Danielle Putman v. Shawn J. Walther and Amy M. Walther

IN THE SUPREME COURT OF IOWA
No. 20–0195
Submitted October 21, 2021—Filed April 29, 2022
DANIELLE PUTMAN,
Appellant,
vs.
SHAWN J. WALTHER and AMY M. WALTHER,
Appellees.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Black Hawk County, Kellyann
Lekar, Judge.
The plaintiff in a misrepresentation case involving the seller disclosure in
a home sale appeals the district court’s grant of summary judgment in favor of
the defendants. DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT REVERSED AND REMANDED.
Appel, J., delivered the opinion of the court, in which all justices joined.
Patrick C. Galles of Correll, Sheerer, Benson, Engels, Galles & Demro
P.L.C., Cedar Falls, for appellant.
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Matthew M. Craft of Dutton, Daniels, Hines, Kalkhoff, Cook & Swanson,
P.L.C., Waterloo, for appellees.
3
APPEL, Justice.
A few months after a buyer purchased a home, the buyer discovered water
in the basement. The buyer contacted a contractor who inspected the basement,
found evidence of past water events, and submitted a bid for the needed repairs.
In the next couple of months, four additional events of water infiltration in the
basement occurred and continued thereafter.
The buyer sued the sellers, her real estate agent, the seller’s real estate
agent, and a home inspector, claiming that they had misrepresented the
condition of the house prior to her purchase. The defendants moved for summary
judgment based on the failure of the buyer to designate an expert on causation
and damages. The district court granted summary judgment and the buyer
appealed. We transferred the case to the court of appeals, which affirmed the
district court.
Based on our review of the record and applicable rules, we conclude that
the buyer offered sufficient evidence to survive the defendants’ motion for
summary judgment. We therefore vacate the decision of the court of appeals,
reverse the district court judgment, and remand the case for further proceedings.
I. Background Facts and Proceedings.
A. Overview of Facts. Danielle Putman was interested in purchasing a
home in Waterloo from Shawn and Amy Walther. As required by Iowa law,
Putman received from the Walthers a document entitled “Seller Disclosure of
Property Condition” on February 8, 2018. The disclosure described the basement
conditions as “2010 sewer back up [&] SW wall seepage a few times.” Putman
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and the Walthers entered into a purchase agreement for the home on March 5,
and the purchase closed as per the agreement on April 27.
In late June or early July 2018, Putman asserts that water seeped into the
basement of the property after two inches of rain. She states that Magee
Construction inspected the water damage shortly after the infiltration event and
provided her a letter signed by David Holien from Magee Construction dated
July 19, five sets of photographs, and a bid for necessary basement repairs
(Magee Construction documents).
The Holien letter in the Magee Construction documents declared that
water damage was observed in the lower level family room and bedroom. The
letter declared that the walls of the rooms were tested with a moisture meter,
revealing water in the drywall a foot up from the floor. The letter further noted
that in the bedroom in the southwest corner, the floor was raised 2.5 inches off
the concrete, “which indicates a previous water infiltration from the exterior.”
The letter observed that an exterior wall in the vicinity of a basement window
had been built to channel water flow on the south side of the structure. The letter
declared that an old drain line was capped off and a cleanout was under the
carpet and pad of the family room. The letter concluded by stating, “I do not
know what the south wall looks like behind the drywall, but it is obvious the
infiltration of the water/rain on June 29th which was over 2″ according to the
US Weather Service came through this wall.”
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In addition to the Holien letter, Magee Construction attached a series of
photographs of the basement and a detailed bid to repair the damage totaling
$11,571.48.
After July 19, according to Putman, other instances of water infiltration in
the basement occurred. Specifically, Putman claimed basement water infiltration
occurred on August 6, September 4, September 19, and October 1. Further,
according to Putman, the water infiltration in the basement continued after these
occurrences.
B. Putman’s Petition. Putman filed her petition in this case on
October 25, 2018. She alleged water damage in the basement occurred in late
June or early July and that additional water issues occurred on a frequent basis
and damaged the home. Putman further asserted that she has been advised that
the Walthers had a sump pit in the backyard with a pump for the purpose of
pumping water away from the house. She additionally claimed that the
defendants called the Waterloo water department at least twenty times for water
issues regarding the house, including sanitary sewer issues that were not
disclosed to her.
