Opinion
No. COA10-856
Filed 5 April 2011 This case not for publication
Appeal by plaintiffs from judgment entered 6 April 2010 by Judge Dennis J. Winner in Henderson County Superior Court. Heard in the Court of Appeals 14 December 2010.
The Dungan Law Firm, P.A., by Alicia Gaddy Vega and Robert E. Dungan, for plaintiff-appellants.
Constangy Brooks Smith, LLP, by Michelle Rippon, for defendant-appellee Michael D. Mooney.
Bennett Guthrie, P.L.L.C., by Rodney A. Guthrie and Kimberly S. Shipley, for defendant-appellees Mystery Masiello and Wood Investments, Inc. d/b/a RE/MAX Advantage Realty.
Henderson County, No. 08 CVS 141.
Because the parties dealt at arm's length and plaintiffs had full opportunity to make a reasonable investigation as to the features of the house but neglected to do so prior to purchase and defendants resorted to no artifice calculated to induce plaintiffs to forego investigation, we affirm the trial court's grant of summary judgment on behalf of defendants dismissing plaintiffs' action grounded in deceit.
Facts
On 20 April 2007, plaintiffs Joseph and Karen Mauro accompanied real estate agent defendant Mystery Masiello to view a house owned by defendant Michael Mooney. On 27 April, the Mauros, along with Masiello, made a second visit and orally offered to purchase the property for $1,300,000.00. Mooney accepted, and later that day, the Mauros, Mooney, and Masiello signed an Offer to Purchase and Contract. The closing was set for 4 May 2007, but, under the terms of the Offer to Purchase and Contract, Mooney could remain on the property until 28 May 2007 and would have forty-five days after the closing to cure any deficiencies in the property as outlined in the home inspection report. On 30 April 2007, Andrew Erskine, from Affordable Inspections, Inc., conducted an inspection of the house.
In their complaint, the Mauros assert that Erskine reported observing the foundation, walls, columns or piers and floors and that the same appeared to be functioning as intended except for evidence of water intrusion, columns that should be permanently installed rather than dry stacked, and securing the base around one support column. . . . Erskine recommended repair or replacement to cure the deficiencies.
On 4 May 2007, the Mauros and Mooney closed on the sale of the property.
After Mooney vacated the property, the Mauros removed carpet and other flooring, discovering alleged defects in the flooring and foundation, such as: (a) cement covering wood decking to level the floors and conceal foundation problems; (b) carpet padding and wood pieces installed to conceal uneven floors and foundation problems; (c) walls raised and separated from the floor to level the roofline and conceal uneven floors; and (d) insufficient soil stability to support the foundation. Further, the Mauros discovered that the water pressure, water supply, and septic system were inadequate for the house, and that the house, built in 1925, violated Henderson County building codes and regulations. On 28 January 2008, the Mauros filed a complaint against Mooney, Masiello, Wood Investments, Inc., d/b/a Re/Max Advantage Realty, Andrew Erskine, and Affordable Inspections, Inc.
The Mauros sought relief from Mooney, Masiello, and Re/Max on grounds of fraud, negligent representation, and for punitive damages. They sought relief from Masiello and Re/Max on grounds of deceptive trade practices and from Erskine and Affordable Inspections on grounds of negligence and negligent misrepresentation. On 24 September 2009, Mooney filed an amended answer and motion to dismiss along with affirmative defenses, counterclaims, crossclaims, and third-party claims. Mooney sought relief from the Mauros, Masiello, Re/Max, and third-party defendant Russell Woods on grounds of breach of contract, breach of fiduciary duty, negligence, conversion, unfair and deceptive trade practices, and fraud and requested punitive damages. On 11 June 2009, pursuant to Rule 41, the Mauros filed a voluntary dismissal with prejudice as to their claims against Andrew Erskine and Affordable Inspections, Inc.
On 13 November 2009, Mooney moved for a Rule 12 dismissal and Rule 56 summary judgment as to the Mauros' claims against him for fraud, negligent misrepresentation, and punitive damages. On 27 January 2010, the Mauros filed a motion for partial summary judgment as to Mooney's counterclaims for unfair and deceptive trade practices and fraud. On 24 February 2010, Masiello and Woods Investments, Inc., filed a motion for summary judgment as to the Mauros' claims against them and a motion for summary judgment as to Mooney's crossclaims. The same day, third-party defendant Woods also filed a motion for summary judgment as to Mooney's crossclaims. On 6 April 2010, the trial court, after having heard the arguments of counsel and having read the submissions of the parties in their briefs, affidavits, and depositions granted summary judgment to Mooney, Masiello, and Wood Investments, Inc., as to the Mauros' claims, granted summary judgment to Masiello and Woods Investments, Inc., as to Mooney's crossclaims, and granted summary judgment to third-party defendant Woods as to Mooney's claims against him. The trial court granted the Mauros' partial summary judgment with respect to Mooney's claims of unfair and deceptive trade practices and fraud. The trial court left outstanding Mooney's counterclaims against the Mauros' for breach of contract and conversion. However, having determined there was no just reason to delay an appeal from the order granting summary judgment dismissing claims, the trial court, pursuant to Rule 54(b) of the Rules of Civil Procedure, certified the matter for immediate appeal. The Mauros appeal.
