                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                January 27, 2012 Session

                     DEBORAH CHANDLER RUSSELL
               v. HOUSEHOLD MORTGAGE SERVICES                         ET AL.

                  Appeal from the Circuit Court for Davidson County
                    No. 06C1899      Thomas W. Brothers, Judge


                  No. M2008-01703-COA-R3-CV - Filed June 7, 2012


Homeowner challenges the trial court’s dismissal at the summary judgment stage of all of her
claims against lenders. We reverse the trial court’s grant of summary judgment with respect
to the homeowner’s claims for intentional misrepresentation, negligent misrepresentation,
fraud, and violation of the Truth-In-Lending Act. We affirm the trial court’s dismissal of her
claim under the Tennessee Consumer Protection Act.

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

A NDY D. B ENNETT, J., delivered the opinion of the Court, in which F RANK G. C LEMENT, J R.
and R ICHARD H. D INKINS,JJ., joined.

Deborah Chandler Russell, Greenbrier, Tennessee, Pro Se.

Donald N. Capparella, Nashville, Tennessee, for the appellees, Household Mortgage Services
and Household Financial Services.

                                         OPINION

                        F ACTUAL AND P ROCEDURAL B ACKGROUND

       Homeowner Deborah Chandler Russell brought suit against several entities:
Household Mortgage Services, Household Financial Services, Sellers Financial Group, LLC
(“Sellers”), and Southstar Funding, LLC (“Southstar”). The latter two entities are not
involved in this appeal. The first two entities are part of HSBC Mortgage Services, Inc. and
will be referred to collectively as “HSBC.”
                                           Undisputed facts1

       In June of 2000, Ms. Russell was solicited by a representative of HSBC by mail and
by telephone inquiring as to whether she was interested in refinancing her existing home
mortgages. The purpose of HSBC’s offer was to lower Ms. Russell’s interest rate and
monthly payments. On or about June 9, 2000, Ms. Russell visited the offices of HSBC in
Madison, Tennessee. Ms. Russell discussed the possibility of refinancing with a person
named “Sandy” who represented herself to be an employee of HSBC. Ms. Russell told
Sandy that she was interested in learning more about her financing options and that her
monthly payment, including property taxes and insurance, must not exceed $850 a month
because she could not afford anything higher. Sandy stated that the actual payment might
be a few dollars less or more but that the desired payment amount would not be a problem.

       On July 21, 2000, Ms. Russell appeared at the offices of attorney William Davis in
Brentwood, Tennessee, for the closing. She expected the lender to be HSBC. At the closing,
Ms. Russell asked for a copy of all documents executed by her. The copies were not
provided at the time of the closing, but later that afternoon copies of the following documents
were faxed to Ms. Russell: the Truth-in-Lending Disclosure Statement, the promissory note,
a monthly payment letter, a settlement statement, and a portion of the Uniform Residential
Loan Application.

       The Truth-in-Lending Disclosure Statement shows a total loan amount of $131,750
and lists Southstar as the lender. There is no interest rate listed, but it is clear that the
monthly payment due was $890.53, in the range of what Ms. Russell claims she was
anticipating. The promissory note listed Southstar and not HSBC as the lender, something
that came as a surprise to Ms. Russell.

        Thirty to forty days after the closing, Ms. Russell received a statement for payment
that included a loan number of 0101094803. The statement gave her monthly payment as
$1,390.80. This was $500.27 more per month than the payment of $890.53 printed on the
Truth-in-Lending Disclosure Statement and the note that had previously been faxed to Ms.
Russell. Ms. Russell asserts that she would not have entered into the loan had she been told
the monthly payment would be $1,390.80.




        1
          Because the trial court decided this case at the summary judgment stage, we take our statement of
the facts directly from the undisputed facts submitted by HSBC and admitted by Ms. Russell for purposes
of summary judgment.

