Karyl Pogue v. Kim Rawlings and Deborah S. Rawlings ( 2012 )

Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before FILED
any court except for the purpose of Mar 27 2012, 8:52 am
establishing the defense of res judicata,
collateral estoppel, or the law of the case. CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES:
ALAN D. WILSON LOUIS D. EVANS
Kokomo, Indiana Frankfort, Indiana
IN THE
COURT OF APPEALS OF INDIANA
KARYL POGUE, )
)
Appellant-Plaintiff, )
)
vs. ) No. 12A02-1107-PL-654
)
KIM RAWLINGS and )
DEBORAH S. RAWLINGS, )
)
Appellees-Defendants. )
APPEAL FROM THE CLINTON SUPERIOR COURT
The Honorable Justin H. Hunter, Judge
Cause No. 12D01-1002-PL-72
March 27, 2012
MEMORANDUM DECISION - NOT FOR PUBLICATION
NAJAM, Judge
STATEMENT OF THE CASE
Karyl Pogue appeals the trial court‟s judgment in favor of Kim Rawlings and
Deborah Rawlings on Pogue‟s complaint alleging fraud, following a bench trial. Pogue
presents a single restated issue for our review, namely, whether the trial court erred when
it entered judgment in favor of the Rawlingses.
We affirm.
FACTS AND PROCEDURAL HISTORY
The trial court set out the relevant facts in its judgment as follows:
Buyer [Pogue] and Seller [the Rawlingses] executed a land contract
(Exhibit A) on December 29, 2007[,] for the purchase and sale of
residential real estate located in Clinton County, Indiana (hereafter “the
Property”). The sales price was $80,000 and the seller[-]financed terms
called for buyer to pay $8,000 up front and monthly payments of $550
including interest on principal at the rate of 5% per annum.
The residence on the Property was over one hundred years old when
sold to Buyer. Seller had previously lived in the residence between the
years 1975 and 2003. Seller did not provide Buyer with a disclosure form
required by Ind. Code §32-21-5-10. The land contract provided Buyer the
right to enter and inspect the Property (paragraph 8c. of Exhibit A) but also
declared that “Buyer has personally inspected the real estate and the
improvements thereon and agrees to accept the same „as is‟ in its present
condition. Seller makes no warranties whatsoever to Buyer either express
or implied.” (Paragraph 12 of Exhibit A).
Buyer took possession and lived in the home with her significant
[]
other beginning February[] 2008[,] and began making improvements.
Buyer experienced significant problems after taking possession. The
furnace stopped working shortly after Buyer moved into the property. By
April[] 2008, Buyer noticed the water was brown. By summer[] 2008 the
water pump failed. The water quality did not improve, and the well went
dry by the end of 2008.
Buyer shortly thereafter abandoned the Property, returned the keys
to Seller and notified Seller that she was returning possession to him due to
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several problems with the Property, all specified in a letter dated February
10, 2009 (Exhibit D).
One of the asserted problems was related to the description of the
property being transferred. Prior to execution of the contract, Seller had
advertised the Property for sale in the Kokomo Tribune. The property was
advertised to include 2 acres. After execution of the land contract, Buyer
discovered that the description contained only approximately 1.4 acres. . . .
A second asserted problem related to the location of the well [sic].
Before execution of the contract, Buyer asked Seller about the location of
the well. Seller represented that the well was located near the south side of
the house, and Seller pointed to an area close to the house. After Buyer
began experiencing water quality problems in April[] 2008, she and close
family members began to troubleshoot the problem. Eventually Buyer and
family members dug to locate the well where Seller had previously pointed
and never found it there. . . .
Appellant‟s App. at 4-5.
On February 5, 2010, Pogue filed a complaint against the Rawlingses alleging
fraudulent inducement. In particular, Pogue alleged that the Rawlingses
made false and fraudulent representations to Karyl Pogue to induce her into
signing the contract: [t]hat the real estate consisted of a two[-]acre plot,
that the septic system would be repaired, that the well was located outside
the utility room window where repairs could easily be made, that the
kitchen window would be replaced, that the barn would be cleaned out, and
that the house complied with local and state codes.
Id. at 7-8. And Pogue requested in relevant part “judgment against defendants of all
sums paid to defendants pursuant to the contract, [and] for such additional sums that
plaintiff has incurred to remedy defects in the home[.]” Id. at 8.
