IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 12, 2014 Session
DAVID M. DULANEY, ET AL. v. DON WALKER CONSTRUCTION, ET AL.
Appeal from the Circuit Court for Hamilton County
No. 11C1471 W. Neil Thomas, III, Judge
No. E2013-00805-COA-R3-CV-FILED-JULY 30, 2014
David M. Dulaney and Traci L. Dulaney (“Plaintiffs”) sued Don Walker Construction
(“Walker Construction”) and Rhonda P. Walker (collectively “Defendants”) with regard to
real property and a house constructed and sold by Defendants to Plaintiffs. After a trial, the
Circuit Court for Hamilton County (“the Trial Court”) entered its judgment finding and
holding, inter alia, that Plaintiffs had failed to prove negligent construction and had failed
to prove misrepresentation and violations of the Tennessee Consumer Protection Act.
Plaintiffs appeal. We find and hold that the evidence does not preponderate against the Trial
Court’s findings, and we affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed;
Case Remanded
D. M ICHAEL S WINEY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
J R., C.J., and T HOMAS R. F RIERSON, II, J., joined.
Whitney Durand, Chattanooga, Tennessee, for the appellants, David M. Dulaney and Traci
L. Dulaney.
David L. Franklin, Chattanooga, Tennessee, for the appellees, Don Walker Construction and
Rhonda P. Walker.
OPINION
Background
Plaintiffs filed suit against Defendants in December of 2011 alleging, in
pertinent part, negligent construction, misrepresentation, and violation of the Tennessee
Consumer Protection Act. Plaintiffs sought, among other things, rescission of the agreement
for their purchase of the property at issue. The case was tried without a jury in November
of 2012.
In late 2009, Plaintiffs entered into a contract to purchase from Defendants real
property with a house located in Hamilton County, Tennessee near Savannah Bay (“the
Property”). The house (“the House”) was under construction by Defendants at that time.
Because the Property was affected by the 690 contour line and TVA had a property interest
in the land below the 690 contour line, Walker Construction applied for permission from the
Tennessee Valley Authority (“TVA”) for a deed modification to allow construction of the
House. TVA granted conditional approval to begin construction, but up to the time of trial
of this case, TVA had not granted a final deed modification.
Plaintiffs alleged that because the Property was affected by the 690 contour
line, Defendants were required to comply with TVA requirements pertaining to grading, and
that because Defendants allegedly did not so comply with the TVA requirements, TVA could
require either Plaintiffs or Defendants to remove the House from the Property. Plaintiff Mr.
Dulaney admitted that he had a conversation with Mr. Walker while the House was being
constructed. During that conversation, Mr. Walker showed Mr. Dulaney a “silk [sic] fence”
on the Property and explained that the real property beyond this fence was TVA property.
Mr. Dulaney asked if he could build a gazebo on this land, and Mr. Walker told him that he
could not build anything “structural-wise” on the property that TVA had an interest in or
TVA could require that it be torn down.
With regard to the 690 line, Mr. Walker testified that an application was
submitted to TVA to allow Defendants to fill below the existing 690 contour line to make
buildable lots. Dirt was added to the front portion of the Property to move the 690 line
backward on the lot to allow for building the House above the 690 line. Mr. Walker testified
that the area where the House was constructed was at or above the 690 line by virtue of the
added dirt.
Mr. Walker asserted that he paid all of the fees necessary to obtain the deed
modification from TVA and that the fact that the deed modification was not obtained was
due to someone else’s mistake, either TVA or the title company. An August 2, 2012 letter
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from TVA introduced as an exhibit at trial stated that although Mr. Walker had paid the
required fees, the deed modification could not be granted to Mr. Walker as he no longer was
the fee owner of the Property. The letter from TVA stated that in order to obtain a deed
modification the owner of the Property would need to submit a new application and an
application fee of $5,000 and would then be responsible for administrative costs including
title research and document preparation costs.
The sale of the Property to Plaintiffs closed in early 2010. Plaintiffs moved
into the House shortly before the closing and lived there until June or July of 2011, when
they moved to South Carolina. Plaintiffs began to build a deck on the House in March of
2010, and Mr. Dulaney discovered a water problem while digging. Plaintiffs contacted Mr.
Walker, who, after investigating determined that a water line had broken. Walker
Construction repaired the water line.
