CALVIN HOUGHLAND and wife, JOSEPHINE HOUGHLAND, Plaintiffs-Appellees VS.
SECURITY ALARMS & SERVICES, INC., Defendant-Appellant
Court of Appeals of Tennessee, Middle Section at Nashville-1985 Tenn. App.
LEXIS 2960-June 25, 1985
PRIOR HISTORY: Davidson Law
CofA No. 84-306-II
APPEAL FROM CIRCUIT COURT OF DAVIDSON COUNTY, TENNESSEE AT NASHVILLE
HONORABLE HARRY S. LESTER, JUDGE
DISPOSITION: REVERSED IN PART AND REMANDED.
PROCEDURAL POSTURE: Defendant security alarm company sought review of the
decision of the Circuit Court of Davidson County (Tennessee), which granted
judgment in favor of plaintiff property owners and awarded the property
owners damages in their misrepresentation action against the security alarm
company. The property owners sought review of the dismissal of their
statutory unfair and deceptive practice claim.
OVERVIEW: The property owners filed a suit for misrepresentation and
statutory unfair and deceptive practices against the security alarm company
for property loss that occurred when their home was burglarized and the
alarm provided by the company did not function as it had been previously
represented. The trial court granted judgment in favor of the property
owners and awarded them damages in their misrepresentation claim and
directed a verdict for the security alarm company on the statutory unfair
and deceptive practice claim. On appeal, the court affirmed the security
alarm company's liability, holding that the company had misrepresented the
alarm system and that the jury's verdict regarding the security alarm
company's liability was proper. However, the court held that the testimony
of an appraiser that testified about the value of the stolen property was
improperly admitted because relevancy was not established showing that the
property appraised was the property stolen. The court remanded the issue to
the trial court for a new trial on the issue of damages. The court also
affirmed the directed verdict in favor of the security alarm company.
OUTCOME: The court affirmed the trial court's directed verdict for the
security alarm company on the statutory unfair and deceptive practice claim
and the judgment of liability of the security alarm company on the
misrepresentation claim, however, the court vacated the order for damages
and remanded to the trial court for a new trial limited to the issue of the
amount of damages.
COUNSEL: Jonathan Harwell, Glenn B. Rose, HARWELL, BARR, MARTIN & STEGALL,
172 Second Avenue, North, Nashville, Tennessee 37219, ATTORNEYS FOR
John E. Brandon, Daniel R. Loftus, WATKINS, McGUGIN, McNEILLY & ROWAN, 18th
Floor, First American Center, Nashville, Tennessee 37238
JUDGES: Todd, Presiding Judge, Middle Section wrote the opinion. SAMUEL L.
LEWIS, JUDGE, CONCURS, WILLIAM C. KOCH, JR., JUDGE, NOT PARTICIPATING.
OPINION: HENRY F. TODD, PRESIDING JUDGE, MIDDLE SECTION
Plaintiffs sued defendant for property loss through burglary as a result of
breach of contract and/or breach of express and/or implied warranty,
misrepresentations, statutory unfair and deceptive acts and practices,
and/or negligence. Defendant denied wrongdoing, pled contractual limitation
and waiver of liability, contributory negligence and intervening independent
causes. Defendant counter-claimed for indemnity under an indemnity
The Trial Judge directed a verdict for defendant as to statutory [*2]
unfair and deceptive practices. The jury returned a verdict in favor of
plaintiffs for $100,000. The court entered judgment accordingly and
dismissed defendant's counterclaim.
Defendant appealed, and plaintiffs have filed a protective issue in respect
to the dismissal of their statutory claim.
Defendant presents seven issues of which the first is as follows:
Whether the Trial Court erred in overruling the Defendant's Motion for a
Directed Verdict at the conclusion of all of the proof in this cause.
