PH W. Dover Prop., LLC v. Lalancette Eng'rs

• Decision Date: 20 March 2015
• Docket Number: No. 13–157.,13–157.
• Citation: 2015 VT 48,120 A.3d 1135
• Parties: PH WEST DOVER PROPERTY, LLC, Mitchell Frankenberg and Jennifer Fredreck v. LALANCETTE ENGINEERS, Richard and Barbara Lalancette and Barbara Walowit Realty, Inc.
• Court: Vermont Supreme Court

120 A.3d 1135

2015 VT 48

PH WEST DOVER PROPERTY, LLC, Mitchell Frankenberg and Jennifer Fredreck

v.LALANCETTE ENGINEERS, Richard and Barbara Lalancette and Barbara Walowit Realty, Inc.

No. 13–157.

Supreme Court of Vermont.

March 20, 2015.

James A. Valente of Costello Valente & Gentry, P.C., Brattleboro, for Plaintiffs–Appellants.

Potter Stewart, Jr. of Potter Stewart, Jr. Law Offices, P.C., Brattleboro, for Defendant–Appellee Barbara Walowit Realty, Inc.

Present: DOOLEY, SKOGLUND, ROBINSON and CRAWFORD,¹ JJ., and EATON and MORRIS (Ret.), Supr. JJ., Specially Assigned.

Opinion

SKOGLUND, J.

¶ 1. Plaintiff buyers in this consumer fraud action appeal from a summary judgment order in favor of defendant realtor who represented the seller in the sale of an inn. Plaintiffs argue that the trial court erred in concluding that defendant's alleged misrepresentation and omission were immaterial as a matter of law. We affirm.

¶ 2. For purposes of our review, we consider the relevant facts in the light most favorable to the nonprevailing party—in this case, plaintiffs. Chase v. Agency of Human Servs., 2011 VT 31, ¶ 14, 189 Vt. 613, 19 A.3d 167 (mem.). Based on the evidence presented in connection with the parties' cross-motions for summary judgment, those facts are as follows. Defendant Barbara Walowit Realty, Inc. was the listing agent for an inn in West Dover.² After Ms. Walowit secured the listing for the inn, she contacted a prior-prospective purchaser to renew discussions about a potential sale. The prior-prospective purchaser claims she told defendant during their conversation that she had witnessed flooding in the parking lot and had learned of “major problems with the roof and that there was a possibility of collapse.” The prospective purchaser stated in her affidavit that defendant told her that flooding was a common occurrence. There is no evidence that the prior-prospective purchaser provided any information about the specific claimed problems with the roof or a description of any flooding, or any information about the source or basis for her complaints.

¶ 3. Following this exchange, defendant asked the seller, who had himself performed much of the carpentry work at the inn, about the condition of the roof. In her deposition, defendant stated that the seller said he believed the roof to be satisfactory. Again, in her deposition testimony, defendant testified she recommended that the seller “secure[ ] an estimate” because “this issue might be raised in an inspection and he should be prepared to be able to either compensate, fix, or do something.” In response, the seller gave defendant a document labeled “Roof Materials List” reflecting the materials cost for shingles, flashing, and nails for 6,600 square feet of roof. The estimated cost of the materials was $5000.

¶ 4. In the meantime, plaintiffs Mitchell Frankenberg and Jennifer Fredreck formed PH West Dover Property, LLC (hereinafter plaintiffs) for the purpose of buying an inn. They contacted defendant, who showed them the property in West Dover. Defendant did not disclose to plaintiffs the substance of her conversation with the prior-prospective purchaser, the $5000 materials estimate for roof repairs, or any concerns about the condition of the roof.

¶ 5. Before entering into a purchase-and-sale agreement with the seller, plaintiffs received a written disclosure from the seller concerning the condition of the property. The “Seller's Property Information Report” states “[t]his report is not a warranty of any kind by the seller or by any real estate agent representing the seller. This report is not a substitute for a property inspection.” The Report stated that the seller was aware of no “current problems with the roof,” and that there was no “flooding, drainage or grading problems on the property.” Plaintiffs entered into a purchase-and-sale agreement with the seller in December 2007. The agreement contained an inspection contingency.

¶ 6. At the recommendation of defendant, plaintiffs then hired Lalancette Engineers to perform a prepurchase structural inspection of the property, and received an inspection report in late January 2008. The report included a statement that “[t]he visible portion of the upper roof on the main inn is showing signs of wear and should be kept under observation. Resurfacing of this portion of the roof should be planned for within the next three to five years.” Specifically, the report recommended replacement of “torn and missing shingles at a few locations ... and repair of active roof leaks that were noted in the right attic at the right front plumbing vent and right rear metal chimney.”

