Ganzevoort v. Russell

Citation949 S.W.2d 293
PartiesTammy R. GANZEVOORT, Plaintiff-Appellant, v. Richard B. RUSSELL, Martha T. Russell, and Jim Cassetty d/b/a Jim Cassetty Realty, Defendants-Appellees.
Decision Date27 May 1997
CourtSupreme Court of Tennessee

Michael W. Edwards, Hendersonville, for Plaintiff-Appellant.

John R. Bradley, Hendersonville, for Defendants-Appellees.


REID, Judge.

This case presents for review the decision of the Court of Appeals reversing the trial court and dismissing an action for violation of the Tennessee Consumer Protection Act 1 brought by the purchaser of residential real property against the seller and the seller's broker. The judgment of the Court of Appeals dismissing the suit is affirmed.


The subject of this suit is a house and lot located in Hendersonville, Tennessee, which was purchased by defendants Richard Russell and Martha Russell in 1969. The property was occupied as a residence by the Russells until 1991, when Martha Russell moved in connection with their divorce. 2 Richard Russell and his child continued to occupy the premises until a short time prior to June 3, 1993, the date on which the property was conveyed to the plaintiff, Tammy R. Ganzevoort.

In the latter part of 1992, the house and lot were listed for sale with Jim Cassetty Realty, a real estate agency owned by the defendant Jim Cassetty, who is a broker, and his wife, Pat Cassetty, who is an agent. The plaintiff was represented by real estate agent Judy Cassetty. (Judy Cassetty is not related to Jim and Pat Cassetty.)

On February 1, 1993, the parties entered into a contract for the sale of the property for $68,500. The closing was set for May 31, 1993. The sale was subject to approval by the United States Department of Housing and Urban Development of a Federal Housing Authority (F.H.A.) loan. F.H.A. required an inspection by a representative of that agency, an appraisal by an appraiser approved by F.H.A., and a professional termite inspection.

The F.H.A. inspection revealed the need for some minor repairs but did not mention the defects on which this suit is based. Those repairs were made.

The real estate appraiser approved by F.H.A. inspected the property in the process of preparing an appraisal. During that inspection, he examined the house's underpinnings but found no defects in the floor joists or the subflooring. He only required the purchaser to have knowledge of a sump pump located beneath the house and that it be in working condition. A copy of the appraiser's report was given to the purchaser on May 12, 1993, several days prior to the closing.

An employee of a pest control company made an inspection of the house on May 25, 1993. His report showed there was no evidence of termite infestation or damage. The termite inspector did, however, find water damage under the bathroom, which he verbally reported to Jim Cassetty. He testified:

It wasn't a problem that I would normally put on this report simply because it was the deterioration of subflooring under the bathroom, under the main bathroom of the house. And I just took note of that as I was inspecting it....

When I went under the bathroom I did see that the subflooring was damaged, and it was obviously moisture damage. It looked to me, and I've looked at a few of them, it looked like a drain type leak. It wasn't dripping water. It looked like something where maybe when the bathtub--when the commode was flushed or the bathtub was drained or the shower drain, whatever, was getting in there and damaging the wood.

Since there was no structural damage, that's the reason I didn't put it on my report. But I did report it to the Cassetty agency. I do this as a matter of courtesy. If I find a plumbing leak or anything like that under a house I'll usually tell the agent so they're aware of it and they can get it repaired.


It was obvious there had been a leak there at some time and that it had damaged the subflooring, but not the floor joists themselves. So it wasn't structural, and that's why I didn't put it on my report.

The termite inspector told an employee of the Cassetty agency, "Look, there's no problem with ... termites.... By the way, though, tell Jim that some of the subflooring under the bathroom has been damaged by water and it looks like a drain leak because there is no water dripping right now."

Apparently, the termite inspection was made while Jim Cassetty was out of town. Jim Cassetty testified:

Well, I come back from being out of town and had a report from the Allied Pest Control that they had inspected the property and issued the letter but recommended that the exterior, the underside of the property under the bathroom be refurbished, renovated and strengthened.