In March of 2011, Plaintiffs installed a sump pump near a foundation wall of
the House. Plaintiffs alleged that the sump pump drained water far in excess of a normal
amount. Mr. Walker testified at trial that the water going through the sump pump did not
come from under the foundation, but rather from rain and from a creek behind the House
flooding.
Plaintiffs had another problem with water running down the driveway and
allegedly getting under the slab. Plaintiffs contacted Defendants about this problem, and
Walker Construction installed a curb to deflect that water. Plaintiffs also notified Defendants
in the fall of 2011 about the need for a second gutter and problems they were having in
getting it installed. Defendants contacted the gutter installer and had the job done in about
a week. Defendants also replaced or repaired some cracked man-made rock on the outside
of the House at Plaintiffs’ request. Additionally, Plaintiffs complained about cracks in tiles
in the bathroom. Defendants offered to replace these tiles, but Plaintiffs filed this suit before
the replacement could be done. Plaintiff Mr. Dulaney testified at trial that he did not blame
Defendants for not replacing the tiles after suit was filed. Mr. Dulaney agreed that other than
the tiles, Defendants repaired everything that Plaintiffs requested.
Plaintiffs put the House on the market for sale in August of 2011. They
originally listed it for around $176,400. Plaintiffs received one offer for around $150,000,
which they declined. Plaintiffs took the House off the market in November of 2011.
In January of 2012, Plaintiffs rented the House. The renters are paying the
rental company $1,250 per month, and Plaintiffs net over $1,000 a month of that rent.
Plaintiffs’ mortgage on the House is $920 per month. The renters have a one year lease on
the House. At the time of trial Mr. Dulaney believed that the renters would renew the lease.
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The House was appraised in April of 2012 for a fair market value of $162,500.
The appraiser, William Haisten, testified that the value of the House is less than what
Plaintiffs paid due to the current market and not because of the condition of the House.
Realtor Charles W. Walldorf testified as an expert for Plaintiffs. Mr. Walldorf
visited the Property, reviewed Mr. Haisten’s appraisal of the House, and reviewed the
disclosure statement prepared for the potential sale of the House. Mr. Walldorf testified:
this particular home seemed to be in very good order. It was well kept. It is
leased at this point. The tenants were keeping it well. And as I mentioned, I
have noticed . . . - - some cracks in the concrete, in the garage, and that type
of thing. But other than that, it looked fairly normal.
He testified: “The home is salable, but at a very reduced price, I feel.” Mr. Walldorf testified
that he spent about 40 minutes in the House and that the tenants did not complain to him
about any problems with the House. He admitted that the House was in good shape and was
a good, habitable home. Mr. Walldorf further admitted that it was not uncommon to find
cracks in concrete floors or in sheet rock walls in buildings in Hamilton County.
Michael Allen Price of MAP Engineers, LLC performed engineering work for
Walker Construction in the subdivision where the Property is located. Mr. Price testified that
he prepared a master grading plan for the development. Mr. Price had no knowledge of
whether compacted fill was used during the preparation of the Property for construction of
the House. It was not within the scope of his services to determine whether compaction was
suitable.
Mr. Price never had any conversations with Mr. Walker or anyone else about
the construction of the House. Mr. Price does not know what was used to backfill during
construction of the House. Mr. Price was asked what he would have used in the construction
of the House as backfill if he did not use gravel, and he testified that he would most likely
use chert, which is a specific type of dirt. He agreed, however, that it was an acceptable
building practice in Hamilton County to use limestone as backfill. When asked if it was
acceptable to use limestone specifically in the construction of the House, Mr. Price stated:
“That’s not an easy question to answer yes or no on. It’s going to depend upon the
conditions that are encountered at the time of construction whether or not that would be
acceptable.”
With regard to the foundation and fill used during construction of the House,
Mr. Walker testified:
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We pushed up the dirt that was there up against the wall, put the gravel on the
inside, put the dirt on the outside. That’s why your footing shows it to be deep
because we backfilled it. When the footing was dug, it wasn’t that deep. . . .
If it had been fill dirt and you built on fill dirt, yes, it would crumble. So when
you dig through that to hardened ground, it prevents that.
Mr. Walker was asked if using gravel as was used, not dirt, inside the foundation walls would
lead to instability, and he stated:
No, sir. It’s better stability. . . . It’s better stability, just like you said a while
ago. You backfill it with dirt and that dirt is going to settle, and you’re going
to have a void between the dirt and your concrete. And if that void is enough,
that concrete will absolutely enclose and crack, but it won’t with gravel
because gravel doesn’t settle.
