Thomson v. McGinnis
Annotate this Case
September 1995 Term
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No. 22872
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REBECCA A. THOMSON,
Plaintiff Below, Appellant
v.
ERMA MCGINNIS; ROBERT R. VITELLO;
THE PROPERTY CENTRE, INC.;
DAVID R. STEPHENS; AND D&R BUILDERS,
Defendants Below, Appellees
_______________________________________________
Appeal from the Circuit Court of Kanawha County
Honorable Charles King, Circuit Judge
Civil action No. 93-C-7931
REVERSED AND REMANDED
_______________________________________________
Submitted: September 26, 1995
Filed: December 15, 1995
Duane C. Rosenlieb, Jr.
St. Albans, West Virginia
Attorney for the Appellant
Stephen R. Crislip
George A. Halkias
Jackson & Kelly
Charleston, West Virginia
Attorneys for the Appellees
JUSTICE WORKMAN delivered the Opinion of the Court.
RETIRED JUSTICE MILLER sitting by temporary assignment.
JUSTICE ALBRIGHT did not participate.
SYLLABUS BY THE COURT
1. "A vendor's real estate broker may be liable to a purchaser if the broker makes
material misrepresentations with regard to the fitness or habitability of residential property
or fails to disclose defects or conditions in the property that substantially affect its value or
habitability, of which the broker is aware or reasonably should be aware, but the purchaser
is unaware and would not discover by a reasonably diligent inspection. It also must be
shown that the misrepresentation or concealment was a substantial factor in inducing the
purchase to buy the property." Syl. Pt. 1, Teter v. Old Colony Co., 190 W. Va. 711, 441 S.E.2d 728 (1994).
2. "One of the essential elements of an agency relationship is the existence of some
degree of control by the principal over the conduct and activities of the agent." Syl. Pt. 3,
Teter v. Old Colony Co., 190 W. Va. 711, 441 S.E.2d 728 (1994).
3. "'An agent in the restricted and proper sense is a representative of his principal in
business or contractual relations with third persons; while a servant or employee is one
engaged, not in creating contractual obligations, but in rendering service, chiefly with
reference to things but sometimes with reference to persons when no contractual obligation is to result.' Syllabus Point 3, State ex rel. Key v. Bond, 94 W. Va. 255, 118 S.E. 276
(1923)." Syl. Pt. 2, Teter v. Old Colony Co., 190 W. Va. 711, 441 S.E.2d 728 (1994).
4. "Summary judgment is appropriate where the record taken as a whole could not
lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving
party has failed to make a sufficient showing on an essential element of the case that it has
the burden to prove." Syl. Pt. 4, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
5. "'The question to be decided on a motion for summary judgment is whether there
is a genuine issue of fact and not how that issue should be determined.' Syl. pt. 5, Aetna
Casualty & Surety Co. v. Federal Ins. Co. of N.Y., 148 W. Va. 160, 133 S.E.2d 770 (1963)."
Syl. Pt. 4, Henderson v. Coombs, 192 W. Va. 581, 453 S.E.2d 415 (1994).
6. "'One who would defend against tort liability by contending that the injuries were
inflicted by an independent contractor has the burden of establishing that he neither
controlled nor had the right to control the work, and if there is a conflict in the evidence and
there is sufficient evidence to support a finding of the jury, the determination of whether an
independent contractor relationship existed is a question for jury determination.' Syllabus
Point 1, Sanders v. Georgia-Pacific Corp., 159 W. Va. 621, 225 S.E.2d 218 (1976)." Syl.
Pt. 5, Pasquale v. Ohio Power Co., 187 W. Va. 292, 418 S.E.2d 738 (1992).
7. "The general rule is that where one person has contracted with a competent person
to do work, not in itself unlawful or intrinsically dangerous in character, and who exercise
no supervision or control over the work contracted for, such person is not liable for the
negligence of such independent contractor or his servants in the performance of the work."
