Young v. ERA Advantage Realty

• Decision Date: 12 July 2022
• Docket Number: DA 21-0434
• Citation: 2022 MT 138
• Parties: JODIE YOUNG, Plaintiff and Appellant, v. ERA ADVANTAGE REALTY, Defendant and Appellee.
• Court: Montana Supreme Court

2022 MT 138

JODIE YOUNG, Plaintiff and Appellant, v. ERA ADVANTAGE REALTY, Defendant and Appellee.

No. DA 21-0434

Supreme Court of Montana

July 12, 2022

Submitted on Briefs: March 16, 2022

APPEAL FROM: DISTRICT COURT OF THE EIGHTH JUDICIAL DISTRICT, IN AND FOR THE COUNTY OF CASCADE, CAUSE NO. ADV-20-0121 HONORABLE WM. NELS SWANDAL, PRESIDING JUDGE

For Appellant: Brian J. Miller, Morrison, Sherwood, Wilson, and Deola PLLP, Helena, Montana

For Appellee: Brett P. Clark, Kristen Meredith, Crowley Fleck PLLP, Helena, Montana

OPINION

BETH BAKER, JUDGE

¶1 Jodie Young purchased a house in Great Falls, Montana through ERA Advantage Realty, Inc. (Advantage). Young later discovered that local zoning ordinances precluded her from enclosing her yard with a fence and that there was a mold problem in her basement. Young sued Advantage for the alleged negligence of its brokers in failing to disclose these facts. The District Court granted summary judgment to Advantage. Young raises several claimed errors in the court's ruling. Because we conclude that she could not establish that Advantage owed her a duty under the facts alleged, or that Advantage's conduct caused her damages, we find it unnecessary to address Young's additional arguments and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 In the summer of 2018, Young was looking for a house in Great Falls. She engaged Jim Dea of Advantage as her real estate agent and executed a buyer broker agreement with Advantage. Young informed Dea that she intended to enclose her yard with a tall fence for her service dog. The buyer broker agreement stated, in part: "Buyers understand and acknowledge that Broker does not and cannot assure that any house and/or buildings will be satisfactory to Buyers in all respects . or that any property and/or improvements thereon that Buyers are considering purchasing or leasing comply with the current building and zoning codes." Dea also provided Young a buyer due diligence checklist, which advised her, in part, to consult local building and zoning codes for any intended future improvements. Dea later testified that he has some familiarity with zoning rules because of his real estate experience, but he does not know all the rules and does not consider himself an expert.

¶3 In August 2018, Young made an offer on a house at 102 14th Street South, Great Falls (the Property). Patrick Parce had owned the Property before he died in 2016. Parce's daughter and representative of his estate (the Estate), Bernadine Wutzke, listed the property for sale, with her husband Russell Wutzke (Wutzke) acting as her real estate agent. Wutzke is a licensed real estate broker and listed the house with Advantage. The Estate accepted Young's offer. The documents it tendered with the Buy-Sell Agreement included an owner's property disclosure and a mold disclosure. The property disclosure advised Young that Parce had not occupied the Property since June 2016. It said nothing about any previous water damage on the Property. The portion of the property disclosure titled "BASEMENT: (Leakage, Flooding, Moisture or evidence of Water, and Fuel Tanks)" was left blank, indicating the absence of any such conditions in the basement. The mold disclosure stated: "The undersigned are not representing that a significant mold problem exists or does not exist on the property, as such a determination may only be made by a qualified inspector." Young executed these disclosure forms but claims that Dea "rushed her through the information."

¶4 Young hired Mike Anderegg as a property inspector. He advised that the north and west sides of the house had negative drainage and needed backfill and that there were moisture stains on the foundation-a common sign of water intrusion inside the house. The following day, Young proposed an amendment to the Buy-Sell Agreement providing for remediation of the drainage issue, which the Estate accepted. But Young elected not to test the Property for mold.

¶5 Young's lender engaged Mark Fought to conduct an appraisal of the property. Fought's appraisal stated: "Drainage along the west side of the dwelling was negative .... Per the listing agent (who is a relative of the owner), no water has ever entered into the basement from the exterior during their ownership (38 years)." Wutzke denies making this statement or having any knowledge on which to base such an opinion. Young testified in her deposition that she was not aware of Wutzke's alleged representation to Fought until after she filed her complaint against Advantage. She stated that she did not read the lender's appraisal report, that she was not present during the conversation between Fought and Wutzke, and that Wutzke never made such a representation to her directly.

