Federal and Urban anything like plumbing If a leak or I find (F.H.A.) Authority F.H.A. re- ing loan. usually tell the a I’ll that under house inspection by representative a quired an they can agent they’re of it and so aware appraisal by appraiser agency, an an get repaired. F.H.A., professional ter- approved inspection. mite been leak there had It was obvious inspection the need The F.H.A. revealed it had dam- at time and that there some mention repairs but did not for some minor aged subflooring, but not the floor is based. on which this suit the defects structural, joists it wasn’t themselves. So repairs made. Those report. why put my it on I didn’t and that’s approved appraiser The real estate employee of inspector told an The termite process inspected “Look, prob- no agency, there’s Cassetty in- appraisal. During that an preparing termites_ By way, lem with ... underpin- spection, he the house’s examined (cid:127)subflooring of the tell that some though, Jim joists in the floor no defects nings but found damaged by been has under bathroom only required the subflooring. He or the like drain leak because water it looks sump knowledge aof purchaser to have dripping right now.” nois water there that it pump house located beneath inspection was the termite copy ap- Apparently, working A be in condition. out of town. was Jim made while report given praiser’s Cassetty testified: 12, 1993, prior days May on several closing. Well, out being back from I come Allied Pest report from the and had a company town pest control employee of An inspected prop- they had May Control that the house inspection of on an made Russell, appeal. no against from which Martha Appeals the suit dismissed 2. The Court erty just piece minor issued letter but recom- it. It was a little wood. exterior, everything house mended that the underneath the underside Jim said plaintiff] I that. refur- And did tell [the bathroom be fine.” bished, strengthened. renovated and letter; I that there is a clear termite said *3 replaced; piece
I was a of wood talked to there inspector] [the termite about fine, he they’re saying everything went suggested] laminating that. He or scab- bing it. But we the sawdust out laminating being did see understand —I said, “Well, there, explain I that plank plank- on must each side of the scab- —or bing you put only plank where on. I the sawdust.” one inspector] informed [the [the termite that Cassetty’s Pat version of the discussion was: carpenter] would that. do it, explained that the As I it was termite .... I went out there and looked at had there fellow told us that was some area, and I then hired a man name Bob of just damage there. He had said there —he repair Murdock to it. Mr. out Russell was there, damage and we’d check it was some town, him, I contacted told him what the we And Mr. out when came home. Russell was, requirement him told that there was everything done for wanted to be going to be some or so to make the $300 thought house. We did what we was the repairs. He go authorized to ahead [me] proper thing to cost do. The we incurred fixed, and have it I and did so. statement, put closing on the was so I was
telling them that we found this at the last moment and that we had Well, corrected and it looked like an It old leak. this was cost. something hap- looked like it was that had pened years thought five or 10 earlier. I it There is no evidence Russell that had just precautionary. was you start Until about information the defects than that taking up carpet ripping paneling back given by Cassetty carpenter. him and the taking protective off all paper, of this repair Russell authorized the work recom- it wasn’t visible. cost, agreed mended and that the estimated $300, charged at at closing. be to him the carpenter described the conditions repairs found made: though plaintiff agent Even and her joist pretty was one that was in bad prior looked at house several times to shape. x x put up I a 2 they apparently or a on closing, see indi- house, block wall on the damaged. outside of the cation that bathroom floor was ran it back or 4 plaintiff feet on the end of The did not discuss the condition of joist. there, up prior And then on the floor closing. with the floors seller discolored, it was a little I brought plaintiff upon bit testified she relied dry personal inspection, report, around on it. It was and still firm and F.H.A. her put plywood intact. I up against some termite letter. does not claim and the She joists upon any that. And the two on both representation sides that she relied made it, put splices agent. I on them. or the seller’s seller put pressure Then I on it had to kind reports required After all jack upit was everything to make sure filed, agency approv- issued its had been tight against I up the floor. went inside plaintiffs al house as collateral for the anything sure no make there was cracks or loan. grout tile in on the the bathroom. closed, plaintiff After the sale had been Everything It Ev- was intact. was fine. discovered, upon carpet removing the erything dry. was dining near the that a section area closing, agent Prior to the seller’s told floor, approximately of the hardwood 3 feet according testimony buyer’s agent, area, Further in- 3 feet was rotten. Cassetty, Judy leaking spection that water from the revealed un- commode had caused extensive piece replaced “There was a wood shower and house, floor where the worry but don’t about to the bathroom derneath the findings specific no repairs The trial court made had been made and also the floor It ruled joists fact. as follows: adjoining dining and floor under the convinced that the Defen- area. The Court is guilty were of unfair dants engineer engaged by An de- provi- practices and violated the the condition as scribed follows: Tennessee Code Ann. 47-18- sions of carpet gotten in [the] had wet 104(b)(27).... dining pulled room had been back and Appeals affirmed the conclu- The Court of floor there was hardwood underneath Russell and sion that the defendants carpet. Within 3 or feet of wall that guilty very badly damaged, hardwood they “engaged decep- It in a acts. held that completely decomposed; some cases so the *4 intentionally negligent- by, tive act either going had been on for some time. ly, a covering over serious defect evidence, There was no the however, concluded, That court house.” time, any of deterioration at that from not of deceptive the act was the cause bathroom; looking going inside the but judgment the entered damages and reversed space underneath the house in the crawl by the trial court. joist damaged by floor the had been the II plywood com-
