White v. Heng Ly Lim

• Decision Date: 13 October 2009
• Docket Number: No. 107,068.,No. 107,054.,107,068.,107,054.
• Citation: 2009 OK 79,224 P.3d 679
• Parties: Steve R. WHITE, an individual and Nikki L. White, an individual, Plaintiffs/Respondents, v. HENG LY LIM and Rachel Sunnora Lim, husband and wife, as individuals as well as Trustees of the Rachel S. Lim Revocable Living Trust dated November 9, 2002, Defendants/Respondents, and Karla Yates, as an individual, and Action Real Estate, L.L.C., an Oklahoma Corporation, Defendants/Petitioners.
• Court: Oklahoma Supreme Court

224 P.3d 679

2009 OK 79

Steve R. WHITE, an individual and Nikki L. White, an individual, Plaintiffs/Respondents, v. HENG LY LIM and Rachel Sunnora Lim, husband and wife, as individuals as well as Trustees of the Rachel S. Lim Revocable Living Trust dated November 9, 2002, Defendants/Respondents, and Karla Yates, as an individual, and Action Real Estate, L.L.C., an Oklahoma Corporation, Defendants/Petitioners.

No. 107,068.

No. 107,054.

Supreme Court of Oklahoma.

October 13, 2009.

On Writ of Certiorari of Certified Interlocutory Order to the District Court of Rogers County, Oklahoma; Honorable Dynda Post, Trial Judge

¶ 0 The plaintiffs/respondents, Steve R. White and Nikki L. White (collectively, Whites/purchasers), bought a home from the defendants/respondents, Heng Ly Lim and Rachel Sunnora Lim (Lims/sellers). The defendants/petitioners, Karla Yates and Action Real Estate, L.L.C. (collectively, agents/real estate licensees), brokered the sale. The purchasers filed suit alleging that the property had severe termite damage and that the sellers and the agents misrepresented the condition of the property in the disclosure statement and in oral communications. Requesting both actual and punitive damages, the Whites sought discovery of the Lims' and the agents' tax returns and other financial information. The sellers and the agents filed motions for summary judgment and/or partial summary adjudication contending that the Residential Property Condition Disclosure Act (Disclosure Act), 60 O.S.2001 § 831, et seq. was the exclusive remedy and that punitive damages could not be recovered under the Act. The trial court denied the motions, compelled the production of the financial information subject to a protective order, and certified the issue of punitive damages as an interlocutory order pursuant to 12 O.S. 2001 § 952(b)(3). Having granted the petition for certiorari and reviewed the cause de novo, we hold that the mandatory, clear, and unmistakable language of 60 O.S. Supp.2003 § 837 limits the right of a purchaser to recover damages for failure to disclose known defects in residential property to those provided in the Disclosure Act which expressly prohibits awards of exemplary damages.

REVERSED; CAUSE REMANDED.

Michael C. Woodward, Woodward & Guten, PLLC, Tulsa, OK, for plaintiffs/respondents, Steve R. White and Nikki L. White.

Ronald D. Cates, Tulsa, OK, for defendants/respondents, Heng Ly Lim and Rachel Sunnora Lim.

W. Michael Hill, Don W. Danz, Richard C. Honn, Benjamin J. Oxford, Secrest, Hill & Butler, Tulsa, OK, for defendants/petitioners, Karla Yates and Action Real Estate, L.L.C.

WATT, J.

¶ 1 The language of 60 O.S. Supp.2003 § 837¹ provides that: the "sole and exclusive civil remedy at common law or otherwise" under the Residential Property Condition Disclosure Act (Disclosure Act), 60 O.S.2001 § 831, et seq. "shall be an action for actual damages;" awards "shall not² include the remedy of exemplary damages"; and the Disclosure Act "applies to, regulates and determines rights, duties, obligations and remedies at common law or otherwise . . . and supplants and abrogates all common law liability, rights, duties, obligations and remedies. . . ." The consolidated causes present a single issue of statutory construction: whether the quoted language limits a purchaser's recovery for failure to disclose defects in residential property to those damages allowed under the Disclosure Act?³

¶ 2 This cause is before the Court pursuant to a certified interlocutory order⁴ to which certiorari has been granted. Upon a de novo review of the legal question presented,⁵ we determine that the mandatory, clear, and unmistakable language of 60 O.S. Supp.2003 § 837 limits the right of a purchaser⁶ to recover for failure to disclose known defects in residential property to those provided in the Disclosure Act which expressly prohibits awards for exemplary damages.