Attaching a copy of the Seller Disclosure of Property Condition, Putman
alleged that the sellers understated the problem of water seepage. With respect
to the basement conditions, the disclosure statement only disclosed “2010 sewer
back up [&] SW wall seepage a few times.” Putman alleged that the Walthers
knew or should have known that the failure to disclose information about the
persistent water infiltration in the basement would cause damage to her. She
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alleged that the Walthers’ intentional and negligent misrepresentation of the
property was a proximate cause of mental, emotional, and “financial” damages.
Putman also alleged that: “[O]n July 16, 2018, Plaintiff contacted Magee
Construction Company to inspect the water damage to the residence. Plaintiff
received the attached report marked as ‘Exhibit C.’ ”
Putman attached a copy of the Magee Construction documents to the
original petition. Putman’s amended petition contained the same allegation but
Putman apparently failed to attach the Magee Construction documents to her
second petition.
C. Course of Discovery. On March 15, 2019, the parties filed a trial
scheduling and discovery plan with the district court. The order setting trial and
incorporating the discovery plan required the disclosure of expert witnesses by
Putman by June 11, 210 days before trial. The defendants served discovery on
Putman, including interrogatories requesting Putman to identify expert
witnesses. Notably, Putman disclosed “a representative of Magee Construction”
as an expert witness in her discovery responses.
D. Motion for Summary Judgment. The Walthers joined the other
defendants in filing for summary judgment. As undisputed facts, the defendants
collectively observed that Putman in her deposition stated that she did not know
the cause of the water infiltration. The defendants also claimed that Putman had
failed to designate an expert to testify in the case and had not identified any
witnesses that could testify as to the cause of water infiltration in her home.
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Putman resisted the summary judgment motion. In her resistance, she
asserted that she disclosed in discovery “Magee Construction who viewed the site
and provided an estimate for the cost to repair and otherwise provided
observations as to the source of water infiltration.” Putman’s resistance asserted
that “the Plaintiff herself can testify as to the source of water and her
observations having lived in the home for more than a year” and that she had
“video evidence and photos of the water to provide to the Defendants.” The
Putman resistance further cited statements of a neighbor regarding the water
infiltration in the basement of her residence and noted a call log of the City of
Waterloo which “clearly indicates calls were made for storm water pumping.”
The only evidence offered in support of Putman’s resistance to the motion
for summary judgment was a short affidavit by Putman herself. In the Putman
affidavit, she asserted that she had read and verified every statement contained
in her resistance. In addition, Putman claimed that water came into the
basement from sanitary sewer overflow, seepage through the floor and walls, and
other unknown sources. She asserted that after the real estate transaction
closed, she “was advised” that the Walthers had a sump pit in the backyard in
an effort to redirect water around the house, “presumably to keep water out of
the basement.” She further summarized the contents of the letter in the Magee
Construction documents, noting the elevation of the floor in the finished
basement bedroom beneath the carpeting, the presence of a drain hidden in the
floor beneath the carpet, and watermarks on the wall behind the flooring and
sheetrock. She asserted that the City of Waterloo continues to be active in water
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management in the area. Lastly, she claimed that “it is well known” that the
neighborhood has severe issues with sewage backup which were not disclosed
to her prior to her purchase.
E. Pretrial Conference. About a week before trial, the district court on
January 3 held a pretrial conference. The district court noted that the motions
for summary judgment were still pending but decided to proceed with the pretrial
conference. With respect to pretrial evidentiary matters, the defendants
challenged the late listing of a repair estimate prepared by Midwest Basement,
and the late listing as a witness of Steve Burrell, a real estate agent who was
prepared to testify regarding the resale value of the house in its present
condition. Finally, the defendants challenged the admissibility of the call log of
the City of Waterloo, asserting that Putman’s resistance to the motion for
summary judgment did not establish an adequate foundation for the
admissibility of the document.
In addition, the parties at the pretrial conference discussed the Magee
Construction documents. Notably, the defendants conceded that the Magee
Construction documents were produced in discovery and, as a result, the
defendants were aware of their contents. But according to the defendants, the
Magee Construction documents don’t
necessarily appear as a report, but as an estimate in which it
explains the work that could be done in the home, even though it
has not been done. We’ll have other objections at the time of trial,
but I think the expert report is limited to anything that has not been
produced to us.