At the conclusion of all of the evidence, defendant moved for a directed
verdict. The motion was sustained in respect to plaintiffs' claim based upon
the Tennessee Consumer Protection Act. In all other respects, the motion was
On July 1, 1977, plaintiff, Calvin Houghland (hereafter referred to as
plaintiff) and defendant joined in executing a written agreement requiring
defendant to provide certain security equipment and services for plaintiffs'
home. Said agreement contained the following provision:
14. It is agreed that Security Alarms is not an insurer and that the
payments hereinbefore named are based solely upon the value of the services
herein described [*3] and it is not the intention of the parties that
Security Alarms assume responsibility for any loss occasioned by malfeasance
or misfeasance in the performance of the services under this contract or for
any loss or damage sustained through burglary, theft, robbery, fire or other
cause or any liability on the part of Security Alarms by virtue of this
Agreement or because of the relation hereby established. If there shall,
notwithstanding the above provisions, at any time be or arise any liability
on the part of Security Alarms by virtue of this Agreement or because of the
relation hereby established, whether due to the negligence of Security
Alarms or otherwise, such liability is and shall be limited to a sum equal
in amount to the service charge hereunder for a period of service not to
exceed six months, which sum shall be paid and received as liquidated
damages. Such liability as herein set forth is fixed as liquidated damages
and not as a penalty and this liability shall be complete and exclusive.
That in the event Subscriber desires Security Alarms to assume greater
liability for the performance of its services hereunder, a choice is hereby
given of obtaining [*4] full or limited liability by paying an additional
amount under a graduated scale of rates proportioned to the responsibility,
and an additional rider shall be attached to this Agreement setting forth
the additional liability of Security Alarms and additional charge. That the
rider and additional obligation shall in no way be interpreted to hold
Security Alarms as an insurer. (Emphasis supplied) IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT IN ENTERING INTO THIS AGREEMENT AND IN GRANTING
THE SERVICES AND MAINTAINING THE EQUIPMENT HEREIN DESCRIBED, SECURITY ALARMS
MAKES NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION CONTAINED IN THIS
AGREEMENT, SECURITY ALARMS EXPRESSLY DISCLAIMS ANY WARRANTY FOR MERCHANT
ABILITY OR FITNESS FOR USE.
15. This Agreement is not assignable by the Subscriber except upon the
written consent of Security Alarms first being obtained. The Subscriber may
not assign any rights inuring under this contract or under the relationship
created hereby either voluntarily or by operation of law, without having
first obtained the written consent of Security Alarms. The Subscriber does
hereby for itself and all parties claiming under it release and discharge
[*5] Security Alarms from and against all hazards covered by insurance, it
being expressly understood and agreed that no insurance company or insurer
shall have any right of subrogation against Security Alarms. (Emphasis
[Emphasis as set forth in the Contract.]
The contract did not specify its duration, but provided for payments of
$162.00 plus tax quarterly in advance "during the term hereof" and for
termination upon non payment. Apparently the agreement was intended to be of
indefinite duration so long as the quarterly payments were made.
In 1979, plaintiff employed Jim Loving to handle his affairs, including the
provision of suitable burglar protection for his home. Mr. Loving discussed
with Ted Chapman, representative of defendant, the security service being
provided and any needed improvements. It was disclosed that the security
alarm equipment installed under the 1977 agreement was connected to
defendant's office by a "loop" which included other customers, so that an
alarm transmitted to defendant's office would not identify which customer's
premises was being entered. Chapman advised Loving that improved equipment
On September [*6] 19, 1979, Chapman wrote Loving as follows:
The purpose of this correspondence is to confirm the fact that we can honor
the pricing for the installation of the proposed fire alarm system for Mr.
Calvin Houghland's home on Old Hickory Boulevard. The pricing of Five
Hundred Fifty Dollars ($500.00) plus tax, installation and Eighteen Dollars
and Fifty Cents ($18.50) plus tax, additional monthly service agreement
would be effective until October 1, 1979.
We also wanted to confirm the fact that it is our company policy to dispatch
the appropriate law enforcement department on all burglar alarm signals and
the appropriate fire department on fire alarm signals, received at our
Central Station. We cannot, of course, assure (sic) liability for the police
or fire department dispatchers ability to have their representatives, in
fact, repond (sic) to the alarms in a timely fashion.
Per our recent discussion, please find two proposal for additions to Mr.
Houghland's security system.
