Cato v. Batts

• Decision Date: 17 February 2011
• Docket Number: No. M2009-02204-COA-R3-CV,M2009-02204-COA-R3-CV
• Parties: EDMOND CATO et al. v. D. L. BATTS et al.
• Court: Tennessee Court of Appeals

EDMOND CATO et al.

v.D. L. BATTS et al.

No. M2009-02204-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

Filed February 17, 2011

Appeal from the Chancery Court for Davidson County

No. 07-1317-III Ellen H. Lyle, Chancellor

Purchasers of home filed this action against the sellers for negligent misrepresentation and fraudulent misrepresentation for the failure to disclose defects in the home. The trial court found for the purchasers on their claim of negligent misrepresentation but denied their claim of fraudulent misrepresentation and their request for rescission. Purchasers appealed contending the trial court erred by not finding fraudulent misrepresentation and partially denying their motion to alter or amend the judgment in which they sought to introduce new evidence. We affirm the ruling of the trial court in all respects.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

Frank G. Clement, Jr., J., delivered the opinion of the Court, in which Patricia J. Cottrell, P.J., M.S., and Andy D. Bennett, J., joined.

Shawn P. Sirgo and Curtis R. Harrington, II, Nashville, Tennessee, for the appellants, Edmond and Duanna Cato.

Edward J. Gross, Nashville, Tennessee, for the appellees, D. L. Batts and Helen Batts.

OPINION

This action arose from the sale of a home located at 629 Vanoke Drive in Madison, Tennessee. The plaintiffs, Edmond and Duanna Cato, purchased the home from D.L. Batts and his wife Helen Batts on November 10, 2005. Prior to purchasing the home, the Catos reviewed the Tennessee Residential Property Condition Disclosure provided by the sellers, they visited the house on several occasions, and they had a home inspection performed. The Catos stated that the home appeared in good condition. On the last visit to the residence, ahome inspection was performed by Lurid Vinson, who noted no major problems with the home.

The Catos did not move into the home immediately after the purchase but began making some improvements on the home including removing wallpaper, painting, and removing ivy from the exterior walls of the residence. During this time period, the Catos began to notice defects in the home. In the living room of the house, a large crack ran down the wall; this crack had previously been obscured by a large mirror. The Catos also discovered large cracks in the basement walls of the house, which they deemed to be more significant than the "settling cracks" disclosed to them during the negotiations of the purchase of the home. The Catos had been unable to view these cracks due to the significant amount of clutter in the basement in addition to shelving, a pegboard, and a workbench, which had covered the walls. When they removed the ivy from the exterior walls of the house, they noticed additional cracks and that the walls were bowing. They moved into the residence in February of 2006 and the problems with the home continued.

When the Catos turned on the pool for the first time, in the summer of 2006, they soon discovered that the pool was unable to hold water and that their water bill increased significantly. Mrs. Batts, during the sale of the home, represented that the pool was operational but had a "small leak." The Catos hired American Leak Detection to determine the full extent of the problems with the pool. The company determined that the pool was structurally unsound, that there were multiple leaks in the pool, and that there were problems with the pump and the filter.

Early in the spring of 2007, the Catos began to experience flooding in the basement; the amount of water was so significant Mr. Cato referred to it as "Lake Okeechobee." Thereafter, anytime it rained water would come into the basement. The water appeared to come from areas in the basement and from around the chimney. The Catos also discovered that the cracks in the basement walls were becoming wider and new cracks appeared.

Although the Catos experienced numerous and serious problems with the house and pool not long after purchasing the house from the Batts, no significant defects or malfunctions were disclosed on the Tennessee Residential Property Disclosure.¹ The Disclosure provided to the Catos represented that the only "Defects / Malfunctions" of which the sellers were "aware" concerned "Windows," "Exterior Walls," "Basement," and "Double Paned or Insulated Window and or Doors" and those defects were explained by Mrs. Batts as being minor. As she explained on the Disclosure, the disclosed defects were limited to:

"Some Broken Panes, Settling Cracks, Some Settling Cracks Interior, Some Water Comes In Basement Near Front Porch (Hard Rain) Pool Has Small Leak."²

In April 2007, the Catos hired a contractor to investigate the various problems with the home. The investigator found numerous and serious problems with the house. He determined that the house was structurally unsound and that steel I-beams had been installed in an attempt to support the basement walls, which were bowing in. The contractor also discovered that untreated wood blocks had been inserted between the walls and the I-beams to provide further support.