I talked to [the termite inspector] about that. He suggest[ed] laminating or scabbing--I understand laminating as being a plank on each side of the plank--or scabbing where you put only one plank on. I informed [the termite inspector] that [the carpenter] would do that.

.... I went out there and looked at the area, and then I hired a man name of Bob Murdock to repair it. Mr. Russell was out of town, I contacted him, told him what the requirement was, told him that there was going to be some $300 or so to make the repairs. He authorized [me] to go ahead and have it fixed, and I did so.


Well, it looked like an old leak. It looked like it was something that had happened five or 10 years earlier. I thought it was just precautionary. Until you start taking up carpet and ripping back paneling and taking off all of this protective paper, it wasn't visible.

The carpenter described the conditions found and the repairs made:

there was one joist that was in pretty bad shape. I put a 2 X 10 or a 2 X 12 up on the block wall on the outside of the house, ran it back 3 or 4 feet on the good end of the joist. And then on the floor up there, it was a little bit discolored, I brought it around on it. It was dry and still firm and intact. I put some plywood up against that. And the two joists on both sides of it, I put splices on them.

Then I had to kind of put pressure on it to jack it up to make sure everything was up tight against the floor. I went inside to make sure there was no cracks or anything in the grout on the tile in the bathroom. Everything was intact. It was fine. Everything was dry.

Prior to closing, the seller's agent told the buyer's agent, according to the testimony of Judy Cassetty,

"There was a piece of wood replaced underneath the house, but don't worry about it. It was just a little minor piece of wood. Jim said underneath the house everything is fine." And I did tell [the plaintiff] that.

I said that there is a clear termite letter; there was a piece of wood replaced; they're saying everything is fine, he went under it. But we did see the sawdust out there, and I said, "Well, that must explain the sawdust."

Pat Cassetty's version of the discussion was:

As I explained it, it was that the termite fellow had told us that there was some damage there. He had just--he said there was some damage there, and we'd check it out when we came home. And Mr. Russell wanted everything to be done for the house. We did what we thought was the proper thing to do. The cost we incurred was put on the closing statement, so I was telling them that we found this at the last moment and that we had corrected and this was the cost.

There is no evidence that Russell had any information about the defects other than that given him by Cassetty and the carpenter. Russell authorized the repair work recommended and agreed that the cost, estimated at $300, be charged to him at the closing.

Even though the plaintiff and her agent looked at the house several times prior to closing, they apparently did not see any indication that the bathroom floor was damaged. The plaintiff did not discuss the condition of the floors with the seller prior to closing. The plaintiff testified that she relied upon her personal inspection, the F.H.A. report, and the termite letter. She does not claim that she relied upon any representation made by the seller or the seller's agent.

After all the reports required by F.H.A. had been filed, that agency issued its approval of the house as collateral for the plaintiff's loan.

After the sale had been closed, the plaintiff discovered, upon removing the carpet in the dining area near the bathroom, that a section of the hardwood floor, approximately 3 feet by 3 feet in area, was rotten. Further inspection revealed that water leaking from the shower and commode had caused extensive damage to the bathroom floor where the repairs had been made and also to the floor and floor joists under the adjoining dining area.

An engineer engaged by the plaintiff described the condition as follows:

The carpet that had gotten wet in [the] dining room had been pulled back and there was a hardwood floor underneath the carpet. Within 3 or 4 feet of the wall that hardwood was very badly damaged, in some cases completely decomposed; so the damage had been going on for some time.

There was no evidence, in the bathroom, of any deterioration at that time, from looking inside the bathroom; but going underneath the house in the crawl space the floor joist had been damaged by the water. The plywood subfloor had completely delaminated, the bonding between the layers of the plywood were separated.

The floor joists were very wet and had decayed somewhat; and someone had gone in at some previous time, I don't know when, and tried to repair the floor joist by splicing four pieces of lumber onto the sides of the joist.

When asked by the judge whether the F.H.A. inspector should have discovered this problem, the engineer responded,

... The rotted hardwood was covered by carpet, wall-to-wall carpet, and I'm sure the floor would have felt a little soft; but that would have been a pretty extensive inspection, to go around [and] poke your fingers along the...

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