Robert W. Bagby v. Dean Russell Carricco ( 1997 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
ROBERT W. BAGBY, ) C/A NO. 03A01-9705-CV-00183
) December 9, 1997
Plaintiff-Appellee, )
) Cecil Crowson, Jr.
) Appellate C ourt Clerk
)
) APPEAL AS OF RIGHT FROM THE
v. ) CARTER COUNTY CIRCUIT COURT
)
)
)
)
DEAN RUSSELL CARRICO, )
) HONORABLE G. RICHARD JOHNSON,
Defendant-Appellant. ) CHANCELLOR, By Interchange
For Appellant For Appellee
THOMAS R. BANKS HOWELL H. SHERROD, JR.
Banks & Banks Sherrod, Stanley, Lincoln &
Elizabethton, Tennessee Goldstein
Johnson City, Tennessee
OPINION
AFFIRMED AND REMANDED Susano, J.
1
In this case, the plaintiff claims that the defendant
made an intentional misrepresentation in connection with the sale
of a tract of unimproved real property. Following a bench trial,
the court found that the defendant, Dean Russell Carrico
(“Carrico”), had fraudulently misrepresented a material fact,
resulting in a judgment of $21,911.97 for the plaintiff, Dr.
Robert W. Bagby (“Bagby”). The trial court also found that
Carrico’s conduct violated the Tennessee Consumer Protection Act
of 1977, T.C.A. § 47-18-101, et seq. (“the Act”). Carrico
appealed, raising three issues that present the following
questions for our review:
1. Was the Chancellor correct in finding
that Bagby and Carrico entered into an
agreement to buy property together?
2. Was the Chancellor correct in finding
that Carrico was guilty of a fraudulent
misrepresentation?
3. If Carrico made a misrepresentation of
fact, was Bagby’s reliance on the
misrepresentation reasonable?
I
In the spring of 1995, Carrico commenced negotiations
with Michael Miller and his wife, Alesia Miller (“the Millers”)
to purchase the Millers’ 40-acre tract of land. The Millers and
Carrico subsequently agreed upon a purchase price of $2,500 per
acre. Several weeks later, Carrico contacted Bagby, who had
previously told Carrico that he would be interested in purchasing
some property “with a view,” and offered to sell one-half of the
Miller tract to Bagby for $3,450 per acre.
2
Bagby testified that Carrico told him that he, Carrico,
had agreed to pay the Millers $3,450 per acre. Carrico, however,
testified that he had made no such representation, but had only
quoted that amount as the sale price between himself and Bagby.
Bagby testified that they agreed that Carrico would purchase the
entire tract, at $3,450 per acre, and would then sell half of the
land to Bagby at the same price. It is undisputed that the
parties agreed to share equally the cost of a survey and the
attorney’s fees attendant to the transaction. Carrico
subsequently billed Bagby for half of the fees charged by the
attorney and surveyor. Bagby had no contact with the attorney,
the surveyor, or the Millers; nor did he review any paperwork
between the Millers and Carrico.
Carrico’s transaction with the Millers was closed on
June 28, 1995. The deed to Carrico, which reflects a purchase
price of $100,600 -- representing 40.24 acres at $2,500 per acre
-- was recorded immediately after the closing. Carrico and Bagby
completed their transaction the same afternoon. Bagby paid
Carrico $69,414 for 20.12 acres, or $3,450 per acre.
Approximately one month later, Bagby discovered that
Carrico had paid only $2,500 per acre for the entire tract.
Bagby and his wife testified that when Bagby confronted Carrico
regarding the discrepancy, Carrico stated that he had paid the
Millers “something under the table” in addition to the $2,500 per
acre, and thus had paid as much for his half of the tract as had
Bagby; however, there was no other evidence at trial of an “under
the table” payment.
3
Bagby filed suit, alleging that Carrico was guilty of a
fraudulent misrepresentation, as well as a violation of the Act.