¶ 3 Our holding is supported by the amendatory language of the Disclosure Act enacted after this Court's pronouncement in Rogers v. Meiser, 2003 OK 6, 68 P.3d 967 construing the prior version of the same statute⁷ as an insufficient expression of legislative intent to supplant or abrogate a common law actual fraud claim or to preclude the award of punitive damages. It is also material that in amending the Disclosure Act, the Legislature utilized language identified by this Court as sufficient to abrogate all common law claims. Although the reasoning of Rogers was correct under the then-existing statute, it is not in accord with the expression of legislative intent in the amended statutory language and is overruled.

FACTS

¶ 4 This cause arises out of the purchase and sale of a single-family residence (residence/property) located in Oologah, Rogers County, Oklahoma. The sale closed on June 11, 2006. The purchasers filed suit against the sellers and the agents in November of the same year alleging that the property had extensive termite damage and that the condition of the property had been misrepresented in the disclosure statement and in oral communications. The Whites sought relief on grounds of breach of contract, unjust enrichment, misrepresentation/fraud, violation of the Disclosure Act, and deceit. In the alternative, the Whites requested rescission of the contract, asserting claims for negligence and breach of fiduciary duty. The purchasers sought recovery of actual and punitive damages.

¶ 5 In their answer of December 15, 2006, the sellers issued a general denial of all allegations. They also argued that all the Whites' claims were governed exclusively by the Disclosure Act.

¶ 6 In February of 2008, the purchasers issued their second discovery request. The purchasers sought production of financial records including tax returns and financial statements beginning with those dated January 1, 2004, and monthly statements for all financial accounts for the years 2006 through 2008. In response to the request, the sellers filed a motion for a protective order along with motions for summary judgment or partial summary judgment. They argued that the purchasers' exclusive recovery was governed by the Disclosure Act which limited recovery to actual damages making the discovery of financial records inappropriate. The sellers' motion for summary judgment was denied, and the Lims' filed a motion for new trial. While the new trial motion was pending, the purchasers filed a motion to compel the production of the earlier requested financial records. On October 29, 2009, the agents filed a motion for summary judgment joining in the sellers' argument that punitive damages were not recoverable under the Disclosure Act. The trial judge heard argument on the motions to compel discovery, new trial, and summary judgment on January 14th, 2009. In an order filed on April 15, 2009, the trial court sustained the discovery motion and overruled the motions for new trial and summary judgment. Additionally, the journal entry certified the issue of the award of punitive damages as appropriate for review as an interlocutory order.⁸

¶ 7 The sellers filed an original action in this Court on May 5, 2009, seeking a writ prohibiting the discovery of personal financial information. Three days later, the agents timely filed a petition for certiorari review of the certified interlocutory order. On June 15, 2009, we issued an order consolidating the causes, requiring preparation and transmission of the record, and setting a briefing cycle. While the briefing cycle was completed on August 19, 2009 with the filing of the sellers' and the agents' reply briefs, the record was not received until August 24, 2009.

¶ 8 The mandatory, clear, and unmistakable language of 60 O.S. Supp.2003 § 837 limits the right of a purchaser to recover for failure to disclose known defects in residential property to those provided in the Residential Property Condition Disclosure Act (Disclosure Act), 60 O.S.2001 § 831, et seq. which expressly prohibits an award of exemplary damages.

¶ 9 The sellers and the agents assert that the only reasonable interpretation of the language of 60 O.S. Supp.2003 § 837⁹ is that the Legislature intended that representations regarding the condition of the sale of residential property be governed exclusively by the Disclosure Act which limits recovery to actual damages while expressly prohibiting awards of exemplary damages. The purchasers concede that only actual damages may be recovered under § 837.¹⁰ Petitioners neither intimate nor argue that the legislative exclusion from recovery of exemplary damages rests on some constitutional infirmity. Nevertheless, the Whites assert that their common law claims are independent of anything contained in the disclosure statement and, instead, refer to the sellers' actions and assurances allegedly made before and after delivery of the statement. We disagree with the purchasers' contention that they may maintain an action independent of the Disclosure Act.

1) Significance of amendment of statutory language following the pronouncement in Rogers v. Meiser.

¶ 10 The Whites rely heavily on this Court's pronouncement in Rogers v. Meiser, 2003 OK 6, 68 P.3d 967, for the proposition that their common law claims are not prohibited by the Disclosure Act. In Rogers, as here, the purchasers alleged that although the sellers had acknowledged a problem with the property in the disclosure statement, they also indicated that the issue had been alleviated before the sale. Upon discovery of flooding issues affecting the residence, the purchasers sued the sellers on grounds of fraud and for violation of the Disclosure Act. We allowed the purchasers to pursue their common law claims in Rogers; because, at that time, the Disclosure Act did not contain language which either expressly or by implication could be interpreted as a legislative intent to supplant or abrogate a common law actual fraud claim or to preclude the award of punitive damages.¹¹ In so doing, we...