Finch v. Inspectech, LLC

• Decision Date: 24 May 2012
• Docket Number: No. 11–0276.,11–0276.
• Citation: 229 W.Va. 147,727 S.E.2d 823
• Parties: David F. FINCH and Shirley R. Finch, Plaintiffs Below, Petitioners v. INSPECTECH, LLC, a West Virginia Limited Liability Company, Defendant Below, Respondent.
• Court: West Virginia Supreme Court

229 W.Va. 147
727 S.E.2d 823

David F. FINCH and Shirley R. Finch, Plaintiffs Below, Petitioners
v.
INSPECTECH, LLC, a West Virginia Limited Liability Company, Defendant Below, Respondent.

No. 11–0276.

Supreme Court of Appeals of
West Virginia.

Submitted April 11, 2012.
Decided May 24, 2012.

[727 S.E.2d 825]

Syllabus by the Court

1. “A motion for summary judgment should be granted if the pleadings, exhibits and discovery depositions upon which the motion is submitted for decision disclose that the case involves no genuine issue as to any material fact and that the party who made the motion is entitled to a judgment as a matter of law.” Syllabus point 5, Wilkinson v. Searls, 155 W.Va. 475, 184 S.E.2d 735 (1971).

2. “When a statute imposes a standard of conduct, a clause in an agreement purporting to exempt a party from tort liability to a member of the protected class for the failure to conform to that statutory standard is unenforceable.” Syllabus point 1, Murphy v. North American River Runners, Inc., 186 W.Va. 310, 412 S.E.2d 504 (1991).

3. “Generally, in the absence of an applicable safety statute, a plaintiff who expressly and, under the circumstances, clearly agrees to accept a risk of harm arising from the defendant's negligent or reckless conduct may not recover for such harm, unless the agreement is invalid as contrary to public policy. When an express agreement is freely and fairly made, between parties who are in an equal bargaining position, and there is no public interest with which the agreement interferes, it generally will be upheld.” Syllabus point 1, Kyriazis v. University of West Virginia, 192 W.Va. 60, 450 S.E.2d 649 (1994).

4. “A clause in an agreement exempting a party from tort liability is unenforceable on grounds of public policy if, for example, (1) the clause exempts a party charged with a duty of public service from tort liability to a party to whom that duty is owed, or (2) the injured party is similarly a member of a class that is protected against the class to which the party inflicting the harm belongs.” Syllabus point 2, Kyriazis v. University of West Virginia, 192 W.Va. 60, 450 S.E.2d 649 (1994).

5. W. Va.C.S.R. § 87–5–1 et seq. imposes upon providers of home inspection services a standard of conduct with which home inspectors are required to comply in the performance of home inspections and the preparation of reports based upon such inspections. Accordingly, a provider of home inspection services may not seek to relieve itself of liability for failure to comply with such regulations, and, thus, the inclusion of a limitation of liability provision, anticipatory release, or exculpatory clause in a contract for home inspection services which does so is invalid and unenforceable as contrary to the public policy of this State.

George J. Cosenza, Cosenza Law Office, Parkersburg, WV, Attorney for the Petitioners.

William Crichton VI, Crichton & Crichton, Attorneys at Law, Parkersburg, WV, Attorney for the Respondent.

DAVIS, Justice:

The petitioners herein and plaintiffs below, David F. Finch and Shirley R. Finch (hereinafter

[727 S.E.2d 826]

“Mr. and Mrs. Finch” or “the Finches”), appeal from an order entered January 11, 2011, by the Circuit Court of Wood County. By that order, the circuit court granted summary judgment to the respondent herein and defendant below, Inspectech, LLC (hereinafter “Inspectech”). The circuit court concluded that, by signing the parties' “Inspection Agreement,” which contained a clause entitled “Unconditional Release and Limitation of Liability,” the Finches had released Inspectech from liability for any defects it failed to report in its inspection of the house the Finches planned to, and ultimately did, purchase. On appeal to this Court, the Finches argue that the circuit court erred by precluding them from asserting their claims against Inspectech wherein they seek damages for the costs they have incurred in repairing the defects that they allege Inspectech failed to report in its inspection of their house. Upon a review of the parties' arguments, the appendix record, and the pertinent authorities, we reverse the January 11, 2011, order of the Wood County Circuit Court and remand this case for further proceedings consistent with this opinion. Inspectech is not entitled to judgment as a matter of law based upon the terms of the parties' Inspection Agreement and the release language therein because anticipatory releases contained in home inspection contracts are void and unenforceable as contrary to the public policy of this State.

