Legal Research AI

Murvin v. Cofer

Court: Court of Appeals of Tennessee
Date filed: 1997-12-08
Citations: 968 S.W.2d 304
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18 Citing Cases

                 IN THE COURT OF APPEALS OF TENNESSEE




THEOREN J. MURVIN and
MELODY S. MURVIN,
                                 )
                                 )
                                                        FILED
                                      C/A NO. 03A01-9702-CH-00055

                                 )                      December 8, 1997
          Plaintiffs-Appellees, )
                                 )                      Cecil Crowson, Jr.
                                 )                      Appellate C ourt Clerk
                                 )
v.                               )    APPEAL AS OF RIGHT FROM THE
                                 )    HAMILTON COUNTY CHANCERY COURT
                                 )
                                 )
                                 )
                                 )
THOMAS F. COFER and              )
CYNTHIA H. COFER,                )
                                 )    HONORABLE HOWELL N. PEOPLES,
          Defendants-Appellants. )    CHANCELLOR




For Appellants                        For Appellees

JERRY H. SUMMERS                      PAUL CAMPBELL III
JIMMY F. RODGERS, JR.                 WILLIAM R. HANNAH
Summers & Wyatt, P.C.                 Campbell & Campbell
Chattanooga, Tennessee                Chattanooga, Tennessee




                           OPINION




VACATED IN PART
AFFIRMED IN PART
REMANDED WITH INSTRUCTIONS                                  Susano, J.

                                  1
              This dispute arose out of the sale of a residence in

Signal Mountain, Tennessee.          The trial court found that the

sellers, Thomas F. Cofer and wife, Cynthia H. Cofer, had violated

the Tennessee Consumer Protection Act of 1977 (“the Act”) in

connection with the sale of their five-bedroom, two and a half-

bath residence to the plaintiffs, Theoren J. Murvin and wife,

Melody S. Murvin.        The Cofers appealed, arguing that the Act does

not apply to this transaction, and that the evidence does not

show that the Cofers “knowingly withheld information from the

[Murvins] to constitute fraud.”



              The Murvins contend, on the other hand, (1) that the

evidence does not preponderate against the trial court’s finding

that the Cofers willfully and affirmatively misrepresented the

condition of the property; (2) that the Act applies to this

transaction; (3) that the defendants cannot rely upon the

inapplicability of the Act because they agreed in the trial court

that it was applicable; (4) that, even if the Act is not

applicable to the facts of this case, there is sufficient

evidence in the record to sustain the trial court’s judgment on

the plaintiffs’ alternative theories of recovery; (5) that we

erred in staying execution of the judgment; and, finally, (6)

that this appeal is frivolous, entitling the plaintiffs to

damages pursuant to T.C.A. § 27-1-122.1



     1
         T.C.A. § 27-1-122 provides as follows:

              When it appears to any reviewing court that the appeal
              from any court of record was frivolous or taken solely
              for delay, the court may, either upon motion of a
              party or of its own motion, award just damages against
              the appellant, which may include but need not be
              limited to, costs, interest on the judgment, and
              expenses incurred by the appellee as a result of the
              appeal.

                                        2
                      I.    Standard of Review



           Our review of this non-jury case is de novo on the

record; 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, 919 S.W.2d 26, 35

(Tenn. 1996); Presley v. Bennett, 860 S.W.2d 857, 859 (Tenn.

1993).



           Our de novo review is tempered by the well-established

rule 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 v. Perry, 526 S.W.2d 488, 490 (Tenn.App.

1974).




                                  3
4
                                   II.   Facts



              The plaintiffs purchased the subject residence for

$174,500.      The purchase was closed on April 15, 1994.            The

plaintiffs first saw and toured the house on February 20, 1994,

at which time they were furnished a three-page document signed by

the defendants entitled “Seller’s Disclosure of Condition of

Property.”      The plaintiffs were at the house for approximately an

hour, during which time they did not notice any problems.