¶6 Young closed on the Property on September 19, 2018. She learned later that she could not erect a fence enclosing the yard due to setback requirements and height limitations for corner lots in Great Falls. The Great Falls zoning department allegedly informed Young that only ten feet of the perimeter could be fenced in and that the fence would have to be more than twenty-two feet back from the curb and only four feet high on the front side of the house. In addition, several months after Young took possession of the Property, she discovered flooding in the basement after a rainstorm. Young removed the wood paneling in the basement and discovered mold. Trent Short of Cooper Creek Construction inspected the basement after the paneling was removed. Based on his assessment of the mold and water damage, Short opined in his deposition that "water infiltration into the basement had been going on for quite some time and would have been known to any occupant of the house or someone who was familiar with the history of water intrusion in the home."

¶7 Young alleged one count of negligence for failure to disclose the water damage and the zoning limitations for fences, one violation of the Montana Consumer Protection Act (MCPA) for failure to disclose the water damage, and one count of constructive fraud for failure to disclose the water damage. The District Court granted summary judgment to Advantage. It held that Young could not sustain her negligence and constructive fraud claims because she failed to submit notice of a real estate expert who could establish the standard of care applicable to real estate agents. The court also held that Advantage did not owe Young a duty to disclose information regarding the fence and did not breach a duty or cause damages to Young by failing to warn her of prior water intrusion.

STANDARD OF REVIEW

¶8 We review a district court's grant of summary judgment de novo, applying the standards of M. R. Civ. P. 56. Wagner v. MSE Tech. Applics., Inc., 2016 MT 215, ¶ 16, 384 Mont. 436, 383 P.3d 727. Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. M. R. Civ. P. 56(c)(3). We review a district court's conclusions of law de novo and its findings of fact for clear error. Brookins v. Mote, 2012 MT 283, ¶ 22, 367 Mont. 193, 292 P.3d 347. "Unsupported conclusory or speculative statements do not raise a genuine issue of material fact." Abraham v. Nelson, 2002 MT 94, ¶26, 309 Mont. 366, 46 P.3d 628 (citations omitted).

DISCUSSION

¶9 Young asserts that the District Court ignored the existence of genuine issues of material fact when it granted summary judgment to Advantage. Advantage counters that Young cannot establish the duty, breach, or causation elements of her claims as a matter of law.

¶10 Young's negligence and constructive fraud claims require proof that Advantage owed her a duty of care and breached it. A negligence claim requires a showing of duty, breach of that duty, and that the breach caused damages. Dubiel v. Mont DOT, 2012 MT 35, ¶ 12, 364 Mont. 175, 272 P.3d 66. Similarly, "[c]onstructive fraud is a breach of duty" that "creates an advantage for the breaching party by misleading another person to that person's prejudice." Morrow v. Bank of Am., N.A., 2014 MT 117, ¶ 62, 375 Mont. 38, 324 P.3d 1167 (citing § 28-2-406, MCA).

¶11 "As to real estate professionals, Montana law specifies in detail 'the duties [that] govern the relationships between brokers and salespersons and buyers or sellers[.]'" Wagner, ¶ 28 (quoting § 37-51-313(1), MCA). "Section 37-51-313, MCA, governs the relationship between brokers and buyers or sellers and is intended to replace other duties as described in state law or common law." Zuazua v. Tibbles, 2006 MT 342, ¶ 14, 335 Mont. 181, 150 P.3d 361. The statute prescribes specific duties for buyer agents and for seller agents.

Claim Involving Buyer Agent's Duties

¶12 A buyer agent is "a broker or salesperson who, pursuant to a written buyer broker agreement, is acting as the agent of the buyer in a real estate transaction[.]" Section 37-51-102(6), MCA. It is undisputed that Dea was Young's buyer agent pursuant to the buyer broker agreement. The buyer agent must "act solely in the best interests of the buyer" and "disclose all relevant and material information that concerns the real estate transaction and that is known to the buyer agent and not known or discoverable by the buyer[.]" Section 37-51-313(4)(a), (c), MCA. The buyer agent also is obligated to "exercise reasonable care, skill, and diligence in pursuing the buyer's objectives and in complying with the terms established in the buyer broker agreement." Section 37-51-313(4)(e), MCA.

¶13 Young pleaded one claim of negligence based on Dea's failure to advise her of the height and setback requirements for fences on the Property. The District Court determined that this claim failed as a matter of law because Young could not...