SCOTT BAKER v. LARRY BASKIN

12/30/2024

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

April 2, 2024 Session

SCOTT BAKER ET AL. v. LARRY BASKIN ET AL.

Appeal from the Chancery Court for Davidson County

No. 18-1046-I Patricia Head Moskal, Chancellor

___________________________________

No. M2023-00433-COA-R3-CV

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Buyers of a residential home brought action against sellers for 1) breach of contract, 2)

negligent misrepresentation, 3) negligence, 4) negligence per se, 5) gross negligence, 6)

residential disclosures violations, and 7) fraud. The claims arise from the discovery of a

sinkhole months after the sale. The sinkhole was not indicated “through the contour lines

on the property’s recorded plat,” see Tenn. Code Ann. § 66-5-212(c) (2015), and the sellers

insist they had no knowledge of a sinkhole on the property. For these reasons, they did not

disclose the existence of the sinkhole on the Tennessee Residential Property Condition

Disclosure form. Nevertheless, the proof at trial established that one of the sellers, Larry

Baskin, while mowing the lawn, discovered a depression in the yard six months prior to

listing the property for sale, which he believed to be caused by rotting roots from a tree that

had been removed years earlier. He filled the depression with two four-by-four, pressure-

treated, rot-resistant posts and topsoil. Because it was near a downspout, he also placed the

plastic bag from the topsoil over the posts, which he covered with more soil and grass. The

property was sold seven months later, during which time Mr. Baskin did not notice the area

“concaving or dipping in any way” even though he mowed regularly over the area with his

500-pound riding mower. Following a bench trial, the court dismissed all claims except the

negligence claim. Significantly, the court dismissed the claim for negligent

misrepresentation because the purchase agreement contained an “as is” clause. However,

the court held that Larry Baskin was liable under the claim for common law negligence,

finding that he “breached the duty of reasonable care by not informing the Buyers of the

existence of the hole prior to their purchase of the Property. The harm resulting from Mr.

Baskin’s breach was damage to the value of the Property.” The court awarded the buyers

compensatory damages of $55,000 for the diminution in value of the property.

Additionally, finding the buyers to be the prevailing parties according to the purchase

agreement, the trial court awarded them attorney’s fees and costs. This appeal followed,

with the sellers challenging Mr. Baskin’s liability under the negligence claim and the

buyers challenging the dismissal of the gross negligence claim. For the reasons explained

below, we affirm the dismissal of the claim for gross negligence; however, we reverse the

finding of Mr. Baskin’s liability based on the claim of negligence because “a seller’s

liability for the failure to disclose such material facts in a real estate transaction is

coextensive with a party’s liability for fraudulent or negligent misrepresentation.” Fayne

v. Vincent, 301 S.W.3d 162, 177 (Tenn. 2009). Because we have affirmed the dismissal of

the claim for gross negligence and reversed the ruling concerning the negligence claim, we

also vacate the award of damages and attorney’s fees to the buyers. In that the sellers are

now the prevailing parties, we remand with instructions to award the sellers the reasonable

and necessary attorney’s fees and costs they are entitled to recover pursuant to the parties’

contract.

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

Affirmed in Part, Reversed in Part, Vacated in Part, and Remanded

FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the court, in which D.

MICHAEL SWINEY, C.J., and ANDY D. BENNETT, J., joined.

J. Ross Pepper, Nashville, Tennessee, for the appellants, Larry Baskin and Linda Baskin.

Jean Dyer Harrison, Nashville, Tennessee, for the appellees, Julie Baker and Scott Baker.

OPINION

FACTS AND PROCEDURAL HISTORY

Larry and Linda Baskin (“Sellers”) had lived at 113 Blue Hills Court (“the

Property”) for thirty-two years, when in March 2017, Mr. Baskin felt a dip in the ground

while riding the mower. Upon further investigation, he pulled back the grass and

discovered a small hole to the side of a bush. He believed it was caused by the decay of

roots from a tree that had been cut down years earlier. Because the hole was near a

downspout, Mr. Baskin placed two five feet long, four-by-four pressure treated posts into

the hole, placed some topsoil and the topsoil bag on top of the posts, and covered the area

with more topsoil and grass.

Over the next seven months, between March and October 2017, Mr. Baskin never

noticed the area “concaving or dipping in any way” even though he mowed regularly over

the area with his 500-pound riding mower.1 He stated that a professional landscaper also

drove over the area with commercial landscaping equipment. For these reasons, Mr. Baskin

believed the matter was resolved and no further action was required.2

1

The weight was an approximation.

2

Mr. Baskin testified that he did not discuss this discovery or repair with Mrs. Baskin, and she

testified that she knew nothing of the hole until this suit was filed. Significantly, the trial court found that

Mrs. Baskin had no knowledge of the hole until suit was filed, and that ruling is not challenged on appeal.

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After deciding to move closer to their family, Sellers listed the home for sale on

September 8, 2017, for the price of $329,900. In the process, they provided a Tennessee

Residential Property Condition Disclosure form, which contained a “sinkhole” question:

Is a sinkhole present on the property? A sinkhole is defined pursuant to Tenn.

Code Ann. § 66-5-212(c) as “a subterranean void created by the dissolution

of limestone or dolostone strata resulting from groundwater erosion, causing

a surface subsidence of soil, sediment, or rock and is indicated through the

contour lines on the property’s recorded plat map.”