              On April 16, 1994, the plaintiffs moved into their new

residence.      Following their occupancy, rain produced water leaks

from the upstairs ceiling and water in the basement.                 Thereafter,

they discovered numerous structural and other problems.



              The plaintiffs sued the defendants on April 26, 1995.

Their complaint sought “equitable remedies and legal damages”

against the defendants “for fraud, intentional and/or negligent

misrepresentation, breach of contract, and negligence.”                After

reciting facts to demonstrate the trial court’s jurisdiction and

venue, the complaint sets forth a “factual background.”                The

remainder of the allegations of the complaint are grouped under

three headings: violations of the Act; common law fraud; and

negligent construction and repair.           The complaint prays for

damages, attorney’s fees, and costs under the Act, including

treble damages under T.C.A. § 47-18-109(a)(3).2             In the


     2
         T.C.A. § 47-18-109(a)(3) provides as follows:

              If the court finds that the use or employment of the
              unfair or deceptive act or practice was a willful or
              knowing violation of this part, the court may award
              three (3) times the actual damages sustained and may

                                         5
alternative, the complaint seeks compensatory and punitive

damages “for defendants’ fraudulent misrepresentations.”



          The defendants’ answer, among other things, denies the

plaintiffs’ operative allegations under the Act.          As particularly

pertinent to one of the issues before us on this appeal, the

defendants responded that they



          would show that [the defendant Mr. Cofer] has
          not engaged in the business of a residential
          builder or a general contractor,...



                    III.   Trial Court’s Judgment



          The trial court found that the plaintiffs were entitled

to compensatory damages of $4,294 as a result of damage done to

the driveway and front lawn by the defendants at and about the

time they moved from the subject residence.         The court

specifically found that these damages, while compensable, “were

[not] caused...by the violations of the...Act.”



          Turning to the plaintiffs’ other complaints regarding

structural, water-related and numerous other defects and

deficiencies, the trial court made specific findings:



          The Court finds that the plaintiffs relied
          upon the [defendants’] disclosure documents
          in purchasing the house. The plaintiffs may
          also have relied upon an inspection to be
          made...by a Veterans Administration
          inspector; however, the fact that they may



          provide such other relief as it considers necessary
          and proper.

                                    6
have also relied upon that inspection does
not take away from the fact that




                      7
in making the purchase, the offer and price,
and       also in weighing the
          inspection by a VA
          inspector, they were also
          entitled to rely upon the
          disclosures made by the
          defendants.

The Court finds that the defendants are not
engaged in the business of building houses
for resale, that the house in question was
initially built by the defendants to be used
as their residence, and they subsequently
determined that they would sell that house
after they had contracted to purchase another
house.

The Court finds that there were significant
problems with the house at 2908 Reynard
Trail, and that those problems preexisted the
sale of the house to the plaintiffs, and that
the defendants had an obligation to disclose
certain of those problems to the plaintiffs.
This duty of disclosure arises under the
Tennessee Consumer Protection Act found at
TCA 47-18-101 and subsequent numbers.

The defendants also made a disclosure
required of persons selling real
estate,...and that disclosure was incomplete,
and at least in certain areas, incorrect.

In pertinent part, the Court finds that the
disclosure statement...should have at least
revealed the fact that the house had never
passed inspection by the Building Inspector,
that there were problems with the stairwell,
and that the house had not been constructed
by a licensed builder or contractor, that
there had been leaks in the roof, and that
the problems of water and mud in the basement
had not been cured.

It’s significant to note that both Mr. Cofer
and his realtor admitted in their testimony
that he failed to disclose matters that a
buyer would want to know prior to purchase of
a house.

