Bott v. Holman
| Decision Date | 29 July 2014 |
| Docket Number | No. A–13–301.,A–13–301. |
| Citation | 22 Neb.App. 229,850 N.W.2d 800 |
| Parties | Jeff Bott and Victoria Bott, husband and wife, appellants, v. Thomas L. Holman and Sharon A. Holman, husband and wife, appellees. |
| Court | Nebraska Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from the District Court for Scotts Bluff County: Leo Dobrovolny, Judge. Reversed and remanded for further proceedings.
Maren Lynn Chaloupka, of Chaloupka, Holyoke, Snyder, Chaloupka, Longoria & Kishiyama, P.C., L.L.O., for appellants.
Paul W. Snyder, of Smith, Snyder & Petitt, G.P., for appellees.
1. Actions: Rescission: Equity. An action for rescission sounds in equity.
2. Equity: Appeal and Error. In an appeal of an equity action, an appellate court tries factual questions de novo on the record, reaching a decision independent of the findings of the trial court. Where credible evidence is in conflict on a material issue of fact, the appellate court will consider and may give weight to the fact the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.
3. Actions: Fraud: Proof. To maintain an action for fraudulent misrepresentation,a plaintiff must allege and prove the following elements: (1) that a representation was made; (2) that the representation was false; (3) that when made, the representation was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) that it was made with the intention that the plaintiff should rely upon it; (5) that the plaintiff reasonably did so rely; and (6) that the plaintiff suffered damage as a result.
4. Fraud: Rescission: Proof. The party alleging fraud as the basis for rescission must prove all the elements of the fraudulent conduct by clear and convincing evidence.
5. Fraud. A statement that is true but partial or incomplete may be a misrepresentation, because it is misleading when it purports to tell the whole truth and does not.
6. Fraud. When a party makes a partial or fragmentary statement that is materially misleading because of the party's failure to state additional or qualifying facts, the statement is fraudulent.
7. Fraud: Proof. To succeed on a claim of fraudulent misrepresentation, a plaintiff must prove not only a misrepresentation, but also justifiable reliance upon that representation.
8. Fraud. A party is justified in relying upon a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity.
9. Fraud. Nebraska law imposes a duty of ordinary prudence upon a party claiming fraudulent misrepresentation.
10. Fraud. In fraudulent misrepresentation cases, whether a plaintiff exercised ordinary prudence is relevant to whether the plaintiff justifiably relied on the misrepresentation when the means of discovering the truth was in the plain-tiff's hands.
11. Actions: Fraud. The fact that a plaintiff made inquiries elsewhere which did not disclose the falsity of the representations is not, as a matter of law, a defense to a fraud action.
Jeff Bott and Victoria Bott brought an action for rescission of a purchase agreement they entered into with Thomas (Tom) L. Holman and Sharon A. Holman, based on allegations of fraudulent misrepresentation and fraudulent concealment. Following a bench trial, the district court for Scotts Bluff County found insufficient evidence to establish the Botts' claims and entered judgment in favor of the Holmans. The Botts appeal from that judgment. Because we find that the Botts proved all of the elements of fraudulent misrepresentation, we reverse the district court's order and remand the matter for further proceedings.
In June 2011, the Botts entered into a purchase agreement with the Holmans for the purchase of a home in Scottsbluff, Nebraska. Shortly after moving in, the Botts hired a contractor to install a heating and cooling system in the crawl space of the residence. While working in the crawl space, the contractor discovered water damage on the floor joists and alerted the Botts. Jeff Bott went into the crawl space and observed that the floor joists in the northeast corner of the house were rotten, crumbling, and moldy.
The Botts hired an engineer, Larry McCaslin, to conduct a structural inspection of the home in September 2011. Upon inspecting the crawl space, McCaslin observed a considerable amount of damage in the flooring system. McCaslin observed multiple floor joists that were cracked and rotten. Some of the floor joists had rotted so severely that they no longer reached the sill plate, and they were being supported by floor jacks and shims. The insulation between the floor joists and above the sill plate was deteriorated and black, and there was mold and mildew throughout the crawl space.
A sill plate is a 1 1/2-inch-thick piece of wood that sits on top of the concrete foundation. McCaslin explained that the purpose of the sill plate is to provide a smooth and level surface to which the floor joists are attached and to transfer the load from the floor joists down to the foundation. McCaslin observed that the sill plate had completely rotted away in the northeast corner of the home, causing the floor joists to sit 1 1/2 inches lower in that area.
