      IN THE COURT OF APPEALS OF TENNESSEE
                  AT NASHVILLE
                                              FILED
JAMES M. WEBB, SR. and          )             February 27, 1998
RICKY L. MORROW,                )
                                )            Cecil W. Crowson
                                            Appellate Court Clerk
    Plaintiffs/Appellants,      )
                                )   Davidson Chancery
                                )   No. 94-873-I
VS.                             )
                                )   Appeal No.
                                )   01A01-9512-CH-00566
MORTGAGE SYSTEMS CORPORATION, )
LARRY LATHAM AUCTIONEERS, INC., )
GEORGE A. HATCHER, SR., and     )
OSIAS ENTERPRISES, INC.,        )
                                )
    Defendants/Appellees.       )


   APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY
                 AT NASHVILLE, TENNESSEE

      THE HONORABLE IRVIN H. KILCREASE, JR., CHANCELLOR

For James M. Webb, Sr. and       For Larry Latham Auctioneers, Inc.:
Ricky L. Morrow:
                                 Michael J. Vetter
J. Randall Hooper                Brewer, Krause, Brooks & Mills
Hooper & Hooper                  Nashville, Tennessee
Brentwood, Tennessee
                                 For George A. Hatcher, Sr.:

                                 J. Russell Farrar
                                 D. Todd Sholar
                                 Nashville, Tennessee

                                 For Osias Enterprises, Inc.:

                                 E. Steele Clayton, IV
                                 Bass, Berry & Sims
                                 Nashville, Tennessee




                 AFFIRMED AND REMANDED


                                 WILLIAM C. KOCH, JR., JUDGE
                                    OPINION

       This appeal involves a dispute over representations concerning the availability
of financing for a piece of commercial property sold at auction. After losing their
earnest money because their financing did not materialize, the successful bidders sued
the owner of the property, the auctioneers, and a mortgage broker in the Chancery
Court for Davidson County, alleging that they had misrepresented the availability of
financing for the purchase. The trial court granted the bidders a summary judgment
against the mortgage broker but also granted a summary judgment to the property
owner and the auctioneers with regard to the bidders’ claims against them. On this
appeal, the bidders assert the summary dismissal of their claims against the property
owner and the auctioneers was unwarranted. We have determined that the material
facts are not in dispute and that the property owner and the auctioneers are entitled
to a judgment as a matter of law. Accordingly, we affirm the trial court.


                                              I.


       Osias Enterprises, Inc. (“Osias”) decided to sell four pieces of Class B
commercial property including the Rivergate Executive Center in Goodlettsville.
After Osias contracted with Larry Latham Auctioneers, Inc. (“Latham”) to sell the
properties at auction, Latham retained George A. Hatcher, a licensed Tennessee real
estate broker and auctioneer, to sell the properties. Latham’s contract with Osias
required Latham to assist with promoting the sale as well as conducting the auction.




       Mortgage Systems Corporation (“Mortgage Systems”) was one of the tenants
in the Rivergate Executive Center. When John D. Gregory, Jr., president of Mortgage
Systems, learned that Osias was selling its commercial properties, he contacted Osias
to offer financing for the auction.1 Osias accepted Mortgage Systems’s offer, and Mr.
Hatcher obtained the terms of the financing Mr. Gregory was offering in order to
include them in the advertisements for the auction. As part of the promotion of the
sale, Osias paid for a marketing brochure, a marketing video, a due diligence package,



       1
       Specifically, Mr. Gregory offered to provide financing on the following terms: 20% down,
7.75% interest, amortization up to thirty years, and a five or ten-year balloon.

                                             -2-
and various newspaper advertisements. These materials contained the following
representations concerning financing:
                          Excellent Financing
                          20% down, 7.7% APR,
                          30 yr. amortization, 5-10 yr. Balloon
                          Call John Gregory at
                          Mortgage Systems Corporation
                          615-851-7410
                          Applications are available in
                          due diligence packages or by calling the
                          Auction Information Center.

