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The Tennessee Consumer Protection Act (Act) forbids unfair or deceptive acts or practices affecting the conduct of any trade or commerce. Tenn. Code Ann. § 47-18-104(b). The Act covers the transfer of real property. It is less clear what the seller's role must be in order for the alleged violation to constitute the conduct of any trade or commerce. The Act defines "trade," "commerce," or "consumer transaction" as the advertising, offering for sale, lease or rental, or distribution of any goods, services, or property, tangible or intangible, real, personal, or mixed, and other articles, commodities, or things of value wherever situated. Tenn. Code Ann. § 47-18-103(11). Relying in part on the Act's purpose of maintaining ethical standards of dealing between persons engaged in business and the consuming public, Tenn. Code Ann. § 47-18-102(4), courts have limited the Act's application to transactions between businesses and consumers and not to casual, non-commercial transactions between two individuals.
The sellers were real estate professionals intending to sell their personal residence. In January 1997, the purchasers toured the sellers’ house. They executed a contract to purchase the house in June 1997. Prior to the closing, the purchasers obtained an inspection of the house, including the septic system. A dye test conducted by the inspector did not reveal any leaks in the septic system at that time. The sellers did not inform the purchasers or their inspector about the problems they had with the sewer in December 1996. After the purchasers moved into their new home, they began to notice odorous fluid seeping around the septic tank, especially after they used the washing machine or the bathtub. Hence, the purchasers filed suit against the sellers seeking to rescind the sale transaction and to recover compensatory and punitive damages. The purchasers’ claims sounded in negligent misrepresentation, fraud, deceit, and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 to -130 (2001 & Supp. 2009). The trial court ordered that the sales contract be rescinded and directed the sellers to repurchase the property from the purchasers for the original purchase price of $ 104,500. The purchasers appealed, and the Court of Appeals remanded the case to award additional damages to return the purchasers to their position prior to the sale and to pay for their legal expenses. On remand, the trial court found that the sellers had violated the Tennessee Consumer Protection Act and that the sellers should pay the buyers $ 120,483.93, as well as $ 37,483.93 in attorney's fees. The sellers appealed, and the Court of Appeals affirmed the judgment. The state supreme court granted the sellers' application for permission to appeal.
The Court affirmed the judgment, holding that because the sellers were acting in a business capacity when they sold the home, the sale was covered by the Tennessee Consumer Protection Act (“Act”) and the sellers were liable under the Act for any deceptive acts they committed in attempting to sell the home. The instant court reasoned that the undisputed facts provided ample basis to conclude that the sellers' business model included living in the houses that one seller built and then listing them for sale. Next, the instant court found that the sellers' failure to disclose all the information they possessed regarding the house's septic system was a deceptive act that gave rise to liability under the Act.