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

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, pressuretreated,
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.