Hulse v. BHJ, INC.

• Decision Date: 17 June 2003
• Docket Number: No. 02-148.,02-148.
• Citation: 2003 WY 75,71 P.3d 262
• Parties: Raymond M. HULSE and Kristina Hulse, f/k/a Kristina Bova, Appellants (Plaintiffs), v. BHJ, INC., Appellee (Defendant).
• Court: Wyoming Supreme Court

71 P.3d 262

2003 WY 75

Raymond M. HULSE and Kristina Hulse, f/k/a Kristina Bova, Appellants (Plaintiffs), v. BHJ, INC., Appellee (Defendant).

No. 02-148.

Supreme Court of Wyoming.

June 17, 2003.

Brad A. Schreiber of Day, Morris & Schreiber, LLP, Belle Fourche, SD; and Michael W. Strain of Morman Law Firm, Sturgis, SD, Representing Appellants

James R. Bell of Murane & Bostwick, LLC, Casper, WY, Representing Appellee.

Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

LEHMAN, Justice.

[¶ 1] This is an appeal from the entry of summary judgment against appellants Raymond M. Hulse and Kristina Hulse (collectively the Hulses) in favor of appellee BHJ, Inc. (BHJ), ruling that the Hulses' claim of negligence against BHJ is barred by the statute of limitations. We affirm.

ISSUE

[¶ 2] The Hulses' raise a solitary issue on appeal:

Whether or not the trial court erred as a matter of law granting BHJ's motion for summary judgment.

FACTS AND HISTORICAL BACKGROUND

[¶ 3] On August 10, 1998, the Hulses filed their complaint surrounding their purchase of a piece of real property. The Hulses alleged breach of contract, negligence, fraud, and bad faith against First American Title Company of Crook County (First American) and negligence and fraud against BHJ, the real estate broker of the selling party. The basis of the complaint stemmed from allegations that there was a failure by First American and BHJ to disclose that the access easement to the property was restricted prohibiting commercial use of the easement.

[¶ 4] In their complaint, the Hulses allege they purchased the property with the intent of conducting commercial business, including an outfitting and hunting business and a bed and breakfast, and that both First American and BHJ were aware of the Hulses' reasons for purchasing the property. However, subsequent to the purchase, the Hulses learned that sole access to the property was by way of a restricted easement which prohibited commercial use of the easement causing the Hulses to sustain damages.

[¶ 5] Initially, the district court granted summary judgment in favor of both First American and BHJ. Following appeal, this court issued its opinion in Hulse v. First American Title Co. of Crook County, 2001 WY 95, 33 P.3d 122 (Wyo.2001) (hereinafter, Hulse I), upholding the summary judgment ruling as to First American and BHJ, with the exception of summary judgment entered in favor of BHJ on the negligence claim. Specifically, this court remanded the negligence claim asserted against BHJ to the district court for a determination of whether BHJ's agent, Edward "Amory" Hubbard, exercised the care, skill, and diligence others who are engaged in the profession would ordinarily exercise under similar circumstances in fulfilling the duties imposed upon him by statute. Hulse I, at ¶ 62. In Hulse I, this court also recognized that the claim asserted by the Hulses against BHJ, while labeled "negligent misrepresentation," essentially asserted a breach of the duty of care owed by real estate professionals to non-client buyers or a "professional negligence" claim as defined under Wyo. Stat. Ann. § 33-28-124 (LexisNexis 2001) and controlled by Wyo. Stat. Ann. § 1-3-107 (LexisNexis 2001). Hulse I, at ¶¶ 51-62.

[¶ 6] On remand, BHJ filed a second motion for summary judgment asserting that the Hulses had failed to timely file their professional negligence claim against BHJ within the applicable two-year statute of limitations called for under Wyo. Stat. Ann. § 1-3-107. Upon review, the district court entered summary judgment in favor of BHJ. This appeal followed.

STANDARD OF REVIEW

[¶ 7] Our standard of review is well established. We recently reiterated this standard of review in the case of Trabing v. Kinko's, Inc., 2002 WY 171, ¶ 8, 57 P.3d 1248, ¶ 8 (Wyo.2002):

Summary judgment is appropriate when no genuine issue as to any material fact exists and the prevailing party is entitled to have a judgment as a matter of law. Eklund v. PRI Environmental, Inc., 2001 WY 55, ¶ 10, 25 P.3d 511, ¶ 10 (Wyo. 2001); see also W.R.C.P. 56(c). A genuine issue of material fact exists when a disputed fact, if it were proven, would have the effect of establishing or refuting an essential element of the cause of action or defense that has been asserted by the parties. Williams Gas Processing-Wamsutter Co. v. Union Pacific Resources Co., 2001 WY 57, ¶ 11, 25 P.3d 1064, ¶ 11 (Wyo.2001). We examine the record from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record. Id. We evaluate the propriety of a summary judgment by employing the same standards and by using the same materials as were employed and used by the lower court. Scherer Constr., LLC v. Hedquist Constr., Inc., 2001 WY 23, ¶ 15, 18 P.3d 645, ¶ 15 (Wyo.2001). We do not accord any deference to the district court's decisions on issues of law. Id.

