FRANKIE G. MUNN
SANDRA M. PHILLIPS ET AL.
Session September 13, 2017
from the Circuit Court for Cocke County No. 33976-III Rex H.
unjust enrichment action, the trial court awarded the
plaintiff $42, 929.00 for the fair market rental value of
improved real property that the plaintiff purchased at a
foreclosure sale in 2012 but did not gain possession of until
2015. Following the foreclosure sale, the plaintiff was
forced to litigate for a period of three years to obtain
title, during which time the former owners of the home, who
had defaulted in payments on their mortgage, remained in
possession and failed to pay rent. The plaintiff subsequently
filed this action in the trial court, seeking an award of
fair market rental value of the home from the former owners.
The trial court ordered that the former owners pay reasonable
rent of $1, 200.00 per month from August 2, 2012, the date of
the foreclosure sale, to July 24, 2015, the date upon which
the court in the prior action entered a final order declaring
the plaintiff to be the rightful owner of the property. The
former owners have appealed. Because the trial court failed
to make specific findings of fact and conclusions of law
regarding the applicability of any res judicata
defense, we vacate the trial court's judgment and remand
this matter to the trial court for resolution of that issue.
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Vacated; Case Remanded
S. Byrd, Morristown, Tennessee, for the appellants, Sandra M.
Phillips and Danny Phillips.
Hooper, III, Newport, Tennessee, for the appellee, Frankie G.
R. Frierson, II, J., delivered the opinion of the court, in
which John W. McClarty, J., joined.
R. FRIERSON, II, JUDGE.
Factual and Procedural Background
defendants, Sandra M. Phillips and Danny Phillips, were the
owners of a home located in Cocke County, Tennessee, for
which they defaulted on their mortgage payments in 2012.
Consequently, the substitute trustee ("Trustee")
for the Phillipses' lender, Beneficial Tennessee, Inc.
("Beneficial"), conducted a foreclosure sale of the
Phillipses' home on August 2, 2012. The plaintiff,
Frankie G. Munn, was the highest bidder and purchaser of the
home at the sale. Following the sale, Trustee sought to
cancel the sale and set it aside due to an alleged error with
regard to the starting bid. Trustee further refused to
deliver a deed to Mr. Munn, despite the fact that Mr. Munn
had wired the purchase money to Trustee. As a result, on
August 10, 2012, Mr. Munn filed an action in the Cocke County
Chancery Court ("Chancery Court") seeking specific
performance of the sale contract. In addition to Trustee, Mr.
Munn named the Phillipses and others as defendants in the
Chancery Court action. The Phillipses remained in possession
of the home for the three-year period during which the
specific performance litigation was pending.
mediation and entry of a settlement agreement, the Chancery
Court entered an agreed final order on June 23, 2015,
declaring Mr. Munn to be the owner of the real property at
issue. Mr. Munn received a Substitute
Trustee's Deed for title to the property, which he
subsequently recorded. The Phillipses ostensibly vacated the
home in August 2015. However, they paid neither mortgage
payments to the lender nor any rental payments to Mr. Munn
during the time period between the date of the foreclosure
sale and the date of their departure from the residence.
December 28, 2015, Mr. Munn filed the instant action in the
Cocke County Circuit Court ("trial court"),
asserting a claim against the Phillipses for fair market
rental value of the real property from August 2, 2012, the
date of the foreclosure sale, until the date the property was
vacated in August 2015. Mr. Munn alleged, inter
alia, that the Phillipses failed to pay rent during that
three-year period, resulting in their unjust enrichment. Mr.
Munn further alleged that he was damaged by the denial of his
use of and/or rental income derived from the real property
and that the home sustained damage and depreciation during
the period when the Phillipses were in possession of the home
following foreclosure. Mr. Munn asserted that the foreclosure
sale was conducted pursuant to the Phillipses' deed of
trust, which contained a provision stating that if the
property were sold in foreclosure, the Phillipses would
immediately surrender possession of the property to the
purchaser at the sale or would pay the reasonable rental
value for same.
Phillipses filed an answer, admitting that they continued to
occupy the real property while the prior litigation was
pending. Furthermore, the Phillipses averred that they
remained in possession of the property with the permission of
their "bank" and with the "implicit
permission" of Mr. Munn. According to the Phillipses,
Mr. Munn never requested that they vacate the property, such
that they relied on his implicit authorization to their
detriment. They also alleged that because Mr. Munn had failed
to seek rent payments in the prior litigation, he had waived
October 7, 2016, the trial court entered an order, which
provided, inter alia: "Plaintiff shall have and
recover from the defendants, jointly and severally, the sum
of $42, 929.00 for rent at the rate of $1, 200.00 per month
from August 2, 2012 to July 24, 2015." The trial
court's order does not specifically address the
Phillipses' asserted affirmative defenses. The Phillipses
filed a timely notice of appeal.
Phillipses present the following issues for our review, which