Sellers checked the box “no.” In response to the question if there were any “other soil

problems,” Sellers again checked the “no” box.

Four days later, Scott and Julie Baker (“Buyers”) made an offer to purchase the

Property. The purchase and sale agreement contained a sinkhole provision: “16. Seller’s

Additional Obligations. If Seller has any knowledge of an exterior injection well, a sinkhole

as defined pursuant to Tenn. Code Ann. § 66-5-212(c) . . . , Seller shall be obligated to

counter this offer by disclosure of the existence of the above.” Sellers counter-offered with

several conditions, one of which stated, “Buyer[s’] obligations are subject to a home

inspection, but the property is purchased as is.” Buyers responded in “Counter Offer #2,”

acknowledging, “Sale of home is contingent on a satisfactory home inspection. Buyers are

aware that home is being sold ‘as is.’” During the negotiation process, Buyers also signed

a disclaimer notice that advised them to, among other things, seek the advice of a

geotechnical engineer to determine the risk of sinkholes. Buyers performed a home

inspection, which revealed nothing remarkable, and the parties closed on October 20, 2017.

The final purchase price was $329,900.

Mr. Baker, one of the Buyers, testified that no issues were noted with the Property

during the fall of 2017 or the winter of 2018. However, that spring, while Mr. Baker was

digging in preparation to remove the shrubs in the front of the house, he discovered a

partially filled plastic topsoil bag and a hole that was approximately a quarter inch in size.

The small hole exposed the edge of a four-by-four post.3 When Mr. Baker first saw the

hole, he thought, as Mr. Baskin did a year earlier, that it had been caused by decayed roots.

As he removed the post, the hole enlarged approximately 12 to 18 inches, and he could not

see the bottom of the hole.

3

Mr. Baker’s testimony on this issue reads:

So I tugged on the -- the plastic bag a little. It immediately -- everything -- the contents of

the bag immediately dumped out and went into the hole. And that’s when I pulled the bag

out, and it was about a quarter inch hole at that time. And what it exposed was a -- it wasn’t

a 2x4. It was the edge of a 4x4. And I tugged on the 4x4 and more of it dropped out. And

I pulled out [a] 5-foot 4x4, and the hole enlarged between 12 to 18 inches.

-3-

Buyers then contacted their insurance company. Following an inspection, the

insurance representative informed them that the hole appeared to be a sinkhole. Buyers

then consulted with a geotechnical engineer, John Rami Mishu, who confirmed that it was

a sinkhole, adjacent to an old septic tank and sewer lines, and it was at least 12 feet deep.4

Buyers commenced this action against Sellers on September 27, 2018, asserting

claims for: 1) breach of contract, 2) negligent misrepresentation, 3) negligence, 4)

negligence per se, 5) gross negligence, 6) residential disclosures violations, and 7) fraud.

Buyers sought rescission of the contract and return of the purchase price, compensatory

damages, attorney’s fees, and punitive damages. Sellers answered, “deny[ing] that a

sinkhole existed on the property at the time the Tennessee Residential Property Condition

Disclosure form was completed,” denying knowledge of a sinkhole on the Property,

denying that they breached their duty, and denying any misrepresentation. Sellers also

raised the affirmative defenses of “statute of frauds, release, accord and satisfaction, merger

and comparative fault.”

On November 1, 2019, during the pendency of this action, Buyers listed the home

on the market for $379,500, with the sinkhole disclosed in the listing. On November 3,

Kathy Hughes made an offer to purchase the home for $330,000, and Buyers accepted with

no counteroffer on November 5. After Ms. Hughes reduced her offer by $5,000 based on

an inspection, the sale closed on December 19, 2019, for $325,000.

The case was tried without a jury, and the following witnesses testified: Scott Baker,

a plaintiff and one of the Buyers; John Rami Mishu, geotechnical engineer; Larry Baskin,

a defendant and one of the Sellers; Linda Baskin, a defendant and one of the Sellers; and

Richard Courtney, real estate broker for the Buyers. Significantly, the trial court expressly

found that the credibility of the trial witnesses was not at issue.5

Following the bench trial, the trial court dismissed all claims except for the common

law negligence claim. As for the breach of contract claim, the court noted that the parties

stipulated that no sinkhole was indicated through contour lines on the Property’s recorded

4

Mr. Mishu explained,

[B]y tape measure, extending it underground, it is at least 12 feet deep. And what I mean

by “at least” is this tape measure is flimsy. And so when I send [my] tape measure down a

hole, frequently, with the -- with these sinkhole defects, these ground defects that form

voids and/or very soft soil and mud, the -- the dropout -- the hole doesn’t extend nice and

neatly vertically underground. It meanders to the left or to the right. And so all I can do

with my tape measure is know that directly below me where I’m looking, it’s [at] least 12

feet deep.

5

As stated by the trial court in footnote 2 of its memorandum and order: “The Court did not find

that the credibility of any of the trial witnesses was at issue.”

-4-

plat, as required under subsection (ii) of the Residential Property Condition Disclosures

Act.6 Thus, because the second requirement of the statutory definition of sinkhole was not

satisfied, the trial court concluded that Sellers did not breach paragraph 16 of the purchase

agreement.

