author: CHARLES D. SUSANO, JR., J.,

text:
    Patrick BEAUDREAU, et al. v. LARRY HILL PONTIAC/OLDSMOBILE/GMC, INC.
    Court of Appeals of Tennessee, at Knoxville.
    March 22, 2004 Session.
    Sept. 28, 2004.
    Permission to Appeal Denied by Supreme Court March 28, 2005.

      Gordon Ball, Knoxville, Tennessee, for the appellant, Patrick Beaudreau, on behalf of himself and all others similarly situated.
    William A. Young, John W. Butler, and Jeffrey R. Thompson, Knoxville, Tennessee, for the appellee, Larry Hill Pontiac/Oldsmobile/GMC, Inc.
   OPINION

CHARLES D. SUSANO, JR., J.,

delivered the opinion of the court,

in which HERSCHEL P. FRANKS, P.J., and D. MICHAEL SWINEY, J„ joined.

This is a class action lawsuit filed by a consumer, Patrick Beaudreau, against a car dealer, Larry Hill Pontiac/Oldsmobile/GMC, Inc. (“Hill Pontiac”). Beau-dreau purchased an automobile from Hill Pontiac and the purchase was financed through General Motors Acceptance Corporation (“GMAC”). Beaudreau alleges, inter alia, that Hill Pontiac violated the Tennessee Consumer Protection Act (“the TCPA”) and the Tennessee Trade Practices Act (“the TTPA”) in that it failed to reveal to Beaudreau that it had an arrangement with GMAC by the terms of which Hill Pontiac received a portion of the interest rate charged to Beaudreau. The trial court dismissed Beaudreau’s claims. Beaudreau appeals. We affirm.

I.

On April 12, 1999, Beaudreau agreed to purchase an automobile from Hill Pontiac in Sevierville. In order to purchase the vehicle, Beaudreau obtained financing— with the help of Hill Pontiac representatives — through GMAC. The Hill Pontiac representatives informed Beaudreau that the financing would be subject to a per annum interest rate of 13.5%, which Beau-dreau accepted. Sometime later, Beau-dreau learned that GMAC had quoted Hill Pontiac an interest rate of 11.25% and that Hill Pontiac had added 2.25% to that rate, thus arriving at the 13.5% interest rate. This practice of a car dealer receiving a certain percentage of the financing it arranges for its customers is commonly referred to as the “dealer reserve” or a “dealer participation” agreement.

On March 8, 2000, Beaudreau filed a complaint against Hill Pontiac, alleging that Hill Pontiac’s practice of dealer reserve violated the TCPA. As additional grounds, Beaudreau raised the issues of unjust enrichment, money had and received, and civil conspiracy, among others. In his complaint, Beaudreau sought class certification for all Hill Pontiac customers similarly situated.

Hill Pontiac moved (1) to dismiss the complaint for failure to state a claim, or, in the alternative, (2) for a more definite statement. The trial court granted the motion for a more definite statement and took the motion to dismiss under advisement.

Beaudreau filed his first amended complaint on April 10, 2001, and two months later, Hill Pontiac renewed its motion to dismiss, alleging that the amended complaint still failed to state a claim. The trial court orally denied the motion, but it did not enter an order memorializing its action. Subsequently, Hill Pontiac filed an answer to the amended complaint, denying that it was liable to Beaudreau under any of his several theories of recovery.

In September, 2002, Beaudreau moved to certify the proposed class of Hill Pontiac customers, and on November 12, 2002, Beaudreau filed a motion requesting permission to file a second amended class action complaint. The trial court held a hearing on Beaudreau’s motions on November 14, 2002. At that time, the trial court noted that it had never entered an order denying Hill Pontiac’s renewed motion to dismiss. The court went on to state that, after reviewing applicable case law, it had reconsidered its previous ruling. It then granted Hill Pontiac’s motion to dismiss. The court did, however, grant the plaintiffs motion to file a second amended complaint. These rulings were confirmed by an order filed January 31, 2003.

On March 20, 2003, the trial court filed a supplement to its previous order, in which it offered an explanation for its rationale in granting the motion to dismiss. Finding that the cases relied upon by Beaudreau were easily distinguishable from his case, and holding that an unpublished California trial court opinion provided good insight, the trial court reasoned that there was nothing unlawful about the practice of dealer reserve.

From this ruling, Beaudreau appeals.

II.

As previously stated, the trial court granted Hill Pontiac’s motion to dismiss Beaudreau’s claims. Hill Pontiac’s motion was premised on the failure of the complaint to state a claim upon which relief can be granted. See Tenn. R. Civ. P. 12.02(6). “Such a motion challenges the legal sufficiency of the complaint.” Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn.2002). Our role on this appeal is clear. We “must construe the complaint liberally, presum[e] all factual allegations to be true and giv[e] the plaintiff the benefit of all reasonable inferences.” Id. A complaint should be dismissed only if “it appears that the plaintiff can prove no set of facts in support of [its] claim that would entitle [it] to relief.” Cook v. Spinnaker’s of Rivergate, Inc., 878 S.W.2d 934, 938 (Tenn.1994). Our review is de novo with no presumption of correctness attaching to the trial court’s judgment, Trau-Med, 71 S.W.3d at 696-97, because the question before us is one of law: Does the complaint state a cause of action?

III.

The plaintiff raises four issues on appeal, which can be succinctly stated as follows:

1. Did the trial court err in finding that Beaudreau faded to state a cause of action under the TCPA?
2. Did the trial court err in finding that Beaudreau failed to state a cause of action for civil conspiracy?
3. Did the trial court err in finding that Beaudreau failed to state a cause of action under the TTPA?
4. Did the trial court err in finding that Beaudreau failed to state a cause of action for unjust enrichment and/or money had and received?

IV.

A.

Beaudreau first asserts that the trial court erred in finding that he failed to state a cause of action under the TCPA. Specifically, Beaudreau claims that Hill Pontiac had a duty to disclose the “real” interest rate, ie., the 11.25% rate, to him. We disagree.

The TCPA was enacted, in part, “[t]o protect consumers ... from those who engage in unfair or deceptive acts or practices in the conduct of any trade or commerce ... within this state.” Tenn.Code Ann. § 47-18-102(2) (2001). Beaudreau alleges that Hill Pontiac’s practice of “secretly inflating the real interest rates consumers are charged when financing their car purchases” is a deceptive practice under the meaning of the TCPA and is thus unlawful. (Emphasis in original omitted). See TenmCode Ann. § 47-18-104(b)(27) (Supp.2003) (stating that engaging in an act that is deceptive to the consumer is unlawful). In support of his position, Beaudreau points to the following allegations in his second amended complaint:

During the course of the transaction, [Beaudreau] was told by Hill Pontiac representatives that financing for him could and would be arranged by Hill Pontiac through GMAC “at the lowest rates offered” by GMAC. Financing of [Beaudreau’s] vehicle was ultimately provided by GMAC. When the Hill Pontiac representative, who at all times was acting as [Beaudreau’s] agent, returned with what he characterized as “the best rate they could give us,” [Beaudreau] believed he had negotiated the “best rate” with GMAC on his behalf.
However, Hill Pontiac secretly, and without [Beaudreau’s] knowledge, added 2.25 percentage points to [Beaudreau’s] real interest rate (consequently arriving at the 13.50% rate). [Beaudreau] was specifically told by Hill Pontiac representatives, including the salesman and finance department personnel, that Hill Pontiac had dealt with GMAC on [Beau-dreau’s] behalf and that the 13.50% rate was the best rate GMAC could offer. However, Hill Pontiac knew GMAC had agreed to finance [Beaudreau’s] purchase at a rate lower than 13.50%, which would have consequently led to lower monthly payments.
[Beaudreau] was never told and did not understand that Hill Pontiac was going to receive any of the 13.5% interest rate that he was charged. The real interest rate was never disclosed to [Beaudreau], Specifically, [Beaudreau] also did not know that the interest rate at which the automobile was financed — and which he paid — was secretly inflated by and for the economic benefit of Hill Pontiac by utilizing the dealer reserve scheme described herein.
GMAC arranges for its automobile dealers to act as intermediaries between the consumer and GMAC in order to finance the sale of automobiles. This arrangement is set out in a “dealer participation” agreement between Hill Pontiac and GMAC. According to the agreement between GMAC and Hill Pontiac, the dealership is specifically authorized by GMAC to overcharge consumers by inflating the interest rate charged.

(Numbering in original omitted) (emphasis in original).

