Hall v. Lovell Regency Homes Ltd. Partnership

• Decision Date: 01 September 1997
• Docket Number: No. 526,526
• Citation: 708 A.2d 344,121 Md.App. 1
• Parties: James T. HALL, et al. v. LOVELL REGENCY HOMES LIMITED PARTNERSHIP, et al. ,
• Court: Court of Special Appeals of Maryland

Page 1

121 Md.App. 1

708 A.2d 344

James T. HALL, et al. v. LOVELL REGENCY HOMES LIMITED PARTNERSHIP, et al.

No. 526, Sept. Term, 1997.

Court of Special Appeals of Maryland.

April 20, 1998.

Argued before DAVIS, THIEME and BYRNES, JJ.

BYRNES, Judge.

Appellants are four couples who purchased newly-constructed houses in the Kingsbrook Development in Frederick County, Maryland. After experiencing water and drainage problems with their properties, they brought suit in the Circuit Court for Frederick County against appellees, the builder of their houses and its general partners, alleging violations of the Maryland Consumer Protection Act, Maryland Code, (1990 Repl.Vol., 1997 Cum.Supp.), §§ 13-301 through 13-501 of the Commercial Law Article (the "CPA"), and asserting claims in contract, warranty, and tort.

From July 19, 1996 to August 16, 1996, the case was tried before a jury presided over by Judge Mary Ann Stepler. At the close of appellants' case, the trial court granted appellees' motion for judgment on the CPA claim. The remaining claims were submitted to the jury, which returned a verdict in favor of appellants for breach of contract, breach of express warranty, and negligent misrepresentation and awarded each appellant $1.00 in nominal damages. Appellants challenge the judgment on appeal, presenting three questions for review, which we have reordered and slightly rephrased:

I. Did the trial court err in ruling that appellants were limited to nominal damages for their property loss?

II. Did the trial court err in ruling that appellants were not entitled to damages for "loss of use and enjoyment" of their houses in addition to damages for injury to their property value?

III. Did the trial court err in failing to submit the Consumer Protection Act claim to the jury?

We find no reversible error on the part of the trial court. Accordingly, we affirm the judgment. ¹

FACTS ²

In 1989, Kingsbrook Limited Partnership ("KLP") began developing a 217 acre tract of land that it owned in Frederick County into "Kingsbrook," a residential community. KLP divided the property into lots and sold them to appellee Lovell Regency Homes Limited Partnership ("Lovell Regency"). Lovell Regency constructed single-family dwellings on the lots and sold the improved residential properties to interested buyers.

Between July, 1992 and September, 1993, appellants James and Janice Hall, Mickey and Mary Ellen Mitchell, Richard and Linda Harcum, and Ronald and Lorene Pregenzer ("the homeowners") purchased from Lovell Regency lots improved by newly-constructed dwellings. ³

After the homeowners moved into their new houses, they noticed that the streets in their section of Kingsbrook would flood after heavy rains or snow, that their yards collected water and stayed "soggy" for long stretches of time, and that their sump pumps continuously pumped out large volumes of water. The Halls found standing water and mud around the perimeter of the their house. Water accumulated in an unpaved portion of the Halls' basement. Their basement walls became discolored and "splotched" and developed cracks. Excessive moisture in their basement caused mold and fungi to proliferate. These water and drainage problems prevented the Halls from finishing their basement, adding a deck to their house, or fencing their yard. The other three families experienced similar problems with their properties: water in their basements, cracks in basement walls and floors, exterior wall cracks, and ground sinking. They, too, were unable to finish their basements and to use their properties as they had planned. The homeowners remained in their properties nonetheless.

In February, 1995, the homeowners filed the instant law suit against Lovell Regency and against Lovell Homes, Inc. and Lovell Regency Homes Corporation, the general partners in Lovell Regency. ⁴ Their complaint sets forth claims for negligence, negligent misrepresentation, breach of implied warranties, breach of express warranty, fraud, breach of contract, and violation of the CPA.