Concerning the fraud claim, the trial court found that:

Mr. Baskin’s conduct was negligent in failing to inform the Buyers of the

existence of a hole on the Property and his efforts to repair the hole, but the

Court does not find that Mr. Baskin knowingly or recklessly misrepresented

the existence of a “sinkhole” on the Property (which is the misrepresentation

alleged) to the Buyers so as to constitute an intentional misrepresentation.

Nor does the Court find that Mr. Baskin intentionally concealed the existence

of a “sinkhole” on the Property. He did not know that the hole was a sinkhole.

And while he was negligent in his efforts to repair the hole and by not

informing the Buyers, his conduct does not rise to the level of fraudulent

concealment of the existence of a “sinkhole” on the Property and concludes

that fraud claim should be dismissed.

Regarding the gross negligence claim, the court concluded that Mr. Baskin’s

conduct regarding the hole was negligent; however, the court found that his “conduct was

not informed, but he believed he had repaired the hole. The Court does not find sufficient

proof to establish that Mr. Baskin’s conduct rose to the level of a ‘conscious neglect of

duty or a callous indifference to the consequences[.]’”

As for the negligent misrepresentation claim, the trial court, relying on this court’s

decision in Pritchett v. Comas Montgomery, ruled that the “as is” provision defeated

Buyers’ claim “as a matter of law,” because the “as is” provision eliminates the element of

reasonable reliance. See Pritchett v. Comas Montgomery Realty & Auction Co., Inc., No.

M2014-00583-COA-R3-CV, 2015 WL 1777445, at *4 (Tenn. Ct. App. Apr. 15, 2015).

Concerning the common law negligence claim, the trial court made the following

findings and conclusions:

The Court finds that Mr. Baskin discovered a deep hole in front of his

house which, given its unknown depth, was a material fact—and defect—

about which a potential purchaser of the Property should have been told, even

6

The second statutory requirement of the definition of a “sinkhole” under the Residential Property

Condition Disclosures Act is that it must be “indicated through the contour lines on the property’s recorded

plat map.” Tenn. Code Ann. § 66-5-212(c)(ii) (2015). This statute was revised effective July 1, 2024.

Throughout, however, we reference the version that was in effect when Buyers’ complaint was filed.

-5-

if the hole did not meet the technical definition of a “sinkhole” under the

Residential Property Disclosure Act or breach of the terms of paragraph 16

of the purchase contract. The Court further finds that Mr. Baskin’s efforts to

repair the hole by filling it with not one, but two, five-foot wooden posts and

topsoil, and then covering the hole with a plastic bag and planting grass,

without any further investigation or repair of the hole, created an

unreasonable and foreseeable risk of harm to persons present on the Property,

including potential purchasers, and to the stability of the house located on the

Property given its close proximity to the hole. The Court finds that as a result

of Mr. Baskin’s actions in covering the hole, the Buyers could not have

discovered the hole through the exercise of ordinary diligence. The Court

concludes Mr. Baskin—but not Mrs. Baskin who had no knowledge of the

hole—owed a duty to the Buyers of care to inform them of the existence of

this hole and the risk of harm to their persons or the Property created by a

hole of unknown depth. Mr. Baskin breached the duty of reasonable care by

not informing the Buyers of the existence of the hole prior to their purchase

of the Property. The harm resulting from Mr. Baskin’s breach was damage

to the value of the Property.

The court then awarded Buyers compensatory damages of $55,000 for the

diminution in value of the Property. Finding that Buyers were the prevailing party, the

court also awarded them costs and attorney’s fees in accordance with Paragraph 13 of the

purchase agreement;7 those fees were later determined to be $18,875 in attorney’s fees and

$4,810.30 in discretionary costs. However, the court did not find that Mr. Baskin’s conduct

rose “to the level of egregiousness so as to support an award of punitive damages.”

Sellers appeal the trial court’s decision.

ISSUES

Sellers raise four issues on appeal:

1. Whether the Trial Court erred in concluding that Defendant Larry Baskin

was liable to [Buyers] for negligence under the common law of Tennessee?

2. Whether the Trial Court erred in finding that [Buyers] incurred damages

as the result of the Trial Court’s conclusion that Larry Baskin was negligent?

7

Paragraph 13 of the purchase contract reads, in pertinent part:

13. Default. . . . In the event that any party hereto shall file suit for breach or enforcement

of this Agreement (including suits filed after Closing which are based on or related to the

Agreement), the prevailing party shall be entitled to recover all costs of such enforcement,

including reasonable attorney’s fees.

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3. Whether the Trial Court erred in making an award of attorney’s fees and

discretionary costs to [Buyers] instead of to [Sellers]?

4. Whether the [Sellers] are entitled to an award of attorney’s fees and

expenses arising from this appeal?

Buyers raise five issues, three of which are substantially the same as Sellers:

1. Whether the Trial Court correctly held that Mr. Baskin was negligent?

2. Whether the Trial Court incorrectly held that Mr. Baskin was not grossly

negligent?

3. Whether the Trial Court correctly awarded damages to the [Buyers]?

4. Whether the Trial Court correctly held that the [Buyers] were entitled to

attorney’s fees as the prevailing party?

