Cervone v. W. Real Estate Corp.
| Decision Date | 26 August 2021 |
| Docket Number | 352820 |
| Parties | DANIELLE CERVONE, Plaintiff-Appellant/Cross-Appellee, v. WESTERN REAL ESTATE CORPORATION and DONNA CRONBERGER, Defendants-Appellees, and B-DRY SYSTEM OF SOUTHEASTERN MICHIGAN, INC., Defendant-Appellee/Cross-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Macomb Circuit Court LC No. 2018-000740-CZ
Before: Cavanagh, P.J., and O'Brien and Redford, JJ.
In this matter involving the sale of residential property, plaintiff appeals as of right, and defendant B-Dry System of Southeastern Michigan, Inc. cross-appeals as of right, the trial court's consent judgment after a jury verdict making final the jury's verdict against B-Dry. On appeal plaintiff challenges the trial court's earlier opinion and order dismissing plaintiff's claims of common-law fraud and silent fraud against defendant Donna Cronberger (seller) and defendant Western Real Estate Corporation, as well as plaintiff's additional breach of warranty claims against B-Dry. On cross-appeal, B-Dry claims that the trial court erred by denying its motion for directed verdict and allowing evidence of consequential damages, and further posits that the verdict is against the great weight of the evidence. We affirm.
Seller was the owner of a property in St. Clair Shores, Michigan which she had owned and resided in since 1985. In September 2016, seller listed the home for sale through a listing agreement with Lewis Gazoul, a real-estate agent with Western Real Estate. When listing the property, seller completed a Seller Disclosure Statement (SDS). Under the section titled "Property conditions, Improvement, & Additional Information," the SDS asked, "Has there been evidence of water?" and seller checked "yes." As an explanation, seller wrote, "Waterproofed B-Dry System w/lifetime warranties." Under "Other Items," the SDS asked if seller was aware of "[s]ettling, flooding, drainage, structural, or grading problems?" and seller checked "no." In listing the home for sale, Gazoul advised seller to leave all the documentation related to the B-Dry warranties on the counter for prospective buyers to review.
Sometime in late 2016 or early 2017, plaintiff toured the subject property and, after reviewing the SDS, decided to make an offer. Plaintiff understood the SDS to say that the entire basement was waterproofed and that the home had no flooding or structural problems. Eventually, on March 1, 2017 plaintiff entered into a purchase agreement with seller to buy the property. On the same date, Gazoul sent plaintiff's agent a prior inspection report performed at the home, which a different prospective buyer had obtained. With respect to the basement walls, the inspector for the prior report stated:
Walls are concrete block. Inspector could not rate all walls due to coverings. Cracks and stains noted in exposed areas. Monitor for further leakage/seapage [sic]. The seller is claiming the basement is waterproofed and still has remaining warranty. There is some form of repairs made to some portion of the walls. Inspector was unable to determine the age of the repairs or the effectiveness of the repairs made. The repairs are described, but the inspector accepts no liability for the repairs or their effectiveness. It is strongly recommended that you investigate the source of the repairs made with the current owner prior to closing. If possible, determine who made the repairs and what warranty if any remains.
With regard to "Moisture," the inspector stated, "Staining was observed: evidence of prior water penetration is noted."
Three days before plaintiff's scheduled home inspection, Gazoul informed plaintiff's agent that water had been identified in the basement. Plaintiff, upset about this news, said to her agent that she wanted to "call off the deal," but decided to wait and see what repairs would be recommended. Seller later emailed Gazoul stating, "False alarm, it was the dog's water bowl that went over." Gazoul forwarded this message to plaintiff's agent adding,
When plaintiff received this information, she was satisfied and agreed to proceed with the sale pending her inspection of the property. The report eventually prepared by plaintiff's inspector noted with respect to the basement and crawl space: With regard to the basement wall, the report stated:
Minor settlement cracks noted, not significant at this time[.] Staining was observed: [e]vidence of prior water penetration is noted-[s]een at corners and randomly on perimeter walls[.] Efflorescence seen on walls indicates the presence of periodic moisture. Water seepage may occur in the future. The best defense against water seepage is good drainage of soils near the foundation wall. See grading under landscaping. Deterioration noted to foundation walls is minor. Symptoms of prior water seepage are present. Paneling prevents viewing of primary basement wall material in areas[.] A water seepage control system is already in place.
After the inspection, plaintiff was unhappy with the condition of the home and sought $2, 000 in concessions from seller for repairs. Seller agreed and the sale closed on April 14, 2017, with ownership of the property passing to plaintiff. According to plaintiff, seller gave her a copy of B-Dry's lifetime warranty for the basement at closing, and, about a week later, seller gave plaintiff additional documentation regarding the B-Dry system.
Plaintiff moved into the home in July 2017. Shortly thereafter, while making an unrelated repair, plaintiff removed the paneling from the southern basement wall. She discovered that the wall had holes and cracks from top to bottom, including exposed metal beams with plastic behind them. When plaintiff tugged on a corner of the plastic, chunks of concrete fell to the floor. Plaintiff eventually found that water seeped through these holes and cracks when it rained.
In September 2017, on the basis of her belief that the entire basement had been waterproofed, plaintiff contacted B-Dry. From B-Dry's records, plaintiff learned that the entire basement had not, in fact, been waterproofed. Instead, B-Dry had waterproofed sections of the basement over a period of years. This work is reflected in separate contracts for repairs, each of which contained a warranty guaranteeing the work completed:
An engineering report that plaintiff obtained in October 2017 indicated that all four of the basement walls were bowing inward. By June 2018, plaintiffs engineer informed her that the walls had moved another 1.5 inches. In the same month, plaintiff sought repairs from B-Dry under the transferrable warranty, but B-Dry refused plaintiffs request.
Plaintiff then filed the instant lawsuit alleging, as relevant to this appeal, claims of common-law fraud and silent fraud against both seller and Western Real Estate, and claims for breach of warranty against B-Dry. Fifteen days before the close of discovery, the parties filed cross-motions for summary disposition. Plaintiff asserted that summary disposition in her favor was proper on her claims of common-law fraud and silent fraud given that seller and Western Real Estate both allegedly hid, and lied about, the fact that the entire basement had been waterproofed, that water was leaking through the walls, and that structural defects existed. As to B-Dry, plaintiff posited that judgment in her favor should be granted because no question of fact existed that B-Dry breached its warranties. Seller countered that the trial court should dismiss the fraud claims against her because she made no material misrepresentation (affirmatively or otherwise) and acted in good faith in executing the SDS. Western Real Estate likewise asserted that the fraud claims against it should be dismissed because a release in the Purchase Agreement barred plaintiff's claims. Finally, B-Dry responded that summary disposition as to the warranty claims should be denied because its workmanship and materials were not defective and its warranties did not otherwise cover the damaged area.
After a hearing, the trial court granted summary disposition in favor of defendants, except with regard to a single claim for breach-of-warranty claim against B-Dry. The trial court dismissed the claims of common-law fraud and silent fraud against seller and Western Real Estate because plaintiff had failed to demonstrate that she reasonably relied on any alleged misrepresentations in light of the abundant evidence that plaintiff was "aware of ongoing water issues in the basement before agreeing to proceed to closing." The court also dismissed plaintiff's claims of common-law fraud and silent fraud against Western Real Estate on the basis that plaintiff had executed a release that barred her claims. As for plaintiff's claims against B-Dry, the trial court granted summary disposition in favor of B-Dry under MCR 2.116(I)(2) on plaintiff's breach of warranty claims for the 1995 Warranty,...
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