                                                   -2-
       On September 3, 2004, Ms. Russell filed a complaint in an adversary proceeding in
federal bankruptcy court. This case was dismissed without prejudice on March 16, 2006, and
Ms. Russell filed the present action in chancery court on July 14, 2006.2

                                               Lawsuit

        In her complaint in chancery court, Ms. Russell asserted causes of action for
intentional misrepresentation, negligent misrepresentation, violation of the Truth-in-Lending
Act, violation of the Tennessee Consumer Protection Act, and common law fraud. She also
requested injunctive relief from a detainer warrant notifying her of HSBC’s intent to take
possession of her property. The matter was transferred to circuit court since the general
sessions detainer warrant was on appeal in circuit court. In an order entered on August 29,
2006, the circuit court denied Ms. Russell’s request for a temporary injunction and dissolved
all prior temporary restraining orders. The court also dismissed her appeal from the detainer
warrant and writ of possession judgment and ordered her to turn the property over to HSBC.

        The defendants filed answers to Ms. Russell’s complaint, and Southstar filed a
counterclaim. HSBC’s answer raised numerous defenses, including the statute of limitations.
On November 27, 2006, HSBC filed a motion for summary judgment based on two grounds:
(1) that all of Ms. Russell’s claims were barred by the applicable statutes of limitations, and
(2) that her claims under the Truth-in-Lending Act must fail because HSBC was an assignee
of the loan, not the originator of the loan. (The other defendants also moved for summary
judgment.) In support of its motion, HSBC submitted a letter from Ms. Russell to William
Aldinger of HSBC and an affidavit of Dana St. Clair-Houghan of HSBC. HSBC also
submitted a statement of undisputed facts. Ms. Russell’s response to the defendants’ motions
for summary judgment included a response to HSBC’s statement of undisputed facts (the
basis for the previous factual summary).

       In opposing summary judgment, Ms. Russell also submitted her own affidavit, which
includes the following statements:

              6. . . . I did not sign any document that represented my payment to be
        $1,390.80 per month. Some of the blanks in the loan documents were not
        completed at the time I signed them. I was told not to worry because they
        would be filled in later when the information was provided by Sandy at the
        Household office.
        ...


       2
       There is no dispute that, for purposes of the statute of limitations, the relevant filing date is
September 3, 2004, when Ms. Russell initiated her suit in bankruptcy court.

                                                  -3-
        8. When I still had not received copies of my loan documentation
almost a week after the closing, I began to call the offices of Household. I was
told that I might not receive the documents for as long as ninety (90) days after
closing and that it “was no big deal.”

       9. Approximately thirty (30) to forty (40) days after closing, I received
a statement from Household that indicated my monthly payment was
$1,390.80. I knew that this was a mistake and immediately contacted
Household. Household employees acknowledged to me that it was a mistake.

       10. For the next 3 ½ years, I wrote and called employees, agents and
attorneys of Household in an attempt to correct the mistake and obtain copies
of my loan documents. Household employees told me several different things,
including:

       -it was a mistake;

       -it was a computer error;

       -it would be straightened out;

       -don’t worry about not receiving copies of my loan documentation;
       -just pay the amount shown on the statement until it was straightened
       out;

       -my file had been turned over to a supervisor because it was a mistake;

       -my interest rate would be reduced;

       -they were working to refinance my loan as the computer would not
       allow an adjustment to the payment shown;

       -don’t worry, they were not going to foreclose on my house even
       though I got a letter from an attorney about foreclosure;

       -my loan documents were in archives and no longer in their computer
       so I would have to get copies of them from the closing agent.

       11. Each Household representative told me that the last representative
I had spoken with failed to make the proper notations in my file and had failed

                                        -4-
      to file the proper paperwork before the cut-off date for that particular month
      in order for the problem to be corrected in time to be reflected on the following
      month’s statement.

             12. Household representatives also told me that I would have to submit
      other paperwork because my original paperwork was missing and because the
      closing was a “no-doc” loan.