5. Whether the [Buyers] are entitled to an additional award of attorney’s fees

incurred on appeal?

STANDARD OF REVIEW

“The determination of negligence claims involves mixed questions of law and fact.”

Francoeur v. State, No. W2007-00853-COA-R3-CV, 2007 WL 4404105, at *6 (Tenn. Ct.

App. Dec. 18, 2007) (quoting Kelley v. Johnson, 796 S.W.2d 155, 157 (Tenn. Ct. App.

1990)). First, “[d]etermining the existence and extent of one person’s duty to another is a

question of law to be decided by the courts.” Guesthouse Intern., LLC v. Shoney’s N. Am.

Corp., 330 S.W.3d 166, 195 (Tenn. Ct. App. 2010) (citations omitted). Our review of a

trial court’s determinations on issues of law is de novo, without any presumption of

correctness. Lind v. Beaman Dodge, Inc., 356 S.W.3d 889, 895 (Tenn. 2011).

“Once duty is established, the question of breach of duty and proximate cause of the

plaintiff’s injury are usually treated as questions of fact.” Leatherwood v. Wadley, 121

S.W.3d 682, 694 (Tenn. Ct. App. 2003). Our “review of findings of fact by the trial court

. . . shall be de novo upon the record of the trial court, accompanied by a presumption of

the correctness of the finding, unless the preponderance of the evidence is otherwise.”

Tenn. R. App. P. 13(d). For the evidence to preponderate against a trial court’s finding of

fact, it must support another finding of fact with greater convincing effect. Walker v. Sidney

Gilreath & Assoc’s., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000) (citation omitted); Realty

Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999).

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We also give great deference to the trial court’s credibility assessments. See Watson

v. Watson, 309 S.W.3d 483, 490 (Tenn. Ct. App. 2009) (citation omitted). We do not

disturb “factual findings based on witness credibility unless clear and convincing evidence

supports a different finding.” Coleman Mgmt., Inc. v. Meyer, 304 S.W.3d 340, 348 (Tenn.

Ct. App. 2009) (citing Humphrey v. David Witherspoon, Inc., 734 S.W.2d 315, 315–16

(Tenn. 1987)).

ANALYSIS

I. THE NEGLIGENCE CLAIM

Mr. Baskin contends that the trial court erred in its determination that he is liable

for damage to the value of the Property based on principles of ordinary negligence.

Specifically, he challenges the trial court’s finding that

Mr. Baskin . . . owed a duty to the Buyers of care to inform them of the

existence of this hole and the risk of harm to their persons or the Property

created by a hole of unknown depth. Mr. Baskin breached the duty of

reasonable care by not informing the Buyers of the existence of the hole prior

to their purchase of the Property. The harm resulting from Mr. Baskin’s

breach was damage to the value of the Property.

He presents three arguments concerning the common law negligence claim.

One, Mr. Baskin contends that he had no knowledge of the sinkhole and had no duty

to disclose it.

Two, he contends:

For the Trial Court to have found Mr. Baskin liable for failing to disclose the

existence of the repaired hole, it could have only done so under the [Buyers’]

causes of action for negligent misrepresentation or fraud because the

elements of those causes of action define the outer limits of a seller’s duty in

a real estate transaction where a buyer alleges either, or both, that the seller

made a misrepresentation or failed to disclose something. A finding of non-

liability under those causes of action pretermitted any finding of liability

under the [Buyers’] common law negligence claim. To put it another way,

the Trial Court’s findings of non-liability for fraud and negligent

misrepresentation, which were correct, are irreconcilable with its finding of

liability for common law negligence.

-8-

Three, Mr. Baskin contends that his alleged acts or omissions were neither the cause

in fact nor proximate or legal cause of any damage to the Property, each of which are

essential elements of a claim based on ordinary negligence. See Morrison v. Allen, 338

S.W.3d 417, 437 (Tenn. 2011). Thus, contrary to the trial court’s finding, Mr. Baskin insists

that he did not cause any “damage to the value of the property.” Instead, the sole reason

the Property lost value was the sinkhole, the existence of which was not discovered until

after the sale. We will discuss each contention in turn.

A.

First and importantly, the parties stipulated at trial that the hole did not meet the

statutory definition of a sinkhole. The applicable statutory language reads:

(c)(1) In addition to any other disclosure required by this part, the seller shall,

prior to entering into a contract with a buyer, disclose in the contract or in

writing, including acknowledgment of receipt, the presence of a known

sinkhole on the property.

(2) For purposes of this section, “sinkhole”:

(i) Means a subterranean void created by the dissolution of

limestone or dolostone strata resulting from groundwater erosion,

causing a surface subsidence of soil, sediment, or rock; and

(ii) Is indicated through the contour lines on the property’s

recorded plat map.

Tenn. Code Ann. § 66-5-212 (2015) (emphasis added). It is undisputed that no sinkhole

was indicated through the contour lines on the Property’s recorded plat. Thus, Sellers had

no statutory duty to disclose the unknown sinkhole.

The trial court also made findings of fact that are germane to this issue. Specifically,

the trial court found that Mr. Baskin “did not know the hole was a sinkhole” and that he

had not “knowingly or recklessly misrepresented the existence of the ‘sinkhole.’” It also

found that Mr. Baskin had not “intentionally concealed the existence of the ‘sinkhole.’”