PROPOSAL #1 - Installation of one telephone line security transceiver for
further security of the interconnecting leased telephone line. This unit
would call us immediately should someone cut this line [*7] or should an
intruder try to compromise the line.
Installation Price: One Hundred Sixty-Five Dollars ($165.00) plus tax.
Additional Monthly Lease and Service Agreement: Ten Dollars ($10.00) plus
PROPOSAL #2 - Installation of one wireless panic alarm receiver and one
wireless portable panic button. This equipment will give you the means of
creating an alarm by pressing a button from any where within the home.
Installation Price: One Hundred Sixty-Two Dollars and Fifty Cents ($162.50)
plus tax. Additional Monthly Lease and Servce Agreement: Nine Dollars and
Fifty Cents ($9.50) plus tax.
Additional Panic Button:
Installation Price: Thirty-Seven Dollars and Fifty Cents ($37.50) plus tax.
Additional Monthly Lease and Service Agreement: Two Dollars ($2.00) plus
On October 2, 1979, Loving and defendant executed the following instrument:
To Alarm Service Agreement dated July 1, 1977 by and between Security Alarms
& Services, Inc. Nashville, Tennessee, referred to as COMPANY and Mr. Calvin
Houghland - Old Hickory Boulevard - Brentwood, Tenn. referred to as
The COMPANY agrees to furnish additional protection in conjunction [*8]
with the electronic alarm system at the SUBSCRIBER'S premises included
1 telephone line security transceiver
1 wireless panic alarm receiver
1 wireless portable panic button
SUBSCRIBER agrees to pay the sum of $327.50 + tax for the installation of
additional protection and an additional service charge in the amount of
$19.50 + tax per month. Monthly addition for above to be effective for a
period of at least one year from date of completion. Installation charge and
additional monthly charge increase effective upon completion.
SECURITY ALARMS & SERVICES, INC.
(Name and Title)
(Name and Title)
Plaintiffs' claims in the present case are based upon the representations
made by Chapman leading to the execution of the last quoted instrument and
the performance of defendant and its equipment under said latter instrument.
Appellees insist that the October 2, 1979 instrument was a new undertaking
separate and apart from the former, July 1, 1977, original contract.
Appellant insists that the October 2, 1979 instrument was exactly what its
title implies, a rider amending, but not superseding [*9] the July 1, 1977
agreement which continued in full force and effect with additional
equipment, services and charges.
The instrument dated October 2, 1979, plainly states that it is a "Contract
Rider to Alarm Service Agreement dated July 1, 1977". The text of the 1979
instrument uses the word, additional, four times in describing the
equipment, services and charges therefor.
A rider is defined as:
4a: an addition or amendment to a manuscript, printer's proof, or other
document often attached to a separate piece of paper; b: something added as
an extra to a seemingly completed statement or act. Webster's Third
International Dictionary p. 1952.
A schedule or small piece of parchment annexed to some part of a roll or
record. It is frequently familiarly used for any kind of schedule or writing
annexed to a document which cannot be well incorporated in the body of the
document. Thus, in passing bills through a legislature, when a new clause is
added after the bill has passed through committee such new clause is termed
a "rider", (citing authorities) an additional paper attached to, and forming
a part of, an insurance policy. (citing authority). (Blacks Law Dictionary,
[*10] Fourth Edition, p. 1486.
To the same effect is Markman v. H.A. Bruntjen Co., Minn. 1957, 81 NW2d 858.
There can be no doubt that, as a matter of law, the document executed on
October 2, 1979, was an addition to and became a part of the previous
document executed on July 1, 1977.
Nevertheless, plaintiffs insist that the exculpatory clauses of the 1977
agreement are inapplicable to the present suit because the representative of
defendant called the "Contract Rider" a "work order". There is no evidence
that the representative of plaintiff was in any way at a disadvantage as to
knowledge of the contents of the "Contract Rider", and its oral designation
as a work order was not a representation that it was a new contract separate
from the former contract.
Fraud is never presumed; it must be proved. Pipkin v. Lentz, 49 Tenn. App.