             13. During the 3 ½ years, at the request of Household representatives,
      I was required to submit personal and confidential documents to them such as
      tax documents, bank statements, blank checks for them to keep on file, and a
      “hardship” letter stating my “special circumstances” despite the fact that
      Household representatives repeatedly assured me that this was simply a
      mistake and would be corrected.

      ...
           15. I continued to make payments as instructed by representatives of
      Household.

              16. I believed the things that Household employees told me.
      Afterwards, when my home was scheduled for foreclosure on April 8, 2004,
      I realized that Household was not going to correct the matter. I continued to
      try and get copies of my loan documents but Household did not send them to
      me until March 25, 2004 with the letter attached at Exhibit C. They finally
      sent them to me two days after William Aldinger, Chairman and CEO of
      Household, received my personal letter to him . . ..

              17. I received my loan documents by overnight delivery on March 26,
      2004.

             18. When I received the loan documents, it was the first time that I had
      seen a document that purported to bear both my signature and a monthly
      payment of $1,390.80.

       Ms. Russell also submitted the affidavit of Daniel Scott Bowman, who stated that he
had lived with Ms. Russell for 20 years and had signed the Truth-in-Lending Disclosure
Statement attached to her affidavit, which showed a monthly payment of $890.53. Mr.
Bowman stated that he had not signed the Truth-in-Lending Disclosure Statement attached
to HSBC’s motion to summary judgment showing a monthly payment of $1,390.80. Mr.
Bowman also stated:

                                             -5-
                I spoke by phone to Household employees who told me that they were
        trying to “fix” the problem with Ms. Russell’s loan, that certain paperwork was
        missing, and that would should [sic] be patient and cooperate. They requested
        that I send them certain documentation to support a “re-financing” of Ms.
        Russell’s loan which was necessary because their computer would not let them
        make the correction in the payment amount.

              Household employees also told me by phone that Ms. Russell and I
        should ignore any letters about foreclosure because that department of
        Household was aware of the mistake and that they were working on it.

        The defendants’ motions for summary judgment were heard on March 9, 2007. In an
order entered on August 14, 2007, the court granted the motions for summary judgment
based upon a finding that there were no genuine issues of material fact. The court further
stated:

        The Court specifically finds that no genuine issue of material fact exists which
        could constitute fraudulent concealment on the part of any Defendant. The
        Court also finds that, as a matter of law, all claims of intentional
        misrepresentation, negligent misrepresentation, common law fraud, violations
        of the Federal Truth-in-Lending Act, and violations of the Tennessee
        Consumer Protection Act are time barred by the applicable statutes of
        limitations.

        Further, the Court dismisses the allegations of violations of the Tennessee
        Consumer Protection Act as to all Defendants, as the subject matter of this
        lawsuit involved credit terms, a subject matter that is specifically exempted by
        Tenn. Code Ann. § 47-18-111(a)(3).

Ms. Russell filed a motion requesting findings of fact and conclusions of law, but the court
denied the motion stating that the order granting summary judgment “provides sufficient
explanation of the reasons for this Court’s ruling to allow adequate appellate review.”

       In a June 30, 2008 order, the court granted motions to dismiss Southstar’s
counterclaim against Ms. Russell.3 Southstar’s counterclaim against Ms. Russell was the
only obstacle to making the court’s previous order granting summary judgment a final order.



        3
         In April 2007, Southstar filed a suggestion of bankruptcy stating that all claims against the company
were stayed pending further orders of the bankruptcy court.

                                                     -6-
With the removal of this obstacle, the court decreed that its order dated August 14, 2007 be
made a final order pursuant to Tenn. R. Civ. P. 58. Ms. Russell appealed.

