Hermann v. Yater

Decision Date29 March 1994
Docket NumberNo. 30A04-9311-CV-408,30A04-9311-CV-408
Citation631 N.E.2d 511
PartiesE. Conn HERMANN and Connie M. Hermann, Appellants-Plaintiffs, v. David G. YATER and Pattee L. Yater, Appellees-Defendants.
CourtIndiana Appellate Court

Jonathan E. Palmer, Matchett, Arnold & Palmer, Shelbyville, for appellants.

Raymond S. Robak, Robak & Murphy, Greenfield, for appellees.

RILEY, Judge.

STATEMENT OF THE CASE

Plaintiffs-Appellants E. Conn Hermann and Connie M. Hermann (collectively the Hermanns) appeal from an order of the Hancock Circuit Court granting summary judgment in favor of the Defendants-Appellees David G. Yater and Pattee L. Yater (collectively the Yaters). We affirm.

ISSUE

We re-state the issue as follows: Whether the trial court erred in granting summary judgment against the Hermanns on the issues of actual fraud and constructive fraud.

FACTS AND PROCEDURAL HISTORY

The Yaters are owners and developers of the Hickory Hills Subdivision in Greenfield, Indiana. On or about June 21, 1990, the Hermanns entered into a contract with the Yaters to purchase an unimproved parcel of real estate in the subdivision. 1 At the time of closing the Hermanns were not ready to begin building.

Approximately two years after the closing, the Hermanns applied to the Hancock County Board of Health for a building permit, including a septic permit. Their application was denied upon a determination that based on the soil borings that had been done, the lot was not suitable for a septic system due to an unacceptable substance in the soil. Essentially, the Hermanns had plans drawn up for their new home, closed on the sale of their old home, and then discovered that their lot was not suitable for a septic system and therefore that they could not build on it.

The Hermanns initiated this action by bringing suit against the Yaters alleging constructive fraud in Count I and actual fraud in Count II. The essence of the Hermanns' complaint is that they were denied a septic permit for the property after representations were made to them by the Yaters, through their agent, that a home could be built and a septic system maintained on the land. The Yaters filed a motion for summary judgment. 2 After hearing the testimony of one witness and the argument of counsel, the trial court granted the motion by written order. The Hermanns appeal. Additional facts will be provided as necessary.

STANDARD OF REVIEW

Summary judgment is an appropriate disposition if the "designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Ind.Trial Rule 56(C). The purpose of summary judgment is to terminate litigation about which there can be no factual dispute and which may be determined as a matter of law. T.R. 56(C); Fawley v. Martin's Supermarkets, Inc. (1993), Ind.App., 618 N.E.2d 10, 12, trans. denied.

Relying on specifically designated evidence, the moving party bears the burden of making a prima facie showing: (1) that there are no genuine issues of material fact; and (2) that the movant is entitled to judgment as a matter of law. Babinchak v. Town of Chesterton (1992), Ind.App., 598 N.E.2d 1099, 1101, reh'g denied. Only when these two requirements are met does the burden shift to the non-moving party to set forth specifically designated facts showing the existence of a genuine issue. T.R. 56(E); Id. at 1101.

On appeal we are bound by the same standard as the trial court and we must consider only those matters which were designated at the summary judgment stage. T.R. 56(C); Campbell v. Criterion Group (1993), Ind.App., 613 N.E.2d 423, 428, on reh'g (1993), Ind.App., 621 N.E.2d 342. On appeal however, the party that lost in the trial court has the burden to persuade the appellate tribunal that the trial court erred. Id. Summary judgment will be affirmed on appeal if it is sustainable on any theory or basis found in the evidentiary matter designated to the trial court. T.R. 56(C); Fawley, 618 N.E.2d at 12. Our role is to closely scrutinize the trial court's determination in order to assure that the Hermanns were not improperly denied their day in court. Campbell, 613 N.E.2d at 428.

DISCUSSION AND DECISION

The issue before the trial court and the issue before us is whether the allegations contained in the Hermanns' complaint present any genuine issues of material fact. The complaint contained two counts: Count I alleging constructive fraud and Count II alleging actual fraud. The elements of constructive fraud are as follows:

(1) a duty owing by the party to be charged to the complaining party due to their relationship, (2) violation of that duty by the making of deceptive material misrepresentations of past or existing facts or remaining silent when a duty to speak exists, (3) reliance thereon by the complaining party, (4) injury to the complaining party as a proximate result thereof, and (5) the gaining of an advantage by the party to be charged at the expense of the complaining party.

