Jackowski v. Borchelt
| Decision Date | 14 June 2012 |
| Docket Number | No. 83660–4.,83660–4. |
| Citation | 174 Wash.2d 720,278 P.3d 1100 |
| Parties | Timothy L. JACKOWSKI and Eri Jackowski, husband and wife, Respondents, v. David BORCHELT and Robin Borchelt, husband and wife; Hawkins Poe, Inc., dba Coldwell Banker Hawkins–Poe Realtors; and Robert Johnson, real estate agent, Petitioners, Himlie Realty Inc. and Vince Himlie, broker for Windermere Himlie Real Estate, real estate brokers; and Jef Conklin, real estate agent, Respondents. |
| Court | Washington Supreme Court |
OPINION TEXT STARTS HERE
Robert William Johnson, Kristin L. French, Robert W. Johnson, PLLC, Shelton, WA, Jeffrey Paul Downer, Erin J. Varriano, Lee Smart, PS, Seattle, WA, for Petitioners.
Melanie A. Leary, Matthew F. Davis, Demco Law Firm, PS, Seattle, WA, Jon Emmett Cushman, Benjamin D. Cushman, Stephanie M.R. Bird, Cushman Law Offices, PS, Olympia, WA, for Respondents.
Kent Michael Fandel, Graham & Dunn, PC, Seattle, WA, for amicus counsel for Washington Realtors.
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[174 Wash.2d 724]¶ 1 After a landslide damaged their home, the homeowners sued the sellers of the home, seeking rescission or, in the alternative, damages for fraud, fraudulent concealment, negligent misrepresentation, and breach of contract. The homeowners also sued the sellers' broker and agent, alleging fraud, fraudulent concealment, negligent misrepresentation, and breach of common law fiduciary duties. They leveled similar claims against their own broker and agent together with a claim for breach of statutory fiduciary duties. The trial court entered summary judgment dismissing all of the homeowners' claims, except the fraudulent concealment claims against the sellers and the sellers' broker and agent regarding cracks in the concrete basement floor. The Court of Appeals affirmed that decision in part and reversed it in part. The sellers and the homeowners' broker and agent then obtained review in this court. We affirm the Court of Appeals' decision and remand to the trial court for further proceedings consistent with this opinion.
¶ 2 In 2004, Timothy Jackowski and Eri Takase (collectively Jackowskis), a married couple, purchased a waterfront home in Mason County from David and Robin Borchelt (Borchelts). In the transaction, the Jackowskis' broker was Hawkins Poe Inc., dba ColdwellBanker Hawkins–Poe Realtors (Hawkins Poe), and their real estate agent was Robert Johnson (Johnson). The Borchelts' broker was Himlie Realty Inc. and Vince Himlie of Windermere Himlie Real Estate (collectively Windermere Himlie), and their real estate agent was Jef Conklin (Conklin).
¶ 3 The Jackowskis and Borchelts entered into a residential real estate purchase and sale agreement (PSA) on May 13, 2004. As part of the transaction, the Borchelts, as sellers, completed a “Form 17” real property transfer disclosure statement. On this form, the Borchelts checked “no” in response to the following questions: (1) “Has there been any settling, slippage, or sliding of the property or its improvements?” (2) “Does the property contain fill material?” (3) “Is there any material damage to the property from ... landslides?” and (4) “Are there any other existing material defects affecting the property that a prospective buyer should know about?” Clerk's Papers (CP) at 915, 916. Prompted by an inspection of a county-ordered revegetation project, the Borchelts later amended Form 17 to refer to a Mason County Department of Community Development letter dated June 11, 2003. The letter, which signified the granting of a permit for a block wall as a part of the revegetation project, indicated that the property was located within a landslide hazard area. It also referred to a geotechnological report by geologist Harold Parks, which had been ordered in 2002 when the Borchelts contemplated an addition to the house. The Parks report said that a slope on the property was unstable within the first 25 feet of the shoreline, particularly within the first 10 feet. Although the report indicated that an addition could be safely placed only to the west of the existing house, it was eventually built to the north of the existing house.
¶ 4 The Borchelts provided the amended Form 17, including the above mentioned documents, to Conklin. Conklin then passed along the information to Johnson. It is unclear from the record when the Jackowskis received and reviewed the amended Form 17. It appears, however, that Johnson e-mailed the form to them within a day or two of the date on which the parties signed the PSA.