This is an issue of first impression in Tennessee. While the issue of dealer reserve was involved in the case of Pyburn v. Bill Heard Chevrolet, 63 S.W.3d 351 (Tenn.Ct.App.2001), that case centered solely on the issue of an arbitration agreement; the issue of whether the practice of dealer reserve violated the TCPA was never reached. Beaudreau relies upon the unreported case of Adkinson v. Harpeth Ford-Mercury, Inc., No. 01A01-9009-CH00332, 1991 WL 17177 (Tenn.Ct.App. M.S., filed February 15,1991), in which the concept of dealer reserve, among many other issues, was involved. In Adkinson, the court made the following finding with respect to dealer reserve:

We are also of the opinion that under the circumstances it was proper for the jury to base a finding of unfair or deceptive acts and practices on the evidence at trial which shows that Harpeth kept for itself 2.5% of the 16.5% annual percentage rate financing which plaintiff was led to believe was charged by [Ford Motor Credit Company] to finance the transaction. Harpeth told plaintiff that FMCC was financing the transaction but failed to disclose to plaintiff that it had secretly imposed the 2.5% additional charge.

Id., at *7 (emphasis added). Relying upon this language, Beaudreau advances the position that the Court of Appeals has “specifically held that the practice [of dealer reserve] ... violates the TCPA.” However, Beaudreau overlooks the limiting language of “under the circumstances.” In Adkin-son, the court found evidence of oral misrepresentations that induced the plaintiff into signing a written contract, as well as evidence that the dealership “used high-pressure tactics” to pressure the plaintiff into purchasing a car when she simply wanted to pay off her lease of the vehicle. Id. Based upon these events, the court went on to find that “[t]here is substantial material evidence that Harpeth engaged in unfair or deceptive acts or practices under the [TCPA] and that it also made negligent misrepresentations to plaintiff.” Id. The court did state that the jury could have based its findings on the “deceptive act” of dealer reserve — under the circumstances of the case, which included numerous acts which were clearly deceptive under the TCPA. Id. Indeed, this court has previously interpreted this language to mean that “a dealer’s failure to disclose ‘dealer reserve’ was actionable when the dealer engaged in a pattern of deceptive conduct.” Harvey v. Ford Motor Credit Co., 8 S.W.3d 273, 275 (Tenn.Ct.App.1999) (emphasis added). By contrast, there are no allegations of such deceptive or misleading acts in the instant case — the only allegation is that Hill Pontiac engaged in the practice of dealer reserve. We find that the facts in Adkinson are distinguishable from those in the case at bar. Accordingly, we conclude that Adkinson does not have precedential value in the instant case.

Beaudreau also relies upon another unreported case, Baggett v. Crown Auto. Group, Inc., No. 01A01-9110-CV00401, 1992 WL 108710 (Tenn.Ct.App. M.S., filed May 22, 1992), to support his position that the practice of dealer reserve is unlawful. This case contains evidence of the dealership engaging in egregious fraudulent conduct, which included the dealership making alterations to the original sales contract without the plaintiffs knowledge. Id., at *7. When the plaintiff signed the sales contract on the purchase of his automobile, he agreed to an annual percentage rate of 14.75%. Id., at *3. However, when the dealership realized that Ford Motor Credit Company was not going to approve the financing on the terms agreed upon by the plaintiff and the dealership, the dealership unilaterally increased the annual percentage rate to 15.3% in order to obtain the financing. Id., at *3-*5. The dealership then induced the plaintiffs wife to sign a new contract, in the absence of the plaintiff, without telling her of the changes in the contract. Id., at *4-*5. This court held that increasing the interest rate without informing the plaintiff constituted an unfair or deceptive act as contemplated by the TCPA. Id., at *10., However, the actions by the dealership in increasing the rate of interest in the Baggett case do not constitute the practice of dealer reserve such as we have in the instant case. Further, as in Adkinson, the actions of the dealership in Baggett were clearly deceptive, as well as fraudulent. We have no such conduct in the case at bar.

The only other instance in which dealer reserve has been addressed in Tennessee is in the case of Harvey v. Ford Motor Credit Co., 8 S.W.3d 273 (Tenn.Ct.App.1999), in which we held that the plaintiffs complaint did not state a cause of action against Ford Motor Credit Company for a violation of the TCPA, based upon the practice of dealer reserve. Id. at 276. Because the plaintiff filed suit against the automotive financing company only and not the dealership involved, we did not reach the issue of the dealership’s liability, if any, for engaging in the practice of dealer reserve. Id. However, in our opinion on Harvey’s petition for rehearing, this court held as follows:

Although the Amended Complaint alleges that the plaintiff was “required to pay hidden fees,” he was clearly informed of the total interest rate, which he was free to accept or reject. Regardless of how payment was allocated between the dealer and defendant, the plaintiff was aware of what his overall payment and total interest rate would be.

Harvey v. Ford Motor Credit Co., No. 03A01-9807-CV-00235, 1999 WL 486894, at *2 (Tenn.Ct.App. E.S., filed July 13, 1999). The court went on to point out that the plaintiff was “free to seek financing from other sources.” Id. There is no allegation in the instant case that Hill Pontiac prevented Beaudreau from considering other financing options.

Because there is no case that is squarely on point in Tennessee, we have looked to the case law outside of our jurisdiction for guidance. While our research has revealed that only a handful of jurisdictions have addressed the legality of dealer reserve, the cases in those jurisdictions are indeed instructive.

The United States Court of Appeals for the Seventh Circuit addressed the issue of dealer reserve in the context of the plaintiffs allegation that the dealership was acting as his agent when it arranged the financing:

[A]n automobile dealer is not its customers’ agent, obviously not in selling cars but only a little less obviously in arranging financing. If the buyer pays cash and arranges his own financing, the dealer is not in the picture at all. If the buyer wants to buy on credit, he recognizes that his decision does not change the arms’ length nature of his relation to the dealer. He knows, or at least has no reason to doubt, that the dealer seeks a profit on the financing as well as on the underlying sale.
[Tjhere is no suggestion that the dealer here represented that he would act as the buyer’s agent in dealing with the finance company, no indication therefore that an agency relationship was created. If there were such a relationship it would mean that the buyer could tell the dealer to shop the retail sales contract among finance companies and to disclose the various offers the dealer obtained to him, and no one dealing with an automobile dealer expects that kind of service.

Bolderos v. City Chevrolet, 214 F.3d 849, 853-54 (7th Cir.2000).

The Alabama Supreme Court adopted similar reasoning when it addressed the issue of dealer reserve:

Although this case specifically involves lenders and interest rates, interest is nothing other than the cost or price of borrowing money. The [dealer reserve] agreement at issue here is nothing more than [the dealership’s] profit on the loan transaction, which had a wholesale price and a retail price. We decline to recognize a common law duty that would require the seller of a good or service, absent special circumstances, to reveal to its purchaser a detailed breakdown of how the seller derived the sales price of the good or service, including the amount of profit to be earned on the sale.

Ex parte Ford Motor Credit Co., 717 So.2d 781, 787 (Ala.1997) (internal citation omitted).

Finally, the California Court of Appeal has made the following statements with respect to the legality of dealer reserve:

The [plaintiffs] effectively assert that payment of the dealer reserve is deceptive merely because it is not disclosed to consumers. However, disclosure is not required by law, and indeed the Federal Reserve Board long ago rejected the proposition that such disclosure would be useful to consumers. Moreover, the [plaintiffs] allege no facts suggesting why a reasonable person would believe that the financing rate in his or her contract with the dealer is the same rate at which a lender would make a direct loan. Indeed, a reasonable person would likely believe the opposite; the Federal Reserve Board thought so, and several courts have agreed.... Accordingly, we conclude payment of the dealer reserve as alleged in the complaints does not constitute a fraudulent business practice.
The claim that consumers pay higher interest rates than they would if no dealer commission existed may be true, but that is scarcely unfair. Dealers, like any other retailer, seek a profit on the credit services they provide. We are compelled to agree with [the defendant] that the “unfair” prong of the unfair competition law was not intended to eliminate retailers’ profits by requiring them to sell at their cost, whether the product is automobiles or automobile financing. In short, we discern no offense to public policy, and no unfairness to be weighed. Payment of the dealer reserve is not an unfair practice under the unfair competition law.

Kunert v. Mission Fin. Servs. Corp., 110 Cal.App.4th 242, 1 Cal.Rptr.3d 589, 606-607 (2003) (internal citations omitted); see also Getter v. Onyx Acceptance Corp., No. 728614, 2001 WL 1711313, at *2, *6 (Cal. Superior, filed November 13, 2001) (noting that the practice of dealer reserve has been “an integral part of the indirect auto finance market since at least the 1960’s” and finding that dealer reserve does not constitute an unfair or deceptive business practice).

We find the approach to dealer reserve followed by these other jurisdictions to be well-reasoned and adopt it as our own. Each of the aforementioned cases holds, in essence, that a reasonable consumer should be aware that a for-profit retailer, in arranging for financing for a consumer, would expect to receive some sort of remuneration for its efforts; that the consumer is free to seek financing elsewhere if he or she is unhappy with the terms quoted by the dealer; that the practice of dealer reserve need not be disclosed to the consumer, as previously found by the Federal Reserve Board; and that the practice of dealer reserve is in no way unlawful. It appears that this court was contemplating a similar reasoning in Harvey, when it noted that the plaintiff was “free to accept or reject” the quoted interest rate and that the plaintiff was no doubt aware of the total payment and interest rate. Harvey, 1999 WL 486894, at *2.

