Epperson v. Roloff

• Decision Date: 28 May 1986
• Docket Number: No. 15900,15900
• Citation: 102 Nev. 206,719 P.2d 799
• Parties: David R. EPPERSON and Shirley A. Epperson, Appellants, v. Henry ROLOFF, Mylan Barin Roloff and Ruth K. Lesser, Respondents.
• Court: Nevada Supreme Court

Page 799

719 P.2d 799

102 Nev. 206

David R. EPPERSON and Shirley A. Epperson, Appellants, v. Henry ROLOFF, Mylan Barin Roloff and Ruth K. Lesser, Respondents.

No. 15900.

Supreme Court of Nevada.

May 28, 1986.

Charles A. Price, Incline Village, for appellants.

Gene R. Barbagelata, Reno, for respondents.

OPINION

PER CURIAM:

This is an action for breach of contract, fraud and rescission arising out of the sale of a home in Incline Village, Nevada. The district court awarded summary judgment to respondents, the defendants below. This appeal followed. Because appellants have apparently abandoned their rescission claim, we affirm the judgment to that extent. With respect to the other claims, however, material issues of fact remain to be tried, and summary judgment was therefore improper. Accordingly, we reverse the judgment and remand the matter for trial.

I. The Facts

In evaluating the propriety of a summary judgment, we review the evidence in the light most favorable to the party against whom judgment was rendered. Servaites v. Lowden, 99 Nev. 240, 660 P.2d 1008 (1983). So viewed, the record in this case reveals the following facts.

In 1981, appellants David and Shirley Epperson decided to sell their home in California and move to Lake Tahoe to retire. They contacted Fran Mercer, a local real estate agent with whom they had previously dealt, and asked her to help them find a home at the lake. Mrs. Mercer saw a listing on a home located in Incline Village. She contacted the listing agent, Michael Alexander, and arranged a tour of the home.

The Eppersons saw the home for the first time in the summer of 1981, in the company of Mrs. Mercer and Mr. Alexander. Near the beginning of their tour, Alexander told the Eppersons that the home had a solar heating system and sought to explain the control panel which allegedly operated the system. At some point during the tour, the Eppersons were shown a brochure by Alexander which stated that the home had "forced air gas/solar implecations [sic]." According to Mr. Epperson, Alexander stated that the "solar really saves on your gas bill."

The Eppersons concluded their tour and decided to make an offer on the home. The contract between the Eppersons and the seller, respondent Mylan Roloff, was entered into in July, 1981. ¹ By an addendum to the contract, the parties agreed that all "mechanical equipment" at the home was to be in "good operating order" at the close of escrow.

The Eppersons moved into the home in late September, about one week before the close of escrow. At some point after they moved in, Mr. Epperson noticed water stains on the drywall in the garage. It rained within approximately a week after escrow closed, and Mr. Epperson noticed that water was leaking into the garage. He climbed into the attic over the garage and found the source of the leak. He discovered that the "solar panel" on the roof was actually a part of the roof and that he could see daylight through numerous holes in the panel. Moreover, the panel consisted of corrugated metal which had simply been painted black.

For the first time, Mr. Epperson spoke directly with Mrs. Roloff. He called her to complain about the operation of the "solar heating system." According to Epperson, Mrs. Roloff expressed surprise at the problem and claimed that the heating system had "worked great" while she had lived in the house. During her subsequent deposition, however, Mrs. Roloff conceded that she had never used the system. According to her, there had been some delay in completing the system, additional work had been done, and she had thereafter been told that the system was operational. Mrs. Roloff also admitted that she had told Mr. Alexander, when the home was listed for sale, that it had a "solar feature," which she described to him as "a solar storage area for auxiliary heating." She was not asked to explain what a "solar implecation" might be.

The Eppersons' complaint set forth three claims for relief against the respondents. First, it alleged that respondents had breached that portion of the purchase agreement relating to the operation of mechanical equipment. Second, it alleged that respondents were guilty of fraud. Finally, the Eppersons sought to rescind the purchase agreement on the theory that there had been a failure of consideration.