The trial court conducted a bench trial on June 16, 2011, and the court entered
findings and conclusions sua sponte. In addition to the findings of fact set out above, the
trial court stated:
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At trial, Seller conceded that he intended to convey the visibly
mowed ground, which was actually closer to 3 acres of ground. Contrary to
the contention of Buyer, the Court finds that the discrepancy between the
property description contained in the contract and the representation of
Seller before execution of the contract was not based on fraud and serves as
no foundation for Buyer to cancel the contract or make a claim for
damages. Before abandoning the Property, Buyer never demanded a
correction to conform the property description to the parties‟ understanding.
. . . At trial there was no credible evidence of the actual location of
the well. It does not logically follow that the well went dry because it was
not located where Seller said it was. Locating the well would clearly make
water quality issues easier to diagnose, but Buyer never sought a
professional for such assistance.
The elements of a cause of action in fraud are well established: To
sustain an action for fraud it must be proven by a preponderance of the
evidence that a material representation of a past or existing fact was made
which was untrue and known to be untrue by the party making it, or else
recklessly made, and that another party did in fact rely on the representation
and was induced thereby to act to his detriment. Plymale v. Upright, [] 419
N.E.2d 756 ([Ind. Ct. App. ]1981).
In the present, the Court finds that Buyer has not proved that Seller
made a material misrepresentation of fact upon which they relied to their
detriment. While it‟s true that Seller misrepresented the location of the
well [sic]. Indeed, it was not where he told Buyer it was located. There is
no evidence, however, that the misrepresentation was material because
there is no evidence for the Court to conclude that the well went dry
because it was in a location different than the location represented to Buyer.
In connection with the weak floor joists, the Court finds no evidence
that Seller ever misrepresented the condition of any component of the
house that would be categorized to include the floor joists. Again, Buyer
neglected to exercise her right to inspect, accepted the property “AS IS,”
and moved in knowing that the property was over 100 years old.
The remaining reasons asserted by Buyer for abandoning the
Property and the contract were related to an alleged breach of promises that
were not performed, namely the Seller‟s failure to fix the septic, to repair a
window, and to clean an outbuilding. A failed promise to perform an act is
not a misrepresentation of a past or existing fact and will not sustain a cause
of action for fraud.
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IT IS THEREFORE ORDERED that Plaintiff shall take nothing by
way of her complaint and cause of action against Defendants.
Id. at 5-6. This appeal ensued.
DISCUSSION AND DECISION
The trial court entered findings of fact and conclusions thereon sua sponte.
Findings of fact entered by the trial court sua sponte
control only as to the issues they cover, while a general judgment standard
applies to any issue upon which the trial court has made no findings. In
reviewing the judgment, this court must determine whether the evidence
supports the findings and whether the findings, in turn, support the
conclusion and judgment. We will reverse a judgment only when it is
shown to be clearly erroneous, i.e., when the judgment is unsupported by
the findings of fact and conclusions entered on the findings. In order to
determine that a finding or conclusion is clearly erroneous, an appellate
court‟s review of the evidence must leave it with the firm conviction that a
mistake has been made. In determining the validity of the findings or
judgment, we consider only the evidence favorable to the judgment and all
reasonable inferences to be drawn therefrom, and we will not reweigh the
evidence or assess the credibility of witnesses. In the case of a general
judgment, a general judgment may be affirmed on any theory supported by
the evidence presented at trial.
Borovilos Rest. Corp. II v. Lutheran Univ. Ass‟n, 920 N.E.2d 759, 763 (Ind. Ct. App.
2010) (citations omitted), trans. denied.
Further, Pogue bore the burden of proof on her fraud claim and, thus, appeals
from a negative judgment. We will not reverse a negative judgment unless it is contrary
to law. Eppl v. DiGiacomo, 946 N.E.2d 646, 649 (Ind. Ct. App. 2011). A judgment is
contrary to law when the evidence is without conflict and leads to but one conclusion, but
the trial court reached a different conclusion. Id.Pogue first contends that:
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[a]lthough the real estate disclosure statute and the case law are silent as to
the consequences of failing to provide a real estate disclosure form as in our
case, failure to do so is obviously a statutory violation. Rawlings cannot be
allowed to benefit from his failure to comply with his statutory obligation
to provide a written disclosure. Sellers can be held liable for omissions on
the sales disclosure form. Here, Rawlings omitted everything by failing to
provide a disclosure form, and, thus should be held liable. In this case,
liability means a return of Pogue‟s $8,000 down payment.
