McLaughlin v. Williams

• Decision Date: 30 June 2008
• Docket Number: No. 4421.,4421.
• Citation: 665 S.E.2d 667,379 S.C. 451
• Court: South Carolina Court of Appeals
• Parties: Dugan J. McLAUGHLIN, Appellant, v. Sally W. WILLIAMS, Coldwell Banker Chicora Real Estate, Dunes Realty, Inc., Dan Laudone d/b/a U.S. Home Inspections, Inc., and Michael W. Alpaugh d/b/a Xtreme Termite & Pest Control, Defendants, of whom Sally W. Williams, Coldwell Banker Chicora Real Estate, and Dunes Realty, Inc. are Respondents.

665 S.E.2d 667

379 S.C. 451

Dugan J. McLAUGHLIN, Appellant, v. Sally W. WILLIAMS, Coldwell Banker Chicora Real Estate, Dunes Realty, Inc., Dan Laudone d/b/a U.S. Home Inspections, Inc., and Michael W. Alpaugh d/b/a Xtreme Termite & Pest Control, Defendants, of whom Sally W. Williams, Coldwell Banker Chicora Real Estate, and Dunes Realty, Inc. are Respondents.

No. 4421.

Court of Appeals of South Carolina.

Submitted March 1, 2008.

Decided June 30, 2008.

N. Ward Lambert, R. Patrick Smith, of Greenville, for Appellant.

Amanda A. Bailey, Mark McAdams, of Myrtle Beach, Kathryn M. Cook, of North Myrtle Beach, Phillip Ferderigos, Charleston, for Respondents.

Luther O. McCutchen, III, of Myrtle Beach, Nikole Setzler Mergo, of Columbia, for Defendants.

WILLIAMS, J.

Dugan J. McLaughlin (McLaughlin) appeals the circuit court's grant of summary judgment on his claims for fraud and negligent misrepresentation. We affirm.

FACTS

In 2003, McLaughlin was searching for a house to purchase in Myrtle Beach or Georgetown, South Carolina. McLaughlin utilized the services of Barbara Kingsmore (Kingsmore), a real estate agent with Coldwell Banker Chicora Real Estate (Chicora), to locate a suitable house.

Kingsmore showed various properties to McLaughlin's mother-in-law, who believed McLaughlin might be interested in the property located at 138 Tarpon Circle in Georgetown (the Subject Property). At the time, the Subject Property was owned by Sally W. Williams (Williams), and Dunes Realty, Inc. (Dunes Realty) was Williams' listing agent.

On May 3, 2003, Kingsmore contacted Dunes Realty and requested a Residential Property Disclosure Statement (the Disclosure Statement) for the Subject Property. On May 5, 2003, Williams and her husband prepared the Disclosure Statement, which was subsequently sent to Kingsmore. Upon receipt of the Disclosure Statement, Kingsmore noticed several of the items were left blank and there were no explanations for certain items, indicating possible problems with the Subject Property. Kingsmore requested a more complete disclosure statement; however, neither Dunes nor Williams provided one.

On May 14, 2003, Kingsmore showed the Subject Property to McLaughlin. Ultimately, McLaughlin decided to submit an offer to purchase the Subject Property and executed contracts with Chicora to establish the representative relationship between the parties. On May 15, 2003, Kingsmore showed the Disclosure Statement to McLaughlin and advised him to obtain an inspection to ensure there were no major defects with the Subject Property. McLaughlin initialed each page of the Disclosure Statement, signifying he had reviewed it.

Following negotiations between McLaughlin and Williams, the parties entered into an Agreement of Sale and Purchase and scheduled the closing for June 18, 2003. Pursuant to the agreement, McLaughlin employed U.S. Home Inspections to perform a "whole house inspection" on the Subject Property. Following the inspection, McLaughlin received a written inspection report (the Home Inspection Report) indicating moisture damage to the exterior of the Subject Property.

In addition to the Home Inspection Report, a termite and moisture inspection (the CL-100) was performed on the Subject Property and included in the closing documents. The CL-100 indicated the presence of wood-destroying fungi and a wood moisture content of 28% or more below the first main floor.

On June 18, 2003, McLaughlin closed and took possession of the Subject Property. Approximately six weeks following the closing, McLaughlin learned of defects in the structure of the Subject Property due to prior water intrusion.

McLaughlin asserted claims for fraud and negligent misrepresentation against Williams, Chicora, and Dunes Realty. Separately, each defendant filed a motion for summary judgment. In separate orders, the circuit court granted summary judgment for all three defendants. This appeal followed.