There is no factual predicate in the complaint before us which gives rise to a legal duty on Hill Pontiac to disclose to the plaintiff that it is to receive a portion of the interest charged by GMAC. The plaintiff was aware that his contract called for interest at the rate of 13.5% per annum. There is nothing in the complaint indicating that this information or the amount of his monthly payment was hidden from him. Regardless of whether GMAC was to receive all or only a portion of the stated interest of 13.5%, the fact remains that the plaintiff knew that he was paying 13.5% interest to borrow the money to finance the purchase of his car. He was, at all times, free to reject GMAC financing and look elsewhere for a loan to pay for his vehicle.

Accordingly, we find, in the instant case, that Hill Pontiac’s dealer participation agreement with GMAC does not constitute a deceptive act or practice and that Hill Pontiac had no duty to disclose the existence of the agreement to Beaudreau. We conclude that the practice of dealer reserve, standing alone, does not violate the TCPA.

M

Beaudreau next contends that the trial court erred in finding that he had not stated a cause of action for civil conspiracy. A civil conspiracy is a “combination between two or more persons to accomplish by concert an unlawful purpose, or to accomplish a purpose not in itself unlawful by unlawful means” Chenault v. Walker, 36 S.W.3d 45, 52 (Tenn.2001) (quoting Dale v. Thomas H. Temple Co., 186 Tenn. 69, 208 S.W.2d 344, 353 (1948)). In the case at bar, Beaudreau alleges that Hill Pontiac conspired with GMAC to “purposely conceal the practice by which Hill Pontiac is paid a ‘kickback’ by [GMAC and other lenders].” Because we hold that the practice of dealer reserve does not have “an unlawful- purpose” or constitute the accomplishment of a lawful purpose “by unlawful means” — an essential element of a civil conspiracy claim — we find this issue to be without merit.

C.

Next, Beaudreau argues that the trial court erred in finding that he failed to state a claim under the TTPA. With respect to this issue, Beaudreau specifically asserts that Hill Pontiac conspired with lenders “to lessen competition and/or to advance the costs of auto financing.”

The TTPA provides, in pertinent part, as follows

All arrangements, contracts, agreements, trusts, or combinations between persons or corporations made with a view to lessen, or which tend to lessen, full and free competition in the importation or sale of articles imported into this state, or in the manufacture or sale of articles of domestic growth or of domestic raw material, and all arrangements, contracts, agreements, trusts, or combinations between persons or corporations designed, or which tend, to advance, reduce, or control the price or the cost to the producer or the consumer of any such product or article, are declared to be against public policy, unlawful, and void.

TenmCode Ann. § 47-25-101 (2001) (emphasis added).

Despite Beaudreau’s attempts to argue that Hill Pontiac provided a product when it arranged the financing for Beaudreau’s automobile, the transaction at issue clearly involves a service. This court has previously held that the TTPA is not applicable to workers’ compensation insurance premiums, “which [are] an intangible contract right or service” rather than a product or article. Jo Ann Forman, Inc. v. Nat’l Council on Comp. Ins., Inc., 13 S.W.3d 365, 373 (Tenn.Ct.App.1999); see also McAdoo Contractors, Inc. v. Harris, 222 Tenn. 623, 439 S.W.2d 594, 597 (1969) (holding that the TTPA does not apply to the award of a building construction contract). Likewise, the arranging of financing constitutes a service, not a product. We therefore hold that the TTPA has no applicability in the instant case. Furthermore, even if the arranging of financing was deemed to fall under the purview of the TTPA — and we do not believe that it does — we find that the practice of dealer reserve is not an arrangement made to lessen “full and free competition,” as contemplated by the statute.

D.

Finally, Beaudreau contends that the trial court erred in finding that he had not stated a cause of action for unjust enrichment and/or money had or received. We disagree.

In order to recover under a theory of unjust enrichment, the plaintiff must prove the following:

A benefit conferred upon the defendant by the plaintiff, appreciation by the defendant of such benefit, and acceptance of such benefit under such circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof.

Paschall’s, Inc. v. Dozier, 219 Tenn. 45, 407 S.W.2d 150, 155 (1966). While the first two prongs of this test have been satisfied, Beaudreau cannot prove that it would be inequitable for Hill Pontiac to retain the 2.25% dealer reserve commission. Indeed, as discussed earlier in this opinion, a consumer cannot expect a dealership to assist that consumer in obtaining financing without receiving some sort of payment for its services. Under the circumstances, we cannot say that it was inequitable for Hill Pontiac to retain the 2.25% dealer reserve.

With respect to the claim of money had and received, such an action “may be maintained where one receives money or its equivalent under such circumstances that in equity and good conscience he ought not to retain and in justice and fairness it belongs to another.” Steelman v. Ford Motor Credit Co., 911 S.W.2d 720, 724 (Tenn.Ct.App.1995) (citing Interstate Life & Accident Co. v. Cook, 19 Tenn.App. 290, 86 S.W.2d 887, 891 (1935)). Again, we find that there is nothing inequitable in allowing Hill Pontiac to retain the dealer reserve. Accordingly, Beaudreau’s claims for unjust enrichment and money had and received must fail.

V.

Hill Pontiac raises two issues, asserting further bases for upholding the trial court’s judgment. Specifically, Hill Pontiac asserts that (1) the transaction in question was in full compliance with the Truth In Lending Act; and (2) the transaction in question complied with the statutes governing retail installment sales contracts and the sale of commercial paper. We have looked at these matters in a cursory fashion, but as we have previously found that the issues raised by Beaudreau are dispositive of this appeal, we do not need to reach Hill Pontiac’s issues. Accordingly, we will not address them.

VI.

The judgment of the trial court is affirmed. This case is remanded to the circuit court for collection of costs assessed below, pursuant to applicable law. Costs on appeal are taxed to the appellant, Patrick Beaudreau.

      . While the contract between Beaudreau and Hill Pontiac is not in the record, the complaint contains allegations clearly reflecting (1) that the transaction was memorialized in a retail installment sales contract between Beaudreau and Hill Pontiac calling for an interest rate of 13.5% and (2) that this contract was negotiated by Hill Pontiac to GMAC.

      . At this point in the opinion, the California court refers the reader to an earlier footnote, which states as follows:
      In 1977, the Federal Reserve Board issued a decision interpreting Regulation Z (12 C.F.R. Part 226), which implemented the federal Truth in Lending Act. The Board ruled that a dealer participation need not be identified or disclosed in Truth in Lending disclosures as a separate component of the finance charge. At the same time, the Board withdrew a proposal that would have required separate disclosure of the existence, but not the amount, of a dealer participation. The Board concluded that disclosure of the total finance charge and widespread advertisement of credit terms afforded consumers "the most important information with which to comparison shop for credit.” Also, the Board believed the addition of another disclosure requirement would result in more complex disclosure statements and could lead to confusion or misunderstanding by consumers. (42 Fed. Reg. 19124-19125 (Apr. 12, 1977).)....

        Kunert, 1 Cal.Rptr.3d at 599 n. 10.


source: Caselaw Access Project

author: HOLLY M. KIRBY, J.,

license: Public Domain

text:
    Steven R. OUZTS v. Michael L. WOMACK, Victoria A. Raub, Frank Donato, Remax-Elite, Steven Boysen, Crye-Leike, Inc., and McAnally Inspection Service, Inc.
    Court of Appeals of Tennessee, at Jackson.
    April 20, 2004 Session.
    Oct. 4, 2004.
    Permission to Appeal Denied by Supreme Court Feb. 28, 2005.
    Stephen H. Biller, Memphis, for the appellant Steven R. Ouzts.
    Richard Glassman and Tameka Turner-Perry, Memphis, for the appellees Michael L. Womack and Victoria A. Raub.
   OPINION

HOLLY M. KIRBY, J.,

delivered the opinion of the Court,

in which W. FRANK

CRAWFORD, P.J., W.S., and DAVID R. FARMER, J., joined.

This case involves alleged fraud in the sale of real estate. The sellers completed a residential disclosure statement indicating that the subject property had no flooding problems. The sellers then bargained to include language in the deed disavowing any previous representations concerning the property’s condition. The buyer accepted these terms. After the buyer took possession, the property flooded. The buyer filed suit against the sellers, alleging fraudulent concealment and misrepresentation. The sellers filed a motion for summary judgment, which was granted. We affirm, holding that the buyers are bound by the unambiguous terms of the contract for sale and the deed.

