Opinion
No. C2-96-77.
Filed June 18, 1996.
Appeal from the District Court, Crow Wing County, File No. C0-93-1987.
Michael W. Jonak, (for Appellant).
Mark A. Solheim, Sarah E. Morris, Rider, Bennett, Egan Arundel, L.L.P., (for Respondents).
Considered and decided by Harten, Presiding Judge, Davies, Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
A house purchaser appeals from summary judgment granted to real estate agents on her misrepresentation claims and other related claims. We affirm.
FACTS
In September 1992, appellant Bernice Woods purchased a house in Ironton from Arthur and Kathleen Lordbock. The house was marketed by respondents North Country Realty and its associated realtor, Larry Pater, as the listing and selling agents for the Lordbocks. Prior to purchasing the house, Woods walked through it. Pater told her that it would be a "nice little house" for her, but made no other oral representations. Pater gave Woods a real estate disclosure statement prepared by the Lordbocks representing the condition of the premises and a one-page highlight sheet that he had prepared describing the property.
After the transaction was closed on September 9, 1992, Woods took possession of the house, but shortly thereafter she left for Florida, returning to occupy the house the following spring. After her return, Woods discovered numerous defects, including holes in the ceilings and walls, a leaky roof, defective kitchen cabinets that were falling off the walls, defective siding, faulty electrical wiring, and a leaky basement; she also discovered bats in the attic. Woods sued North Country Realty, Pater, and the Lordbocks for fraudulent and negligent misrepresentation, statutory claims, breach of warranty, and negligent infliction of emotional distress.
The claims against the Lordbocks were settled and consequently they are not parties to this appeal.
The district court granted summary judgment for respondents. Woods appeals, arguing that summary judgment was inappropriate.
DECISION
On appeal from summary judgment, this court determines whether there are any genuine issues of material fact and whether the district court misapplied the law. Fabio v. Bellomo , 504 N.W.2d 758, 761 (Minn. 1993). On appeal, evidence is viewed in the light most favorable to the party against whom judgment was granted. Id. The burden is on the moving party to show absence of a genuine issue of material fact. Bixler v. J.C. Penney Co., Inc. , 376 N.W.2d 209, 215 (Minn. 1985). The opposing party must show that a genuine issue of material fact remains in dispute by presenting specific, admissible facts giving rise to a factual issue. Id.
1. Fraudulent and Negligent Misrepresentation Claims
Fraudulent misrepresentation requires the plaintiff to show that defendant made a false representation of a past or existing material fact , susceptible of knowledge, knowing it to be false or without knowing whether it was true or false, with the intention of inducing the person to whom it was made to act in reliance upon it or under such circumstances that such person was justified in so acting and was thereby deceived or induced to so act to his damage.
Berryman v. Riegert , 286 Minn. 270, 275, 175 N.W.2d 438, 442 (1970) (emphasis added).
Negligent misrepresentation occurs when the representer of false information fails to exercise reasonable care or competence in obtaining or communicating the information on which the other party detrimentally relies. Bonhiver v. Graff , 311 Minn. 111, 122, 248 N.W.2d 291, 298-99 (1976). In Minnesota, real estate licensees
shall disclose to any prospective purchaser all material facts pertaining to the property, of which the licensee is aware, which could adversely and significantly affect an ordinary purchaser's use or enjoyment of the property, or any intended use of the property of which the licensee is aware.
Minn. R. 2805.1400, subpt. 3 (1995). "[A] realtor may be independently liable for fraud if he or she knew or should have known of the misrepresentations of the principal." Baker v. Surman , 361 N.W.2d 108, 111 (Minn.App. 1985) (emphasis added).
Respondents made no oral representations to Woods; there is no evidence of any false representations on the highlight sheet that Pater prepared. The disclosure statement completed by the Lordbocks indicated that the basement had never had foundation problems, flooding, wet walls, leakage/seepage, drain tiling problems, cracked floors/walls, sewer backup, or other problems. It stated that the roof, which was new in 1986, had never had any leakage, damage from ice buildup, or repairs. The statement also indicated that the electrical systems were all working and there was no rodent infestation. Woods signed an acknowledgement at the bottom of the form that stated: "LISTING BROKER AND AGENTS MAKE NO REPRESENTATIONS AND ARE NOT RESPONSIBLE FOR ANY CONDITIONS EXISTING IN THE PROPERTY." The Lordbocks said by deposition that all the information was true and accurate to the best of their knowledge. Both respondents submitted affidavits stating that they had no reason to dispute the accuracy of the information in the disclosure statement and no notice of the alleged deficiencies that Woods discovered after purchasing the house.