The trial court agreed and entered judgment in favor of Bagby on
both theories. The trial court specifically found that Carrico
had falsely stated to Bagby that the price of the property was
$3,450 per acre, when in fact it was only $2,500 per acre. The
court also stated that “particularly in this case, word against
word, the Court has devoted time and effort in evaluating and
weighing and determining the credibility of the parties and their
witnesses.” The trial court awarded Bagby compensatory damages
of $19,414, pre-judgment interest of $2,497.97, attorney’s fees,
and certain discretionary costs. It declined, however, to award
treble damages under the Act, finding that such an award was not
appropriate under the circumstances. Likewise, the court refused
to award punitive damages, finding that Bagby had “failed to
prove the elements of punitive damages by clear and convincing
evidence.”
II
Our review of this non-jury case is de novo upon the
record of the proceedings below; however, that record comes to us
with a presumption that the trial court’s factual findings are
correct. Rule 13(d), T.R.A.P. We must honor this presumption
unless we find that the evidence preponderates against those
findings. Id.; Union Carbide Corp. v. Huddleston, 854 S.W.2d 87,
91 (Tenn. 1993). The trial court’s conclusions of law, however,
are not afforded the same deference. Campbell v. Florida Steel
4
Corp., 919 S.W.2d 26, 35 (Tenn. 1996); Presley v. Bennett, 860
S.W.2d 857, 859 (Tenn. 1993).
Our de novo review is subject to the well-established
principle that the trial court is in the best position to assess
the credibility of the witnesses; accordingly, such credibility
determinations are entitled to great weight on appeal.
Massengale v. Massengale, 915 S.W.2d 818, 819 (Tenn.App. 1995);
Bowman v. Bowman, 836 S.W.2d 563, 566 (Tenn.App. 1991). In fact,
this court has noted that
...on an issue which hinges on witness
credibility, [the trial court] will not be
reversed unless, other than the oral
testimony of the witnesses, there is found in
the record clear, concrete and convincing
evidence to the contrary.
Tennessee Valley Kaolin Corp. v. Perry, 526 S.W.2d 488, 490
(Tenn.App. 1974).
III
To prevail on a claim of fraudulent misrepresentation,
a plaintiff must demonstrate that:
1) the defendant made a representation of an
existing or past fact; 2) the representation
was false when made; 3) the representation
was in regard to a material fact; 4) the
false representation was made either
knowingly or without belief in its truth or
recklessly; 5) plaintiff reasonably relied on
the misrepresented material fact; and 6)
plaintiff suffered damage as a result of the
misrepresentation.
5
Metropolitan Gov’t of Nashville and Davidson County v. McKinney,
852 S.W.2d 233, 237 (Tenn.App. 1992)(citing Graham v. First
American Nat’l Bank, 594 S.W.2d 723, 725 (Tenn.App. 1979));
Devorak v. Patterson, 907 S.W.2d 815, 819 (Tenn.App. 1995). In
cases involving fraud in the sale of real property, this court
has held that
[o]ne who in a real estate transaction in
which he has a pecuniary interest supplies
false information for the guidance of others
is subject to liability for the pecuniary
loss caused to them by their justifiable
reliance on such information.
Youngblood v. Wall, 815 S.W.2d 512, 518 (Tenn.App. 1991)(citing
Chastain v. Billings, 570 S.W.2d 866 (Tenn.App. 1978)).
Generally speaking, the measure of damages in a fraud
case is to compensate the injured party for actual damages by
attempting to place that party in the same position that he or
she would have been in had the fraud not occurred. Harrogate
Corp. v. Systems Sales Corp., 915 S.W.2d 812, 817 (Tenn.App.
1995); Youngblood, 815 S.W.2d at 518.