Syl. Pt. 1, Chenoweth v. Settle Eng'rs, Inc., 151 W. Va. 830, 156 S.E.2d 297 (1967),
overruled in part on other grounds by Sanders v. Georgia-Pacific Corp., 159 W. Va. 629, 225 S.E.2d 218 (1976).
8. While a real estate broker bears no responsibility to conduct an independent
investigation of a latent defect, when such broker volunteers to secure an inspection of the
premises, or some part thereof, by retaining on behalf of the buyer a third party to conduct
the inspection, then that real estate broker may be held liable to the buyer for civil damages
if the broker in retaining said third party is negligent in the selection and retention of the
third party and if such negligence proximately causes harm to the buyer.
Workman, J.:
This is an appeal by Rebecca A. Thomson (hereinafter "the Appellant"), from a final
order of the Circuit Court of Kanawha County granting summary judgment to the Appellees,
Erma McGinnis, Robert R. Vitello, and The Property Centre, Inc., in an action instituted by the Appellant alleging negligence and fraud in connection with her purchase of a home. The
Appellant contends that genuine issues of material fact existed which should have precluded
the lower court from granting summary judgment. We agree with the contentions of the
Appellant, reverse the decision of the lower court, and remand this matter for consideration
on the merits.
I.
On April 20, 1992, the Appellant contracted to purchase a home located in
Charleston, West Virginia. The Appellant was represented by Ms. Pam Grey of Home
Finders Associates, Inc., and the seller was represented by Appellee Erma McGinnis, a real
estate agent employed by Appellee The Property Centre, Inc.See footnote 1 At the request of the
Appellant, the Appellees agreed to have the furnace inspected and to certify the working condition of the heating system.See footnote 2 The approval of the mortgage loan was also conditioned
upon this inspection.
David Stephens, owner of Appellee D & R Builders, was retained by Ms. McGinnis
and The Property Centre, Inc., to inspect the residence for termites and to install smoke
detectors. During his performance of these duties on June 4, 1992, he was contacted by Ms.
McGinnisSee footnote 3 and asked to inspect the heating system. Mr. Stephens testified that he had
previously been employed by Ms. McGinnis and The Property Centre, Inc., to inspect
heating systems and that his performance of the inspection upon the home in question
consisted of listening to the furnace running while he was in the home. He was later
provided with a Heating Certification form by Ms. McGinnis upon which he certified that
the furnace was in proper working condition. Having received certification of the condition
of the furnace, the Appellant purchased the home.
On October 7, 1992, upon discovering that the furnace was not functioning, the
Appellant telephoned Kerstein's Heating and Air-Conditioning. A representative of that
business went to the Appellant's home and informed the Appellant that it would be dangerous
to light the pilot light because the furnace had no safety shut-off switch. The Property
Centre, Inc., was thereafter informed of the furnace problems, and Mr. Stephens and an
associate went to the Appellant's residence to service the furnace. When the Appellant asked
whether the associate was certified in heating and air-conditioning, it is the Appellant's
testimony that Mr. Stephens informed her that neither Mr. Stephens nor his associate was
certified in heating and air-conditioning. According to the testimony of both Mr. Stephens
and the Appellant, Mr. Stephens also advised the Appellant that he never should have signed
the certification and that he did so only at the direction of Ms. McGinnis. The Appellant
thereafter obtained three estimates for a new furnace and accepted the bid of $1450. All
three companies inspecting the furnace emphasized that the heating pipes connected to the
furnace were wrapped in asbestos. The Appellant was informed by these companies that the
asbestos could not be removed from the pipes due to the danger of asbestos fibers. The only
recommendation they offered the Appellant was to wrap the pipes with tape to encase the
asbestos insulation.
The Appellant filed a civil action alleging fraudulent misrepresentation and negligence
on October 13, 1993. On September 22, 1994, the lower court granted the Appellees' motion
for summary judgment. It is from that order that the Appellant appeals.
II.
