Wysocki v. Johnson

• Decision Date: 03 March 2014
• Docket Number: No. 45A03–1309–CT–385.,45A03–1309–CT–385.
• Citation: 4 N.E.3d 1218
• Parties: Joseph and M. Carmen WYSOCKI, Appellants–Plaintiffs, v. Barbara A. and William T. JOHNSON, both individually and as Trustees of the Barbara A. Johnson Living Trust, Appellee.
• Court: Indiana Appellate Court

4 N.E.3d 1218

Joseph and M. Carmen WYSOCKI, Appellants–Plaintiffs,

v.Barbara A. and William T. JOHNSON, both individually and as Trustees of the Barbara A. Johnson Living Trust, Appellee.

No. 45A03–1309–CT–385.

Court of Appeals of Indiana.

March 3, 2014.

Background: Home purchasers sued vendors alleging fraud arising from vendor's failure to disclose defects discovered after closing. Following bench trial, the Lake Superior Court, 2011 WL 7394997,Gerald N. Svetanoff, J., awarded damages to purchasers but denied their request for relief under the Indiana Crime Victims Relief Act (CVRA). After the Court of Appeals, affirmed in part, reversed in part, 971 N.E.2d 1273, the Supreme Court, 990 N.E.2d 456, granted transfer, vacated the Court of Appeals opinion and remanded.

Holding: On remand, the Court of Appeals, Friedlander, J., held that purchasers could not recover attorney fees under the CVRA.

Affirmed.Shaun T. Olsen, Olsen Campbell Ltd., Merrillville, IN, Attorney for Appellants.

Katherine A. Brown–Henry, Cline Farrell Christie & Lee, P.C., Indianapolis, IN, Attorney for Appellees.

OPINION

FRIEDLANDER, Judge.

Joseph and M. Carmen Wysocki appeal the denial of their request for attorney fees and additional damages under Indiana's Crime Victims Relief Act, i.e., Ind.Code Ann. § 34–24–3–1 (West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.) (the CVRA).

We affirm.

This is the second time litigation between these parties concerning the same operative facts has come before our appellate courts. Those facts concern the 2006 sale of a home from Barbara A. Johnson, William T. Johnson, and the Barbara A. Johnson Living Trust Dated 12–17–1996 (collectively, the Johnsons) to the Wysockis. Our Supreme Court set out those facts as follows:

In 1973, William and Barbara Johnson purchased a single-family home in Lake County, Indiana. In 1996, the Johnsons established the Barbara A. Johnson Living Trust and deeded the property to the Trust. They lived in the home continually, with William Johnson doing most renovation work that arose.

In 2006, the Trust sold the property to Joseph and M. Carmen Wysocki for $235,000. Prior to finalizing the purchase agreement, Barbara Johnson—in her position as trustee—executed a Seller's Residential Real Estate Sales Disclosure Form in which she averred that there were no violations of applicable building codes, that all work had been done with a building permit when required, that there were no foundational or structural problems, and that there were no issues with moisture, water, or roof leakage. The Wysockis acknowledged and signed the Disclosure Form on July 11, 2006. The next day they signed a purchase agreement for the property, electing in that agreement to obtain their own independent inspection before closing.

The Wysockis' independent inspection noted no roof leaks, major deficiencies, electrical issues, or structural defects. However, it was limited to “readily accessible areas of the building” and “visual observations of apparent conditions existing only at the time of the inspections.” (App. at 84.) “Latent and concealed defects and deficiencies” were excluded. (App. at 84.) The Wysockis then waived any further independent inspections and agreed to accept the property in the “as is” condition as reported in the inspection. Closing occurred on July 28, 2006.

Shortly after taking possession, the Wysockis began noticing issues with the property. At the first substantial rain, they discovered water leaking into the garage and cascading down the wall of their front porch. That fall, when they closed the swimming pool for the season, they discovered electrical issues with the pool system. An electrical inspector for the City of Crown Point found numerous electrical code violations in the wiring to the pool, and the repair necessitated going under the property's screened-in rear patio. While under the patio, the Wysockis discovered that the patio's structural supports appeared to be resting on bare earth.

