LITTON (WILLIAM), ET AL. VS. MEADOWS (RANDY), ET AL.
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RENDERED: DECEMBER 30, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-001750-MR
WILLIAM LITTON AND
MARY LITTON
v.
APPELLANTS
APPEAL FROM MCCREARY CIRCUIT COURT
HONORABLE PAUL E. BRADEN, JUDGE
ACTION NO. 07-CI-00332
RANDY MEADOWS AND
CHASTITY MEADOWS
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; DIXON, JUDGE; BUCKINGHAM,1
SENIOR JUDGE.
COMBS, CHIEF JUDGE: William and Mary Litton appeal from a judgment of
the McCreary Circuit Court entered on July 11, 2008, in favor of Randy and
Chastity Meadows, buyers of real estate, who had alleged misrepresentation and
fraudulent concealment of conditions in the transaction. We affirm.
1
Senior Judge David C. Buckingham sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
The Littons lived in their McCreary County residence for nearly
fourteen (14) years. When they decided to move to Pulaski County, they placed
the house on the market “for sale by owner.” Eventually, with the house still
unsold, the Littons packed their possessions and moved to a new home in
Somerset.
In July 2006, the Littons contracted with Re/Max Appletree Realty to
list and sell the vacant house. The Littons agreed to sell the house for $68,900.00.
In conjunction with the listing agreement, the Littons completed a Seller
Disclosure of Property Condition form as required by the provisions of Kentucky
Revised Statute(s) (KRS) 324.360. On the form, the Littons disclosed that the roof
of the house had been repaired; that there had been additions, structural
modifications, or other alterations made to the residence; and that the house had
been treated for wood infestation. In answer to a question concerning the owners’
knowledge of “any past or current problems affecting [the home’s] . . . . [f]loors
and walls,” the spaces designated both “no” and “unknown” were marked.
The Meadowses toured the empty house with Patricia Schroyer, their
Re/Max agent. Chastity peeled back a bit of carpet and inspected the hardwood
underneath. They walked through to inspect every room of the house and
remarked to their agent that the wood floors would be beautiful once they had been
cleaned up. Back at the Re/Max office, the Meadowses reviewed the sellers’
disclosure form. On March 29, 2007, they made an offer to purchase the Littons’
home for $65,000.00
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The Meadowses’ form offer contained provisions pertaining to their
anticipated inspection of the property. Pursuant to paragraph 5, as the buyers, they
were entitled to a wood-destroying organism inspection; a whole house inspection;
an individual inspection of the cooling/heating, plumbing, and electrical systems; a
water quality inspection; a radon test; or any other inspection that they designated.
The form contained this warning: “Inspections required by FHA/VA, lending
institutions, appraiser or other regulatory agencies are for their benefit and do not
necessarily eliminate the need for an inspection by Buyer.” Nevertheless, the
Meadowses elected to conduct an inspection only “as lender requires.”2
Paragraph 6 of the agreement provided as follows:
Buyer may have inspections made at Buyer’s expense to
determine whether there are undisclosed material defects
in the property, improvements or personal property . . . .
Buyer shall notify Seller or Seller’s Agent in writing
within (10) days, following expiration of the inspection
period as noted in 5(a), of any such defects, presence of
wood destroying organisms. . . . If Buyer fails to give
such notice within the time specified, Buyer shall be
deemed to have accepted the property, improvements and
personal property in the condition as of the Contract
Date. If buyer notifies Seller or Seller’s Agent of any
such defect, buyer and seller will negotiate in good faith
within 5 days for repairs. Should buyer and seller fail to
reach an agreement of repairs, within the time limits
specified, this contract is voidable by either party with
both parties signing a mutual release and Buyer receiving
a return of the earnest money.
[ ] Buyer waives all inspections of the Property and
relies solely upon the Buyer’s examination of the
Property and releases Seller and Brokers from any and all
2
Although an appraisal of the property was eventually undertaken, apparently it was not
provided to the Meadowses.
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liability relating to any defect or deficiency affecting the
Property. This release shall survive the closing.
The Meadowses did not check the bracket indicating that they would waive the
sellers’ liability arising from any defect in the home.
Pursuant to the provisions of KRS 324.360, the Meadowses were
given a copy of the sellers’ disclosure form within seventy-two (72) hours of the
offer. The Littons accepted the Meadowses offer on April 1, 2007. Closing was
scheduled for May 1.
When the Meadowses returned for another look at the house, they
were accompanied by a friend, Lonnie Poynter, a home inspector. Poynter brought
a ladder and a flashlight. He inspected the attic, the main level, and the crawl
space. Poynter suggested that the underside of the house could be better insulated
for energy conservation and that builder’s wrap should be placed underneath as
barrier against moisture. Otherwise, he was satisfied with the condition of the
house. The Meadowses did not visit the house again, nor did they arrange for
another inspection of any kind before the purchase was completed. The transaction
closed on June 8, 2007.
The Meadowses moved on June 9, 2007. When Randy began to mop
the living room floor, he noticed that the floor was separated substantially from the
baseboard at one corner and that the floor was not firm underfoot. Meadows
became alarmed and contacted his agent.