Mr. Walker then was asked if dirt didn’t attract the water that allegedly got through the
foundation wall of the House, and he stated:
It didn’t come out of the foundation. All that said is it went through the pump.
When that pump is sitting out in the open for rain to go into it and the back
waters of the creek to flood up and it goes into that pump, it’s going to pump
it out too. It doesn’t know where it’s coming from. So there is no way it can
be said that 42,000 gallons of water came out of that foundation. It’s a fact.
Mr. Walker testified that the requirement on the grading plan calling for
compacted dirt below 690 feet was met. Mr. Walker agreed that when gravel is used water
can collect inside foundation walls and stated that this is what happened when the water line
burst. Mr. Walker explained that he built the House on a slab and that he put in a vapor
barrier on top of the gravel to prevent moisture underneath the House from coming up into
the House.
With regard to Mr. Price’s testimony regarding using chert, Mr. Walker stated:
I don’t agree with that because dirt settles unless it’s compacted. Now, he
didn’t say anything about putting compacted dirt in it; he just said put chert in
there.
If I filled this thing up with chert, levelled [sic] it, put my vapor barrier,
poured the slab, within six months, the floor would be cracking the size you
could put your hand in, not hairline cracks, because dirt compacts itself,
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especially with tons of concrete on it. That’s why I go to - - now, if I had used
chert, it’s $50 a load. It’s a lot cheaper. Gravel is $300 a load, but much better
material.
After trial the Trial Court entered its Memorandum and Judgment on February
26, 2013 finding and holding:
This matter was tried before the undersigned on [November 6, 7, 8, and
9, 2012]. Originally, this case was set for a jury trial, but the parties then
waived their rights to a jury trial, and the matter was tried before the
undersigned. In their post-trial memorandum of law, Plaintiffs dropped their
claim for breach of warranties and punitive damages, relying instead on the
remaining theories of recovery and treble damages under the Tennessee
Consumer Protection Act. Those other theories are rescission of the agreement
for the sale of the home in question and restitution for mortgage payments, real
estate tax and repairs. Although the Plaintiffs have stated that they have only
two claims, rescission and restitution, these are the remedies which they seek
under a variety of legal and factual theories. The Court will attempt to discuss
each of these.
Before discussing each of those theories, the Court would like to set
forth the chronology of the main claim underlying this lawsuit, namely, a deed
modification which was requested of Tennessee Valley Authority (“TVA”)
with respect to filling a portion of the lot of the Plaintiffs to what is known as
the 690 line. This lot is one of many lots in three subdivisions developed by
D & M Properties, LLP (“D & M”) in the Savannah Bay area of Hamilton
County. On July 28, 2005, Don Walker (“Walker”) filed an application with
TVA to be able to fill the property to the 690 line. On August 10, 2005,
Walker submitted the paperwork for a deed modification. On December 8,
2006, TVA approved the application to fill the Plaintiffs’ lot and would record
a deed modification if all conditions regarding the filling and construction on
the lots were complied with. A contract to purchase was signed on December
4, 2009 by the Plaintiffs with Walker. The house was built on slab with
limestone gravel fill. Closing on the home took place on March 4, 2010, with
Gateway Title Company, LLC, as the closing agent. No conditions were
noted, and title insurance was issued. The Dulaneys lived in the home until
July, 2011, when they moved to Anderson, South Carolina. The Plaintiffs
contend that they have encountered other problems with the property, such as
alleged excessive water containment under the slab, cracks in tile and exterior
brick and excessive water in the TVA property behind their lot.
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The home has been rented by the Plaintiffs since January, 2012, for
$1,250 per month with a mortgage of $900 per month. Except for the water
and some of the cracks, Walker has repaired the property pursuant to
complaints of the Plaintiffs. Some of the cracks were not cured because this
lawsuit was filed.
Returning to a discussion of the deed modification, Walker testified at
the time of the closing he thought he had paid all of the fees of TVA. Walker
received a copy of a letter sent by TVA to Deborah Fisher1 , dated February 2,
2012. At that time, Walker determined that the amount TVA was claiming
was $1,035.40, which he paid on February 23, 2012. By letter dated May 7,
2012, TVA acknowledged that all fees had been paid but a further glitch arose.