The Wysockis then hired a consulting engineer to examine the property. He noted a broken or deflected beam in the front porch that needed to be replaced and that the roof intersection of the porch and garage did not come together properly, with a number of defects that would cause water leakage from that point. Additionally, he noted defects in the attic above the garage—including an improperly cut ceiling joist and water damage directly below the improper roof intersection. Below the screened-in patio, the engineer found that many of the deck posts were resting on the ground and beginning to decay; others did not reach the ground at all and were instead resting on shims of concrete blocks and other materials. The Wysockis spent $1200 to repair the electrical service to the pool, $3494.74 to repair the roof intersection, and had estimates of $2786.86 to repair the broken front beam and $6324.54 to repair the patio supports.

The Wysockis filed suit against the Johnsons individually and as trustees of the Trust. Count I of their complaint alleged fraud arising from the Johnsons' failure to disclose the defects discovered by the Wysockis after closing. Count II alleged a breach of contract or, alternatively, conversion arising out of the Johnsons' removal of pump systems connected to the pool and several landscaping ponds. They sought compensatory damages and pursuant to the Indiana Crime Victims Relief Statute, treble damages, attorney fees, costs, and interest.

The trial court granted summary judgment in favor of the Johnsons with respect to Count II of the Wysockis' complaint. A bench trial was held on Count I, with the trial court finding the Johnsons liable for the defective electrical service to the pool, the roofing above the front porch, the front porch beam, and the screened-in patio supports. It awarded damages in the amount of $13,805.95, but denied their request for relief under the Indiana Crime Victims Relief Statute. The Wysockis filed a motion to correct errors seeking an additional $13,500 in attorney and expert fees. The trial court denied their motion and both parties appealed.

The Court of Appeals, in an unpublished memorandum decision, affirmed in part and reversed in part. Johnson v. Wysocki, 2012 WL 3067898 (Ind.Ct.App. July 30, 2012). It found that the Wysockis failed to show that the Johnsons had actual knowledge of the defects and so reversed the trial court's judgment in favor of the Wysockis. Id. at *5. It therefore also affirmed the trial court's denial of relief under the Indiana Crime Victims Relief Statute. Id.

Johnson v. Wysocki, 990 N.E.2d 456, 459–60 (Ind.2013).

Our Supreme Court reversed, holding that Indiana's Disclosure Statutes, i.e., Ind.Code Ann. § 32–21–5 et seq. (West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.), “abrogated the common law principles originally set forth in [Cagney v. Cuson, 77 Ind. 494 (1881) ]. In such transactions the seller may be liable for fraudulent misrepresentations made on the Disclosure Form when he or she had actual knowledge that the representation was false at the time he or she completed the form.” Johnson v. Wysocki, 990 N.E.2d at 466. Further, the Court concluded that the trial court applied the wrong legal standard in determining whether the Johnsons knew about the defects in question. The Disclosure Statutes require actual knowledge that the representations in question were false at the time they were made. The trial court here, however, found that the Johnsons were liable because those defects “should have been obvious to the Johnsons”. Id. Accordingly, the Court remanded with instructions to reevaluate the Wysockis' fraudulent misrepresentation claim, which was premised upon the allegation that the Johnsons made false statements on the Sellers Residential Real Estate Disclosure Form, using the correct legal standard.

This brings us to the current appeal. Upon remand, the trial court determined that the defects in question were clearly within the actual knowledge of the Johnsons at the time the disclosure form was completed, and therefore the court entered judgment in favor of the Wysockis with respect to the cost of performing the necessary repairs. On the other hand, the trial court denied the Wysockis' request for attorney fees and expert fees under the CVRA. This is the ruling that the Wysockis appeal. In a nutshell, the Wysockis urge this court to create “a categorical ‘bright line’ rule that the Crime Victims Relief Act is applicable in instances where a seller is held liable [for] false or incomplete statements in their disclosure forms [.]” Appellant's Brief at 24. We will discuss only the request for attorney fees, but our conclusion applies with equal force to other fees recoverable under the CVRA.

In deciding whether the trial court erred in denying the Wysockis' request for attorney fees, we are mindful that Indiana generally follows the “American Rule”, whereby parties pay their own attorney fees. Nonetheless, attorney fees are recoverable if there is an agreement between the parties to that effect, or where attorney fees are authorized by statute or rule. Estate of Kappel v. Kappel, 979 N.E.2d 642 (Ind.Ct.App.2...