In June 2007, the Catos filed this action against Mr. and Mrs. Batts, asserting claims for both negligent and fraudulent misrepresentation due to the failure to disclose the structural defects with the home and the condition of the pool.³ The Catos sought monetary damages and/or rescission of the contract.

A bench trial was held on March 9-11, 2009. At trial, the Catos testified and they presented the testimony of two experts on the structural defects in the home, one expert on the problems with the swimming pool, and the testimony of their real estate agent, Angel Sims Wright. Mrs. Batts, her son Dennis Batts, and her real estate agent, Wanda Barker, testified for the defense. Mr. Batts, who suffered from severe dementia when the case came to trial, did not testify.

William Elliston, a licensed structural engineer, testified to the structural problems with the home. Elliston testified that the freestanding retaining wall, which was the "front" basement wall in the home, had large cracks and was bowing inward due to improper construction and "significant" violations of the Building Code. Improper drainage and waterproofing techniques in the basement walls was also causing the serious leakage into the home. He also stated that it was "virtually certain" that the conditions had occurred steadily over the life of the house and would certainly have been observable during the life of the home, as evidenced by repairs made to the foundation walls. While steel I-beams were installed on the two adjacent walls, the front basement wall also required reinforcement. Elliston stated that the house was structurally unsound to such an extent that without repair, the walls would collapse. In his report, Elliston also stated that the other problems with theresidence such as warping of the floors and distortion of door openings were "likely a result fro m the inward movement of the front masonry wall, which has transferred a matching movement into the structural framing of the home." Elliston recommended numerous repairs in order to remedy the situation including installing additional beams, removing the stud walls to examine the existing beams, installing an exterior french drain, modifying the exterior grades between the front of the home and the street, and installing a secondary drainage system. These repairs would prevent further movement of the wall, eliminate the majority of water entering the home, and prevent the movement of the upper structure of the home.

Rob Myers from United Structural Systems, Inc., also testified regarding the structural problems in the house. Myers was the initial contractor called to inspect the home and provide an estimate on the repairs. Myers noted the same structural problems caused by lateral earth pressure on the front basement wall, which caused the cracking and bowing. Like Elliston, Myers testified that additional steel beams would need to be installed and the drainage issues would need to be corrected. Myers also recommended excavating to relieve the pressure on the basement wall. Myers testified that the Catos would most likely need to perform further repairs outside of the initial estimate and that costs could very likely increase as the work was performed and the contractors encountered additional problems. The proof presented at trial demonstrated that $12,000 was needed to fix the problems with the front basement wall and $9,850 for the left and rear walls of the structure to correct for "vertical settlement."

Victor Mickelson, from American Leak Detection, testified regarding the pool. Following his inspection of the pool, Mickelson found leaks in the return line plumbing of the pool, in the skimmer line, and in the pump room, in addition to structural cracks in the pool. Mickelson also determined that the main drain line of the pool was inoperable, that the pump was not functional, and that the skimmer had been plugged with a ball, which he testified could not occur accidentally. Mickelson stated that when the pumps were on the pool could leak between one to two inches of water per day. The repairs to make the pool functional cost $4,000 and Mickelson recommended additional repairs in the future.

The Catos also testified on their own behalf to the problems experienced with the home. Both Catos stated that they were never informed of the problems with the home prior to the purchase and both stated that they would not have purchased the home if they had been made aware of the defects. The Catos' realtor Angel Sims Wright, who was also Mrs. Cato's sister, testified that she was never informed of any defects in the home and was unaware of the existence of any steel I-beams installed in the home.

Mrs. Batts testified that she sold her home due to her husband's deteriorating health. Mr. Batts suffered from severe dementia.⁴ Mrs. Batts testified that she...