Lowdermilk v. Vescovo Building and Realty

• Decision Date: 18 June 2002
• Docket Number: No. ED 79055.,ED 79055.
• Citation: 91 S.W.3d 617
• Parties: Gregory A. LOWDERMILK and Mary Catherine Lowdermilk, Plaintiffs/Appellants, v. VESCOVO BUILDING AND REALTY COMPANY, INC., Gary Vescovo, Robert Vescovo, Gundaker Real Estate Company, Inc., Larry D. Wilson, Jr., and Beth Gundaker-Lisk, Defendants/Respondents.
• Court: Missouri Court of Appeals

Page 617

91 S.W.3d 617

Gregory A. LOWDERMILK and Mary Catherine Lowdermilk, Plaintiffs/Appellants, v. VESCOVO BUILDING AND REALTY COMPANY, INC., Gary Vescovo, Robert Vescovo, Gundaker Real Estate Company, Inc., Larry D. Wilson, Jr., and Beth Gundaker-Lisk, Defendants/Respondents.

No. ED 79055.

Missouri Court of Appeals, Eastern District, Division One.

June 18, 2002.

Application for Transfer to Supreme Court Denied August 7, 2002.

Case Transferred to Supreme Court September 24, 2002.

Case Retransferred to Court of Appeals December 24, 2002.

Original Opinion Reinstated January 9, 2003.

COPYRIGHT MATERIAL OMITTED

Don M. Downing, Sandra J. Wunderlich, Carrie Mulholland Brous, Stinson, Mag & Fizzell, P.C., St. Louis, MO, for appellants.

Beth C. Boggs, Boggs, Backer & Bates, L.L.C., St. Louis, MO, Robert C. Jones, Jones, Korum, Waltrip, & Jones, Clayton, MO, for respondents Vescovo Bldg. & Rlty. Co., Robert and Gary Vescovo.

Paul F. Devine, Vatterott, Shaffar Dolan, P.C., Maryland Heights, MO, for respondents Gordon A. Gundaker Real Estate Co., Beth Gundaker-Lisk and Larry Wilson, Jr.

KATHIANNE KNAUP CRANE, Judge.

Plaintiff homeowners were awarded $140,000 in actual damages and $260,000 in punitive damages against defendant homebuilders and realtors for failure to disclose that the foundation of the home they had purchased for $560,000 had not been damp-proofed. At trial, evidence was admitted with respect to numerous defects in the house, the cost to repair all of those defects, and the diminution in market value as a result of those defects. However, the case was only submitted on theories relating to defendants' failure to disclose that the foundation had not been damp-proofed, including a theory of negligence per se based on a violation of a disclosure provision of the real estate licensing statute. The trial court ordered a new trial on the grounds that the jury was allowed to consider damages not proximately caused by the failure to damp-proof and that the submission of negligence per se was improper. Plaintiffs appeal. We affirm and remand for a new trial.

FACTUAL AND PROCEDURAL BACKGROUND

This case involves a new home in Webster Groves, Missouri. The home was built by defendant Vescovo Building and Realty Company, Inc., of which defendants Gary Vescovo and Robert Vescovo were the principals. The home was originally listed for sale by Vicki Kirk, a real estate salesperson for Janet Mcafee Real Estate Co. On April 21, 1998 Gene Kiernan, a resident in the neighborhood where the home was being built, sent a letter to Ms. Kirk that advised her of problems he observed during the construction of the house, including problems with the exterior wall, roofing, windows, showers, bathtubs, decks/porches, and interior drywall with the house. Specifically, Mr. Kiernan reported that he did not observe that the foundation had been waterproofed:

I also did not see any waterproofing on the outside of the foundation. There were places where I would see down as far as twelve inches below the construction grade; and no waterproofing. The bituminous coatings used for this purpose normally are applied to the outside of the foundation walls from the footings up to the final grade line to prevent ground water and moisture from entering the basement by weeping through the concrete foundation walls. Verifications of this condition can be done by removing enough of the backfilled earth to establish the absence or presence of such coatings and, if present, how high up the walls they have been applied.

Mr. Kiernan did not disclose the basis of his expertise or write the letter on his business stationary.

On May 21, 1998, Mr. Kiernan sent the builder defendants a copy of his letter to Ms. Kirk. Between April, 1998 and September, 1998, Ms. Kirk informed a broker at Janet Mcafee and a representative of Prudential Mortgage Company, who represented some prospective buyers, that she received a letter that outlined serious concerns with the property. The prospective buyers made an offer to purchase the house, but did not ultimately purchase it because the parties were "too far apart" on price and other amenities in the home. Ms. Kirk's listing agreement with Vescovo Building expired before the house was sold. Ms. Kirk did not disclose the contents of Mr. Kiernan's letter to the listing agent or agency that replaced her.

