                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                               September 16, 2013 Session

           REID R. CRUMPTON v. PATRICIA G. GRISSOM, ET AL.

                   Appeal from the Chancery Court for Knox County
                    No. 175161-2    Michael W. Moyers, Chancellor


               No. E2013-00218-COA-R3-CV - Filed December 23, 2013


Reid R. Crumpton (“Plaintiff”) sued Patricia G. Grissom (“Affiliate Broker”), Ashley
Carpenter, and Mary Bea Corbitt (“Managing Broker”) in connection with a real estate sales
contract for real property containing both a house and a business. The Managing Broker
filed a motion for summary judgment asserting, in part, that she was not personally involved
in Plaintiff’s purchase of the real property at issue and had no knowledge of the details of the
transaction, and, therefore, could not be held liable for the actions of the Affiliate Broker.
After a hearing, the Trial Court entered an order granting the Managing Broker summary
judgment and making its judgment final pursuant to Tenn. R. Civ. P. 54.02. Plaintiff appeals
the grant of summary judgment to the Managing Broker. We find and hold that Tenn. Code
Ann. §§ 62-13-101, et seq. creates a duty on the part of the Managing Broker, and that the
Managing Broker failed to show that she met the standard of care sufficient to satisfy her
duty. We, therefore, reverse the grant of summary judgment to the Managing Broker, and
remand this case for further proceedings.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed;
                                  Case Remanded

D. M ICHAEL S WINEY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
J R., P.J., and T HOMAS R. F RIERSON, II, J., joined.

Shannon M. Holland, Knoxville, Tennessee, for the appellant, Reid R. Crumpton.

Ellis A. “Sandy” Sharp, Jon M. Cope, and Zachary B. Tenry, Knoxville, Tennessee, for the
appellee, Mary Bea Corbitt.
                                               OPINION

                                             Background

             In October of 2004, Plaintiff entered into a real estate sales contract with Patsy
and Kelly Beeler for Plaintiff to purchase from the Beelers real property in Knoxville,
Tennessee containing a house and a business (“Kelly Tire Transaction”).1 The Affiliate
Broker worked with Plaintiff on this transaction. At that time, the Affiliate Broker worked
for Heath Shuler Real Estate, LLC under the supervision of the Managing Broker.

               At some point after the closing of the Kelly Tire Transaction, Plaintiff
discovered that a five year non-compete clause in an addendum to the real estate sales
contract was not contained in all copies of the contract signed by the parties. Plaintiff sued
the Affiliate Broker, the Managing Broker, and Ashley Carpenter, whom Plaintiff asserted
was the Affiliate Broker’s supervising agent, alleging, as pertinent to this appeal, that the
Affiliate Broker had made misrepresentations with regard to the addendum and that the
defendants had breached duties owed to Plaintiff pursuant to Tenn. Code Ann. §§ 62-13-101,
et seq.

              The Managing Broker filed a motion for summary judgment supported, in part,
by her affidavit in which she stated, in pertinent part:

        2. At all relevant times to the above litigation, I was the managing broker for
        Heath Shuler Real Estate.
        3. Patricia Grissom, [sic] was an independent contractor realtor affiliated with
        the Heath Shuler Real Estate at all relevant times.
        4. At no point did I act as an agent or provide real estate services to [Plaintiff]
        in regards to the Kelly Tire transaction.
        5. I was not aware, at any relevant time, of the general substance or the details
        of the Kelly Tire contract entered into by [Plaintiff].
        6. I was not personally involved in [Plaintiff’s] purchase of the Kelly Tire
        business.
        7. My duties as managing broker at Heath Shuler Real Estate did not include
        involvement in the day-to-day activities or review of the routine contracts of
        independent contractor realtors affiliated with the brokerage.




        1
        We discuss the facts merely to give context to our resolution of this appeal with the understanding
that some of these facts have not yet been proven.

                                                   -2-
               After a hearing the Trial Court entered its order on December 13, 2012 granting
the Managing Broker summary judgment after finding and holding that it was undisputed that
the Managing Broker had no knowledge of the substance or details of the Kelly Tire
Transaction, and that “neither Tennessee statutes nor Tennessee case law suggests that
managing brokers’ duty to supervise their affiliates can create liability on the part of the
managing broker where the managing broker has no direct involvement with or knowledge
of the transaction . . . ,” and, therefore, the Managing Broker could not be held liable in this
case. The Trial Court certified its December 13, 2012 order as final pursuant to Tenn. R.
Civ. P. 54.02. Plaintiff appeals the grant of summary judgment to the Managing Broker to
this Court.