IV
The trial court found that each of the elements of a
fraudulent misrepresentation were present in this case. After
reviewing the record, we are of the opinion that the evidence
does not preponderate against this conclusion. Rule 13(d),
T.R.A.P. As stated earlier, the trial court’s determinations
6
regarding witness credibility are afforded great deference on
appeal. Massengale, 915 S.W.2d at 819; Bowman, 836 S.W.2d at
566. It is clear that the trial court accredited Bagby’s
testimony to the effect that Carrico had stated that he was
paying the Millers a price of $3,450 per acre for the property.
Carrico argues that the trial court erred in finding
that the parties entered into an agreement to buy property
together, in finding that Carrico was guilty of fraudulent
misrepresentation, and in finding that Bagby’s reliance on any
misrepresentation was reasonable.
Carrico contends that he and Bagby were neither
partners nor engaged in a joint venture. We believe that the
question of whether the parties were partners or engaged in a
joint venture is immaterial. Such a relationship is not a
prerequisite to a finding of a fraudulent misrepresentation in
this case. For the elements of such a claim, see, e.g., Devorak,
907 S.W.2d at 819; McKinney, 852 S.W.2d at 237.
Secondly, Carrico argues that he had no duty to
disclose to Bagby the nature of his dealings with the Millers.
We find this argument to be without merit. Carrico did have an
obligation to respond truthfully when Bagby asked him the
purchase price of the property. This is not a case of fraudulent
concealment; on the contrary, it involves an affirmative
misrepresentation. As found by the trial court, Carrico stated
that he was paying $3,450 per acre for the property.
7
Carrico maintains that the proof does not establish that he made
that representation to Bagby. He supports this contention by
pointing out that the parties’ testimony on this point is in
conflict, and that another witness, Bert Pat Wolfe, Jr.,
testified that he did not specifically hear Bagby ask Carrico if
the Millers were selling Carrico the land for $3,450 per acre.
Wolfe’s testimony, however, indicates that Carrico did
specifically represent to Bagby that $3,450 per acre was the
purchase price:
Q. Tell the Court what you heard and what
was said and what the price was.
A. Well, while we were standing in the road
looking at the property... Dr. Bagby
confirmed with Mr. Carrico that thirty-four
hundred and fifty ($3,450.00) dollars was the
price per acre that they were paying. Mr.
Carrico confirmed that thirty-four hundred
and fifty ($3,450.00) dollars was the
purchase price.
Q. And is there any doubt in your mind about
that?
A. That thirty-four hundred and fifty
($3,450.00) dollars was the price?
Q. Right.
A. No sir.
Q. For the whole tract.
A. For the whole tract.
Q. Did you understand it that Dr. Bagby and
Mr. Carrico were going to split the tract at
some point in time?
A. Yes sir. Twenty acres each.
The trial court obviously accredited this testimony, along with
that of Bagby. Again, these determinations pertain to the
8
credibility of the witnesses and are entitled to great weight on
appeal. Massengale, 915 S.W.2d at 819; Bowman, 836 S.W.2d at
566. We have found no “clear, concrete and convincing” evidence
to contradict the trial court’s credibility determinations.
Tennessee Valley Kaolin Corp., 526 S.W.2d at 490.
Finally, Carrico contends that, if he did make a
misrepresentation, Bagby’s reliance on his misrepresentation was
not reasonable, due to the fact that Bagby had equal access to
the information in question, i.e., the true purchase price of the
property from the Millers. In support of his argument, Carrico
cites three cases for the proposition that a party’s reliance
upon a fraudulent misrepresentation is not reasonable where the
means of knowledge is readily within that party’s reach. See
McKinney, 852 S.W.2d at 239; Solomon v. First American Nat’l
Bank, 774 S.W.2d 935, 943 (Tenn.App. 1989); Winstead v. First
Tennessee Bank N.A., Memphis, 709 S.W.2d 627, 633 (Tenn.App.
1986).
The facts of the McKinney and Solomon cases are
inapposite to those of the instant case. In the Winstead case,
which did involve a sale of real property, the Court of Appeals
stated that the general rule regarding justifiable reliance and
the means of knowledge is applicable
[u]nless the representations are such as are
calculated to lull the suspicions of a
careful man into a complete reliance
thereon....
