Gail Varnado v. Alfonso Realty, Inc.
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2008-CA-00280-COA
GAIL VARNADO AND DARRIS VARNADO
APPELLANTS
v.
ALFONSO REALTY, INC.
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANTS:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEE
09/01/2006
HON. JERRY O. TERRY, SR.
HARRISON COUNTY CIRCUIT COURT
ROBERT O. HOMES JR.
FRED MANNINO
CIVIL - PROPERTY DAMAGE
SUMMARY JUDGMENT GRANTED TO
DEFENDANT
AFFIRMED - 07/28/2009
BEFORE LEE, P.J., GRIFFIS AND CARLTON, JJ.
CARLTON, J., FOR THE COURT:
¶1.
Gail and Darris Varnado (collectively, the Varnados) purchased a home in Gulfport,
Mississippi from Thomas Brown. Shortly after their purchase, the Varnados discovered
extensive termite damage in the home. The Varnados sued Alfonso Realty, Inc. (Alfonso
Realty) along with other defendants for damages. In response, Alfonso Realty filed a motion
for summary judgment, which the circuit court granted. On appeal, the Varnados claim that
Alfonso Realty breached its fiduciary obligations to them when it knew or should have
known that Brown suffered from a “memory problem” which would, in turn, cause Brown
to provide an unreliable statement as to prior termite damage to his home. Therefore, the
Varnados argue that the circuit court erred in granting Alfonso Realty’s motion for summary
judgment. We find no error and affirm.
FACTS AND PROCEDURAL HISTORY
¶2.
The Varnados purchased a home from Brown, now deceased. Alfonso Realty agents,
Brenda McFall, Diane Albrecht, and Patti Schankin, acted as dual agents for the parties in
the sale and purchase of the home. McFall and Albrecht worked together on behalf of
Brown, and Schankin worked on behalf of the Varnados.
¶3.
Mississippi Code Annotated section 89-1-501 (Supp. 2008) requires that homeowners
selling their property submit a disclosure statement prior to the sale regarding the condition
of the property. In the case at bar, Brown submitted two disclosure statements – the first one
with the listing agency, Champions Real Estate, and the second one with Alfonso Realty.
When Brown executed the second listing agreement with Alfonso Realty, the first listing
agreement with Champions Real Estate terminated.
¶4.
In Brown’s first disclosure statement provided to Champions Real Estate dated
September 21, 1999, Brown admitted that his home had been treated for termite damage. In
contrast, in Brown’s later disclosure statement provided to Alfonso Realty dated July 13,
2000, Brown denied that his home had been treated for prior termite damage.
¶5.
On August 9, 2000, the Varnados performed an initial walk-through of Brown’s home.
Gail Varnado (Gail) testified that when she first looked at Brown’s home she noticed “drill
holes” in some brickwork, and she asked Brown whether “he [ever] had the house treated for
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termites.” Gail testified that Brown answered, “No.” Gail stated that Brown told her the drill
holes were “weepholes.” 1 Gail failed to report these drill holes to Alfonso Realty.
¶6.
After Gail inspected Brown’s property, she reviewed Brown’s second disclosure
statement with Brown. She testified that Brown again told her that his home had never been
treated for termites. Gail testified that she “was satisfied with [her] initial inspection, [her]
walk-through.” Additionally, Gail stated that when she met Brown, she “did not feel [like]
he had a memory problem.”
¶7.
The Varnados’ purchase of Brown’s home was contingent upon a building inspection
performed by Michael Jenner and a termite inspection performed by Terminator Pest Control.
On August 14, 2000, Jenner inspected the property, and on August 22, 2000, Terminator Pest
Control performed a termite inspection. Neither the general inspection report nor the termite
inspection report noted serious problems or defects in the property.
¶8.
Additionally, we note that Gail failed to report any of the drill holes she had noticed
in Brown’s home to either Jenner, Terminator Pest Control, or Alfonso Realty. Moreover,
real estate agents McFall, Albrecht, and Schankin all testified that they did not know about
Brown’s first disclosure statement provided by Champions Real Estate until after the
Varnados purchased Brown’s home and reported to Alfonso Realty the damages at issue.
¶9.
The Varnados contend that when they showed the termite damage to Brown’s home
to the Alfonso Realty agents after the sale, McFall told them that Brown “had a memory
problem.” However, McFall denies stating that Brown “had a memory problem.” On this
point, McFall testified as follows: “I don’t recall saying [Brown] had a memory problem, at
1
We find no definition in the record of a “weephole.”
