Joseph amd M. Carmen Wysocki v. Barbara A. and William T. Johnson, both individually and as Trustees of the Barbara A. Johnson Living Trust

Mar 03 2014, 9:26 am
FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEY FOR APPELLEES:
SHAUN T. OLSEN KATHERINE A. BROWN-HENRY
Olsen Campbell Ltd. Cline Farrell Christie & Lee, P.C.
Merrillville, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
JOSEPH and M. CARMEN WYSOCKI, )
)
Appellants - Plaintiffs, )
)
vs. ) No. 45A03-1309-CT-385
)
BARBARA A. and WILLIAM T. JOHNSON, )
both individually and as Trustees of the )
BARBARA A. JOHNSON LIVING TRUST, )
)
Appellee. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Gerald N. Svetanoff, Judge
Cause No. 45D04-0805-CT-92
March 3, 2014
OPINION - FOR PUBLICATION
FRIEDLANDER, Judge
Joseph and M. Carmen Wysocki appeal the denial of their request for attorney fees
and additional damages under Indiana’s Crime Victims Relief Act, i.e., Ind. Code Ann. § 34-
24-3-1 (West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.) (the
CVRA).
We affirm.
This is the second time litigation between these parties concerning the same operative
facts has come before our appellate courts. Those facts concern the 2006 sale of a home
from Barbara A. Johnson, William T. Johnson, and the Barbara A. Johnson Living Trust
Dated 12-17-1996 (collectively, the Johnsons) to the Wysockis. Our Supreme Court set out
those facts as follows:
In 1973, William and Barbara Johnson purchased a single-family home in
Lake County, Indiana. In 1996, the Johnsons established the Barbara A.
Johnson Living Trust and deeded the property to the Trust. They lived in the
home continually, with William Johnson doing most renovation work that
arose.
In 2006, the Trust sold the property to Joseph and M. Carmen Wysocki for
$235,000. Prior to finalizing the purchase agreement, Barbara Johnson—in her
position as trustee—executed a Seller’s Residential Real Estate Sales
Disclosure Form in which she averred that there were no violations of
applicable building codes, that all work had been done with a building permit
when required, that there were no foundational or structural problems, and that
there were no issues with moisture, water, or roof leakage. The Wysockis
acknowledged and signed the Disclosure Form on July 11, 2006. The next day
they signed a purchase agreement for the property, electing in that agreement
to obtain their own independent inspection before closing.
The Wysockis’ independent inspection noted no roof leaks, major deficiencies,
electrical issues, or structural defects. However, it was limited to “readily
accessible areas of the building” and “visual observations of apparent
conditions existing only at the time of the inspections.” (App. at 84.) “Latent
and concealed defects and deficiencies” were excluded. (App. at 84.) The
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Wysockis then waived any further independent inspections and agreed to
accept the property in the “as is” condition as reported in the inspection.
Closing occurred on July 28, 2006.
Shortly after taking possession, the Wysockis began noticing issues with the
property. At the first substantial rain, they discovered water leaking into the
garage and cascading down the wall of their front porch. That fall, when they
closed the swimming pool for the season, they discovered electrical issues with
the pool system. An electrical inspector for the City of Crown Point found
numerous electrical code violations in the wiring to the pool, and the repair
necessitated going under the property’s screened-in rear patio. While under the
patio, the Wysockis discovered that the patio’s structural supports appeared to
be resting on bare earth.
The Wysockis then hired a consulting engineer to examine the property. He
noted a broken or deflected beam in the front porch that needed to be replaced
and that the roof intersection of the porch and garage did not come together
properly, with a number of defects that would cause water leakage from that
point. Additionally, he noted defects in the attic above the garage—including
an improperly cut ceiling joist and water damage directly below the improper
roof intersection. Below the screened-in patio, the engineer found that many of
the deck posts were resting on the ground and beginning to decay; others did
not reach the ground at all and were instead resting on shims of concrete
blocks and other materials. The Wysockis spent $1200 to repair the electrical
service to the pool, $3494.74 to repair the roof intersection, and had estimates
of $2786.86 to repair the broken front beam and $6324.54 to repair the patio
supports.
The Wysockis filed suit against the Johnsons individually and as trustees of the
Trust. Count I of their complaint alleged fraud arising from the Johnsons’
failure to disclose the defects discovered by the Wysockis after closing. Count
II alleged a breach of contract or, alternatively, conversion arising out of the
Johnsons’ removal of pump systems connected to the pool and several
landscaping ponds. They sought compensatory damages and pursuant to the
Indiana Crime Victims Relief Statute, treble damages, attorney fees, costs, and
interest.