206, 354 SW2d 87 (1961). Where fraud is alleged, the facts sustaining it
must be clearly made out. Bevins v. Livesay 22 Tenn. App. 1, 221 SW2d 106
(1949). The mere reference to the "Rider" as a "work order" is not proof of
In the absence of proven fraud, even illiteracy will not excuse the failure
to ascertain the contents of a written [*11] instrument before signing.
Richardson v. McGee 193 Tenn. 500, 246 SW2d 572 (1951), DeFord v. National
Life & Acc. Ins. Co. 182 Tenn. 255, 185 SW2d 617 (1945).
Plaintiffs assert that the execution of the "Rider" was ineffective to
incorporate the former exculpatory provision into the new addition to the
contract because the parties had already agreed upon the details of the new
addition before the Rider was presented. There is no evidence of a previous
written agreement. There was only a letter signed by defendant's
representative which was an offer.
Plaintiffs next assert that the exculpatory clause does not relieve
defendant of liability for misrepresentation. Paragraphs 14 and 15 of the
1977 agreement relieve defendant of "malfeasance or misfeasance in the
performance of the services under this contract", or "any liability on the
part of Security Alarms by virtue of this agreement, or because of the
relation hereby established", and "all hazards covered by insurance".
The foregoing are not interpreted as relieving defendant of liability for
misrepresentation in the procurement of the contract or any amendment
Tennessee recognizes the tort of misrepresentation [*12] separate and apart
from contract or warranty liability, McElroy v. Boise Cascade Corp., Tenn.
App. 1982, 632 SW2d 127; Haynes v. Cumberland Builders, Inc., Tenn. App.
1976, 546 SW2d 228, Ford Motor Co. v. Taylor, 60 Tenn. App. 271, 446 SW2d
Defendant's letter, quoted above, stated:
PROPOSAL #1 - Installation of one telephone line security transceiver for
further security of the interconnecting leased telephone line. This unit
would call us immediately should someone cut this line or should an intruder
try to compromise the line.
We wanted to confirm the fact that it is our company policy to dispatch the
appropriate law enforcement department on all burglar alarm signals . . .
received at our Central Station.
Prior to October 2, 1979, the only connection between plaintiffs' home and
defendant's central office was a "loop" which contained many subscribers,
and which would not identify the particular site of an intrusion. Under this
system, it was necessary for the defendant to visit each subscriber's
premises on the loop to discover where the trouble was. It was this
difficulty and delay which plaintiffs sought to avoid by the equipment and
[*13] services provided in the rider.
The above quoted statements in defendant's letter were an unequivocal
1. The capability of the proposed equipment to identify defendant's home as
the scene of an intrusion, and
2. The policy and practice of reporting all alarms to the police.
After plaintiffs' loss and the resultant claim and lawsuit, it developed
that the new equipment did not discriminate between an equipment malfunction
and an actual intrusion, and that the policy of the defendant was not to
immediately notify the police when the central office received an "open
loop" signal, but to investigate first to see whether there had been an
Under the facts just stated, a jury would be justified in finding a tortious
misrepresentation of facts for which defendant would be liable in spite of
its exculpatory contract provisions.
On the occasion of plaintiffs' loss, the equipment did produce an indication
at defendant's office that there was something amiss in the alarm system,
but did not notify defendant's office that "someone cut this line or . . .
an intruder (tried) to compromise the line", as stated in defendant's
letter, quoted [*14] above. The signal received was ambiguous in that
defendant's employees could not tell whether the line had been cut or
compromised or whether there was simply a malfunction in the equipment. This
was not what was represented in the letter which said, "This unit would call
us immediately should someone cut the line, etc.", the import being that the
"call" from the unit would be an alarm of a cut line.
Also, contrary to the representation of the letter, the office did not
respond to the indication as an "alarm", but, in accordance with company
policy and procedure, treated it as an indication of malfunction and did not
report to the police.
Appellant argues that there is no evidence that plaintiffs losses were the
proximate result of the misrepresentations. There is no direct evidence of
proximate cause. The circumstances are such that conclusive proof of the
fact would be virtually impossible. However, the circumstances are such as
to raise a reasonable inference of proximate cause.
