Day on Torts
Where the trial court found that the defendants committed fraud, not breach of contract, the damages awarded were not limited by language in the parties’ contract.
In Amonett’s Eagle Auction & Realty, LLC v. Norris Bro. Properties, LLC, No. E2024-01931-COA-R3-CV (Tenn. Ct. App. Dec. 17, 2025), the plaintiff was an auction company that contracted to sell real property at auction for the defendants. During the auction, the individual defendants bid on the property themselves to increase the price, and they caused a shill bidder to also take part and increase the price. An LLC owned by the defendants won the auction, but it refused to complete the sale.
The plaintiff auction company filed this suit, asserting various tort claims. The trial court found that the defendants committed fraud and intentional misrepresentation, and it awarded the plaintiff over $91,000 as compensation for the plaintiff’s damages for not having the sale completed, lost time, lost sales expenses, and attorneys’ fees. While the defendants did not appeal the finding of fraud, they did appeal the damages awarded.
On appeal, the defendants argued that the damages were limited by the contract between the parties to $25,000 plus the cost of the auction, which the trial court found to be $16,550.00. The contract stated: “In the event the auction is not consummated for any reason or the SELLER(S) reject the final bid, the SELLER(S) shall owe to the [plaintiff] a minimum fee of $25,000 plus costs incurred under Section II.” The Court of Appeals ruled, however, that this language did not apply here.
The plaintiff did not allege, and the trial court did not find, a “simple non-consummation of the auction sale.” Instead, “the auction sale failed as a direct result of Defendants’ fraudulent acts.” When a party commits fraud, “the injured party should be compensated for actual injuries sustained by placing him or her in the same position he or she would have been had the fraud not occurred.” (internal citation omitted). The economic loss doctrine, which “precludes a contracting party who suffers only economic losses from recovering damages in tort, only applies in products liability cases and should not be extended to other claims.” (internal citation omitted).
Because the finding of fraud was well-founded, the trial court’s award of damages based on the plaintiff’s actual injuries was affirmed. The damages for fraud were not limited by the contract language.
This opinion was released three months after oral arguments.