                                          Discussion

             Although Plaintiff raises multiple issues on appeal, the dispositive issue is
whether the Trial Court erred in granting summary judgment to the Managing Broker.
Because this case was filed prior to July 1, 2011, we apply the standard of review for
summary judgment cases as set out by our Supreme Court as follows:

              The scope of review of a grant of summary judgment is well
       established. Because our inquiry involves a question of law, no presumption
       of correctness attaches to the judgment, and our task is to review the record to
       determine whether the requirements of Rule 56 of the Tennessee Rules of Civil
       Procedure have been satisfied. Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.
       1997); Cowden v. Sovran Bank/Cent. S., 816 S.W.2d 741, 744 (Tenn. 1991).

               A summary judgment may be granted only when there is no genuine
       issue of material fact and the moving party is entitled to judgment as a matter
       of law. Tenn. R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.
       1993). The party seeking the summary judgment has the ultimate burden of
       persuasion “that there are no disputed, material facts creating a genuine issue
       for trial . . . and that he is entitled to judgment as a matter of law.” Id. at 215.
       If that motion is properly supported, the burden to establish a genuine issue of
       material fact shifts to the non-moving party. In order to shift the burden, the
       movant must either affirmatively negate an essential element of the
       nonmovant’s claim or demonstrate that the nonmoving party cannot establish
       an essential element of his case. Id. at 215 n.5; Hannan v. Alltel Publ’g Co.,
       270 S.W.3d 1, 8-9 (Tenn. 2008). “[C]onclusory assertion[s]” are not sufficient
       to shift the burden to the non-moving party. Byrd, 847 S.W.2d at 215; see also
       Blanchard v. Kellum, 975 S.W.2d 522, 525 (Tenn. 1998). Our state does not
       apply the federal standard for summary judgment. The standard established

                                               -3-
      in McCarley v. West Quality Food Service, 960 S.W.2d 585, 588 (Tenn. 1998),
      sets out, in the words of one authority, “a reasonable, predictable summary
      judgment jurisprudence for our state.” Judy M. Cornett, The Legacy of Byrd
      v. Hall: Gossiping About Summary Judgment in Tennessee, 69 Tenn. L. Rev.
      175, 220 (2001).

              Courts must view the evidence and all reasonable inferences therefrom
      in the light most favorable to the non-moving party. Robinson v. Omer, 952
      S.W.2d 423, 426 (Tenn. 1997). A grant of summary judgment is appropriate
      only when the facts and the reasonable inferences from those facts would
      permit a reasonable person to reach only one conclusion. Staples v. CBL &
      Assocs., Inc., 15 S.W.3d 83, 89 (Tenn. 2000). In making that assessment, this
      Court must discard all countervailing evidence. Byrd, 847 S.W.2d at 210-11.
      Recently, this Court confirmed these principles in Hannan.

Giggers v. Memphis Housing Authority, 277 S.W.3d 359, 363-64 (Tenn. 2009).

             As pertinent to this appeal, Tenn. Code Ann. § 62-13-406 provides:

      62-13-406. Designated broker – Managing broker. – (a) A licensee entering
      into a written agreement to represent any party in the buying, selling,
      exchanging, renting or leasing of real estate may be appointed as the
      designated and individual agent of this party by the licensee’s managing
      broker, to the exclusion of all other licensees employed by or affiliated with
      the managing broker. A managing broker providing services under this
      chapter shall not be considered a dual agent if any individual licensee so
      appointed as designated agent in a transaction, by specific appointment or by
      written company policy, does not represent interests of any other party to the
      same transaction.
             (b) The use of a designated agency does not abolish or diminish the
      managing broker’s contractual rights to any listing or advertising agreement
      between the firm and a property owner, nor does this section lessen the
      managing broker’s responsibilities to ensure that all licensees affiliated with
      or employed by the broker conduct business in accordance with appropriate
      laws, rules and regulations.
             (c) There shall be no imputation of knowledge or information among
      or between clients, the managing broker and any designated agent or agents in
      a designated agency situation.

Tenn. Code Ann. § 62-13-406 (2009).

