Block v. Lake Mortg. Co., Inc.

• Citation: 601 N.E.2d 449
• Decision Date: 29 October 1992
• Docket Number: No. 37A03-9203-CV-80,37A03-9203-CV-80
• Parties: Michael T. BLOCK, Appellant-Plaintiff, v. LAKE MORTGAGE COMPANY, INC., Jon Krumm, and Southlake Appraisal Service, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 449

601 N.E.2d 449

Michael T. BLOCK, Appellant-Plaintiff, v. LAKE MORTGAGE COMPANY, INC., Jon Krumm, and Southlake Appraisal Service, Appellees-Defendants.

No. 37A03-9203-CV-80.

Court of Appeals of Indiana Third District.

Oct. 29, 1992.

Rehearing Denied Jan. 5, 1993.

John E. Kolas, Medley, Smith, Kolas & Tollema, Carmel, Voyle A. Glover, Schererville, for appellant.

R. Lawrence Steele, Jill M. Madajczyk, Hodges & Davis, P.C., Merrillville, for appellee Lake Mortg. Co., Inc.

David E. Wickland, Munster, for appellees Jon Krumm and Southlake Appraisal Service.

HOFFMAN, Judge.

Appellant-plaintiff Michael T. Block (Block) appeals the trial court's grant of summary judgment in favor of appellees-defendants Lake Mortgage Company, Inc. (Lake Mortgage), Jon Krumm (Krumm), and Southlake Appraisal Service (Southlake).

The facts relevant to the appeal disclose that Block began looking for a house to purchase in the Hammond area in the fall of 1989. After viewing approximately nine homes, Block made an offer of $83,000.00 on a house with a listing price of $85,000.00. The seller accepted the offer, and the parties executed a purchase agreement on March 1, 1990. Block then contacted Lake Mortgage to arrange financing and to inquire about an IHFA loan. In accordance with state and federal regulations governing IHFA loans, Lake Mortgage enlisted the services of Krumm and his company, Southlake, to conduct an appraisal of the property. Krumm's appraisal estimated the market value of the property as of March 14, 1990 to be $83,000.00, the same amount as Block's offer. Lake Mortgage informed Block of the appraisal figure prior to the closing but did not provide him with a copy of the appraisal until after the closing.

A short time after the closing, a realtor who had assisted Block in his house search informed him that he had paid too much for the house. Block then hired two appraisers, Sandra Adomatis and Daniel Barrick, who estimated market values of $56,000.00 and $57,355.00 respectively for the property. On November 13, 1990, Block filed a complaint against Lake Mortgage, Krumm, and Southlake for actual and constructive fraud. Krumm and Southlake filed a motion for summary judgment on August 12, 1991, and Lake Mortgage filed a motion for summary judgment on August 13, 1991. The court held a hearing on the motions on October 4, 1991, after which it took the matter under advisement. On December 2, 1991, the court entered findings of fact and conclusions of law granting summary judgment in favor of Lake Mortgage, Krumm, and Southlake. This appeal ensued.

Although the trial court's entry of findings of fact and conclusions of law with its order granting summary judgment was inappropriate, it aids our review by providing us with a statement of reasons for the trial court's actions. See P.M.S., Inc. v. Jakubowski (1992), Ind.App., 585 N.E.2d 1380, 1381 n. 1. This Court may affirm a grant of summary judgment only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. We must liberally construe all designated evidentiary matter in favor of the non-moving party and resolve any doubt against the moving party. Even if the non-moving party will not succeed at trial, summary judgment is inappropriate where material facts conflict or undisputed facts lead to conflicting inferences. State Bd. of Tax Com'rs v. New Energy Co. (1992), Ind.App., 585 N.E.2d 38, 39. Absent a genuine issue of material fact, this Court will affirm a grant of summary judgment on any legal basis supported by the designated evidentiary matter found in the record. ¹

In his complaint, Block alleges two bases for recovery: actual fraud and constructive fraud. The elements of actual fraud are as follows:

"1. a material misrepresentation of past or existing fact by the party to be charged which

2. was false,

3. was made with knowledge or in reckless ignorance of the falsity,

4. was relied upon by the complaining party, and

5. proximately caused the complaining party injury."

Pugh's IGA v. Super Food Services, Inc. (1988), Ind.App., 531 N.E.2d 1194, 1197. The elements of constructive fraud are as follows:

"1. a duty owing by the party to be charged to the complaining party due to their relationship,

2. violation of that duty by the making of deceptive material misrepresentations of past or existing facts or remaining silent when a duty to speak exists,

3. reliance thereon by the complaining party,

4. injury to the complaining party as a proximate result thereof, and

5. the gaining of an advantage by the party to be charged at the expense of the complaining party."

Id. Unlike actual fraud, intent to deceive is not an element of constructive fraud. Rather, the law infers fraud from the relationship of the parties and the circumstances which surround them. Id.

Mere expressions of opinion cannot be the basis for an action in fraud; an action in fraud requires a misrepresentation of material fact. Id. at 1198. Although the instant parties agree with the trial court's conclusion that an appraisal is an opinion of value rather than a statement of fact, ² Block contends that "the KRUMM appraisal presents itself as a compilation of facts gleaned by comparing the subject house to houses sold in the area." He then compares the Krumm appraisal to the appraisal of Sandra Adomatis, an appraiser he hired after closing on the house, to demonstrate his point; however, as appellees note, one need only examine eminent domain cases to realize that different appraisers can value properties at different amounts. See, e.g., Derloshon v. City of Fort Wayne (1968), 250 Ind. 643, 238 N.E.2d 659. According to In re Owen, 70 B.R. 366, 368 (Bkrtcy.N.D.Ind., 1987), rev'd on other grounds, In re Galvan Bankr.L.Rep. (CCH) p 73,254 (Feb. 21, 1990): "an appraisal of property is not the result of a scientific analysis, but is, rather, a subjective opinion which can and does differ from the next appraisal even though both may be based on current real estate market trends. [Citation omitted.]" The trial court correctly concluded that Krumm's appraisal was an opinion and, thus, not actionable under a theory of fraud.

Next, Block asserts that, with respect to his constructive fraud claim, the trial court erred in concluding that Lake Mortgage did not have a fiduciary relationship with him. A fiduciary relationship does not exist between a lender and a borrower unless certain facts exist which establish a relationship of trust and confidence between the two. Mantooth v. Federal Land Bank (1988), Ind.App., 528 N.E.2d 1132, 1138-1139. Here, the record shows that Block contacted Lake Mortgage to arrange for the financing of the property and that he entered into the purchase agreement prior to contacting Lake Mortgage. The...