Construction Defect - Under Tennessee law what is required to establish a claim for intentional misrepresentation for a construction defect claim?

Analysis:  The recent Tennessee Court of Appeals decision of Brooke Buttrey v. Holloway's, Inc., No. M2011-01335-COA-R3-CV, 2012 WL 6451802 (Tenn. Ct. App. December 12, 2012) discussed the Tennessee tort of intentional misrepresentation in the context of a construction defect case.  In this case the trial court found there was ample evidence the home was not constructed in a workmanlike manner.  Buttrey at 5.  In fact the defendant did not even appeal this issue to the Tennessee Court of Appeals.  However, the defendant did appeal the trial court's ruling that the defendant was responsible for intentional misrepresentation under Tennessee law.

Under Tennessee law in order to establish a claim for fraudulent or intentional misrepresentation (these two torts have identical elements) the plaintiff must prove the following:

1) the defendant made a representation of an existing or past fact; 2) the representation was false when made; 3) the representation was in regard to a material fact; 4) the false representation was made either knowingly or without belief in its truth or recklessly; 5) the plaintiff reasonably relied on the misrepresented material fact; and 6) the plaintiff suffered damage as a result of the misrepresentation.

Buttrey at 5 (citing Walker v. Sunrise Pontiac – GMC Truck, 249 S.W.3d 301, 311 (Tenn. 2008)).  One of the alleged misrepresentations in this case was testified about by the plaintiff as follows:

Q: When you approached Mr. Holloway about building this home, did he make any representations to you about his abilities in terms of being a builder?

A: He made himself seem very competent with decades of experience, if I remember correctly, about building in Michigan and several years and several houses. If that's experience, then yes.

Buttrey at 6.  Despite the reliance on this testimony to support the intentional misrepresentation claim, the plaintiff did not introduce any evidence showing the defendant did not in fact have decades of experience nor did the plaintiff establish he did not build houses in Michigan.  Buttrey at 6.  As a result, essential elements of the claim were not established by the plaintiff (specifically that the representation was false). 

Further, the plaintiff claimed the defendant misrepresented the workmanship in constructing the house.  However, the court found these representations were, “essentially the same as the warranty in the contract, those representations related to future acts or conduct.  They did not constitute representations of an existing or past fact.” Buttrey at 6.  Therefore for these specific alleged misrepresentations the plaintiff failed to prove all of the essential elements for an intentional misrepresentation claim (specifically the requirement that the misrepresentation be about an existing or past fact).  Buttrey at 6.

Finally, the plaintiff asserted the defendant made statements that the plaintiff was being “picky” when the defendant actually knew the house had defects.  Also, the defendant “knew the house was partially supported” by an insufficient foundation and did not disclose that to the plaintiff. Buttrey at 6.  The court however found that “we can find no evidence that these particular representations, even if false when made and made knowingly, caused Ms. Buttrey to suffer any damages as a result of her reliance on the alleged misrepresentations themselves, as distinguished from damages arising from the poor workmanship itself.”  Buttrey at 6.  For this reason, these alleged misrepresentations failed to support a claim for intentional misrepresentation under Tennessee law (plaintiff did not prove the essential element of this tort that damage resulted from the misrepresentation). 

As a result, the Tennessee Court of Appeals found that the representations by the defendant did not constitute “intentional misrepresentations” because the plaintiff failed to prove all the essential elements for her claim for intentional misrepresentation.  This case shows that in the construction defect context there are good defenses to a claim for intentional misrepresentation especially because of the overlap between that claim and the other claims that are normally brought in a construction defect situation.