Amend v. McCabe

• Decision Date: 01 December 1995
• Citation: 664 So.2d 1183
• Parties: 95-0316 La
• Court: Louisiana Supreme Court

Page 1183

664 So.2d 1183

95-0316 La. 12/1/95

Chester AMEND, et ux, v. John McCABE, et ux.

No. 95-C-0316.

Supreme Court of Louisiana.

Dec. 1, 1995.

Gregory R. Aymond, for Applicant.

H. Brenner Sadler, Raymond B. Landry, Provosty, Sadler & DeLaunay, for Respondent.

ON REHEARING

[95-0316 La. 1] VICTORY, Justice. ¹

We granted the defendants' rehearing application to determine if the sellers had a contractual obligation to inspect their home for hidden termite damage after a pest inspection report required by the buy-sell agreement revealed active termite infestation. We find that the contract did not require the sellers to inspect the home for structural termite damage, and that the sellers are entitled to damages for the buyers' refusal to purchase the home.

FACTS & PROCEDURAL HISTORY

Following negotiations, Chester and Jean Amend agreed to sell their home to John and Jacalyn McCabe for a price of $195,000.00. The parties expressed the terms of their agreement through a "Contract to Buy and Sell," dated June 16, 1992. Paragraph 7 of the buy-sell agreement provided:

Seller shall provide, at seller's expense, a wood destroying pest inspection report from a licensed pest control firm prior to closing. All required extermination in said report shall be paid for by seller and completed prior to closing, unless otherwise agreed upon in writing by the parties. If said report reveals structural damage caused by wood destroying pests, the seller shall have the option of (1) completing the repairs, (2) providing for their completion, or (3) refusing to complete them. If the seller elects to refuse to complete the repairs, the purchaser shall have the option of (1) accepting the [95-0316 La. 2] property in its present condition (2) terminating the contract, in which latter case, the deposit shall be refunded in full. The above mentioned options will control should all parties involved in the sale be unable to reach an acceptable compromise. (Emphasis added.)

Pursuant to this provision, the Amends hired Mid-South Pest Control, Inc., to perform the inspection, which was conducted on July 2, 1992, by its employee, Craig Bordelon. As is customary, Bordelon inspected only the accessible and unobstructed areas of the home. He discovered that a lower exterior board had sustained a softball sized area of termite damage. ² He also found that the home was actively infested with termites, and indicated this finding in Item 9 of the Wood Destroying Insect Report, which stated: "BASED ON CAREFUL VISUAL INSPECTION OF THE READILY ACCESSIBLE AREAS OF THE PROPERTY (See Item 12A before completing.), C. Visible evidence of active infestation of Native Subterranean Termites was found. Proper control measures were performed."

The report, a pre-printed form adopted and approved by the Louisiana Structural Pest Control Commission and the Louisiana Pest Control Association, ³ contained numerous disclaimers of responsibility for inspecting hidden or inaccessible areas. The first was set forth in the following paragraphs, positioned at the top of the one page form:

A qualified inspector employed by this company has carefully inspected all accessible areas of the property located at the address [95-0316 La. 3] below for termites and other wood destroying insects. This disclosure specifically excludes hidden and/or inaccessible areas of damage and the pest control company assumes no legal responsibility for repairs to such damaged areas.

WARNING: THE INSPECTION DESCRIBED HEREIN HAS BEEN MADE ON THE BASIS OF VISIBLE EVIDENCE IN READILY ACCESSIBLE AREAS AND THIS REPORT IS SUBMITTED WITHOUT WARRANTY, GUARANTEE OR REPRESENTATION AS TO CONCEALED EVIDENCE OF INFESTATION OR DAMAGE OR AS TO FUTURE INFESTATION. (Bold and caps in original.)

The "FINDINGS" section of the report also contained several warnings and/or notices which unequivocally revealed that only the accessible areas of the home had been inspected. Particularly, Item 6 of the report read:

6. WERE ANY AREAS OF THE PROPERTY OBSTRUCTED OR

INACCESSIBLE?

[x] Yes [ ] No

(If "Yes" see Items 7 & 8).

Item 7 inquired as to the type of construction of the home, to which Bordelon responded "monolithic slab." Item 8 consisted of a warning listing a litany of common obstructions and/or inaccessible areas which were not inspected. ⁴

[95-0316 La. 4] Finally, Item 12, entitled STATEMENT OF PEST CONTROL OPERATOR, provided, in pertinent part:

A. The inspection covered the readily visually accessible areas of the property only. Attention was given to those visually accessible areas which have been shown to be particularly susceptible to attack by wood destroying insects. Probing and/or sounding of visually infested and/or damaged wood members was performed.

