                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                   August 16, 2007 Session

          GARY WEAVER, ET AL. v. THOMAS R. McCARTER, ET AL.

                A Direct Appeal from the Chancery Court for Shelby County
               No. 98-0425-3  The Honorable D. J. Alissandratos, Chancellor



                    No. W2006-02058-COA-R3-CV - Filed October 8, 2007


        This is the second appeal of this breach of contract case. In Gary Weaver, et al v. Thomas
R. McCarter, et al, No. W2004-02803-COA-R3-CV, 2006 WL 1529506 (Tenn. Ct. App. June 6,
2006), this Court affirmed the trial court’s grant of summary judgment in favor of plaintiffs and
remanded the case “for further clarification concerning the amount of damages awarded with respect
to plaintiff’s claims of negligence per se, negligent misrepresentation, and breach of contract.” Upon
remand, the trial court entered judgment against the defendants jointly and severally and in favor of
plaintiffs for compensatory damages and pre-judgment interest. Finding that the trial court abused
its discretion in awarding pre-judgment interest, we reverse that portion of the Judgment. We
reverse in part and affirm in part.


Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Reversed in Part, Affirmed in Part

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which DAVID R. FARMER ,
J. and HOLLY M. KIRBY , J., joined.

Charles F. Morrow and Elizabeth E. Chance of Memphis, Tennessee for Appellant, Coldwell Banker
Hoffman-Burke, Inc., Realtors

Robert L. Moore and Dawn Davis Carson of Memphis, Tennessee for Appellant, Jim Perdue

Henry C. Shelton, III and Tricia T. Olson of Memphis, Tennessee for Gary and Gail Weaver

                                             OPINION

      The relevant facts and procedures are set out in this Court’s Opinion in the previous appeal,
Gary Weaver, et al v. Thomas R. McCarter, et al, No. W2004-02803-COA-R3-CV, 2006 WL
1529506 (Tenn. Ct. App. June 6, 2006). The Opinion, filed June 6, 2006, states in pertinent part:
        This suit arises from a contract to sell Gary and Gail Weaver’s
(“the Plaintiffs”) house (“the Hacks Cross House”) located on Hacks
Cross Road in Memphis, Tennessee. On November 1, 1994, Thomas
McCarter (“Defendant McCarter”) approached the Plaintiffs with an
offer to purchase the Hacks Cross House for $680,000 in cash. The
Plaintiffs agreed and subsequently entered into a verbal contract with
Defendant McCarter for a cash sale. However, Defendant McCarter
never consummated the sale and, thus, the transaction never closed.


         In February 1997, the Plaintiffs purchased a second home
located on Langston Cove (“the Langston Cove House”) and soon
after listed the Hacks Cross House with Jim Perdue (“Defendant
Perdue”) at Coldwell Banker Hoffman-Burke, Inc. Realtors
(“Defendant CBHB”). On August 27, 1997, Defendant Perdue
brought the Plaintiffs a written offer from Janet Hunter to purchase
the Hacks Cross House for $575,000. The Plaintiffs eventually
accepted a counter-offer of $595,000, with $10,000 in escrow, and
signed a contract of sale (hereinafter referred to as “the sale contract”)
with Janet Hunter. Closing was set for September 30, 1997.
However, the $10,000 escrow check bounced on September 17, 1997,
and Defendants CBHB received notice of this on September 30, 1997.
Furthermore, the sale contract was not signed by Janet Hunter, but
rather Janet Hunter’s name was forged by Chip Hunter (“Defendant
Hunter”), Janet Hunter’s husband, without Janet Hunter’s knowledge
or permission. Defendant Hunter signed Janet Hunter’s name to the
sale contract at the request of Defendant McCarter and while in the
presence of Defendant Perdue. The Plaintiffs did not learn of the
bounced escrow check or the forged sale contract until the closing
date, when the Plaintiffs’ attorney checked on the escrow funds and
Defendant Perdue informed the Plaintiffs’ closing attorney of the
forgery. As a result, the closing did not occur on September 30, 1997.