The trial court found it significant that the hole was of an “unknown depth.”

However, the only witness who had any knowledge of the hole, and its depth, prior to the

sale to Buyers was Mr. Baskin, and he repeatedly explained that he believed the hole, the

dip or “depression,” was where the roots of the removed pine tree had rotted, which he

believed he had repaired.8 We also find significant his actions of repeatedly driving his

8

Mr. Baskin offered this testimony at trial:

-9-

lawnmower over the hole for the next seven months, supporting his belief that it was both

repaired and safe. And as noted above, the trial court found Mr. Baskin, and all witnesses,

to be credible. Thus, Mr. Baskin’s testimony is not only credible, but unchallenged, as to

his knowledge of the condition of the hole prior to the sale.

This is also significant because Buyers’ geotechnical engineer, Mr. Mishu, testified

that the growth of a sinkhole is unpredictable, and that there is no way to predict, with any

precision, how much deeper and wider a sinkhole will get from year to year.

As it concerns issues of concealment or nondisclosure, we need not surmise the

unknown, but only what was known, and this court has made it clear that “a plaintiff

purchaser must show that the seller actually knew of the defect, not merely that he or she

should have known.” Edmondson v. Coates, No. 01-A-01-9109-CH00324, 1992 WL

108717, at *10 (Tenn. Ct. App. May 22, 1992) (citing Akbari v. Horn, 641 S.W.2d 506,

507 (Tenn. Ct. App. 1982)). The trial court’s findings of fact, along with the details of Mr.

Baskin’s testimony, indicate that Mr. Baskin knew that there was a hole, or depression, in

which he had forced two, five-foot long, 4x4 posts. He knew that he had removed a tree

from that same area years earlier. And he knew that after repeatedly driving over the area

with heavy equipment throughout a seven-month period, he observed no further issues with

the hole. What was known to Mr. Baskin was that he had repaired a hole or depression,

believed to be caused by rotted roots.

While Buyers showed that Mr. Baskin knew of a repaired hole, the evidence does

not support a finding that Mr. Bakin had knowledge of a material defect, specifically, the

existence of a sinkhole or even an unrepaired hole.

In determining a breach of duty, the defendant, here Mr. Baskin, must “fail[] to

exercise reasonable care under the circumstances,” “[t]he risk involved is that which is

foreseeable,” and it “is foreseeable if a reasonable person could foresee the probability of

its occurrence or . . . was on notice that the likelihood of danger . . . is probable.” Doe v.

Linder Constr. Co., 845 S.W.2d 173, 178 (Tenn. 1992). As Sellers note in their brief, “Mr.

Baskin was required to use the standard of care of a reasonable person under the

circumstances, not that of a soil scientist or engineer.”

Q. Mr. Baskin, when you have a hole that you have -- that’s deep enough to put in two 4x4

posts that are 4 to 5 feet tall, did that not strike you as strange?

A. Not terribly because I believed this hole to be the -- the rotting out of the tree that I had

cut down about 15 years earlier. And that was about a 30-foot tree.

Q. So it was your understanding -- is what your testimony is -- that you thought it was a

rotting tree?

A. Yes.

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Perhaps most relevant to our circumstances here,

The actor’s conduct must be judged in the light of the possibilities apparent

to him at the time, and not by looking backward “with the wisdom born of

the event.” The standard is one of conduct, rather than of consequences. It is

not enough that everyone can see now that the risk was great, if it was not

apparent when the conduct occurred.

Id. (quoting 5 Prosser and Keeton, The Law of Torts § 31, p. 170 (1984)) (footnotes omitted

in original).

While “the wisdom born of the event” revealed that the hole was not repaired, that

it was at least 12 feet deep when discovered by Mr. Baker, and that it was a sinkhole, there

is no evidence that Mr. Baskin possessed that knowledge when he repaired the hole or

when he made disclosures about the Property. Id. While we now have the benefit of 20/20

hindsight, Buyers failed to prove that a material defect in the Property was or should have

been apparent to Mr. Baskin at the time of his conduct. See id.

For these reasons, we find that the evidence preponderates against the trial court’s

determination that Mr. Baskin “breached the duty of reasonable care by not informing the

Buyers of the existence of the hole prior to the purchase of the Property.”9 Because a breach

of duty is an essential element of a negligence claim, see Morrison, 338 S.W.3d at 437, we

respectfully reverse the trial court’s decision in finding that Mr. Baskin was negligent.

B.

For completeness, we discuss Sellers’ contention that the trial court’s finding of

liability for common law negligence is irreconcilable with its findings of non-liability for

fraud and negligent misrepresentation.

We question, as our Supreme Court did in Grogan v. Uggla, whether Buyers’

negligence claim here is simply redundant to their claim for negligent misrepresentation.

Grogan v. Uggla, 535 S.W.3d 864, 868–69 (Tenn. 2017). The Grogan court explained:

9

Pitz notes that “known material defects” should be disclosed “provided the defects are not

apparent or readily discoverable through the exercise of ordinary diligence.” Pitz v. Woodruff, No. M2003-

01849-COA-R3-CV, 2004 WL 2951979, at *9 (Tenn. Ct. App. Dec. 17, 2004). It bears noting here that

Buyers were advised, before closing, to seek the services of a geotechnical engineer to inspect for defects

such as sinkholes, but they declined to do so. The trial court did not explore whether such an inspection

would be considered “ordinary diligence,” and we find it unnecessary to do so.