STANDARD OF REVIEW

When reviewing the grant of a summary judgment motion, this Court applies the same standard of review as the circuit court under Rule 56, SCRCP. Cowburn v. Leventis, 366 S.C. 20, 30, 619 S.E.2d 437, 443 (Ct.App.2005). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Id. To determine whether any triable issues of fact exist, the reviewing court must consider the evidence and all reasonable inferences in the light most favorable to the non-moving party. Id.

LAW/ANALYSIS

McLaughlin argues the trial court improperly granted summary judgment in favor of Williams and Chicora¹ because there was a genuine issue of material fact as to his ability to rely upon the Disclosure Statement. We disagree.

To survive a motion for summary judgment, McLaughlin must offer some evidence that a genuine issue of material fact existed as to each element of fraud and negligent misrepresentation. See Steele v. Rogers, 306 S.C. 546, 552, 413 S.E.2d 329, 333 (Ct.App.1992) (explaining the plaintiff has the burden to prove each element of the cause of action). To maintain a claim for fraud, a plaintiff must show by clear and convincing evidence:

(1) a representation; (2) its falsity; (3) its materiality; (4) knowledge of its falsity or a reckless disregard for its truth or falsity; (5) intent that the plaintiff act upon the representation; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximate injury.

Hendricks v. Hicks, 374 S.C. 616, 620, 649 S.E.2d 151, 152-53 (Ct.App.2007). To maintain a claim for negligent misrepresentation, a plaintiff must show by a preponderance of the evidence:

(1) the defendant made a false representation to the plaintiff; (2) the defendant had a pecuniary interest in making the statement; (3) the defendant owed a duty of care to see that he communicated truthful information to the plaintiff; (4) the defendant breached that duty by failing to exercise due care; (5) the plaintiff justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary loss as the proximate result of his reliance upon the representation.

Redwend Ltd. P'ship v. Edwards, 354 S.C. 459, 473-74, 581 S.E.2d 496, 504 (Ct.App. 2003).

"The key difference between fraud and negligent misrepresentation is that fraud requires the conveyance of a known falsity, while negligent misrepresentation is predicated upon transmission of a negligently made false statement." Armstrong v. Collins, 366 S.C. 204, 219-20, 621 S.E.2d 368, 375-76 (Ct.App.2005) (internal quotations and citations omitted). While the two causes of action differ, both fraud and negligent misrepresentation contain "the necessary element that the hearer had the right to rely upon the misrepresentation or fraud." Id.

Initially, we note McLaughlin's claims against each of the three defendants are based on his assertion that the Disclosure Statement completed by Williams was a misrepresentation. Specifically, McLaughlin's complaint asserted: 1) the Disclosure Statement was a misrepresentation, upon which he reasonably and detrimentally relied; and 2) all three Defendants had a statutory duty to ensure that the Disclosure Statement was in compliance with the applicable statutory law. Because McLaughlin's claims focused on the Disclosure Statement as a misrepresentation, we must determine whether McLaughlin was entitled to rely on the Disclosure Statement itself.

In arguing summary judgment was inappropriate because there was an issue of fact as to whether he could rely upon the Disclosure Statement, McLaughlin points to the general premise that "issues of reliance and its reasonableness going as they do to subjective states of mind and applications of objective standards of reasonableness, are preeminently factual issues for the trier of facts." Unlimited Servs., Inc. v. Macklen Enters., Inc., 303 S.C. 384, 387, 401 S.E.2d 153, 155 (1991) (internal quotations and citations omitted). Additionally, McLaughlin notes "a buyer has the right in South Carolina to rely on a seller of a home to disclose latent defects or hidden conditions which are not discoverable on a reasonable examination of the property and of which the seller has knowledge." May v. Hopkinson, 289 S.C. 549, 557, 347 S.E.2d 508, 513 (Ct.App.1986).

However, while issues of reliance are ordinarily resolved by the finder of fact, "there can be no reasonable reliance on a misstatement if the plaintiff knows the truth of the matter." Gruber v. Santee Frozen Foods, Inc., 309 S.C. 13, 20, 419 S.E.2d 795, 800 (Ct.App.1992). Thus, if the undisputed evidence clearly shows the party asserting reliance has knowledge of the truth of the matter, there is no genuine issue of material fact.

In the instant case, the circuit court determined McLaughlin failed to create an issue of fact regarding reliance on the Disclosure Statement in light of the information available to him prior to closing. The circuit court pointed to the information contained in the Home Inspection Report and the CL-100, which showed the existence of water damage to the Subject Property, as well as the testimony of McLaughlin and Kingsmore stating such information placed them on notice of potential moisture problems. Ultimately, the circuit court...