A jury of reasonable persons was justified in reasoning that, if the burglar
alarm system had furnished an immediate alarm as represented and if the
company policy and procedure had required that [*15] the police be called
immediately, then the burglary would have been interrupted before completion
and plaintiffs would not have sustained the loss. Therefore, there was
evidence from which the jury could properly find that defendant was guilty
of a misrepresentation which proximately caused the loss.
The foregoing effectively disposes of the first ten issues presented by
defendant, all of which are concerned with the exculpatory provisions in the
A general verdict approved by the trial judge is not vitiated by the absence
of proof on one or more counts if there is evidence to sustain a single
count. Alex v. Armstrong, 215 Tenn. 276, 385 SW2d 110 (1964); Tallent v.
Fox, 24 Tenn. App. 96, 141 SW2d 485 (1940); Central Produce Co. v. General
Cab Co. of Nashville, 23 Tenn. App. 209, 129 SW2d 1117 (1939).
Appellant's eleventh issue complains of the refusal of the Trial Judge to
charge as follows:
"Predictions or other such sales talk regarding the future cannot be the
basis of a negligent mispresentation action."
Appellant's brief states that the misrepresentation was "sales talk" between
the representatives of plaintiff and defendants. Plaintiffs' [*16]
argument contains no citation to the record to support the timely
presentation or refusal of the special request or the evidence to which the
requested charge alludes.
Rule 6(b) of the Rules of this Court is as follows:
No complaint of or reliance upon action by the trial court will be
considered on appeal unless the argument thereon contains a specific
reference to the page or pages of the record where such action is recorded.
No assertion of fact will be considered on appeal unless the argument upon
such assertion contains a reference to the page or pages of the record where
evidence of such fact is recorded.
This complaint must be considered as waived by failure to present same in
accordance with the Rules of this Court. See Schoen v. J.C. Bradford & Co.,
Tenn. App. 1982, 642 SW2d 420. Moreover, the letter quoted above formed a
written confirmation of the oral "sales talk", and the letter cannot be
denominated as "sales talk". It is serious representation of fact. McElroy
v. Boise Cascade Corp., Tenn. App. 1982, 632 SW2d 127, cited by appellant,
is not in point. Under the facts of the cited case, there was an alleged
misrepresentation of the competency of a builder, [*17] not of the
capacity of equipment or of the policy or procedure of the defendant.
Appellant's eleventh issue is found to be without merit.
Appellant's twelfth issue is as follows:
Whether the Trial Court erred in admitting into evidence Andrew Pott's
opinion on the value of the jewelry and silverware lost by the Plaintiffs in
the August 31-September 1, 1980 burglary when Mr. Pott's opinion was
predicated upon hearsay evidence i.e. a 1974 appraisal report made by
another jeweler and various sales slips.
The witness testified that he was a qualified professional appraiser of
jewelry, that, in the fall of 1980, Plaintiffs' representative requested him
to establish the value of jewelry that had been lost or stolen, that he was
furnished a previous appraisal containing a description of the various items
together with some sales tickets, that he prepared and submitted an
appraisal on October 1, 1980, and that he never saw the jewelry in question,
but relied upon the description in a 1974 appraisal by Broadnax which was "a
fairly good amount of information to establish value from".
Defendant objected to the testimony of this witness as to the value on
grounds stated as follows: [*18]
MR. BRANDON: If Your Honor please, testimony based on hearsay is no better
than hearsay testimony. This gentleman has stated he never saw the jewelry,
silver. He's based it on descriptions given by others and a paper appraisal
which was six years old. We cannot cross-examine that appraisal that was six
years old, and to allow this man to give an opinion based on those factors
is the grossest hearsay. It's just not admissible.
The Court overruled the objection, and the witness stated the value to be
On cross-examination, the witness testified in part as follows:
A. There again we took the information that we had and tried to get -- I
think in talking with Mrs. Houghland she gave us a description of her own
jewelry as much as possible. We reconstructed it from that.
Q. You didn't put the weight of the stones in your appraisal either, did
A. We didn't have the weights.
A. We took our information from that appraisal.
A. I think that some of it -- if you'll notice some of the pieces did have
weight on them. We used that as much as we could. The others we used the
information that we had to establish values.
