Brief Summary: The Tennessee Consumer Protection Act (also “TCPA”) does not provide the basis for a claim under the TCPA for deceptive conduct in a foreclosure proceeding.
Analysis: The Tennessee Court of Appeals in David Paczko v. SunTrust Mortgages, Inc., No. M2011-02528-COA-R3-CV, 2012 WL 4450896 (Tenn. Ct. App. September 25, 2012) discussed whether allegedly deceptive foreclosure conduct can form the basis for a Tennessee Consumer Protection Act claim. In this case the plaintiff alleged claims against SunTrust Mortgage, Inc. for instituting a foreclosure against the plaintiffs with knowledge that they did not have any rights, titles, or interest in the property in question. Paczko at 2.
The trial court dismissed plaintiff's Tennessee Consumer Protection Act claim for failure to state a claim upon which relief can be granted under Tennessee Rule of Civil Procedure 12.02(6). The Tennessee Court of Appeals affirmed this decision and found the Tennessee Consumer Protection Act "does not apply to allegedly deceptive conduct in foreclosure proceedings." Paczko at 2. (citing Gibson v. Mortgage Elec. Registration Sys., Inc., 2011 WL 3608538 at *5 (W.D. Tenn. August 16, 2011)).
The court relied upon the reasoning in the Tennessee Supreme Court's decision in Pursell v. First American National Bank, 937 S.W.2d 838 (Tenn. 1996) to support this decision. In that case the Tennessee Supreme Court found:
The TCPA did not create a cause of action for deceptive repossession procedures because the actions of a bank and its agent in carrying out a repossession “did not affect the ‘advertising, offering for sale, lease or rental, or distribution of any goods, services, or property, tangible or intangible, real, personal, or mixed, and other articles, commodities, or things of value wherever situated.
In the Pursell decision the Tennessee Supreme Court also noted that "the Tennessee Consumer Protection Act does not extend to every action of every business in the State of Tennessee." Pursell, 937 S.W.2d at 941. The Tennessee Court of Appeals in this case therefore dismissed the cause of action for a Tennessee Consumer Protection Act derived from alleged deceptive conduct in the foreclosure proceeding.
Tennessee Consumer Protection Act claims are often alleged in cases that do not have a TCPA violation. When evaluating a TCPA case from a defense perspective, it is important to determine if the claim has merit under the specific provisions of the TCPA. This is especially important now that the Tennessee tort reform bill of 2011 eliminated the “catch all” provision previously found in the Tennessee Consumer Protection Act which was commonly used to stretch the TCPA as far as possible (The Tennessee Consumer Protection Act is found in T.C.A. § 47-18-101 – T.C.A. § 47-18-130). See my prior blog post on this subject for more information.