The due diligence package contained a copy of Mr. Gregory’s letter to Osias offering
the financing, as well as a blank financing application with instructions.


      On September 26, 1993, both Ricky L. Morrow and James M. Webb, Sr. saw
an advertisement for the auction. Mr. Morrow owned a grocery store and five other
pieces of property leased to the United States Postal Service. Mr. Webb also owned
and operated grocery stores and was a general partner in Webb Investment Company,
Ltd. that owned a shopping center and two other commercial buildings. Messrs.
Webb and Morrow discussed the auction and then called the Auction Information
Center for a brochure. Mr. Webb also inspected the Rivergate Executive Center.
Shortly thereafter, Messrs. Webb and Morrow received brochures about the properties
and also obtained the due diligence package and videotape. All of these materials
contained the description of the financing being offered by Mortgage Systems.


      After deciding that the Rivergate Executive Center would be a good
investment, Messrs. Webb and Morrow toured the property with an Osias employee.
They also discussed Mortgage Systems with Mr. Hatcher who told them that “they”
had “checked out” Mr. Gregory and that “they felt like he was okay” and that “they
had done some big financing deals.” Messrs. Webb and Morrow submitted their
application for up to $2,000,000 in financing to Mortgage Systems and requested a
written loan commitment before the auction. On October 18, 1993, Mr. Gregory
informed Messrs. Webb and Morrow that their loan had been approved and that he
would give them a written loan commitment before the auction on October 19, 1993.
Mr. Gregory told them that Mortgage Systems “had a lender that was going to do




                                            -3-
this,” that “they had a lot of applications to process and that they were getting them
out as fast as they could.”


      On the day of the auction, Mr. Gregory informed Mr. Webb that he would be
unable to provide a commitment letter because it lacked one signature. He explained
that the signature was only a formality and that they had been approved for a loan of
up to $2,000,000. Mr. Webb informed Mr. Gregory that he and Mr. Morrow intended
to submit a bid based on Mortgage Systems’s financing, and Mr. Gregory informed
him that they would have the written commitment by 9:00 a.m. the next morning.
Messrs. Webb and Morrow were the successful bidders on the Rivergate Executive
Center with a bid of $1,590,750, including a one percent buyer’s premium. After the
auction, they executed a sales contract and paid $159,075 as their earnest money
deposit. The contract required that the closing take place no later than November 19,
1993. Mr. Gregory again informed Messrs. Webb and Morrow that they would
receive a written loan commitment for eighty percent of the purchase price.


      Instead of providing the written loan commitment as he had promised, Mr.
Gregory informed Messrs. Webb and Morrow on the day following the auction that
he was still working on the financing. Messrs. Webb and Morrow realized that they
had a problem after a week passed without receiving the written loan commitment.
Mr. Gregory finally informed them that he had been unable to obtain financing for
them. When Messrs. Webb and Morrow attempted to obtain alternative financing,
they discovered that lenders were not making loans on Class B office space.
Accordingly, they were unable to close the sale of the property on November 19,
1993 and were required to forfeit their $159,075 earnest money deposit to Osias.


      In March 1994, Messrs. Webb and Morrow sued Osias, Latham, and Mr.
Hatcher for negligent misrepresentation, seeking rescission of the contract and
restitution of their earnest money. They also sued Mortgage Systems for fraudulent
and negligent misrepresentation and violation of the Tennessee Consumer Protection
Act. When Mortgage Systems did not answer the complaint, Messrs. Webb and
Morrow moved for a summary judgment on its claims of fraudulent and negligent
misrepresentation. Osias, Latham, and Mr. Hatcher also moved for summary
judgments with regard to the claims against them by Messrs. Webb and Morrow. On
July 20, 1995, the trial court entered an order granting Osias, Latham, and Mr.


                                         -4-
Hatcher a summary judgment, and on October 12, 1995, the trial court granted
Messrs. Webb and Morrow a summary judgment against Mortgage Systems and
awarded them a $190,321.86 judgment. Messrs. Webb and Morrow now appeal from
the summary judgment dismissing their claims against Osias, Latham, and Mr.
Hatcher.