-4-
On June 25, 2007, the Meadowses had the house inspected by a
licensed home inspector. The inspector’s report indicated that the presence of
moisture and wood-destroying insects under the home had contributed to the
deterioration of its original wood structure and support. The floor had begun to
sink, and relatively recently, cement blocks and wood posts had been added to
support the sub-floor. A building contractor estimated that repairs to the support
structure and replacement of the sub-floor and surface floor would cost more than
$25,000.00.
On August 2, 2007, the Meadowses filed this action against the
Littons. In their complaint, the Meadowses alleged that the Littons had
fraudulently misrepresented to them the condition of the property. They alleged
that the home has structural defects and that it is plagued by mold, fungus, woodboring insects, and environmental hazards. They alleged that the Littons had made
temporary repairs at the baseboards and in the crawl space in an effort to conceal
material defects in the property and to defraud an unsuspecting buyer. The Littons
denied these allegations.
Trial was conducted on July 8, 2008. After hearing the evidence, the
jury returned a verdict against the Littons in the sum of $12,500.00. This appeal
followed.
The Littons contend that the trial court erred by submitting the issue
of misrepresentation to the jury. They contend that because the Meadowses had
had a sufficient opportunity to inspect the property and to observe the condition of
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the premises, the doctrine of caveat emptor (“buyer beware”) prevents a cause of
action based on fraud. The Littons argue that they were entitled to a directed
verdict or judgment notwithstanding the verdict (JNOV).
In ruling on either a motion for a directed verdict or a
motion for judgment notwithstanding the verdict, a trial
court is under a duty to consider the evidence in the
strongest possible light in favor of the party opposing the
motion. Furthermore, it is required to give the opposing
party the advantage of every fair and reasonable
inference which can be drawn from the evidence. And, it
is precluded from entering either a directed verdict or
judgment n.o.v. unless there is a complete absence of
proof on a material issue in the action, or if no disputed
issue of fact exists upon which reasonable men could
differ.
Taylor v. Kennedy, 700 S.W.2d 415, 416 (Ky. App. 1985).
The Meadowses claim that in order to induce them to purchase the
house, the Littons committed fraud by materially misrepresenting the condition of
the floor (and underlying structure), the presence of wood-boring insects, and
extensive insect damage. The allegation of fraud in any transaction requires that
the following elements be established by clear and convincing evidence:
(1) a material representation,
(2) which is false,
(3) known to be false or made recklessly,
(4) made with inducement to be acted upon,
(5) acted in reliance thereon, and
(6) causes injury.
United Parcel Service Co. v. Rickert, 996 S.W.2d 464 (Ky. 1999).
When she was questioned by the Meadowses’ attorney at trial, Mary
Litton explained that her brother had once worked under the house to stabilize her
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bedroom floor. She indicated that the extra weight of a waterbed in that room had
caused the floor to give way over time. Mary testified that the work had been
undertaken more than ten years before the Meadowses bought the house and that
she had not been concerned about the state of the floors or the substructure when
they decided to sell the house. She denied that she meant to deceive potential
buyers by aligning trim to cover a gap between the floor and wall of her bedroom,
but she did admit that she had supplied a “wrong answer” on the disclosure form
by specifically representing that she did not know of any past or current problems
affecting the floors and walls.
With respect to an infestation of wood-boring insects, Mary Litton
told the jury that the house had never been inspected and that no one had ever
mentioned the problem to her. She denied that she had intended to mislead a
prospective buyer by indicating on the disclosure form that the house had been
treated for wood infestation when in truth it had been treated by an exterminator
only for fruit ants (which are not wood-boring). She also explained that she
assumed that a rotting wood plank found outside the house had been left over from
a vinyl-siding project; her husband had given that same explanation to the realtor
in response to a question posed by the Meadowses.
Randy Meadows testified that he reviewed the sellers’ disclosure form
before making the offer to purchase. He stated that he detrimentally relied on the
Littons’ oral statements and the written representations made in the disclosure
form. He stated that he and his family had been injured as a result.
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In compliance with our governing standard, we must make no
determinations with respect to witness credibility and view the evidence more
favorably to the Meadowses. We are persuaded that the Meadowses presented
sufficient evidence of fraud to withstand a directed verdict against them. Properly
instructed, the jury believed that the Littons knowingly made false, material
representations concerning the condition of their house; that the Meadowses relied
on these misrepresentations; and that they were injured as a consequence. Thus,
the trial court did not err by denying the Littons’ motion for directed verdict or
motion for JNOV.
The Littons also contend that the jury award is excessive and
unsupported by the evidence. We disagree. As noted previously, a building
contractor presented evidence that the damages would cost $25,000 to repair. The
jury was persuaded by competent evidence that the Meadowses were damaged to
the extent of $12,500.00 – only half that amount. We will not disturb the verdict as
excessive.
We affirm the judgment of the McCreary Circuit Court.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEES:
Matthew J. Choate
Winter R. Huff
Somerset, Kentucky
Marcia A. Smith
David O. Smith
Corbin, Kentucky
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