McClain v. Papka

• Citation: 108 S.W.3d 48
• Decision Date: 01 April 2003
• Docket Number: No. ED 81182.,ED 81182.
• Parties: Donald L. McCLAIN and Mary L. McClain, Plaintiffs/Appellants, v. Raymond PAPKA and Jean Papka, Defendants/Respondents.
• Court: Court of Appeal of Missouri (US)

Page 48

108 S.W.3d 48

Donald L. McCLAIN and Mary L. McClain, Plaintiffs/Appellants, v. Raymond PAPKA and Jean Papka, Defendants/Respondents.

No. ED 81182.

Missouri Court of Appeals, Eastern District, Division Four.

April 1, 2003.

Rehearing Denied May 27, 2003.

COPYRIGHT MATERIAL OMITTED

Charles W. Niedner, St. Charles, MO, for appellant.

Dennis R. Chassaniol, St. Charles, MO, for respondent.

WILLIAM H. CRANDALL, JR., Presiding Judge.

Plaintiffs, Donald L. McClain and Mary L. McClain, appeal from the judgment of the trial court in their favor on their breach of contract claim and in favor of defendants, Raymond Papka and Jean Papka, on plaintiffs' fraud and negligent misrepresentation claims, all of which claims arose from the sale of defendants' residence to plaintiffs. We affirm.

In December 1998, plaintiffs, Donald L. and Mary L. McClain (buyers), entered into a residential sale contract with defendants, Raymond and Jean Papka (sellers), for the sale of sellers' home. The parties were represented by the same real estate agent. In October 1998, sellers executed a disclosure statement and completed the section entitled "TERMITES/WOOD DESTROYING INSECTS, PESTS," as follows:

(a) Are you aware of any termites/wood destroying insects, or pests affecting the property? No

(b) Are you aware of any uncorrected damage to the property caused by termites/wood destroying insects, pests? No

(c) Is your property currently under a warranty contract by a licensed pest control company? Yes

(d) Are you aware of any termite/pest control reports for or treatments of the property? [No response]

Explain any "yes" answers you gave in this section [No response]

Sellers also completed the section entitled "BASEMENT AND CRAWL SPACE (Complete only if applicable)," as follows:

(a) Are you aware of any dampness, water accumulation or leakage, in the basement or crawl space? Yes If yes, describe in detail: Some leakage between basement floor & side walls. Very seldom.

(b) Are you aware of any repairs or other attempts to control any water or dampness problem in the basement or crawl space? Yes. If "yes," describe the location, extent, date and name of the person/company who did the repair or control effort: Underground drain pipe on west end of home out to street. Down spout extensions on east end of home.

Prior to closing, buyers telephoned the exterminating company to check if sellers had maintained the termite warranty on the home. The company informed them that the warranty had expired because sellers had not paid the renewal fee in June 1998. The company also informed buyers that it had treated an area under the window in the exterior garage wall for live termites in the past, and that the termites were exterminated. Sellers confirmed the accuracy of this report and the real estate agent informed buyers that sellers claimed there was no termite damage to the house. Sellers told the real estate agent that buyers could open up the wall in the garage to check for termite damage, but the agent advised buyers not to do so because sellers had not provided written permission. Prior to closing, buyers negotiated another service agreement with a different exterminating company and received a credit at closing for the cost of the new agreement. Also, two weeks before trial but three years after closing, plaintiffs discovered a 1989 written report (consisting of a drawing with an X marking two areas) from the exterminating company indicating evidence of termites not only under the window of the exterior garage wall but also in the corner where the garage wall met the interior kitchen wall. Sellers denied ever seeing this report.

