Reynolds Termite and Pest Control, Inc. v. Michael and Denise Brady

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION ROBERT J. GLADWIN, JUDGE

DIVISION I

REYNOLDS TERMITE AND PEST CONTROL, INC.

APPELLANT

V.

MICHAEL and DENISE BRADY

APPELLEES

CA02-766

April 2, 2003

APPEAL FROM THE BENTON COUNTY CIRCUIT COURT

[NO. CIV-2000-861-1]

HON. TOM J. KEITH,

JUDGE

REVERSED

Appellees, Michael and Denise Brady, filed suit against appellant, Reynolds Termite and Pest Control, Inc., seeking to recover damages that occurred as a result of termite infestation of their home. Prior to appellees' purchase of their home, appellant was hired by appellees to perform an initial inspection for termites and issued a report that stated there was no visible evidence of infestation. The trial court found that appellant breached its contract with appellees when it failed to disclose in the "wood destroying insect inspection report" the existence of prior termite treatment and repairs to the premises. The court also found appellant was negligent in not disclosing to appellees this information. Regardless of whether appellee's claim is based on breach of contract or on negligence, we agree with appellant's contention that there was no showing of proximate causation between its conduct

and the eventual termite damage suffered by appellees, and, accordingly, we reverse the decision of the trial court.

On December 29, 1997, David Reynolds, appellant's agent, inspected the home appellees were purchasing and prepared a "Wood Destroying Insect Infestation Inspection Report." On this report, Reynolds checked a box that indicated that "no visible evidence of a wood destroying insect infestation was observed" and another box that indicated that "any visible evidence observed above appears inactive; no treatment recommended at this time." The basis for appellees' claim against appellant is Reynolds' failure to check the box beside this statement: "It appears that the structure(s) or a portion thereof may have been previously treated." That appellant did know of the previous treatment was established by a letter from David Reynolds stating that on April 1, 1997, he had inspected the house for the then-owner, found termite activity, and made the necessary repairs.

Subsequent to this initial inspection, appellant and appellees entered into a contract for termite control service, which was in force from December 29, 1997, until December 29, 1998. During the spring of 1998, appellees found evidence of termites and called appellant, who treated the problem. There was no further evidence of termite activity from April 1, 1998, through the end of the contract term, December 29, 1998. The renewal fees for the contract were not paid by the due date, and appellant cancelled the contract for non-payment.

Appellees contacted the Arkansas State Plant Board and at their request, a Plant Board Inspector came to their home to evaluate the front porch. The inspector's report, datedMarch 3, 1999, noted that two items were found that did not meet the state's minimum standards for termite treatment: (1) an opening, at least fourteen inches high and sixteen inches wide should be made to permit inspection under the front porch, and (2) all soil which is within twelve inches of the bottom edge of all floor joists or within five inches of any subsills should be removed. The report further noted that any pest control company that entered into a contract for the control of termites or other structural pests must see to it that these conditions were met.

Appellees entered into a contract with Serfco Termite and Pest Control, which ran from April 1, 1999, through March 30, 2000. On April 5, 1999, the inspector for Serfco found evidence of active termites in appellees' home. Appellees undertook repairs and sued appellant to recover damages.

Our standard of review for bench trials is whether the trial court's findings were clearly erroneous or clearly against the preponderance of the evidence. Stuttgart Reg'l Med. Ctr. v. Cox, 343 Ark. 209, 33 S.W.3d 142 (2000). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made. Foundation Telecomm. v. Moe Studio, Inc., 341 Ark. 231, 16 S.W.3d 531 (2000).

Whether a cause of action is based in contract or in tort, there must be sufficient proof of causation; damages cannot be based on speculation or conjecture. See, e.g., Hill v. Maxwell, 247 Ark. 811, 448 S.W.2d 9 (1969); Gregory v. Walker, 239 Ark. 415, 389 S.W.2d 892 (1965); Superior Forwarding Co. v. Garner, 236 Ark. 340, 366 S.W.2d 290 (1963);Sumlin v. Woodson, 211 Ark. 214, 199 S.W.2d 936 (1947). In Sumlin, a contract case, the court, quoting from various sources, noted that damages must be proved with reasonable certainty, as flowing directly and proximately from the act complained of, and that damages must be certain both in their nature and in respect to the cause from which they proceed. In Hill, a wrongful death action, the court observed that authorities on the elements of causation point out that while it is not required that the proof eliminate every possible cause other than the one on which the plaintiff relies, he should introduce evidence from which a reasonable person could conclude that it was more probable than not that the event was caused by the defendant.

Appellees contend that they would not have proceeded with the closing on their house had appellant checked the box indicating prior termite treatment and repairs to the property. Yet appellees both admit they never saw the document before closing and that neither of them read it in its entirety at that time. Appellees never sought recission of the contract for the purchase of the house; the damages sought related to the repairs necessitated by the termite infestation discovered in April 1999.

When appellant's agent inspected the appellees' property on December 29, 1997, there was no evidence of termite activity. Early during the year that the termite contract was in effect, appellant responded to several calls from appellees and treated the property. Appellant's records showed that there were no further calls regarding any problems with the property between April 1, 1998, and December 29, 1998, when the contract was cancelledfor non-payment. It was not until April 5, 1999, more than three months after the contract with appellant had expired, that termites were once again found on appellees' property.

While we may agree that appellant should have disclosed to appellees the existence of previous termite treatment, we cannot see any causal connection between this failure to disclose treatment that occurred in June of 1997 and the termite infestation and resulting damages that occurred in April of 1999, when the premises had been certified termite-free on more than one occasion during the intervening months. We are unable to find evidence that establishes causation between the alleged negligence or breach of contract by appellant and the damages suffered by appellees. It is perhaps possible that there is a causal connection, but the law requires more than a mere possibility of causation; a reasonable probability must be established. See Davis v. Kemp, 252 Ark. 925, 481 S.W.2d 712 (1972). We would have to invade the realm of speculation and conjecture to say that any damages suffered by appellees were directly attributable to appellant's failure to disclose the existence of previous treatment for termites. Even assuming that appellant was guilty of breach of contract or negligence, appellees' claim against appellant must fail because there was no showing of proximate causation between appellant's actions and the damages suffered by appellees. Accordingly, the decision of the trial court is reversed.

Appellant also contends that the court erred in awarding attorney's fees to appellees based on their breach of contract claim because the preponderance of the evidence does not support a breach of contract claim. Because we reverse the judgment in favor of appellees, it is unnecessary for us to address appellant's argument on this point. When a judgment infavor of a prevailing party is reversed, any award of attorney's fees must also be reversed. Pettus v. McDonald, 343 Ark. 507, 36 S.W.3d 745 (2001).

Reversed.

Hart and Pittman, JJ., agree.