Clouse v. Gordon

• Decision Date: 19 July 1994
• Docket Number: No. 9320SC653,9320SC653
• Citation: 115 N.C.App. 500,445 S.E.2d 428
• Court: North Carolina Court of Appeals
• Parties: Robert D. CLOUSE and wife Barbara A. Clouse, Plaintiffs, v. Walter L. GORDON, Walter L. Gordon & Associates, Cynthia J. French, New World Real Estate Service (A Domestic Corporation), Raymond D. Petty, Sr., Defendants.

Page 428

445 S.E.2d 428

115 N.C.App. 500

Robert D. CLOUSE and wife Barbara A. Clouse, Plaintiffs, v. Walter L. GORDON, Walter L. Gordon & Associates, Cynthia J.

French, New World Real Estate Service (A Domestic

Corporation), Raymond D. Petty, Sr., Defendants.

No. 9320SC653.

Court of Appeals of North Carolina.

July 19, 1994.

Franklin S. Hancock, Monroe, and Dean and Gibson by Michael G. Gibson, Charlotte, for plaintiff-appellants.

W. David McSheehan, Monroe, for defendant-appellee Petty.

Cozen and O'Connor by Michael L. Minsker and Eric J. Parham, Charlotte, for defendant-appellees French and New World Real Estate Service.

ORR, Judge.

The issues before this Court are whether the trial court erred in (1) granting Defendant Petty's motion for judgment notwithstanding the verdict as to plaintiffs' claim for fraud against him, and (2) granting Defendants French's and New World Real Estate Service's motion for judgment notwithstanding the verdict as to plaintiffs' negligence claims against them. At the outset we note that during oral argument it was conceded that Defendant French was acting as an agent of New World Real Estate Service, and for the purposes of this appeal, we shall treat Defendant French and Defendant New World Real Estate Service as one defendant.

The evidence viewed in the light most favorable to plaintiffs showed that during July, 1987, Barbara Clouse and her husband Robert Clouse wanted to move from New Jersey to North Carolina. Subsequently, Mrs. Clouse contacted Defendant French, an agent of New World Real Estate Service, to help her find a house in North Carolina for the Clouses to purchase. Thereafter, while Mr. Clouse remained in New Jersey, Mrs. Clouse came to North Carolina, and French showed her the house and property owned by Defendant Petty located at 608 Sunnybrook Drive. While French was showing Mrs. Clouse this property, Mrs. Clouse had an opportunity to walk around the yard. Mrs. Clouse testified that as she was walking around the yard she noticed a creek located several hundred feet from the house. At this time, French did not inform Mrs. Clouse that the property was subject to flooding, and Mrs. Clouse did not inquire as to whether the property was subject to flooding.

The next day, French showed Mrs. Clouse the property again, and French helped Mrs. Clouse videotape the property to show Mr. Clouse. As they were videotaping the property, French testified that she answered some questions Mrs. Clouse had about the property, none of which concerned flooding. Further, French testified that she suggested to Mrs. Clouse at that time that she should have a survey and termite inspection done for the property and the house. The next day, Mrs. Clouse returned to New Jersey.

Thereafter, French and Mrs. Clouse were in contact over the phone about the property. After talking to the listing agent, French informed the Clouses that the property actually consisted of two lots instead of one and that the creek was on one of the lots. Eventually French and plaintiffs reached an agreement, and French prepared, and the Clouses signed, a contract for the sale of the property. French testified that she never did anything to prevent the Clouses from making a full and thorough investigation of the property.

Prior to the closing, French testified that she suggested to Mrs. Clouse again that she have a survey of the property done. Subsequently, French testified that Mrs. Clouse authorized her to have a survey done, and French contacted Walter Gordon, a registered land surveyor, to perform the survey of the property. Gordon performed such survey and prepared a map of the property on which he stated, "I have consulted the Federal Emergency Management Agency Flood map and determined the property shown is not in a special flood hazard zone." Additionally, the map prepared by Gordon did not show a creek on or near the property.

The closing was held on 11 December 1987. At the closing, French saw the survey map prepared by Gordon for the first time and noticed that it did not show a creek. French informed Mr. Clouse that the survey was incorrect in that it did not show the creek and pointed out to Mr. Clouse where the creek should have been drawn. The Clouses were represented by an attorney at the closing. They concluded the purchase of the property for $74,400.

