Harrison v. McMillan, 98-CA-00540-SCT.

• Decision Date: 10 October 2002
• Docket Number: No. 98-CA-00540-SCT.,98-CA-00540-SCT.
• Citation: 828 So.2d 756
• Parties: Neil R. HARRISON and Julia A. Harrison v. Fred L. McMILLAN.
• Court: Mississippi Supreme Court

828 So.2d 756

Neil R. HARRISON and Julia A. Harrison v. Fred L. McMILLAN.

No. 98-CA-00540-SCT.

Supreme Court of Mississippi.

October 10, 2002.

James W. Nobles, Jr., James G. McIntyre, attorneys for appellants.

James Lawton Robertson, R. Mark Hodges, David B. Miller, attorneys for appellee.

Before McRAE, P.J., and EASLEY and GRAVES, JJ.

EASLEY, J., for the court.

PROCEDURAL HISTORY

¶ 1. On February 12, 1997, Dr. Fred L. McMillan (McMillan) filed suit against Julia A. Harrison (Julia) and Neil R. Harrison (Neil) (collectively the Harrisons) in the Circuit Court of Madison County, Mississippi, for damages arising from the purchase of a residence located at 137 Overlook Pointe Drive, in the Overlook Pointe Subdivision adjacent to the Ross Barnett Reservoir. The case proceeded to jury trial before Honorable Samac S. Richardson, Circuit Court Judge, in January 1998.

¶ 2. The jury awarded damages in favor of McMillan against the Harrisons. On January 20, 1998, the trial court entered a judgment in favor of McMillan in the amount of $290,066.84. The Harrisons timely moved for a new trial and/or for a remittitur. On March 6, 1998, the trial court denied the Harrisons' motion for a new trial. On April 1, 1998, the Harrisons filed their notice of appeal to this Court.¹

¶ 3. The trial court, on January 22, 1999, entered an order correcting clerical mistakes and awarding post-judgment interest and attorneys' fees. The clerical correction rectified the judgment to provide that McMillan shall recover from the Harrisons, jointly and severally, on the $290,066.84 awarded, due and payable from and after January 20, 1998, and awarded interest of 8% per annum until the judgment is paid. The trial court further ordered that the judgment against the Harrisons be increased by the sum of $32,833.67, representing the additional, reasonable and necessary attorneys' fees incurred by McMillan as a result of the Harrisons' failure and refusal to pay the judgment debt. Interest of 8% per annum was further assessed on the post-judgment attorneys' fees and legal expenses, to be calculated from the date said fees and expenses were incurred by McMillan and until that said sum was paid.

¶ 4. On September 8, 2000, the Harrisons filed their motion pursuant to M.R.C.P. 60(b)(6) for relief from the judgment. After their notice of appeal was filed, the Harrisons discovered that an abandoned sanitary sewer line ran directly beneath the McMillan house, as well as, four other houses built by the Harrisons at Overlook Pointe. This evidence was not discovered until December, 1999, more than 6 months after entry of the final judgment. The Harrisons proceeded under Rule 60(b)(6) to set aside the jury's verdict. This Court remanded this case to the Circuit Court of Madison County with instructions to hear the Rule 60(b)(6) motion filed by the Harrisons. The motion was called for an evidentiary hearing on March 29, 2001, and, after substantial proceedings, the matter was continued and then completed on April 4, 2001. Upon due consideration, the trial court denied the Harrisons' Rule 60(b) motion, retaining jurisdiction for purposes of considering McMillan's motion for assessment of post judgment attorneys' fees and legal expenses.

¶ 5. Since this Court had ordered that the Rule 60(b)(6) motion to be heard and remanded the case to the Circuit Court of Madison County, Mississippi, for hearing, subject to review by this Court on this appeal, no notice of appeal was required to be filed. On September 20, 2001, the Harrisons moved to supplement the record on appeal to include the evidence and exhibits offered at the trial court hearing on their Rule 60(b)(6) motion. The supplemental evidence is presently before this Court on appeal contained in three supplemental transcript volumes.

¶ 6. On April 6, 2001, Neil filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Act in the United States Bankruptcy Court for the Southern District of Mississippi, Bankruptcy No. 01-0196-JEE. In due course thereafter, Neil filed in the trial court his suggestion of bankruptcy, in which he gave notice that he had filed his bankruptcy petition. Julia, however, did not seek bankruptcy protection.

¶ 7. On June 13, 2001, the trial court filed its final order in the case granting McMillan's motion for assessment of post judgment attorneys' fees and legal expenses providing that the judgment against Julia in the principal amount of $290,066.84, awarded January 20, 1998, be increased together by the additional sum of $22,770.37, in addition to the sum of $32,833.67, previously provided by the order for assessment of post-judgment attorneys fees entered on January 22, 1999, together with interest at 8% per annum plus costs on said judgment until collected.

