Lane v. Oustalet

• Decision Date: 04 June 2002
• Docket Number: No. 2000-CA-01814-COA.,2000-CA-01814-COA.
• Citation: 850 So.2d 1143
• Parties: F. Baxter LANE and Kathryn Lane, Appellants, v. A.J.M. OUSTALET, Jr., Alfonso Realty, Inc., and Jerry Rosetti, Esquire, Appellees.
• Court: Mississippi Court of Appeals

850 So.2d 1143

F. Baxter LANE and Kathryn Lane, Appellants, v. A.J.M. OUSTALET, Jr., Alfonso Realty, Inc., and Jerry Rosetti, Esquire, Appellees.

No. 2000-CA-01814-COA.

Court of Appeals of Mississippi.

June 4, 2002.

Rehearing Denied November 5, 2002.

Robert H. Tyler, Biloxi, attorney for appellants.

Fred Mannino, Biloxi, W.F. Holder, II, James C. Simpson, Jr., Gulfport, attorneys for appellees.

Before McMILLIN, C.J., BRIDGES, and IRVING, JJ.

BRIDGES, J., for the court.

¶ 1. The case sub judice concerns the purchase of residential real estate property located on the Mississippi Gulf Coast and the alleged breach of the contractual and fiduciary duties of the parties involved. The purchasers of the property, Kathryn and Baxter Lane, filed suit against the former owner of the property, the real estate agency and the closing attorney. The trial court directed a verdict in favor of the defendants. Feeling aggrieved, the Lanes perfected their appeal and ask this Court to review the directed verdict ruling of the trial court. Finding error, we reverse in part and affirm in part.

STATEMENT OF FACTS

¶ 2. Appellants Kathryn and Baxter F. Lane (Buyers/the Lanes) were relocating from New York to the Mississippi Gulf Coast area in 1996. The Lanes contacted Sherry Owen (Owen) of Alfonso Realty, Inc. (Alfonso), and were shown a single-family residence that pleased them. Prior to signing a sales contract, the Lanes received a disclosure statement giving information about the home, including the fact that the home had prior termite damage. The Lanes also agreed to have Alfonso act in a dual agent capacity, giving rise to a heightened fiduciary duty owed to both the prospective buyers and the seller to the transaction. The contract price was negotiated and the Lanes agreed to purchase the home from the seller, Mr. A.J.M. "Bubba" Oustalet (Seller/Oustalet).

¶ 3. The sales contract detailed specifics relating to the buyer, seller and broker. Paragraphs four and twenty-one of the contract are important to this litigation and were repeatedly referred to during the course of trial. Paragraph four of the contract specifically required the seller to furnish to the purchaser, prior to or at closing, a closing termite certificate from a licensed termite company stating that the subject property showed no evidence of termite or other wood destroying insect infestation. If such infestation existed, the contract specified that the seller shall furnish warranty of approved treatment and correct any structural damage caused by such infestation. Paragraph twenty-one specified the responsibility of the broker and attempted to limit the liability of such broker. Additionally, a special contractual provision was added at the insistence of the buyers stating that a home inspection would be conducted within five days of the signing of the contract at the expense of the Lanes.

¶ 4. Pursuant to Alfonso's request, Ben Watson, an Orkin Pest Control technician performed the pest inspection and completed the Mississippi Official Wood Destroying Insect Report on November 6, 1996. The report indicated that there was unrepaired termite damage and recommended that a qualified expert be consulted to determine if the damage needed repairing.

¶ 5. Orkin delivered the insect report directly to the closing attorney, Jerry Rosetti (Rosetti), per the normal course of business. Rosetti's fees were paid by the Lanes to ensure that Rosetti would represent their best interests. Rosetti testified that upon review of the report, his office notified Owen of the recommendation to have the property examined by a damage expert. Owen testified that she then contacted Steve Foster of Foster Construction Company to evaluate the termite damage. Owen further testified that she advised the seller, Oustalet, of the report and the need to have the house examined by a qualified contractor, but did not advise the buyers. The Lanes contend that they never received a copy of the report prior to or at closing.

¶ 6. The residential property closed on November 18, 1996, and the Lanes took possession of the home shortly thereafter. After closing, the Lanes contacted Terminix for pest control. Terminix, after an inspection, formulated a report, showing an area of 750 to 800 square feet of damage. By this time, the Lanes had requested and received a copy of the Orkin report from Rosetti. After reviewing the two reports, the Lanes hired two different professional contractors to offer estimates to repair the damage. Both contractors testified as experts at trial and corroborated that the home was damaged and the costs to repair were estimated over $35,000.