                 *    *    *

Mr. Greer [the plaintiffs’ expert] has also
testified as to other defects in the home
which he attributed in part to poor
construction, in part to violations of
building codes, in part to the use of
improper materials, and in part to poor
workmanship. These matters all can be traced

                      8
              to the fact that an unlicensed contractor or
              builder...construct[ed] this home. It can be
              traced to the fact that the home never passed
              a final building inspection. The amount
              necessary to correct these problems as
              testified by Mr. Greer was $40,403.



The trial court then concluded that the actual damages associated

with the defendants’ violations of the Act should be doubled:



              In an action of this nature under the
              Consumer Protection Act, TCA 14-18-109
              provides that the Court may award treble
              damages for a violation of the Act, if the
              Court finds that the unfair or deceptive act
              or practice was a willful or knowing
              violation of the Act.

              In this case, the Court does find that there
              was a willful or knowing violation of the
              Act.



Finally, the trial court held that the plaintiffs were entitled

to recover reasonable attorney’s fees under T.C.A. § 47-18-

109(e)(1)3 and later set those fees at $15,669.95.



              The court awarded a total judgment of $100,769.95,

broken down as follows:



              Damages not associated with the Act          $    4,294.00
              Actual damages under the Act                     40,403.00
              Double damages under the Act                     40,403.00
              Attorney’s Fees                                  15,669.95

                                                           $100,769.95
                                                           ===========



     3
         T.C.A. § 47-18-109(e)(1) provides as follows:

              Upon a finding by the court that a provision of this
              part has been violated, the court may award to the
              person bringing such action reasonable attorney’s fees
              and costs.

                                        9
10
                    IV.    Ganzevoort v. Russell



          After this case was tried, the Supreme Court released

its opinion in the case of Ganzevoort v. Russell, 949 S.W.2d 293

(Tenn. 1997).   A unanimous Supreme Court ruled that the Act does

not apply when, as in Ganzevoort, the defendant is “not in the

business of selling property as owners or brokers.” Id. at 298.

In so holding, the Court relied heavily upon the fact that two of

the stated purposes of the Act, as set forth in T.C.A. § 47-18-

102(2)&(4) refer, respectively, to “unfair and deceptive acts or

practices in the conduct of any trade or commerce” and “persons

engaged in business.”     949 S.W.2d at 298.   (Emphasis added.)    The

court pointed out that



          [a]lthough this language does not explicitly
          exclude from the Act sellers not in the
          business of selling property as owners or
          brokers, a reasonable construction is that
          they are not included.



The Supreme Court, in affirming the Court of Appeals’ reversal of

the trial court’s judgment in favor of the purchasers of a

residence, specifically stated that it reached a “different

conclusion” from that arrived at in the decision of the District

Court in the case of Klotz v. Underwood, 563 F.Supp. 335, 337

(E.D. Tenn. 1982), aff’d, 709 F.2d 1504 (6th Cir. 1983).      See

Ganzevoort, 949 S.W.2d at 298 n.3.     In holding that the Act

applied to the sale of a residence between a homeowner and

purchaser, the federal court had stated that it did not




                                  11
            find any persuasive indication in the Act
            that it does not apply to isolated sales
            between individuals.



Id. at 337.    Klotz was later followed in the unreported Tennessee

Court of Appeals’ case of Edwards v. Bruce, C/A No. 01A01-9510-

CH-00458, 1996 WL 383294 (Court of Appeals at Nashville, July 10,

1996).



            The plaintiffs in the instant case relied at trial on

the Klotz and Edwards cases in arguing that the Act applies to

the instant case even though the Cofers were not engaged in the

business of selling houses.4



            The plaintiffs argue before us that there are

significant differences between Ganzevoort and the instant case

and that those differences are such as to militate in favor of a

ruling that the Act does apply to the instant sale.            They rely

heavily upon the fact that Mr. Cofer, in effect, acted as his own

contractor when he built his house in 1989: he hired and paid the

subcontractors, he arranged for the permits, and, to the extent

the construction was supervised, he did so.           They also point out

that in Ganzevoort the sellers had no information regarding

defects in the house other than as reported to them by their

realtor and a carpenter hired to correct the problems; that the

purchasers in Ganzevoort did not rely on anything that the

sellers said about the house; that the sellers in that case tried



     4
       Apparently, the trial court’s attention was not called to another
unreported decision of the Court of Appeals that expressly disagreed with the
conclusion reached in the Klotz case. See White v. Eastland, C/A No. 01A01-
9009-CV-00329, 1991 WL 149735 (Court of Appeals at Nashville, August 9, 1991).