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all. . . . What I did say – and I do remember – was that he had lost his wife and daughter
within a six-month period, and if I had been in the same situation, I wouldn’t know if I would
remember everything.” Additionally, Albrecht and Schankin denied stating or knowing that
Brown suffered from a “memory problem.” Brown’s son also denied that his father suffered
from a memory problem. We note that the Varnados never provided the circuit court with
any medical evidence supporting their contention that Brown suffered from a memory
problem.
¶10.
The Varnados named several defendants in their complaint and amended complaint:
Terminator Pest Control; Jenner; Vic Porter, an appraiser, who performed Brown’s appraisal
without reporting any damage; Brown himself, who provided the false disclosure statement
to the Varnados; and Alfonso Realty. All of the above defendants, except for Alfonso
Realty, reached a settlement agreement with the Varnados. Alfonso Realty filed a motion
for summary judgment which the circuit court granted.
STANDARD OF REVIEW
¶11.
For a summary judgment motion to be properly granted, the court must determine that
no genuine issue of material fact exists and that the moving party must be entitled to
judgment as a matter of law. M.R.C.P. 56(c). “The moving party has the burden of
demonstrating that no genuine issue of material fact[] exists, and the non-moving party must
be given the benefit of the doubt concerning the existence of a material fact.” Howard v. City
of Biloxi, 943 So. 2d 751, 754 (¶4) (Miss. Ct. App. 2006). “Numerous, immaterial facts may
be controverted, but only those that ‘affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment.’” Summers v. St. Andrew's Episcopal
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Sch., 759 So. 2d 1203, 1208 (¶12) (Miss. 2000) (quoting Sherrod v. U.S. Fid. & Guar. Co.,
518 So. 2d 640, 642 (Miss. 1987)). We review de novo a circuit court’s grant of summary
judgment. Moss v. Batesville Casket Co., 935 So. 2d 393, 398 (¶15) (Miss. 2006).
WHETHER THE CIRCUIT COURT PROPERLY GRANTED
ALFONSO’S MOTION FOR SUMMARY JUDGMENT
¶12.
Mississippi Rule of Civil Procedure 56(b) provides that a defendant may move for
summary judgment at any time. In turn, Mississippi Rule of Civil Procedure 56(c) provides
in part, the following:
The judgment sought shall be rendered forthwith 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 the
moving party is entitled to a judgment as a matter of law.
The rule does not provide for evidence that might be introduced or developed at trial.
Commercial Bank v. Hearn, 923 So. 2d 202, 210 (¶24) (Miss. 2006).
¶13.
From the facts in the record, the circuit court found that beyond the Varnados’
allegation that McFall stated that Brown suffered from a “memory problem,” the Varnados
did not produce any evidence showing that Brown suffered from a memory problem, that
Alfonso Realty knew or should have known that Brown suffered from a memory problem,
or that Alfonso Realty knew or should have known that Brown’s home had been treated for
prior termite damage.
¶14.
The Varnados argue on appeal that the circuit court erred when it granted Alfonso
Realty’s motion for summary judgment because Alfonso Realty breached its fiduciary duty
to them when Alfonso Realty knew or should have known that Brown suffered from a
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memory problem. The Varnados allege that Brown’s memory problem caused him to
provide an unreliable disclosure statement as to the previous termite damage to his home.
¶15.
In turn, Alfonso Realty contends that the Varnados failed to present any evidence that:
(1) Brown suffered from a memory problem; (2) Alfonso Realty knew or should have known
about Brown’s memory problem; and (3) Alfonso Realty knew or should have known that
Brown would not be capable of accurately filling out his disclosure statement due to his
alleged memory problem.
¶16.
In determining whether the circuit court properly granted Alfonso Realty’s motion for
summary judgment, we must first analyze Alfonso Realty’s fiduciary duty as a real estate
agent for the Varnados. We have outlined the following standard of care required of real
estate agents as follows:
The standard of care of an agent has been described as “a duty to use the
degree of diligence and care which a reasonably prudent person would
ordinarily exercise in the transaction of his own business . . . .” More
specifically, “a business agent represents that he understands the usages of the
business in which he is employed. One undertaking a matter involving special
knowledge ordinarily thereby represents that he has the special knowledge
required, and undertakes that, so far as it is necessary to keep in touch with
events, he will do so.”
Cavagnaro v. Coldwell Banker Alfonso Realty, Inc., 995 So. 2d 754, 758 (¶12) (Miss. Ct.