        Subsequently, on October 2, 1997, Defendant McCarter, in a
memorandum to Defendant Perdue, affirmed that he was the true
party who had made the offer on August 29, 1997, to purchase the
Hacks Cross House for his daughter, Janet Hunter. While Defendant
McCarter indicated a desire to honor the sale contract, he informed
Defendant Perdue that his funding for the purchase would not be
available until October 8, 1997. Although reserving their rights under
the original sale contract, the Plaintiffs informed Defendant McCarter
that they were willing to close the transaction if his funding came
through by October 8, 1997. Despite this, the closing did not take


                                   -2-
place on October 8, due to a continued lack of funding. At that time,
Defendant McCarter promised to fund the transaction on October 15,
1997. However, on that date, he delivered a $10,000 check to
Defendant CBHB and stated that he no longer wanted to purchase the
Hacks Cross House. The Plaintiffs subsequently demanded that
Defendant Perdue pay them Defendant McCarter’s $10,000 in earnest
money, cancelled their listing agreement with Defendant CBHB, and
placed the Hacks Cross House back on the market. However, the
Hacks Cross House did not sell and the Plaintiffs eventually sold the
Langston Cove House and moved back to the Hacks Cross House.

        On May 11, 1998, the Plaintiffs filed suit against Defendants
McCarter, CBHB, Perdue, and Hunter, seeking damages for
negligence per se, negligent misrepresentation, breach of contract,
and fraud. Specifically, the Plaintiffs asserted that Defendants Perdue
and CBHB were negligent per se for violating section 62-13-403 of
the Tennessee Real Estate Broker License Act of 1973. The Plaintiffs
further asserted that Defendant Perdue was also negligent per se
because he violated section 62-13-404 of the Brokers Act, which
provides for duties of reasonable care and loyalty between real estate
brokers and their clients; and that Defendant Perdue was further
guilty of negligent misrepresentation for failing to exercise reasonable
care in communicating information to the Plaintiffs. The Plaintiffs
next asserted a breach of contract claim against Defendant McCarter
arguing that, although Defendant McCarter did not actually sign the
contract, he had previously entered into an oral agreement, through
Defendant Perdue, with the Plaintiffs to purchase their house, but
failed to follow through with the purchase. Finally, the Plaintiffs
asserted a fraud complaint against Defendants McCarter, Hunter, and
Perdue, arguing that all three parties engaged in dishonest practices
with a deceptive intent in order to induce the Plaintiffs to enter into
an illusory contract to sell their house, which the Plaintiffs
subsequently relied upon to their detriment. As remedies, the
Plaintiffs sought either specific performance by Defendant McCarter
or a judgment for $200,000 in compensatory damages against all
defendants jointly and severally, along with punitive damages.

        In response to the Plaintiffs’ claims, Defendants CBHB and
Perdue filed an answer arguing that Plaintiffs failed to assert a claim
upon which relief could be granted. Defendant CBHB also asserted
a counter-claim against the Plaintiffs alleging that they were entitled
to split the $10,000 in earnest money with the Plaintiffs. In turn,
Defendant Hunter denied forging Janet Hunter’s signature and


                                  -3-
asserted the statute of frauds as an affirmative defense. Defendant
McCarter denied being the contractual purchaser of the house and
further asserted the statute of frauds as an affirmative defense.
Defendant McCarter also asserted a counter-claim against Defendant
Perdue, Defendant CBHB, and the Plaintiffs seeking the return of the
$10,000 placed in escrow arguing that Defendant McCarter entered
into no enforceable contract of sale and, thus, no legal basis existed
for the continued retention of such funds. Defendants CBHB and
Perdue and the Plaintiffs responded to Defendant McCarter’s counter-
complaint and asserted that an enforceable contract of sale did exist.

        On July 13, 2000, the Plaintiffs filed a Motion for Summary
Judgment against all Defendants. Defendant McCarter subsequently
filed a motion seeking a directed verdict in relation to the return of
the $10,000 escrow money. (FN1) On January 22, 2001, the trial
court entered an order granting summary judgment in favor of the
Plaintiffs against Defendants McCarter, Hunter, Perdue, and CBHB.
The court also denied Defendant McCarter’s directed verdict motion
and further ordered that Defendant CBHB tender the $10,000 in
earnest money to the Plaintiff, with said amount being credited
against the damage award against Defendant McCarter. The amounts
of compensatory and punitive damages were reserved for further
hearing; however, the trial court did state that while all judgments
rendered herein and subsequently by the Court shall be joint and
several as against all Defendants, that among the Defendants the fault
shall be apportioned [forty-five] percent (45%) to [Defendant]
McCarter, ten percent (10%) to [Defendant] Hunter, and [forty-five]
percent (45%) to Defendants [Perdue and CBHB].