TVA stated that although all fees had been paid, it could not record the deed
modification because Walker was no longer the owner. TVA then advised that
the new owner would have to re-start the process with an initial deposit of
$5,000. It is interesting to note that the tract referenced in letter of September
26, 2011, from TVA in which TVA indicated that $1,035.40 remained to be
paid, was not the tract upon which the Plaintiffs’ house was built.
Addressing first the claim of negligence in the construction of the
house, the main complaint lies with respect to the limestone placed under the
slab. Although Plaintiffs’ expert, Mike Price, stated that he would have filled
with chert, he said it was acceptable for Walker to fill with limestone. Even
if it were impermissible, there is no evidence of the amount of damage. The
same applies with respect to the allegations of cracks. There is no evidence of
the cause of the cracks or the damage associated therewith.
With respect to negligent misrepresentation and misrepresentation, the
Court does not believe that the evidence preponderates in favor of the
Plaintiffs on these claims, except perhaps with respect to the TVA “wetlands.”
Even on this theory, the Plaintiffs were aware that there was a creek on the
TVA property and that that creek overflowed. Finally, with respect to these
claims, there is no evidence of the amount of damage which may have been
caused by such misrepresentations. The same may be said of the claim for
violation of the Consumer Protection Act. Accordingly, the remedy of
rescission is not appropriate.
1
Fisher is a neighbor of the Plaintiffs.
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In short, Plaintiffs have not prevailed upon their claims by a
preponderance of the evidence. Even if they had, there is evidence of
comparative fault on the part of TVA and the title company which closed the
transaction. To be liable in comparative fault, a party does not have to be a
party to the lawsuit. If the title company had noted that the deed modification
was not of record at the time of the closing, the entire problem with respect to
the deed modification would likely have been satisfied. Likewise, if TVA had
acted promptly with respect to the payments made by Walker, Walker would
still have been a title owner and able to accept the deed modification. For the
foregoing reasons, judgment will be entered in favor of the Defendants.
(footnote in original). Plaintiffs appeal the Trial Court’s judgment to this Court.
Discussion
Although not stated exactly as such, Plaintiffs raise four issues on appeal: 1)
whether the Trial Court made sufficient findings of fact; 2) whether Plaintiffs proved their
claim for negligent construction; 3) whether Plaintiffs proved that Defendants made
negligent misrepresentations; and, 4) whether Plaintiffs proved that Defendants violated the
Tennessee Consumer Protection Act. Defendants raise an issue regarding whether Plaintiffs
proved that TVA or Gateway Title, LLC were liable for comparative fault, and also filed a
motion with this Court seeking consideration of post-judgment facts.
Our review is de novo upon the record, accompanied by a presumption of
correctness of the findings of fact of the trial court, unless the preponderance of the evidence
is otherwise. Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001).
A trial court’s conclusions of law are subject to a de novo review with no presumption of
correctness. S. Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710 (Tenn.
2001).
We first address whether the Trial Court made sufficient findings of fact.
Pursuant to Tenn. R. Civ. P. 52.01:
In all actions tried upon the facts without a jury, the court shall find the facts
specially and shall state separately its conclusions of law and direct the entry
of the appropriate judgment. . . . If an opinion or memorandum of decision
is filed, it will be sufficient if the findings of fact and conclusions of law
appear therein. . . .
Tenn. R. Civ. P. 52.01.
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In their brief on appeal, Plaintiffs argue that the Trial Court failed to make
sufficient findings of fact in this case. We disagree. In its judgment, quoted above, the Trial
Court did make specific findings of fact relative to the issues which were tried. While some
of the findings of fact that the Trial Court made are brief, this brevity is because little or no
evidence was presented with regard to that specific fact. We find the Trial Court made
sufficient findings of fact in this case given the evidence presented to it. This issue is
without merit.
We next consider whether Plaintiffs proved their claim for negligent
construction. As our Supreme Court has explained:
In order to establish a prima facie claim of negligence, basically defined as the
failure to exercise reasonable care, a plaintiff must establish the following
essential elements: “(1) a duty of care owed by defendant to plaintiff; (2)
conduct below the applicable standard of care that amounts to a breach of that
duty; (3) an injury or loss; (4) cause in fact; and (5) proximate, or legal, cause.”
Morrison v. Allen, 338 S.W.3d 417, 437 (Tenn. 2011) (quoting Giggers v. Memphis Hous.
Auth., 277 S.W.3d 359, 364 (Tenn. 2009)).