¶ 7. At the close of the Lane's case, the defense moved for a directed verdict pursuant to Rule 50 of the Mississippi Rules of Civil Procedure. The judge granted the motion and dismissed all causes of action against all defendants.

STANDARD OF REVIEW

¶ 8. On appeal, we conduct a de novo standard of review of motions for directed verdict. When deciding whether the granting of a motion for directed verdict was proper by the lower court, this Court considers the evidence in the light most favorable to the non-moving party and gives that party the benefit of all favorable inferences that may be reasonably drawn from the evidence presented at trial. Houston v. York, 755 So.2d 495, 499 (¶ 12) (Miss.Ct.App.2000) (citing Sperry-New Holland, a Div. of Sperry Corp. v. Prestage, 617 So.2d 248, 252 (Miss.1993)). If those facts and inferences, so viewed, can be said to create a question of fact from which reasonable minds could differ, then the matter should be submitted to the jury and the directed verdict should not be granted. Houston, 755 So.2d at 499 (¶ 12) (citing Prestage, 617 So.2d at 252).

LEGAL ANALYSIS

¶ 9. The Lanes asserted legal theories against Oustalet for failing to furnish a closing certificate from a licensed termite company and misrepresentation. The theories against Rosetti included failing to ensure that all provisions of the contract for sale were fulfilled including the seller's duty to provide the termite certificate and breach of his fiduciary duty to disclose all significant and material information known by him. Alfonso was sued on theories of breach of the heightened fiduciary duty, including the duty to disclose, and misrepresentation.

A. The claims against seller A.J.M. Oustalet

1. Failure to furnish termite report

¶ 10. One of the primary duties owed to the buyer by the seller was the delivery of the termite certificate as contemplated by paragraph four of the sales contract. The Lanes argue that they never received a copy of the report prior to or at closing as the contract dictates. Oustalet contends that delivery to the Lanes's agents Rosetti and Owen sufficed for delivery. We agree with the seller.

Under the general law of agency, knowledge acquired by an agent when transacting his principal's business will be imputed to his principal although not communicated to him, in the absence of a limitation on the agent's authority to the contrary, known to the person with whom the agent deals.

Pittman v. Home Indemnity Co., 411 So.2d 87, 89 (Miss.1982) (citing Home Insurance Co. of New York v. Thornhill, 165 Miss. 787, 796, 144 So. 861, 863 (1932)).

¶ 11. It is undisputed that both Rosetti and Owen were aware of the termite report. Testimony at trial revealed that Orkin delivered the report directly to the closing attorney Rosetti's office. Further testimony revealed that Rosetti studied the report and heeded the recommendation to have an expert look at the damaged property. Rosetti then called Owen, the Lanes's real estate agent, to relay such information.

¶ 12. As each of the Lanes's two agents testified, they were aware of the report. In accord with agency law, the Lanes were also aware of the report. The lower court was correct in granting the directed verdict on the issue of failure to present a copy of the termite report.

2. Misrepresentation

¶ 13. The Lanes must prove negligent misrepresentation by a preponderance of evidence. Levens v. Campbell, 733 So.2d 753, 762 (¶ 40) (Miss.1999). To prove this theory, the Lanes must show (1) a misrepresentation or omission of a fact; (2) that the representation is material or significant; (3) failure to exercise reasonable care on the part of the defendant; (4) reasonable reliance on the misrepresentation or omission; and (5) damages as a direct result of such reasonable reliance. Id. at 762(¶ 40).

¶ 14. A misrepresentation argument was initially addressed at trial but was not addressed at all in the Lanes's brief to this Court. The Mississippi Supreme Court has frequently held that propositions unsupported by reasons and authority are considered to have been waived. Thibodeaux v. State, 652 So.2d 153, 155 (Miss.1995); Dozier v. State, 247 Miss. 850, 157 So.2d 798, 799 (1963). Furthermore, Oustalet admitted prior infestation on the disclosure statement given to the Lanes prior to signing a sales contract. Additionally, as his sworn answers indicate, Oustalet instructed Owen to "do what was necessary to have the problem corrected." Oustalet properly disclosed the prior termite problem and was under no other duty.

B. The claims against closing attorney Jerry Rosetti

1. Failure to ensure contractual provisions

¶ 15. The Lanes assert that their attorney, Jerry Rosetti, failed to ensure that all provisions of the sales contract were met prior to the closing of their residential property as they did not receive a copy of the termite report as the sales contract indicated. Rosetti contends he did what he was hired to do.

¶ 16. We have previously discussed this issue with respect to Oustalet and the theory of his failure to disclose the termite report and our ruling has not changed. The report was delivered to Rosetti and therefore, following agency law, this met the provision of providing a termite report to the buyers. All contractual provisions were...