LESTER v. SMITH

LESTER v. SMITH
2008 OK CIV APP 97
198 P.3d 402
Case Number: 104854
Decided: 07/11/2008
Mandate Issued: 11/13/2008
DIVISION I
THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION I

STEPHEN T. LESTER and DANA L. LESTER, Co-Trustees of THE LESTER FAMILY REVOCABLE TRUST, Plaintiff/Appellants,
v.
DANIEL A. SMITH and PATRICIA J. SMITH, Husband and Wife, Defendant/Appellees.

APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA

HONORABLE J. MICHAEL GASSETT, TRIAL JUDGE

AFFIRMED

Gentner F. Drummond, Anne M. Zimmerman, DRUMMOND LAW, PLLC, Tulsa, Oklahoma, for Plaintiff/Appellants,
Neal E. Stauffer, Jody R. Nathan, Nathan G. Parrilli, STAUFFER, GRAVES & NATHAN, Tulsa, Oklahoma, for Defendant/Appellees.

CAROL M. HANSEN, JUDGE:

¶1 In this action pursuant to the Oklahoma Residential Property Condition Disclosure Act (the Act),

¶2 In October 2003, while in the process of selling a residence in Tulsa, Sellers executed a Residential Property Condition Disclosure Statement (the Statement) according to the Act. The Statement was provided to Buyers prior to closing the sale in March 2004. In April 2007, Buyers brought this action claiming a right of recovery under §837 of the Act.

¶3 In their Petition, Buyers further alleged Sellers were made aware of the defects they failed to disclose by an engineering report provided to Sellers in December 2002, which report had only been "recently discovered" by Buyers. Buyers additionally alleged Sellers were aware their representations were untrue, that such representations were made with the intent to defraud Buyers, and that Buyers were thereby induced to buy and acted in reliance on Sellers' representations, all in violation of §837(A).

¶4 In Sellers' Answer, filed June 18, 2007, they asserted a number of affirmative defenses, including, as relevant here, that Buyers' Petition was "barred by all applicable statutes of limitations" and "all defenses they have under" the Act. On June 25, 2007, the trial court entered an "agreed" Journal Entry of Final Judgment. The trial court made findings of fact and concluded, as a matter of law, Sellers were entitled to final judgment because Buyers brought "this action beyond the two-year statute of limitation," citing §837(C) of the Act.

¶5 On appeal, Buyers contend (1) §837(C) is unconstitutional and (2) the "discovery rule" should apply to §837(C). In matters of constitutional and statutory interpretation, we apply a de novo standard of review, "i.e., a non-deferential, plenary and independent review of the trial court's legal rulings." Boston Ave. Management, Inc. v. Associated Resources, Inc.,

¶6 The two year limitation provision at §837(C) has not been the subject of appellate review in Oklahoma. However, in St. Paul Fire & Marine Ins. Co. v. Getty Oil Co.,

¶7 The distinction between a statute of limitations and a statute of repose is set forth in Neer v. State ex rel., Oklahoma Tax Com'n,

A statute of limitations extinguishes a remedy for an existing right by penalizing a party who sleeps on that right. ... A statute of repose sets an outer chronological time boundary beyond which no cause of action may arise for conduct that would otherwise have been actionable. (Citations omitted.)

¶8 In Neer, 982 P.2d at 1079, the Supreme Court considered language in the Oklahoma Tax Code allowing a refund for taxes paid to another state on the same income taxed in Oklahoma. That provision,

¶9 Similarly, the St. Paul Fire Court, 782 P.2d at 919, found

¶10 At 782 P.2d 920, the St. Paul Fire Court further explained "[b]y limiting the time within which actions could be brought against architects and engineers, the legislature sought to limit the impact of recent changes in the law which otherwise allowed these professionals to incur liability long after the completion of the improvement." The Court concluded, at 923, the ten year period in §109 strikes a "reasonable balance between the public's right to a remedy and the need to place an outer limit on the tort liability of those involved in construction." The Court there examined the constitutional issues raised here by Buyers and held the §109 statute of repose constitutional.

¶11 The reasoning and rationale applied by the St. Paul Fire Court apply equally here. As explained in Rogers v. Meiser,

One of the main purposes of the Act appears to be placing a limitation on the doctrine of caveat emptor

¶12 Under the common law, as a general rule, caveat emptor applied to preclude a fraud claim where a buyer inspected the property, and there was silence on the seller's part where it relates to conditions which the buyer, through the exercise of reasonable diligence, could discern upon the inspection. Rogers v. Meiser, 68 P.3d at 976. The Act abrogated the common law to the extent that even patent defects, i.e., those readily observable, could serve as grounds for an action thereunder if the seller has actual knowledge of the defect and either does not disclose it in the disclosure statement or does not provide the buyer a disclosure statement. Id., at 977.

¶13 In Rogers, the Supreme Court, at 977, expounded on the effect of the Act:

The Act, in major part then, expands the liability of sellers where no liability would exist at common law via an actual fraud theory because the buyer's reliance on misrepresentation or failure to speak on the seller's part is viewed as unjustifiable or unreasonable given the open/patent nature of a particular defect, whether or not the buyer actually noticed, saw or was aware of the defect, where the buyer conducted an unimpeded inspection of the property.

... another purpose of the Act is limiting the remedy available to a buyer and providing a certain amount of immunity to a seller.

¶14 The Rogers Court recognized the same reasonable balance between the public's right to a remedy and the need to place an outer limit on the liability of those involved as did the Court in St. Paul Fire. Before the Act, sellers had no liability for patent defects where buyers were afforded the opportunity for inspection. The Legislature expanded the sellers' liability in §837 where there was failure to provide a disclosure statement or failure to disclose a known defect. However, recognizing such a change in long established law could subject sellers to liability "long after the completion" of the property transfer, the Legislature, as it did in

¶15 As we have noted, the §837(C) language is similar to that in

¶16 The statutory language in §109 and §837(C) is in contrast to the general statute of limitations at

¶17 We are persuaded §837(C), like §109, is a statute of repose. Because a statute of repose "sets an outer boundary beyond which no cause of action may arise," St. Paul Fire, at 919, the discovery rule may not be applied to the limitation period. Buyers concede they failed to file their action within the two year limitations period provided in §837(C). The trial court was correct in finding Buyers were time barred and rendering judgment in favor of Sellers.

¶18 The trial court's judgment is accordingly, AFFIRMED.

ADAMS, P.J., and JOPLIN, J., concur.

FOOTNOTES

1 Section 837 provides, in relevant part:

A. The purchaser may recover in a civil action only in the event of any of the following:
...
2. The failure of the seller to disclose in the disclosure statement ... provided to the purchaser a defect which was actually known to the seller prior to acceptance of an offer to purchase;...
...
B. The sole and exclusive civil remedy at common law or otherwise for a failure under subsection A of this section by the seller .. shall be an action for actual damages, including the cost of repairing the defect, .. and shall not include the remedy of exemplary damages.

2 Section 837(C) provides:

Any action brought under this act shall be commenced within two (2) years after the date of transfer of real property subject to this act.

3 "Caveat emptor means, let the buyer beware or take care. BLACK'S LAW DICTIONARY 281 (Revised Fourth Edition 1968). It summarizes the maxim that a purchaser must examine, judge, and test for himself/herself. Id." Rogers v. Meiser, 68 P.3d at 976, note 17.