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On appeal, the Mauros raise three questions: Did the trial court err in granting summary judgment with respect to (I) all of plaintiffs' claims against Mystery Masiello; (II) Wood Investments, Inc.; and (III) Michael Mooney.
Standard of Review
Under Rule 56 of the North Carolina Rules of Civil Procedure, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. R. Civ. P. 56(c) (2009). "[W]hen considering a summary judgment motion, all inferences of fact . . . must be drawn against the movant and in favor of the party opposing the motion." Craig v. New Hanover County Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 353 (2009) (citation and internal quotations omitted).
When more than one claim for relief is presented in an action, whether as a claim, counterclaim, crossclaim, or third-party claim, or when multiple parties are involved, the court may enter a final judgment as to one or more but fewer than all of the claims or parties only if there is no just reason for delay and it is so determined in the judgment. Such judgment shall then be subject to review by appeal or as otherwise provided by these rules or other statutes.
N.C. R. Civ. P. 54(b) (2009). Here, the order appealed from represents a final judgment as to most of the claims of most of the parties. The only claims remaining before the trial court are breach of contract and conversion. Therefore, we accept the trial court's Rule 54(b) certificate and agree there is no just reason to delay this appeal.
"We review a trial court's order granting or denying summary judgment de novo. Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the lower tribunal." Craig, 363 N.C. at 337, 678 S.E.2d at 354 (internal citations and quotations omitted).
I II
The Mauros first argue that the trial court erred in granting Masiello and Woods Investment, Inc.'s, motion for summary judgment and dismissing the Mauros' claims of negligent misrepresentation, fraud, and unfair and deceptive trade practices. We disagree.
Because all of the claims defined below require that a plaintiff's reliance on information received must be reasonable to be actionable, we refer generally, in this opinion, to these as actions grounded in deceit.
"The tort of negligent misrepresentation occurs when (1) a party justifiably relies (2) to his detriment (3) on information prepared without reasonable care (4) by one who owed the relying party a duty of care." Simms v. Prudential Life Ins. Co. of Am., 140 N.C. App. 529, 532, 537 S.E.2d 237, 240 (2000) (citation omitted).
While fraud has no "all-embracing definition . . . the following essential elements of actionable fraud are well established: (1) False representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party." Ragsdale v. Kennedy, 286 N.C. 130, 138, 209 S.E.2d 494, 500 (1974) (citations omitted).
"An action for unfair or deceptive practices is a creation of statute. . . ." Nelson v. Hartford Underwriters Ins. Co., 177 N.C. App. 595, 609, 630 S.E.2d 221, 231 (2006) (citation omitted). The unfair or deceptive practices statute is N.C.G.S § 75-1.1. "To establish a violation of N.C.G.S. § 75-1.1, plaintiffs `must show: (1) an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) which proximately caused injury to plaintiffs.'" Id. (quoting Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 68, 529 S.E.2d 676, 681 (2000)).
"When the parties deal at arms length and the purchaser has full opportunity to make inquiry but neglects to do so and the seller resorted to no artifice which was reasonably calculated to induce the purchaser to forego investigation[,] action in deceit will not lie." Goff v. Frank A. Ward Realty and Ins. Co., 21 N.C. App. 25, 29, 203 S.E.2d 65, 68 (1974) (quoting Cash Register Co. v. Townsend, 137 N.C. 652; May v. Loomis, 140 N.C. 350; Frey v. Lumber Co., 144 N.C. 759; Tarault v. Seip, 158 N.C. 369, 23 A.J., 981); see also Simms, 140 N.C. App. 529, 537 S.E.2d 237 (2000) (negligent misrepresentation); C.F.R. Foods, Inc. v. Randolph Dev. Co., 107 N.C. App. 584, 589, 421 S.E.2d 386, 389 (1992) (fraud).
"The policy of the courts is, on the one hand, to suppress fraud and, on the other, not to encourage negligence and inattention to one's own interest." Calloway [v. Wyatt, 246 N.C. 129, 134-35, 97 S.E.2d 881, 886 (1957)]. Before purchasing property, it is incumbent upon buyers to take reasonable steps to protect their own interest. Clouse v. Gordon, 115 N.C. App. 500, 509, 445 S.E.2d 428, 433 (1994).
Hearne v. Statesville Lodge No. 687, 143 N.C. App. 560, 562, 546 S.E.2d 414, 416 (2001).