Block v. Lake Mortgage Co., Inc. (1992), Ind.App., 601 N.E.2d 449, 451, reh'g denied (quoting Pughs' IGA v. Super Food Services, Inc. (1988), Ind.App., 531 N.E.2d 1194, 1197, reh'g denied, trans. denied ). The elements of actual fraud are as follows:

(1) a material misrepresentation of past or existing fact by the party to be charged which (2) was false, (3) was made with knowledge or in reckless ignorance of the falsity (4) was relied upon by the complaining party, and (5) proximately caused the complaining party injury.

Id.

In the present case, the parties designated to the trial court the portions of the record upon which they relied in support of and in opposition to summary judgment. The trial court relied on the following designated materials in determining that the Yaters were entitled to judgment as a matter of law: the deposition of Mr. Hermann, the deposition of Mrs. Hermann, the affidavit of Dr. David Yater, the affidavit of Rick Roudebush, the testimony of Roger Wilson, the affidavit of Mr. Hermann, the affidavit of Amy Klene and the arguments of counsel. We look to these designated portions of the record in determining whether to affirm or reverse the trial court's grant of summary judgment.

To obtain summary judgment as to the constructive fraud or fraud claim, the Yaters need only show that the undisputed material facts negate at least one element of the Hermanns' claim. Hardy v. South Bend Sash & Door Co. (1992), Ind.App., 603 N.E.2d 895, 901, reh'g denied, trans. denied (citing Sanders v. Townsend (1987), Ind.App., 509 N.E.2d 860, 862, reh'g denied, trans. denied, Aff'd in part, Vacated in part, Sanders v. Townsend (1991), Ind., 582 N.E.2d 355). The Yaters contend that there was no false representation of past or existing fact and therefore there is no fraud or constructive fraud. Some additional facts are necessary.

The proposed subdivision was granted final approval by the Hancock County Planning Commission in May, 1987. Prior to final approval, the plans were submitted and approved by the Technical Review Committee. This committee was charged with verifying compliance with the rules and regulations then in effect in Hancock County, including the Hancock County Board of Health. In 1988, after the Yaters had begun selling lots in the subdivision, they were notified by the State Board of Health that borings were necessary before any future septic permits would be granted in the subdivision. In compliance with this request, the Yaters secured the services of William Strange, P.E., to conduct the borings in accordance with the Board of Health rules in effect at the time. The results of the borings indicated that there were no unsuitable soils on the portions of the lots designed to accommodate septic systems, including lot 19.

Prior to the August, 1990, closing on the Hermanns' lot, the Yaters had sold 19 lots and homes were being constructed on these lots. The Yaters had personally constructed 3 homes, and received septic permits for each. In fact, the Yaters resided in the home located on lot 20 which lies immediately west and adjacent to lot 19 from February, 1990, to October, 1992. Further, prior to the Hermanns' purchase of lot 19, a home had been constructed on lot 18, which adjoins and lies immediately east of lot 19.

The record reveals that on December 21, 1990, the State Board of Health promulgated new rules and regulations relating to the installation of septic systems throughout the State. Apparently, the new rules redefined the method for analyzing soils and the standard was changed dramatically. Sometime after April, 1991, when the Hancock County Board of Health adopted the new rules, the Yaters were notified that septic systems would not be approved on the remaining unsold lots.

The Hermanns submitted their application in July, 1992, and their application was denied based on the results of the new soil borings and the new rules. 3 Mr. Hermann then attended a board meeting of the County Board of Health and asked how the subdivision was approved and his lot available for sale, yet his application denied. He was informed that his application was denied because the soil borings taken from lot 19 contained peat, which is an unacceptable substance for a septic system.

The premise of the Yaters' argument is that had the Hermanns made application for the installation of a septic system prior to the effective date of the new rules, such application would have been approved based on the original soil borings submitted by William Strange in 1988. 4 Therefore, based on the Yaters' knowledge in August, 1990, no false representations were made.

The subdivision contains 47 lots. Prior to the initiation of this suit, 28 lots had been sold, and 18 lots remained unsold and of the unsold lots, 11 will not be approved for septic permits per the Hancock County Board of Health. The Yaters have taken issue with...

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