In syllabus point one of Teter v. Old Colony Co, 190 W. Va. 711, 441 S.E.2d 728
(1994), we explained as follows:
A vendor's real estate broker may be liable to a purchaser
if the broker makes material misrepresentations with regard to
the fitness or habitability of residential property or fails to
disclose defects or conditions in the property that substantially
affect its value or habitability, of which the broker is aware or
reasonably should be aware, but the purchaser is unaware and
would not discover by a reasonably diligent inspection. It also
must be shown that the misrepresentation or concealment was
a substantial factor in inducing the purchase to buy the property.
Id. at 713, 441 S.E.2d at 730. In Teter, the prospective purchasers had expressed concern
about a crack in a retaining wall, and the real estate agent agreed to secure the services of an
engineer to examine the wall. 190 W. Va. at 715, 441 S.E.2d at 732. Based upon a written
report indicating that the wall was in good condition, the Teters purchased the property. Id.
Upon the collapse of the retaining wall, the Teters sought to establish liability of the real
estate company on the theories that it had failed to make a reasonably diligent inspection and
that the engineering firm negligently inspecting the wall was an agent of the real estate
company. Id. We held that a broker has no "independent duty to inspect and uncover latent
defects on residential premises." 190 W. Va. at 719, 441 S.E.2d at 736.
We also concluded in Teter that the real estate company, by hiring an engineering firm
to conduct an investigation, did not create an agency relationship whereby the real estate
company could become liable for negligent acts of the engineering firm. Id. We based this
latter determination upon the absence of any "evidence demonstrating that the broker
retained any control over the manner in which the engineering firm performed its inspection
of the premises." Id. at 720, 441 S.E.2d at 737. As we noted in syllabus point three of
Teter, "[o]ne of the essential elements of an agency relationship is the existence of some
degree of control by the principal over the conduct and activities of the agent." Id. at 713,
441 S.E.2d at 730. In syllabus point two of Teter, we also explained as follows:
"An agent in the restricted and proper sense is a
representative of his principal in business or contractual
relations with third persons; while a servant or employee is one
engaged, not in creating contractual obligations, but in rendering
service, chiefly with reference to things but sometimes with
reference to persons when no contractual obligation is to result."
Syllabus Point 3, State ex rel. Key v. Bond, 94 W. Va. 255, 118 S.E. 276 (1923).
190 W. Va. at 713, 441 S.E.2d at 730.
In syllabus point four of Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994),
we explained the following:
Summary judgment is appropriate where the record taken
as a whole could not lead a rational trier of fact to find for the
nonmoving party, such as where the nonmoving party has failed
to make a sufficient showing on an essential element of the case
that it has the burden to prove.
Id. at 190, 451 S.E.2d at 756. We emphasized the necessity for the nonmoving party to "take
initiative and by affirmative evidence demonstrate that a genuine issue of fact exists." 192
W. Va. at 192, 451 S.E.2d at 758 n.5. Doubt regarding the existence of a genuine issue of
material fact, however, is to be resolved against the moving party. Aetna Casualty and Sur.
Co. v. Federal Ins. Co., 148 W. Va. 160, 133 S.E.2d 770 (1963). Moreover, as we
emphasized in syllabus point four of Henderson v. Coombs, 192 W. Va. 581, 453 S.E.2d 415
(1994), "'[t]he question to be decided on a motion for summary judgment is whether there
is a genuine issue of fact and not how that issue should be determined.' Syl. pt. 5, Aetna
Casualty & Surety Co. Federal Ins. Co. of N. Y., 148 W. Va. 160, 133 S.E.2d 770 (1963)."
Id. at 582, 453 S.E.2d at 416.
In the present case, unlike the scenario in Teter, there was some evidence tending to
demonstrate that the broker retained an element of control over the actions of the individual
inspecting the furnace. Despite the Appellees' contention that Mr. Stephens acted only as
an independent contractor, the Appellant testified in her deposition that she was informed
by Mr. Stephens that he signed the certification upon the direction of Ms. McGinnis. Mr.
