Day on Torts
Tennessee does not recognize a common law cause of action for wrongful foreclosure.
In Case v. Wilmington Trust, N.A., No. E2021-00378-SC-R11-CV, — S.W.3d — (Tenn. Nov. 14, 2024), the Tennessee Supreme Court held that there is no tort for wrongful foreclosure in Tennessee. In the underlying case, plaintiff alleged that defendant failed to give required written notice when the foreclosure sale for plaintiff’s home was postponed. Plaintiff filed a complaint asserting several causes of action, but only appealed the trial court’s grant of summary judgment on the tort claim of wrongful foreclosure.
The Court of Appeals agreed with plaintiff that notice was required, and it reversed summary judgment on the wrongful foreclosure claim. The Supreme Court, however, ruled that no such claim exists in Tennessee.
After an extensive discussion of constitutional standing in Tennessee, the Supreme Court considered the issue of whether there is a common law cause of action for wrongful foreclosure in this state. The Court noted that it had not explicitly recognized this cause of action, and that the basis for recognizing this tort came from a 2015 Court of Appeals case. The Court found, however, that the Court of Appeals had misinterpreted the Supreme Court case it relied on, and that no tort for wrongful foreclosure exists in Tennessee.
The Supreme Court wrote:
We decline to create or recognize a cause of action where no real precedent exists, particularly when established causes of action already apply to the factual scenario. The recognition of a tort is not something to be done lightly, and we will not assume a cause of action exists merely because lower courts have begun using a certain descriptive phrase. There can be breaches of contract, torts, and statutory causes of action based on allegations of “wrongful foreclosure,” but the use of that terminology to describe a claim does not transform it into its own separate common law cause of action. For instance, “negligence” is a cause of action; “bad driving,” despite maybe being an accurate summation of an automobile-related personal injury case, is not a cause of action. Similarly, “breach of contract” is a cause of action, while “wrongful foreclosure” is merely a description of the breach. If Tennessee law recognized a common law cause of action for wrongful foreclosure, there would be opinions specifying its elements, discussing its affirmative defenses, and analyzing its statute of limitations. Instead, the case law of this state reflects that “wrongful foreclosure” is merely a description of the underlying factual basis for the substantive cause of action actually being asserted.
Based on this reasoning, the Court specifically overruled the Court of Appeals case purporting to recognize wrongful foreclosure.
Because plaintiff had only appealed summary judgment on the wrongful foreclosure claim, there were no remaining claims at issue in this case.
This opinion was released thirteen months after oral arguments in this case. (The concurring opinion addressed open courts provision only).