WPC 6R$%ߍ5]6Gl ›;>/.Cx{Og1YuP}Oܺ[o06+~nr۟p^2 O>S(M*CU/.MvƂW wd;}twhLr೼GY;(3^Y޴ilL> (^}MPuV;Y  V\)\QayIo#zOxzU LzDUvc6u_ 5wzMDNޑBjͽϮZ($Y!;Q:[@WAۚbW/k0Kk@\rc4_E b#\ % ^ # 0/ UN w 4 z  i x mz U>   [ !UNN555E777777777777777777777777b9999999999999999999999999cAA 0D 0 B 0 D3 D- 0K AS? 0X 0D A@HP LaserJet 4050 Series PCL 6,,,,0 u1-s (`$.8dd8    ("  Z6Times New Roman Regular,-Ť C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt3|xU\  `&Times New RomanLevel 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5(9 Z6Times New Roman Regular- - Y R $      1    _WedonotagreewithWoodsassertionthatthistransactionperpetratedafraudagainstthelender.Itis  undisputedthatthelenderhadnoticethatthisaddendumhadbeenexecutedpriortoclosing.(#$  0  (|G2 $ !.8HEdXXd8         0   d(|3 T$ !.8HEdXXd8     VVVV'dxd)!dxdx( $ Figure  1  ^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3 T$ !.8HEdXXd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK !.8HEdd8     _  HE89XXdd8  @ GdHEINTHECOURTOFAPPEALSOFTENNESSEE  @kk$ATNASHVILLE#HEGd #Ԉ &   August8,2002Session L X9XHE #HEXX9#FELIXM.WOODS,etal.v.JAMESN._FARIS_ԀX9XHE  J @@ DirectAppealfromtheChanceryCourtforDavidsonCounty  J @@No.002240IIIEllen_Hobbs_ԀLyle,Chancellor  6 @@*AV) ` dE<` A   @@TTNo.M200102901_COA_ԄR3CVFiledSeptember17,_2002_   AV) ` dE<|` A }      X9XXX9Thisappealarisesfromanactionbroughtbytheplaintiff/sellertoenforceanagreementmadeasan x  addendumtoacontractforsaleofahomepurportingtogiveamortgagetotheseller.Wefindthat d bothpartiesactedwithuncleanhands.Judgmentofthetrialcourtisaffirmedinpart,reversedin P part,andthiscaseisremandedforfurtherproceedingsconsistentwiththisopinion. <  #X9XX X9##HEXX9#X9XHETenn.R.App.P.3AppealasofRight;JudgmentoftheChanceryCourtAffirmedinpart; d ReversedinPart;andRemanded  P   #HEX9W#X9X.HEDavidR.Farmer,J.,deliveredtheopinionofthecourt,inwhichW.FrankCrawford,P.J.,W.S., ( andAlanE.Highers,J.,joined.  _Renard_ԀA.Hirsch,Sr.,Nashville,Tennessee,fortheappellants,FelixM.WoodsandAgnesJ.  Woods.  ARussellWillisandWilliamB.Hawkins,Nashville,Tennessee,fortheappellee,JamesN._Faris_. `  OPINION #HEXX9K#X9XHE 8!  #HEXX9 #  X9XHE X9XXX9   FelixandAgnesWoods(Woods),theplaintiffs/sellersandJames_Faris_Ԁ(_Faris_),the #`" defendant/counterclaimant/buyer,enteredintoacontractforsaleofahomeinNashvilleinAugust #L# of1998.Thelistingpricewas$116,900,butthesalescontractanddeedoftrustrecitedaselling $8 $ priceof$147,500.ThetransactionbetweenthepartiesalsoincludedanaddendumgivingWoods %$!% asecondmortgageonthepropertyequaltotwentypercentoftheagreeduponsalespriceof &"& $147,500.Theaddendumprovided, thepartiesagreethatinatimelymannerfollowingclosingthe '"' secondmortgagewill,infact,beforgivenandthedebtreleased._Faris_Ԁsecuredafirstmortgageof (#( $118,000from_WMC_ԀMortgageandexecutedadeedoftrustnotefor$29,500forthesecond )$) mortgage,whichwassecuredbyadeedoftrust.Woodsdidnotreleasethedebtafterclosing,nor p*%* did_Faris_Ԁmakepaymentonthenote.InFebruaryof2000,_Faris_Ԁattemptedtosecureareleaseofthe \+&+ lienbyWoodsinordertoreselltheproperty.Woodssignedtherelease,butthepartiesdispute H,', whetheritwasdeliveredto_Faris_.Thereleasecouldnotberecorded,however,becauseithadnot 4-(- beennotarized.Thelienthusresultedinacloudon_Faris_titletotheproperty,preventinghimfrom  closingonthesale.    