B. The inspection did not include areas which were obstructed or inaccessible at the time of inspection.

C. This is not a structural damage report. (Emphasis added.)

On July 2, the same day that the inspection was performed, the Amends had the termites exterminated as required by paragraph 7 of the buy-sell agreement. The treatment costs totalled $600.00.

The McCabes were not informed of the results of the inspection and extermination until two days before the closing, which was scheduled for July 16, 1992. Upon learning about the inspection report, the McCabes indicated they no longer desired to purchase the home due to prior difficulties that they had encountered in selling a termite damaged home. The McCabes informed Kathy Gawthorp, the selling real estate agent with Noles-Frye Realty, that they did not intend to go through with the sale. In turn, she notified Nat Marks, the listing agent with Noles-Frye Realty, of the McCabes' decision not to buy the home.

After becoming aware that the McCabes no longer intended to consummate the sale, the Amends conferred with Ms. Marks, who suggested that the McCabes' fears might be placated if a civil engineer inspected the home. On July 15, 1992 [95-0316 La. 5] (one day before the scheduled closing), the Amends hired Richard M. Primeaux, civil engineer, to inspect the property for structural damage. However, Primeaux testified that he was unaware that he was hired to inspect the home to insure that there was no structural damage from termites. He assumed that he was retained to examine the home for ordinary structural defects caused by soil and foundation problems, and conducted the inspection for this purpose. Primeaux stated that if he had known that there were concerns about structural termite damage he would have recommended a more thorough inspection (e.g., removing paneling from walls). Primeaux reported:

Interior inspection showed no structural damage to any components of the structure which could be seen without removing any wall or ceiling panels. The attic inspection showed all factory trusses properly braced with no sagging or splits. All interior doors, window openings, skylights, and walls were checked and found to be in good structural condition with no evidence of any structural problems.

The exterior inspection revealed no slab cracks or structural damage. One short board, near an exterior sliding door unit, had experienced minor termite damage and it is understood that the entire perimeter of the foundation has since been treated. No evidence of any other termite damage was observed.

This house is considered to be in excellent structural condition with no problems noted.

This report of inspection does not constitute or infer any warranty by the undersigned; but, intends to verify the structural condition of the residence from a visual inspection. (Emphasis added.)

Despite the sellers' efforts, the McCabes refused to purchase the property, expressing concerns about possible hidden damage which would not have been revealed by Primeaux's "visual inspection." Approximately two months later, the Amends sold the home to another purchaser, Wally Metrejean, for $185,000.00.

On November 10, 1992, the Amends filed suit against the McCabes for breach of contract and damages. The McCabes reconvened, claiming that the [95-0316 La. 6] Amends failed to comply with paragraph 7 of the buy-sell agreement which required them to evaluate whether the home had been structurally damaged by the termites. As such, the McCabes argued that they were entitled to have their $1,000.00 deposit refunded.

Following a bench trial, the trial court ruled against the McCabes, finding that the termite infestation, "did not constitute sufficient structural damage or cause to vitiate the contract." The trial court awarded the Amends $10,000.00 in damages, representing the difference between the original $195,000.00 purchase price agreed to by the McCabes, and the $185,000.00 purchase price ultimately paid by Metrejean. The trial court also awarded the Amends $2,500.00 in closing costs associated with the Metrejean sale; $1,718.72 representing two interim mortgage payments made after the McCabes refused to close; and $250.00 representing two extra monthly insurance payments and property tax payments that the Amends were required to pay after the McCabes refused to close.

The defendants appealed, and the Louisiana Third Circuit Court of Appeal reversed the trial court's decision. Amend v. McCabe, 94-332 (La.App. 3d Cir. 1/4/95); 649 So.2d 1059. The court of appeal concluded that the sale failed for lack of fulfillment of a suspensive condition, interpreting paragraph 7 of the buy-sell agreement as requiring the sellers to inspect the home for termite infestation and structural damage caused thereby. According to the court of appeal, the inspection reports from Bordelon and Primeaux did not fulfill the sellers' end of the bargain because both disclaimed structural damage.

On March 30, 1995, this Court summarily granted the Amends' writ application, and reversed the court of appeal. Amend v. McCabe, 95-0316 (La. 3/30/95); 652 So.2d 1298. We found that the buy-sell agreement, and the usage [95-0316 La. 7] of practice...