                                         II.


      Summary judgments enjoy no presumption of correctness on appeal. See City
of Tullahoma v. Bedford County, 938 S.W.2d 408, 412 (Tenn. 1997); McClung v.
Delta Square Ltd. Partnership, 937 S.W.2d 891, 894 (Tenn. 1996). Accordingly,
reviewing courts must make a fresh determination concerning whether the
requirements of Tenn. R. Civ. P. 56 have been satisfied. See Hunter v. Brown, 955
S.W.2d 49, 50-51 (Tenn. 1997); Mason v. Seaton, 942 S.W.2d 470, 472 (Tenn. 1997).
Summary judgments are appropriate only when there are no genuine factual disputes
with regard to the claim or defense embodied in the motion and when the moving
party is entitled to a judgment as a matter of law. See Tenn. R. Civ. P. 56.04; Bain
v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Carvell v. Bottoms, 900 S.W.2d 23, 26
(Tenn. 1995).


      Courts reviewing summary judgments must view the evidence in the light most
favorable to the nonmoving party and must also draw all reasonable inferences in the
nonmoving party’s favor. See Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997);
Mike v. Po Group, Inc., 937 S.W.2d 790, 792 (Tenn. 1996). Thus, a summary
judgment should be granted only when the undisputed facts reasonably support one
conclusion -- that the moving party is entitled to a judgment as a matter of law. See
McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn. 1995); Carvell v. Bottoms, 900
S.W.2d at 26. A party may obtain a summary judgment by demonstrating that the
nonmoving party will be unable to prove an essential element of its case, see Byrd v.
Hall, 847 S.W.2d 208, 212-13 (Tenn. 1993), because the inability to prove an
essential element of a claim necessarily renders all other facts immaterial. See
Alexander v. Memphis Individual Practice Ass’n, 870 S.W.2d 278, 280 (Tenn. 1993);
Strauss v. Wyatt, Tarrant, Combs, Gilbert & Milom, 911 S.W.2d 727, 729 (Tenn. Ct.
App. 1995).




                                        -5-
                                         III.


      Messrs. Webb and Morrow take issue with the trial court’s conclusion that
representations attributed to Osias, Latham, and Mr. Hatcher do not, as a matter of
law, support a claim for negligent misrepresentation. They insist that the trial court
should not have granted the summary judgment because the statements in the
promotional materials and Mr. Hatcher’s comments led them to believe that they
would be able to obtain financing from Mortgage Systems and that they could safely
rely on Mortgage System’s promises to provide financing.


      In Tennessee, claims for negligent misrepresentation are based on Restatement
(Second) of Torts § 552 (1977). See Ritter v. Custom Chemicides, Inc., 912 S.W.2d
128, 130 (Tenn. 1995); John Martin Co. v. Morse/Diesel, Inc., 819 S.W.2d 428, 431
(Tenn. 1991). To make out a claim for negligent misrepresentation, a plaintiff must
prove that
             (1) the defendant was acting in the course of its business,
             profession, or employment, or in a transaction in which it
             had a pecuniary (as opposed to gratuitous) interest; and

             (2) the defendant supplied faulty information meant to
             guide others in their business transactions; and

             (3) the defendant failed to exercise reasonable care in
             obtaining or communicating the information; and

             (4) the plaintiff justifiably relied upon the information
             provided by the defendant.

See Robinson v. Omer, 952 S.W.2d at 427; Hill v. John Banks Buick, Inc., 875 S.W.2d
667, 670 (Tenn. Ct. App. 1993). This appeal hinges on the sufficiency of the
plaintiffs’ proof with regard to the second and fourth elements of the cause of action.