water. The subfloor had delaminated, of review is stated pletely bonding standard the between 13(d) Appel of Rules of Rule the Tennessee layers plywood separated. the of the were late Procedure: joists very The floor wet and had statute, required by re- otherwise Unless somewhat; decayed gone and someone had findings view of of fact the trial court time, previous in at some I don’t know upon civil actions shall be de novo when, joist repair tried to the floor court, accompanied by a record of trial splicing pieces four of lumber onto the of find- presumption of the correctness joist. of the sides ing, preponderance unless the of evi- judge When asked whether dence is otherwise. should have discovered this judge has failed to make When the trial problem, engineer responded, fact,- specific findings of will re this Court ... The rotted hardwood was covered preponder view the record to determine carpet, carpet, and I’m sure wall-to-wall Kemp v. Thur ance of the evidence. See soft; have a little but the floor would felt (Tenn.1975). mond, 806, 521 S.W.2d 808 pretty have been a extensive that would Furthermore, of “the construction the statute poke your go [and] around inspection, application facts a of the law to the fingers along the walls. question v. law.” Beare Co. Tennessee (Tenn. 906, Revenue, 858 S.W.2d 907 cracked, Dept. The tile in the bathroom is 1993). questions of scope of review for so have been clue there wouldn’t upon novo the record the chan law is de there. cery presumption with no of correct court house would have been Underneath Huddleston, Corp. Union v. ness. Carbide finding thing, and only hope of (Tenn.1993). 91 S.W.2d covering though paper was foil even foil not cover the plywood, the does III joist, of water and there was evidence floor presented re of the issues Resolution joist; would on the stain and mildew quires Tennessee Con construction suspect there enough to at least been have construing In Act. sumer Protection leakage problem. awas statute, give must ascertain this Court intent and the ordi legislative estimated effect Defendant language of the statute. nary meaning repaired for not more damaged area could be Resorts, Dept. Inc. v. expert Creek Vacation plaintiffs submitted Carson than $800. (Tenn.1993). Revenue, $7,000. 865 S.W.2d damaged portion for repair the bid to Additionally, disclaiming “[t]he Tennessee Consumer contractual warranties liberally Protection Act to be construed the broad the U.C.C. would contravene protect consumers and others those from Protec- remedial intent of the Consumer engage who practices.” tion Act. Cars, Monis v. Used Mack’s 824 S.W.2d Id. at 540. (Tenn.1992); Tenn.Code Ann. 47-18- 102(2)(1995). Quality City In v. Auto Parts Co. Bluff Co., (Tenn.1994), Buick S.W.2d protect The Act was enacted “to consum- not need to the Court concluded that it did legitimate ers and enterprises business from protec- reach issue of whether consumer those engage who acts arising in apply disputes tion laws practices in the conduct of trade or ..., relationships. employer-employee context encourage commerce promote [t]o development practices; alleged of fair found that false state- consumer ... provide [and] declare and to civil disparage [t]o ments about the legal maintaining means for ethical standards quality plaintiffs services and of dealing persons engaged between in busi- support therefore would not claim under consuming public ness and the to the end the Act. dealings faith buyers between In Pursell First American National *5 sellers at all levels had in commerce be Bank, 838, (Tenn.1996), 937 S.W.2d 839 this state -” § Tenn.Code Ann. 47-18- Court found defendant bank’s agreement property breach of an to in return private The Act a authorizes of ac- cause repossession dispute, a form did not the basis tion: of an under action the Act because the ac- Any person who suffers an ascertainable bank tions of the did not affect the conduct of money real, loss of property, or personal, any noted, or commerce.” “trade mixed, article, or any commodity, or other holding This is confined to facts and thing situated, or of value wherever as a ease, not, circumstances of this and we do employment
result of the or by use anoth- person by Opinion, generally exempt banking er unfair deceptive of an or act or this practice to by declared be unlawful from the this activities Tennessee Consumer part, may bring individually an action Protection Act. damages. recover actual Id. at 842. 47-18-109(a)(1) § Tenn.Code Ann. applicable Act is transac This Court has discussed issues tion in case. The is a consumer this only Act in three cases. In Morris v. Mack’s Act, in purchase as defined of real Cars, (Tenn.1992), Used 824 S.W.2d 538 Act, property by covered is and the truck, seller sold the “as is.” by property offered a realtor in for sale The seller knew it was a vehi- reconstructed of the real estate trade. The course Being cle. vehi- reconstructed reduced the Act, term “consumer” is defined in the and in percent. cle’s fair market value 30 to 50 states, pertinent part “‘Consumer’ means seller’s defense was the disclaimer con- any person acquires by or natural who seeks protected tained in the of sale from bill real, any purchase ... ... ....