                                            -4-
            In Konop v. Henry, this Court discussed Tenn. Code Ann. 62-13-406 and
managing and affiliate brokers stating:

                 As noted earlier, Jason Jent was an affiliate broker hired by the sellers
        to list their properties for sale; as such, he was required to be supervised by a
        managing broker who, in this case, was David Jent. See Tenn. Code Ann. §
        62-13-406(b). David Jent’s duty to the purchasers was to ensure that Jason
        Jent complied with all appropriate laws, rules and regulations. See Tenn. Code
        Ann. § 62-13-406(b) (the duty of a managing broker whose affiliated licensee
        provides real estate services in a real estate transaction is to ensure that all
        licensees affiliated with or employed by the broker conduct business in
        accordance with appropriate laws, rules and regulations); see also Tenn. Op.
        Att’y Gen. No. 96-015, 1996 WL 66988, at *2 (1996) (“The managing or
        principal broker must fulfill her obligation to ensure that all licensees that she
        employs carry out their responsibilities ethically and in accordance with the
        law[,] but the principal broker does not have a specific duty to either the buyer
        or the seller.”). Inasmuch as David Jent was not involved in or did not
        otherwise provide real estate services in the transactions, he was not obligated
        under Tenn. Code Ann. § 62-13-403 to disclose his knowledge, if any, of
        adverse facts.

Konop v. Henry, No. M2010-00037-COA-R3-CV, 2010 Tenn. App. LEXIS 526, at **22-23
(Tenn. Ct. App. Aug. 18, 2010), no appl. perm. appeal filed.

              In Konop, this Court was addressing a situation wherein “under Tenn. Code
Ann. § 62-13-403, Mr. Jent was obligated to disclose adverse facts of which he had actual
notice or knowledge to the purchasers as parties to the transaction.” Id. at *19. In the case
now before us, the scope of the duty alleged to have been breached is less clear. In addition
to the duty contained in Tenn. Code Ann. § 62-13-406 quoted above, we note that Tenn.
Code Ann. § 62-13-403 sets out duties that brokers owe to all parties in a real estate
transaction, and Tenn. Code Ann. § 62-13-404 sets out duties owed to the broker’s own
client.2

                In pertinent part, Tenn. Code Ann. § 62-13-403 provides:

        62-13-403. Duty owed to all parties. – A licensee who provides real estate
        services in a real estate transaction shall owe all parties to the transaction the


        2
          We need not, and do not, address all of the potential duties pursuant to Tenn. Code Ann. §§ 62-13-
101, et seq., but instead discuss only two specific sections of the statute to illustrate the point.

                                                    -5-
      following duties, except as provided otherwise by § 62-13-405, in addition to
      other duties specifically set forth in this chapter or the rules of the commission:
      (1) Diligently exercise reasonable skill and care in providing services to all
      parties to the transaction;
      (2) Disclose to each party to the transaction any adverse facts of which the
      licensee has actual notice or knowledge;
      (3) Maintain for each party to a transaction the confidentiality of any
      information obtained by a licensee prior to disclosure to all parties of a written
      agency or subagency agreement entered into by the licensee to represent either
      or both of the parties in a transaction. . . .
      (4) Provide services to each party to the transaction with honesty and good
      faith;
      (5) Disclose to each party to the transaction timely and accurate information
      regarding market conditions that might affect the transaction only when the
      information is available through public records and when the information is
      requested by a party. [sic]
      (6) Timely account for trust fund deposits and all other property received from
      any party to the transaction; and
      (7)(A) Not engage in self-dealing nor act on behalf of licensee’s immediate
      family or on behalf of any other individual, organization or business entity in
      which the licensee has a personal interest without prior disclosure of the
      interest and the timely written consent of all parties to the transaction; and
              (B) Not recommend to any party to the transaction the use of services
      of another individual, organization or business entity in which the licensee has
      an interest or from whom the licensee may receive a referral fee or other
      compensation for the referral, other than referrals to other licensees to provide
      real estate services under this chapter, without timely disclosing to the party
      who receives the referral the licensee’s interest in the referral or the fact that
      a referral fee may be received.

Tenn. Code Ann. § 62-13-403 (2009).