- 11 -

In U.S. v. Neustadt, the United States Supreme Court reasoned that

negligence in an inspection underlying a report was part of a claim of

negligent misrepresentation. Neustadt, 366 U.S. 696, 706–07, 81 S.Ct. 1294,

6 L.Ed.2d 614 (1961). Several years later, however, the Court acknowledged

that a plaintiff might allege a separate cause of action when the negligent

conduct is separate from the communication of misinformation. See

Block v. Neal, 460 U.S. 289, 296–97, 103 S.Ct. 1089, 75 L.Ed.2d 67 (1983).

. . . In this case, the plaintiff has presented allegations separate from

communication of misinformation. Therefore, we conclude that the

plaintiff’s complaint fairly raises both negligent misrepresentation (by way

of his allegation that the defendant home inspector failed to report negligent

construction) and ordinary negligence (by way of his other allegations that

amount to a claim that the defendant home inspector negligently performed

the inspection).

Id. at 869 (emphasis added).

Here, Buyers’ “Negligence” claim, as stated in their complaint, is essentially a

restatement of their claim for “Negligent Misrepresentation.” This is evident from reading

the complaint, for under the caption “Negligence” it reads, in pertinent part:

54. The [Sellers] had a duty to disclose the existence of the sinkhole

pursuant to the contract at paragraph 16.

55. The [Sellers] knew or should have known that the hole in the ground

which had no visible end was not an ordinary hole and required disclosure.

56. The [Sellers] had a duty to disclose any adverse facts of which they had

notice.

57. The [Sellers] had notice and knowledge of the existence of the sinkhole.

58. The [Sellers] breached their duty to the [Buyers] by failing to inform

them of the sinkhole and by covering up the evidence of the hole so it was

not discoverable in the ordinary course of inspection.

59. The [Sellers] further breached their duty by failing to provide notice of

the sinkhole to the [Buyers] as required by T.C.A. § 66-5-212.

60. As a result of the [Sellers’] breaches of duty, the [Buyers] have been

compelled to hire and pay various experts to ascertain the existence and

extent of the sinkhole and have purchased a home needing substantial repair.

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61. As the result of the [Sellers’] misrepresentations, the [Buyers] are entitled

to . . . [recover] damages equal to the cost of repair plus all costs and fees

associated with ascertaining the damage to the home, plus a return of moneys

paid to repair damage and the cost of improvements, or the diminution in

value, and incidental and consequential damages.

(Emphasis added).

Thus, the essence of the alleged negligent conduct at the center of this claim is Mr.

Baskin’s failure to disclose the existence of the sinkhole. However, as noted earlier, the

trial court found that Mr. Baskin “did not know the hole was a sinkhole,” and it found that

Mr. Baskin had not “knowingly or recklessly misrepresented the existence of the

‘sinkhole.’” The court also found that Mr. Baskin had not “intentionally concealed the

existence of the ‘sinkhole.’” Further, it has been established that Sellers were under no duty

to disclose the sinkhole, pursuant to its statutory definition.

The trial court’s ruling concerning the common law negligence claim reads, in

pertinent part:

The Court concludes Mr. Baskin—but not Mrs. Baskin who had no

knowledge of the hole—owed a duty to the Buyers of care to inform them

of the existence of this hole and the risk of harm to their persons or the

Property created by a hole of unknown depth. Mr. Baskin breached the

duty of reasonable care by not informing the Buyers of the existence of

the hole prior to their purchase of the Property. The harm resulting from

Mr. Baskin’s breach was damage to the value of the Property.

(Emphasis added). Based on these findings, the court then awarded Buyers compensatory

damages of $55,000 for the diminution in value of the Property.

The trial court’s findings reveal that its ruling on the ordinary negligence claim was

based on a finding of failure to inform Buyers of the sinkhole; however, the trial court also

found that Mr. Baskin cannot be held liable based on a failure to inform—to disclose—

because Buyers contractually agreed to purchase the Property on an “as is” basis. We find

these two rulings irreconcilable as explained in Fayne v. Vincent, 301 S.W.3d at 177.

We also find it significant that a claim based on this conduct is not “separate from

the communication of misinformation.” Grogan, 535 S.W.3d at 869. And, as our Supreme

Court explained,

In a transaction involving the sale of real property, the seller has a duty to

disclose to the buyer material facts that affect the property’s value and that

are not known or reasonably discoverable by a purchaser exercising ordinary

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diligence. Simmons v. Evans, 185 Tenn. 282, 285–86, 206 S.W.2d 295, 296

(1947); Patel v. Bayliff, 121 S.W.3d 347, 352–53 (Tenn. Ct. App. 2003). As

a general matter, a party may be found liable for damages caused by his or

her failure to disclose material facts to the same extent that the party may be

held liable for damages caused by fraudulent or negligent misrepresentations.

Macon County Livestock Mkt., Inc. v. Ky. State Bank, 724 S.W.2d 343, 349

(Tenn. Ct. App. 1986). Thus, a seller’s liability for the failure to disclose

such material facts in a real estate transaction is coextensive with a

party’s liability for fraudulent or negligent misrepresentation. Justice v.

