Fimbel v. DeClark

• Citation: 695 N.E.2d 125
• Decision Date: 28 April 1998
• Docket Number: No. 71A03-9707-CV-259,71A03-9707-CV-259
• Parties: Ronald C. FIMBEL and Patricia A. Fimbel, Appellants-Defendants, v. Thomas L. DeCLARK, Joan C. DeClark and Gena M. Logli, Appellees-Plaintiffs.
• Court: Court of Appeals of Indiana

Page 125

695 N.E.2d 125

Ronald C. FIMBEL and Patricia A. Fimbel, Appellants-Defendants, v. Thomas L. DeCLARK, Joan C. DeClark and Gena M. Logli,

Appellees-Plaintiffs.

No. 71A03-9707-CV-259.

Court of Appeals of Indiana.

April 28, 1998.

Transfer Denied Sept. 23, 1998.

Rochelle S. Meyers, Fred R. Hains, Fred R. Hains & Associates, South Bend, for Appellants-Defendants.

Paul T. Cholis, South Bend, for Appellees-Plaintiffs.

OPINION

STATON, Judge.

Ronald and Patricia Fimbel appeal from a judgment in favor of Thomas and Joan DeClark and Gena Logli ("DeClarks"). The trial court concluded that the DeClarks were entitled to rescission of the contract for the purchase of real estate from the Fimbels, including the return of the contract price and damages associated with the purchase of the real estate. On appeal, the Fimbels contend that the evidence is insufficient to sustain the finding that they fraudulently misrepresented the suitability of the real estate for home construction.

We affirm.

Our test for sufficiency of the evidence requires that we neither weigh the evidence nor resolve questions of credibility. We look only to the evidence of probative value and the reasonable inferences to be drawn therefrom which support the judgment. Bright v. Kuehl, 650 N.E.2d 311, 315 (Ind.Ct.App.1995) (citing Martin v. Roberts, 464 N.E.2d 896 (Ind.1984)), reh. denied, trans. denied.

The facts relevant to this appeal and most favorable to the judgment are that the Fimbels own two contiguous lots on Lake Latonka in Plymouth, Indiana. The lots were purchased with the intention of building a lake cottage on them. However, in 1992 the Fimbels discovered that a home could not be constructed on the lots since the soil was unsuitable for a septic system. Alternative septic arrangements were available at that time for $7,500 to $8,000 plus the cost of additional land. ¹ It would cost $1,000 for a study to determine whether an alternate septic arrangement was feasible, but the Fimbels never fully investigated these options.

In April 1994, the Fimbels decided to sell the two lots. The Fimbels set up a meeting with all interested buyers, which included the DeClarks. Mr. DeClark placed a $1,000 deposit on the property after viewing the property for approximately one-half hour. The Fimbels never disclosed the unsuitable condition of the soil for a septic system. One week after closing, the DeClarks discovered the problems detailed above. The trial court found that the Fimbels fraudulently misrepresented the character of the lots by not disclosing the condition of the soil, and granted the DeClarks rescission of the real estate contract and damages. This appeal ensued.

To constitute a valid claim for fraud the party must prove there was a material misrepresentation of past or existing facts made with knowledge or reckless ignorance of its falsity, and the misrepresentation caused reliance to the detriment of the person relying upon it. Adoptive Parents of M.L.V. v. Wilkens, 598 N.E.2d 1054, 1058 (Ind.1992). Too, "the failure to disclose all material facts by one on whom the law imposes a duty to disclose constitutes actionable fraud." The First Bank of Whiting v. Schuyler, 692 N.E.2d 1370, 1372 (Ind.Ct.App.1998); Fleetwood Corp. v. Mirich, 404 N.E.2d 38, 42 (Ind.Ct.App.1980). The Fimbels rely on several different theories in attacking the sufficiency of the evidence.

Initially, the Fimbels contend that they cannot be held liable in fraud for failing to disclose the soil condition of the lots since they were under no duty to do so. "Ordinarily a seller is not bound to disclose any material facts unless there exists a relationship for which the law imposes a duty of disclosure." Indiana Bank & Trust v. Perry, 467 N.E.2d 428, 431 (Ind.Ct.App.1984). Courts have found such a relationship, and therefore a duty to disclose, where the buyer makes inquiries about a condition on, the qualities of, or the characteristics of the property. See id.; Thompson v. Best, 478 N.E.2d 79 (Ind.Ct.App.1985), reh. denied, trans. denied. When a buyer makes such inquiries, it becomes incumbent upon the seller to fully declare any and all problems associated with the subject of the inquiry. Thompson, 478 N.E.2d at 84.

In this case, the evidence supports the conclusion that the DeClarks and Fimbels had conversations which imposed a duty upon the Fimbels to disclose the unsuitability of the lots for home construction. Mr. DeClark testified that, while viewing the lots, he asked Mr. Fimbel if he had ever intended to build a home on them. According to Mr. DeClark, Mr. Fimbel stated that he was going to build, but he ultimately decided that he preferred some property he owned in Minnesota, noting its peacefulness and that he had a friend that lives there. Too, during closing, Mr. DeClark told Mr. Fimbel that he wanted to build a home on the lots. The above inquiry and statement sufficiently introduced the issue of home construction into the parties' transaction such that a duty was imposed on the Fimbels to disclose the information they had regarding the suitability of the lots for residential construction. See Thompson, 478 N.E.2d at 81 (duty to disclose water problem when buyer made inquiries regarding sump pump and footing tiles); Perry, 467 N.E.2d at 429-30 (duty to disclose structural defects of home and their causes when buyer's agent questioned wet carpet and pillar that was "pulled away" from home). The Fimbels dispute whether these conversations ever took place, but this evidence was before the court and we may not reweigh it and substitute our judgment for that of the trial court. Bright, 650 N.E.2d at 315.

The Fimbels also contend that they made no misrepresentation of fact as to whether a home could be constructed on the lots. True, the Fimbels never expressly stated whether or not a home could be constructed on the lots. However, this does not insulate the Fimbels from a judgment in fraud.

[I]f a seller undertakes to disclose facts within his knowledge, he must disclose the whole truth without concealing material facts and without doing anything to prevent the other party from making a thorough inspection. For, if in addition to his silence, there is any behavior of the seller which points affirmatively to a suppression of the truth or to a withdrawal or distraction of the other parties' attention to the facts, the concealment becomes fraudulent.

Perry, 467 N.E.2d at 431. In this case, Mr. Fimbel told Mr. DeClark that the reason he never built on the lots was that he preferred other property. The record is unclear as to whether this was indeed a factor as to the Fimbels' decision not to build on Lake Latonka. Nevertheless, the preference for the other property is, at best, only one reason for not building on Lake...