Jeff v. Eugene, CA 04-353 (AR 2/9/2005)

• Decision Date: 09 February 2005
• Docket Number: CA 04-353
• Citation: Jeff v. Eugene, CA 04-353 (AR 2/9/2005), CA 04-353 (Ark. Feb 09, 2005)
• Parties: JEFF and Tammy Barringer, Appellants v. EUGENE and Connie Hall, Appellees
• Court: Arkansas Supreme Court

Page 1

JEFF and Tammy Barringer, Appellants v.EUGENE and Connie Hall, Appellees

CA 04-353

Court of Appeals of Arkansas, Division IV

Opinion Delivered February 9, 2005

An Appeal from Washington County Circuit Court; No. CV03-453; Honorable John Mark Lindsey, Circuit Judge.

Affirmed.

WENDELL L. GRIFFEN, Judge.

Appellants Jeff and Tammy Barringer sued appellees Eugene and Connie Hall for fraud and breach of contract in connection with the sale of a home.Following a jury verdict in appellees' favor, appellants filed a motion for a new trial, which the trial court denied.Appellants now appeal from that ruling and from an order awarding attorney fees to appellees.We affirm.

In mid-2002, appellees sold appellants a home and surrounding acreage in rural Washington County.Prior to the purchase, appellees provided appellants with an owner disclosure form, which stated, inter alia, that sewer service on the property was provided by an "individual septic system."In February 2003, appellantTammy Barringer discovered a sewage backup in the home and called a serviceman.The serviceman, after investigating the problem, informed Mrs. Barringer that the home was served not by a septic tank but by a single pipe leading from the house to the side of a mountain approximately 250 feet away, where it emptied into a ravine.

In March 2003, appellants sued appellees for fraud and breach of contract, asserting, inter alia, that appellees had misrepresented that a septic system existed on the property.The case went to trial on November 20, 2003, and the following pertinent testimony was given.¹AppellantTammy Barringer testified that, when she experienced problems with sewage backup in February 2003, she called Best Jet Sewer & Drain Service, who, after searching unsuccessfully for a septic tank, eventually located the pipe coming out of the side of the mountain.At that point, Mrs. Barringer said, she realized that the home had no septic system.She also testified that, prior to purchasing the home, she viewed the property with her father, Richard Temple, who asked appelleeEugene Hall where the "septic tank" was.According to Mrs. Barringer, Hall pointed to the right side of the house and said, "it's over there somewhere" and "down there somewhere."Additionally, Mrs. Barringer testified that, at closing, Eugene Hall drew a diagram with lines that went under the house's patio and used the word "septic" in doing so.Finally, she acknowledged that she and her husband had hired an inspector prior to purchase, who reported only certain electrical and plumbing problems that were ultimately remedied by appellees.

Craig Sheppard of Best Jet Sewer & Drain Service testified that he was the one who discovered the pipe that emptied out of the side of the mountain.He said that the pipe would not be considered a "septic system" because it did not contain a tank for bacterial breakdown of waste and did not contain lines that allow liquids to be leached into the soil.

AppelleeEugene Hall testified that he had been under the impression since purchasing the property from Charles Klim in 1995 that the property had a septic system.When Hall moved his trailer onto the property for the purpose of completing construction on the home, Klim had left a four-inch sewer pipe out of the ground to which Hall could connect.²Hall said that he assumed the pipe went into a septic system with lateral lines.He further said that he never saw any sewage running out of the side of the mountain, which was at least 250 feet away from the home, nor did he have any problems with odors or have other occasion to search for the system.Therefore, he said, when he filled out the disclosure form, he believed that there was a working septic system on the property with a tank and lateral lines, even though no one had ever told him that one in fact existed.Hall also testified that, when Richard Temple asked him where the "septic system" was, he said that he had "no idea" but that it was "somewhere out there."

Charles Klim, who sold the property to appellees in 1995, testified that he was the one who had run the sewer line to the side of the mountain.He described the system as an "open-end" sewer, in which the water from the house ran into one pipe, then through a rock formation and out the side of the mountain.According to Klim, the county said that his system was legal.Klim further stated that he did not believe that he ever showed appellees the outlet pipe nor did he discuss the sewer system with them.When he listed the property for sale, he listed it as having a "sewer system."

In addition to the above testimony, the jury was told that the parties had stipulated that there was no septic tank nor lateral lines on the property and that appellants, after purchasing the property, paid $3,800 to have a septic system installed.