       (FN1)    Pursuant to Rule 50.01 of the Rules of Civil Procedure,
       a party may only move for directed verdict “at the close of the
       evidence offered by an opposing party or at the close of the
       case.” Tenn. R. Civ. P. 50.01 (2005).


Nearly two years after the trial court’s grant of summary judgment,
Defendant CBHB filed a motion to reconsider, which the trial court
denied.

        Prior to the trial on damages, several events occurred which
ultimately affected the trial court’s ability to assess damages. First,
on May 5, 2004, Defendant Perdue filed a Plea of Bankruptcy stating
that he had filed bankruptcy and that, pursuant to an Order Modifying
Discharge Injunction issued by the United States Bankruptcy Court
for the Western District of Tennessee, the trial court would only be

                                     -4-
allowed to proceed to a judgment against Defendant Perdue for any
causes of action except acts of fraud, fraudulent misrepresentation, or
other cause of action which would permit the denial of discharge
pursuant to 11 U.S.C. § 727 or render the judgment nondischargeable
pursuant to 11 U.S.C. § 523. The trial court granted this plea. In
addition to Defendant Perdue’s filing of bankruptcy, Defendant
McCarter died (FN2) and Defendant Hunter also filed bankruptcy.
As a result, at trial, the Plaintiffs sought to collect damages arising
from Defendants CBHB and Perdue’s negligence per se and negligent
misrepresentation, as well as Defendant McCarter’s breach of
contract. (FN3)

       (FN2)    W e find no indication in the record of a substitution of
       parties for Defendant McCarter pursuant to Rule 25.01 of the
       Tennessee Rules of Civil Procedure.


       (FN3)     In their brief, the Plaintiffs assert that at the trial on
       damages, they proceeded only against Defendants CBHB and
       Perdue “and sought damages only under the Tennessee Real
       Estate Broker[] Act of 1973 and for negligence.” However, a
       review of the trial transcript reveals that the Plaintiffs also sought
       damages for their breach of contract claim against Defendant
       McCarter, although the Plaintiffs admitted that Defendant
       McCarter died apparently leaving no estate to satisfy a judgment
       and that “no formal Notice [or] substitution” was made pursuant
       to Rule 25.01.

       In relation to damages suffered due to fraud, neither the
       Plaintiffs’ brief nor the record in this case supports the
       conclusion that damages were awarded based upon fraud in this
       case. At trial, the Plaintiffs’ counsel admitted that no judgment
       for fraud was awarded against Defendants CBHB and Perdue.
       Furthermore, the Plaintiffs indicated that they were unable to
       pursue damages against Defendant Hunter due to his filing
       Chapter 7 bankruptcy. Finally, a review of the record and
       transcript in this case fails to show that damages were awarded
       for any fraud alleged against Defendant McCarter.


        At the trial on damages, the parties presented testimony of
Plaintiff Gary Weaver and John Jordan, a real estate appraiser who
had appraised the Plaintiffs’ property in 1997, near the time the sale
contract was signed. The Plaintiffs asserted that the proof showed
that they had suffered $300,000 in damages as a result of the
Defendants conduct. After hearing the proof, the trial court first held
the Plaintiffs would receive no damages in relation to their purchase
and subsequent sale of the Langston Cove House because the
purchase of this property occurred prior to the Plaintiffs’ contract to

                                        -5-
               sell the Hacks Cross House and, thus, damages resulting from the
               purchase and sale of the Langston Cove home were not reasonable
               consequential damages flowing from the Defendants’ actions in
               regard to the Hacks Cross House. As a result of this finding, the trial
               court focused its award of damages on the following issues: 1) the
               contract price for the Hacks Cross House minus the sales
               commission, 2) the duty of the Plaintiffs to mitigate damages, and 3)
               additional expenses incurred as a result of the Defendants’ actions.
               After hearing the evidence submitted at trial, the trial court entered an
               Order of Judgment providing as follows:

                       Plaintiffs should have a judgment, against Defendants,
                       pursuant to their apportioned fault, in the amount of
                       $55,600.00 for lost value of real estate; $3,000.00 for
                       1998 and $3,000.00 for 1999 for necessary
                       maintenance costs, and $20,000.00 for attorneys fees,
                       with prejudgment interest computed at 10% per year
                       on each amount from the date incurred, or, in the case
                       of attorneys fees, from the date paid, and statutory
                       cost of this case. [Defendants] Perdue and [CBHB]
                       have been apportioned fault in the amount of forty-
                       five percent (45%), and judgment is awarded against
                       these Defendants specifically in the amount of
                       $60,118.53, and forty-five percent (45%) of statutory
                       costs.

