Bergen v. Baker

• Decision Date: 20 January 2005
• Docket Number: Docket No. 248214.
• Parties: James A. BERGEN and Vickie L. Bergen, Plaintiffs-Appellants, v. Kenneth L. BAKER and Karen S. Baker, Defendants-Appellees, and Gregory Glass & Maintenance, Inc., and Schweitzer Real Estate, Inc., doing business as Coldwell Banker Schweitzer Real Estate, Defendants.
• Court: Court of Appeal of Michigan — District of US

691 N.W.2d 770

264 Mich. App. 376

James A. BERGEN and Vickie L. Bergen, Plaintiffs-Appellants, v. Kenneth L. BAKER and Karen S. Baker, Defendants-Appellees, and Gregory Glass & Maintenance, Inc., and Schweitzer Real Estate, Inc., doing business as Coldwell Banker Schweitzer Real Estate, Defendants.

Docket No. 248214.

Court of Appeals of Michigan.

Submitted November 9, 2004, at Detroit.

Decided November 18, 2004, at 9:05 a.m.

Released for Publication January 20, 2005.

Cox, Hodgman & Giarmarco, P.C. (by Christopher J. Nelson), Troy, for the plaintiffs.

Plymouth Legal Group, L.L.C. (by Stephen H. Boak), Plymouth, for the defendants.

Before: BORRELLO, P.J., and MURPHY and NEFF, JJ.

PER CURIAM.

Plaintiffs appeal as of right the order granting summary disposition in favor of defendants¹ under MCR 2.116(C)(10) and the order denying plaintiffs' motion for reconsideration. This action was filed after plaintiffs purchased a home from defendants in 2001 and then discovered a significant leak in the glass-paned roof of a sunroom, or alternately referred to as the hot tub room, that is attached to the back of the house. We reverse.

Plaintiffs filed a complaint sounding in fraud, negligent misrepresentation, and breach of contract arising out of defendants' alleged failure to disclose the leaking roof. Before the sale was consummated, defendants executed and delivered a seller's disclosure statement that affirmatively indicated problems with a leaking roof, but also noted, in regard to the roofing, that there had been a "complete tear-off & replacement [in] June 1998." Another portion of the disclosure statement reflected that there had been evidence of water in the home's basement or crawl space, with the statement specifically providing that there had been "leaking under front porch"; however, the problem was "completely rectified w/new roof '98." There is no specific mention of leaking skylights or leaks in the sunroom roof. A reasonable interpretation of the disclosure statement is that there had once been a problem with a leaking roof, but it was rectified with a new roof in 1998.

In 1999, however, defendants had hired Gregory Glass & Maintenance, Inc., to perform repairs on leaking skylights in the sunroom. Brant Rousseaux, owner of Gregory Glass, provided a quote for the repairs, which quotation indicated that the "existing caulking has failed and is hard and dry creating many areas where water is penetrating under the flashing and around the glass to the interior of the system." Rousseaux recommended that all the old caulking be removed and replaced, and the repairs were performed in October 1999. Rousseaux testified in his deposition that he informed defendant Karen Baker that certain areas of rotting wood in the sunroom, including around the skylights, needed to be addressed by a carpenter.

Before the closing on the real estate transaction, plaintiffs had a home inspection performed by Jeffrey Halprin, president of JLH Home Services, Inc. Under the heading of "hot tub," the inspection report provided that the "glass enclosure shows heavy applications of silicone along the edge where the glass has leaked in the past." In the summary section of the inspection report, which section addressed "significant concerns and considerations," the report states that the "[h]ot tub room has experienced past leakage and shows signs of ice damming at the roofs edge (glass roof is heavily caulked at the gutter)."

Halprin stated in his affidavit that he "saw nothing that would lead me to conclude or speculate as to whether the Property was experiencing an active leak." Halprin further explained that he observed inadequate ventilation in the room, but "because [he could not] speculate, [he] had no reason to believe that certain ... signs of past water in the hot tub room were not attributable to the ventilation issues rather than the active leak condition that Plaintiffs experienced after the closing." Halprin averred that, on his second visit to the house after the closing, he personally "observed water freely running into the hot tub room," but he was unable to identify the entry points for the water. On the basis of his experience of observing almost five thousand roofs as a home inspector, he opined that the intensity of the leaking condition that he saw on his second visit indicated that the leak was active before the sale. Halprin further averred that the wood rot he identified "along the exterior [of] the hot tub room was at the front, side and bottom of the room and not along the glass enclosure at the top of the room."