The trial court granted summary judgment in favor of the Johnsons with
respect to Count II of the Wysockis’ complaint. A bench trial was held on
Count I, with the trial court finding the Johnsons liable for the defective
electrical service to the pool, the roofing above the front porch, the front porch
beam, and the screened-in patio supports. It awarded damages in the amount of
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$13,805.95, but denied their request for relief under the Indiana Crime Victims
Relief Statute. The Wysockis filed a motion to correct errors seeking an
additional $13,500 in attorney and expert fees. The trial court denied their
motion and both parties appealed.
The Court of Appeals, in an unpublished memorandum decision, affirmed in
part and reversed in part. Johnson v. Wysocki, 2012 WL 3067898 (Ind. Ct.
App. July 30, 2012). It found that the Wysockis failed to show that the
Johnsons had actual knowledge of the defects and so reversed the trial court’s
judgment in favor of the Wysockis. Id. at *5. It therefore also affirmed the trial
court’s denial of relief under the Indiana Crime Victims Relief Statute. Id.Johnson v. Wysocki, 990 N.E.2d 456, 459-60 (Ind. 2013).
Our Supreme Court reversed, holding that Indiana’s Disclosure Statutes, i.e., Ind.
Code Ann. § 32-21-5 et seq. (West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg.
Technical Sess.), “abrogated the common law principles originally set forth in [Cagney v.
Cuson, 77 Ind 494 (1881)]. In such transactions the seller may be liable for fraudulent
misrepresentations made on the Disclosure Form when he or she had actual knowledge that
the representation was false at the time he or she completed the form.” Johnson v. Wysocki,
990 N.E.2d at 466. Further, the Court concluded that the trial court applied the wrong legal
standard in determining whether the Johnsons knew about the defects in question. The
Disclosure Statutes require actual knowledge that the representations in question were false
at the time they were made. The trial court here, however, found that the Johnsons were
liable because those defects “should have been obvious to the Johnsons”. Id. Accordingly,
the Court remanded with instructions to reevaluate the Wysockis’ fraudulent
misrepresentation claim, which was premised upon the allegation that the Johnsons made
false statements on the Sellers Residential Real Estate Disclosure Form, using the correct
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legal standard.
This brings us to the current appeal. Upon remand, the trial court determined that the
defects in question were clearly within the actual knowledge of the Johnsons at the time the
disclosure form was completed, and therefore the court entered judgment in favor of the
Wysockis with respect to the cost of performing the necessary repairs. On the other hand, the
trial court denied the Wysockis’ request for attorney fees and expert fees under the CVRA.
This is the ruling that the Wysockis appeal. In a nutshell, the Wysockis urge this court to
create “a categorical ‘bright line’ rule that the Crime Victims Relief Act is applicable in
instances where a seller is held liable [for] false or incomplete statements in their disclosure
forms [.]” Appellant’s Brief at 24. We will discuss only the request for attorney fees, but our
conclusion applies with equal force to other fees recoverable under the CVRA.
In deciding whether the trial court erred in denying the Wysockis’ request for attorney
fees, we are mindful that Indiana generally follows the “American Rule”, whereby parties
pay their own attorney fees. Nonetheless, attorney fees are recoverable if there is an
agreement between the parties to that effect, or where attorney fees are authorized by statute
or rule. Estate of Kappel v. Kappel, 979 N.E.2d 642 (Ind. Ct. App. 2012). Although a trial
court’s decision to grant attorney fees is generally reviewed for abuse of discretion, we apply
a de novo standard of review with respect to any legal conclusions upon which the trial court
based its decision. Emergency Physicians of Indianapolis v. Pettit, 714 N.E.2d 1111 (Ind.
Ct. App. 1999), adopted in relevant part, reversed in part, 718 N.E.2d 753 (Ind. 1999). The
Wysockis seek a ruling that attorney fees are recoverable under the CVRA whenever the
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request is premised upon a violation of the Disclosure Statutes. This is a pure question of
law, and therefore we apply a de novo standard of review.
We must construe the CVRA in order to determine whether it authorizes the Wysockis
to recover attorney fees under the present circumstances. When construing any statute, our
primary goal is to effectuate legislative intent. Walczak v. Labor Works-Ft. Wayne LLC, 983
N.E.2d 1146 (Ind. 2013). A “cardinal rule of statutory construction” is to ascertain the intent
of the drafter by giving effect to the ordinary and plain meaning of the language used.
Siwinski v. Town of Ogden Dunes, 949 N.E.2d 825, 829 (Ind. 2011). We presume the
legislature intended the statutory language to be applied logically and consistently with the
statute’s underlying policy and goals, and we avoid construing a statute in such a way as to
create an absurd result. Walczak v. Labor Works-Ft. Wayne LLC, 983 N.E.2d 1146.