                The Plaintiffs subsequently filed a Motion to Alter or Amend
                Judgment arguing that the trial court should apportion fault jointly
                and severally among the Defendants. The trial court granted the
                Plaintiffs’ motion and, on October 4, 2004, entered an Amended
Order of Judgment stating that the Plaintiffs should have a judgment against Defendants (except
Defendant Chip Hunter, whose bankruptcy injunction precludes judgment, and Defendant[] Perdue,
whose judgment is limited by the Order Modifying Discharge Injunction, entered on May 21, 2003,
in the Bankruptcy Court for the Western District of Tennessee Western Division, Cause No. 98-
21718L)[], jointly and severally, in the amounts of $55,600.00 for lost value of real estate; $3,000.00
for 1998 and $3,000.00 for 1999 for necessary maintenance costs, and $20,000.00 for attorneys fees,
with prejudgment interest computed at 10% per year on each judgment from the date incurred, or,
in the case of attorneys fees, from the date paid, for a total judgment of $134,225.06 and the costs
of the cause.

               IT IS THEREFORE ORDERED judgment shall be entered in favor
               of Plaintiffs Gary and Gail Weaver against Defendants Thomas
               McCarter, (FN4) Jim Perdue and Coldwell Banker Hoffman Burke


                                                 -6-
               Realtors, jointly and severally, in the amount of $134,225.06 and the
               costs of the cause, for which let execution issue if necessary.
               Judgment as to Defendant Perdue is limited by the Order Modifying
               Discharge Injunction . . . .

                       As previously noted, we find no indication in the record of a
                       substitution of parties for Defendant McCarter pursuant to Rule
                       25.01 of the Tennessee Rules of Civil Procedure. Despite this,
                       the Defendants nonetheless received a judgment against
                       Defendant McCarter.


               Defendants Perdue and CBHB appeal.

Weaver, et al v. McCarter, et al, 2006 WL 1529506 at *1 - *4.

        This Court affirmed the trial court’s grants of summary judgment, and they are not issues on
this appeal. This appeal involves only issues concerning the damages awarded.

        Upon remand, the trial court held a hearing on August 7, 2006. On August 15, 2006, the trial
court filed an Order of Judgment on Remand which states:

                       This cause came on to be heard the 7th day of August, 2006,
               upon opinion of the Court of Appeals of Tennessee of June 6, 2006,
               remanding this case to determine the measure of damages, if any, to
               be assessed among Defendants Coldwell Banker Hoffman Burke, Jim
               Perdue and Thomas R. McCarter upon argument of counsel for
               Plaintiff, Coldwell Banker Hoffman Burke and Jim Perdue adduced
               in open Court, based upon all of which,

                       IT APPEARING TO THE COURT, for the reasons set forth
               in the Court’s oral findings of fact and conclusions of law pursuant
               to Tennessee Rule of Civil Procedure 52, which the Court hereby
               incorporates by reference, that the Court should measure damages in
               this case of negligence per se and negligent misrepresentation by the
               same process used to measure damages resulting from the breach of
               contract, which permits an award of prejudgment interest, and

                       IT FURTHER APPEARING TO THE COURT that because
               Defendants’ torts preceded the breach of contract, thus causing
               Plaintiffs to enter into a contract they otherwise would not have,
               100% of the damages set forth below should be assessed against
               Defendants, Perdue and Coldwell Banker, solely for their torts, and




                                                    -7-
                     IT FURTHER APPEARING TO THE COURT that each
             defendant is liable for the entire amount of damages due Plaintiff for
             each separate tort committed by each such Defendant, but that
             Plaintiffs may only recover the amount of damages set forth below (as
             they may not recover double or quadruple the amount of such
             damages even though each Defendant committed two torts each), the
             torts committed by Defendants Coldwell Banker Hoffman Burke and
             Jim Perdue damaged Plaintiffs in the amounts of $55,600.00 for lost
             value of real estate; $3,000.00 for 1998 and 43,000.00 for 1999 for
             necessary maintenance costs, with prejudgment interest computed at
             10% per year on each amount from the date incurred, and

                     IT FURTHER APPEARING TO THE COURT that Plaintiff’s
             renewed request for attorneys’ fees as an element of tort damages in
             this case based upon the availability of such a remedy for breach of
             contract in this case may not be granted due to the Order of the Court
             of Appeals in this case,

