Shiozawa v. Duke

2015 UT App 40_________________________________________________________
THE UTAH COURT OF APPEALS
NATALIE SHIOZAWA AND ULRIKE DANNHAUER,
Plaintiffs and Appellants,
v.
MARCI DUKE, JAMES DUKE, CHRISTOPHER DUKE, REBECCA DUKE,
AND PINE VALLEY REALTY, LLC,
Defendants and Appellees.
Opinion
No. 20130253-CA
Filed February 20, 2015
Third District Court, Salt Lake Department
The Honorable Andrew H. Stone
No. 110917225
Aaron R. Harris and Stephen Quesenberry,
Attorneys for Appellants
Barry N. Johnson and Joshua L. Lee, Attorneys
for Appellees
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGE STEPHEN L. ROTH concurred. JUDGE JAMES Z. DAVIS
concurred in the result.
CHRISTIANSEN, Judge:
¶1 Natalie Shiozawa and Ulrike Dannhauer (collectively,
Plaintiffs) appeal from the district court’s order granting summary
judgment in favor of Marci Duke, James Duke, Christopher Duke,
and Rebecca Duke (collectively, the Dukes),1 and in favor of Pine
Valley Realty, LLC, on Plaintiffs’ claims of breach of contract and
1. When referring to the Dukes individually, we use their first
names for clarity.
Shiozawa v. Duke
fraud in connection with the sale of real property. We affirm in
part, reverse in part, and remand the matter to the district court.
BACKGROUND
¶2 This dispute concerns the sale of a house built in Salt Lake
County in 1928.2 The Dukes never lived in the house, which had
been previously owned and occupied by James and Christopher’s
grandparents.3 Before offering it for sale, the Dukes made certain
repairs and improvements to the house. The Dukes performed
some of this work themselves but contracted to have other aspects
of the work done by licensed contractors. Christopher, a licensed
plumber, installed plumbing improvements in the house. The
Dukes also finished the basement. As part of this project,
Christopher and James patched some of the cracks on the interior
walls of the foundation. When that task was completed, a
contractor installed drywall, which concealed the basement
foundation from view. In addition, James and Marci patched and
painted the exterior of the foundation above the ground, thereby
covering some exterior foundation cracks. The Dukes also installed
landscaping along portions of the exterior foundation. After
completing the repairs and improvements, the Dukes offered the
house for sale through real estate agent and part-owner, Marci.
Pine Valley Realty acted as the broker for the house. Neither Marci
nor Pine Valley Realty received any commission or compensation
from the sale of the house.
2. “Because we are reviewing a grant of summary judgment, we
view the facts and all reasonable inferences drawn therefrom in the
light most favorable to . . . the nonmoving party.” Magana v. Dave
Roth Constr., 2009 UT 45, ¶ 5, 215 P.3d 143 (citation and internal
quotation marks omitted). Accordingly, we recite the facts in the
light most favorable to Plaintiffs.
3. Marci and Rebecca are married to Christopher and James
respectively, who are brothers.
20130253-CA 2 2015 UT App 40Shiozawa v. Duke
¶3 On April 10, 2007, Plaintiffs executed a Real Estate Purchase
Contract (the REPC), agreeing to purchase the house, subject to
their approval of the seller disclosures and after physical inspection
of the home. The REPC included the following warranty
obligations:
10.2 Condition of Property. Seller warrants that the
Property will be in the following condition ON THE
DATE SELLER DELIVERS PHYSICAL POSSESSION
TO BUYER:
...
(b) the . . . plumbing [and other] systems . . . will be
in working order and fit for their intended purposes;
(c) the . . . foundation shall be free of leaks known to
Seller . . . .
On April 11, 2007, the Dukes delivered “Seller’s Property
Condition Disclosure” to Plaintiffs. Pursuant to this document, the
Dukes agreed that they were “obligated under law to disclose to
Plaintiffs defects in the Property known to Seller that materially
and adversely affect the value of the Property that cannot be
discovered by a reasonable inspection by an ordinary prudent
buyer.” Relevant to this appeal, the Dukes’ completed disclosure
contained the following questions and answers:
Q: With the exception of an occasional clogged
drain or toilet, are you aware of any past or
present problems with the sewer or septic
service or components, for example, broken
sewer lines, consistently slow or clogged
drains, etc.?
A: No.
...
Q: Are you aware of any past or present
problems with termites, dry rot, rodents, or
pests on or affecting the Property?
A: No.
...
