A finding of fraudulent misrepresentation against a homebuilder was affirmed based on the builder’s misrepresentations about his qualifications.
In Ferguson v. M. Brown Construction, Inc., No. M2022-01637-COA-R3-CV (Tenn. Ct. App. Dec. 27, 2024) the plaintiff hired defendant Timothy Brown to build a custom home. The defendant assured the plaintiff he had considerable experience and was qualified to do the job. The parties agreed that the house would be built for a specific price.
According to the plaintiff, he and his wife made payments and purchases at the direction of the defendant. The defendant unilaterally made changes to the building plan that altered the quality of the home. At some point, the defendant requested $30,000, which the plaintiff refused because he had paid/spent the full contract amount. The defendant then stopped working on the home.
The plaintiff eventually hired another builder to finish the home and correct problems caused by the defendant’s defective construction. The plaintiff then filed this suit asserting various claims. The trial court found the plaintiff credible and ruled that the defendant builder was liable for breach of contract and fraudulent misrepresentation. The fraudulent misrepresentation and breach of oral contract rulings were affirmed on appeal.
The defendant argued on appeal that the plaintiff could not prove two of the elements of fraudulent misrepresentation—that “the defendant made a representation of a present or past fact” and “that the representation was false when it was made.” (internal citation omitted). The Court of Appeals disagreed. The Court noted that the defendant “assured [the plaintiff] that he was a qualified builder with extensive experience on large residential construction projects,” and that this assertion was not true. The Court also found that by using his brother’s license number, the defendant misled the plaintiff about his qualifications.
The defendant also argued that the plaintiff could not show reliance, another element of a fraudulent misrepresentation claim. The defendant attempted to use the contract, wrongfully written under his brother’s company’s name, to show that the plaintiff could not have relied on any alleged representation. The Court rejected this argument, finding that there was “ample proof” that the plaintiff hired the defendant, not the brother’s company, and that the plaintiff “did so in reliance on his representations.” The finding for plaintiff on the fraudulent misrepresentation claim was thus affirmed.
The trial court also found the defendant liable of constructive fraud. The Court of Appeals vacated this ruling, stating that the plaintiff did not request equitable relief and that “an award of damages was an adequate remedy here.” Because a plaintiff can choose his remedy, and because the Court found actual fraud, the Court wrote that “the constructive fraud finding served no purpose.” (internal citation omitted).
After finding that the plaintiff could not show breach of the written contract but could show breach of an oral contract, the Court remanded the case with instructions to recalculate damages.
While the analysis of the fraudulent misrepresentation claim in this opinion is short, this case is a good example of a set of facts that supported both a tort and contract claim.
This opinion was released thirteen months after oral arguments.