DISCUSSION

[¶ 8] The Hulses contend that Wyo. Stat. Ann. §§ 33-28-124 and 1-3-107 refer to the rendering of services and that the rendering of services contemplates a contractual or fiduciary relationship with a client, not a non-client.¹ Therefore, the Hulses reason that because they had no contractual or fiduciary relationship with BHJ, BHJ's agent, Mr. Hubbard, could not have provided professional services to the Hulses. The Hulses argue that due to the fact that they had no contractual or fiduciary relationship with BHJ, they may only sue BHJ for non-disclosure of the restricted easement under a "negligent misrepresentation" theory defined under Wyo. Stat. Ann. § 33-28-303(c) (LexisNexis 2001), which they assert is controlled by Wyo. Stat. Ann. § 1-3-105(a)(iv)(C) (LexisNexis 2001), affording a four-year statute of limitations.² Thus, the Hulses conclude that their negligence claim against BHJ was timely made.

[¶ 9] We begin our analysis by reiterating the language stated in Hulse I. While we recognize that this quotation is somewhat lengthy, we find it instructive. Therein, we stated:

The Hulses appeal the district court's grant of summary judgment for the defendant BHJ, Inc., a licensed real estate brokerage, for the acts of its agent Amory Hubbard on claims they label negligent misrepresentation and fraud. We take this opportunity to clarify the duties owed by licensed real estate brokers, agents, and salespersons and the causes of action that may arise as a result of an alleged breach of those duties.

The Hulses assert a claim of negligent misrepresentation against defendant BHJ, Inc. citing Restatement (Second) Torts § 552. In Richey v. Patrick, a case involving claims by purchasers of real property against lay sellers, we discussed the tort of negligent misrepresentation as found in the Restatement and stated that in order for there to have been a negligent misrepresentation, the plaintiff must show that

[o]ne who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

Richey, 904 P.2d 798, 802 (Wyo.1995).

In Richey, we found that the sellers had not "supplied false information," as required by the claim, because the sellers had not supplied any information to the purchasers. We said, "[a] nondisclosure of information cannot support a claim of misrepresentation; since nothing has been represented, an essential element of the claim is missing." Id. at 802 (citing Burman v. Richmond Homes, Ltd., 821 P.2d 913, 919 (Colo.App.1991)). We went on to hold that the crux of the purchasers' complaint was that the sellers should have informed them of a material fact, they owed a duty to do so, and it was this nondisclosure that caused the plaintiff's damage. In Richey, we then clarified that the appropriate claim was one for negligent nondisclosure as found within Restatement (Second) Torts § 551. However, we declined to apply the Restatement section to the plaintiffs' claim because we reasoned that the "as is" clause contained within the purchase contract signed by the sellers and purchasers placed the risk of discovery of adverse material facts upon purchasers of real estate. Thus, we recognized the relationship between the parties was essentially contractual and held that when a contract places the burden on the purchaser to discover defects, they are barred from seeking relief for negligent nondisclosure.

Likewise, in our recent case of Snyder v. Lovercheck, we addressed as an issue of first impression whether a purchaser of realty could even bring a claim of negligent misrepresentation, a tort action, against a seller when the relationship between the parties arises in contract. Again, we held that the contractual relationship is controlling. When purchasers of realty sign contracts with disclaimers and merger clauses stating that the purchaser is not relying on the representations of the sellers or their agents as to the condition of the property, the contract has allocated the risks of loss resulting from the purchaser's reliance on the seller's representations to the purchaser. In reasoning to our ultimate conclusion, this court had an extended discussion of the distinction between duties arising by tort and those arising by contract. We said:

Tort law proceeds from a long historical evolution of externally imposed duties and liabilities. Contract law proceeds from an even longer historical evolution of bargained-for duties and liabilities. The careless and unnecessary blanket confusion of tort and contract would undermine the carefully evolved utility of both.

In tort, the legislatures and the courts have set the parameters of social

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