July 30, 2008

Judgment for fraudulent misrepresentation against seller for covering up termite damage; 30% comparative fault against termite company

STEVE L. ELCHLEPP, JR., ET AL. v. EMOL HATFIELD, ET AL (Tenn.Ct.App. July 30, 2008).

The buyers of a house and real property brought this action against the sellers and a termite control company, alleging that the house was completely infested with termites to the extent that it was worthless and unsalvageable. The buyers charged the sellers with fraudulent and negligent misrepresentation, fraudulent concealment of the extent of termite damage, and breach of contract. The buyers alleged that the termite control company was negligent in its inspection of the house.

Following a six-day jury trial, the jury found in favor of the buyers, holding the sellers 70 percent at fault and the termite control company 30 percent at fault and awarding the buyers $55,000 in damages. The trial court also awarded the buyers $25,000 in attorney's fees pursuant to the real estate sales contract. We find that the jury verdict is supported by material evidence and that the trial court committed no reversible error in its jury instructions and evidentiary rulings, and consequently affirm the trial court's judgment.

Opinion located on the TBA website:

"The clear and convincing standard of proof is appropriate to those cases where a party seeks the reform or rescission of a written instrument due to fraudulent inducement. But in all other cases involving claims of fraud, the standard of proof is preponderance of evidence." Id. (quotation omitted).

"Limit your damage consideration specifically to termite damage and the value of the land is not a consideration in determining the amount of damages in this case." Id. (quoting and affirming trial court's jury instruction).

"When a party intentionally misrepresents a material fact or produces a false impression in order to mislead another or to obtain an undue advantage over him, there is a positive fraud. The representation must have been made with knowledge of its falsity and with a fraudulent intent. The representation must have been to an existing fact which is material and the plaintiff must have reasonably relied upon that misrepresentation to his injury." Id. (quotation omitted).

"Simply stated, the central factual issue in this case was the credibility of the Hatfields’ assertion that they were unaware that the house was infested with termites. There is an abundance of evidence supporting the conclusion, obviously drawn by the jury, that the Hatfields were not believable on this point. ... The testimony of Mr. Elchlepp, including his testimony that Mr. Hatfield assured him that the termite damage discovered before closing was a limited and localized problem, also supports the jury verdict. ... We find that there is ample material evidence supporting the jury verdict in the case, and the Hatfields’ argument to the contrary is without merit." Id.