Respondents answered the complaint and moved for summary judgment. In granting summary judgment, the district court concluded that there had been no breach of the purchase agreement. The court apparently reasoned that the Eppersons had waived any right to complain of defects by failing to complain prior to the close of escrow. With respect to the fraud claim, the court concluded that "the evidence presented contains no misrepresentation by defendants or their agents...." Finally, because it found no breach of the agreement, nor any fraud in inducing the Eppersons to enter into the agreement, the court held there was no right to rescission. ²

We have repeatedly held that summary judgment is proper only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Cladianos v. Coldwell Banker, 100 Nev. 138, 676 P.2d 804 (1984); Casarotto v. Mortensen, 99 Nev. 392, 663 P.2d 352 (1983); see also NRCP 56(c). Our review of the record reveals that several issues of fact remained to be resolved in the court below on both the misrepresentation and the contract causes of action set forth in the Eppersons' complaint, and that summary judgment was therefore improper.

II. The Misrepresentation Claim

The tort action of deceit or misrepresentation requires the plaintiff to establish that the defendant made a false representation to him, with knowledge or belief that the representation was false or without a sufficient basis for making the representation. Further, the plaintiff must establish that the defendant intended to induce the plaintiff to act or refrain from acting on the representation, and that the plaintiff justifiably relied on the representation. Finally, the plaintiff must establish that he was damaged as a result of his reliance. See Sanguinetti v. Strecker, 94 Nev. 200, 577 P.2d 404 (1978); Lubbe v. Barba, 91 Nev. 596, 540 P.2d 115 (1975). See generally W. Prosser, Handbook on the Law of Torts, § 105, at 685-86 (4th ed. 1971). Whether these elements are present in a given case is ordinarily a question of fact. Lentz Plumbing Co. v. Fee, 235 Kan. 266, 679 P.2d 736 (1984); Tice v. Tice, 672 P.2d 1168 (Okla.1983). Respondents contend, however, that no genuine issues of fact remained to be decided on the Eppersons' misrepresentation claim. Respondents argue first that the Eppersons were barred from bringing such a claim, and second, that the Eppersons failed to present sufficient evidence of misrepresentation in support of their claim. We disagree.

First, respondents contend that the Eppersons were barred from bringing the misrepresentation claim because of an integration clause in the purchase agreement. ³ No relevant authority is cited in support of this proposition and, in fact, there is authority directly to the contrary, indicating that an integration clause does not bar a claim of this nature. See Herzog v. Capital Co., 27 Cal.2d 349, 164 P.2d 8 (1945); Kett v. Graeser, 241 Cal.App.2d 571, 50 Cal.Rptr. 727 (1966).

Additionally, respondents contend that the Eppersons waived their right to make a claim of misrepresentation because the Eppersons and their agent were given the opportunity to inspect the premises, and did in fact examine the premises on at least three occasions prior to the purchase of the home. Respondents further point out that the Eppersons took possession of the home eight days prior to the close of escrow and allowed escrow to close without objection. Respondents assert that, under these facts, the Eppersons should be charged with knowledge of the alleged defects in the solar heating system, as well as the leakage problems, prior to the purchase. Respondents therefore conclude that the Eppersons waived their right to complain of the problems when they permitted escrow to close.

We have previously held that a plaintiff who makes an independent investigation will be charged with knowledge of facts which reasonable diligence would have disclosed. Such a plaintiff is deemed to have relied on his own judgment and not on the defendant's representations. See Freeman v. Soukup, 70 Nev. 198, 265 P.2d 207 (1953). Nevertheless, an independent investigation will not preclude reliance where the falsity of the defendant's statements is not apparent from the inspection, where the plaintiff is not competent to judge the facts without expert assistance, or where the defendant has superior knowledge about the matter in issue. See Stanley v. Limberys, 74 Nev. 109, 323 P.2d 925 (1958); Bagdasarian v. Gragnon, 31 Cal.2d 744, 192 P.2d 935 (1948). The question of whether the Eppersons could or should have discovered the alleged defects during their initial inspections of the home was a question of fact for the jury to decide. Accordingly, the district court erred by deciding this issue as a question of law prior to trial.

Respondents also contend the Eppersons failed to allege or establish that the respondents made any direct or express representations to them regarding the functioning or efficiency of the solar heating system, on which the Eppersons could have justifiably relied in purchasing the home. In this regard, respondents contend that the brochure that was shown to the Eppersons referred only to solar "implecations," and made no representations regarding the functioning or efficiency of the system. Respondents also appear to contend that they cannot be held liable for the statements their listing agent made to the Eppersons regarding the system, or that the agent's representations were not in any event sufficient to cause the Eppersons' reliance.

We conclude, however, that a...