InJulyof2000,Woodsfiledacomplainttocollecttheunpaidbalanceonthepromissory t note._Faris_Ԁansweredandcountercomplainedforbreachofcontract,intentionalfraud, ` misrepresentationandrescissionofthecontract.Bothpartiesasserted, interalia ,thedefenseof L  uncleanhands.ThetrialcourtdismissedWoodscomplaintattheconclusionofWoodsproof.The 8  courtawarded_Faris_Ԁajudgmentforconsequentialdamagesintheamountof$21,384,representing $ t $1,188ofinterestpermonthfromFebruary2000throughAugustof2001,andreasonableattorneys  ` feesanddiscretionarycosts.Thetrialcourtrejectedthedefenseofuncleanhands,findingtherewas  L  noevidencetosupportthedefense.Thisappealfollowed.  8    IssuesPresented    m  WoodspresentsthefollowingissuesforreviewbythisCourt:   8   ` (1)Whetherthesalescontractmergedintothedeed,deedoftrustnote,deed l oftrustandsettlementsheet,therebyrenderingthesalescontractinoperative.X   8   ` (2)Whether_Faris_Ԁcomesintocourtwithuncleanhandswithacontractthat 0 isashamandisfraudulentasto[a]thirdpartylender.l   8   ` (3)Whetherthe[trial]courterredinallowingcounterplaintifftorecover D whenhefailedtomitigatedamagesand_declar[ed_]mitigationisaburden.0   8   ` (4)Whetherthedeedoftrustnoteanddeedoftrust[were]released.     _Faris_Ԁraisesthreeadditionalissues:  8   ` (1)Whetherthetrialcourterredbydenying_Faris_ԀrequestforRule11 h sanctionsbasedupontheactionsoftheWoodsandtheirattorney.T    8   ` (2)Whetherthetrialcourterredbynotawardingpostjudgmentattorneys ,"|  fees.#h!   8  0`   (3)WhetherthetrialcourterredbyrulingthatWoodsdidnotcommitfraud.$@ #` `    StandardofReview  &"% #X9XX X90 #X9XXX9  Inanonjurytrial,ourstandardofreviewis denovo .  SeeWrightv.CityofKnoxville ,898 (#' S.W.2d177,181(Tenn.1995).Thereisapresumptionofcorrectnessastothetrialcourtsfindings )$(  offact,unlessthepreponderanceoftheevidenceisotherwise.Tenn.R.App.P.13(d).Withrespect t*%) tothetrialcourtslegalconclusions,however,thereisnopresumptionofcorrectness. SeeBowden  v.Ward ,275S.W.3d913,916(Tenn.2000);Tenn.R.App.P.13(d).#X9XXX9j# X9XXX9     UncleanHandsDefense  t V   Thedoctrineofuncleanhandsoperatestopreventpartiesfromusingacourttoenforce H  agreementsthat ariseoutofunconscionable,immoralorjustplaincrookedconduct. Farmers 4  &MerchantsBankv.Templeton ,646S.W.2d920,924(Tenn.Ct.App.1982).Itiswellsettledthat  p acourtwillnotenforceillegaltransactions. ReavesLumberCo.v.CainHurleyLumberCo. ,279  \ S.W.257,258(Tenn.1925).Atransactionneednotbepunishableasacrime,however,tojustify  H  applicationoftheuncleanhandsdoctrinebythecourt. SeeMcDonnellDyer,P.L.C.v.SelectO  4  Hits,Inc. ,No.W200000044COAR3CV,2001Tenn.App.Lexis272,at*32(Tenn.Ct.App.   Apr.20,2001)( noperm.app.filed ).Whenacauseofactionarisesfromafraudulentcollusionand   isdesignedto gildoverandconcealthetruth...[thecourt]willbrushawaythecobwebvarnishand   showthetransaction[]in[its]truelight. ReavesLumber ,279S.W.at258.Suchfraud baffles   definition. KnoxTennRentalCo.v.JenkinsInsurance,Inc .,755S.W.2d33,40(Tenn.1988)   (quoting Smithv.Harrison ,49Tenn.230(1871)).Butwhenacauseofactionarisesoutofa l transactionthatthepartiesknowtobefraudulentor justplaincrooked,thecourtwillnotenforce \ theiragreementorgivethemrelief. ReavesLumber ,279S.W.at258. H    Itisclearfromtheevidenceintherecordthatthelistedsalespriceforthispropertywas  p $116,900.Itisalsoundisputedthatthecontractforsalerecitesasalespriceof$147,500,thatFaris  \ obtainedafirstmortgagefromalenderintheamountof$118,000,andthatheexecutedasecond H mortgagetoWoodsintheamountof$29,500.Theaddendumagreementwhichtheparties 4 voluntarilyandknowinglyexecutedandwhichisthecruxofthislawsuitprovides:   8  ThisaddendumisapartoftheContractfortheSaleofRealEstatedatedAugust11,  1998.Theabovepartiesagreeandaffirmthataspartoftheabovecontract,the  sellerswillholdasecondmortgageequalto20%oftheagreedpurchasepriceof  $147,500.Theabovepartiesagreethatinatimelymanner,followingclosingthis l secondmortgagewillinfact,beforgivenandthedebtreleased.X      Woodscontends,inessence,thatthisaddendumiswithouteffectbecausethecontractfor 0"  salemergedintothedeedandthesettlementsheetandwarrantydeedreciteasalespriceof$147,500. #l! Woodsarguesthatthedeedbecamethecontractofthepartiesandthatthereisnomentionofany $X" agreementtoreleasethenoteordeedoftrustintheclosingdocuments.Woodsfurthercontendsthat $D # theinflatedsalespriceallowed_Faris_Ԁtoget100%financingfromthethirdpartylender. %0!$   _Faris_Ԁcontendsthattheactualagreeduponsalespricewas$116,900.Hesubmitsthatthe '#& contractpricewasinflatedbecausehecouldobtainfinancingofonly80%andthustheinflatedprice (#' permittedhimtoobtainfinancingof$118,000andprovidetheWoodswithcashatclosing.He )$( arguesthatWoodsbreachedthesalescontractbyrefusingtoreleasethesecondmortgagesubsequent |*%) totheclosing. h+&* Ї  Insum,itiscleartothisCourtthatthepartiesagreedtoasalespriceof$116,900andthen  intentionallyinflatedthepriceinthesalescontracttorepresentasellingpriceof$147,500.The  partiesagreedintheaddendumthatthesellerswouldholdasecondmortgageequaltotwenty  percentoftheinflatedsalespriceof$147,500which,followingclosing,wastobeforgivenandthe t deedoftrustsecuringthesamereleased._Faris_Ԁsignedanaffidavitofconsiderationonthefaceofthe ` deed,underoath,thatthevalueofthepropertyoractualconsideration,whicheverwasgreater,was L  $147,500.Byinflatingthesalesprice,_Faris_Ԁwasabletoobtain100%financingfromthelenderand 8  Woodswasableselltheproperty.G I#  1      ׀Regardlessofwhichpartybenefittedmoreorwhoinitiatedthe $ t transaction,thepartiesjointlyconspiredtomisrepresentthevalueofthisproperty.Inshort,the  ` partiesagreedtoonepriceandthen cookedthebookstoreflectanother.Itisirrefutablythis  L  conspiracybetweenthepartiesthatgaverisetothepresentaction.  8    ThistransactionoffendsthesensibilitiesofthisCourt.Werespectfullydisagreewiththetrial   courtsconclusionthattheevidencedidnotsupportafindingofuncleanhands.Wefindthatboth   partiescameintocourtwithuncleanhands.Weaccordinglyholdthatthistransactionisuntenable.   Inlightoftheforegoing,weaffirmthetrialcourtsorderthatWoodsshallexecuteareleaseofthe   secondmortgage.Judgmentfor_Faris_Ԁisreversed,includingamountsawardedforattorneysfeesand p discretionarycosts.Weaffirmthetrialcourtsdenialof_Faris_requestforRule11sanctionsagainst \ Woods.Otherissuesarepretermittedasnondispositiveinthiscase. H   Thiscauseisremandedforfurtherproceedingsconsistentwiththisopinion.Costsofthis  p appealaredividedequally,onehalftotheAppellee,JamesN._Faris_,andonehalftotheAppellants,  \ FelixM.andAgnesJ.Woods,andtheirsurety,forwhichexecutionmayissueifnecessary. H #X9XX X9 #   `     h     ___________________________________     `     h     DAVIDR.FARMER,JUDGE