Appellant insists that the opinion of [*19] an expert may not be based upon
the opinion of others. This statement of law is applicable to some factual
circumstances but inapplicable to others. There is no legal prohibition
against receiving the opinion of an expert which is based or influenced in
part upon the opinion of others. It is well known and understood that
experts confer and compare notes "frequently" in efforts to assure that
their individual opinions reasonably conform to general consensus.
On the other hand an "expert" who relies solely upon the opinions of others
is not an expert at all for he is not giving his own opinion but merely
repeating that of others.
In the present case, it is obvious that Mr. Potts made his separate and
independent determination of the value of plaintiffs' property, but that he
did so without seeing any of it and was forced to rely upon the previous
appraisal and the statements of Mrs. Houghland for descriptions of the
property being appraised.
If Mr. or Mrs. Houghland had testified that the property listed on the
former appraisal was their property and was lost by burglary, then the
appraisal by Mr. Potts of the same property would be properly related to the
present case [*20] by identification. No such identifying testimony by
either owner has been found in this record. This omission is natural and
understandable, but it is fatal to the relevance of the testimony of Mr.
Potts. It is natural to assume that the jewelry appraised for plaintiffs by
Brodnax in 1974 is the same jewelry lost in the burglary; but this is not
necessarily so and must be proven before the appraisal of that jewelry has
anything to do with this case.
Absent any competent evidence that the jewelry appraised by Mr. Potts was
the same jewelry as that owned by and lost by the plaintiffs in the subject
burglary, it was error to admit the appraisal of Mr. Potts.
There is some testimony of Mr. Houghland concurring in Mr. Potts' appraisal,
but it is not an identification of the property appraised by Potts or valued
by Houghland as the property lost, hence this Court cannot say that Mr.
Houghland's evaluation of the property renders harmless the admission of the
appraisal by Mr. Potts.
The improper admission of Mr. Potts' testimony will require a new trial, but
it is not fatal to plaintiffs' suit.
In Nabors v. Gearhiser, Tenn. 1975 525 SW2d 145, the Trial Judge erroniously
admitted [*21] testimony in violation of TCA § 24-105 (now 24-1-203), the
Dead Man's Statute. The Supreme Court reversed for admission of the evidence
 Where it appears from the record, as it does here, that more
satisfactory evidence can be obtained on the issues presented, and, if
produced, will enable the court to come to a more satisfactory conclusion,
the cause may be remanded for such additional proof, and for a decision in
the trial court based thereon. T.C.A. § 27-329. Stokely v. Southern Railway
Company, 57 Tenn. App. 271, 418 S.W.2d 255 (1967); Federated Mut. Imp. &
Hdwe. Ins. Co. v. Anderson, 49 Tenn. App. 124, 351 S.W.2d 411 (1961).
In the present case, upon remand it will be possible for the plaintiff or
plaintiffs to testify as to the precise description of their property, to
give his, her or their opinion of value as owner of the property and to then
introduce the testimony of an expert as to the value of property of the
description related in plaintiffs' testimony.
To the extent indicated, the twelfth issue has merit.
Appellant's thirteenth issue is as follows:
Whether the Trial Court erred in admitting into evidence a sales brochure
distributed [*22] by the Defendant when there was no proof that either of
the Plaintiffs had read or relied upon that brochure.
The portions of the record cited by appellant have been examined, but there
is no evidence that the questioned brochure was ever made a part of the
record. It does not appear to be listed on the index of exhibits and is not
found in the envelope containing other exhibits. Without an opportunity to
examine the questioned evidence, and, especially without evidence that it
was read to or shown to the jury, this Court is unable to say that the
admission of the evidence was reversible error.
Accordingly, no merit can be found in appellant's thirteenth issue.
Appellant's fourteenth and last issue is as follows:
Whether the Trial Court erred in failing to remit the verdict by $81,144.70
which is the amount of insurance proceeds the Plaintiffs received for the
loss they sustained in the August 31-September 1, 1980 burglary.