The purchase agreement signed by Woods and the Lordbocks also stated: BUYER ACKNOWLEDGES THAT NO ORAL REPRESENTATIONS HAVE BEEN MADE BY EITHER SELLER OR AGENT(S) REGARDING POSSIBLE PROBLEMS OF WATER IN BASEMENT, OR DAMAGE CAUSED BY WATER OR ICE BUILD-UP ON THE ROOF OF THE PROPERTY AND BUYER RELIES SOLELY IN THAT REGARD ON THE FOLLOWING STATEMENT BY SELLER: SELLER HAS NOT HAD A WET BASEMENT, AND HAS NOT HAD ROOF, WALL OR CEILING DAMAGE CAUSED BY WATER OR ICE BUILD-UP. BUYER HAS RECEIVED A REAL ESTATE TRANSFER DISCLOSURE STATEMENT.
To be material, a defect must be in existence prior to or at the time of closing. Woods knew that she was buying an older home that was formerly rental property. She stated in her deposition that before purchasing the house she did not notice evidence of bats, rodents, roof problems, a wet basement, or other major defects. During the two days following the closing, she found minor problems, which the Lordbocks promptly remedied at her request. Without legal obligation to do so, the Lordbocks filled holes in the yard, shampooed the carpet, removed a workbench from the garage, fixed loose cupboard doors, removed dog excrement, and arranged to have the electrical wiring inspected. Arthur Lordbock testified by deposition that on the second day after closing, "I personally asked [Woods] if she had any other problems in the house and she said no, everything's just fine."
The closing occurred in September 1992. Not until May or June 1993, at least eight months after closing, did Woods notice problems with bats, rodents, siding, a leaky roof, or a wet basement. Arthur Lordbock stated in deposition that these conditions occurred after Woods bought the house. For example, Woods' complaint about the roof occurred after a "three-inch torrential rain." Woods has not presented any evidence that respondents knew about any such defects at the time of closing, or that these conditions existed at that time. We conclude that the district court properly granted summary judgment to respondents.
2. Other Claims
The district court granted total summary judgment to respondents, even though respondents had moved for summary judgment only on the "misrepresentation claims." A district court may grant summary judgment sua sponte if under the same circumstances it would grant summary judgment on the motion of a party. Estate of Riedel v. Life Care Retirement Communities, Inc. , 505 N.W.2d 78, 81 (Minn.App. 1993). Although the district court should have detailed its evaluation of Woods' remaining claims — the statutory, breach of warranty, and negligent infliction of emotional distress claims — we conclude that respondents nonetheless were entitled to summary judgment on those claims.
Woods alleged in her complaint that respondents violated the Real Estate Brokers Act, Minn. Stat. §§ 82.17-82.34 (1994 Supp. 1995), and the accompanying rules authorized under Minn. Stat. § 82.28. The Real Estate Brokers Act, however, creates no private cause of action. Semrad v. Edina Realty, Inc. , 493 N.W.2d 528, 532 (Minn. 1992). The same would apply to the administrative agency rules that are authorized under the act. There being no private cause of action, respondents are entitled to judgment as a matter of law on this count.
Woods also alleged in her complaint that respondents breached express and implied warranties. The parties agree that Pater made no oral representations to her. The written material respondents provided to Woods created no warranties as a matter of law. The disclosure statement specifically stated:
This disclosure is not a warranty of any kind by the Seller(s) or any Agent(s) representing any Party(s) in this transaction, and is not a substitute for any inspections or warranties the Party(s) may wish to obtain.
(Emphasis added.) Respondents' highlight sheet also contained a disclaimer: "The above information is deemed reliable, but not guaranteed and is subject to change." The statement on the purchase agreement about the roof and basement makes it clear that the representations were those of the Lordbocks. The allegations underlying the warranty claims are the same as those underlying the misrepresentation claims.
Woods also alleged negligent infliction of emotional distress. In Minnesota, there is no cause of action for negligent infliction of emotional distress absent physical injury or physical danger to the plaintiff. Langeland v. Farmers State Bank of Trimont , 319 N.W.2d 26, 32 (Minn. 1982). Although Woods alleged "mental and physical anguish and distress" in her complaint, she withheld medical records during discovery. There is no evidence in the record to substantiate an assertion of physical injury.