Remeikis v. Boss & Phelps, Inc., 79-361.

• Docket Nº: No. 79-361.
• Citation: 419 A.2d 986
• Case Date: August 28, 1980
• Court: Court of Appeals of Columbia District

419 A.2d 986 Albert A. and Mary Grace REMEIKIS, Appellants,
v.
BOSS & PHELPS, INC. and Western Exterminating Company, Inc., Appellees. No. 79-361. District of Columbia Court of Appeals. Argued March 27, 1980. Decided August 28, 1980.

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Daniel E. Schultz, Washington, D. C., with whom Melinda Gray Murray, Washington, D. C., was on the briefs, for appellants.

Joseph F. Cunningham, Washington, D. C., for appellee, Boss & Phelps, Inc.

Michael Evan Jaffe, Washington, D. C., with whom George R. Kucik, Howard V.

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Sinclair and Kathleen A. Morse, Washington, D. C., were on the brief. Anita Barondes, Washington, D. C., also entered an appearance, for appellee, Western Exterminating Co., Inc.

Before GALLAGHER, MACK and PRYOR, Associate Judges.

GALLAGHER, Associate Judge:

Appellants bought a house which, they discovered after closing, had extensive termite damage. They sued (a) the seller, Mrs. Herman, for breach of contract and fraud, and (b) the real estate agent, Boss & Phelps, and termite inspection company, Western, for negligence and fraud. Mrs. Herman settled the breach-of-contract and fraud claims against her by tendering $10,000. Later, during trial, she died and the cross claims against her were dropped. At the close of the plaintiffs' evidence, the trial judge granted a directed verdict in favor of Boss & Phelps and Western on the remaining two counts. We reverse, concluding that sufficient evidence was introduced to allow a jury to find negligence or fraud.

On a motion for directed verdict, it is well settled that the evidence must be construed most favorably to the plaintiff; to this end he is entitled to the full effect of every legitimate inference therefrom. If upon the evidence, so considered, reasonable men might differ, the case should go to the jury; if, on the other hand, no reasonable man could reach a verdict in favor of the plaintiff, the motion should be granted. [Jackson v. Capital Transit Co., 69 App.D.C. 147, 148, 99 F.2d 380, 381 (1938), cert. denied, 306 U.S. 630, 59 S.Ct. 464, 83 L.Ed. 1032 (1939).]

See Kendall v. Gore Properties, Inc., 98 U.S.App.D.C. 378, 384, 236 F.2d 673, 679 (1956); Tobin v. Pennsylvania R. Co., 69 App.D.C. 262, 100 F.2d 435 (1938), cert. denied, 306 U.S. 640, 59 S.Ct. 488, 83 L.Ed. 1040 (1939). We conclude that appellants introduced ample evidence to satisfy this standard.

The elements of fraud are (1) a false representation (2) of material fact (3) knowingly made (4) with intent to deceive and (5) action taken in reliance upon the misrepresentation. Jacobs v. District Unemployment Compensation Board, D.C. App., 382 A.2d 282 (1978); Bennett v. Kiggins, D.C.App., 377 A.2d 57 (1977), cert. denied, 434 U.S. 1034, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978); United States v. Kiefer, 97 U.S.App.D.C. 101, 228 F.2d 448 (1955), cert. denied, 350 U.S. 933, 76 S.Ct. 305, 100 L.Ed. 815 (1956). When viewed in the light most favorable to them, appellants' evidence could be taken to reveal a deliberate scheme by Boss & Phelps and Western to mislead appellants as to the extent of termite damage in the house, which scheme would amount to fraud.

It is undisputed that Mrs. Herman employed Western the year before she sold her house to inspect and treat the premises for termites. Western's 1974 report showed "termite damage to window sill . . . joists and support beams . . . subflooring and finished flooring." (Plaintiff's exhibit 9.) When appellants were shown the house by Rita Connors, a Boss & Phelps real estate agent, Mrs. Remeikis noted what she suspected were termite tracks. Mrs. Connors told her not to worry, because the Boss & Phelps contract provided the best available protection to the buyer, not only against presence of termites, but also against termite damage. Indeed, the sales contract signed by the Remeikises and Mrs. Herman on April 2, 1975 contained the following clause:

Seller agrees to furnish purchaser with a letter from a reliable termite company that the premises are free from termite damages and/or infestation at time of settlement.

On June 5, 1975, Boss & Phelps asked Western to furnish the termite clearance report. Western's sales representative, Mr. Barrett, who had inspected and treated the house in 1974, performed an inspection on June 25, 1975. Western's termite clearance report, dated July 9, 1975, was handed to the Remeikises at closing on July 10, 1975.

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The form report stated that the house had been treated in 1974, and that the guarantee against reinfestation remained in force. At issue here, two further statements on the preprinted form were checked off, indicating there was "no visible evidence of present termite activity," and "no visible evidence of structural termite damage." Next to the word "damage" was a footnote, filled in at the bottom of the form as follows: "old evidence of termites in basement-inactive."

When the real estate agent handed appellants the report at closing, she also told them that there had been a small problem in the basement, which had been taken care of, and got Mrs. Herman to show Mr. Remeikis the receipt for repair of one beam. Mr. Remeikis then stated, "if this takes care of everything, fine." The real estate agent made no response, and the sale was concluded.

Four evidentiary items support appellants' contention that Western and Boss & Phelps suppressed an earlier written report which revealed the full extent of the termite damage and substituted the more favorably worded July 9 report given to the buyers at closing. A controversial piece of evidence is the entry in Boss & Phelps' file on July 2, of the notation "Term. in., damage, copy to Rita." Appellants maintain that the notation refers to a written report sent from Western to Boss & Phelps revealing extensive termite damage, which report was suppressed. Boss & Phelps maintain that the notation refers to a telephone call to Western, where the only damage mentioned was one unsound beam. They claim they received no written report until July 9, the day before settlement. Appellants introduced a number of identical notations "term. in." in files of other properties where Western performed the termite inspection, and each time the notation referred to Western's written report dated a few days prior to the notation. The second piece of evidence is Boss & Phelps' letter of July 7 to the title company which said "enclosed . . . is a copy of the termite report from Western Exterminating Company, Inc. which indicates the presence of old damage." Third, and perhaps most damaging, is the testimony of Mr. Hannum, a repairman hired by Mrs. Herman on July 7 to replace one termite-damaged beam. Mr. Hannum stated that he saw a termite report on a preprinted form which listed extensive repairs needed, and that this report was not the July 9 report nor the 1974 report prepared by Western when they first treated the house. The final testimony supporting appellants' theory is Mr. Remeikis' own statement that Mr. Barrett, the Western employee who inspected the house and wrote the report, admitted after closing that there had been an earlier report indicating extensive damage.

Some evidence was also presented which weakens appellants' theory of an earlier report. The secretary at Boss & Phelps stated that her July 2 notation "Term. in., damage, copy to Rita" could have referred to a telephone message, not a written report. Mr. Connors at Boss & Phelps said the basis for the notation was his call to Western on July 2 when Mr. Barrett told him that one beam was damaged (the one later mended by Mr. Hannum). Mr. Barrett's testimony agreed insofar as he said there was only a telephone conversation on July 2; however, he testified that in the telephone conversation, he told Mr. Connors he expected there was damage to flooring and subflooring, not just to one beam.

This contradictory testimony creates an issue of fact for the jury. Certainly, there was more that the "barely...