20130253-CA 3 2015 UT App 40Shiozawa v. Duke
Q: With the exception of cosmetic upgrades to
the Property (such as carpet, paint, wallpaper,
etc.), have you remodeled, made any room
additions, made structural modifications or
other alterations or improvements to the
Property? If “Yes,” please describe, to your
knowledge, the nature of any such
remodel/alteration work:
A: Yes. [A]ll new electrical, windows, furnace,
a/c unit, sprinkling syst[em], new water
heater, new duct work, newer plumbing,
drywall, cabinets, fixtures/hardware, added
motion lights southside outside, new garage
door, new garage roof, etc.
...
Q: Are you aware of any past or present
movement, shifting, deterioration, or other
problems with the walls or foundation?
A: No.
...
Q: In reference to the basement and/or
crawlspace, are you aware of any past or
present water leakage, water accumulation or
dampness?
A: No.
Q: Are you aware of any past or present water or
moisture-related damage caused by: flooding;
lot drainage; moisture seepage or
condensation; sewer overflow/backup;
leaking or broken pipes, pipe fittings, or
plumbing fixtures; or leaking appliances,
fixtures, or equipment?
A: No.
Q: Please describe, to your knowledge, any
attempts to repair any moisture-related
damage and/or to prevent any recurrence of
water and moisture-related damage on the
Property.
A: None.
20130253-CA 4 2015 UT App 40Shiozawa v. Duke
¶4 In connection with their right to inspect the house as part of
the sale, Plaintiffs and their home inspector walked through the
house to assess its condition. Before closing, the inspector provided
a written inspection report to Plaintiffs. The report noted that
“[w]ater will inevitably flow towards the foundation due to the
grade; such conditions can promote undermining of the structural
foundation and subsequent damage.” In addition, the report
contained a section specifically related to the condition of the
foundation of the house:
FOUNDATION:
The foundation was constructed of poured
concrete. A single inspection cannot determine
whether movement of a foundation has ceased. Any
cracks should be monitored regularly. There were no
major visual defects observed on the visible portions
of the foundation. There were several minor, vertical
cracks observed on the foundation. The cracks were
1/16-inch or less in width. These cracks did not
appear to have any structural significance at the time
of the inspection. Vertical cracks can be found in
most foundation materials, which would include
poured concrete, hollow masonry block, brick and
stone. We have seen such crack patterns in all of the
above noted materials. It is not uncommon to find
such cracks in poured concrete foundation walls.
These vertical cracks in concrete are typically very
narrow, hairline to 1/16 of an inch, and usually pose
no significant structural problem for a building. This
type of crack is generally the result of curing and
moisture shrinkage of newly poured concrete and it
will commonly develop between the first several
months after construction right up to two years.
Parging, the stucco-sand mixture applied to
foundation walls, may be added (it exists but is
deteriorating in some sections) to help assuage
moisture intrusion [into] such cracks.
20130253-CA 5 2015 UT App 40Shiozawa v. Duke
¶5 In the section devoted to the condition of the basement, the
inspection report stated, “Most of the interior walls of the basement
were finished; therefore, a complete inspection of the foundation
was not possible.” The report continued;
The full slab [of the basement floor] was not visible at
the time of inspection because of carpet or other floor
coverings. There were no indications of moisture
present. There were no major visual defects observed
on the visual portions of the slab. . . . MONITOR:
Several curing cracks were visible on/in the slab; the
cracks were less than 1/8" and do not appear to
represent a serious structural concern; patching or
caulking such cracks may help assuage potential
movement and should be considered.
¶6 Plaintiffs completed the purchase of the house on May 10,
2007, and moved in shortly thereafter. In August 2007, the sewer
line to the house backed up in the basement. Plaintiffs contacted a
plumber who resolved the immediate problem. When the sewer
line backed up again in August 2008, Plaintiffs hired a contractor
to perform a video inspection of the sewer line. The video revealed
that tree roots and dirt had infiltrated the line. Based on this
information, Plaintiffs replaced the sewer line. In the summer of
2008, Plaintiffs also experienced a leak in the house’s exterior hose
bib faucet. During the resulting repair efforts, Plaintiffs learned that
Christopher had installed the hose bib faucet’s water line without
a required “J-hook.” Plaintiffs also discovered that Christopher had
not installed a water pressure gauge in the house’s plumbing
system.
