Goff v. American Sav. Ass'n of Kansas

• Decision Date: 04 March 1977
• Citation: 1 Kan.App.2d 75,561 P.2d 897
• Parties: James E. GOFF and Janice Sue Goff, Appellants, v. AMERICAN SAVINGS ASSOCIATION OF KANSAS, Appellee.
• Court: Kansas Court of Appeals

Page 897

561 P.2d 897

1 Kan.App.2d 75

James E. GOFF and Janice Sue Goff, Appellants, v. AMERICAN SAVINGS ASSOCIATION OF KANSAS, Appellee.

Court of Appeals of Kansas.

March 4, 1977.

Syllabus by the Court

1. A litigant may not for the first time on appeal change the theory of his case from that on which it was presented to the trial court, nor may he present matters or issues which he did not bring to the attention of that court.

2. Fraud cannot be predicated upon what as a matter of law amounts to be an expression of opinion and which cannot reasonably be understood to be anything else.

3. In an action for fraud the plaintiff may not reasonably rely on an alleged fraudulent statement where the plaintiff has knowledge of facts which would serve as a danger signal to any normal person of equal intelligence and experience.

4. Where fraud is alleged and the facts are undisputed and only one reasonable conclusion can be reached, or where there is an entire failure of proof, the trial court may apply the principles of law to the facts and grant summary judgment.

Fred W. Phelps and R. W. Niederhauser, Fred W. Phelps, Chartered, Topeka, for appellants.

Gerald L. Goodell and Harold S. Youngentob, Goodell, Casey, Briman & Cogswell, Topeka, for appellee.

En Banc.

ABBOTT, Judge:

This is an action for fraud brought by the appellants, James E. Goff and Janice Sue Goff, homeowners, against appellee, American Savings Association of Kansas, holder of the first mortgage, and Clarence H. Lyden, contractor.

The trial court granted summary judgment against the Goffs and in favor of American Savings Association, and the Goffs appealed. The action against Clarence H. Lyden is pending in the district court and Lyden is not a party to this appeal.

In the latter part of 1973, the appellants signed a construction loan agreement whereby Lyden would build a home for appellants and American Savings Association would loan money to the appellants to pay for the construction as it progressed.

On April 14, 1974, Lyden, while attempting to backfill around the basement walls, caused a wall to 'bow' and crack in three places. James E. Goff was present and helped in an effort to straighten the wall. Goff observed three cracks about the size of a pen or pencil tip in the basement wall that went all the way through. Mr. Goff immediately became concerned that the basement might not be watertight and asked the contractor to guarantee the basement 'not to leak.' Lyden replied, 'No, I can't guarantee it not to leak.'

The following day, the Goffs requested Mrs. Goff's father and Lee Likes, a family friend, to inspect the basement for the sole purpose of ascertaining if it would be watertight. Lee Likes was a building contractor. Likes and Mrs. Goff's father told the Goffs that the basement would leak and it should be torn out. Likes, in particular, was very adamant, saying, '. . . it will never work'; 'the cracks would not seal out water'; and, '. . . no contractor in his right mind would build a frame on top of a wall like that.'

Approximately one month later, Mr. Goff talked to Benny Benge and Dale Casto, the cement contractors who were pouring the basement and garage floor, and they told Goff that the basement would never hold water.

Appellants' cause of action for fraud is based on a conversation with Delores Green, a contracting officer for American Savings Association, and a single five- to ten-minute phone conversation with Bill Light, an appraiser for American Savings Association. The conversation with Delores Green took place at the time of the signing of the construction loan agreement. The phone conversation with Bill Light took place on April 19. Appellants testified Delores Green assured them American Savings Association's inspector would see that the construction 'was being handled properly and so on and so forth.' Delores Green did not state American Savings Association would guarantee the workmanship. Mr. Goff testified Delores Green told them 'that American Savings would have to send out an inspector quite periodically to inspect the job site, to make sure that the material and the workmanship was 100 percent satisfactory.'

On April 15 or 16, 1974, Mrs. Goff called American Savings Association and requested that Bill Light inspect the basement walls. On April 19, 1974, Mrs. Goff talked to Bill Light on the phone. Taking Mrs. Goff's testimony in its most favorable context, as we are required to do on a motion for summary judgment, Bill Light told Mrs. Goff she had a good contractor and not to worry about it; that the drain tile would handle the water around the basement and that the basement would not leak. Bill Light did not guarantee the basement would not leak, and he was not asked to do so.