This issue is based upon one of the exculpatory clauses in the original 1977
agreement. It will be recalled that this Court has held that the 1979 rider
was a part of the 1977 agreement, so that the exculpatory clauses of the
former were applicable [*23] to the latter. However, this Court has also
held that the exculpatory clauses were inapplicable to an action for
misrepresentation in the procurement of the latter, 1979 rider.
Therefore, the fourteenth issue is without merit as to the misrepresentation
theory upon which the verdict and judgment must rest.
As stated above, the plaintiffs have filed a counter-issue which is as
Did the trial court commit reversible error by granting defendant's motion
for a directed verdict on plaintiffs' cause of action alleging a violation
of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101, et
Plaintiffs' second amended complaint charged the defendant with violating
TCA §§ 47-18-104a, 47-18-104(b) 7 and 21 which read as follows:
47-18-104. Unfair or deceptive acts prohibited. -- (a) Unfair or deceptive
acts or practices affecting the conduct of any trade or commerce are hereby
(b) Without limiting the scope of subsection (a) of this section, the
following unfair or deceptive acts or practices affecting the conduct of any
trade or commerce are hereby declared to be unlawful and in violation of
(7) Representing that [*24] goods or services are of a particular standard,
quality, or grade, or that goods are of a particular style or model, if they
are of another:
(21) Engaging in any other act or practice which is deceptive to the
consumer. [Acts 1977, ch. 438, § 4.]
TCA § 47-18-109 (a)(1) provides as follows:
Private right of action -- Damages -- Notice to division. -- (a)(1) Any
person who suffers an ascertainable loss of money or property, real,
personal or mixed or any other article, commodity or thing of value wherever
situated, as a result of the use or employment by another person of an
unfair or deceptive act or practice declared to be unlawful by this part may
bring an action individually, but not in a representative capacity, to
recover actual damages.
§ 47-18-109 (a) (3) and (4) provide as follows:
(3) If the court finds that the use or employment of the unfair or deceptive
act or practice was a willful or knowing violation of this part, the court
may award three (3) times the actual damages sustained and may provide such
other relief as it considers necessary and proper.
(4) In determining whether treble damages should be awarded, the trial court
may consider, among other [*25] things:
(A) The competence of the consumer:
(B) The nature of the deception or coercion practiced upon the consumer:
(C) The damage to the consumer: and
(D) The good faith of the person found to have violated the provisions of
(b) Without regard to any other remedy or relief to which a person is
entitled, anyone affected by a violation of this part may bring an action to
obtain a declaratory judgment that the act or practice violates the
provisions of this part and to enjoin the person who has violated, is
violating, or who is otherwise likely to violate this part: provided,
however, that such action shall not be filed once the division has commenced
a proceeding pursuant to § 47-18-107 or § 47-18-108.
Since this Court has held that the evidence supports a verdict for damages
suffered by the tort of misrepresentation, it follows that it was error to
direct a verdict as to § 47-18-109 (a)(1). However, the evidence does not
support a finding of willful or knowing violation of the statute. The
misrepresentations consisted of using words which were true under the
interpretation of defendant, but which were subject to misinterpretation by
a reasonable person [*26] so as to be false. There was, therefore, a
negligent, but not a wilful and knowing misrepresentation so as to invoke
the penal provisions of the statute, treble damages and/or declaratory
In this view of the matter, the error in directing a verdict for the
defendant on the statutory phase of the suit was harmless error.
No reason is found to reverse the finding of liability of defendant. Because
of the error in admitting the testimony of Mr. Potts as to the amount of
loss, the judgment of $100,000 must be vacated and the cause must be
remanded for a new trial.
The verdict and judgment in favor of plaintiffs is vacated and the cause is
remanded to the Trial Court for a new trial limited to the assessment of the
damages due plaintiffs. Costs of this appeal are taxed against
Reversed in part.
SAMUEL L. LEWIS, JUDGE, CONCURS, WILLIAM C. KOCH, JR., JUDGE, NOT
CALVIN HOUGHLAND and wife, JOSEPHINE HOUGHLAND, Plaintiffs-Appellees VS. SECURITY ALARMS & SERVICES, INC., Defendant-Appellant
CALVIN HOUGHLAND and wife, JOSEPHINE HOUGHLAND, Plaintiffs-Appellees VS.