Stephens also testified that Ms. McGinnis contacted him while he was at the home
performing the termite inspection and requested him to inspect the furnace, and that she
actually provided him with the written heating certification to sign. We have previously
noted that where factual conflict exists regarding the degree of control exercised and the nature of the relationship thereby created, jury resolution is warranted. Spencer v. Travelers
Ins. Co., 148 W. Va. 111, 133 S.E.2d 735 (1963). In Spencer, we stated that "[a]s a general
rule, where the evidence relating to an independent contractor or employee is conflicting, or
if not conflicting, where more than one inference can be derived therefrom, the question is
one of fact for jury determination . . . ." Id. at 118, 133 S.E.2d at 740. In syllabus point five
of Pasquale v. Ohio Power Co., 187 W. Va. 292, 418 S.E.2d 738 (1992), we elaborated:
'One who would defend against tort liability by
contending that the injuries were inflicted by an independent
contractor has the burden of establishing that he neither
controlled nor had the right to control the work, and if there is
a conflict in the evidence and there is sufficient evidence to
support a finding of the jury, the determination of whether an
independent contractor relationship existed is a question for jury
determination.' Syllabus Point 1, Sanders v. Georgia-Pacific
Corp., 159 W. Va. 621, 225 S.E.2d 218 (1976).
187 W. Va. at 295, 418 S.E.2d at 741.
Based upon the foregoing, we find that there exists a genuine issue of material fact
regarding the existence of an agency relationship between the Appellees and Mr. Stephens,
precluding the summary judgment granted by the lower court.See footnote 4
III.
As an alternative to her position that the Appellees are liable for the negligent acts of
Mr. Stephens based upon an employer/employee relationship, the Appellant also alleges in
her complaint that the Appellees owed her "a duty to use reasonable care to discover and
communicate truthful information about the subject property, and in particular . . . the
qualifications of the Defendant, David R. Stephens, to inspect furnaces and heating systems."
The Appellant further asserts that the Appellees "breached this duty of reasonable care to
obtain and communicate truthful and accurate information concerning the subject property,
and in particular . . . the qualifications of the Defendant, David R. Stephens, to inspect
furnaces and heating systems."
The Appellant is essentially asserting a claim of negligent hiring against the
Appellees. While West Virginia has not previously addressed the specific issue of negligent
hiring of an employee or an independent contractor, we have explained our approach to
liability of an employer for the actions of an independent contractor as follows:
The general rule is that where one person has contracted
with a competent person to do work, not in itself unlawful or
intrinsically dangerous in character, and who exercise no supervision or control over the work contracted for, such person
is not liable for the negligence of such independent contractor
or his servants in the performance of the work.
Syl. Pt. 1, Chenoweth v. Settle Eng'rs, Inc., 151 W. Va. 830, 156 S.E.2d 297 (1967),
overruled in part on other grounds by Sanders, 159 W. Va. at 628, 225 S.E.2d at 222.
(emphasis added). Other jurisdictions have entertained a cause of action for negligent hiring
of an independent contractor, reasoning that negligently securing the services of the
independent contractor falls within one of several typically recognized exceptions to the rule
that an employer is not liable for the actions of his independent contractor.See footnote 5 See Payne v.
Lee, 686 F. Supp. 677, 679 (E.D.Tenn. 1988), aff'd sub nom. Payne v. The Law Center, 872 F.2d 1027 (6th Cir. 1989) ; Sullivan v. St. Louis Station Associates, 770 S.W.2d 352, 354-55
(Mo.App. 1989).See footnote 6
For instance, in Del Signore v. Pyramid Sec. Servs., Inc., 537 N.Y.S.2d 640 (N.Y.
App. Div. 1989), the New York court held that an action for negligent hiring of an
independent contractor who assaulted concert patrons could be maintained "where the
employer engages an unqualified or careless contractor or, when on notice of deficient
performance, fails to prevent the continuance of such negligence." Id. at 641. In Levy v.