The basement leaked and appellants filed suit. The trial court held that a lending institution may insist on the right to supervise construction and to inspect as construction proceeds in order to protect its mortgage, and in this case had protected itself by providing:

'The Owner Agrees. . . . To grant American's inspector access to the building and premises during construction to inspect said construction, and to grant American, or its agents, the right to reject and to require replacement of any materials or work that does not in American's opinion comply with the plans and specifications; provided however, American shall be under no obligation to so inspect or to accept or reject materials or work, and it is agreed that the right granted in this paragraph shall be solely for the benefit of American.'

The trial court then concluded, as a matter of law, that (1) there was no confidential relationship between the plaintiffs and American Savings Association: (2) according to the terms of their contract, the plaintiffs were not entitled to rely on American's evaluation of the quality of construction; (3) American could not have intentionally defrauded the plaintiffs without damaging their own interest in the property, something which it would not do intentionally. The trial court later added a fourth finding that, 'fraud cannot be predicated upon the expression of an opinion and that Mr. Light's statements relied upon by plaintiff clearly fall within that rule,' and then granted summary judgment against the appellants as to their claim against American Savings Association.

Appellants rely on five points. Basically, appellants contend that the trial court erred in making the above findings as a matter of law as to four points.

The fifth point on which appellants rely is that a question remains whether the written document referred to by the court as being determinative on the question of reliance was modified by subsequent parol. Appellants concede that this issue was not raised in the trial court. We note that appellants filed a motion, or motions, after summary judgment was entered, requesting the court to interpret or amend the journal entry of summary judgment and in the alternative for a rehearing of American Savings' motion for summary judgment. Appellants did not raise the oral modification of a written contract issue on their post judgment motion. Having failed to present the issue to the trial court, it cannot be a subject for appellate review. (Nelson v. Hy-Grade Construction & Materials, Inc., 215 Kan. 631, 527 P.2d 1059; State v. Osbey, 213 Kan. 564, 517 P.2d 141.)

'A litigant may not for the first time on appeal change the theory of his case from that on which it was presented to the trial court, nor may he present matters or issues which he did not bring to the attention of that court. (In re Bowlus, 197 Kan. 351, 416 P.2d 711; Green v. Kensinger, 193 Kan. 33, 392 P.2d 122; Potwin State Bank v. Ward, 183 Kan. 475, 327 P.2d 1091, 80 A.L.R.2d 166.)' Evangelist v. Bellern Research Corporation, 199 Kan. 638, 641, 433 P.2d 380, 384.

Each case alleging fraud must be dealt with on its own particular set of facts and circumstances, and unless one finds an identical set of facts the case will usually be distinguishable in many particulars.

Good faith is required in every business transaction and the law will not permit a business person to intentionally or recklessly make false representations. If the business person does so, he may be called upon to respond in damages if damages are, in fact, incurred. This does not mean, however, that a business person is responsible in damages for every erroneous, reckless, or false representation made to a person, even though it may cause the other person damage. On the undisputed facts of this case, certain elements must be present in order for plaintiffs to recover on a fraud theory. If any one element is absent, then plaintiffs may not recover. The essential elements are that a representation was made as a statement of a material fact, which was untrue and known to be untrue by Bill Light at the time he made the statement, or else recklessly made, which was of such a character that the Goffs had a right to reasonably rely on it, and did rely on it to their damage. The statement must have been of such a nature that it was reasonably calculated to deceive the Goffs and to induce them to do what they otherwise would not have done. It must have been a statement of fact, which existed at the time it was made or had existed in the past, as opposed to an opinion. 37 Am.Jur.2d, Fraud & Deceit § 12, pp. 33-4, Atlas Acceptance Corp. v. Weber, 138 Kan. 89, 23 P.2d 479.

Many factors must be considered in determining whether a statement is a matter of fact or matter of opinion and whether or not a plaintiff has a right to rely on the statement. Among the facts the court will take into consideration are the intelligence, education, business experience and relative situation of the parties; the general information and experience of the persons involved as to the nature and use of the property; the habits and methods of those in the industry or profession involved; the opportunity for...