Raudebaugh v. Action Pest Control, Inc.

THORNTON, J.

Defendant appeals from a judgment for plaintiffs in an action for negligence and violations of the Oregon Unlawful Trade Practices Act (UTPA).¹ ORS 646.010 -. 180. The acts alleged consisted of falsely reporting and representing that plaintiffs’ home-to-be was free from insect infestation and that there was no damage from fungus growth, rot or other wood-destroying organisms.

Defendant makes the following assignments of error:

(1) Failing to grant defendant’s motion for dismissal; failing to direct a verdict for defendant; and failing to grant defendant’s motion for judgment notwithstanding the verdict. The motions asserted that there was no evidence that defendant made the complained-of representation directly to plaintiffs, or that defendant made the representation to a third party with the intent that it be passed on to the plaintiffs; and that the evidence showed that the complained-of. representation was not made to plaintiffs in the normal course of defendant’s business.

(2) Failing to give defendant’s requested supplemental jury instruction, which required that the jury find that the complained-of representation was made by defendant to plaintiffs in the normal course of defendant’s business as a prerequisite to awarding damages to plaintiffs.

(3) Failing to give defendant’s requested supplemental jury instruction, which required that the jury find that plaintiffs had a right to rely on the complained-of representation as a prerequisite to awarding damages to plaintiffs.

(4) Failing to give Uniform Jury Instruction 30.01 - the preliminary instruction on damages.

The essential facts are not disputed.

Plaintiffs entered into an agreement with a Mr. and Mrs. Baxley to purchase real property to be used by plaintiffs and their children as their home. The agreement was contingent on plaintiffs’ obtaining financing. As part of the agreement the Baxleys were to obtain a structural pest control inspection report, which was required for plaintiffs to obtain financing from the State Department of Veterans’ Affairs. Plaintiffs could not obtain financing from any other sources.

Defendant was contacted by Mrs. Baxley to perform the inspection and make a report. Defendant knew that the inspection and its report were for the purpose of obtaining a loan from the Department of Veterans’ Affairs and that such loans were often for financing for a new purchaser, but did not know of plaintiffs agreement to purchase.

Defendant made an inspection and reported the property free from all insect infestations and from damage to structural members from fungus growth, rot or other wood-destroying organisms and/or conditions conducive to damage. The property in fact had insect infestations and had sustained extensive damage to its structural members, some of which had been occurring over a 10- to 15-year period.

Defendant’s agent, Jim Brick, was employed by defendant and acting within the scope of his employment at the time he inspected the premises and issued defendant’s reports. Defendant’s representation was made in two documents, one being a “Structural Pest Control Inspection Report” and the second a “Clearance Statement.” Mrs. Ostrum, a realtor, picked up a copy of the reports to take to the Department of Veterans’ Affairs, communicated the contents to plaintiffs, first by reading the “Clearance Statement” to Mrs. Raudebaugh over the phone and then by leaving a copy of the “Clearance Statement” with plaintiffs. The Department of Veterans’ Affairs relied on defendant’s “Clearance Statement”, and the loan was approved. Plaintiffs alleged that in reliance on defendant’s representations they had purchased the property and suffered damages thereby.

ORS 646.608 provides:

“(1) A person engages in an unlawful practice when in the course of the person’s business, vocation or occupation the person:

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“(e) Represents that real estate, goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, quantities or qualities that they do not have or that a person has sponsorship, approval, status, qualification, affiliation or connection that he does not have;

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“(g) Represents that real estate, goods or services are of a particular standard, quality, or grade, or that real estate or goods are of a particular style or model, if they are of another;

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ORS 646.605(7) provides:

“ ‘Real estate, goods or services’ means those which are or may be obtained primarily for personal, family or household purposes * *

The requirements for private enforcement are set out in ORS 646.638U).²

Defendant’s first and primary assignment³ is premised on the proposition that in order to recover under the UTPA plaintiffs must allege and prove that the alleged representation was made either directly by defendant to plaintiffs or to a third party with the intent that it be transmitted to plaintiffs. Defendant asserts that is an essential element in the traditional common law test for actionable fraud. In support of this argument, defendant points to the following facts: The complained-of representation was made by defendant at the request of the sellers and with the knowledge that it would be communicated to and utilized by the Department of Veterans’ Affairs; defendant was unaware that the house was to be sold or that plaintiffs were potential purchasers; that the complained-of representations were communicated to plaintiffs by an agent of the seller without the knowledge of defendant; and that defendant had no pecuniary interest in the sale of the house.