                                      12
to correct the problems; that the sellers in Ganzevoort did not

act as their own contractor; and that there were no statements or

representations regarding the residence’s condition in that case.



          The plaintiffs also rely on the following language in

Ganzevoort:



          Brokers, agents and other professional
          sellers of real property have knowledge and
          information superior both in quantity and
          quality to that of an average residential
          purchaser regarding factors and conditions
          that affect the value of the property they
          are offering for sale.



Id. at 299.   This statement was made in connection with the

Supreme Court’s analysis of the real estate agent’s liability in

that case.    While it is true that the Cofers, and particularly

Mr. Cofer, had superior knowledge regarding the problems with the

house, this does not change the fact that the basic holding of

Ganzevoort--that the Act does not apply to a sale by an

individual not in the business of selling houses--applies with

equal force to the factual scenario before us.    As we read

Ganzevoort, the criteria for applying the Act is not the extent

of a seller’s knowledge--sellers almost always have more

knowledge about their houses than do buyers--but whether or not

the seller is engaged in the business of selling houses.       The

defendants in Ganzevoort were not; the Cofers were not.    We find

and hold that the Act does not apply to the subject transaction.




                                 13
             V.   Waiver and Prospective Application



          The plaintiffs contend that even if the Act does not

apply to this transaction, the defendants cannot rely upon its

inapplicability because, according to the plaintiffs, the

defendants did not assert this position at trial.    They rely upon

those cases holding that “questions not raised in the trial court

will not be entertained on appeal.”   Lawrence v. Stanford, 655

S.W.2d 927, 929 (Tenn. 1983).   See also Tops Bar-B-Q, Inc. v.

Stringer, 582 S.W.2d 756, 758 (Tenn.App. 1977); Devorak v.

Patterson, 907 S.W.2d 815, 818 (Tenn.App. 1995); Atkins v.

Kirkpatrick, 823 S.W.2d 547, 551 (Tenn.App. 1991).



          When this case was tried below, both sides believed,

based on the Klotz and Edwards cases, that the Act applied to a

casual sale of a residence between individuals.     The plaintiffs

asserted this in their trial brief, and counsel for the

defendants expressed his view of the then-current state of the

law when he remarked in his opening statement as follows:



          ...I think the [plaintiffs’] trial brief
          insofar as it talks about the law accurately
          states the law with respect to the Consumer
          Protection Act. That Act has now been
          expanded to cover real estate. We don’t
          quarrel with that.



In closing argument, counsel for the defendants again stated that



          [t]he Consumer Protection Act certainly does
          cover real estate. That’s been established.
          I don’t quarrel with that.


                                14
The plaintiffs argue that these statements reflect that it was

the defendants’ position below that the Act applied to the

transaction before the court and that this position precludes

them from raising a Ganzevoort defense in this case.    We

disagree.



            The defendants’ answer controverted all of the

plaintiffs’ allegations with respect to the Act.    It had the

effect of denying each and every element of the plaintiffs’

alleged cause of action under the Act, including the plaintiffs’

allegation that the Act applies to the facts of this case.       If

the Act did not apply, the plaintiffs could not rely on its

provisions to sustain their claim for damages.    All of the

elements of the plaintiffs’ alleged cause of action under the

Act--including its applicability--were “in play” as a result of

the issues made by the pleadings.     As previously indicated, the

answer specifically states that the defendants are not engaged in

the business of selling houses--the linchpin of the ruling in

Ganzevoort.