In April 2000, Defendants/Appellees Michael L. Womack (“Womack”) and Victoria A. Raub (“Raub”), husband and wife, listed their residence at 516 St. Nick Drive, Memphis, Tennessee (“the Property”) for sale. At that time, Womack and Raub completed a residential disclosure statement, which indicated in part that the property was not subject to flooding. Plaintiff/Appellant Steven R. Ouzts (“Ouzts”) became interested in purchasing the Property, but was concerned that it might be subject to flooding. His real estate agent inquired about flooding, and the sellers’ agent responded that they had not experienced any flooding problems.

Ouzts made an offer to purchase the Property. Womack and Raub counter-offered, adding the condition that after closing they would “have no further obligation or responsibility to [Ouzts] for the condition of the Property” and that the deed would contain language to that effect. The counter-offer recited the language to appear in the deed:

Notwithstanding anything to the contrary contained in this deed, it is understood and agreed that the Property is being conveyed without any representation or warranty of any kind by Grantor except as expressly set forth herein. Grantor has not made and does not hereby make (except as expressly set forth herein) any representations or warranties of any kind or character whatsoever, express or implied, with respect to the property, its condition (environmental or otherwise), uses or fitness for any particular purpose, and Grantor hereby disclaims and renounces any such representation or warranty and by Grantee accepting the Property, Grantor is forever discharged therefrom.

The counter-offer noted that these provisions “shall survive the closing and be binding upon the parties, their successors, successors in title, heirs and assigns.” Ouzts reviewed the counter-offer and accepted it on June 14, 2000. On July 28, 2000, Womack and Raub executed a Special Warranty Deed containing the exculpatory language set forth in the contract for sale.

On August 12, 2002, the Property purchased from Womack and Raub was damaged by significant flooding. On July 26, 2002, Ouzts filed a lawsuit against Womack and Raub, as well as the listing agent and agency for the Property. In the lawsuit, Ouzts asserted that Womack and Raub were aware that the Property was subject to flooding, but fraudulently concealed this fact and made material misrepresentations by failing to disclose the flooding problem on the residential disclosure statement. Ouzts sought rescission of the contract, as well as compensatory and punitive damages.

Womack and Raub filed motions for summary judgment, arguing that the exculpatory language of the contract and deed shielded them from a lawsuit arising out of the condition of the Property, and additionally that the statute of limitations had run on Ouzts’ claim. The trial court granted the motion for summary judgment, noting, “there is specific language in the warranty deed which is a part of the transferring document, which clearly states that the defendants did not make any representations as to any of the conditions [of] which the plaintiff is complaining.” The trial court concluded, “[I]t doesn’t appear as though the Court can perceive any basis upon which the plaintiff could succeed in an action against these defendants.” The trial court did not rule on the statute of limitations defense. From that order, Ouzts now appeals.

On appeal, Ouzts argues that there are genuine issues of material fact as to whether Womack and Raub knew that the Property had a flooding problem. Ouzts asserts that this disputed fact is material because the representations in the residential disclosure statement and by the sellers’ agent that the Property was not subject to flooding induced him into accepting the exculpatory language in the contract for sale and the Special Warranty Deed. Therefore, Ouzts maintains that the trial court erred in granting the motion for summary judgment.

A motion for summary judgment should be granted when the movant demonstrates that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04. Summary judgment is only appropriate when the facts and the legal conclusions drawn from the facts reasonably permit only one conclusion. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.1995). Since only questions of law are involved, there is no presumption of correctness regarding a trial court’s grant of summary judgment. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997). Therefore, our review of the trial court’s grant of summary judgment is de novo on the record before this Court. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn.1997).

It is well settled that “exculpatory clauses are valid in Tennessee and are not against the public policy of this state.” Burks v. Belz-Wilson Props., 958 S.W.2d 773, 776 (Tenn.Ct.App.1997). Under the common law of contracts, such clauses must be interpreted and enforced according to their plain terms. Warren v. Metropolitan Gov’t of Nashville & Davidson County, 955 S.W.2d 618, 622 (Tenn.App.1997). The application of rules of construction of contracts is not necessary “[w]hen clear contract language reveals the intent of the parties.” Id. Contract language is considered unambiguous unless “it is of uncertain meaning and may fairly be understood in more ways than one.” Id. When a contract is plain and unambiguous, its meaning is purely a question of law. Id.

It is undisputed that the question of whether to insert this language was a significant issue in the negotiations on the contract for sale. In this case, the language in the Special Warranty Deed is clear and unambiguous: “Grantor has not made and does not hereby make (except as expressly set forth herein) any representations or warranties of any kind ... with respect to the property, its condition (environmental or otherwise), uses or fitness for any particular purpose.” Indeed, the language in the Special Warranty Deed goes a step further, disclaiming and renouncing any previous representations made by Womack and Raub: “Grantor hereby disclaims and renounces any such representation or warranty and by Grantee accepting the Property, Grantor is forever discharged therefrom.” It was a major component of the contract negotiations. Under these circumstances, Ouzts’ assertion that he based his acceptance of the exculpatory language upon representations made by Womack and Raub is unreasonable. Thus, even assuming that Womack and Raub knowingly misrepresented the Property’s susceptibility to flooding, this would not be a material fact. Because there are no genuine issues of material fact, the trial court’s grant of summary judgment to Womack and Raub was not error.

In this appeal, Womack and Raub seek an award of sanctions against Ouzts and his legal counsel under Rule 11 of the Tennessee Rules of Civil Procedure for a frivolous appeal. We decline to do so.

The decision of the trial court is affirmed. Costs of this appeal are taxed against the appellant Steven R. Ouzts and his surety, for which execution may issue, if necessary.

      . Ouzts later amended the complaint to add his own real estate agent, Steven Boysen, and his agency, Ciye-Leike, Inc., and McAnally Inspection Service, Inc.

      . The trial court made the judgment final as to Womack and Raub under Tennessee Rule of Civil Procedure 54.02.


author: D. MICHAEL SWINEY, J.,

text:
    Holli Thacker HANEY, et al. v. BRADLEY COUNTY BOARD OF EDUCATION, et al.
    Court of Appeals of Tennessee, at Knoxville.
    June 9, 2004 Session.
    Sept. 20, 2004.
    Permission to Appeal Denied by Supreme Court March 21, 2005.

      Lynn Perry, Cleveland, Tennessee, for the Appellant Holli Thacker Haney, individually and as Administratrix of the Estate of Maylyn Thacker and the Estate of Carson Thacker.
    Charles W. Cagle, Robert G. Wheeler, Jr., and Deb A. Smith, Nashville, Tennessee, for the Appellee Bradley County Board of Education.
   OPINION

D. MICHAEL SWINEY, J.,

delivered the opinion of the court,

in which HERSCHEL P. FRANKS, P.J., and CHARLES D. SUSANO, JR., J., joined.

Holli Thacker Haney (“Plaintiff’) had two children who attended Michigan Avenue Elementary School (the “School”) in Bradley County. Plaintiffs husband, Tracy Thacker (“Thacker”), was not the biological father of the oldest child, but he was the biological father of the youngest child. Thacker filed for divorce, and he and Plaintiff were in sharp disagreement over custody matters. Apparently believing he was going to lose on the custody issues, on the morning of December 12, 2000, Thacker went to the School and signed out both children. The School required Thacker to provide a written explanation as to why the children were being signed out. Thacker wrote “Keeping Promise by Mother” and “Pay Back” as his reasons for signing out the children. School employees did not read what Thacker had written prior to allowing him to leave the premises with the children. Tragically, Thacker then murdered both young children. Plaintiff sued the Bradley County Board of Education asserting claims of negligence and negligence per se based on the School’s allowing Thacker to sign out the children and leave the School with them on December 12. The Trial Court granted the Board of Education’s motion for summary judgment. We affirm in part, reverse in part, and remand for further proceedings.

Background

This lawsuit was filed by Plaintiff against the Bradley County Board of Education (the “Board” or “Board of Education”) following the tragic murder of Plaintiffs two young children. Before we discuss the specifics of Plaintiffs lawsuit, some background information is necessary. Plaintiff and Thacker were married on February 29, 1992. This was Plaintiffs first marriage. Thacker had been married previously. Plaintiff was pregnant when she married Thacker. Both Plaintiff and Thacker were aware that Thacker might not be the biological father of the unborn child, but they nevertheless proceeded with the marriage. Plaintiff gave birth to a daughter, Maylyn, in August of 1992. Even though the paternity of Maylyn was uncertain, Thacker was listed on the birth certificate as her father, she was given Thacker’s last name, and Thacker raised Maylyn as though she wei'e his child. Plaintiff and Thacker had a son, Carson, who was born in December of 1994.

Thacker filed for divorce in May of 2000, alleging irreconcilable differences had arisen between him and Plaintiff. In his complaint for divorce, Thacker stated that genetic testing had proven that he was not Maylyn’s biological father. Along with the complaint, Thacker filed a Marital Dissolution Agreement (“MDA”) which had been signed by Thacker and Plaintiff. The MDA provided for joint custody of Carson, designated Thacker as the primary residential parent, and set forth Plaintiffs visitation schedule. The MDA made no mention of Maylyn. The following month, at Thacker’s request a guardian ad litem was appointed on Maylyn’s behalf.