             Duties owed to a client by a broker are addressed in Tenn. Code Ann. § 62-13-
404, which provides:

      62-13-404. Duty owed to licensee’s client. – Any licensee who acts as an
      agent in a transaction regulated by this chapter owes to the licensee’s client in
      that transaction the following duties, to:




                                              -6-
       (1) Obey all lawful instructions of the client when the instructions are within
       the scope of the agency agreement between licensee and licensee’s client;
       (2) Be loyal to the interests of the client. A licensee must place the interests
       of the client before all others in negotiation of a transaction and in other
       activities, except where the loyalty duty would violate licensee’s duties to a
       customer under § 62-13-402 or a licensee’s duties to another client in a dual
       agency; and
       (3)(A) Unless the following duties are specifically and individually waived,
       in writing by a client, a licensee shall assist the client by:
               (i) Scheduling all property showings on behalf of the client;
               (ii) Receiving all offers and counter offers and forwarding them
       promptly to the client;
               (iii) Answering any questions that the client may have in negotiation
       of a successful purchase agreement within the scope of the licensee’s
       expertise; and
               (iv) Advising the client as to whatever forms, procedures and steps are
       needed after execution of the purchase agreement for a successful closing of
       the transaction.
       (B) Upon waiver of any of the duties in subdivision (3)(A), a consumer shall
       be advised in writing by the consumer’s agent that the consumer may not
       expect or seek assistance from any other licensees in the transaction for the
       performance of the duties in subdivision (3)(A).

Tenn. Code Ann. § 62-13-404 (2009).

                In its Memorandum and Order incorporated into its December 13, 2012 Order
by reference the Trial Court noted that if it accepted Plaintiff’s argument that “the
misrepresentations and negligence [alleged by Plaintiff] against the affiliate brokers are
attributable to the [Managing Broker] pursuant to her duty to supervise the affiliates,” the
result “would be tantamount to creating strict liability for managing brokers for the negligent
or intentional torts of their affiliates.” We agree with the Trial Court that our General
Assembly did not intend to impose strict liability on managing brokers in cases such as this.
On the other hand, we cannot agree with the outcome which would result if we were to hold
that by simply and purposefully remaining ignorant of the substance and details of the
affiliate broker’s transactions, a managing broker could completely escape her statutory duty
and any liability. Clearly, neither of these two scenarios is what our General Assembly
intended when it enacted Tenn. Code Ann. § 62-13-406. In short, the Managing Broker’s
liability, if any, does not arise solely from the Affiliate Broker’s action but instead arises
from a breach of her own statutory duty. Our holding gives effect to all relevant parts of
these statutes as enacted by our General Assembly.

                                              -7-
               The plain and unambiguous language of Tenn. Code Ann. § 62-13-406
provides that a managing broker has the responsibility “to ensure that all licensees affiliated
with or employed by the broker conduct business in accordance with appropriate laws, rules
and regulations.” Tenn. Code Ann. § 62-13-406(b) (2009). Other sections of Tenn. Code
Ann. §§ 62-13-101, et seq. further delineate the duties owed. Thus, the Managing Broker
did owe Plaintiff a duty pursuant to Tenn. Code Ann. §§ 62-13-101, et seq. Given the record
now before us, however, we are unable to determine the standard of care required of the
Managing Broker in order to satisfy her statutory duty.3

               Plaintiff alleged that the Managing Broker breached her duty to Plaintiff. The
Managing Broker produced no evidence showing that she met the standard of care required
of a managing broker and, therefore, satisfied her statutory duty. As such, the Managing
Broker failed to negate any essential element of Plaintiff’s claim, and, therefore, was not
entitled to summary judgment. We reverse the grant of summary judgment to the Managing
Broker and remand this case to the Trial Court for further proceedings consistent with this
Opinion.

                                              Conclusion

               The judgment of the Trial Court is reversed, and this cause is remanded to the
Trial Court for further proceedings consistent with our Opinion and for collection of the costs
below. The costs on appeal are assessed against the appellee, Mary Bea Corbitt.




                                                          _________________________________
                                                          D. MICHAEL SWINEY, JUDGE




        3
          We note that Plaintiff alleges in his Complaint that the Affiliate Broker represented both him and
the sellers in the Kelly Tire transaction. We are unable to determine, given the record now before us,
whether the situation in this case involved a dual agency. The answer to this question would, of course,
affect the scope of the duty required by both the Affiliate Broker and the Managing Broker.

                                                    -8-