            We do not understand counsel’s comments as a waiver of

the issues made in the pleadings.     While it is true that both

parties believed, based on the Klotz and Edwards cases, that the

Act applied, we cannot find in the record before us any conduct

on the part of the defendants or their counsel that would

preclude their reliance on Ganzevoort on this appeal.     Both

parties--and also the trial judge--proceeded on the assumption

that Klotz and Edwards expressed “good law.”     Ganzevoort, after



                                 15
the fact, held otherwise.     The issue was sufficiently raised

below to allow the defendants to raise it here.     Furthermore, it

is clear “that questions of law are not subject to stipulation by

the parties to a lawsuit and that a stipulation purporting to

state a proposition of law is a nullity.”     Mast Advertising &

Publishing, Inc. v. Moyers, 865 S.W.2d 900, 902 (Tenn. 1993).



          As to the plaintiffs’ argument that Ganzevoort should

be given prospective application only, we find nothing in that

case to suggest that it should not apply to the facts of this

case.   In Ganzevoort, the Supreme Court held, in effect, that the

Act has never been applicable to a casual sale of a residence.

The fact that there was a holding of a federal district court and

a decision of the Court of Appeals to the contrary does not

change this fact.     This is not a case where the Supreme Court

changes the law and specifically limits the cases to which it is

applicable.     See, e.g., McIntyre v. Balentine, 833 S.W.2d 52, 58

(Tenn. 1992).    The Supreme Court interpreted the Act as

originally enacted.    This means that the inapplicability of the

Act to a casual sale of a residence has always been the law even

though it was only recently pronounced authoritatively by the

Supreme Court.



          We find and hold that the issue of whether the Act

applies to the facts of this case was before the lower court; is

controlled by Ganzevoort; and is properly before us.




                                  16
                     VI.   Basic Damage Award



          Having determined that no portion of the judgment below

can be predicated on a finding that these casual sellers violated

the Act, we now turn to the plaintiffs’ argument that the damages

found to be associated with the Act can be sustained on one or

more of the plaintiffs’ alternate theories.     We agree that the

basic damage award associated with alleged violations of the Act

can be upheld on the plaintiffs’ alternative theory of common law

fraud.



          The elements of a fraud claim are set forth in the case

of Stacks v. Saunders, 812 S.W.2d 587 (Tenn.App. 1990):



          The basic elements for a fraud action are:
          (1) an intentional misrepresentation with
          regard to a material fact, (citation
          omitted); (2) knowledge of the representation
          falsity--that the representation was made
          “knowingly” or “without belief in its truth,”
          or “recklessly” without regard to its truth
          or falsity, (citation omitted); (3) that the
          plaintiff reasonably relied on the
          misrepresentation and suffered damage,
          (citations omitted); and (4) that the
          misrepresentation relates to an existing or
          past fact, (citation omitted),...



Id. at 592.   This subject is further addressed in the case of

Lonning v. Jim Walter Homes, Inc., 725 S.W.2d 682 (Tenn.App.

1986):



          For concealment or non-disclosure to
          constitute fraud, the party charged with
          fraud must have knowledge of an existing fact
          or condition and a duty to disclose the fact
          or condition. (Citation omitted). A party
          to a contract has a duty to disclose to the

                                17
            other party any material fact affecting the
            essence of the subject matter of the
            contract, unless ordinary diligence would
            have revealed the undisclosed fact.



Id. at 685.



            In the instant case, the trial court found that the

defendants “fail[ed] to adequately and completely disclose

factors that were of importance to the purchaser of a house,

information which was known to the defendants and not easily or

readily obtainable by the plaintiffs.”    The trial court found

that the disclosure statement signed by the defendants “was

incomplete, and at least in certain areas, incorrect.”    The court

found that these misrepresentations were made willfully or

knowingly.