Brief of Appellant at 11 (emphasis added, citation omitted). At trial, however, Pogue
argued that the Rawlingses violated the statute when they did not give her a disclosure
form and that the statutory violation “requires Mr. Rawlings to repay Ms. Pogue for the
money she put in to remedy those defects that weren‟t disclosed.” Transcript at 87.
In support of her contention on this issue, Pogue cites to this court‟s recent opinion
in Vanderwier v. Baker, 937 N.E.2d 396 (Ind. Ct. App. 2010). In Vanderwier, the home
sellers completed a disclosure form under the statute and stated in relevant part that
“during severe rain they had „minor garage seepage.‟ ” Id. at 397. But after the buyers
moved in, the lower level of the house flooded, and in the course of making repairs, the
buyers discovered evidence of prior water damage, including “water marks on the walls
and rotted boards.” Id. The buyers sued, and the trial court entered judgment in favor of
the buyers after a bench trial.
On appeal, we adopted this court‟s opinion in Hizer v. Holt, 937 N.E.2d 1 (Ind. Ct.
App. 2010), “in its entirety.” Vanderwier, 937 N.E.2d at 401. In Hizer, we held, in
relevant part, that “sellers can be held liable for errors, inaccuracies, or omissions on the
Sales Disclosure Form if the seller has actual knowledge of the defect.” 937 N.E.2d at 7.
Thus, in Hizer, we concluded that Indiana Code Chapter 32-21-5 “abrogates any
interpretation of the common law that might allow sellers to make written
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misrepresentations with impunity regarding the items that must be disclosed to the buyer
on the Sales Disclosure Form[.]” Id.
In essence, Pogue asks us to hold that the Rawlingses‟ failure to provide a
disclosure form is, by itself, grounds for rescission under the reasoning in Vanderwier.
But, as the Rawlingses correctly point out, Indiana Code Section 32-21-5-10 expressly
states that “[a]fter closing, the failure of the owner to deliver a disclosure statement form
to the buyer does not by itself invalidate a real estate transaction.” Further, a
misrepresentation or omission in a disclosure form, which may support a fraud claim, is
not equivalent to providing no form at all. We find Vanderwier inapposite here.
Pogue also contends, without citation to the record, that the evidence shows that
Mr. Rawlings misrepresented the location of the well and whether there had been any
problems with the “water system.” Brief of Appellant at 11. To prevail in a cause of
action for fraudulent misrepresentation, Pogue had to prove that (1) the Rawlingses made
false statements of past or existing material facts; (2) the Rawlingses made such
statements knowing them to be false or recklessly without knowledge as to their truth or
falsity; (3) the Rawlingses made the statements to induce Pogue to act upon them; (4)
Pogue justifiably relied and acted upon the statements; and (5) Pogue suffered injury.
See Vanderwier, 937 N.E.2d at 398.
The trial court found in relevant part:
At trial there was no credible evidence of the actual location of the well. It
does not logically follow that the well went dry because it was not located
where Seller said it was. Locating the well would clearly make water
quality issues easier to diagnose, but Buyer never sought a professional for
such assistance.
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***
In the present, the Court finds that Buyer has not proved that Seller
made a material misrepresentation of fact upon which they relied to their
detriment. While it‟s true that Seller misrepresented the location of the
well [sic]. Indeed, it was not where he told Buyer it was located. There is
no evidence, however, that the misrepresentation was material because
there is no evidence for the Court to conclude that the well went dry
because it was in a location different than the location represented to Buyer.
Appellant‟s App. at 5-6 (emphasis original). Pogue‟s argument on appeal amounts to a
request that we reweigh the evidence, which we will not do. And the trial court‟s
reasoning based on the evidence before the court is persuasive. There is no error on this
issue.
Finally, Pogue contends that, given that “neither of the parties knew the exact
amount of land being conveyed” at the time of entering the contract, rescission is
warranted under the doctrine of mutual mistake. Brief of Appellant at 11. But Pogue did
not make that argument to the trial court. Rather, at trial, Pogue argued the alleged
acreage dispute in the context of her fraud claim. Accordingly, the issue is waived. See,
e.g., McGill v. Long, 801 N.E.2d 678, 688 (Ind. Ct. App. 2004) (holding failure to raise
class action tolling argument to trial court waived that issue on appeal), trans. denied.
Affirmed.
ROBB, C.J., and VAIDIK, J., concur.
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