Anderson County, 955 S.W.2d 613, 616–17 (Tenn. Ct. App. 1997); Wyner v.

Athens Utils. Bd., 821 S.W.2d 597, 599 (Tenn. Ct. App. 1991).

Fayne v. Vincent, 301 S.W.3d at 177 (emphasis added). As noted earlier, the trial court

dismissed Buyers’ claims for negligent misrepresentation and fraud, and Buyers do not

challenge these decisions on appeal.

Although the trial court dismissed Buyers’ claims for negligent misrepresentation

and fraud, the court found Mr. Baskin liable for damage to the Property based on Buyers’

ordinary negligence claim. For the reasons stated above, we find these rulings

irreconcilable.

C.

Mr. Baskin contends that his alleged acts or omissions were neither the cause in fact

nor the proximate or legal cause of any damage to the Property, each of which are essential

elements of a claim based on ordinary negligence. See Morrison, 338 S.W.3d at 437.

Instead, the sole reason the Property lost value was the sinkhole, the existence of which

was not discovered until after the sale.

There is no competent evidence to support a finding that anything Sellers did or

failed to do damaged or devalued the Property. Not disclosing the unknown sinkhole did

not devalue the Property. Placing two four-by-four posts and topping it off with dirt to level

out the depression Mr. Baker found while mowing the lawn, as well as placing a plastic

bag and grass over the dirt, did not worsen the situation nor devalue the Property. To the

contrary, it was the existence of the sinkhole, which was unknown to Sellers, that devalued

the Property.

Because Mr. Baskin’s actions were not the cause in fact or proximate, or legal, cause

of damage to the Property—essential elements of a negligence claim, see Morrison v.

Allen, 338 S.W.3d at 437—Mr. Baskin cannot be held liable for the diminution to the value

of the Property.

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Accordingly, and for the reasons discussed above, we reverse the trial court’s

finding based on the claim of ordinary negligence.

II. GROSS NEGLIGENCE

Buyers’ claim of gross negligence is set forth in paragraphs 68 through 82 of the

complaint.

We begin by noting that gross negligence is a “negligent act done with utter

unconcern for the safety of others, or one done with such a reckless disregard for the rights

of others that a conscious indifference to consequences is implied in law.” Odum v. Haynes,

494 S.W.2d 795, 807 (Tenn. Ct. App. 1972). Stated another way, as the trial court noted:

“Gross negligence is conduct that amounts to ‘a conscious neglect of duty or

a callous indifference to the consequences.’” Spearman v. Shelby Cnty. Bd of

Educ., 637 S.W.3d 719, 736 (Tenn. Ct. App. 2021) (quoting Cook v.

Spinnaker’s of Rivergate, Inc., 878 S.W.2d 934, 938 (Tenn. 1994)). To prove

a claim of gross negligence, a plaintiff must prove defendant’s conduct was

negligent and, further, was done with utter unconcern or reckless disregard

for the safety or rights of others that “a conscious indifference is implied in

law.” Id. (citations omitted).

As noted earlier, the trial court found, and it is undisputed, that Mrs. Baskin had no

knowledge of the hole her husband found or his efforts to fill in the hole. Thus, our focus

is on what Mr. Baskin knew or should have known when he discovered the hole, the

“depression,” as he called it when he drove over it with his riding lawnmower, in March

of 2017 and whether his acts or omissions thereafter were “done with utter unconcern for

the safety of others[ ] or . . . done with such a reckless disregard for the rights of others that

a conscious indifference to consequences is implied in law.” Odum, 494 S.W.2d at 807.

Many of the factual assertions in the complaint state that Sellers had a duty to

disclose a sinkhole; however, it has been established that Mrs. Baskin had no knowledge

of the hole her husband found or his efforts to fill in the hole, and Mr. Baskin did not know

of the existence of a sinkhole on the Property. The complaint further alleges that:

72. [Sellers] covered up the hole in the ground by wedging a wood post into

the hole and “plugging” the top with a plastic bag filled with sand and

covered with dirt and grass.

73. [Sellers] knew or should have known that a hole of this depth was not an

ordinary hole.

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74. The covering up of the hole was dangerous and could have swallowed a

small child or pet as the “plug” of the hole only hid the danger hiding below

an unstable surface.

. . .

77. [Sellers’] breaches were a conscious, voluntary act and omission in

reckless disregard of their legal duty to disclose and of the consequences to

[Buyers].

78. [Buyers] reasonably relied on [Sellers] to their detriment and were

damaged by the reckless conduct of [Sellers].

79. The gross negligence of [Sellers] resulted in [Buyers] purchasing a

property that has significant danger and damage and which is greatly reduced

in value.

As explained above, there is no evidence to support a finding that anything Sellers

did or failed to do damaged or devalued the Property.10 It was the existence of the sinkhole,

which was unknown to Mr. Baskin, that devalued the Property.

Moreover, the evidence in the record fails to establish that Mr. Baker’s acts or

omissions were of such a nature as to indicate an “utter unconcern for the safety of others,”

or that his acts or omissions constituted “a reckless disregard for the rights of others.” Odum

v. Hayner, 494 S.W.2d at 807.