¶7 Between May 2007 and August 2008, Plaintiffs also noticed
that some of the vertical cracks in the exterior foundation wall were
beginning to widen. They contacted a foundation-repair contractor,
who provided them a bid for the installation of helical piers.4
Plaintiffs authorized the installation of one helical pier, which the
4. A helical pier is used to reinforce the foundation and provides
additional support.
20130253-CA 6 2015 UT App 40Shiozawa v. Duke
contractor installed in October 2008 under the northeast corner of
the house’s foundation. Rather than resolving the problem, the
helical pier actually caused the cracks in the northeast corner of the
exterior wall of the foundation to widen further. While addressing
this issue, Plaintiffs dug around the northeast corner foundation
and exposed the exterior foundation cracks that had been patched
and painted over during The Dukes’ remodeling efforts. Once they
were exposed, Plaintiffs became concerned about the width of these
below-ground, exterior foundation cracks.
¶8 At this same time, Plaintiffs noticed that mold was
developing in both the northeast and southwest corners of the
basement. In order to mitigate the mold, Plaintiffs removed the
drywall that had been installed when the Dukes finished the
basement of the house, thereby revealing the interior foundation
wall. Plaintiffs discovered cracks in the interior foundation wall
and noticed that some of these cracks had been patched. When
Plaintiffs removed the drywall on the southwest corner of the
house to mitigate the mold in that area, they discovered what they
believed to be evidence of older water and termite damage to wood
strips located on the west side of the basement.
¶9 On August 31, 2011, Plaintiffs filed a complaint against the
Dukes and Pine Valley Realty (collectively, Defendants), asserting
claims for fraudulent nondisclosure and fraudulent
misrepresentation (collectively, the Fraud Claims) and for breach of
contract and breach of the implied covenant of good faith and fair
dealing (collectively, the Contract Claims).5 After the completion of
fact discovery, Defendants moved for summary judgment on each
claim. Plaintiffs opposed the motion. After oral argument, the
district court ruled that the Fraud Claims were “barred by the
applicable statute of limitations . . . because the undisputed facts
demonstrate that Plaintiffs were on notice of their Fraud Claims
more than three years before this action was commenced.” With
respect to the Contract Claims, the district court concluded that “the
undisputed facts demonstrate that at the time Plaintiffs took
5. Plaintiffs also asserted other claims that are not relevant to this
appeal.
20130253-CA 7 2015 UT App 40Shiozawa v. Duke
possession of the home at issue: (1) the plumbing systems were in
working order and fit for their intended purpose; and (2) the seller
Defendants were unaware of any leaks in the foundation.”
Accordingly, the district court granted summary judgment in favor
of Defendants on all claims. Plaintiffs timely appeal.
ISSUE AND STANDARD OF REVIEW
¶10 Plaintiffs claim that the district court incorrectly granted
summary judgment in favor of Defendants. We review a district
court’s legal conclusions and ultimate decision granting summary
judgment for correctness while viewing the facts and all reasonable
inferences from those facts in the manner most favorable to the
nonmoving party. Basic Research, LLC v. Admiral Ins. Co., 2013 UT 6,
¶ 5, 297 P.3d 578; Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.
Summary judgment is appropriately entered only when “there is no
genuine issue as to any material fact” and “the moving party is
entitled to a judgment as a matter of law.” Utah R. Civ. P. 56(c);
Wilcox v. Anchor Wate Co., 2007 UT 39, ¶ 10, 164 P.3d 353.
ANALYSIS
¶11 Plaintiffs assert that the district court erred in granting
summary judgment because genuine issues of material fact exist
that preclude the entry of summary judgment in Defendants’ favor
on the Fraud Claims and Contract Claims. Defendants disagree and
ask us to affirm the district court’s order. Defendants also seek to
recover attorney fees incurred in defending the district court’s order
on appeal. We consider each argument in turn.
I. The Fraud Claims
¶12 Plaintiffs argue that Defendants are liable for fraudulent
nondisclosure and fraudulent misrepresentation. Specifically,
Plaintiffs allege that while preparing for sale and at the time of the
sale of the house, Defendants knew of material defects in the
foundation of the house, including cracks in the interior and
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exterior foundation walls, that Defendants failed to disclose to
Plaintiffs. Defendants moved for summary judgment on the Fraud
Claims on multiple grounds, including Plaintiffs’ failure to put forth
any evidence on each element of the Fraud Claims and to bring the
Fraud Claims within the applicable statute of limitations. Because
the district court concluded that the Fraud Claims were barred by
the statute of limitations, the court did not consider any alternative
bases for relief set forth in Defendants’ summary judgment motion.