liability Act. under the This Court ruled personal Ann. or mixed....” Tenn.Code (U.C.C.) that the Uniform Commercial Code 47-18-103(2)(1995). § The Act defines imposes obligation an in the faith pertinent part, in “trade” and “commerce” as performance every may contract not which “ ‘Trade,’ ‘commerce,’ or disclaimed, follows: ‘consumer permitted be and that disclaimers offering means the ... for sale by § defeat transaction’ Tenn.Code Ann. 47-2-316 do not personal, ... separate property_real, ... of causes of action under the Consum- mixed_” court er Protection Act. Id. at 539. The or Tenn.Code Ann. 47-18- 103(9)(1995). complaint Consequently, stated: the defendant liability against of action states cause To allow the here to avoid seller by Cassetty. practices for unfair or
298
However, exists, exception’ ap its applica the Act is that a ‘homeowner’s whether Russell, plication to an involved ble to the is limited individual sale defendant who residence.”); in or her generally is in the sale of his own engaged not the sale of real 437, N.C.App. Boyd, 363 property, less clear. Robertson 88 is Two of the stated 672, (1988)(“private parties en purposes S.E.2d of the Act to maintain “ethical are residence, gaged in the of a were not dealing persons sale standards of between en gaged consuming in trade or commerce cannot be public,” involved business protect [realty ... legitimate and to held liable under statute com consumers and inspector] enterprises pany engaged engage business from those who termite meaning” or practices trade commerce acts within statute); Mosley, 206 DiBernardo v. conduct trade or commerce.” Tenn. (A.D. (em 47-18-102(2) (4) (1995) N.J.Super. §§ A.2d Code Ann. & (“the 1986) added). response phasis was intended as Although language does Act resulting only public harm from ‘the explicitly exclude from Act sellers not deception, misrepresentation and unconscio the business of selling owners brokers, practices by professional engaged construction is that nable reasonable they seeking many sellers mass distribution of are not included.3 types goods’ ... and not to the consumer protection Some acts consumer found family single of a isolated sale residence jurisdictions, only per- clearly apply owner”); Joyce, Young v. 351 A.2d its regularly engage sons who solicit or in con- (Del.Supr.1975)(“we do not believe that e.g. sumer transactions. Iadanza v. See sale of real estate its owner isolated (D.Utah Mather, F.Supp. ... constitutes the conduct of trade or com 1993). majority jurisdictions in which merce”). The conclusion that the Act act, real are governed estate sales applicable in this case. seller persons making held an *6 have isolated question The next is whether evi by sale of their home are not covered supports dence the trial conclusion court’s Act. Cassetty committed an the defendant A number of state courts have ruled deceptive practice unfair or act or within the that, gen- even where real estate sales are meaning in of the Act. The claim this case is covered, erally sale of real isolated following provisions on the of the Act: based by a estate nonmerchant covered. following deceptive ... acts attempt as an This should be viewed affecting any practices or conduct keep sales transac- consumer-to-consumer trade commerce are declared to be un- or deceptive tions and acts [unfair outside part: in lawful and violation of this practices] not an scope, statute’s and (27) practice in act Engaging or attempt practices all real estate to exclude deceptive to which is the consumer.... particular, coverage. In from the state’s though may dismiss the even a court (1995). 47-18-104(b) §Ann. Tenn.Code defendant, ... as a the case homeowner terms “unfair” and Act does not define the and ter- against the homeowner’s realtor “deceptive,” the Court has heretofore go inspector mite should forward. defined these terms. determining Sheldon, Deceptive The Act states that Jonathan Unfair (foot- (3d 1991) meaning Practices, the court should statute’s intended 51 Acts and ed. concerning provi- omitted); opinions a similar Manasquan look to v. *7 Cir.1983), subject the the sale was an old parties took little note of it. None of the to house which later additions had been damage were aware that the water had ex- sale, Subsequent made. purchas to the the dining damage to the That tended area. discovered, by removing portion ers of a not noted the F.H.A. or the wall, damage appurte water to members and independent appraiser, both of in- whom nances the house. The District Court held spected premises. expert the the Even em- the that Tennessee Consumer Protection Act ployed finding the testified that imposes liability no the seller had no where damage required one the would have to knowledge of the hidden defects and where walls,” “poke your fingers along the and that inspection by purchaser an the would reveal damage the in there was no “clue” to the same known the the information seller. only He under the bathroom. stated that