FACTS

¶ 8. The Harrisons operated an upscale home construction business in the Jackson, Mississippi, area for twenty years. Julia acknowledged that as a home builder, she was aware of the customs and skills required of a builder and understood the implied warranty given when building and selling a house. The Harrisons' building practice was to build a home and live in it for a short while before selling to avoid the State Board of Contractors' licensing requirements.

¶ 9. The Harrisons purchased 4 lots in the Overlook Pointe Subdivision in Madison County adjacent to the Ross Barnett Reservoir. The lot in question was lot 19. Construction began on lot 19 in the fall of 1991. The Harrisons' building permit was issued on October 7,1991.

¶ 10. The residence that the Harrisons built at 137 Overlook Pointe Drive on lot 19 was the first of the four homes built by the Harrisons. The lot slopes downward toward the Reservoir. The house was a split level design, 117 feet long from west to east with a single story front section facing the street and a two story section some 64 feet in length on the Reservoir side of the house. A retaining wall is located at the split level point.

¶ 11. The Harrisons began trying to market the house in the summer of 1993. The house was listed with Larry Sanders Realty and the Multiple Listing Service. On August 30, 1993, the Harrisons signed a Seller's Disclosure Statement. The statement provided that the foundation repairs performed by Eddie Bankston (Bankston) were "minor" and would only require "regular upkeep."

¶ 12. During 1993, McMillan, a medical doctor specializing in ophthalmology, became interested in purchasing a house on the water, and he secured the services of Juda Wabha (Wabha) of Re-Max Realtors, as his broker. McMillan looked at the house in December 1993, but he passed on the house. In April 1994, McMillan again looked at the house without making an offer. In September 1994, Wabha suggested that McMillan look again at the house. In October 1994, McMillan made an offer to the Harrisons for $350,000. McMillan and the Harrisons finally agreed on a sales price of $410,000 for the house. The house had previously been appraised by Hugh Hogue (Hogue) for $420,000 in September of 1994. Hogue's figure was based on an understanding that the house had "minor" foundation problems.²

¶ 13. McMillan testified that about a month after he moved in, he noticed a cat coming out of a hole in the wall at the southwest corner of the dining room. The Harrisons had not told McMillan about the hole. It took 3.9 cubic yards of dirt to fill the hole. Within a few weeks after moving into the house, he noticed "severe cracking in the wall and the ceiling from the hall at the beginning of the hallway going from the ... den to the master bedroom." When McMillan reported this to Julia, she replied, "Oh, yes, I've had trouble with a beam right there before..." McMillan testified that he had not been told about the latent problem with the beam and the ceiling before he purchased the home, and it was not noticeable upon a visual inspection of the house.

¶ 14. McMillan testified that he had experienced numerous problems with the house.³ A defective gutter caused huge sheets of water to run down the wall when it rained. The wood around a window began to rot. The north wall developed huge cracks. The swimming pool began to sink. The carpet developed a brown stain, a problem the Harrisons had experienced but not disclosed to McMillan. The basin in the fountain leaked.

¶ 15. Robert Ewing (Ewing) testified that his firm had installed "jacking pads" in 1992 which did not correct the foundation problems. Ewing testified that while installing the "jacking pads" was a less expensive procedure, it was not an adequate remedy to the foundation problems because of the sand fill on which the house sat. Before installing the jacking pads, the firm had recommended helical piers as a permanent solution to the foundation problems. Furthermore, on September 23, 1993, Eddie Bankston of Bankston Builders had also installed ten foundation support "jacking pads." These did not correct the problem. Ultimately, McMillan hired John Ray (Ray) of Ewing and Ray Foundation Service to install helical piers to stabilize and reinforce the foundation of the house.⁴

DISCUSSION

I. Failure to Disclose

¶ 16. Julia contends that McMillan is precluded from recovery of damages based on her alleged full disclosure of the problems that existed with the house's foundation. To this end, Julia cites two cases in support of her position. In Cummins v. Century 1Action Realty, Inc., 563 So.2d 1382, 1387 (Miss.1990), the purchaser was precluded from recovery of damages when he was specifically advised as to the home's termite damage before purchasing the home, and in Parker v. Thornton, 596 So.2d 854, 858 (Miss.1992), this Court stated that a builder complies with the implied warranty of fitness of habitation where he gives notice of the problem and informs the purchasers of the problems.

¶17. Julia argues that McMillan admitted that he knew that there was foundation problems with the house and a possibility of future foundation...