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Faerber v. Troutman & Troutman, P.C.

Court of Appeals of Tennessee, Knoxville

June 22, 2017


          Session Date May 23, 2017

         Appeal from the Circuit Court for Campbell County No. 15495 Don R. Ash, Senior Judge

         Appellees entered into a contract for the purchase of an undeveloped lot in a planned unit development. Appellants, an attorney and his law firm, prepared closing documents, including a warranty deed and settlement statement. The warranty deed included language that the property was unencumbered, and the settlement statement provided for payoff of the first mortgage and for the purchase of title insurance. Appellees later discovered that Appellants had failed to procure release of the first lien and had also failed to procure title insurance. The property was foreclosed, and Appellees filed suit against Appellants for negligent misrepresentation and violation of the Tennessee Consumer Protection Act. The trial court found Appellees liable on these claims. We concluded that the Tennessee Consumer Protection Act does not apply to Appellants, who were engaged in the practice of law in the preparation of the closing documents. Accordingly, we reverse the trial court's award of attorney fees and costs pursuant to the Tennessee Consumer Protection Act. The trial court's order is otherwise affirmed.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part, Reversed in Part, and Remanded.

          Conrad Mark Troutman, Knoxville, Tennessee, pro se. [1]

          Ronald L. Grimm and M. Patrick O'Neal, Knoxville, Tennessee, for the appellees, Jerry Faerber, and Margaret Faerber.

          Kenny Armstrong, J., delivered the opinion of the court, in which Charles D. Susano, Jr. and John W. McClarty, JJ., joined.



         I. Background

         On May 26, 2016, Jerry and Margaret Faerber (together, the "Faerbers, " or "Appellees") entered into an agreement, "The Willows at Mountain Lake Marina PUD Sale Agreement" ("Purchase Agreement") for the sale of real estate in a planned unit development. The seller was Thor Industries ("Thor"), which is owned by Wilrite Company. The purchase price for the property was $75, 000. On August 20, 2010, the Faerbers and Thor entered into a Settlement Statement, with Troutman & Troutman ("Troutman") listed as the Settlement Agent. The Settlement Statement was signed by Troutman attorney Conrad Mark Troutman (together with Troutman, "Appellants"). The Settlement Statement referenced a $387.50 charge for title insurance and a $30, 000 loan payoff to Tennessee State Bank. On August 20, 2010, the Faerbers tendered a $71, 083 cashier's check to Troutman (they had previously paid a $5, 000 deposit). Troutman deposited the check into its trust account. Thereafter, Mark Troutman prepared a Warranty Deed, which was signed on August 20, 2010. The Warranty Deed reflected that the property was unencumbered.

         Although the Settlement Statement provided for title insurance, Troutman never provided the insurance; instead, Mark Troutman relied on the statements of Thor and Tennessee State Bank employees, who allegedly advised that title insurance was not necessary. Tennessee State Bank held a lien/mortgage on the property at the time of closing. Troutman issued a $30, 000 check to Tennessee State Bank to receive a release of the lien. Teresa Montgomery, a Tennessee State Bank employee, allegedly informed Mr. Troutman that the bank would accept the $30, 000 for a "partial" release, but the bank ultimately rejected the payoff. Without obtaining a release from Tennessee State Bank, on September 21, 2010, Troutman issued a $30, 000 check to Wilrite. Mr. Troutman testified that he received a document from Mr. Steve Williams, one of Thor's owners, indicating that Tennessee State Bank would release the lien, or that another entity would arrange a "rural development loan" and remove Tennessee State Bank's lien via an "approval letter". When Mr. Troutman discovered that the property was still encumbered, he contacted Mr. Williams, who allegedly informed Mr. Troutman that a refinance plan was in place. Although Mr. Troutman suggested that Thor return the purchase price to the Faerbers, Mr. Williams rejected the suggestion. Mr. Troutman did not inform the Faerbers of these issues. None of the arrangements, which Mr. Williams described, happened, and the property went into foreclosure.