Even though the divorce action was pending, Plaintiff and both children continued living with Thacker, as well as Thacker’s daughter and step-daughter from his previous marriage. In September of 2000, Plaintiff and Thacker separated. That same month, Plaintiff filed a motion to set aside the MDA and for a temporary restraining order. In support of the motion, Plaintiff filed her affidavit stating that Thacker had threatened to kill her and her mother and sister if she contested the divorce. Plaintiff claimed it was because of these threats that she signed the MDA which designated Thacker as Carson’s primary residential parent. Based on the contents of the affidavit, Plaintiffs motion for a temporary restraining order was granted. The restraining order further provided that “the parties will treat the Marital Dissolution Agreement as a Temporary Order until further orders of the Court.” This resulted in Thacker being Carson’s primary residential parent and Plaintiff being Maylyn’s primary residential parent while the divorce litigation was pending. Notwithstanding the fact that Thacker was not Maylyn’s biological father, he continued to exercise overnight visitation with Maylyn and refer to her as his daughter.

Throughout the divorce proceedings, Thacker was insistent that he be Carson’s primary residential parent. Thacker apparently came to realize that this was not likely to happen and on the morning of December 12, 2000, he went to the School where Maylyn attended third grade and Carson attended kindergarten. Thacker signed out both children from school. On the sign-out sheet, Thacker wrote “Keeping Promise by Mother” as the reason for signing out Maylyn, and “Pay Back” as the reason for signing out Carson. The School’s office employees did not read the reasons Thacker gave for signing out the children before allowing Thacker to leave with the children, and Thacker was allowed to leave with the children with no questions asked. Thacker returned to his house and stabbed the children to death. After murdering the children, he set their bodies and the house on fire.

Plaintiff’s lawsuit against the Board of Education is based on theories of negligence and negligence per se. The complaint centers around the School’s allowing Thacker to sign out the children. In the complaint, Plaintiff alleged the School was negligent in not obtaining a proper reason for the dismissal of the children before allowing them to leave, and in allowing them to leave with Thacker when Plaintiff had specifically requested that Thacker not be allowed to remove the children from the School’s premises. Plaintiff also claimed the School failed to comply with its own policy by not allowing Plaintiff to deny Thacker access to the children. Plaintiff further claimed that School representatives were aware of Thacker’s violent propensities and, therefore, were negligent in allowing him to take the children from the School. According to Plaintiff, had the School not improperly allowed Thacker to leave with the children, they would not have died.

The Board filed a motion for summary judgment claiming the undisputed material facts showed: (1) the School complied with the Board of Education’s early-dismissal policy; (2) even if the School violated the early dismissal policy, the policy itself cannot form the basis of a negligence per se claim; (3) the School’s representatives acted with reasonable and ordinary care; (4) Thacker’s murder of the children was the proximate cause of Plaintiffs injuries; and (5) the Board was immune pursuant to the Tennessee Governmental Tort Liability Act. Numerous depositions were filed with the Trial Court both in support of the Board’s motion for summary judgment, and in support of Plaintiffs opposition thereto.

In August of 2003, the Trial Court issued a very detailed and thoughtful Memorandum Opinion granting the Board’s motion for summary judgment. In summary, the Trial Court concluded: 1) Thacker was the legal father of Maylyn; 2) the School complied with the Board of Education’s policy on early dismissal; 3) Thacker’s murder of the children was not foreseeable; 4) the Board was immune pursuant to the Tennessee Governmental Tort Liability Act because the School’s representatives complied with the Board’s policy and procedure regarding early dismissal and acted in furtherance of the legislative directive underlying the Board’s early dismissal policy; and 5) the School had no legal duty to withhold the children from one parent at the request of the other parent under the circumstances of this case. On appeal, Plaintiff challenges each of these rulings by the Trial Court.

Discussion

In Blair v. West Town Mall, our Supreme Court recently reiterated the standards applicable when appellate courts are reviewing a motion for summary judgment. Blair v. West Town Mall, 130 S.W.3d 761 (Tenn.2004). In Blair, the Court stated:

The standards governing an appellate court’s review of a motion for summary judgment are well settled. Since our inquiry involves purely a question of law, no presumption of correctness attaches to the lower court’s judgment, and our task is confined to reviewing the record to determine whether the requirements of Tennessee Rule of Civil Procedure 56 have been met. See Staples v. CBL & Assoc., Inc., 15 S.W.3d 83, 88 (Tenn.2000); Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.1997); Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn.1991). Tennessee Rule of Civil Procedure 56.04 provides that summary judgment is appropriate where: 1) there is no genuine issue with regard to the material facts relevant to the claim or defense contained in the motion, and 2) the moving party is entitled to a judgment as a matter of law on the undisputed facts. Staples, 15 S.W.3d at 88.
When the party seeking summary judgment makes a properly supported motion, the burden shifts to the non-moving party to set forth specific facts establishing the existence of disputed, material facts which must be resolved by the trier of fact.
To properly support its motion, the moving party must either affirmatively negate an essential element of the non-moving party’s claim or conclusively establish an affirmative defense. If the moving party fails to negate a claimed basis for the suit, the non-moving party’s burden to produce evidence establishing the existence of a genuine issue for trial is not triggered and the motion for summary judgment must fail. If the moving party successfully negates a claimed basis for the action, the non-moving party may not simply rest upon the pleadings, but must offer proof to establish the existence of the essential elements of the claim.

Blair, 130 S.W.3d at 763-64, 767 (quoting Staples, 15 S.W.3d at 88-89).

Our Supreme Court also has provided instruction regarding assessing the evidence when dealing with a motion for summary judgment, stating:

The standards governing the assessment of evidence in the summary judgment context are also well established. Courts must view the evidence in the light most favorable to the nonmoving party and must also draw all reasonable inferences in the nonmoving party’s favor. See Robinson v. Omer, 952 S.W.2d at 426; Byrd v. Hall, 847 S.W.2d at 210-11. Courts should grant a summary judgment only when both the facts and the inferences to be drawn from the facts permit a reasonable person to reach only one conclusion. See McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn.1995); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.1995).

Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 89 (Tenn.2000).

The Board's early dismissal policy (the “Policy”) in effect at the relevant time provides, in pertinent part, as follows:

DISMISSAL PRECAUTIONS

The following procedure will be observed with regard to dismissal of students during school hours:
1. No student will leave school prior to regular dismissal hours, except with the request of the parent and approval of the principal. Record of the time and date of departure and return of all students leaving or returning to the school during the school day with the reason for leaving shall be kept on file for the entire year....

In addition to the foregoing, the School has what is referred to as a “custody book” wherein the School keeps court documents dealing with custody awards, visitation restrictions, and the like.

We first will address Plaintiffs negligence per se claim. The Board argues that even if the Policy was violated, violation of a school board policy cannot form the basis of a negligence per se claim. In Smith v. Owen, 841 S.W.2d 828 (Tenn.Ct.App.1992), this Court observed that:

The doctrine of negligence per se is firmly established in our case law. In order to recover on the basis of negligence per se, three elements must be established. First, it must be shown that the defendant violated a statute or ordinance which “imposes a duty or prohibits an act for the benefit of a person or the public.” Nevill v. City of Tullahoma, 756 S.W.2d 226, 232-233 (Tenn.1988).... Second, the proof must show that the injured party was within the class of persons whom the legislative body intended to benefit and protect by the enactment of that particular statute or ordinance.... In addition to establishing negligence per se by showing these two elements, the plaintiff must of course show that such negligence was the proximate cause of the injury....

Smith v. Owen, 841 S.W.2d at 831 (citations omitted in part).

In Snider v. Snider, 855 S.W.2d 588 (Tenn.Ct.App.1993), this Court addressed whether the violation of a school board policy could form the basis of a negligence per se claim. Snider involved a minor child who had signed herself out of school and eventually was found at the home of a distant relative. Thereafter, the school was instructed by the parents not to let anyone except the parents check their daughter out of school. Later that same school year, the child became sick at school. The school was unable to locate the parents and the child’s uncle, who worked with the father, was contacted and agreed to pick up the child. After picking up the child from school, the uncle raped the child causing serious physical and emotional injuries. Id. at 589. The school board’s policy stated that students should not be allowed to leave school “without request of the parent/guardian and the approval of the principal.” Id. at 590.