                    IT IS THEREFORE ORDERED that judgment shall be entered in
             favor of Plaintiffs, Gary Weaver and Gail Weaver, against Defendants, Jim
             Perdue and Coldwell Banker Hoffman Burke Realtors, jointly and severally,
             for compensatory damages with prejudgment interest through August 10,
             2006, in the amount of $97,282.30 ($55,600.00 for los value of real estate,
             $3,000.00 for 1998 and $3,000.00 for 1999 for necessary maintenance costs
             and $35,682.30 for prejudgment interest (upon which sum interest accrues
             per day in the amount of $16.88), and the costs of the cause, for which let
             execution issue of necessary. Judgment as to Defendant Perdue is limited by
             the Order Modifying Discharge Injunction, entered on May 21, 2003, in the
             Bankruptcy Court for the Western District of Tennessee, Western Division,
             Cause No. 982178L, and

                   IT IS FURTHER ORDERED that Plaintiffs’ request for a
             judgment for attorneys’ fees should be, and is hereby, denied.

        Defendants Perdue and Coldwell Banker Hoffman Burke Realtors appeal and raise three
issues for review as stated in their brief:

             1. Whether the trial court erred in assessing 100% of the damages set
             forth in the order of August 15, 2006, against defendants Perdue and
             Coldwell Banker Hoffman-Burke, solely for their torts and ignoring
             the breach of contract by defendant McCarter.




                                              -8-
                2. Whether the trial court erred in holding the defendants jointly and
                severally liable for the amount the judgment.

                3. Whether the trial court erred in assessing prejudgment interest
                against the Defendants, Perdue and Coldwell Banker.

         Perdue and Coldwell-Banker first assert that the trial court erred in its award of damages to
the Plaintiffs. Specifically, they assert that the only party to breach the contract was McCarter and
that damages should be assessed only against him. Although that may very well be, the fact that
McCarter had no damages assessed against him would not negate the justification for damages
awarded to the Plaintiffs against the Defendants, Perdue and Coldwell Banker. The trial court made
it clear on remand that the torts committed by these Defendants preceded the breach of contract and
the torts caused the Plaintiffs to enter into a contract that they otherwise would not have made. The
evidence does not preponderate against the trial court’s findings that the torts committed by these
Defendants caused damages to the Plaintiffs herein. The Appellants seem to imply that the trial
court assessed damages against Perdue for breach of contract. That is not the case. There is no
allegation against Perdue that he breached any contract or was a party to a contract, and the trial court
found only that McCarter and Hunter could be liable for breach of contract.

        Because this case was tried by the court sitting without a jury, we review the case de novo
upon the record with a presumption of correctness of the findings of fact by the trial court. Unless
the evidence preponderates against the findings, we must affirm, absent error of law. Tenn. R. App.
P. 13(d). In the case before us, the evidence does not preponderate against the trial court’s finding
that the Defendants, Perdue and Coldwell Banker, were guilty of negligence which directly and
proximately caused the damages assessed against them in favor of the Plaintiffs, the Weavers.

        Defendants next assert that the trial court erred in assessing the liability for damages against
Perdue and Coldwell Banker jointly and severally. In this case, Coldwell Banker and Perdue each
participated in the negligent misrepresentation and thus contributed to the end result. Master and
servant are jointly and severally liable in damages where they jointly breach some duty which they
owe to a third person and damages result therefrom. See Campbell v. Campbell, 199 S.W.2d 931
(Tenn. Ct. App. 1946).

        Coldwell-Banker raises the single issue of whether the trial court erred in assessing an award
of pre-judgment interest. It is well settled that an award of pre-judgment interest is within the sound
discretion of the trial court. See, e.g., Myant v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998). In
the instant case, Plaintiffs occupied the property which is the subject of this lawsuit and did not
suffer any loss of use or funds in the course of the litigation. In sum, Plaintiffs did not suffer any
out-of-pocket loss, and the Defendants in the case did not have the use of any of Plaintiffs’ money.
Under the circumstances of this case, prejudgment interest is not required as an equitable
consideration and, therefore, should not have been awarded.




                                                  -9-
         Accordingly, the judgment of the trial court awarding prejudgment interest is reversed, and
the judgment of the trial court is affirmed in all other respects. Costs of the appeal are assessed one-
half to Appellants, Coldwell Banker Hoffman-Burke, Inc., and Jim Perdue and one-half to Appellees,
Gary Weaver and Gail Weaver.




                                               __________________________________________
                                               W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.




                                                 -10-