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While the defendants asked that the testimony arising from the Magee
Construction documents be limited by the extent of disclosure, the defendants
sought to exclude entirely any testimony from Midwest Basement or Steve
Burrell on the ground that the sum and substance of their testimony was not
timely disclosed. The defendants repeated their objection to “any claim for
damages that were not disclosed or claimed in discovery and any documentation
which was not disclosed or produced in the course of discovery.” So, the
defendants at the pretrial conference did not object to the admissibility of the
Magee Construction documents, but only that the testimony be limited to the
scope of the subject matter of the documents.
The Walthers joined “each and every one” of the arguments provided by
the defendants. In addition, the Walthers’ counsel argued that evidence related
to the installation and removal of a sump pit in the backyard of the home should
be excluded under Iowa Rule of Evidence 403. Putman replied that the removal
of the sump pit is “not disputed as a fact.” The defendants responded that the
record lacked any testimony linking the sump pit to any damages claimed in the
case.
F. Order on Summary Judgment Motion. On the same day that the
district court conducted the pretrial conference, the district court entered an
order on the defendants’ motion for summary judgment. The district court
granted the defendants’ motion and dismissed the case.
In its order, the district court analyzed the defendants’ claim that
summary judgment should be granted due to Putman’s failure to designate an
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expert on causation and damages. The district court noted that Putman’s
evidence was generally sufficient to survive summary judgment. However, the
district court concluded that expert testimony was required on the issues of the
cause of the water damage and cost of repair. While the district court recognized
that Putman might have been able to testify regarding damages to personal
property without an expert, the district court concluded that “this element of
damages cannot be reached without first proving the issue of causation, which
cannot be done without expert testimony.” As a result, the district court granted
the defendants’ motion for summary judgment and dismissed the case.
G. Issues on Appeal. Putman filed a timely notice of appeal. Putman first
asserts that the district court improperly excluded the Magee Construction
documents on the issues of causation and damages in its summary judgment
analysis. Putman claimed that disclosure of Magee Construction as an expert
was not required under Iowa Rule of Civil Procedure 1.500(2)(b) or Iowa Rule of
Civil Procedure 1.508. In any event, Putman argued that any failure to comply
with our expert rule should be considered harmless under Iowa Rule of Civil
Procedure 1.517(3)(a).
Second, assuming that the Magee Construction documents could properly
be considered by the court, Putman asserts that she presented sufficient
evidence of her claim under Iowa Code chapter 558A (2018) to survive summary
judgment.1
1No claim on appeal is made that the district court should have considered the untimely
disclosed evidence related to Midwest Basement or Steve Burrell.
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We transferred the case to the court of appeals. The court of appeals
affirmed. It held that expert testimony on causation and damages was required
in the case. The court of appeals found that Putman failed to preserve in the
district court any argument that designation of the expert was not required or
that any shortcomings in failure to designate were harmless error.
II. Standard of Review.
A district court’s summary judgment ruling is reviewable for correction of
errors at law.” Terry v. Dorothy, 950 N.W.2d 246, 249 (Iowa 2020). Summary
judgment is appropriate if expert testimony is required to establish general
negligence or foundational facts and such testimony is unavailable. Welte v.
Bello, 482 N.W.2d 437, 440 (Iowa 1992) (en banc).
III. Discussion.
We first address the question of whether expert testimony was required for
Putman to survive the defendants’ motion for summary judgment on either
causation or damages. Although not specifically mentioned in her petition,
Putman’s factual allegations tracked Iowa’s Real Estate Disclosures Act, Iowa
Code chapter 558A.2 Under this statutory provision, a seller of real estate is
required to provide a written disclosure statement to a potential buyer. Iowa
Code § 558A.2. The disclosure must include “information relating to the
condition and important characteristics of the property and structures located
2Under our notice pleading approach, a pleading is sufficient if it informs the defendant
of the incident giving rise to the claim and of the claim’s general nature. Soike v. Evan Matthews
& Co., 302 N.W.2d 841, 842 (Iowa 1981). There is no requirement that the plaintiff allege theories
of recovery. Tigges v. City of Ames, 356 N.W.2d 503, 507 (Iowa 1984) (en banc).