In Hearne, the plaintiffs could not secure a license to open a restaurant because according to the department of health, the septic system on the property was inadequate to service the potential waste the restaurant would generate. Id. at 562, 143 S.E.2d at 416. In their complaint, the plaintiffs alleged that the realtor specifically knew about the plaintiffs' plans to develop a club and restaurant and willfully and wantonly misrepresented that the septic system located on a property sold to the plaintiffs was adequate for such a development. Id. at 560, 143 S.E.2d at 414. The trial court granted summary judgment for the defendant realtor. Id. at 560, 143 S.E.2d at 414. On appeal, this Court affirmed the judgment. The Court cited Goff v. Realty and Insurance Co., 21 N.C. App. 25, 203 S.E.2d 65 (1974), as controlling precedent.
In Goff, within two months after the plaintiffs purchased a residential property, they observed the drainage of septic material from nearby residences. Prior to purchase, the plaintiffs had inquired of the defendant-realtor as to whether the residence suffered from any septic problems. Id. at 27-28, 203 S.E.2d at 67. The defendant-realtor indicated that he would contact the owner and later related that there were no septic tank or drainage problems. Id. at 28, 203 S.E.2d at 67. The plaintiffs brought suit, and at trial, the court allowed the defendants' motion for a directed verdict. Id. at 27, 203 S.E.2d at 66. On appeal, this Court affirmed the decision.
In the negotiation of the sale and purchase of the subject property, the parties were dealing at arms length. Plaintiffs had full opportunity to view the topography of the lot in question and to see that it was lower than the lots adjoining on the north and west. Plaintiffs had full opportunity to inquire of other residents of the area as to any septic tank problems in the area but they neglected to do so. Defendants resorted to no artifice which was calculated to induce plaintiffs to forego investigation. Hence, plaintiffs' action in deceit will not lie. Calloway v. Wyatt, supra.
Id. at 29-30, 203 S.E.2d at 68. Compare Willen v. Hewson, 174 N.C. App. 714, 622 S.E.2d 187 (2005) (affirming the trial court's conclusion that defendant committed fraud and unfair and deceptive trade practices where there was competent evidence to establish that the plaintiffs would not have purchased the property except for the defendant's false representations as to material facts, concealment, and artifice intended to discourage further inquiry and where there were insufficient indicia to put a reasonable person on notice of the material issues with the property); Johnson v. Beverly-Hanks Assoc., 328 N.C. 202, 400 S.E.2d 38 (1991) (holding summary judgment for the defendant-real estate broker on a claim of fraudulent concealment was not appropriate where the plaintiffs' reliance on a house inspection was induced by the broker but evidence suggested the broker may have been aware the inspection may not have been neutral or independent). Applying Goff, the Hearne Court noted that the parties at issue were dealing at arms-length and the plaintiffs had full opportunity to inspect the property they ultimately purchased to determine whether it was suitable for their proposed restaurant and club, including whether the current septic system could withstand the increased demands. Hearne, 143 N.C. App. at 563, 546 S.E.2d at 416. Further, the plaintiffs failed to forecast any evidence that the defendant-realtor induced them to forego their own reasonable investigation of the property. Therefore, the Hearne Court held that summary judgment for the defendant-realtor was appropriate. Id.
Here, all of the Mauros' claims on appeal are grounded in actions for deceit. The Mauros argue that Masiello misrepresented the age of the house, the sufficiency of the septic system to serve a four bedroom home, the adequacy of the flooring to support hardwood floors, the existence of plumbing in the garage area, and the applicability of the city zoning ordinances to the house. However, there is no indication that Masiello, Wood Investments, Inc., or Michael Mooney induced the Mauros to forego their own reasonable investigation. Moreover, the record indicates that Mr. Mauro stated he previously had a general contracting business in Texas that built single family homes, and that he accompanied Erskine on the inspection of the house prior to purchase. Therefore, applying Hearne and Goff to the instant case, we hold summary judgment for defendants was proper. Given the lack of inducement to rely on Masiello, Woods Investments, Inc., or Mooney to the exclusion of the Mauro's own reasonable investigation, and the relatively brief review the Mauros gave to a house they intended to purchase, there was sufficient evidence to support summary judgment. Accordingly, this argument is overruled.
The record also indicates that the Mauros first looked at the Mooney house on 20 April 2007, made an offer to purchase on 27 April 2007, accompanied the inspector and closed on the purchase on 4 May 2007 for $1,300,000.00.
III
The Mauros argue that the trial court committed reversible error by granting Mooney's motion for summary judgment on the claims of fraud and negligent misrepresentation as to the age of the house, renovations, structural deficiencies, subflooring, and garage plumbing. For the reasons stated in I and II, supra, this argument is overruled.
Affirmed.
Judges STROUD and BEASLEY concur.
Report per Rule 30(e).