In addressing the various issues, the Snider Court noted that schools, teachers, and administrators have a duty to exercise ordinary care for the safety of students. Id. at 590 (citing Roberts v. Robertson County Bd. of Educ., 692 S.W.2d 863, 870 (Tenn.Ct.App.1985)). With regard to the plaintiffs’ negligence per se claim, the Snider Court stated that “[n]ot every violation of a statute or ordinance is negligence per se; it depends on the type of statute or ordinance and the reason it was adopted.... A violation of one’s own rules presents even more serious problems.” Snider, 855 S.W.2d at 590. The Snider Court went on to discuss cases involving claimed violations of private rules or rules which did not rise to the level of statutes or ordinances. In so doing, the Snider Court quoted the following excerpt from Epstein, Henning & Co. v. Nashville Chatt. & St. L. Ry. Co., 4 Tenn.App. 412, 420-21 (1926):

Private rules of a master regulating the conduct of his servants in the management of his own business, although designed for the protection of others, stand on an entirely different footing from statutes and municipal ordinances designed for the protection of the public. The latter, as far as they go, fix the standard of duty toward those whom they were intended to protect, and a violation of them is negligence in law or per se. But a person cannot, by the adoption of private rules, fix the standard of his duty to others. That is fixed by law, either statutory or common. Such rules may require more, or they may require less, than the law requires; and whether a certain course of conduct is negligent, or the exercise of reasonable care, must be determined by the standard fixed by law, without regard to any private rules of the party.

Snider, 855 S.W.2d at 590-91.

After discussing Epstein and similar cases, the Snider Court concluded the trial court had properly dismissed the plaintiffs’ negligence per se claim. Specifically, the Snider Court stated:

Under these authorities we are of the opinion that a violation of the school board policy did not amount to negligence per se. Even if a violation [of the school board policy] could be introduced as some evidence of negligence on the part of the defendants, under all of the circumstances in this case we are of the opinion that the evidence does not preponderate against the finding of the trial judge that the defendants were not negligent. Here, an eleven-year-old child complained of being ill and attempted to call her parents in order to be taken home. Subsequently, the child’s uncle showed up to sign her out and the child showed no hesitancy in leaving with him. Under these circumstances the school officials had no notice that the person signing the child out posed a threat. Thus, we do not think the release of the child amounted to negligence....
Assuming that the conduct of the defendants did amount to negligence, we think the plaintiffs’ case fails for the other reason cited by the trial judge: the defendants’ negligence was not the proximate cause of the injury because the injury was entirely unforeseeable ....

Snider, 855 S.W.2d at 591.

In the present case, we agree with the Board that its Policy cannot form the basis of a negligence per se claim. The Policy is neither a statute nor an ordinance. Rather, it is a rule adopted by the Board of Education intended to regulate the conduct of school employees when releasing students during school hours. The applicable standard of care owed by the Board and the School is established by law, not the Policy. Accordingly, we affirm the judgment of the Trial Court when it granted the Board’s motion for summary judgment on Plaintiffs negligence per se claim.

Plaintiff next argues that the School was negligent when it released Maylyn to Thacker because: (1) Thacker was not Maylyn’s biological father; (2) School employees were aware Thacker was not Maylyn’s biological father; and (3) only a day or two before Maylyn’s murder, Plaintiff had instructed the School not to release Maylyn to Thacker. When Plaintiff instructed the School not to release Maylyn to Thacker, Plaintiff was informed by the School that it must have legal documentation in order to prohibit Thacker from signing her out. Plaintiff responded by stating that, according to her attorney, because Thacker was not Maylyn’s biological father she did not need any documentation in order to prevent that from happening.

In its Memorandum Opinion, the Trial Court correctly noted that Thacker was presumed to be Maylyn’s father pursuant to Tenn.Code Ann. § 36 — 2—304(a)(1) because she was born while Thacker and Plaintiff were married. This is, however, a rebuttable presumption which was effectively rebutted when the DNA test conclusively established that Thacker was not Maylyn’s biological father. Although this Court cannot ascertain the exact date the DNA test was performed, it obviously was conducted prior to May of 2000 when the complaint for divorce which discussed the DNA test results was filed.

As stated previously, after the complaint for divorce was filed and once Plaintiff and Thacker separated, Thacker continued to exercise overnight visitation with Maylyn and continued to refer to her as his daughter. Maylyn never was told Thacker was not her biological father. Maylyn’s guardian ad litem met with Plaintiff in May of 2000 and a report discussing this meeting states:

Mrs. Thacker states that Tracy “is a good father” to both Carson and May-lyn. She recognizes the close emotional ties between Maylyn and her husband. Mrs. Thacker insisted, “I don’t want him to be taken out of Maylyn’s life.”

The guardian’s report also details discussions with Thacker. The report indicates that Thacker wanted to have the same rights as a natural father would have when it came to Maylyn. Thacker stated: “Maylyn is my daughter ... I’ve raised her for 8½ years and I’m the only Dad she knows.”

The recommendation of the guardian ad litem contains the following conclusion:

[T]he Guardian is vehement in his recommendation to the Court that Tracy Thacker, whom Maylyn has since birth and still now considers to be her father, continue to have a large role in her life assuming custody is awarded to [the] mother....

In October of 2000, Maylyn’s third grade class was to take a field trip to a pumpkin patch for Halloween. Plaintiff signed an authorization for Maylyn to go on this field trip and wrote the following on the authorization: “Maylyn’s dad, Tracy Thacker, would like to chaperone. Please mark him down. He will drive his own car. Thanks!” In a sworn statement provided to the Tennessee Bureau of Investigation the day following the children’s deaths, Plaintiff stated: “Tracy and I had joint custody of the children but he had primary residence of our son.”

Based on the foregoing, the Trial Court ruled that for all intents and purposes, Thacker was Maylyn’s father. After reaching this conclusion, the Trial Court stated:

What the court is ruling here is that where two parents are involved, the school has no legal duty to follow the instructions of one parent to withhold the children from the custody of the other parent unless the instruction is accompanied by a court order which limits the other parent’s custodial rights in the way the parent’s instruction proposes.

Given the peculiar facts of this case as outlined above, we agree with the Trial Court that, as a matter of law, the School was not negligent in requiring Plaintiff to provide legal documentation to the effect that Thacker no longer had any rights to Maylyn or, at a minimum, no right to sign her out from school before it could prohibit Thacker from doing just that. For most of the time Maylyn attended the School, the School had no reason to believe Thacker was not her biological father. For instance, the School had Maylyn’s birth certificate which listed Thacker as her father, etc. It was not until sometime in 2000 before the paternity of Maylyn ever was questioned. Regardless of whether Thacker was Maylyn’s biological father or whether the School was aware of that fact, Plaintiff and Thacker conducted themselves as though Thacker was Maylyn’s father both before and after they separated. Plaintiff voiced no objection to Thacker’s signing out Maylyn until just a day or two before December 12, and then only after she and Thacker had a heated argument. Maylyn was a child born during Plaintiffs and Thacker’s marriage, and there was no court order down restricting Thacker’s access to Maylyn. For these reasons, we believe the School quite properly informed Plaintiff that she would need a court order stating Thacker could no longer sign out Maylyn before such a restriction could be enforced. The language in the divorce complaint states only that Thacker was not Maylyn’s biological father and falls far short of meeting this requirement. Our conclusion is only that the School, as a matter of law, was not negligent in continuing to treat Thacker as Maylyn’s father based on the facts and the conduct of Plaintiff and Thacker detailed above. We affirm the judgment of the Trial Court on this issue.

Plaintiff then claims there is a genuine issue of material fact on whether the School was negligent in releasing the children to Thacker because certain School employees had knowledge of Thacker’s violent propensities. Plaintiff testified in her deposition to mental and emotional abuse inflicted by Thacker during their marriage. This abuse turned physical in 1998 and Plaintiff pursued criminal assault charges against Thacker on one occasion in May of 2000. Much of Plaintiffs brief is devoted to showing that various School employees were aware of the pending divorce, the custody battle, and Thacker’s propensity to act violently, especially when it came to Plaintiff. However, the only evidence presented regarding Thacker potentially harming the children was Plaintiffs testimony that it had “crossed her mind” Thacker might harm Maylyn because she was not his child. Even though this had crossed her mind, Plaintiff admitted Thacker never threatened to harm the children and she never witnessed any such conduct prior to that horrible day. Plaintiff acknowledged Carson spent the night with Thacker the evening prior to December 12, and she never would have allowed that to happen if she thought any harm would come to the child. In short, absent any proof that Thacker had harmed or intended to harm the children, we do not believe Plaintiffs testimony as to events occurring prior to that fateful day and who at the School knew what is sufficient, in and of itself, to create a factual issue on whether the School was negligent in releasing the children to Thacker.

However, we next must consider whether there is a genuine issue of material fact as to Plaintiffs negligence claim when taking into account what Thacker wrote on the sign out sheet. Resolution of this issue requires a more detailed discussion of the events which occurred the day before and the day of the murders.