McCaslin noted damage in other areas as well, but the most severe damage was in the northeast corner of the home. He believed the damage was caused by moisture leaking into the crawl space. McCaslin described the status of the flooring system as “critical,” and he stated that it needed to be repaired right away to make the house safe. McCaslin recommended replacing the sill plate, floor joists, and insulation, and regrading the site to direct water drainage away from the house, among other possible repairs.
The Botts hired a contractor to provide an estimate for the necessary repairs. The contractor explained that the house would have to be jacked up in order to replace the sill plate and floor joists. He estimated that the total cost, including materials and labor, would be approximately $72,000.
The Botts brought this action to rescind the purchase agreement on the basis of fraudulent misrepresentation and fraudulent concealment in the property condition disclosure statement provided by the Holmans. The evidence at trial established that the Holmans were aware of at least some of the damage in the flooring system and did not fully disclose their knowledge to the Botts.
The Holmans had owned and lived in the home since July 1989, prior to selling it to the Botts. During that time, there were multiple occasions in which water had leaked into the crawl space below the flooring system. There had been a washing machine leak in the southwest corner of the house in 1989, a leak in the shower drain in the northeast corner of the house in 1993 and 1994, and a leak in a water line on the north side of the house in 1997. In addition to those plumbing leaks, there had been water leakage around the foundation into the crawl space due to rainstorms.
In 2007, the Holmans hired Dan Flammang to retile the bathroom floor in the northeast corner of the house. After noticing that the bathroom floor was sagging, Flammang went into the crawl space to investigate the problem. Flammang identified rotting in the sill plate and floor joists that appeared to have been caused by moisture. Some areas of the sill plate had rotted away completely, which Flammangbelieved was the primary cause of the sagging floor. Flammang testified that he advised the Holmans about the rotting sill plate and the sagging floor, but that they chose not to take any corrective action at that time. Tom Holman, however, testified that Flammang advised them that the floor was sagging, but did not mention the rotten sill plate or floor joists.
The Holmans contacted Flammang approximately a year later in May 2008 when they noticed the grout in the tile floor was cracking. Flammang returned to the house and advised the Holmans that the cracking was due to the sagging floor. Flammang stabilized the floor by placing a beam and two jacks under the floor joists to prop up the floor in the northeast corner of the house. The Holmans did not request any additional work to be done to repair the rotting sill plate or floor joists. However, Tom Holman did instruct Flammang to run caulking along the north side of the house, where the sidewalk had separated from the foundation, to prevent further water leakage into the crawl space. In 2009, the Holmans hired Flammang to install cement siding on the house and recaulk around the foundation.
In June 2011, the Holmans contacted a real estate agent to assist them in selling their house. The agent discussed the procedures necessary to properly list the home for sale, including completion of a seller property condition disclosure statement. The agent instructed them to fill out the disclosure form completely, accurately, and honestly regarding the condition of the house, inside and out. Tom Holman testified that he knew the disclosure statement was going to be provided to potential buyers and that he intended for them to rely upon it.
The first page of the disclosure statement contains the following language:
This statement is a disclosure of the condition of the real property known by the seller on the date on which this statement is signed. This statement is not a warranty of any kind by the seller or any agent representing a principal in the transaction, and should not be accepted as a substitute for any inspection or warranty that the purchaser may wish to obtain. Even though the information provided in this statement is not a warranty, the purchaser may rely on the information contained herein in deciding whether and on what terms to purchase the real property.
The disclosure statement contains several questions regarding the structural condition of the property, among other things, to which the...
To continue reading
Request your trial
- State v. Rodriguez
-
Mills v. AmeriCredit Fin. Servs.
...it; (5) that the plaintiff reasonably did so rely; and (6) that the plaintiff suffered damage as a result. Bott v. Holman, 22 Neb. App. 229, 236-37, 850 N.W.2d 800, 807 (2014). False representations must be the proximate cause of the damage before a party may recover. Huffman v. Poore, 569 ......
-
Widick v. Price, A-18-467.
...tries factual questions de novo on the record, reaching a decision independent of the findings of the trial court. Bott v. Holman, 22 Neb. App. 229, 850 N.W.2d 800 (2014). Where credible evidence is in conflict on a material issue of fact, the appellate court will consider and may give weig......