            The evidence does not preponderate against these

findings.    While the lower court did not openly question the

credibility of Mr. Cofer, its findings of fact necessarily

involve a finding that he lacked credibility.    As previously

indicated, this credibility determination is entitled to great

weight on this appeal as we evaluate the preponderance of the

evidence.    See Tennessee Valley Kaolin, 526 S.W.2d at 490.



            The court found--and the evidence does not preponderate

against such a finding--that the defendants failed to reveal to

the purchasers that the house had failed three inspections by the

building inspector, even though the defendant Mr. Cofer

acknowledged that this was something in which a purchaser would

be interested.   This fact was not reflected on the disclosure

                                 18
statement, despite the fact the statement had the following

request for information:



           Please state any other facts or information
           relating to this property that would be of
           concern to a buyer.



Furthermore, there was an abundance of proof from which the trial

court could and did find that the disclosure statement failed to

reveal a problem with water in the basement and leaks in the

roof.   While the disclosure statement did disclose prior water

problems in the basement, it also reflected that those problems

had been “corrected by [a] sump pump.”    When asked on the

statement if the roof “leak[ed] or has it previously leaked,” the

defendants checked the “No” line.    There was evidence, and

reasonable inferences that could be drawn from that evidence,

from which one could reasonably conclude that both of these

representations were false and known by the defendants to be

false when made.



           The disclosure statement reflects that there had been

no “settling, flooding, drainage, grading or soil problems.”    The

plaintiffs’ expert testified to a number of problems falling

within these areas.



           The trial court found that many of the problems

testified to by the plaintiffs’ expert could “be traced to the

fact that an unlicensed contractor or builder...construct[ed]

this home [and that] the home never passed a final building

inspection.”   If the defendants had made a full and complete


                                19
disclosure, it is logical to assume--and the plaintiffs so

testified--that the plaintiffs would not have purchased the

residence and would not have sustained the various damages

clearly shown by the evidence in this case.



            The evidence does not preponderate against an award of

damages of $40,403 based on the defendants’ fraudulent

misrepresentations.     For this reason, we approve this portion of

the judgment.    We can affirm a trial court’s judgment if the

result is correct even though we disagree with the lower court’s

reasoning.    Rule 36(a), T.R.A.P.      See also Kelly v. Kelly, 679

S.W.2d 458, 460 (Tenn.App. 1984).



             As to the trial court’s finding that the plaintiffs are

entitled to recover an additional amount of $4,294 because of

damage done by the defendants to the driveway and front yard at

and about the time the defendants vacated the property, the

defendants in their brief concede their liability for these

damages.



             It results that the basic damage award of $44,697 is

affirmed.



                VII.   Can the Doubling of the Award be
                       Sustained as Punitive Damages?



             The plaintiffs argue that, even if the double damages

award cannot be sustained pursuant to the authority of T.C.A. §

47-18-109(a)(3), it can be upheld as punitive damages.        As



                                   20
previously indicated, the plaintiffs sought punitive damages on

their alternative theory of common law fraud.



           It is true that the trial court specifically found a

“willful or knowing violation of the Act,” as contemplated in

T.C.A. § 47-18-109(a)(3).   While “willful” is not defined in the

Act, “knowing” is.   It is defined as



           ...actual awareness of the falsity or
           deception, but actual awareness may be
           inferred where objective manifestations
           indicate that a reasonable person would have
           known or would have had reason to know of the
           falsity or deception.



T.C.A. § 47-18-103(6).   The plaintiffs argue that this finding

necessarily means that the court found facts that would justify

an award of punitive damages.     We do not believe that this is

necessarily true.



           In Tennessee, it is clear that punitive damages are

“restrict[ed]...to cases involving only the most egregious of

wrongs.”   Hodges v. S. C. Toof & Co., 833 S.W.2d 896, 901 (Tenn.