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on the property.” Id. § 558A.4(1)(a). The seller has a duty to comply with
disclosure requirements in good faith. Id. § 558A.3(1). A person who violates the
chapter is liable for the amount of actual damages suffered by the transferee. Id.
§ 558A.6(1).
The gist of the claim is misrepresentation. The first question is whether
the Walthers adequately disclosed the persistent nature of the water infiltration
problem in the basement which was known or should have been known to them.
Jensen v. Sattler, 696 N.W.2d 582, 588 (Iowa 2005).
The limited disclosures made by the Walthers in the disclosure statement
were arguably misrepresentations in light of the repetitive postsale water
invasion events and the discovery of aggressive past intervention efforts. Whether
the Walthers misrepresented the basement conditions is within a layperson’s
ability to decide without an expert. See Easton v. Strassburger, 199 Cal. Rptr.
383, 393 (Ct. App. 1984) (holding issues in a claim involving real estate are
resolvable by common knowledge and did not turn on facts within the specific
knowledge of professional experts); Durbin v. Ross, 916 P.2d 758, 765 (Mont.
1996) (noting an expert is not required to support a claim under a real estate
disclosure statute); cf. Cockerton v. Mercy Hosp. Med. Ctr., 490 N.W.2d 856, 859
(Iowa Ct. App. 1992) (holding an expert was not needed to establish the standard
of care when a patient fell in an x-ray room, distinguishing between cases
“requiring expert testimony to establish a deviation from an accepted standard
of care of hospitals” and cases “where the hospital was required to exercise
ordinary care in providing a routine service in light of the patient’s known
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condition”). No liability expert was required to support the misrepresentation
claim in this case.
That leaves the question of whether the Walthers were entitled to summary
judgment on the question of damages proximately caused by the
misrepresentation because of the failure to designate an expert. There are several
ways to calculate damages for misrepresentation, including the pecuniary loss
suffered as a result of the recipient’s reliance upon the misrepresentation, the
difference in the value between what was received and what was paid, and the
lost benefit of the bargain. See Restatement (Second) of Torts § 549 (Am. L. Inst.
1977). Iowa “recognize[s] two measures of damages for fraud cases: (1) benefit of
the bargain plus consequential damages and (2) out of pocket expenses.”
Midwest Home Distrib., Inc. v. Domco Indus. Ltd., 585 N.W.2d 735, 739 (Iowa
1998). Simply stated, “a defrauded plaintiff is entitled to recover those losses
proximately caused by reliance on the misrepresentation.” Spreitzer v. Hawkeye
State Bank, 779 N.W.2d 726, 739 n.5 (Iowa 2009).
Putman attempted to prove damages under the lost benefit of the bargain
theory by offering the opinion of a real estate agent as to the diminished value of
her home in its actual condition. However, the district court properly ruled that
opinion inadmissible based on untimely disclosure. There is authority, however,
for the proposition that Putman could have offered her own testimony on the
decreased value of the property. John Thurmond & Assocs., Inc. v. Kennedy, 668
S.E.2d 666, 669 (Ga. 2008); Kimmel v. Iowa Realty Co., 339 N.W.2d 374, 380–
81 (Iowa 1983); Holcomb v. Hoffschneider, 297 N.W.2d 210, 213 (Iowa 1980) (en
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banc). Putman did not offer her lay opinion in her resistance to the motion for
summary judgment and has not presented the question on appeal.
But through the Magee Construction documents and her own affidavit,
Putman put on proof that there had been and continued to be serious water
problems going well beyond the “wall seepage a few times” reference in the seller
disclosure. From reviewing the Magee Construction letter, one can reasonably
infer that the June 2018 water infiltration was a continuation of prior issues and
that the infiltration would not have occurred, nor would the need to repair it
have arisen, had the home been as represented.
Lastly, on the cost of repair, it is not entirely clear to us that testimony
about the scope and cost of repairs amounts to expert testimony. A witness is
allowed to give a lay opinion if the testimony is based on the witness’s own
perception, helpful to determining a fact in issue, and “[n]ot based on scientific,
technical, or other specialized knowledge within the scope of rule 5.702.” See
Iowa R. Evid. 5.701. Holien’s report based on his observation of the work he was
asked to perform and the cost of materials and time he would charge to make
repairs would certainly be based on his own perception. See, e.g., Whitley v. C.R.