On December 11, 2000, Plaintiff asked her mother to pick-up the children from school for her, which she did. About an hour later, Thacker called Plaintiff wanting to know where the children were. When Plaintiff told Thacker she had the children, he stated he was coming over to get them. Plaintiff then informed Thacker that she would not allow him to take the children. Once this discussion ended, Thacker proceeded to call Plaintiffs mother several times “cussing her for taking the kids” from school. Plaintiff eventually talked to her attorney and was informed that she could not stop Thacker from taking Carson because of the terms of the temporary custody order. Later that evening, Plaintiff and Thacker continued to argue and Thacker drove to Plaintiffs residence with the intent of picking-up both children. Plaintiff refused to allow Maylyn to go with Thacker. When Thacker asked Plaintiff why she would not allow his daughter to go with him, Plaintiff told Thacker it was because he was unfit and because he was not her actual father. Plaintiff did allow Carson to go with Thacker. When Plaintiff told Thacker when she would retrieve Carson, he told her “no,” that her visitation “had just been dropped to two weekends a month.” Thacker then left with Carson.

Thacker was upset that the School had allowed Plaintiffs mother to pick-up the children. On December 11, between the above arguments with Plaintiff, Thacker hand delivered to the School some of the pleadings from the divorce litigation. We can only assume Thacker’s intent was to show the School that Plaintiffs mother did not have any rights insofar as the children were concerned and not to allow her to take the children in the future. Thacker gave the documents to Henrietta Morrow (“Morrow”), who then called Plaintiff. During this discussion Plaintiff told Morrow that the School was no longer allowed to release the children to Thacker. According to Plaintiff, Morrow told her that without legal papers specifically prohibiting Thacker from signing out the children, there was nothing the School could do to prevent that from happening. Plaintiff then told Morrow that because Thacker was not the biological father of Maylyn, she (i.e., Plaintiff) did not need any legal papers to prevent the School from releasing Maylyn to Thacker.

The next day Thacker took Carson to school and Plaintiff took Maylyn to school. When Thacker returned home, he had a telephone conversation with either his attorney or Maylyn’s guardian ad litem. During an apparently heated conversation, Thacker placed the phone next to his stepdaughter Crystal’s ear. According to Crystal, “I heard the attorney tell him that if he called up again then he was going to drop the case with Maylyn, and he’d also told him that he’d already lost the kids anyway.” After this conversation Thacker went into a rage and started breaking items in the house. Once Thacker calmed down some, he told Crystal that he was going to get the kids from school and left the house.

Thacker returned to the School at approximately 9:30 a.m. and went directly to Maylyn’s classroom. Thacker spoke with Maylyn who then informed her teacher that she was being checked out of school. The teacher refused to let Maylyn leave and told Thacker he would have to sign her out at the office. Thacker then went to the office. The School had a “Sign-In/Out Sheet” which a parent or guardian was required to fill out before a student would be dismissed early. The person signing this sheet was required to give certain information, including an explanation for the reason the child was being taken out of school. On the Sign-in/Out Sheet, Thacker wrote “Keeping Promise by Mother” as the reason for signing out Maylyn. The reason Thacker gave for signing out Carson was “Pay Back.” Not one of the School’s office employees read at that time the reasons Thacker gave for signing out the children. It then was announced over the School’s intercom system that Maylyn and Carson were being checked out. Maylyn waited in her classroom until she heard the announcement and then left to meet Thacker at the office.

Carson’s kindergarten teacher was Teresa Stephenson (“Stephenson”). Stephenson testified that her kindergarten class ordinarily has birthday parties for each student and Carson’s birthday was December 14. Stephenson called Plaintiff the morning of December 12 to discuss Carson’s upcoming birthday party. Approximately one hour later, it was announced over the intercom system that Carson was being checked out of school. Because School policy required kindergarten students to be accompanied by an adult at all times, Stephenson left her teaching assistant in charge of the class and accompanied Carson to the office. Stephenson testified that she had just talked with Plaintiff “about an hour before and she mentioned nothing about him leaving, and I was just curious as to why he was leaving.” Stephenson walked Carson to the office and Thacker was waiting in the hallway. According to Stephenson:

Tracy was down at the entrance. There’s a little hall entrance where the front door is and he was standing at the corner and Maylyn walked up about the same time, and Tracy waved for Carson to come on. In fact, I think he said, come on, Carson, and Carson took off running to his dad. He was happy to see him.
So I kept going and I was going to speak with Tracy as I always do with all parents. I try to speak to my parents and that’s when he looked at me and he just put his hand up like, stop. He didn’t say anything. Carson went to him and when Carson got to his father, Tracy waved at me and said, hi, and went on out.

Stephenson then started back toward her classroom. She was at the door of the classroom when her curiosity got the best of her and she turned around and went back to the office to see the reason Thacker had given for signing out Carson. When Stephenson read what Thacker had written she became “concerned. It was not a normal remark.” Janice Nicholson and Erin Hattabaugh were in the office and neither one of them had read what Thacker had written down. Stephenson showed the remarks to Ms. Nicholson who stated Thacker was probably paying Plaintiff back for Plaintiffs mother having picked up the children the day before. Apparently unconvinced by Ms. Nicholson’s possible explanation for the comments, Stephenson decided to show Thacker’s comments to Dorene Lowery (“Lowery”), the School Principal. Lowery was paged over the intercom system and arrived at the office a couple of minutes later. After reading what Thacker had written, Lowery asked Stephenson to go to her (i.e., Lowery’s) office and retrieve the legal papers Thacker had brought to the School the day before. While Stephenson was looking for these documents, Lowery went outside to see if Thacker was still on the premises. Unfortunately, Thacker already was gone. Lowery returned to the office and at about the same time, the school resource officer, David O’Boyle (“O’Boyle”), walked into the office. Lowery was showing O’Boyle the reasons Thacker had given for checking out the children when a call came over O’Boyle’s police radio giving a code number and Thacker’s address. O’Boyle stated the code number indicated arson. Lowery then instructed O’Boyle to go to Thacker’s residence. Lowery then received a phone call from Thacker’s attorney advising her that Thacker had threatened to kill himself and the children. Lowery informed the attorney that Thacker already had left with the children. Lowery immediately went to the Thacker residence with the intention of bringing the children back to the School. There were several police cars already present and smoke was coming from the house when Lowery arrived at the Thacker residence. Unbeknownst to Lowery, Thacker already had stabbed Maylyn and Carson to death, poured gasoline over their bodies, and set them and the house on fire. Lowery heard gun shots a few moments after she arrived.

A few minutes prior to Lowery’s arrival, Thacker was sitting outside of the burning house holding a bloody knife when the first police officer arrived. Thacker told the officer that he had killed the children. The officer pleaded with Thacker to allow him to retrieve the bodies of the children from the burning house, but Thacker refused to stand down. After more police officers arrived, Thacker charged the first officer while brandishing the bloody knife and was shot to death. These were the gunshots Lowery heard when she arrived at the scene.

We now will consider whether there is a genuine issue of material fact relevant to Plaintiffs claim that the School was negligent in allowing the children to leave with Thacker in light of the reasons he gave for signing out the children. In order for Plaintiff to prevail on her negligence claim, she must establish the following elements: “(1) a duty of care owed by defendant to plaintiff; (2) conduct below the applicable standard of care that amounts to a breach of that duty; (3) an injury or loss; (4) cause in fact; and (5) proximate, or legal, cause.” Lett v. Collis Foods, Inc., 60 S.W.3d 95, 99 (Tenn.Ct.App.2001)(quoting McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn.1995)). The issue of whether the School owed a duty to Plaintiff is a question of law to be decided by the court. Lett, 60 S.W.3d at 99.

We have already noted that schools, teachers, and administrators have a duty to exercise ordinary care for the safety of their students. See Snider, 855 S.W.2d at 590; Roberts, 692 S.W.2d at 870. What is considered “ordinary care” is not a fixed standard and evolves over time along with the law under which it is defined. Like many other aspects of society, our nation’s school systems have been forced to react to the changing times. Locker searches and policies prohibiting drugs and weapons were relatively unheard of if not nonexistent in the not-so-distant past. Now, school’s are in court defending the legality of so-called zero tolerance policies. The words Columbine High School have taken on a separate meaning unto themselves, along with Oklahoma City and September 11th.

In the present case, the Board claims the School’s employees acted reasonably and followed the requirements of the early dismissal policy, i.e., the children were dismissed from school early at the request of a parent after the time, date, and reason for early dismissal were provided. The Board asserts that, as a general rule, a school has no legal right to prohibit a parent from signing-out their child and, therefore, there is no corresponding duty to examine the reason provided by the parent prior to that parent leaving with his or her child. The Board maintains that it only requires an explanation for early dismissal so the School can determine whether the absence is excused or unexcused in accordance with truancy laws. The Trial Court agreed with the Board and concluded the purpose of the Policy was not so the School “may refuse to let the parent take the child,” but to enable the School to determine whether the absence was excused or unexcused in accordance with Tenn.Code Ann. § 49 — 6—3007(e)(1).