1992).   A court may “award punitive damages only if it finds a

defendant has acted either (1) intentionally, (2) fraudulently,

(3) maliciously, or (4) recklessly.”     Id.   Such an award is only

appropriate when the necessary conduct has been shown “by clear

and convincing evidence.”   Id.



           We cannot say that the trial court’s findings under

T.C.A. § 47-18-109(a)(3) satisfy the quality or quantity of proof



                                  21
required under Hodges to sustain an award of punitive damages.

Since there was no evidence of the defendants’ financial

condition, the trial court was not in a position to evaluate this

aspect of the punitive damages inquiry.   Under Hodges, generally

speaking, this is one factor that a fact finder should consider

when a request for punitive damages has been made.   Id.

Furthermore, the trial court did not indicate whether it found,

by “clear and convincing evidence,” the egregious conduct

required by Hodges.    We cannot extrapolate the trial court’s

findings regarding the defendants’ intentional misrepresentations

into the requisite finding of egregious conduct contemplated by

Hodges.



          Accordingly, we vacate so much of the trial court’s

judgment as adds additional damages of $40,403 under T.C.A. § 47-

18-109(a)(3).   Since the Act does not apply and since we cannot

say that there is a factual predicate for punitive damages, we

cannot sustain this portion of the trial court’s award.



          While the trial court did not make findings that would

sustain an award of punitive damages, we recognize that it did

make findings that clearly reflect its determination that the

defendants were guilty of intentional misrepresentations.   In

view of this finding and in view of the fact that the parties and

the trial court were understandably focused on the Act, we hold

that it is appropriate to remand this case to the trial court to

hold a hearing to determine whether the plaintiffs are entitled

to punitive damages.   We recognize that it was the plaintiffs’

burden as a part of their proof-in-chief to present evidence of


                                 22
the defendants’ financial condition;5 but just as we are not

inclined to penalize the defendants for trying this case as if

the Act applied, we do not believe that the plaintiffs should be

penalized for doing the same thing.             We find and hold that

justice requires a remand for a hearing on the issue of punitive

damages.       See T.C.A. § 27-3-128.6        In doing so, we express no

opinion as to whether the plaintiffs are entitled to punitive

damages.       This determination must be made in the first instance

by the trial court.



                             VIII.   Attorney’s Fees



               The trial court’s award of attorney’s fees was based

upon a finding that the defendants violated the Act.               Since the

Act is not applicable to this transaction, that award cannot

stand.       Such fees are not recoverable as compensatory damages

under any of the plaintiffs’ alternative theories.



                   IX.   Other Issues Raised by Plaintiffs



               In view of our decision in this case, we do not find it

necessary to reach the plaintiffs’ issue regarding our stay of




      5
       The defendants did not seek a bifurcated hearing on punitive damages.
See Hodges, 833 S.W.2d at 901.
      6
          T.C.A. § 27-3-128 provides as follows:

               The court shall also, in all cases, where, in its
               opinion, complete justice cannot be had by reason of
               some defect in the record, want of proper parties, or
               oversight without culpable negligence, remand the
               cause to the court below for further proceedings, with
               proper directions to effectuate the objects of the
               order, and upon such terms as may be deemed right.

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execution.    We find no merit in the plaintiffs’ contention that

this appeal was frivolous.



                            X.   Conclusion



             So much of the trial court’s judgment as awards

attorney’s fees of $15,669.95 and double damages under the Act is

hereby vacated.    The remainder of the judgment reflecting an

award of $44,697 and taxing costs below is affirmed.      This case

is remanded to the trial court for the entry of an order

reflecting this modification of the judgment, and for the holding

of another hearing to determine whether the plaintiffs are

entitled to punitive damages.     Exercising our discretion, we tax

the costs on appeal to the appellants and their surety.



                                        __________________________
                                        Charles D. Susano, Jr., J.


CONCUR:



_______________________
Herschel P. Franks, J.



_______________________
William H. Inman, Sr.J.




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