      We turn first to the requirement that the defendant must have supplied faulty
information meant to guide others in their business transactions. Messrs. Webb and
Morrow characterize the statements in the promotional materials concerning the
availability of financing through Mortgage Systems as tantamount of a guarantee of
financing for otherwise qualified prospective purchasers. This characterization
cannot reasonably be supported by the plain wording of the materials.             The
representations relied on by Messrs. Webb and Morrow are nothing more than
statements that Mortgage Systems was offering financing at the stated terms to

                                         -6-
qualified persons and that persons interested in this financing should inquire further
with Mortgage Systems.
      The materials received by Messrs. Webb and Morrow clearly stated that the
sales of the properties would not be contingent on financing. The materials did not
require any specific type of financing to be eligible to bid at the auction. Persons
desiring to participate in the auction were free to obtain financing from any source,
and nothing in the materials stated or inferred that Mortgage Systems was the
exclusive or even preferred lender for these properties. The materials made no
representations concerning Mortgage Systems’ reliability or solvency and did not
promise that all persons seeking financing through Mortgage Systems would receive
it. Accordingly, the materials promoting the auction contained no faulty information
concerning the terms of the auction or the availability of financing for prospective
bidders.


      Mr. Hatcher’s comments on the day before the sale to the effect that “they”
thought that Mortgage Systems was “okay” and that Mortgage Systems “had done
some big financing deals” are similarly not faulty information meant to guide others
in their business transactions. These statements were, at most, personal observations
and statements of opinion, and the record contains no evidence that the statements
were inaccurate. Mr. Gregory had been in the residential mortgage business and had
only recently began to arrange commercial mortgages. While Mr. Gregory might
have been new to commercial real estate lending, the record contains no evidence that
he had experienced any other business difficulties or that he was incapable of
arranging the type of financing required for this auction. The simple fact that the
financing for Messrs. Webb and Morrow fell through does not, by itself, prove that
Mr. Hatcher’s comments made about Mortgage Systems were inaccurate.


      We turn next to the question of Messrs. Webb and Morrow’s claim of
justifiable reliance on both the statements in the promotional materials and Mr.
Hatcher’s comments on the day before the auction. Messrs. Webb and Morrow had
been dealing directly with Mr. Gregory and Mortgage Systems for one week before
the auction. There is no evidence that Osias, Latham, or Mr. Hatcher were involved
in these discussions directly or indirectly. During this time, Messrs. Webb and
Morrow had ample opportunity to inquire into Mortgage Systems business
background and method of operation. By the time they submitted their bid on the


                                         -7-
Rivergate Executive Center, Messrs. Webb and Morrow knew: (1) that the sale would
not be contingent on financing, (2) that they had requested a formal, written loan
commitment, (3) that Mortgage Systems was arranging the financing with another
lender, and (4) that Mortgage Systems was not going to be able to provide them with
the requested written loan commitment because it lacked one signature.


      Messrs. Webb and Morrow signed the contract to purchase the Rivergate
Executive Center based on Mr. Gregory’s assurance that he had obtained financing
for them. In light of the circumstances known to them when they bid on the property
and signed the contract, no reasonable person could find that Messrs. Webb and
Morrow were relying on any representation other than Mr. Gregory’s representation
that he had obtained their financing and that he would deliver their written loan
commitment by 9:00 a.m. the next day. Neither the materials promoting the auction
nor Mr. Hatcher’s comments relieved Messrs. Webb and Morrow from exercising
ordinary prudence and their sound business judgment. Accordingly, like the trial
court, we have determined that Messrs. Webb and Morrow have not demonstrated
that they will be able to prove that they justifiably relied on any representations made
by either Osias, Latham, or Mr. Hatcher concerning Mortgage Systems or Mr.
Gregory.


                                          IV.


      We affirm the judgment and remand the case to the trial court for whatever
further proceedings may be required. We also tax the costs of this appeal, jointly and
severally, to James M. Webb, Sr. and Ricky L. Morrow and their surety for which
execution, if necessary, may issue.


                                                 ____________________________
                                                 WILLIAM C. KOCH, JR., JUDGE


CONCUR:


___________________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION

___________________________________

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SAMUEL L. LEWIS, JUDGE