With regard to the claim of negligent construction, the Trial Court found and
held:
[Plaintiffs’] main complaint lies with respect to the limestone placed under the
slab. Although Plaintiffs’ expert, Mike Price, stated that he would have filled
with chert, he said it was acceptable for Walker to fill with limestone. Even
if it were impermissible, there is no evidence of the amount of damage. The
same applies with respect to the allegations of cracks. There is no evidence of
the cause of the cracks or the damage associated therewith.
A careful and thorough review of the record on appeal reveals that the evidence does not
preponderate against these findings made by the Trial Court. As such, we find no error in
the Trial Court’s holding that Plaintiffs failed to prove negligent construction.
We next consider whether Plaintiffs proved that Defendants made negligent
misrepresentations. Our Supreme Court has explained that: “[T]o succeed on a claim for
negligent misrepresentation, a plaintiff must establish ‘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
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relied on the information.’” Morrison, 338 S.W.3d at 437 (quoting Walker v. Sunrise
Pontiac-GMC Truck, Inc., 249 S.W.3d 301, 311 (Tenn. 2008)).
With regard to this issue, the Trial Court specifically found and held:
With respect to negligent misrepresentation and misrepresentation, the
Court does not believe that the evidence preponderates in favor of the
Plaintiffs on these claims, except perhaps with respect to the TVA “wetlands.”
Even on this theory, the Plaintiffs were aware that there was a creek on the
TVA property and that that creek overflowed. Finally, with respect to these
claims, there is no evidence of the amount of damage which may have been
caused by such misrepresentations. The same may be said of the claim for
violation of the Consumer Protection Act. Accordingly, the remedy of
rescission is not appropriate.
The evidence in the record on appeal does not preponderate against these findings made by
the Trial Court. As such, we find no error in the Trial Court’s holding that Plaintiffs failed
to prove negligent misrepresentation.
Next, we consider whether Plaintiffs proved that Defendants violated the
Tennessee Consumer Protection Act. Our Supreme Court has explained: “The Tennessee
Consumer Protection Act forbids ‘unfair or deceptive acts or practices affecting the conduct
of any trade or commerce.’ Tenn. Code Ann. § 47-18-104(b). The Act covers the transfer
of real property . . . .” Fayne v. Vincent, 301 S.W.3d 162, 172 (Tenn. 2009). The Fayne
Court further informed:
Negligent misrepresentations may be found to be violations of the Act. A
deceptive act or practice is, in essence, “a material representation, practice or
omission likely to mislead . . . reasonable consumer[s]” to their detriment.
In a transaction involving the sale of real property, the seller has a duty
to disclose to the buyer material facts that affect the property’s value and that
are not known or reasonably discoverable by a purchaser exercising ordinary
diligence.
Id. at 177 (citations omitted).
With regard to this issue, the Trial Court specifically found, as discussed above,
that Plaintiffs had not proven their claims of misrepresentations and further that Plaintiffs had
not proven any damages. The evidence in the record on appeal does not preponderate against
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the Trial Court’s findings relevant to this claim. Given this, we find no error in the Trial
Court’s holding that Plaintiffs failed to prove their claim of violation of the Tennessee
Consumer Protection Act.
Finally, we turn to Defendants’ issue regarding whether Plaintiffs proved that
TVA or Gateway Title, LLC were liable for comparative fault, and to Defendants’ motion
to consider post-judgment facts. Specifically, Defendants request that this Court take notice
of the fact that TVA granted a deed modification post-trial abandoning their easement rights
to the Property. Our disposition of Plaintiffs’ issues, as discussed above, has rendered the
issue of comparative fault moot. Similarly, Defendants’ motion to consider post-judgment
facts also is rendered moot by our resolution of Plaintiffs’ issues. We, therefore, need not
consider the issue raised by Defendants, and we deny Defendants’ motion to consider post-
judgment facts as it is moot.
The Trial Court made sufficient findings of fact and conclusions of law given
the evidence presented to it. The evidence does not preponderate against any of the Trial
Court’s findings, and these findings support the Trial Court’s conclusions of law. Given all
of the above, we affirm the Trial Court’s February 26, 2013 Memorandum and Judgment.
Conclusion
The judgment of the Trial Court is affirmed, and this cause is remanded to the
Trial Court for collection of the costs below. The costs on appeal are assessed against the
appellants, David M. Dulaney and Traci L. Dulaney, and their surety.
_________________________________
D. MICHAEL SWINEY, JUDGE
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