JAMES R. HAYNES, III, ET AL.
LESLIE E. LUNSFORD, ET AL.
Session August 10, 2016
from the Circuit Court for Sevier County No. 2011-0358-II
Richard R. Vance, Judge.
of real estate brought suit against the seller as well as the
real estate agent and agency that assisted the buyers,
alleging, inter alia, fraudulent misrepresentation, breach of
duty to disclose adverse facts related to the purchased
property, and violations of the Tennessee Consumer Protection
Act. The buyers argued that the defendants misrepresented the
age and history of the home and did not disclose that it had
a mold problem. Upon motion for summary judgment, the agent
and the agency were dismissed as defendants. The trial court
subsequently denied the buyers' motion to reconsider the
summary judgment order. The buyers appeal. Finding no error,
R. App. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed; Case Remanded.
R. Hirschfield, Birmingham, Alabama, and Scott Hall,
Sevierville, Tennessee, for the appellants, James R. Haynes,
III, and Sharon Hirschfield.
Roach and Courtney E. Read, Knoxville, Tennessee, for the
appellees, Lynn Chalache and Four Seasons Realty, Inc.
W. McClarty, J., delivered the opinion of the court, in which
D. Michael Swiney, C.J., and Frank G. Clement, Jr., P.J.,
W. MCCLARTY, JUDGE
case arises out of the purchase and sale of a cabin at 1431
North Arbon Lane ("the Cabin") in Gatlinburg,
Tennessee, by the plaintiffs, James R. Haynes, III
("Haynes") and Sharon Hirschfield
("Hirschfield") (collectively, "Buyers"),
from defendant Leslie Lunsford
("Seller"). Hirschfield planned to live at the Cabin;
Haynes, her ex-husband, funded the purchase of the home.
initial ownership of the property at issue, lots 51 and 52,
was in Chalet Properties, Inc. In 1969, the property was
conveyed to Joseph Ridolfo and his wife, Cleone S. Ridolfo.
In 2002, Mrs. Ridolfo, then a widow, sold the property to
Harry V. Wilhite, Jr., and his wife, Karen M. Wilhite. The
Wilhites lost the property in a foreclosure in approximately
2005, at which time it was purchased by American Home Bank
("Bank"). Seller procured the property from Bank in
Lynn Chalache ("Chalache"), a licensed affiliate
broker working at Century 21 Four Seasons Realty
("Century 21"), was contacted by Hirschfield around
Thanksgiving 2009 to look at different properties in the
Gatlinburg area. Hirschfield first learned about the Cabin
while looking at Multiple Listing Service ("MLS")
descriptions online with Chalache. David Dixon, the listing
agent for the Cabin, had prepared the MLS description and the
advertising flyer concerning the home. According to Chalache,
she acted as a facilitator, providing all the information in
the MLS to Hirschfield, and thereby relying on the listing
agent and Seller to provide accurate information about the
home. Upon visiting the Cabin with Chalache, Hirschfield
observed that it looked new and it "smelled
ultimately entered into a contract to purchase the Cabin on
April 30, 2010. A home inspection was performed prior to
Buyers' closing. Buyers contend that they reviewed the
report carefully and became aware of the inspector's
comments, such as those concerning the interior and exterior
Common cracks* Cracks and deterioration common to log
construction noted; maintain caulking/chinking at log joints
and corners. Opening cut into top log near where covered area
of deck ends; uncertain reason. (??)
did not ask for repairs, although the asterisk meant
"This item or component warrants attention, repair or
monitoring." Further, Hirschfield did not take any
action to make sure the basement was moisture
free. Significantly, the inspection report made
no mention of mold.
to Hirschfield, she believed that "everything was
disclosed that was wrong with the house. I asked questions.
The house was inspected. We knew what the inspector's
report said and we were in agreement at that point of what
the knowledge was that we had about the house to purchase
it." A.L. Adams, a friend, also looked through the Cabin
and reported positively. Buyers admit that there was no
indication of moisture or mold in the Cabin at the time they
closing on the Cabin, Hirschfield moved in on June 28, 2010.