The trial court granted defendants' motion for summary disposition pursuant to MCR 2.116(C)(10). The pertinent portion of the trial court's written opinion provides:

[I]t appears that Plaintiffs have based their fraud claims regarding the sunroom on the allegation that Defendants failed to fully disclose the extent and scope of the leaking roof/skylight. The Seller's Disclosure statement clearly indicates that there were "roof leaks" and that the roof was replaced in 1998. Additionally, Plaintiffs retained their own inspector, and an inspection was conducted before the parties proceeded through closing. Plaintiffs' own inspector found "heavy caulking" around the skylight and past leakage. The inspector's report also stated that the "[h]ot tub room has experienced past leakage, and shows signs of ice damming at the roofs edge" and water damage to the walls in the same room....

The Court observes that Plaintiff provided an affidavit indicating that he relied on the Seller's Disclosure Statement. However, a party or a witness may not create a factual dispute by submitting an affidavit that contradicts his own prior conduct. [Citations omitted.]

Other than the Affidavit of James Bergen, Plaintiffs have failed to proffer evidence demonstrating actual reliance on the information contained in the Seller's Disclosure Statement.

Despite the information contained in the Seller's Disclosure Statement, and the results of their own inspection, Plaintiffs proceeded through closing on the home under an "As Is" contract.

* * *

To conclude, the Court finds that Plaintiffs claims of "fraud" based on the Seller's Disclosure Statement and "negligent misrepresentation" fail because the evidence proffered fails to demonstrate the existence of a genuine issue of material fact regarding the actual reliance requirement. [Emphasis in original.]

The trial court found that plaintiffs failed to create a factual issue on the matter of actual reliance. The court's ruling is necessarily predicated on its conclusory belief that the disclosure statement and the inspection report provided sufficient notice to plaintiffs that there was a problem with leakage and that such knowledge could not be overcome with an affidavit to the contrary. In other words, according to the trial court, there could not have been actual reliance on the disclosure statement to the effect that there was no leakage problem in the face of the inspection report and the disclosure statement itself that indicated or suggested a problem with leakage. We find that the trial court overstepped its bounds for purposes of a motion for summary disposition brought pursuant to MCR 2.116(C)(10).

This Court reviews de novo a trial court's ruling on a motion for summary disposition. Spiek v. Dep't of Transportation, 456 Mich. 331, 337, 572 N.W.2d 201 (1998). Further, this Court reviews a trial court's decision to grant or deny a motion for reconsideration for an abuse of discretion. Churchman v. Rickerson, 240 Mich.App. 223, 233, 611 N.W.2d 333 (2000).

MCR 2.116(C)(10) provides for summary disposition where there is no genuine issue about any material fact and the moving party is entitled to judgment or partial judgment as a matter of law. A trial court may grant a motion for summary disposition under MCR 2.116(C)(10) if the affidavits or other documentary evidence show that there is no genuine issue in respect to any material fact and that the moving party is entitled to judgment as a matter of law. Quinto v. Cross & Peters Co., 451 Mich. 358, 362, 547 N.W.2d 314 (1996). In addition, all affidavits, pleadings, depositions, admissions, and other documentary evidence filed in the action or submitted by the parties are viewed in a light most favorable to the party opposing the motion. "Where the burden of proof ... on a dispositive issue rests on a nonmoving party, the nonmoving party may not rely on mere allegations or denials in the pleadings, but must go beyond the pleadings to set forth specific facts showing that a genuine issue of material fact exists." Id. Where "the opposing party fails to present documentary evidence establishing the existence of a material factual dispute, the motion is properly granted." Id. at 363, 547 N.W.2d 314. "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v. Gen. Motors Corp., 469 Mich. 177, 183, 665 N.W.2d 468 (2003) (citations omitted).

A claim for fraudulent misrepresentation or actionable fraud generally requires a showing that

"(1) the defendant made a material representation; (2) the representation was false; (3) when the defendant made the representation, the defendant knew that it was false, or made it recklessly, without knowledge of its truth as a positive assertion; (4) the defendant made the representation with the intention that the plaintiff would act upon it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered damage." [M & D, Inc. v. McConkey, 231 Mich.App. 22, 27, 585 N.W.2d 33 (1998) (M & D II), quoting M & D, Inc. v. McConkey, 226 Mich.App. 801, 806, 573 N.W.2d 281 (1997) (M & D I); see also M. Civ. JI 128.01.]

Furthermore, under the silent fraud doctrine, a cause of action "is established when there is a suppression of material facts and there is...