Plaintiffs argue on appeal that the district court erred in concluding
that the statute of limitations expired on the Fraud Claims before
they filed their complaint.
¶13 In reaching its conclusion that the Fraud Claims were barred,
the district court considered the three-year statute of limitations for
fraud. A cause of action for fraud does not accrue until “discovery
by the aggrieved party of the facts constituting fraud or mistake. See
Utah Code Ann. § 78B-2-305(3) (LexisNexis 2008). This statutory
discovery rule tolls the running of the three year limitations period
for a fraud claim until the plaintiff discovers the facts forming the
basis of the cause of action. Russell Packard Dev., Inc. v. Carson, 2005
UT 14, ¶ 21, 108 P.3d 741. A plaintiff is deemed to have discovered
a claim upon obtaining actual knowledge of the fraud or when “by
reasonable diligence and inquiry [the plaintiff] should know the
relevant facts of the fraud perpetrated against [the plaintiff].”
Colosimo v. Roman Catholic Bishop, 2007 UT 25, ¶ 17, 156 P.3d 806(citation and internal quotation marks omitted); see also Russell
Packard, 2005 UT 14, ¶ 22 (“Once the triggering event identified by
the statutory discovery rule occurs—i.e., when a plaintiff first has
actual or constructive knowledge of the relevant facts forming the
basis of the cause of action—the statutory limitations period begins
to run.”). The Utah Supreme Court has further instructed that “[a]
party who has opportunity of knowing the facts constituting the
alleged fraud cannot be inactive and afterwards allege a want of
knowledge.” Baldwin v. Burton, 850 P.2d. 1188, 1196 (Utah 1993)
(citation and internal quotation marks omitted). Instead, if the facts
known to a plaintiff would prompt a reasonably prudent person to
further investigate, the plaintiff should make further inquiry. Id. at
1197 & n.44. Accordingly, “it is not necessary for a claimant to know
20130253-CA 9 2015 UT App 40Shiozawa v. Duke
every fact about [the claimant’s] fraud claim before the statute
begins to run.” Id. at 1197; see also Colosimo, 2007 UT 25, ¶ 17 n.19.
¶14 Whether a statute of limitations is applicable and whether it
is subject to tolling under the discovery rule are questions of law.
Quick Safe-T Hitch, Inc. v. RSB Sys. LC, 2000 UT 84, ¶ 10, 12 P.3d 577.
In contrast, the determination of when the aggrieved party
reasonably should have known of the facts forming the basis of the
party’s fraud claim is a question of fact. Sevy v. Security Title Co., 902
P.2d 629, 634 (Utah 1995); Hodges v. Howell, 2000 UT App 171, ¶ 15
n.3, 4 P.3d 803. Indeed, at what point a party should have
reasonably discovered its claim is a fact-intensive inquiry that
“‘preclude[s] [judgment as a matter of law] in all but the clearest of
cases.’” Nolan v. Hoopiiaina (In re Hoopiiaina Trust), 2006 UT 53, ¶ 37,
144 P.3d 1129 (alterations in original) (quoting Russell Packard, 2005
UT 14, ¶ 39 (holding that the undisputed facts there placed it
among “the clearest of cases”); see also Berenda v. Langford, 914 P.2d
45, 53 (Utah 1996) (stating that the determination of whether a
reasonable person would have discovered his or her claim earlier
despite the defendant’s fraudulent concealment “is necessarily a
matter left to trial courts and finders of fact”).
¶15 Plaintiffs contend that the Dukes intentionally concealed the
subsurface and interior foundation cracks and the water damage in
the basement of the house and that Plaintiffs reasonably did not
discover those defects until October 2008 when they tore out the
drywall in the basement and uncovered the below-ground portions
of the exterior foundation. Because they filed their complaint on
August 31, 2011, within three years of their discovery of these
defects, Plaintiffs argue that the Fraud Claims are not barred by the
statute of limitations. In the alternative, Plaintiffs contend that the
question of when they should have discovered the Fraud Claims
presents a material dispute that precludes summary judgment. See
Nolan, 2006 UT 53, ¶ 37. In response, Defendants argue that the facts
here fall amongst the “clearest of cases” and undisputedly establish
that Plaintiffs should have discovered the Fraud Claims more than
three years before they filed their complaint. See id. Defendants
point to the uncontested fact that Plaintiffs had notice before they
closed on the house of cracks in the foundation and the fact that
20130253-CA 10 2015 UT App 40Shiozawa v. Duke
some of those cracks had been patched. Defendants also rely on the
uncontested fact that Plaintiffs had noticed that some of the
foundation cracks on the exterior wall of the house’s foundation
had widened between the time Plaintiffs purchased the home and
August 2008. Finally, Defendants assert that Plaintiffs could have
discovered the cracks in the foundation through reasonable
diligence at any time by taking the same investigative steps that
Plaintiffs engaged in after the helical pier proved inadequate.
Accordingly, Defendants argue that the district court correctly
determined that Plaintiffs’ fraud claims are barred by the three-year
statute of limitations.
¶16 Plaintiffs dispute that their knowledge of narrow, vertical
cracks in the foundation of the home before closing equates to
knowledge of “water damage, deterioration, and massive
deficiencies in the foundation they discovered in October 2008 after
they dug underneath the ground outside of the Home and tore
drywall out of the inside of the Home’s basement.” In particular,
Plaintiffs claimed before the district court that the large, horizontal
cracks present in the exterior of the foundation below the ground
level and in the interior of the foundation (the Latent Foundation
Cracks) were only revealed to them after they tore out the drywall
in the basement. Plaintiffs assert that the Latent Foundation Cracks
they found were significantly different than the exterior, hairline
cracks of which they were aware when they purchased the house
(the Existing Foundation Cracks). Plaintiffs also assert that they had
no reason to engage in further investigation of the existing
foundation cracks before October 2008 because the home inspection
report assured them that “[t]hese vertical cracks in concrete are
typically very narrow, hairline to 1/16 of an inch, and usually pose
no significant structural problem for a building.”
¶17 In response to Defendants’ assertion that Plaintiffs failed to
present sufficient evidence of a material difference in the foundation
cracks, Plaintiffs identify the following evidence which they claim
establishes the material differences between the existing foundation
cracks known at the time of sale and the latent foundation cracks:
(1) the home inspection report, (2) photographs attached to
Plaintiffs’ opposition to Defendants’ summary judgment motion,
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and (3) the Dukes’ deposition testimony. We analyze each piece of
Plaintiffs’ asserted evidence in turn and ultimately determine that
the district court erred by concluding that a genuine factual dispute
did not exist.
1. Home Inspection Report
¶18 First, the home inspection report states that the inspector
observed “no major visual defects” on the portions of the
foundation that were visible during the inspection. While the report
does note the existence of “several minor, vertical cracks . . . on the
foundation,” which “were 1/16-inch or less in width,” the report
indicates that these cracks “did not appear to have any structural
significance at the time of the inspection,” and were “not
uncommon in poured concrete foundation walls.” In addition, the
inspection report explains that “[p]arging, the stucco-sand mixture
applied to foundation walls, may be added (it exists but is
deteriorating in some sections) to help assuage moisture intrusion
[into] such cracks.” Taking the inferences from this evidence in the
light most favorable to Plaintiffs, the home inspection report
supports Plaintiffs’ assertion that at the time they purchased the
house, despite some deteriorating of the parging on those cracks,
the existing cracks in the home’s exterior foundation were narrow
and normal and supports Plaintiffs’ argument that a material issue
of fact existed. See Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.
2. Photos of the Latent Foundation Cracks
¶19 Second, as evidence of a material dispute surrounding what
Plaintiffs knew or should have known at the time they purchased
the home, Plaintiffs point to photographs of the Latent Foundation
Cracks taken by Shiozawa. These photographs were attached to
Plaintiffs’ opposition to Defendants’ summary judgment motion
and were accompanied by Shiozawa’s declaration stating that she
took the photographs. In her deposition, Shiozawa indicated that
after the drywall was removed, she observed “a horizontal patch
that goes all the way around the foundation.” Three of the
photographs depict a patched area running horizontally along the
interior foundation in the area where Plaintiffs tore out the
20130253-CA 12 2015 UT App 40Shiozawa v. Duke
basement drywall in October 2008. Other photographs show cracks
in the portions of the exterior foundation that Plaintiffs dug out in
October 2008, which cracks appear wider on the below-ground
portion of the foundation than on the portion above the ground. We
agree with Plaintiffs that these photographs provide some evidence
that the Latent Foundation Cracks were wider than the Existing
Foundation Cracks, and that at least one latent crack ran
horizontally, in contrast to the minor and vertical Existing
Foundation Cracks.
¶20 Defendants argue that these photographs offered by
Plaintiffs do not create an issue of fact, because they were not
properly authenticated and are thus inadmissible. The evidence
offered in opposition to summary judgment must be evidence that
would be admissible at trial. Winegar v. Springville City, 2014 UT
App 9, ¶ 19, 319 P.3d 1. Accordingly, “inadmissible evidence cannot
be considered in ruling on a motion for summary judgment.” D &
L Supply v. Saurini, 775 P.2d 420, 421 (Utah 1989). Defendants
contend that the photographs are inadmissible because Shiozawa
failed to identify a precise date on which she took the photographs.
Defendants thus argue that Plaintiffs have failed to authenticate the
photographs as providing evidence of the condition of the Latent
Foundation Cracks at the time of Plaintiffs’ purchase of the home.
In addition, Defendants argue that to the extent the photographs
demonstrate any change in the cracks, the photographs were taken
after the installation of the helical pier, which Plaintiffs admit
widened the foundation cracks. Although there is no indication that
Defendants filed a motion to strike the photographs, Defendants
did challenge their authenticity in the district court. The record is
silent, however, on whether the district court ruled on this issue or
considered the photographs in reaching its decision to grant
summary judgment in favor of Defendants.
¶21 To the extent that the district court did consider the
photographs, authentication requires that the proponent of an item
of evidence “produce evidence sufficient to support a finding that
the item is what the proponent claims it is.” Utah R. Evid. 901(a).
“[I]f a competent witness with personal knowledge of the facts
represented by a photograph testifies that the photograph
20130253-CA 13 2015 UT App 40Shiozawa v. Duke
accurately reflects those facts, it is admissible.” State v. Purcell, 711
P.2d 243, 245 (Utah 1985) (citing Kenneth S. Broun et al., McCormick
on Evidence § 214, at 671 (Edward W. Cleary ed., 3d ed. 1984)). Here,
Shiozawa filed a declaration indicating that she took the
photographs of the Latent Foundation Cracks after the foundation
contractor installed the helical pier in October 2008. Defendants do
not assert that Shiozawa lacks personal knowledge of the
circumstances under which the photographs were taken or that she
is otherwise incompetent to testify to that fact. Rather, they contend
that she failed to provide an exact date on which she took the
photographs and that the photographs do not provide evidence of
the condition of the latent foundation cracks on the date of closing.
However, the absence of an exact date when the photographs were
taken did not require the district court to disregard the
photographs. Id. (“Any minor discrepancies in the testimony went
only to the details of the time and place the pictures were taken.”).
Furthermore, Defendants’ argument that the latent foundation
cracks were widened by the installation of the helical pier goes to
the weight of the photographic evidence to establish Plaintiffs’
substantive claims, not the photographs’ admissibility. See
Burtenshaw v. Bountiful Irr. Co., 61 P.2d 312, 315–16 (Utah 1936)
(holding that the district court did not err in admitting pictures of
an irrigation ditch taken after the complaint was filed and after
water alleged to have damaged the ditch had run through it,
because the weight to be given to photographs was for the jury to
decide). Thus, the photographs could have properly been
considered by the district court. And because “[r]elevant evidence
is presumptively admissible,” State v. Richardson, 2013 UT 50, ¶ 24,
308 P.3d 526, absent a ruling to the contrary, we assume the district
court considered the photos as admissible evidence. We therefore
agree with Plaintiffs that the photographs provide support for
Plaintiffs’ opposition to Defendants’ summary judgment motion.
3. The Dukes’ Deposition Testimony
¶22 Finally, Plaintiffs rely on the Dukes’ deposition testimony to
support their allegation that the Latent Foundation Cracks were
materially different than the Existing Foundation Cracks. In
particular, Plaintiffs point to Marci’s and James’s testimonies that
20130253-CA 14 2015 UT App 40Shiozawa v. Duke
they painted over exterior, above-ground foundation cracks, and
Christopher’s and James’s testimonies that they patched and
painted over interior foundation cracks. Contrary to Plaintiffs’
assertion, we can find no indication in the referenced testimony that
the Dukes “targeted, patched, and concealed large cracks.”
Christopher and James each testified that they patched the interior
foundation in an effort to thoroughly prepare for the installation of
drywall in the basement. James further testified that the cracks they
patched were minor, and both he and Christopher testified that
they had no concern about the foundation based on these cracks.
With respect to the exterior foundation, James had no recollection
of how they determined to patch and paint only above ground,
while Marci testified that they painted and caulked the portion of
the exterior foundation wall above the ground because it had been
painted previously and the paint was old and flaking. Like James
and Christopher, Marci remembered that the cracks they patched
were small. And we have located nothing in the deposition
testimony relied upon by Plaintiffs that supports the allegation that
the patched cracks were large and similar to the Latent Foundation
Cracks depicted in the photographs. The deposition testimony does
not definitively establish whether the existing and latent foundation
cracks were similar or materially different in size.
¶23 Nevertheless, after analyzing all of Plaintiffs’ evidence
submitted in support of their opposition to Defendants’ summary
judgment motion, we agree with Plaintiffs that the trier of fact could
find that the inspection report did not put Plaintiffs on notice of
structural defects in the foundation or a need to investigate further.
Further, the trier of fact could also find that Shiozawa’s
photographs depict some latent foundation cracks wider than 1/16
of an inch and at least one crack in the foundation running
horizontally, thereby suggesting that the Latent Foundation Cracks
differ from the Existing Foundation Cracks discussed in the
inspection report. Thus, the finder of fact could conclude that
Plaintiffs first discovered foundation cracks that caused them
concern in October 2008, when Plaintiffs tore out the drywall in the
basement and uncovered the below-ground portions of the exterior
foundation. If the finder of fact does conclude that Plaintiffs
discovered the basis of the Fraud Claims in October 2008, then these
20130253-CA 15 2015 UT App 40Shiozawa v. Duke
claims are not barred by the statute of limitations. Accordingly, we
agree with Plaintiffs that there is a disputed issue of material fact as
to when the statute of limitations on the Fraud Claims began to run.
Therefore, the district court incorrectly granted summary judgment
on these claims.
II. The Contract Claims
¶24 Plaintiffs based the Contract Claims on the warranty
obligations contained in the REPC, which state that on the date that
Plaintiffs took physical possession of the house, the “plumbing [and
other] systems . . . will be in working order and fit for their intended
purposes” and the “foundation shall be free of leaks known to
Seller.” The district court concluded that the “undisputed facts
demonstrate that at the time Plaintiffs took possession of the home
at issue: (1) the plumbing systems were in working order and fit for
their intended purpose; and (2) the seller Defendants were unaware
of any leaks in the foundation.” Plaintiffs argue that the court
“incorrectly interpreted and inappropriately applied the REPC’s
warranty obligations” by not considering the plumbing system as
a whole and by ignoring facts demonstrating that Defendants had
knowledge of leaks in the foundation. “Because the interpretation
of the terms of a contract is a question of law, [w]e review a district
court’s interpretation of a contract for correctness, giving no
deference to the district court.” Meadow Valley Contractors, Inc. v.
Utah Dep’t of Transp., 2011 UT 35, ¶ 24, 266 P.3d 671 (alteration in
original) (citation and internal quotation marks omitted).
Additionally, “[w]hen interpreting a contract, we examine the
[plain] language of a contract to determine meaning and intent.” Id.(second alteration in original) (citation and internal quotation marks
omitted).
¶25 Plaintiffs contend that they “set forth material facts”
demonstrating that the water and sewer lines were either defective
or severely compromised at the time the Dukes delivered
possession of the home to Plaintiffs. However, Plaintiffs fail to
identify precisely what those material facts are. While it is true that
Plaintiffs outlined a series of problems relating to the plumbing
fixtures, sewer line, exterior hose bib faucet, and water-pressure
20130253-CA 16 2015 UT App 40Shiozawa v. Duke
gauge in the Statement of Facts section of their opening brief,
Plaintiffs provided no specific factual information relating to these
problems in the relevant argument section of their brief addressing
their Contract Claims. In other words, Plaintiffs did not support
their argument with specific facts. Without this information, we are
unable to ascertain exactly which facts Plaintiffs consider to be
material and whether those facts were properly before the district
court when it made its determination on Defendants’ summary
judgment motion. Furthermore, beyond asserting that the district
court adopted an “unjustifiably narrow” view of what constitutes
a plumbing system, Plaintiffs have failed to cite any relevant legal
authority supporting their argument that the court “incorrectly
interpreted and inappropriately applied” the REPC’s warranty
obligation regarding the plumbing system. See Utah R. App. P.
24(a)(9) (“The argument shall contain the contentions and reasons
of the appellant with respect to the issues presented . . . with
citations to the authorities, statutes, and parts of the record relied
on.”). Thus, because “the overall analysis of [this] issue is so lacking
as to shift the burden of research and argument to the reviewing
court,” we decline to address it further. See State v. Thomas, 961 P.2d
299, 305 (Utah 1998). Accordingly, Plaintiffs have not demonstrated
that the district court incorrectly granted summary judgment on the
plumbing portion of the Contract Claims.