I. FACTUAL AND PROCEDURAL HISTORY

On July 7, 2009, Mr. and Mrs. Finch entered into a “Residential Real Estate Sale Contract” (hereinafter “purchase contract”) to purchase a house owned by Brian and Angela Richardson (hereinafter “Dr. and Mrs. Richardson” or “the Richardsons”). While neither the Finches nor the Richardsons were represented by a real estate agent during the course of this transaction, Mrs. Finch is a licensed real estate agent. With respect to home inspections, the purchase contract provided that

[a] home inspection and report may be completed by a qualified inspector at the Buyer's [Finches'] expense within fifteen (15) business days from the date of acceptance of this contract. This contingency shall terminate at the above-predetermined deadline, unless the Buyer delivers to the Seller [the Richardsons] a written statement listing the specific existing deficiencies and corrections desired, together with a copy of the inspection. The Seller may, at the Seller's option, within (5) days after the delivery of the report, furnish the Buyer with a written statement that the condition shall be remedied before the date of settlement. If the Seller does not elect to make the repairs, or if the Seller makes a counter-offer, the Buyer shall have five (5) days to respond to the counter-offer or remove the contingency and take the property in its present condition or this contract shall become void with a refund of the full deposit being returned to the Buyer. The Buyer acknowledges that they have had a reasonable time to have any and all inspections conducted of the premises, and that they hereby forever waive and release the Sellers from any claim, suit or liability that may result from a defect that could have been revealed by a reasonable diligent inspection of the premises prior to purchase.¹

(Emphasis and footnote added). The purchase contract did not expressly specify, however, that the contract was contingent upon a favorable home inspection or otherwise condition the purchase of the house upon the findings of the home inspector should one be retained.

Additionally, the purchase contract stated that,

[t]o the best of Seller's [the Richardsons'] knowledge, there are no physical problems with the property that would not be apparent upon inspection. Provided however, the Seller recommends and the buyer [sic] [the Finches] affirms that they will rely on the inspection rights of the

[727 S.E.2d 827]

buyer [sic] and not on any representation of the Seller in making this purchase[.]

It is not apparent from the appendix record whether the Richardsons also had completed a separate, standard “Seller's Property Condition Disclosure” form regarding the subject property.

Exercising their rights under the purchase contract, the Finches hired Inspectech to perform a home inspection of the subject property. As part of the house inspection, the Finches and Inspectech, by its representative, Gary Flanagan (hereinafter “Mr. Flanagan”), entered into an Inspection Agreement. At issue in the case sub judice is the enforceability of the “Unconditional Release and Limitation of Liability” (hereinafter “release”) clause contained within the parties' Inspection Agreement. The release provides:

It is understood and agreed that the COMPANY [Inspectech] is not an insurer and that the inspection and report are not intended to be construed as a guarantee or warranty of the adequacy, performance or condition of any structure, item or system at the property address. The CLIENT [the Finches] hereby releases and exempts the COMPANY and its agents and employees of and from all liability and responsibility for the cost of repairing or replacing any unreported defect or deficiency and for any consequential damage, property damage or personal injury of any nature. In the event the COMPANY and/or its agents or employees are found liable due to breach of contract, breach of warranty, negligence, negligent misrepresentation, negligent hiring or any other theory of liability, then the liability of the COMPANY and its agents and employees shall be limited to a sum equal to the amount of the fee paid by the CLIENT for the inspection and report.

(Emphasis in original). Mr. Flanagan performed the subject home inspection on July 9, 2009, and reported his findings to the Finches.²

Thereafter, the Finches purchased the Richardsons' house on August 19, 2009, for $160,000. Within one week of closing, the Finches discovered water damage; prior repairs to correct said water damage; and water infiltration in the basement of their new home, as well as structural problems affecting the house's foundation. The Finches allege that these defects were not previously detectable because the location of a workbench owned by the Richardsons concealed the water damage, and, thus, the Finches claim that they could not fully view this portion of the house until the Richardsons had removed all of their belongings.

At the request of the Finches, Mr. Flanagan performed an additional inspection of the subject property on September 11, 2009. In his report, Mr. Flanagan observed that he had

re-examine[d] some of the foundation cracks in the front and rear foundation walls. It does appear that some of these cracks are beginning to “re open” which does appear to indicate possible recent movement. There does appear to be evidence that some of the cracks were sealed/filled and recently painted...