Brokers, suspect agents professional enough house was indication to and knowledge leakage problem. of real was essen- sellers have and tially inspections except superior quantity in hidden from all information both and average pur- after sale with the remov- quality to that of an residential which occurred the the regarding covering and of the floor in affected area. chaser factors conditions al property they Apparently, persons the several the value of are none of affect duty was to examine offering obligated by professional They for sale. are the whose carpeting of the disclosing premises felt that removal Act to exercise faith persons appropriate. included purchasers material facts affect- was Those prospective independent ap- ing inspector, the value of the known to them the dependent never proof deception praiser, inspector, the termite and three real- Act is knowledge, or is con- of intent upon evidence tors. language of the Act. trary plain to the prepon- The conclusion is that the evidence opinion in against finding this case defines derates that the defen- The Court’s decep- and other guilty applicable of an unfair to this case dant is standard general deteriora- meaning tive act within the of the Act. similar cases which the to the non-apparent tion and defects incident reasons, judgment For these of the property being age of the sold nature and Appeals reversing trial court is Court of purchase price, ordinarily are reflected affirmed and the is to the case remanded given all the in which the County. Circuit Court of Sumner regarding the condition information appeal plaintiff. on taxed Costs are person charged by property known purchaser. The acts of apparent BIRCH, C.J., DROWOTA, J., concur. the realtor in this ease were unfair. ORDER ON PETITION TO REHEAR therefore, Court, rejects petition- plaintiff-appellant petition has filed a contention that Act establishes er’s rehear; General,- Attorney on behalf of in all cases for single applicable standard State, join permission seeks deceptive act or determining an unfair or brief, appli- petition and an amicus file which practice. The Court affirms the standard set granted. are cations appropriate opinion being forth The petitioner takes issue first with the cases. standard for this case similar decision, premise of essential the Court’s petition to rehear denied. determining an unfair or
the standards provision act under the catchall petitioner. Costs are taxed to the Act1 are flexible and can be defined with only “myri- in the context of the particularity BIRCH, JJ., concur. DROWOTA Su- ad of cases from field business.” at pra define Legislature
The Tennessee did not “deceptive” in the “unfair” and Consumer particular act or Protection Act.2 Where specifically practice has not been addressed statute, the definition of those terms case, the courts on a case basis. are left to Tennessee, Appellee, STATE of Reed, Jeffrey L. The Tennessee Consum See Overview, Tenn. Act: er Protection An The conclusion that L.Rev. *8 LOWE, Appellant. Oliver apply every definition the same does provisions varying with the case is consistent Tennessee, Appeals Court Criminal defining deceptive acts the Act unfair and at Nashville. Ann. particular situations. Tenn.Code Sept. 1996. (28-30). —104(b)(l—26) A review § 4 7 though in provisions shows of these Appeal Denied Permission pre actionable fault is not most situations 10,1997. Supreme March others, liability, knowledge requisite to others, intent still prerequisite, and Consequently, the standard.
deceive
contention, that under the
second
petitioner’s
congress
18—104(b)(27)
define those terms
("Engaging
Nor
1. T.C.A.
47—
Act,
on which
Federal Trade Commission
practice
which is
other act
patterned.
Act is
person.”).
Tennessee
or to
consumer
notes
see Jackson
165,
Act.4
Bank,
136,
Trade
N.J.Super.
sion
the Federal
Commission
271
638 A.2d
Sav.
Buckland,
§
(L.1993);
Ann.
47-18-115
v.
328
Tenn.Code
170
Bhatti
N.C.
(1991)
the terms
240,
440,
courts have noted that
(“Assuming federal
444
400 S.E.2d
45(a)(1)(1973)("Unfair
meth
opinion
4.
U.S.C.
Although
See 15
later in this
relies
3.
the Court
commerce,
upon
competition
Court in
v.
the decision of the District
Klotz
and unfair
ods
335,
(E.D.Tenn.
Underwood,
commerce,
F.Supp.
337
563
practices
are
deceptive
(6th Cir.1983),
1982), aff'd,
we