Accordingly, we affirm the trial court’s dismissal of the gross negligence claim.

III. DAMAGES

Because Sellers are not liable to Buyers under any of the claims asserted, Buyers

are not entitled to recover any damages. Accordingly, we vacate the award of damages to

Buyers.

IV. ATTORNEY’S FEES IN THE TRIAL COURT

Sellers also question whether the trial court erred in awarding Buyers their

attorney’s fees and discretionary costs in accordance with the purchase agreement and, in

their brief, contend that Sellers should be awarded attorney’s fees instead.

10

And no child or pet (or anyone) was “swallowed” by the hole, which Buyers alleged could have

occurred due to Sellers’ acts and omissions.

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Summarizing the general approach to the recovery of attorney’s fees, our Supreme

Court has explained:

Tennessee has long followed the “American Rule” with regard to

attorney’s fees. State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186,

194 (Tenn. 2000). This Rule provides that “a party in a civil action may

recover attorney’s fees only if: (1) a contractual or statutory provision creates

a right to recover attorney’s fees; or (2) some other recognized exception to

the American Rule applies, allowing for recovery of such fees in a particular

case.” Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303,

308 (Tenn. 2009).

Eberbach v. Eberbach, 535 S.W.3d 467, 474 (Tenn. 2017) (citations omitted). Then,

specifically regarding the language of contractual provisions, this court stated:

[T]he parties’ use of the term “shall,” i.e., “the prevailing party shall be

entitled to recover all costs of such enforcement, including reasonable

attorney’s fees,” indicates that the award of attorney’s fees to the prevailing

party is mandatory. See Myers v. AMISUB (SFH), Inc., 382 S.W.3d 300, 308

(Tenn. 2012) (“‘When “shall” is used . . . it is ordinarily construed as being

mandatory and not discretionary.’”) (quoting Bellamy v. Cracker Barrel Old

Country Store, Inc., 302 S.W.3d 278, 281 (Tenn. 2009)). Accordingly,

Appellants are entitled to an award of attorney’s fees if they are the prevailing

party.

Tennessee courts have defined a “prevailing party” as one who

“succeeds on a ‘significant claim’ which affords the [party] a substantial

measure of the relief sought.” Daron v. Dep’t of Corr., 44 S.W.3d 478, 481

(Tenn. 2001). Additionally, a “prevailing party” has been defined as a party

“who has succeeded ‘on any significant issue in litigation which achieves

some of the benefit the part[y] sought in bringing suit.[’]” Fannon v. City of

LaFollette, 329 S.W.3d 418, 431 (Tenn. 2010) (internal citations omitted).

Jones v. Reda Homebuilders, Inc., No. M2020-00597-COA-R3-CV, 2021 WL 2375883,

at *6 (Tenn. Ct. App. June 10, 2021) (emphasis in original) (alterations in original).

Here, the pertinent portion of the purchase agreement read:

In the event that any party hereto shall file suit for breach or enforcement of

this Agreement (including suits filed after Closing which are based on or

related to this Agreement), the prevailing party shall be entitled to recover

all costs of such enforcement, including reasonable attorney’s fees.

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Because the trial court determined that Mr. Baskin was negligent and Buyers

prevailed, the trial court did not err in awarding Buyers their attorney’s fees. However,

having now reversed that decision, we find Sellers to be the prevailing party, and pursuant

to the terms of the purchase agreement, along with the guidance of Eberbach and Jones,

Sellers “shall be entitled to recover all costs of such enforcement, including reasonable

attorney’s fees.” We therefore reverse the award of attorney’s fees and remand to the trial

court to determine the amount of reasonable attorney’s fees to be awarded to Sellers.

V. ATTORNEY’S FEES ON APPEAL

Sellers also request attorney’s fees on appeal, arguing that “[t]he provision at issue

entitles [Sellers] to an award of attorney’s fees and costs arising from this appeal.”

Our Supreme Court held in accordance with this premise in Eberbach, explaining

that “the applicability of the [parties’] fee provision to [the] request for appellate attorney’s

fees turns on whether [the requesting party] was the ‘prevailing party’ for those claims in

which she instituted proceedings to procure the enforcement of the [agreement] in the trial

court and at the Court of Appeals.” Eberbach, 535 S.W.3d at 480. The court reasoned that

by obtaining a judgment in her favor and having that judgment affirmed by the Court of

Appeals, the requesting party achieved the primary benefit sought at both the trial court

and appellate levels, and was clearly the prevailing party at both levels. Id. The Supreme

Court then reversed this court and awarded reasonable expenses, including attorney’s fees,

incurred at the appellate level. Id. at 480–481.

Finding Sellers to be the prevailing party, we must, according to the terms of their

purchase agreement, award Sellers their reasonable attorney’s fees and costs incurred at

the appellate level and remand to the trial court to determine the amount of those fees.

CONCLUSION

For the reasons above, we reverse the trial court’s decision concerning the common

law negligence claim, affirm the dismissal of the gross negligence claim, vacate the award

of damages, and remand to the trial court to assess the award of attorney’s fees and costs

to Sellers in accordance with this opinion. Costs of appeal are assessed against Buyers,

Scott and Julie Baker.

________________________________

FRANK G. CLEMENT JR., P.J., M.S.

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