Earlier in this Opinion we agreed with the Board that the Policy does not set the standard of conduct required of the School when we affirmed the dismissal of Plaintiffs negligence per se claim. The Board now takes the inconsistent position by arguing that the School’s compliance with that Policy conclusively negates any negligence claim. Even assuming the Trial Court was correct when it concluded the sole purpose behind the Policy was so the School could determine whether or not the absence was excused, we do not believe the purpose behind the Policy is necessarily determinative of whether the School was negligent.

The deposition of Robert Taylor (“Taylor”), the Director of Schools for Bradley County, was filed with the Trial Court. Taylor testified that in his experience of ten years as a principal and almost two years as the Director of Schools, there was only one occasion when a parent was not allowed to sign out his child and that was because the parent was visibly intoxicated when he arrived at the school. This testimony certainly shows that the Board accepted as part of its duty to its students that the safety of a student can take precedence over a parent’s right to have their child released from school, which is precisely the way it, unfortunately, must be.

Testimony by the School’s principal, Lowery, also raises a genuine issue as to whether the sole purpose behind the Policy was so the School could determine whether or not the absence was excused. Specifically, Lowery testified that if an adult came in to check a child out from the School and the School personnel did not know that adult, the School’s personnel would “find out what’s going on or who that person is, absolutely.” Therefore, Lowery admits that at least in some circumstances the School’s personnel would review the explanation given by an adult before allowing an adult to check out a child, clearly something that is not necessary to do in order to enable the School to determine later whether or not the absence was excused.

While School employees required Thacker to provide an explanation for the early dismissal, the obvious problem is that no one ever read that explanation prior to allowing Thacker to leave with the children. It is difficult to image the rationale behind a policy which requires someone to provide an explanation before they are allowed to engage in an affirmative act, but then does not require that explanation be read before the person is allowed to engage in that act. Because the Policy requires a written explanation before any parent can sign out their child, we believe it is implicit in that Policy that the reason actually be read before the parent and child leave. We conclude that the Policy was not complied with when Thacker provided the required written explanation for signing out the children, but was allowed to leave without anyone from the School having read that explanation. Even if the School’s failure to read Thacker’s explanation was not a violation of the Policy, we nevertheless hold that the School’s duty to exercise reasonable care for the safety of its students requires the School to read even a parent’s explanation for signing out his or her children before they are allowed to leave.

The Board claims that even if the School was required to read Thacker’s explanation for signing out the children, Plaintiffs claim nevertheless must be dismissed because Thacker’s brutal murder of the children was not foreseeable in much the same way as the rape of the minor student in Snider, supra, was held to be unforeseeable. Had Thacker’s stated reasons for signing-out the children been innocuous, we would agree. But Thacker’s stated reasons were not innocuous and were clearly troubling to the School once the School personnel read them. According to Stephenson, when she read what Thacker wrote she was “concerned” because the comments were not “normal.” When Principal Lowery read the comments, she was concerned enough to go outside to see if Thacker had left the premises, and then to show the comments to the school resource officer. In our opinion, the comments written by Thacker are ominous at the very least and set this case apart from the facts in Snider. We believe the reasons Thacker gave for signing out the children were of such a nature that reasonable minds could differ on whether Thacker intended to cause bodily harm to the children. Given the facts as now presented to us at this summary judgment stage, we believe there is a genuine issue of material fact regarding whether the actual harm inflicted on these children would have been foreseeable had someone at the School read Thacker’s reasons for checking out the children before the children were released to him.

Having concluded that the School had a duty to read the reasons Thacker gave for signing out the children and that there is a genuine issue of material fact on whether the murders were foreseeable, the final issue is whether the Board is nevertheless immune pursuant to the Tennessee Governmental Tort Liability Act (“GTLA”), TenmCode Ann. § 29-20-101 et seq. There is no dispute that the Board is a governmental entity and the GTLA applies.

The GTLA was enacted in 1973 and codified the common law rule that “all governmental entities shall be immune from suit for any injury which may result from the activities of such governmental entities ....”§ 29-20-201(a). Later in the statute, immunity for injuries caused by negligent acts or omissions of governmental employees is removed, and then several exceptions to the removal of immunity are listed. § 29-20-205. At issue in this case is whether the Board is immune because the discretionary function exception to removal of immunity applies. The relevant statutory section provides:

Immunity from suit of all governmental entities is removed for injury proximately caused by a negligent act or omission of any employee within the scope of his employment except if the injury arises out of:
(1) the exercise or performance or the failure to exercise or perform a discretionary function, whether or not the discretion is abused;....

Tenn.Code Ann. § 29-20-205(1). The Trial Court concluded that the discretionary function exception applied and the Board was, therefore, immune from Plaintiffs negligence claim.

In Limbaugh v. Coffee Medical Center, 59 S.W.3d 73 (Tenn.2001), our Supreme Court discussed the discretionary function exception to removal of immunity as follows:

This exception immunizes local governmental entities from liability for an employee’s negligence if the injury arises out of “the exercise or performance or the failure to exercise or perform a discretionary function, whether or not the discretion is abused.” Essentially, the discretionary function exception prevents the use of tort actions to second-guess what are essentially legislative or administrative decisions involving social, political, economic, scientific, or professional policies or some mixture of these policies. Doe v. Coffee County Bd. of Educ., 852 S.W.2d 899, 907 (Tenn.Ct.App.1992) (citing United States v. Gaubert, 499 U.S. 315, 323, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991)). The rationale for preserving immunity for certain acts performed by governmental entities is that the government should be permitted to operate without undue interference by the courts, as courts are often “ill-equipped to investigate and balance the numerous factors that go into an executive or legislative decision.” Bowers v. City of Chattanooga, 826 S.W.2d 427, 431 (Tenn.1992) (quoting Wainscott v. State, 642 P.2d 1355, 1356 (Alaska 1982)); see also Carlson v. State, 598 P.2d 969, 972 (Alaska 1979).
In Bowers v. City of Chattanooga, this Court recognized that a more precise method of analysis was needed for determining which acts are entitled to discretionary function immunity. Consequently, we adopted the planning-operational test under which it is the “nature of the conduct,” that is, the decision-making process, and not the “status of the actor,” Bowers, 826 S.W.2d at 430-31, that governs whether the exception applies. See also United States v. Gaubert, 499 U.S. 315, 322, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991). Under this analysis, a planning decision is most likely to reflect a course of conduct that was determined after consideration or debate by those in charge of formulating plans or policies. Bowers, 826 S.W.2d at 430 (citing Carlson, 598 P.2d at 972-73). Decisions that rise to the level of planning or policy-making are considered to be discretionary acts requiring judicial restraint and are, therefore, not subject to tort liability. On the other hand, decisions that merely implement pre-existing policies and regulations are considered to be operational in nature and require the decision-maker to act reasonably in implementing the established policy. If the policy, regulation, or other standard of procedure mandates specific conduct, then any employee reasonably complying with that direction will not abrogate the entity’s immunity if the action furthers the underlying policies of the regulation. See generally Chase v. City of Memphis, 971 S.W.2d 380, 384 (Tenn.1998). If such an employee does not act reasonably but pursues a course of conduct that violates mandatory regulation, the discretionary function exception will not apply because the action would be contrary to the entity’s established policy. Id.; see also Gaubert, 499 U.S. at 324, 111 S.Ct. 1267.

Limbaugh, 59 S.W.3d at 84-85.

The inaction of School employees in not reading the reasons Thacker gave for signing out the children cannot be characterized as a planning decision reflecting a course of conduct by those in charge of formulating the Policy. Rather, it was a failure in the implementation of the Policy adopted by the Board of Education, which is “operational in nature and require[s] the decision-maker to act reasonably in implementing the established policy.” Limbaugh, 59 S.W.3d at 85. We conclude that the discretionary/planning function exception to the removal of immunity does not apply to shield the actions of the School employees which took place on December 12, 2000. Therefore, the Board is not immune from suit on this negligence claim.

Conclusion

The Judgment of the Trial Court is affirmed in part and reversed in part, and this cause is remanded to the Trial Court for further proceedings consistent with this Opinion. Exercising our discretion, costs on appeal are assessed equally against the Appellant, Holli Thacker Haney, and her surety, and the Appellee, Bradley County Board of Education.

      . Some of this information was obtained from a sworn statement Plaintiff provided to the Tennessee Bureau of Investigation on December 13, 2000, the day after the children died.

      . The School later destroyed these documents so we do not know exactly which documents were provided to the School, although Principal Lowery did recall seeing the MDA.

      . Plaintiff claims Thacker apparently meant to write “Keeping Promise to Mother.”

      . Tenn.Code Ann. § 49-6-3007(e)(l) provides: “It is the duty of the principal or teacher of every public, private or parochial school to report promptly to the director of schools, or the director of schools' designated representative, the names of all children who have withdrawn from school, or who have been absent five (5) days (this means an aggregate of five (5) days during the school year and not necessarily five (5) consecutive days) without adequate excuse. Each successive accumulation of five (5) unexcused absences by a student shall also be reported.”