Approximately five months later, but prior to Thanksgiving
2010, Buyers began smelling a mildew type odor. To address
her concerns about the smell, Hirschfield first contacted a
local environmental inspector, Jim Evans, who in December
2010 found moisture in the wall next to the porch and the
master bedroom. Around June/July 2011, another inspector,
Sean Fogarty, found dead mold spores from samples taken from
the tops of the kitchen cabinets and ceiling fans. Michael
Pugliesi, a certified mold inspector, later identified long
term water damage to the walls and found mold growth on the
joists under the Cabin, on door facings and walls in the
basement, and in the living room.
June 2011, Buyers filed their original complaint alleging
misrepresentation/non-disclosure and simple negligence. The
initial complaint only addressed the mold issue. Buyers later
added a claim for violation of the Tennessee Consumer
Protection Act ("TCPA"). Among their contentions,
Buyers argued that Chalache failed to exercise reasonable
skill and care required of realtors pursuant to Tennessee
Code Annotated sections 62-13-102(2), 66-5-206, and
62-13-403. They further asserted that the Cabin was
presented to them as "new" and "just recently
built." According to Buyers, subsequent to their
purchase of the home, they discovered that it was not new,
had not just recently been built, had been previously
involved in a foreclosure sale, and contained mold.
Specifically, Buyers argued that the Cabin "had a
moisture and mold problem about which the Defendants knew or
should have known." The amended complaint provided that
"[d]efendants had a duty to disclose the moisture and
mold problems to Plaintiffs and failed to do so." Buyers
timely filed suit within a year of their purchase against the
to Chalache, she was not aware of the existence of the Cabin
prior to showing it to Hirschfield. Her impression of the
home when they toured it was that it appeared to be new in
that "it smelled great. It looked very shiny on the
inside . . . it looked very nice." Neither Chalache nor
Hirschfield noticed any mold in the Cabin when they walked
through it, and Chalache did not become aware of any
information prior to closing that would have indicated a mold
issue with the home. Chalache asserted that if she had become
aware of any mold in the Cabin, she would have disclosed that
information to Buyers.
further claimed that Chalache "received notice that the
Home was previously involved in a foreclosure and . . . was
built four (4) to five (five) years or more prior to the date
Buyers purchased the Home." Chalache testified that she
only looked at the Seller's warranty deed to ascertain if
both lots were on one deed, as the appraisal had revealed
that the Cabin sat on two lots instead of merely one. Upon
reviewing the deed at the hearing, she acknowledged the fact
that Bank was the grantor perhaps meant that the property had
been in foreclosure. She did not testify, however, that a
foreclosure would definitively be an adverse fact. Rather,
Chalache acknowledged that a prior foreclosure, the year
built, and the age of a home could have a negative impact on
the value of a property.
e-mailed Seller's warranty deed to Hirschfield prior to
the closing. Accordingly, Buyers had been provided the same
information known to Chalache: the MLS listing, the CRS
Property Report,  Seller's disclosures, Buyers' home
inspection report, and Seller's warranty deed.
Additionally, Hirschfield acknowledged that she received and
read a copy of the title search report for the Cabin.
Further, Haynes received a copy of the appraisal for the
Cabin and Hirschfield reviewed his copy. These documents
revealed the history and value of the Cabin and apparently
raised no issues for Buyers.
28, 2014, Chalache and Century 21 filed their motion for
summary judgment. Following a hearing on October 31, 2014,
the trial court entered an order on November 21, 2014
granting the motion. The court found that there were no
genuine issues of material fact concerning the following:
1. The critical issue in this lawsuit is the mold found at
the Plaintiffs' cabin at 1431 N. Arbon Lane.
2. There is no evidence whatsoever that Defendants Lynn
Chalache and Century 21 were aware of mold being present in
3. Ms. Chalache provided everything she knew about the cabin.
4. There is no proof that Ms. Chalache had knowledge of mold
or concealed mold from the Plaintiffs.
5. There is no proof that the condition of the house itself
would put anyone on notice that there was mold in the house.
6. An independent home inspector conducted an inspection of
the house and furnished a report.
7. This report was provided to the buyers and there was no
mention of mold in that report.
8. The Plaintiffs had the same information that Ms. Chalache
and Century 21 ...