At trial, the homeowners presented evidence, including expert witness testimony, demonstrating that Lovell had misrepresented and warranted that their houses had been waterproofed; that Lovell had showed them and other prospective buyers a Camelot model house with a finished basement, thereby misrepresenting that the houses they were purchasing would be suitable for use in fully finished conditions; that Lovell's sales brochures misleadingly touted the ideal location and setting of the community; that Lovell expressly warranted that there were no water problems in the neighborhood and that the houses would contain dry, usable basements; and that Lovell breached its construction contracts by failing to waterproof the houses as promised, by building the houses in violation of certain zoning and building standards, by building the houses near or in a flood plain and on soil not suitable for construction of that sort, and by not building the houses in conformity with sound engineering standards but instead with structural defects that were exposing them to potential health hazards.

According to the homeowners and their expert witnesses, the defects in their properties were irreparable and their properties were uninhabitable. The homeowners called Peter Vidi, a real estate appraiser, to testify about damages. Mr Vidi opined as follows about the present fair market value of each family's property: ⁵

[T]he properties are for all intents and purposes not marketable to someone who understands the degree of risk that is involved in purchasing the properties ... [T]he values of the properties were negligible and that relative to their original market value, their fair market value, at their purchase prices, that they had lost all of their value, that the fair market value that they paid at the time that they paid it was not in my opinion a well informed buyer purchasing what they knew [the value] to be.

Mr. Vidi explained that when real property has a "zero" fair market value, the value is not measurable: "it has no quantification." He opined that because the present fair market value of each family's property was zero, each family had lost a sum equal to the total purchase price of its property plus the amount of any down payment made and the cost of any subsequent improvements to the property.

On cross-examination, Mr. Vidi acknowledged that he had not obtained any information about comparable sales of properties in the neighborhood and that because he considered that the defects in the properties could not be cured, he did not obtain estimates of repair costs. Mr. Vidi did not supply an opinion about the fair market values of the properties with the alleged defects at the times that they were purchased. He also did not express an opinion about the present fair market values of the properties without the alleged defects.

On direct examination, homeowner Richard Harcum was asked: "Do you know what the market value of your home is?" Mr. Harcum responded, "I'm not sure how to answer that right now. I know that I would not feel comfortable selling [my] house at market value, which is in the $220,000 to $230,000 range." When asked the basis for that testimony, Mr. Harcum stated, "Just my general knowledge of what houses like mine tend to sell for when they're up for sale." Later in Mr. Harcum's direct examination, the following colloquy ensued:

MR. STEELMAN: If a willing and knowledgeable buyer was to be told that there's no problems to a house, there's no water problems, the community is beautiful, its everything in the brochures, what would you put the value of a comparable house like yours?

MR. HARCUM: In a condition where everything's fine, I think I said that I would guess my house is around $220,000.00 to $230,000.00

The homeowners introduced into evidence the contracts of sales and settlement sheets for their properties.

At the close of the homeowners' case, Lovell moved for judgment on numerous grounds. The trial court ruled that the homeowners could not recover damages for emotional distress or punitive damages and reserved ruling on other issues raised in the motion. Subsequently, the trial court granted Lovell's motion for judgment on the CPA claim. It concluded that the homeowners had not presented cost of repair evidence and that they had not submitted evidence competent to show the difference between the fair market values of their properties with and without defects at a given point in time. On that basis, the court ruled that the homeowners' evidence was not legally sufficient to permit the jury to award contract, warranty, or tort damages for loss in fair market value measured under an "out of pocket" or "benefit of the bargain" test. Accordingly, they had not submitted proof that they had sustained actual injury or loss, which is necessary to support a private right of action under the CPA.

In its case, Lovell introduced evidence showing that it had inspected the homeowners' properties and that the water problems about which they complained, to the extent that they existed, could be repaired for a total sum of $10,000.00 to $12,000.00. ⁶

The homeowners requested a jury instruction on damages for loss in fair market value. The trial court refused to grant the instruction, stating: "We just don't have [in evidence] two values at the same point of time to award either out of pocket or benefit of bargain ..." The homeowners also requested that the jury be instructed on damages for "loss of use and enjoyment" of their properties. The court denied that request as well, ruling that the evidence presented by the homeowners on "loss of use and enjoyment" was speculative. The court refused to grant an instruction requested by Lovell that would have directed the jury that if it found for the homeowners, it could award nominal damages only.

The trial court instructed the jury on damages as follows:

I [ ... ] ruled...