BECKY LYNN FOX, Plaintiff-Appellant, vs. MELISSA SHEA CLARK, a/k/a MELISSA PETERSEN, Defendant-Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 9-386 / 08-1555
Filed July 22, 2009
BECKY LYNN FOX,
Plaintiff-Appellant,
vs.
MELISSA SHEA CLARK,
a/k/a MELISSA PETERSEN,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, Gordon
Abel, Judge.
Becky Fox was granted discretionary review of a district court appeal
decision that reversed a judgment in her favor and against the defendant in a
small claims action. REVERSED AND REMANDED.
Jon Jacobmeier, Council Bluffs, for appellant.
Anthony Tauke, Council Bluffs, for appellee.
Considered by Sackett, C.J., and Vogel and Miller, JJ.
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VOGEL, J.
Becky Fox was granted discretionary review of a district court appeal
decision that reversed a judgment in her favor and against the defendant,
Melissa Clark, in a small claims action. We reverse the district court appeal
decision and remand for entry of judgment.
I. Background Facts and Proceedings.
In December 2006, Fox purchased a residential home from Clark. Prior to
closing, and pursuant to statute, Clark completed and gave Fox a real estate
disclosure statement. See Iowa Code § 558A.4 (2005). On that form, Clark
indicated there was no “structural damage or physical problems such as:
settling, flooding, drainage, or grading problems.” Fox had a property inspection
completed; however, it was winter and the inspector did not inspect the yard or
grading of the property. In the spring of 2007, Fox discovered that after it rained,
water would accumulate in her backyard resulting in standing water.
On June 13, 2008, Fox filed a small claims action against Clark for failing
to disclose the water drainage problem and seeking damages to correct the
situation. In a written statement, Fox stated that her “backyard sits in water after
any rainfall . . . . With the recent heavy rains I am already seeing water in my
garage from the water in my backyard.” In a written response, Clark stated “we
did get some standing water once in awhile after a heavy rain, but it would go
away after a few hours. If we got a really bad rain, or if it had rained hard for
multiple days, then it would take a little bit longer for the water to dissipate into
the ground.”
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A hearing was held, during which both Fox and Clark testified.1
Fox
introduced evidence that it would cost $2955 to install catch basins and drain tile
to remedy the drainage problem. On July 23, 2008, the small claims court found:
During the spring of 2007, Fox noticed that water would
accumulate in her backyard after heavy rains, causing a “soggy
yard” and standing water for days . . . .
At trial, [Clark] admitted standing water after heavy rains but
did not consider it a problem. [Clark] seemed to think that the
standing water and resulting soggy yard was more of a mere
inconvenience at mowing time, than any real problem that needed
to be addressed. In past years, by [Clark‟s] own acknowledgement,
standing water in the yard was not unusual during heavy rains.
Surrounding neighbors all experienced similar water accumulation
but the water would dissipate within a few days. The water was
away from the house, did not get into the basement or garage and
would only last a few days and evaporates.
A neighbor testified that she had a conversation with [Clark]
(while she was living there) about the water in the yards and the
need to find some way to resolve it.
. . . In this case, the characteristic of this property is that it
has a drainage/grading issue, which results in standing water,
lasting several days to a week.
After finding Clark should have disclosed standing water and the drainage issue
to Fox, the small claims court entered judgment in favor of Fox and against Clark
in the amount of $2955 plus court costs of $88.
Clark appealed to the district court. On September 9, 2008, the district
court found:
The standing water in the backyard after a heavy rain was not
considered to be a problem by [Clark]. From reviewing the pictures
submitted as exhibits it appears the standing water was in the back
part of the back yard of the residence and would only be there for a
short period of time. It is not a condition causing such a problem
for which a seller would reasonably and in good faith believe was of
such nature or importance to have required that it be disclosed on
the property disclosure form. . . . Based on these findings the Court
1
The hearing before the magistrate was not reported; the record on appeal consists of
the magistrate‟s handwritten notes and some exhibits.