                                   S TANDARD OF R EVIEW

       Summary judgment is appropriate when there is no genuine issue of material fact and
the moving party is entitled to a judgment as a matter of law. Tenn. R. Civ. P. 56.04.
Summary judgments do not enjoy a presumption of correctness on appeal. BellSouth Adver.
& Publ’g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn. 2003). We consider the evidence in
the light most favorable to the non-moving party and resolve all inferences in that party’s
favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). When reviewing the evidence, we
must determine whether factual disputes exist. Byrd v. Hall, 847 S.W.2d 208, 211 (Tenn.
1993). If a factual dispute exists, we must determine whether the fact is material to the claim
or defense upon which the summary judgment is predicated and whether the disputed fact
creates a genuine issue for trial. Id.; Rutherford v. Polar Tank Trailer, Inc., 978 S.W.2d 102,
104 (Tenn. Ct. App.1998). To shift the burden of production to the nonmoving party who
bears the burden of proof at trial, the moving party must negate an element of the opposing
party’s claim or “show that the nonmoving party cannot prove an essential element of the
claim at trial.” Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 8-9 (Tenn. 2008).

                                          A NALYSIS

                         1. Claims for misrepresentation and fraud

        The parties agree that the statute of limitations applicable to Ms. Russell’s causes of
action for intentional and negligent misrepresentation and fraud is the three-year statute of
limitations found at Tenn. Code Ann. § 28-3-105. See Vance v. Schulder, 547 S.W.2d 927,
932 (Tenn. 1977); Med. Educ. Assistance Corp. v. State ex rel. E. Tenn. State Univ. Quillen
Coll. of Med., 19 S.W.3d 803, 817 (Tenn. Ct. App. 1999); Tennessee Code Annotated § 28-
3-105 provides that these actions must be filed within three years of the accrual of the cause
of action. Under the discovery rule, a cause of action accrues “when a plaintiff discovers,
or in the exercise of reasonable care and diligence, should have discovered, his injury and
the cause thereof.” City State Bank v. Dean Witter Reynolds, Inc., 948 S.W.2d 729, 735
(Tenn. Ct. App. 1996); see also McCrosky v. Bryant Air Conditioning Co., 524 S.W.2d 487,
491 (Tenn. 1975). The question of whether a plaintiff discovered or should have discovered
an injury is ordinarily a question of fact, and not appropriate for summary judgment. City
State, 948 S.W.2d at 735; Prescott v. Adams, 627 S.W.2d 134, 139 (Tenn. Ct. App. 1981).

        The defendants have the burden of proof to establish the defense of the statute of
limitations. Sherrill v. Souder, 325 S.W.3d 584, 596 (Tenn. 2010). Thus, to be entitled to

                                              -7-
summary judgment, the defendants must point to undisputed facts that establish their
entitlement to the defense. Hannan, 270 S.W.3d at 9 n.6. HSBC argues that Ms. Russell
had notice, as a matter of law, that she had sustained an injury when she received notification
on or before September 1, 2000, of a monthly loan payment in excess of that to which she
had agreed. Thus, asserts HSBC, the trial court properly held that her claims for negligent
misrepresentation, intentional misrepresentation, and fraud were barred by the statute of
limitations.

        As stated above, the issue of when a plaintiff discovers or with reasonable care should
have discovered an injury is generally a question of fact. City State, 948 S.W.2d at 735.
Under the undisputed facts, we cannot agree with the conclusion that Ms. Russell knew or
should have known, as a matter of law, that she had been injured when she got the bank
statement with a higher monthly payment. This information may have given Ms. Russell
inquiry notice, requiring her to exercise due diligence to determine whether an actionable
injury had occurred. See Wyatt v. A-Best, Co., Inc., 910 S.W.2d 851, 856 (Tenn. 1995); City
State, 948 S.W.2d at 735. Ms. Russell has, however, come forward with evidence that she
immediately contacted HSBC and was assured that this statement was a “mistake” and that
the company would rectify the mistake. Contrary to HSBC’s argument, the fact that Ms.
Russell made eleven payments in the amount of $1,390 does not establish, as a matter of law,
that she had been injured. Rather, Ms. Russell was making excess payments that would be
applied to her loan; otherwise, she risked foreclosure proceedings.

