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Erwin v. Great River Road Supercross LLC

Court of Appeals of Tennessee, Jackson

October 19, 2017

JOE DAVID ERWIN ET AL.
v.
GREAT RIVER ROAD SUPERCROSS LLC ET AL.

          Session September 19, 2017

         Appeal from the Chancery Court for Dyer County No. 15-CV-218 Tony Childress, Chancellor

         At oral argument, the parties agreed that the trial court made a finding concerning the reliance element of Appellants' fraud claim that was not supported by the record. Accordingly, we vacate the trial court's order and remand the case for further proceedings.

         Tenn. R. App. 3 Appeal as of Right; Judgment of the Chancery Court Vacated and Remanded

         Jason R. Creasy, Dyersburg, Tennessee, for the appellants, Joe David Erwin, and Amanda Rachel Erwin.

          Matthew W. Willis, Dyersburg, Tennessee, for the appellees, Great River Road Supercross, LLC, and Brian Klinkhammer.

          Kenny Armstrong, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Arnold B. Goldin, J., joined.

          MEMORANDUM OPINION [1]

          KENNY ARMSTRONG, JUDGE.

         I. Background

         Joe Erwin and Amanda Erwin (together, "Appellants") entered into an oral agreement to purchase personal and real property from Great River Road Supercross, LLC ("the LLC"). The sole member of the LLC is Brian Klinkhammer (together with the LLC, "Appellees"). The purchase price was $160, 000.00, and Appellants made a $40, 000.00 down payment. The parties entered into a contract titled "Real Estate Installment Notes" ("the Note") for payment of the balance of the purchase price. The Note required Appellants to make yearly payments of $12, 000.00 for a period of ten (10) years. Appellees executed a warranty deed, which specifically warranted against encumbrances. However, when the parties executed the Note, unbeknownst to Appellants, there was a $20, 000.00 mortgage on the property, which Mr. Klinkhammer did not pay off at the time of closing.

         The parties' agreement provided that certain property/equipment was included in the sale. Appellants contend that a 10-foot fiber shank was to remain with the property. However, unbeknownst to Appellants, the shank was the property of a third party, who removed it. Rather than seek injunctive or other relief, in an effort to recoup for the alleged loss of the shank, Appellants tendered $10, 000.00, as opposed to $12, 000.00, as their first installment under the Note. Appellants believed that $2, 000.00 was the approximate value of the piece of equipment that was removed. Appellees considered this reduced payment to be a material breach and foreclosed on the property. At the foreclosure sale, the property was purchased by Mr. Klinkhammer for the balance of the Note.

         On April 29, 2015, Appellants filed a Complaint in the Dyer County Chancery Court ("trial court") for fraud, breach of warranty, and breach of contract. Appellees filed an Answer and Counterclaim on July 1, 2015. In the counterclaim, Appellees averred breach of contract and conversion by Appellants. The case was heard on October 18, 2016. On December 8, 2016, the trial court entered an order, granting Appellants a $1, 000.00 judgment against Mr. Klinkhammer for failure to perform the obligation to deliver the fiber shank. All other claims asserted by Appellants were dismissed. Appellants appeal.

         II. Issues

1. Whether the trial court erred in finding that Appellants' fraud claim failed since Appellants did not rely on the ...

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