Silva v. Stevens

• Decision Date: 11 January 1991
• Docket Number: No. 88-197,88-197
• Citation: 589 A.2d 852,156 Vt. 94
• Court: Vermont Supreme Court
• Parties: Amaro SILVA and Jean Silva v. John STEVENS, Glendon McAllister and Joyce McAllister.

Page 852

589 A.2d 852

156 Vt. 94

Amaro SILVA and Jean Silva v. John STEVENS, Glendon McAllister and Joyce McAllister.

No. 88-197.

Supreme Court of Vermont.

Jan. 11, 1991.

Motion for Reargument Denied Feb. 11, 1991.

Charles D. Hickey, St. Johnsbury, for plaintiffs-appellees.

Montgomery L. Moore, Island Pond, for defendant-appellee Stevens.

Rexford & Kilmartin, Newport, for defendants-appellants.

Before ALLEN, C.J., and PECK, GIBSON, DOOLEY and MORSE, JJ.

DOOLEY, Justice.

Plaintiffs, Amaro and Jean Silva, purchased an earth-sheltered home from defendants, Glendon and Joyce McAllister, through defendant John Stevens, a local realtor. On finding defects in the home, plaintiffs sued defendants for damages caused by misrepresentations made prior to the sale. The McAllisters appeal from a jury verdict awarding damages against them for fraudulent misrepresentation, fraudulent nondisclosure and negligent misrepresentation. We affirm. Plaintiffs cross-appeal from the trial court's grant of a motion for judgment notwithstanding the verdict in favor of Stevens after the jury returned a verdict holding him liable for negligent misrepresentation. We reverse and remand.

In 1977, the McAllisters built and occupied an earth-sheltered home in Coventry, Vermont. During the seven years they lived in the home they experienced leaks in the ceiling, moisture problems around a picture window, and seepage around the chimney. They also experienced difficulties with a garage they had added in 1979. After they had the rear wall of the garage backfilled, the wall bowed inwards and developed cracks. When the McAllisters discovered the problem, they braced the wall with I-beams.

In May 1984, the McAllisters decided to sell the home. They contacted Stevens, and on May 13, 1984, Stevens and the McAllisters signed a listing agreement. Stevens drafted an advertisement for an "open house" on June 3 at the McAllister home and ran it in a local paper. Stevens based the advertisement on information he obtained in conversations with Mr. McAllister. The advertisement stated, in part:

-- Sale Includes--

A 28' X 60' Earth Sheltered Home built to the strictest standards with 4,000 feet of steel in the roof, on 10"' X 24"' footings, and 12"' X 48"' frost wall. The home is fully insulated in and out.... Also a three-car garage and shop with full second floor. Functional and well-constructed.... EVERYTHING WILL BE SOLD FOR JUST $64,000--please come out and look--

It is unclear whether Mr. McAllister used the specific terms "strictest standards" and "well constructed" in describing the property to Stevens.

The McAllisters sent a copy of the advertisement directly to plaintiffs, who had visited the home in the past and had asked Mr. McAllister about the possibility of his building an earth-sheltered home for them. Mr. McAllister had planned to build the Silvas a home, but decided "we might as well sell [them] this one."

Plaintiffs received the ad and thought that the home "sounded good," so they called the McAllisters. They agreed on a sales price of $60,000. On June 9, plaintiffs drove to Coventry and were shown around the property by the McAllisters. During the visit, Mr. McAllister told plaintiffs that there had been a leakage problem with the skylight and the chimney in the past, but that he had repaired the problem. Mr. McAllister also showed Mr. Silva the garage and told him that the I-beams were there to reinforce the rear wall. Mr. Silva apparently accepted these explanations and did not inquire further. In response to a question from Mrs. Silva, Joyce McAllister said that they did not have any dampness problems with the home.

Immediately after the visit, plaintiffs and the McAllisters went to Stevens' office. Plaintiffs had brought a check for $5,000 as a deposit. Stevens offered to show them the property, but they declined. Stevens had the parties sign a sales agreement which included a provision that "[t]he property and furnishings and appliances are sold as is and no representation has been made by the broker regarding the age or condition of the same." The parties differ as to whether plaintiffs were aware of, or whether the parties ever discussed, this language.

The sale was closed on August 31, 1984, and plaintiffs' daughter and her family took occupancy the following day. Within two months they began to have difficulties. They discovered mold in closets, rot beneath carpeting, and leaks in the middle bedroom ceiling, around the skylight, and around the chimney. They found water pooling in the garage, and found that the rear wall of the garage had cracked and bowed in until it put pressure on the I-beams.