In June, 1990, Margaret Damon Desio, a real estate appraiser with Carolina Appraisal Company, was hired to do a mortgage appraisal on the property. In conducting such appraisal, Desio consulted federal flood maps and discovered that there was a flood plain on Sunnybrook. Desio testified that she determined that the lot containing the creek, Lot 51, was located in the flood plain but that it was unclear whether the lot containing the house, Lot 52, was in the flood plain. Thereafter, plaintiffs employed another surveyor to survey the property. The new survey showed that almost all of Lot 51 was contained in the flood plain and that a portion of Lot 52 was in the flood plain, including a part of plaintiffs' front and back yard.

Further, plaintiffs produced evidence tending to show that since they purchased the property, during heavy rain, the creek would overflow and flood their yard. Mrs. Clouse testified that during Hurricane Hugo, part of her house was flooded. A witness who lived near the property testified that between 1979 and 1982, when Petty owned the property, the creek flooded up and over the road approximately seven or eight times. Additionally, the evidence showed that the property is located downstream from a four-lane thoroughfare and the Monroe Mall, which mall has a large asphalt-covered parking lot, and that the drainage from this road and parking lot empties into this creek. The evidence also showed that Defendant French lived down the street from the property.

On the issue of damages, Mr. Clouse testified that the actual value of the property on the date of purchase, taking into consideration that it was located in a flood plain and subject to flooding, was thirty thousand dollars or less. Mrs. Clouse testified that the value of the property on the date of purchase, taking the flooding into account, was forty thousand dollars. Further, the Clouses testified that they would not have bought the property if they had known that it was located in a flood plain and subject to flooding.

I.

On appeal, plaintiffs contend that the trial court erred in granting Defendant Petty's motion for judgment notwithstanding the verdict as to plaintiffs' claim for fraud against him. We disagree.

When passing on a motion for judgment notwithstanding the verdict, the same standards applicable to a motion for directed verdict are to be applied. Thus, the court must consider the evidence in the light most favorable to the plaintiff and may grant the motion only if, as a matter of law, the evidence is insufficient to support a verdict for plaintiff.

Brokers, Inc. v. High Point City Bd. of Educ., 33 N.C.App. 24, 28, 234 S.E.2d 56, 59, disc. review denied, 293 N.C. 159, 236 S.E.2d 702 (1977) (citation omitted).

In the present case, Petty owned the property plaintiffs purchased, and plaintiffs alleged that Petty fraudulently concealed the fact from plaintiffs that the property was subject to flooding. On appeal, plaintiffs contend that sufficient evidence exists to support every element of their fraud claim and that the trial court erred in granting Petty's motion for judgment notwithstanding the verdict as to this claim. Because we find that Goff v. Frank A. Ward Realty and Ins. Co., Inc., 21 N.C.App. 25, 203 S.E.2d 65, cert. denied, 285 N.C. 373, 205 S.E.2d 97 (1974) is controlling, we disagree.

In Goff, plaintiffs contracted to purchase a house from Charles J. Poche for $37,500. This house was located on a lot that was topographically lower than the lots located on its north and west, and was lower on the back than on the front. At the time of negotiating and executing the contract, Ward Realty and Insurance Company, Inc., through its agents, acted as sales agent for Poche. After plaintiffs closed on the transaction and moved into the house, they

discovered that the property "had a long history of sewer and septic tank problems"; that in wet weather raw sewage from neighboring houses behind plaintiffs' property flows across plaintiffs' backyard and the resulting odor and slime rendered the backyard useless and constituted a serious health problem; that raw sewage sometimes bubbled up from plaintiffs' septic tank into their yard; and raw sewage from other houses flowed into a ditch in front of plaintiffs' house.

Id. at 26, 203 S.E.2d at 66. Subsequently, plaintiffs filed a complaint against Ward Realty and Insurance Company, Inc. and Poche alleging that these defendants fraudulently concealed the fact that this property had sewer problems and sought actual and punitive damages for this fraud. At the close of plaintiffs' evidence, defendants moved for a directed verdict, which motion the trial court granted. Plaintiffs appealed to this Court.

This Court stated the applicable law:

" * * * When the parties deal at arms length and the purchaser has full opportunity to make inquiry but neglects to do so and the seller resorted to no artifice which was reasonably calculated to induce the purchaser to forego investigation action in deceit will not lie.["] ...

* * * * * *

"The right to rely on representations is inseparably connected with the correlative problem of the duty of a representee to use diligence in respect of representations made to him. The policy of the courts is, on the one hand, to suppress fraud and, on the other, not to encourage negligence and inattention to one's own interest."

Id. at 29, 203 S.E.2d at 68 (citations omitted).

Thereafter, this Court concluded:

In the negotiation of the sale and purchase of the subject property, the parties were dealing at arms length. Plaintiffs had full opportunity to view the...