Pharmacy Serv., Inc., 816 N.W.2d 378, 390–91 (Iowa 2012) (allowing a
pharmacist to testify as a lay witness about delivery log procedures when the
procedures were within the pharmacist’s personal knowledge). The question here
is whether the damages testimony would be “based on scientific, technical, or
other specialized knowledge within the scope of rule 5.702. Iowa R. Evid.
5.701(c).
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We recently described the distinction between expert and lay opinion
testimony by “[l]imiting a lay witness’s testimony to inferences drawn from facts
using ‘reasoning familiar in everyday life’ ” rather than testimony “based on
‘scientific, technical, or specialized knowledge’ that is outside the understanding
of an average juror’s reasoning” in the context of interpreting information from
cell tower records about the location of cell phones. See State v. Boothby, 951
N.W.2d 859, 876–77 (Iowa 2020). The purpose for this distinction is to limit lay
opinion testimony to situations where the jurors can sufficiently understand the
underlying facts to be able to evaluate the reliability of the layperson’s opinion.
See id. (“Limiting a lay witness’s testimony to inferences drawn from facts using
‘reasoning familiar in everyday life’ eliminates reliability concerns because a
juror is able to use her own reasoning to evaluate the witness’s opinion.”).
For example, in Seasha Pools, Inc. v. Hardister, 391 S.W.3d 635 (Tex. App.
2012), the court held that the homeowner could testify about the cost of repairs
of a swimming pool in a breach of contract action through lay testimony and
through bids where the issues were not technical and complex. Id. at 640–42.
On the other hand, there is authority for the proposition that a lay witness
cannot testify about the cost of repairs where they are extensive and technical
in nature. Pjetrovic v. Home Depot, 411 S.W.3d 639, 649 (Tex. App. 2013).
We need not resolve that issue today. Even if testimony about the scope
and cost of repairs in this case does require expert testimony, we conclude that
Putman adequately disclosed the contours of the proposed testimony of Magee
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Construction.3 Putman identified Magee Construction as an expert in discovery
and produced the Magee Construction documents. Because Magee Construction
was not hired for purposes of litigation, an expert report was not required under
Iowa Rule of Civil Procedure 1.500(2)(b). Instead, Putman is required to comply
with Iowa Rule of Civil Procedure 1.500(2)(a), which requires disclosure of the
witness and a summary of factual knowledge. See McGrew v. Otoadese, 969
N.W.2d 311, 323 (Iowa 2022); see also Ziegler v. Easton Suburban Water Auth.,
43 A.3d 553, 556–59 (Pa. Commw. Ct. 2012) (expert report not required from a
contractor hired to make repairs on damage to house). While Putman’s answer
to the expert interrogatory only identified Magee Construction and did not
provide a summary of the facts about which Magee Construction would testify,
the Magee Construction documents attached to the original petition and
produced in discovery provided an adequate summary of the expected testimony.
To the extent that Putman did not fully comply with technical requirements
under rule 1.500(2)(a), such lack of compliance was harmless in light of the
information produced in discovery. Iowa R. Civ. P. 1.517(3)(a).
3We conclude the issue of whether the Magee Construction documents should be
considered in defeating the defendants’ motion for summary judgment was presented to and at
least impliedly decided by the district court. In response to the defendants’ assertion that the
plaintiff did not designate an expert witness, plaintiff in the summary judgment proceedings
noted that Magee Construction “viewed the site and provided an estimate for the cost of repair
and otherwise provided observations as to the source of water pollution.” Further, the district
court order discussed the Magee Construction documents but necessarily rejected the notion
that the evidence was sufficient to defeat defendants’ motion for summary judgment based upon
the lack of expert testimony. Although terse and sparse, we consider the issue preserved in the
district court’s ruling. Lamasters v. State, 821 N.W.2d 856, 864 (Iowa 2012).
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For the above reasons, we conclude the district court erred in concluding
that the defendants were entitled to summary judgment because Putman failed
to provide expert testimony on the questions of causation and damages.
IV. Conclusion.
The decision of the court of appeals is vacated. The order of the district
court granting the defendants’ motion for summary judgment in this case is
reversed. The case is remanded to the district court for further proceedings.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT
JUDGMENT REVERSED AND REMANDED.