App. 2008) (quoting Lee Hawkins Realty, Inc. v. Moss, 724 So. 2d 1116, 1120-21 (¶25)
(Miss. Ct. App. 1998)). Additionally, we have stated that in the situation of a dual agency,
“a dual agent . . . must proceed with a heightened [sense] of duty and conduct to assure that
he serves both masters' interests fully.” Lane v. Oustalet, 873 So. 2d 92, 97 (¶20) (Miss.
2004).
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¶17.
Therefore, in this case, Alfonso Realty possessed a duty “to use the degree of
diligence and care which a reasonably prudent person would ordinarily exercise in the
transaction of his own business.” Cavagnaro, 995 So. 2d at 758 (¶12). Additionally, as a
dual agent, Alfonso Realty possessed “a heightened [sense] of duty and conduct to assure”
that Alfonso Realty served both Brown and the Varnados fully. Lane, 873 So. 2d at 97 (¶20).
¶18.
Additionally, we have also stated that an “agent can never act . . . to the detriment of
the principal.” Moss, 724 So. 2d at 1119 (¶12) (quoting Century 21 Deep South Properties,
Ltd. v. Corson, 612 So. 2d 359, 368 (Miss. 1992)). In evaluating when an agent’s duty to
investigate arises in a case involving the misrepresentation of a warranty, the Moss court
stated that if an agent knew that “there was no . . . warranty but assisted in the
misrepresentations, then [he or] she is liable in tort.” Id. at (¶11). “On the other hand, since
[the agent’s] duty is to her principal, she would not have been required to investigate to
determine whether the warranty existed unless her principal so requested.” Id. “She could
rely upon what her principal told her.” Id. In other words, the Moss court articulated that
an agent could rely on what her principal told her unless the agent was on notice or possessed
actual knowledge of a problem.
¶19.
Our inquiry, thus, in determining whether the circuit court properly granted summary
judgment in favor of Alfonso Realty, turns on whether the Alfonso Realty agents involved
in the sale at issue could reasonably rely on what Brown provided them in his later disclosure
statement. Essentially, the Varnados bore the burden of proving that a reasonable, prudent
real estate agent under similar circumstances would have possessed either notice or
knowledge of a problem as to the reliability of Brown’s second disclosure statement, which
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would trigger a duty to investigate. Moss, 724 So. 2d at 1120-21 (¶25). Again, we note that
Alfonso Realty, as dual agents in the transaction at issue, also possessed a heightened sense
of duty in this case. Cavagnaro, 995 So. 2d at 758 (¶12).
¶20.
In light of our governing case law, we turn again to the facts of this case to determine
whether Alfonso Realty had a duty to investigate Brown’s second disclosure statement. First,
all three Alfonso Realty agents involved in the sale of Brown’s home testified that they knew
nothing about Brown’s first disclosure statement with Champions Real Estate, wherein
Brown admitted to prior termite damage. Second, prior to the sale of Brown’s home, Brown
supplied Alfonso Realty with a new, distinct disclosure statement, wherein he denied any
prior termite damage to his home. Third, Alfonso Realty knew that Brown’s home was
inspected by both a general building inspector as well as a termite inspector and that neither
inspection revealed any serious problems or defects with Brown’s home.
¶21.
Fourth, all three Alfonso Realty agents involved in the sale of Brown’s home testified
that they did not personally know Brown, nor did they possess any reason to suspect that
Brown could not correctly fill out the paperwork necessary to sell his home because of an
alleged memory problem. Fifth, Gail testified that she asked Brown on at least two occasions
about the drill holes she observed in his home and whether his home had ever been treated
for termite damage. Gail stated that Brown told her that his home had never sustained any
termite damage. Gail never reported the drill holes to Alfonso Realty. Finally, Gail testified
that when she met Brown she did not believe Brown suffered from a memory problem.
¶22.
In sum, we affirm the circuit court’s finding that no genuine issue of material fact
existed as to whether Alfonso Realty possessed prior knowledge of any problems with
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Brown’s memory or Brown’s home which would trigger a duty to investigate the credibility
of Brown’s disclosure statement with Alfonso Realty. See Moss, 724 So. 2d at 1119 (¶12).
For the above reasons, we affirm the circuit court’s grant of summary judgment in favor of
Alfonso Realty.
¶23. THE JUDGMENT OF THE HARRISON COUNTY CIRCUIT COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.
KING, C.J., LEE AND MYERS, P.JJ., GRIFFIS, BARNES, ISHEE, ROBERTS
AND MAXWELL, JJ., CONCUR. IRVING, J., CONCURS IN PART AND IN THE
RESULT.
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