Buyers visited the house three to four times before closing and visually inspected the house, although sellers' personal belongings sometimes blocked their view. Mr. McClain was in the home maintenance and repair business. An independent building inspector hired by buyers also inspected the house and gave a written report to buyers, but no evidence was presented about the report at trial and it was not included in the record on appeal. When buyers inspected the house, they noticed a crack in the back foundation wall of the basement and a water stain on the floor under it. Buyers also noticed a damp smell in the utility room of the basement. When buyers inquired about this condition, the real estate agent reported that sellers stated that the crack in question never leaked and that the water stain was from a washing machine. When buyers raised questions about another crack in the front basement foundation wall, the agent reported that sellers stated that the crack had leaked in the past but that they had remedied the leak by landscaping.

On January 15, 1999, the parties closed on the contract for the sale of the house. The closing statement indicated a $1,600.00 credit for "building and termite resolution." When buyers began remodeling shortly after closing, they found extensive termite damage in the wall between the kitchen and garage, a location different from that which sellers indicated had been treated for termite damage. In addition, when there was a substantial amount of rain, water came into the basement through both cracks in the foundation. Buyers also discovered water damage from a leak in the roof at the location of a vent stack. Aluminum foil has been placed at the top of the vent stack, ostensibly to divert the water. As a result of the leak, there was damage to the kitchen and basement walls. The buyers also discovered mold and mildew when they pulled off the paneling and took up the carpeting and tile in the basement. The leak also made it necessary to replace all of the plywood when buyers replaced the roof, because the plywood was damaged and displayed a "sponginess." Buyers viewed the $1,600.00 credit at time of closing as a contribution to the cost of the new roof; but at the time they settled on that figure, they were not aware of the extensive damage to the plywood underneath the shingles.

In March 1999, buyers brought the present action against sellers in a three-count petition. Count I was for breach of contract for sellers' failure to disclose the latent defects in the house and for failing to provide the termite warranty contract. Count II was for fraud and Count III was for negligent misrepresentation for sellers' representing that there were no latent defects and that a termite warranty contract was in effect. After a court-tried case, the trial court found in favor of buyers on their breach of contract claim. The court awarded damages in the amount of $1,194.33, which represented one-third of the amount necessary to fix the water damage caused by the leak by the vent stack (totalling $2,803.00), plus $260.00 that buyers spent to paint the area. It also awarded buyers $1,000.00 for their attorney's fees. The court found in favor of sellers on Counts II and III. The court dictated the reasons for its decision into the record. Buyers appeal.

In a court-tried case, the judgment of the trial court will be affirmed unless there is no substantial evidence to support the judgment, it is against the clear weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We accept all evidence and inferences favorable to the judgment, and disregard all contrary evidence and inferences. Central Dist. Alarm, Inc. v. Hal-Tuc, Inc., 886 S.W.2d 210, 211 (Mo.App. E.D.1994). The trial court sits in the best position to judge the credibility of the witnesses. VanBooven v. Smull, 938 S.W.2d 324, 327 (Mo.App. W.D.1997).

In their first point, buyers contend that the trial court erred in finding that sellers were not liable for termite damage under any of the three counts in their petition. They argue that sellers knew of the prior infestation at the location in the wall between the garage and the kitchen, but did not disclose it. Buyers further argue that they did not waive any claim for termite damage anywhere in the house when they closed on the contract with the knowledge of the presence of termites at only one location in the house.

Two of buyers' counts (fraud and negligent misrepresentation) were based on sellers' failure to disclose the termite damage and the infestation in the wall between the garage and the kitchen. An essential element of both fraud and negligent misrepresentation is reliance on the representation and damage as a result of that reliance. Sanders v. Ins. Co. of North America, 42 S.W.3d 1, 9 (Mo.App. W.D. 2000). The failure to prove any one of the essential elements of either fraud or negligent misrepresentation is fatal to a claim dependent thereon. Id. The concept of fraud liability based upon nondisclosure couches reliance in terms of the availability of the information to the plaintiff and the plaintiff's diligence. VanBooven, 938 S.W.2d at 328. A plaintiff asserting fraud must show that the undisclosed information was beyond his or her...