Management Committee of Graystone Pines Homeowners Ass'n on Behalf of Owners of Condominiums v. Graystone Pines, Inc., 17421

• Decision Date: 20 July 1982
• Docket Number: No. 17421,17421
• Citation: 652 P.2d 896
• Parties: MANAGEMENT COMMITTEE OF GRAYSTONE PINES HOMEOWNERS ASSOCIATION on Behalf of the OWNERS OF the CONDOMINIUMS, Plaintiff and Appellant, v. GRAYSTONE PINES, INC., a Utah corporation, Melvin H. Jensen, Robert R. Busch and Ronald Coulam, Individuals, Defendants and Respondents.
• Court: Utah Supreme Court

Page 896

652 P.2d 896

MANAGEMENT COMMITTEE OF GRAYSTONE PINES HOMEOWNERS ASSOCIATION on Behalf of the OWNERS OF the CONDOMINIUMS, Plaintiff and Appellant, v. GRAYSTONE PINES, INC., a Utah corporation, Melvin H. Jensen Robert R. Busch and Ronald Coulam, Individuals Defendants and Respondents.

No. 17421.

Supreme Court of Utah.

July 20, 1982.

Robert J. DeBry, Salt Lake City, for plaintiff and appellant.

Max Wheeler, Stephen Roth of Show, Christensen & Martineau, Salt Lake City, for defendants and respondents.

HALL, Chief Justice:

Plaintiff brought this action seeking damages for alleged defects and deficiencies in the construction of residential condominiums. At the close of all of the evidence, the trial court directed a verdict in favor of defendants and plaintiff appeals.

In directing a verdict, the court is not free to weigh the evidence and thus invade the province of the jury, whose prerogative it is to judge the facts. ¹ A directed verdict is only appropriate when the court is able to conclude, as a matter of law, that reasonable minds would not differ on the facts to be determined from the evidence presented. ²

This Court's standard of review of a directed verdict is the same as that imposed upon the trial court. We must examine the evidence in the light most favorable to the losing party, and if there is a reasonable basis in the evidence and in the inferences to be drawn therefrom that would support a judgment in favor of the losing party, the directed verdict cannot be sustained. ³

Application of the foregoing principles of law causes us to conclude that the trial judge erred in directing a verdict in this case.

Defendant Graystone Pines, Inc., was organized for the purpose of developing and marketing a condominium complex known as Graystone Pines Condominiums. Defendants Robert Busch, Melvin Jensen and Ronald Coulam were shareholders and served as the officers and directors of the corporation. Construction of the condominiums was completed between January and April, 1976, and all units were sold and occupied by the following summer.

Plaintiff was organized primarily for the purpose of maintaining the common areas of the condominiums. It brought this action on behalf of the unit owners, ⁴ seeking damages for defendants' alleged failure to: 1) construct curb and gutter; 2) construct walls in compliance with fire safety standards; 3) repair roof leaks; 4) repair basement leaks; and 5) eliminate the source of and remove a "black substance" from carpets. Its claims were based upon breach of express and implied warranties, contract ⁵ and fraud. The claim of fraud was predicated upon a theory of "alter ego" and was directed against the named officers, directors and shareholders based upon their alleged withdrawal of the money assets of the corporation for their individual use at a time when plaintiff's damage claims were pending.

The evidence adduced at trial, which for the purposes of this appeal must be viewed in the light most favorable to plaintiff, is as follows:

In January of 1977, official complaints were made by plaintiff to defendants concerning roof leaks in the common areas, as well as in a number of the individual units. These leaks reportedly occurred during periods of precipitation.

Due to defendants' alleged inaction on the matter, plaintiff proceeded on its own to hire a roofer to make the repairs, and paid for his services. The initial repairs did not, however, solve the problem. The roofer was called back a number of times and some of the homeowners themselves attempted to remedy the defects. All were unsuccessful.

Finally, plaintiff consulted an engineering firm for a solution. The firm suggested that the only way to permanently resolve the problem would be to replace the roof entirely. Defendants rejected that proposal and hired their own roofing expert to analyze the problem. His opinion was that the defective condition could be remedied by less expensive and drastic means. Defendants offered to pay for the repairs if done according to their expert's recommendations. However, plaintiff chose to have the roof replaced in accordance with its expert's specifications and, consequently, had to pay for the project.

After a fire occurred in the condominiums, certain surface walls were removed leaving the interior structure of the walls exposed. An expert engineer, hired by plaintiff, examined the exposed walls and discovered certain fire safety defects. He reported that the holes in the studs and plates which held various pipes and vents were too large and were unsealed in violation of the Uniform Building Code. He testified that where the holes are not sealed, a fire can suck additional oxygen into the flame. It was his opinion that the oversized holes could have been properly sealed with a silicone caulking substance.

Defendants' expert testified that the holes were not large enough to require "fire stops" and therefore were not in violation of the Uniform Building Code. Further expert testimony was presented to discount the firestopping method proposed by plaintiff's expert.

Approximately forty cracks developed in the foundational walls of the condominium complex, causing water to leak into the basement. The homeowners complained of the problem to defendants, who promised to repair the cracks. Defendants patched the initial cracks from the inside. When the problem continued, a dispute ensued as to the appropriate method of repairing the foundational cracks. Plaintiff's expert testified that the cracks would have to be repaired from the outside if there were structural defects. Defendants maintained that the leakage was caused by improper sloping in the terrain surrounding the condominiums, and that it was plaintiff's duty to reslope the ground to avert the drainage from the walls. Subsequent repairs were made by plaintiff at its expense. At the time of trial, several of the cracks were still leaking.

Defendants originally had intended to construct curb and gutter on 2700 South Street adjacent to the north boundary of the condominium property. This intention was expressed in a number of ways, including a sales brochure containing a line drawing of curb and gutter in the project, representations by defendants to purchasers, provision in the...