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concludes that the standing water in the back part of the back yard
after heavy spring rains is not a material condition or important
characteristic of the property, which [Clark] is required to disclose
on the property disclosure form.
The district court reversed the small claims judgment. Fox sought discretionary
review, which our supreme court granted.
II. Scope of Review.
“„On discretionary review of a small claims action, our standard of review
depends on the nature of the case.‟” Midwest Check Cashing, Inc. v. Richey,
728 N.W.2d 396, 399 (Iowa 2007) (quoting Hyde v. Anania, 578 N.W.2d 647, 648
(Iowa 1998)). This is a law action and therefore our review is for correction of
errors at law. Id.; Hammes v. JCLB Props., LLC, 764 N.W.2d 552, 555 (Iowa Ct.
App. 2008).
III. Analysis.
Iowa‟s Real Estate Disclosure Act requires a person interested in
transferring real estate to deliver a written disclosure statement to a prospective
buyer. Iowa Code § 558A.2. The disclosure statement must “include information
relating to the condition and important characteristics of the property and
structures located on the property . . . as provided in rules . . . adopted by the
real estate commission.” Id. § 558A.4(1); see, e.g., Iowa Admin. Code r. 193E14.1(6) (setting forth sample disclosure statement).
A person who violates the Act‟s disclosure requirement is ordinarily
liable for the amount of actual damage the buyer suffers. That said,
the Act states: “[t]he transferor . . . shall not be liable for [any] error,
inaccuracy, or omission in information required in a disclosure
statement, unless that person has actual knowledge of the
inaccuracy, or fails to exercise ordinary care in obtaining the
information.”
....
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The plain and unambiguous language of the statute clearly
indicates a seller may be liable for something less than a knowingly
inaccurate disclosure, i.e., if the seller fails to exercise ordinary care
in obtaining the information to be put on the disclosure form. The
Act places a limited affirmative duty upon sellers insofar as they
must exercise ordinary care in obtaining the information.
Jensen v. Sattler, 696 N.W.2d 582, 585-87 (Iowa 2005) (internal citations and
quotations omitted); see also Hammes, 764 N.W.2d at 555-56 (stating that proof
of fraud is not required for recovery under chapter 558A).
Fox argues that the drainage/grading problem is a material condition that
should have been disclosed. The district court concluded that standing water
was not uncommon in the wet spring of 2008 and the standing water only lasted
a short time. However, the evidence demonstrated the problem was not solely
due to the wet spring of 2008, but was a longstanding problem.
Clark
acknowledged that there had been standing water on occasion since she
purchased the home in November 2001. Prior to the sale of the home, Clark and
the owner of the neighboring property discussed the standing water problem and
Clark stated that she needed to find a way to solve it. In the spring of 2007, the
first spring after Fox purchased the property, she discovered the standing water
problem and the problem continued after rainfalls throughout 2008. Additionally,
the record indicated that the standing water would last from several days to a
week after a rainfall and made it difficult to grow anything in that part of the
backyard. We agree with Fox that this is a material condition that, under the
statute, was required to have been disclosed.
Fox further argues Clark is liable because she had actual knowledge of
the inaccuracy on the seller‟s disclosure statement and/or she failed to exercise
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ordinary care in obtaining the information to complete the disclosure form. Clark
testified that she knew of the drainage/grading issue in the backyard, but did not
think it was a problem that needed to be disclosed. We note that the testimony
indicated otherwise. Clark had previously stated to a neighbor that the standing
water was a problem that needed to be fixed. The record reveals the neighbor‟s
testimony was, “it‟s a problem every year and it lasts for weeks.” We agree with
the small claims court, the standard is not whether Clark believed the
drainage/grading issue was a problem, but whether a drainage/grading issue was
a “condition and important characteristic of the property” such that it be
disclosed. See Iowa Code § 558A.4(1). On the seller‟s disclosure form, Clark
indicated there was no problem with the drainage/grading of the property when
she in fact had actual knowledge of the defect. Therefore, we reverse the district
court and remand for entry of judgment as set forth in the magistrate‟s ruling.
REVERSED AND REMANDED.
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