Plaintiffs hired an architect, Don Metz, to inspect the home. Metz determined that the roof of the home was improperly sealed and was, therefore, not waterproof; there was insufficient insulation; there was inadequate ventilation to provide for air exchange; and there were no secondary exits for escape in case of fire. He also determined that the rear wall of the garage was not designed to support the weight pressing against it from backfill. Plaintiffs hired local contractors to repair the roof of the home and to repair the garage. They also had an air exchanger installed.

In 1985, plaintiffs brought suit against defendants McAllister and Stevens. The complaint, as eventually amended, alleged that the representations in the advertisement that the home was built to the "strictest standards" and that the garage was "well constructed" were false, had been made fraudulently, and were relied upon by plaintiffs. Plaintiffs sought compensatory and punitive damages based on the fraud. Plaintiffs also alleged that the misrepresentations were made in a careless and negligent manner and sought damages for this negligence. In two additional counts, plaintiffs alleged that the McAllisters had stated that they had fixed a roof leak prior to closing, when they had not, and that a suspended ceiling had been erected to fraudulently conceal the actual condition of the roof. Damages were sought under each of these counts.

Defendants were granted a directed verdict on the fraudulent concealment count at the close of the plaintiffs' case. The trial was lengthy, extending over a month. The court charged the jury on three "counts," each based on a separate theory of recovery: (1) fraud based on fraudulent misrepresentations; (2) fraud based on fraudulent nondisclosure; and (3) negligent misrepresentation. The court drafted a set of special interrogatories to present the issues to the jury. For each of the three counts, the court asked whether the jury found each of the defendants guilty. However, for the second count of fraudulent nondisclosure, the interrogatories allowed the jury to find liability only for Glendon McAllister and Joyce McAllister. Two additional interrogatories asked the jury to specify the amount of plaintiffs' recovery for compensatory and punitive damages if the jury found liability with respect to any defendant on any count.

The jury returned a verdict against the McAllisters on all three counts, and against Stevens on the claim of negligent misrepresentation. The jury assessed compensatory damages at $21,000 and punitive damages at $15,000.

The trial court denied all post-verdict motions filed by the McAllisters, but granted Stevens' motion for judgment notwithstanding the verdict. The trial court found that the "as is" clause in the sales contract established an affirmative defense for Stevens to the negligent misrepresentation claim.

The McAllisters' appeal raises the following issues: (1) whether the trial court erred in failing to grant the McAllisters' motion for a directed verdict; (2) whether the trial court erred in its charge and interrogatories to the jury; (3) whether liability on the negligent misrepresentation theory was barred by the "as is" clause in the listing agreement; (4) whether an evidentiary ruling or the comment of a court officer to a juror warrant a new trial; and (5) whether the jury's answers to the interrogatories are internally inconsistent. Plaintiffs' cross-appeal contests the grant of the judgment notwithstanding the verdict in favor of Stevens on the claim for negligent misrepresentation. In the following discussion, we refer to the McAllisters as "defendants" and to Stevens by name.

I.

Defendants first contest the trial court's refusal to grant them a directed verdict on all three counts. They argue that there was insufficient evidence to reach the jury on most of the elements of the counts.

In reviewing a trial court's denial of a directed verdict, this Court will view the evidence in the light most favorable to the nonmoving party, excluding the effect of any modifying evidence. Cushman v. Kirby, 148 Vt. 571, 574, 536 A.2d 550, 552 (1987). "If there is any evidence fairly and reasonably supporting the nonmoving party's claim, the case should go to the jury, and a directed verdict would be improper." Lussier v. North Troy Engineering Co., 149 Vt. 486, 490, 544 A.2d 1173, 1176 (1988).

The elements of fraud or intentional misrepresentation are set forth in Union Bank v. Jones, 138 Vt. 115, 121, 411 A.2d 1338, 1342 (1980), as follows:

An action for fraud and deceit will lie upon an intentional misrepresentation of existing fact, affecting the essence of the transaction, so long as the misrepresentation was false when made and known to be false by the maker, was not open to the defrauded party's knowledge, and was relied on by the defrauded party to his damage.

See also Quintin v. Miller, 138 Vt. 487, 489, 417 A.2d 941, 943 (1980).

Taken in the light most favorable to plaintiffs, there was evidence presented at trial that the McAllisters made several representations of fact relating to the condition of the home in the open-house advertisement. ¹ There was evidence that the representations were false and that the McAllisters knew they were false, including the testimony...