         On July 17, 2013, the Faerbers filed suit against Appellants (the Faerbers named other defendants, who were settled prior to trial), alleging negligent misrepresentation, fraudulent misrepresentation, breach of contract, legal malpractice and violation of the Tennessee Consumer Protection Act. The case was tried on April 11, 2016. In its June 6, 2016 order, the trial court found that Appellants had committed negligent misrepresentation by providing erroneous information indicating that Troutman had obtained title insurance and that the $30, 000 payment represented the first mortgage payoff. The trial court also found Appellants liable under the Tennessee Consumer Protection Act ("TCPA"), Tenn. Code Ann. § 47-18-104(b)(12) (finding that Appellants had represented the transaction to include title insurance and to pay off the first mortgage, thus deceiving Appellees). The trial court denied Appellees' fraudulent misrepresentation claim (finding no fraud in the misrepresentations), breach of contract claim (finding that the Faerbers were not in privity of contract with Appellants on the Warranty Deed), and the legal malpractice claim (finding that Troutman had no knowledge of title problems at the time of closing).[2] The trial court awarded Appellees: (1) the $75, 000 purchase price; (2) $1, 083 in closing costs; (3) $67, 620.25 in attorney's fees (under § 47-18-109 of the TCPA); and (4) prejudgment interest.

         II. Issues

         Appellants appeal. They raise three issues for review as stated in their brief:

1. The trial court erred in finding that the Tennessee Consumer Protection Act was applicable and in finding Appellants liable thereunder.
2. The trial court erred in holding the Appellants liable for negligent misrepresentation.
3. The trial court erred in its calculation and award of damages.

         III. Standard of Review

         Because this case was tried by the court sitting without a jury, we review the trial court's findings of fact de novo with a presumption of correctness, unless the evidence preponderates against those findings. McGarity v. Jerrolds, 429 S.W.3d 562, 566 (Tenn. Ct. App. 2013); Wood v. Starko, 197 S.W.3d 255, 257 (Tenn. Ct. App. 2006). For the evidence to preponderate against a trial court's finding of fact, the weight of the evidence must "demonstrate... that a finding of fact other than the one found by the trial court is more probably true." Williams v. City of Burns, 465 S.W.3d 96, 108 (Tenn. 2015); The Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999). This Court conducts a de novo review of the trial court's resolutions of question of law, with no presumption of correctness. Kelly v. Kelly, 445 S.W.3d 685, 691-92 (Tenn. 2014); Armbrister v. Armbrister, 414 S.W.3d 685, 692 (Tenn. 2013).

         With respect to the issue of whether Appellants are liable under the TCPA, the role of this Court is to "give effect to the legislative intent without unduly restricting or expanding a statute's coverage beyond its intended scope." Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995). When reading "statutory language that is clear and unambiguous, we must apply its plain meaning in its normal and accepted use, without a forced interpretation that would limit or expand the statute's application." Eastman Chemical Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). "[W]e presume that every word in a statute has meaning and purpose and should be given full effect if the obvious intention of the General Assembly is not violated by doing so." Lind v. Beaman Dodge, 356 S.W.3d 889, 895 (Tenn. 2011). "When a statute is clear, we apply the plain meaning without complicating the task." Id. "Our obligation is simply to enforce the written language." Id.

         IV. Analysis

         A. Applicability of the Tennessee Consumer Protection Act

         Appellees alleged a violation of the TCPA based on Appellants' failure to issue title insurance, failure to inform them of the rejected payoff, and remittance of the $30, 000 payoff to Wilrite. Appellants maintained that the allegedly wrongful conduct constituted the practice of law, thus rendering the TCPA inapplicable. Concerning applicability of the TCPA, this Court explained:

The Tennessee Consumer Protection Act, Tennessee Code Annotated Sections 47-18-101, et seq. ("TCPA"), prohibits, among other things, "unfair or deceptive acts or practices affecting the conduct of any trade or commerce." Tenn. Code Ann. § 47-18-104(a). A "deceptive" act or practice is "one that causes or tends to cause a consumer to believe what is false or that misleads or tends to mislead a consumer as a matter of fact." Tucker v. Sierra Builders, 180 S.W.3d 109, 116 (Tenn. Ct. App. 2005) (citations omitted). An act or practice may be deemed unfair if it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition." Id. at 116-17 (citing 15 U.S.C. § 45(n)). Because the TCPA is remedial, courts have determined that it should be construed liberally in order to protect the consumer. Id. at 115. In order to recover under the TCPA, a plaintiff must prove: (1) that the defendant engaged in an unfair or deceptive act; and (2) that the defendant's conduct caused an "ascertainable loss of money or property...." Id. (quoting Tenn .Code Ann. § 47-18-109(a)(1)); see also Cloud Nine, L.L.C. v. Whaley, 650 F.Supp.2d 789, 798 (E.D. Tenn.2009) ("plaintiffs asserting claims under the [TCPA] are required to show that the defendant's wrongful conduct proximately caused their injury). . . .
Whether a particular representation or act is "unfair" or "deceptive, " within the meaning of the TCPA, is a question of fact, Id. at 116 (citation omitted), which we review de novo upon the record with a presumption of correctness, unless the evidence ...

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