On September 18, 1998 defendant Gundaker Real Estate Company, Inc., entered into a listing agreement on the property. Defendant Beth Gundaker-Lisk was the listing agent for the home. Defendant Larry Wilson, a Gundaker agent in its new homes division, was in charge of marketing the home to other realtors so that those realtors would bring prospective buyers to the home. Both Mr. Wilson and Ms. Gundaker-Lisk were listed on the multiple listing service as agents to contact about the property.

After Gundaker became the listing agency, Mr. Kiernan telephoned Mr. Wilson. He asked Mr. Wilson about Ms. Gundaker-Lisk and Mr. Wilson told him that he was marketing the property with Ms. Gundaker-Lisk. Mr. Wilson reported Mr. Kiernan's phone call to Gary Vescovo. Mr. Kiernan testified that, on September 1, 1998, he sent a photocopy of the letter he had sent to Ms. Kirk to Ms. Gundaker-Lisk, accompanied by a note on "Kiernan Fine Construction Service" letterhead.

In October, plaintiffs, Gregory Lowdermilk and Mary Catherine Lowdermilk, viewed the house on several occasions. At the end of that month they and their real estate agent, Stacie Fryear of Ann Noonan, Inc., met with Gary Vescovo and Robert Vescovo at the home. Both Gary Vescovo and Robert Vescovo told plaintiffs that the house was well built and had no problems. Mr. Wilson was also present at this meeting, but did not say anything about the house.

A few days after the meeting, plaintiffs made an oral offer through Ms. Fryear to purchase the house for $550,000, which was rejected. On October 26, 1998, plaintiffs made a written offer, prepared by Ms. Fryear, to purchase the house for $560,000. On October 27, 1998, Gary Vescovo accepted the offer and signed the contract as the seller.

Plaintiffs had a mechanical inspection made of the home before closing. Plaintiffs walked along with the inspector throughout his inspection. After the inspection, they were told that there were no major problems with the house. On December 18, 1998 plaintiffs closed on the house and paid $560,000 as contracted.

After they closed on the home and moved in in mid-December, 1998, plaintiffs experienced a few problems with the home. In February, 1999 plaintiffs received a letter from Mr. Kiernan, in which he informed them he was a neighbor and a designer and builder of homes. He described multiple construction problems with the home. He reported that he witnessed various "construction techniques being used that were ... so egregious just in violation of standard practice." In the letter, Mr. Kiernan informed plaintiffs that one of the problems was that the foundation had not been properly damp-proofed. A week after receiving the letter from Mr. Kiernan, plaintiffs met with him. At that meeting, Mr. Kiernan gave plaintiffs copies of the letter he had sent to Ms. Kirk and Ms. Gundaker-Lisk.

After plaintiffs had the February, 1999 meeting with Mr. Kiernan, they told Robert Vescovo and Gary Vescovo of their concerns, and Robert Vescovo and Gary Vescovo went to plaintiffs' house to meet them. Robert Vescovo and Gary Vescovo could not provide documentation to plaintiffs to show that they had damp-proofed the foundation. Plaintiffs asked them to take the house back, but they refused.

Within the first eighteen months after they moved in, plaintiffs noticed numerous other problems with the home. For example, the shower leaked, the front porch began to slope, the floor in the attached garage separated from the wall, a bathroom floor also separated from the wall, some of the trim on the interior of the house became detached from the wall, some of the floor boards in the house became loose, and all of the gutters overflowed in the rain.

On May 11, 1999, plaintiffs filed a lawsuit against Vescovo Building and Realty Company, Robert E. Vescovo, and Gary Vescovo (the defendant builders) and Gordon A. Gundaker Real Estate Company, Ms. Gundaker-Lisk, and Mr. Wilson (the defendant realtors). Plaintiffs sought damages from the defendant builders under theories of breach of implied warranty in a new home, negligence per se, intentional misrepresentation, fraudulent omission; negligent misrepresentation, negligent omission, and unjust enrichment. Plaintiffs sought damages from the defendant realtors under theories of negligence per se, unjust enrichment, fraudulent omission, and negligent omission.

At trial, Matthew Foreman, a registered architect who performs inspections for real estate owners, testified as an expert to the problems with the home. He identified numerous defects. The basement stairs were not properly framed; there was debris in the concrete foundation; there was a piece of wood inside the concrete; the beams that support the framing for the first floor were not properly grouted; the first floor framing application Was not standard; the shower in the master bath was leaking; the framing area underneath the pantry, powder room, and a portion of the laundry room on the first floor was not properly insulated; and the anchor bolts that keep the house attached to the foundation in an earthquake were not tightened. There were "nail pops and gaps" in the trim; the floorboard was pulling away from the trim; the floor slab was sinking, the bathroom floor was not level; the framing in the garage was insufficient to properly support the roof; and the wall between the house and the garage was not a sealed, fire-safe wall. The vent was not properly supported; the plumbing vent that goes through the roof was not sealed; a "baffle" was not installed in between the roof and insulation; and there was a ...