       We need not consider whether Ms. Russell knew or should have known that she had
been injured before she received copies of her loan documents from HSBC in March 2004
or whether HSBC engaged in fraudulent concealment. See Pero’s Steak and Spaghetti House
v. Lee, 90 S.W.3d 614, 625 (Tenn. 2002); Fahrner v. Sw. Mfg., Inc., 48 S.W.3d 141, 145
(Tenn. 2001). We hold only that the trial court erred in finding that Ms. Russell discovered
or should have discovered the injury as a matter of law by September 1, 2000.

                   2. Claims under Tennessee Consumer Protection Act

       Actions under the Tennessee Consumer Protection Act (“TCPA”) must be brought
within one year of “a person’s discovery of the unlawful act or practice.” Tenn. Code Ann.
§ 47-18-110. In light of our determination that the trial court erred in finding, as a matter of
law, that Ms. Russell discovered or should have discovered the injury by September 1, 2000,
we likewise must conclude that the trial court erred in dismissing her TCPA cause of action
under the statute of limitations.

       The trial court also dismissed the TCPA action pursuant to Tenn. Code Ann. § 47-18-
111(a)(3), which exempts from the TCPA “[c]redit terms of a transaction which may be

                                              -8-
otherwise subject to the provisions of this part, except insofar as the Tennessee Equal
Consumer Credit Act of 1974 . . . may be applicable.” The exclusion of the credit terms of
a transaction from the TCPA has been explained as follows:

        The TCPA was enacted in 1977, after the enactment of the TILA [Truth-in-
        Lending Act]; further, the TCPA expressly exempts “credit terms of a
        transaction” from its scope of coverage. It is apparent, then, that the
        Tennessee legislature believed that consumers were already adequately
        protected by the TILA. Each of the plaintiffs’ remaining alleged deceptive
        acts all relate to the terms of a credit transaction, namely the [sic] financing the
        purchase of a motor vehicle from the defendants.

Beard v. Gen. Motors Acceptance Corp., CIV-1-92-149 (E.D. Tenn. May 6, 1993) (quoted
in Thomas F. Barnett & George T. Lewis, Are Automobile Financing and Other Credit
Transactions That Comply with the Federal Truth-In-Lending Act Subject to Private Rights
of Action under the Tennessee Consumer Protection Act?, 71 T ENN. L. R EV. 695, 700-01
(2004)). Ms. Russell’s TCPA action in this case relates to credit terms and therefore was
properly determined to be excluded by Tenn. Code Ann. § 47-18-111(a)(3).4

        While the trial court erred in granting summary judgment on the statute of limitations
issue, the court properly found the TCPA inapplicable to Ms. Russell’s claims.

                             3. Claims under the Truth-in-Lending Act

       The Truth-in-Lending Act (“TILA”) requires that an action be brought “within one
year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). In Jones v.
TransOhio Sav. Assoc., 747 F.2d 1037, 1041 (6th Cir. 1984), the court held that TILA is
subject to equitable tolling and that, under the doctrine of fraudulent concealment, “the one
year period shall begin to run when the borrower discovers or had reasonable opportunity to
discover the fraud involving the complained of TILA violation.” Thus, the same reasoning
discussed under Part I above leads to the same conclusion here: that the trial court erred in
granting summary judgment on Ms. Russell’s TILA claims under the statute of limitations.




        4
         Ms. Russell’s reliance on Harvey v. Ford Motor Credit Co., 8 S.W.3d 273, 275 (Tenn. Ct. App.
1999), is misplaced as this case is distinguishable on its facts and was decided under a different statutory
provision.

                                                    -9-
                                      C ONCLUSION




       We affirm the trial court’s decision to dismiss Ms. Russell’s TCPA claim but reverse
its dismissal of all of the remaining claims. Costs of appeal are assessed against the
appellees, and execution may issue if necessary.

                                                     ______________________________
                                                          ANDY D. BENNETT, JUDGE




                                           -10-