The Wysockis contend their request for fees is governed by Art. 24 of Title 34, which
is entitled, “Civil Proceedings Related to Criminal Activities.” Section 1 of Chapter 3
provides, in relevant part, as follows:
If a person has an unpaid claim on a liability that is covered by IC 24-4.6-5 or
suffers a pecuniary loss as a result of a violation of IC 35-43, IC 35-42-3-3, IC
35-42-3-4, or IC 35-45-9, the person may bring a civil action against the
person who caused the loss for the following:
(1) An amount not to exceed three (3) times:
(A) the actual damages of the person suffering the loss, in the
case of a liability that is not covered by IC 24-4.6-5; or
(B) the total pump price of the motor fuel received, in the case
of a liability that is covered by IC 24-4.6-5.
(2) The costs of the action.
(3) A reasonable attorney’s fee.
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By its own terms, the CVRA applies to a loss that is “covered by” Ind. Code Ann. § 24-4.6-5(West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.), which
governs vehicle owner liability for motor fuel theft. This clearly does not apply here. The
CVRA also applies to pecuniary losses resulting from violations of the following criminal
statutes: Ind. Code Ann. § 35-42-3-3 (West, Westlaw current through 2013 1st Reg. Sess. &
1st Reg. Technical Sess.) (criminal confinement); I.C. §35-42-3-4 (West, Westlaw current
through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.) (interference with custody); Ind.
Code Ann. § 35-43-5-0.1 – 5-20 (West, Westlaw current through 2013 1st Reg. Sess. & 1st
Reg. Technical Sess.) (forgery, fraud, and other deceptions); and Ind. Code Ann. §35-45-9-1– 9-6 (West, Westlaw current through 2013 1st Reg. Sess. & 1st Reg. Technical Sess.)
(criminal gang control). These statutes set out certain criminal offenses, including fraud. For
purposes of the CVRA, the Wysockis would have us equate the common-law tort of fraud
with the criminal offense of fraud. We decline the invitation.
The five elements of common-law fraud include: 1) a false statement of past or
existing material fact; 2) made with knowledge that it was false or made recklessly without
knowledge of its truth or falsity; 3) made for the purpose of inducing the other party to act
upon the statement; 4) upon which the other party justifiably relied and acted; 5) proximately
resulting in injury to the other party. Epperly v. Johnson, 734 N.E.2d 1066 (Ind. Ct. App.
2000). In order to obtain a recovery under this theory, a plaintiff must prove the allegation by
a preponderance of the evidence. Ohio Farmers Ins. Co. v. Indiana Drywall & Acoustics,
Inc., 970 N.E.2d 674 (Ind. Ct. App. 2012), trans. granted, opinion vacated, 976 N.E.2d 12347
(Ind. 2012), trans. vacated, opinion reinstated, 981 N.E.2d 548 (Ind. 2013), trans. denied
(Jan. 28, 2013).
The Wysockis contend that the CVRA applies here because the Johnsons’ actions
constituted the offense of criminal deception, an offense defined in I.C. § 35-43-5 as one
involving “Forgery, Fraud, and Other Deceptions”. In order to obtain a conviction under this
provision, the State would have been required to prove that the Johnsons (1) knowingly or
intentionally (2) made false or misleading written statements (3) with the intent to obtain
property. See I.C. § 35-43-5-3(a)(2) (West, Westlaw current through 2013 1st Reg. Sess. &
1st Reg. Technical Sess.). Of course, as with all crimes, the State would have had to prove
its case beyond a reasonable doubt. See Robinson v. State, 780 N.E.2d 849 (Ind. Ct. App.
2002).
The foregoing reflects that the elements of common-law fraud and the criminal
offense of fraud are different. So, too, is the burden of proof necessary to prove those two
allegations. Thus, it cannot be said that authorization of attorney fees in the CVRA for
victims of criminal offenses that can be categorized as fraud extends to the common-law tort
of fraud. Simply put, in its current form, the CVRA authorizes certain fees only for victims
of certain, specific criminal offenses, as well as for liability arising under I.C. § 24-4.6-5 et
seq., which does not apply here. The Wysockis were not victims of the criminal offense of
fraud because the Johnsons were not charged with that crime in relation to the sale of the
house, much less convicted of it in a court of law. In the absence of such a conviction, the
CVRA does not apply. Accordingly, the trial court did not err in denying the Wysockis’
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request for attorney fees under its provisions.
Judgment affirmed.
KIRSCH, J., and BAILEY, J., concur.
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