Finally, three relevant documents were admitted into evidence.The first was the above referenced owner disclosure form, which stated that the property was served by an "individual septic system."The form certified that "the information herein is true and correct to the best of owner's knowledge as of the above date."It further provided that the owner did not possess any expertise in construction, architecture, engineering, or any other specific areas related to the construction or conditions of improvement on the property; that the owner possessed no greater knowledge than that which could be obtained by inspection of the property by potential buyers; that the form was not a warranty of any kind; and that the form was not a substitute for an inspection.

The second document was a real estate contract dated June 11, 2002, wherein appellants agreed to purchase the property for $185,000.The contract provided that appellants agreed to accept the property "as is" and to hold appellees"harmless of any problems relative to the mechanical, plumbing, appliances, structural defect or failure in any of the components of the Property that may exist, be discovered or occur after Closing."Paragraph twenty-five of the contract contained in bold type what was termed a "Buyer's Disclaimer of Reliance," which read in pertinent part:

BUYER CERTIFIES THAT BUYER HAS PERSONALLY INSPECTED OR WILL PERSONALLY INSPECT, OR HAS HAD OR WILL HAVE A REPRESENTATIVE INSPECT, THE PROPERTY AS FULLY AS BUYER DESIRES AND IS NOT RELYING ON AND SHALL NOT HEREAFTER RELY UPON ANY WARRANTIES, REPRESENTATIONS OR STATEMENTS OF THE SELLER ... REGARDING THE AGE, SIZE, QUALITY, VALUE, OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION ALL IMPROVEMENTS, ELECTRICAL OR MECHANICAL SYSTEMS, PLUMBING OR APPLIANCES OTHER THAN THOSE SPECIFIED HEREIN (INCLUDING ANY WRITTEN DISCLOSURES PROVIDED BY SELLER AND DESCRIBED IN PARAGRAPH 16 OF THIS REAL ESTATE CONTRACT), IF ANY, WHETHER OR NOT AN EXISTING DEFECT IN ANY SUCH REAL OR PERSONAL PROPERTY MAY BE REASONABLY DISCOVERABLE BY BUYER ....

Paragraph sixteen of the contract provided that, although a disclosure form had been delivered by appellees to the appellants, that fact neither limited nor restricted the Buyer's Disclaimer of Reliance set forth in paragraph twenty-five.Subsection (B) of paragraph sixteen reiterated that the disclosure was warranted by appellees to be "true, correct, and complete" to the best of their knowledge.

The third document is an Inspection, Repair, and Survey Addendum signed by appellants prior to closing.It contained a paragraph in bold type titled "Buyer's Agreement to Property Conditions," which provided, inter alia, that:

BUYER WARRANTS, REPRESENTS AND ACKNOWLEDGES THAT BUYER AND ALL PERSONS OR ENTITIES DESIRED BY BUYER HAVE INSPECTED THE PROPERTY TO THE FULLEST EXTENT DESIRED BY BUYER AND FIND THE CONDITION OF THE PROPERTY ACCEPTABLE IN ALL RESPECTS.BUYER REAFFIRMS ALL DISCLAIMERS SET FORTH WITHIN PARAGRAPH 25 OF THE REAL ESTATE CONTRACT ... THE FACT THAT THE BUYER COMPLETES THE PURCHASE OF THIS PROPERTY WARRANTS THAT THE BUYER IS COMPLETELY SATISFIED WITH THE CONDITION OF THE PROPERTY.

Following presentation of the above evidence, the jury unanimously answered four verdict interrogatories on the elements of fraud and one verdict interrogatory on breach of contract in favor of appellees.Once judgment was entered on the verdict, appellants filed a motion for a new trial asserting that, because appellees had unquestionably misrepresented that there was a septic system on the property, the jury's verdict was clearly contrary to the preponderance of the evidence.SeeArk. R. Civ. P. 59(a)(6)(2004).³The trial court denied the motion in light of testimony that appellees presumed that there was a septic tank on the property and in light of the contractual disclaimers and appellants' professional inspection of the property.Appellants now appeal from that denial.

When a motion for a new trial is made on the ground that the verdict is clearly contrary to the preponderance of the evidence, we affirm the denial of the motion if the jury's verdict is supported by substantial evidence.SeeDovers v. Stephenson Oil Co.,354 Ark. 695, 128 S.W.3d 805(2003).Substantial evidence is that which goes beyond suspicion or conjecture and is sufficient to compel a conclusion one way or the other.Id.We give the verdict the benefit of all reasonable inferences in accordance with the proof.Seeid.It is only where there is no reasonable probability that the incident occurred according to the version of the prevailing party or where fair-minded persons can only draw a contrary conclusion that a jury verdict should be disturbed.Id.

Appellants argue first that the jury's verdict on fraud is not supported by substantial evidence.To establish fraud, five elements must be proven: (1) a false representation of a material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance...