Michelle Downey and Brandon J. Downey v. Carmen J. Miller, Real Estate Concepts, L.C. d/b/a RE/MAX Concepts and Melanie Anderson

IN THE COURT OF APPEALS OF IOWA
No. 22-0069
Filed December 7, 2022
MICHELLE DOWNEY and BRANDON J. DOWNEY,
Plaintiffs-Appellants,
vs.
CARMEN J. MILLER,
Defendant-Appellee.
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Appeal from the Iowa District Court for Polk County, Lawrence P. McLellan,
Judge.
Michelle and Brandon Downey appeal the district court’s grant of judgment
notwithstanding the verdict on their claims against Carmen Miller. AFFIRMED.
Matthew M. Sahag of Dickey, Campbell & Sahag Law Firm, PLC, Des
Moines, for appellants.
David L. Brown of Hansen, McClintock & Riley, Des Moines, for appellee.
Considered by Bower, C.J., and Greer and Badding, JJ.
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BOWER, Chief Judge.
Brandon and Michelle Downey appeal the district court’s entry of judgment
notwithstanding the verdict on their claims against Carmen Miller. We conclude
the district court did not err and affirm.
I. Background Facts & Proceedings.
Miller purchased a Des Moines home in 2001. In 2004, after flooding in the
basement, she installed a sump pump and states that resolved the problem.
On September 19, 2018, Miller sold the home to the Downeys. On the
seller’s disclosure form, Miller checked “Yes” to the question “Has there been
known water or other problems?” She wrote “sump pump added—no issues.”
According to Michelle, during her first visit to the house, there was no water
in the basement, but she “could see the marks on the two-by-fours of the level of
water that had been in the home.” However, she did not notice any water damage
to the basement furniture. Brandon said he did not notice any water stains when
he went through the house.
The home inspection summary noted several issues in the basement, but it
did not mention water stains, water seepage, or a problem with the sump pump.
Approximately a week and a half after the Downeys moved into the house,
the basement flooded during a rainstorm. Michelle described it to the jury as
follows:
But I see water coming in on the north side of the wall in the
basement.
So I called my husband down there. And there was so much
water that had come in on the north side that it had traveled to the
other side of the basement. We stayed up throughout the night
running the Shop-Vac and taking turns sucking up the water. It was
almost like somebody turned on the hose up against the north wall,
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and the water was just running everywhere. Most of our belongings
that were down there were sitting in water.
She further explained the water came in where “the concrete block meets the
floor.” Brandon described the water entering the basement as “trickling in the
corner, and then it would run down the wall behind the washer and dryer.”
According to Michelle, “there’s water coming in every single time it rains,” and the
basement floods when the rain is heavy. Michelle also testified black mold grows
due to moisture behind the laundry area and Miller had painted over it. The
Downeys received an estimate of $8154.51 to repair the water issues.
The Downeys filed suit against Miller, alleging she “failed to provide required
information in the written disclosure statement” in violation of Iowa Code chapter
558A (2018) and breached the purchase agreement by failing to disclose material
defects to the property.1 Miller moved for summary judgment. Viewing the
evidence in the light most favorable to the Downeys, the court denied the motion.
The court found a fact question existed whether “Miller had actual knowledge that
the sump pump did not fully fix the flooding issue” in light of the Downeys’
experience and the occurrence of heavy rainfall events between the sump pump
installation and their purchase of the house.
At the trial’s conclusion, Miller’s attorney moved for a directed verdict,
asserting there was no evidence Miller knew the sump pump did not work as
intended or that the Downeys would get water in the basement. The district court
denied the motion.
1The Downeys also filed suit against Miller’s real estate broker and company.
Those claims were resolved via summary judgment.
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The jury found for the Downeys on both allegations and awarded them
$8154.51, consistent with the repair estimate. Miller filed a motion for judgment
notwithstanding the verdict. The district court found there was insufficient evidence
to support a legitimate inference Miller had actual knowledge of flooding or water
issues in the basement before selling it to the Downeys. The court reasoned, “To
reach the conclusion that Miller had actual knowledge based upon the June 25,
2018 rain event required the jury to speculate.” The court stated it should not have
submitted the question to the jury and granted Miller’s motion for judgment
notwithstanding the verdict.
The Downeys appeal.
II. Standard of Review.
“We review the district court’s grant of a motion for judgment
notwithstanding the verdict for correction of errors at law. Doe v. Cent. Iowa Health
Sys., 766 N.W.2d 787, 790 (Iowa 2009). “A motion for judgment notwithstanding
the verdict should be granted if there is not substantial evidence to support the
elements of the plaintiff’s claim.” Thornton v. Am. Interstate Ins. Co., 940 N.W.2d
1, 8 (Iowa 2020). We view the evidence in the light most favorable to the party
against whom the motion is intended, the nonmoving party. Doe, 766 N.W.2d at
790.
III. Analysis.
The Downeys made two claims: breach of contract and a violation of real
estate disclosures required under Iowa Code chapter 558A. As to the breach of
contract, the jury was instructed: “Carmen Miller breached the terms of the
purchase agreement by . . . . [n]ot disclosing that the addition of a sump pump to
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the basement did not fix the water problems in the basement of the home.” On the
chapter 558A claim, the jury was instructed: “Your verdict must be for the Downeys
and against Carmen Miller on the Downeys’ Iowa Code chapter 558A claim if one
or more of the following elements have been proven: . . . Carmen Miller had actual
knowledge that the addition of a sump pump to the basement did not fix the water
problems in the basement of the home.”
The district court granted judgment notwithstanding the verdict based on
the actual-knowledge element of each claim, finding there was not substantial
evidence to support a legitimate inference Miller knew of the issue. The Downeys
assert circumstantial evidence allowed the jury as factfinder to draw a legitimate
inference Miller had actual knowledge of water or flooding issues at the time she
sold the home. Miller asserts the jury’s verdict was based on speculation.
No direct evidence presented supports a finding Miller had actual
knowledge the sump pump did not fix the water problem. So, we consider
circumstantial evidence.
[C]ircumstantial evidence is sufficient to establish a fact only where
the evidence has sufficient force to allow a factfinder to draw a
legitimate inference from the evidence presented. A legitimate
inference drawn from circumstantial evidence must be “rational,
reasonable, and otherwise permissible under the governing
substantive law.” An inference is not legitimate if it is based upon
suspicion, speculation, conjecture, surmise, or fallacious reasoning.
“Under our law it is just as pernicious to submit a case to a jury and
permit the jury to speculate with the rights of citizens when no
question for the jury is involved, as it is to deny to a citizen his trial
by jury when he has the right.”
Godfrey v. State, 962 N.W.2d 84, 102–03 (Iowa 2021) (internal citations omitted).
“In order to prove actual knowledge through circumstantial evidence . . . the
evidence must be sufficient to draw a conclusion that a reasonable person simply
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could not have known otherwise. Actual knowledge thus can be established by
circumstantial evidence only in rare cases.” Caruso v. Apts. Downtown, Inc., 880
N.W.2d 465, 474 (Iowa 2016) (emphasis added) (internal citations omitted). “It is
the general rule in this state that in matters of proof, a litigant is not justified in
inferring a fact as proven from mere possibility of existence of facts.” Goodman v.
Gonse, 76 N.W.2d 873, 877 (Iowa 1956).
Here, the evidence presented included Miller’s testimony she did not have
water problems after the installation of a sump pump in 2005, and the basement
held furniture with rugs on the floor when she was owner of the house. The photos
from the house listing did not show any evidence of water on the walls, floors, or
furniture in the basement. The house inspection summary did not note evidence
of water seeping in or the sump pump’s functionality. Michelle testified she could
see evidence of past water in the basement; her husband saw no evidence of
water damage. The only evidence to support the jury’s inference of actual
knowledge was the presence of mold behind the washer and dryer along the north
wall, the occurrence of a heavy rainfall after the Downeys moved in, and the fact
water entered the basement despite the sump pump.
The district court determined the circumstantial evidence was not sufficient
for the jury to infer Miller had actual knowledge of the water problem in the
basement. We agree and affirm.
AFFIRMED.