¶ 5 The PSA included an inspection addendum that was signed by the Jackowskis. It provided them with an option to inspect the property within 15 days after they made an offer. Although the Jackowskis obtained a standard home inspection on Johnson's advice, they did not conduct an inspection of soil stability prior to closing. The sale closed on June 30, 2004.
[174 Wash.2d 726]¶ 6 In 2006, a landslide occurred that caused damage to the house. The Jackowskis were advised by an engineer to vacate the house immediately and they did so. The Jackowskis claim that at this time they learned from neighbors that the Borchelts had concealed the fact that the addition on the north side of the house had been constructed on uncompacted fill material. The Jackowskis also claim that they learned after the sale had closed that the Borchelts concealed cracks in the concrete basement floor by covering the floor with carpet. The concealment, according to the Jackowskis, occurred after the Borchelts put the house on the market, but prior to the time the Jackowskis first viewed the property.
¶ 7 The Jackowskis brought suit against the Borchelts for rescission or, alternatively, for damages based on causes of action for fraud, fraudulent concealment, negligent misrepresentation, and breach of contract. The Jackowskis also sued the brokers and agents for fraud or negligent misrepresentation related to the property being in a landslide hazard area and for breach of common law fiduciary duties. The trial court permitted the Jackowskis to amend their complaint against Hawkins Poe and Johnson to include an allegation of failure to meet statutory duties under 18.86.050(1)(c) and against the Borchelts, Windermere Himlie, and Conklin for fraud and fraudulent concealment of cracks in the basement.
¶ 8 The Borchelts moved for a summary judgment dismissing all of the Jackowskis' claims against them. The trial court dismissed the Jackowskis' breach of contract claim on the basis that the Jackowskis failed to respond to that portion of the Borchelts' motion for summary judgment. The trial court also dismissed the Jackowskis' negligent misrepresentation claims, applying the economic loss rule set forth in Alejandre v. Bull, 159 Wash.2d 674, 153 P.3d 864 (2007). The trial court dismissed the Jackowskis' “claims of Fraud and Rescission arising out of the Chapter 64.06 RCW real estate disclosure form, Form 17.” CP at 89. Finally, it dismissed the Jackowskis' claims relating to fraud regarding “allegations that the property is in a known landslide hazard area or had been previously subject to landslides,” as well as “allegations that the property contained fill or that the addition was constructed on fill.” Id. at 90. It did so because the evidence showed the Borchelts disclosed to the Jackowskis in written form that the property was in a landslide hazard area and that a reasonable investigation, on which the Jackowskis made their offer contingent, would have revealed the landslide issue and the presence of fill material.
¶ 9 The trial court denied the Borchelts' request to dismiss the Jackowskis' fraudulent concealment claim insofar as it was based on an allegation that the Borchelts concealed cracks in the basement by covering them with carpet.
¶ 10 Hawkins Poe and Johnson also moved for summary judgment. The trial court granted their motion only as to the negligent misrepresentation claim, again relying on Alejandre. Because the trial court did not address the remaining claims, Hawkins Poe and Johnson again moved for a summary judgment dismissing the claims the trial court had not addressed. The trial court granted the motion also on the basis of Alejandre.
¶ 11 Windermere Himlie and Conklin similarly moved for summary judgment. The trial court partially granted their motion reasoning that the Jackowskis had received written disclosures that the property was in a landslide hazard area and that a reasonable inspection of the property would have disclosed landslide risk and the presence of fill material. The trial court denied summary judgment on the Jackowskis' fraudulent concealment claim based on cracks in the basement for reasons similar to those set forth by the trial court in response to the Borchelts' motion.
¶ 12 The Jackowskis appealed the trial court's decisions to the Court of Appeals. That court affirmed the trial court in part and reversed it in part, remanding for trial on unresolved issues. Jackowski v. Borchelt, 151 Wash.App. 1, 209 P.3d 514 (2009). Specifically, the Court of Appeals affirmed the trial court's dismissal of the following claims by the Jackowskis: (1) negligent misrepresentation claims against the Borchelts and (2) all fraud and fraudulent concealment claims against “all parties” relating to the landslide issue. Id. at 21, 209 P.3d 514. The Court of Appeals reversed the trial court's dismissal of the following claims by the Jackowskis: (1) statutory and common law breach of fiduciary duty claims against Hawkins Poe and Johnson; (2) all causes of action relating to fraud regarding fill material; and (3) the breach of contract claims against the Borchelts. The Court of Appeals also held that the Jackowskis were not, under either the economic loss rule or chapter 64.06 RCW, barred from seeking common law...
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