¶26 With respect to whether Defendants were aware of any leaks
in the foundation, Plaintiffs assert that they “presented photographs
that show the deterioration of wood that was exposed to the
cracked foundation and that [Defendants] patched a crack that went
right up to that compromised and damaged wood.” But these
photographs provide little, if any, help in determining when the
wood deteriorated or whether the deterioration was caused by a
foundation leak known to Defendants. Plaintiffs reference
deposition testimony provided by Christopher in which he
allegedly “did not dispute that the wood was, in fact, present at the
time that [Defendants] patched the interior cracks in the basement.”
In reality, Christopher testified only that he did not remember
seeing the wood at the time he patched the cracks. And again, even
if he had seen the wood, this fact would not necessarily help to
establish that he was aware of a leak in the foundation because it
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says nothing about the condition of the wood at the time he patched
the cracks. To the contrary, the Dukes explicitly indicated in their
disclosures that they were unaware of any foundation leaks. See
supra ¶ 3.
¶27 Plaintiffs also claim that this same area of the foundation
“leaked after [Plaintiffs] took possession of the home.” (Emphasis
added.) Even assuming this is true, the warranty only covers leaks
known to Defendants on the date Plaintiffs took possession, and
any leaks occurring thereafter are not material to Plaintiffs’
warranty claims. Plaintiffs have identified no material facts
sufficient to create a genuine dispute on this issue. We therefore
determine that the district court correctly granted summary
judgment on the Contract Claims. See Orvis v. Johnson, 2008 UT 2,
¶¶ 18–20, 177 P.3d 600.6
III. Attorney Fees Incurred on Appeal
¶28 Lastly, Defendants request an award of attorney fees and
costs reasonably incurred on appeal. “A party seeking to recover
attorney’s fees incurred on appeal shall state the request explicitly
and set forth the legal basis for such an award.” See Utah R. App. P.
24(a)(9). “[W]hen a party who received attorney fees below prevails
on appeal, the party is also entitled to fees reasonably incurred on
6. Plaintiffs also challenge the district court’s grant of summary
judgment on their claim for breach of the implied covenant of good
faith and fair dealing. However, “where there is no breach of an
express covenant in a contract, there can be no cause of action for
breach of an implied covenant arising therefrom,” see Craner v.
Northwestern Mut. Life Ins. Co., 12 F. Supp. 2d 1234, 1242 (D. Utah
1998); see also Brehany v. Nordstrom, Inc., 812 P.2d 49, 55 (Utah 1991)
(explaining that the implied covenant of good faith and fair dealing
“cannot be construed . . . to establish new, independent rights or
duties not agreed upon by the parties”). Because we affirm
summary judgment on Plaintiffs’ claims stemming from the REPC,
there can necessarily be no violation of the implied covenant of
good faith and fair dealing.
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appeal.” Valcarce v. Fitzgerald, 961 P.2d 305, 319 (Utah 1998) (citation
and internal quotation marks omitted). After granting summary
judgment in their favor, the district court awarded Defendants
attorney fees and costs according to the terms of the REPC.7 We
therefore award Defendants attorney fees on appeal for their
successful defense of the district court’s grant of summary
judgment on the Contract Claims. We remand to the district court
for a determination of the reasonable amount of attorney fees and
costs incurred by Defendants in addressing the Contract Claims. See
Macris v. Sevea Int’l, Inc., 2013 UT App 176, ¶ 53, 307 P.3d 625.
CONCLUSION
¶29 We affirm the district court’s grant of summary judgment in
favor of Defendants on the Contract Claims. However, we conclude
that, at the very least, an issue of material fact exists as to when the
statute of limitations began to run on the Fraud Claims. We
therefore reverse the grant of summary judgment on the Fraud
Claims as to all Defendants and remand for further proceedings
consistent with this opinion. We remand for a determination of the
appropriate amount of attorney fees and costs incurred on appeal
to be awarded to Defendants and for further proceedings in
accordance with this decision.
7. In the final sentence of their opening brief, Plaintiffs ask us to
vacate the district court’s award of attorney fees and costs.
Plaintiffs have inadequately briefed this claim, and therefore we
decline to address it. See Utah R. App. P. 24(a)(9).
20130253-CA 19 2015 UT App 40