Currier, 587 A.2d 205 (D.C. 1991), the District of Columbia Court of Appeals held that a
townhouse owner could be liable to neighbors for negligent hiring of an independent
contractor if the owner did not use reasonable care in selecting the contractor to perform
work on a fire escape and if such negligent hiring caused a fire. Id. at 211-12. Similarly, in
Wasson v. Stracener, 786 S.W.2d 414 (Tex. Ct. App. 1990), the court explained that "[o]ne
hiring an independent contractor may be held responsible for the contractor's negligent acts
if the employer knew or should have known that the contractor was incompetent and a third
person was injured because of the contractor's incompetency." Id. at 422. The Wasson court
also noted that "[o]ne factor that courts have looked to in determining whether an employee
was negligent in hiring an independent contractor is whether the employer conducted an
inquiry into the contractor's qualifications before hiring the contractor." Id.
In King v. Associates Commercial Corp., 744 S.W.2d 209 (Tex. Ct. App. 1987),
buyers of a truck brought an action against the secured creditor's assignee regarding the
wrongful repossession of a truck. In discussing the application of the negligent hiring theory,
the court noted that "[a]n employer has a duty to use ordinary care in employing an
independent contractor." Id. at 213 (citing Jones v. Southwestern Newspapers Corp., 694 S.W.2d 455, 458 (Tex. Ct. App. 1985)). Regarding the care utilized in investigating the
qualifications of the independent contractor, the court held that the employer "did conduct
a sufficient inquiry into [the independent contractor's] qualifications before it hired the
contractor to repossess the truck . . . ." 744 S.W.2d at 214. "Negligence is not to be
presumed - the mere fact that an independent contractor negligently caused an injury to
another affords no presumption that the employer was negligent in his selection of the
contractor." Id. (citing Moore v. Roberts, 92 S.W.2d 236, 239 (Tex. Ct. App. 1936)).
Accordingly, we hold that while a real estate broker bears no responsibility to conduct
an independent investigation of a latent defect, when such broker volunteers to secure an
inspection of the premises, or some part thereof, by retaining on behalf of the buyer a third
party to conduct the inspection, then that real estate broker may be held liable to the buyer
for civil damages if the broker in retaining said third party is negligent in the selection and
retention of the third party and if such negligence proximately causes harm to the buyer. By
so ruling, we do not impose upon a real estate broker the affirmative duty to conduct a
comprehensive inquiry into the credentials of an individual hired as an independent contractor. Where the independent contractor selected is a licensed, reputable individual or
firm, for instance, the broker is not obligated to engage in a personal inquiry into the
credentials or training of the contractor. However, where the exercise of reasonable
diligence would disclose facts demonstrating that the contractor was clearly incompetent for
the particular task contemplated, a reasonably prudent broker should not retain the
contractor.
The Appellant in the instant case has alleged a cause of action for negligent hiring by
asserting that the Appellees knew or should have known that Mr. Stephens was not qualified
to inspect furnaces or heating systems. The questions of whether the Appellees created an
agency relationship in retaining Mr. Stephens, and whether the Appellees knew or should
have known that Mr. Stephens was not qualified to inspect heating systems create genuine
issues of material facts precluding summary judgment and justifying the remand of this
matter for examination of those issues.
IV.
The Appellees contend that the Appellant waived and released all claims she could
have had regarding the inspection of the home by signing a waiver included within the closing documents.See footnote 7 The Appellant responds by asserting that her waiver was fraudulently
induced by the Appellees to the extent that she purchased the home and signed the
documents based solely upon her reliance on the inspection of the furnace by a properly
certified and qualified inspector. We have previously held that "fraud in the procurement
of an agreement or the obtaining of some benefit vitiates any right to receive the fruits of the
contract or the benefits." North v. West Virginia Bd. of Regents, 175 W. Va. 179, 183, 332 S.E.2d 141, 145 (1985), cert. denied, 475 U.S. 1020 (1986); accord Syl. Pt. 1, Jones v.