Defendant argues that the above-mentioned pleading and proof requirement, requirements under the common law to prove fraud or negligent misrepresentation, apply also under UTPA. We disagree.

The general policy of the UTPA is to discourage deceptive trade practices and to provide a viable remedy for consumers who are damaged by such conduct. Wolverton v. Stanwood, 278 Or 341, 563 P2d 1203, reh den 278 Or 709, 565 P2d 755 (1977). The Act defines the types of conduct that constitute unlawful trade practices, which are not the same as conduct which is the basis of common law fraud actions for damages. See Wolverton v. Stanwood, supra. The Act does not require that there be a loss to an individual consumer for there to be a violation. If there is ascertainable loss to a consumer, that consumer has a cause of action for general and punitive damages. ORS 646.638(1). The elements of the cause of action are specified in the statute, and the consumer may recover by alleging and proving that there was a wilful violation of the provisions of the Act and ascertainable damages as a result of the violation. There is no requirement that the representations which constitute a wilful violation of the Act be made to the injured consumer. Had the legislature intended that a consumer prove all the elements of common law fraud in order to recover damages, it would have been unnecessary to create a cause of action by statute. ORS 646.656 provides that the remedies specified in the Act are in addition to all other civil remedies existing at common law. This indicates legislative intent to create a special remedy different from those that exist at common law.

When the legislature enacted the UTPA, it specifically provided in ORS 646.608(1) and (2) the type of representations that are covered by the law.⁴ We have no authority to add to those requirements by inserting requirements of the common law. In construing a statute, courts must ascertain and declare what is, in terms or in substance, contained therein and cannot insert what has been omitted or omit what has been inserted. ORS 174.010. Union Pac. R. R. Co. v. Bean, 167 Or 535, 119 P2d 575 (1941).

As our Supreme Court declared in Wolverton:

“* * * eiements of common law fraud are distinct and separate from the elements of a cause of action under the Unlawful Trade Practices Act and a violation of the Act is much more easily shown. See, e.g., Sherrod v. Holzshuh, 274 Or 327, 546 P2d 470 (1976); Scott v. Western Int. Sales, Inc., 267 Or 512, 517 P2d 661 (1973). * * *” 278 Or at 713

Accord Searcy v. Bend Garage Company, 286 Or 11, 592 P2d 558 (1979); Abrams v. Mike Salta Pontiac, 51 Or App 495, 625 P2d 1383, rev den 291 Or 151 (1981); Bodin v. B & L Furniture, 42 Or App 731, 601 P2d 848 (1979).

Defendant’s second assignment raises the issue that the trial court erred in not instructing that the representation be made either directly to plaintiffs or to a third party with the intent that it be communicated to plaintiffs. This issue is in reality part of defendant’s first and primary assignment: namely, that this court should engraft requirements of the common law on the UTPA. For reasons already explained, we decline to do so. The same is true as to defendant’s third assignment.

Defendant’s last assignment deals with the failure of the trial court to give Uniform Jury Instruction 30.01 - the preliminary instruction on damages. While the court could have given the requested instruction, its substance had already been included in the court’s cautionary instructions. In view of that, failure to give this requested instruction was not reversible error.

Affirmed.

1 Plaintiffs’ negligence cause of action was dismissed at the close of plaintiffs’ case. No appeal has been taken from that dismissal.

2 ORS 646.638(1) provides:

“Any person who suffers any ascertainable loss of money or property, real or personal, as a result of wilful use or employment by another person of a method, act or practice declared unlawful by ORS 646.608, may bring an individual action in an appropriate court to recover actual damages or $200, whichever is greater. The court or the jury, as the case may be, may award punitive damages and the court may provide such equitable relief as it deems necessary or proper.”

3 Defendant does not assert that services of this type do not come within the ambit of the Act.

4 For a general discussion of the history and purpose of the UTPA see Mooney, The Attorney General As Counsel for the Consumer: The Oregon Experience, 54 Or Law Rev 117 (1975).