9
Winstead, 709 S.W.2d at 633. We find that this language is
particularly applicable to the facts of the instant case. It is
apparent that Carrico’s representations were calculated to
reasonably induce in Bagby a belief that Carrico was paying
$3,450 per acre for the subject property. It is also clear that
Bagby relied completely on Carrico’s representations. Having
misrepresented a material fact to one who had placed his trust in
him, Carrico cannot now claim that the injured party should have
independently discovered that he was not telling the truth. Id.
Furthermore, we disagree with Carrico’s contention that Bagby
“had equal access to the information in question.” Bagby was
under no duty to contact the Millers, or to investigate the terms
of their agreement with Carrico; nothing that Carrico did or said
was reasonably calculated to make Bagby suspicious or put him on
notice that something was amiss. Likewise, Bagby should not be
charged with constructive notice of the actual purchase price
simply because that amount was reflected on a deed recorded only
hours before the closing of his own transaction with Carrico. In
any event, it has been held that one who practices bad faith upon
another may not invoke the doctrine of constructive notice in aid
of his own wrongdoing. Hamilton v. Galbraith, 15 Tenn.App. 158,
175 (1932). For these reasons, we find no merit in Carrico’s
contention that Bagby’s reliance upon his representations was
unjustified.
We find that the evidence does not preponderate against
the trial court’s findings that Carrico made a misrepresentation
of an existing fact; that the representation was false when made;
that the representation was in regard to a material fact; that
10
Carrico made the false representation knowingly; that Bagby
reasonably relied on Carrico’s misrepresentation; and that Bagby
suffered damages as a result of the misrepresentation. See
Devorak, 907 S.W.2d at 819; McKinney, 852 S.W.2d at 237.
We do not find it necessary or appropriate to examine
the trial court’s alternative basis of liability under the Act.
It is not necessary because the lower court’s judgment can be
sustained on the plaintiff’s theory of fraudulent
misrepresentation; it is not appropriate because Carrico advances
no issues under the Act. See Rules 13(b) and 27(a)(4), T.R.A.P.
V
The appellee Bagby contends that, since Carrico’s acts
were intentional, the damages awarded by the trial court should
be multiplied. As stated earlier, the applicable measure of
damages in a case of fraudulent misrepresentation is the amount
of actual damages sustained by the defrauded party. Harrogate
Corp., 915 S.W.2d at 817; Youngblood, 815 S.W.2d at 518. In
contrast, treble damages are available under the Act to remedy
willful or knowing violations; however, the Act vests the trial
court with broad discretion in determining whether to award such
relief. T.C.A. § 47-18-109(a)(3); see also Smith v. Scott Lewis
Chevrolet, Inc., 843 S.W.2d 9 (Tenn.App. 1992). Assuming,
without deciding, that the Act applies to this transaction,1 we
find no abuse of discretion in the trial court’s decision not to
1
Cf. Ganzevoort v. Russell, 949 S.W.2d 293 (Tenn. 1997).
11
multiply the damages. Likewise, to the extent that Bagby argues
that he is entitled to punitive damages, we do not find that the
evidence preponderates against the trial court’s finding that
Bagby failed to prove the requisite “egregious conduct” by clear
and convincing evidence, as required by Hodges v. S.C. Toof &
Co., 833 S.W.2d 896, 901 (Tenn. 1992).
Bagby seeks counsel fees for this appeal, contending
that it is frivolous in nature under T.C.A. § 27-1-122. We
disagree; therefore, his request is denied.
Accordingly, the judgment of the trial court is in all
respects affirmed. Costs on appeal are taxed to the appellant
and his surety. This case is remanded to the trial court for the
enforcement of the judgment and collection of costs assessed
below, all pursuant to applicable law.
__________________________
Charles D. Susano, Jr., J.
CONCUR:
_________________________
Houston M. Goddard, P.J.
_________________________
William H. Inman, Sr.J.
12