¶ 7. The sale closed in May 2008. In September 2008, after encountering various problems relating to the condition of the inn, plaintiffs sued defendant for negligence and consumer fraud for defendant's alleged misrepresentations and omissions concerning the condition of the inn.³

Plaintiffs and defendant filed cross-motions for summary judgment.

¶ 8. On the claim of negligence, the trial court granted summary judgment to defendant. That ruling is not before us on appeal. As to the claim of consumer fraud, the court considered, among other things, defendant's alleged failure to disclose the contents of her conversation with the prior-prospective purchaser and to disclose the estimate of roof repair costs that was in her files. The court concluded that the statements from the prior-prospective purchaser were “simply too vague and foundationless to give rise to knowledge of specific material facts that [defendant] would have a duty to disclose” under the Consumer Fraud Act.⁴ The court further concluded that defendant's failure to disclose the roof-repair estimate was not a material omission because plaintiffs “already knew the roof needed repairs” from the Lalancette report, and disclosure “would have left them in the same position in which the report placed them; needing to make further inquiry.” Thus, the court concluded that the estimate “cannot be considered material as a matter of law,” and granted judgment to defendant. Plaintiffs appealed.

¶ 9. We review de novo a motion for summary judgment, applying the same standard of review as the trial court. Madowitz v. Woods at Killington Owners' Ass'n, 2010 VT 37, ¶ 9, 188 Vt. 197, 6 A.3d 1117. Summary judgment is appropriate only when “the record clearly shows that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Id. (quotation omitted); see V.R.C.P. 56(a). Therefore, we afford the nonmoving party “the benefit of all reasonable doubts and inferences.” Doe v. Forrest, 2004 VT 37, ¶ 9, 176 Vt. 476, 853 A.2d 48.

¶ 10. We have recognized that “[r]eal estate brokers and agents are marketing agents, not structural engineers or contractors. They have no duty to verify independently representations made by a seller unless they are aware of facts that tend to indicate that such representations are false.” Provost v. Miller, 144 Vt. 67, 69–70, 473 A.2d 1162, 1164 (1984) (quotation omitted). They can, however, be liable under the consumer protection statute for misrepresenting or omitting facts known to them that are important enough to affect a reasonable buyer's conduct. Vastano v. Killington Valley Real Estate, 2007 VT 33, ¶¶ 8–10, 182 Vt. 550, 929 A.2d 720 (mem.); see also 9 V.S.A. § 2453(e) (affirming that consumer protection requirements apply in real estate transactions).

¶ 11. To establish an unfair or deceptive act pursuant to the consumer protection statute, 9 V.S.A. § 2453(a), plaintiffs must show: (1) a representation, omission, or practice likely to deceive them; (2) that they interpreted the message reasonably under the circumstances; and (3) that the omission was “material, that is, likely to affect [their] conduct or decision.” Vastano, 2007 VT 33, ¶ 8, 182 Vt. 550, 929 A.2d 720 (alteration in original) (quotation omitted). The question of whether a misrepresentation or omission is material is “generally measured by an objective standard, premised on what a reasonable person would regard as important in making a decision.” Id. ¶ 9 (quotation omitted).

¶ 12. We first consider the statements from the prior-prospective purchaser to defendant about the condition of the roof and the flooding. “We have distinguished statements of fact from statements of opinion in the consumer-fraud context, holding that misrepresentations of the former may constitute fraud while misrepresentations of the latter cannot.” Heath v. Palmer, 2006 VT 125, ¶ 14, 181 Vt. 545, 915 A.2d 1290 (mem.). While the prior-prospective purchaser's statements to defendant do not fall neatly in either category, we agree with the trial court that they were not sufficiently specific to impute knowledge of defects in the property to defendant, nor to require disclosure of material information that might affect a reasonable consumer's conduct or decision.

¶ 13. The prior-prospective purchaser's statements to defendant, given as a reason for declining an earlier opportunity to make a purchase, are second-hand reports—unsupported by evidence or foundation—which are either too unreliable or too vague to require disclosure. To require the realtor to relate every nonspecific and unattributed rumor to subsequent buyers would be unreasonable. The mischief of such a requirement is obvious from this case. Although the roof shingles required replacement, no one with real knowledge about the condition of the inn has claimed that the roof structure was at risk of collapse. The record contains no evidence that the prior-prospective purchaser was qualified to offer a reliable assessment of the roof. The prior-prospective purchaser's statements provided no basis to impose a duty on defendant to investigate.

¶ 14. Similarly, the report of flooding in the parking lot was too vague. Does “flooding” mean that puddles formed when it rained, or does it mean that customers' cars were routinely immersed in deep water? The...