Comer, 123 W. Va. 129, 13 S.E.2d 578 (1941). In regard to releases of liability for personal
injury, we explained in Peters v. Cook, 152 W. Va. 634, 165 S.E.2d 818 (1969), that "if a
written release releasing a claim for personal injuries is obtained by fraud, duress or
incapacity such release will not sustain a plea of accord and satisfaction." Id. at 637, 165 S.E.2d at 821. "However, the burden of proving such matters by clear and distinct evidence
rests upon the plaintiff or the person attempting to vitiate the release." Id. The issue of the
effect of the waiver in the present case and whether it was fraudulently induced must also
be taken up on remand in conjunction with the issues discussed above.
Based upon the foregoing, we find that the Appellant presented sufficient evidence
to preclude summary judgment, we reverse the decision of the lower court, and we remand
for consideration of the merits of this action.
Reversed and remanded.
Footnote: 1
Appellee Robert Vitello was a broker for the Appellee The Property Centre, Inc.,
whose only involvement in this matter was his presence at the closing of the sale to the
Appellant. Ms. McGinnis made the statement regarding finding someone to inspect the
furnace, now alleged to be a misrepresentation, and Mr. Vitello and The Property Centre,
Inc., are sued only upon an agency theory. Ms. Grey, the Appellant's agent, is not a party
to this civil action.Footnote: 2
According to the November 23, 1993, deposition of the Appellant, the alleged
misrepresentation regarding the inspection of the furnace occurred during a conversation
among Ms. Grey, Ms. McGinnis, and the Appellant. The Appellant testified that Ms.
McGinnis informed her and her agent, Ms. Grey, that Ms. McGinnis would "take care of
getting the inspection of the furnace." No other representations were made by Ms. McGinnis
regarding the furnace.Footnote: 3
Mr. Stephens testified that he received a telephone call from Ms. McGinnis while at
the home on June 4, 1992. He informed the Appellant, however, that the conversation
occurred in person when Ms. McGinnis appeared at the home during his attempt to conduct
the termite inspection.Footnote: 4
If, upon remand, an agency relationship between Mr. Stephens and the Appellees is
determined to exist, the rule of respondeat superior would apply to bind the Appellees for
the negligent acts of their employee. As we noted in Barath v. Performance Trucking Co.,
188 W. Va. 367, 424 S.E.2d 602 (1992), "[t]he fundamental rule in West Virginia is that if
it can be shown that an individual is an agent and if he is acting within the scope of his
employment when he commits a tort, then the principle is liable for the tort as well as the
agent." Id. at 370, 424 S.E.2d at 605.Footnote: 5
The traditional rule regarding liability of employers for the negligent acts of an
independent contractor is that the employer is not liable for such acts committed in the
performance of the work the contractor was hired to perform. See Syl Pt. 5, Law v. Phillips,
136 W. Va. 761, 68 S.E.2d 452 (1952). Exceptions previously recognized by this Court
include work which is in itself unlawful, work which is intrinsically dangerous, and work
which is likely to cause injury to another person if proper care is not taken. Id. at 762, 68 S.E.2d at 454. Footnote: 6
Where a negligent hiring cause of action is predicated upon section 411 of the
Restatement (Second) of Torts (1963), physical harm must result from the negligence. That
section provides as follows:
An employer is subject to liability for physical harm to third
persons caused by his failure to exercise reasonable care to
employ a competent and careful contractor (a) to do work which
will involve a risk of physical harm unless it is skillfully and
carefully done, or (b) to perform any duty which the employer
owes to third persons.
Footnote: 7
The form signed by the Appellant which allegedly waives the right to advance claims
regarding the inspections of the home was one promulgated by the Kanawha Board of
Realtors. It stated as follows:
Purchasers hereby waive their right to these inspections
[of structural integrity, utility lines, physical and mechanical
components] and agree to relieve Homefinders Associates, Inc.,
broker, agents and seller(s) of any liability or responsibility
pertaining to these inspections.
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