Scheller v. Otterberg. (Lawyers Weekly No. 11-16-0187, 12 pp.) (Cheri Beasley, J.) Appealed from Catawba County Superior Court. (W. Robert Bell, J.) N.C. App. Unpub. Click here for the full text of the opinion.
Holding: The plaintiff-buyers hired an inspector, who warned them of possible water intrusion into the home they were buying. Even if the plaintiffs relied on false representations of the defendants, such reliance was unreasonable.
We affirm summary judgment for the defendant-sellers.
The plaintiffs bought a single-family residence from the defendants. After moving in, they discovered significant mold damage and that the county building inspector excluded one room’s use as a bedroom.
The plaintiffs brought suit against the defendants alleging breach of contract, fraud or misrepresentation, breach of warranty, unfair and deceptive trade practices, constructive trust and civil conspiracy.
The defendants answered and moved for summary judgment. The trial court granted the defendants’ motion for summary judgment, and the plaintiffs appealed.
The essential elements of fraud include (1) a false representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party.
An action in fraud for misrepresentations regarding realty will lie only where the purchaser has been fraudulently induced to forgo inquiries which he otherwise would have made.
Here, the plaintiffs are unable to establish that their reliance on the alleged representations made by the defendants was reasonable. The plaintiffs hired an inspector to examine the home prior to closing. The inspector’s report warned the plaintiffs of possible water intrusion into the home. Even if the plaintiffs relied on false representations of the defendants, such reliance was unreasonable.
The plaintiffs also argue that the trial court erred in failing to determine that the defendants fraudulently represented that the house had four bedrooms, when the county building inspector had determined that it only had three. But the inspector had issued a certificate of compliance as required by law, meaning the completed dwelling complied with all applicable state and local laws, ordinances and regulations.
Regarding the fourth bedroom, the certificate of compliance authorized the defendants to use the renovated room as a bedroom and the plaintiffs have failed to include contrary evidence in the record.
The defendants have sufficiently demonstrated that the plaintiffs are unable to produce enough evidence to show that the defendants made a false representation or concealed a material fact, an essential element to a claim for fraud. The trial court appropriately determined that no genuine issue of material fact remained in dispute with respect to the fraud claim.
The plaintiffs argued that the trial court erred in granting the defendants’ motion for summary judgment on their breach-of-warranty action. The plaintiffs alleged in their breach-of-warranty action that the defendants warranted through disclosure statements that the dwelling was free from water damage and contained four bedrooms.
The traditional implied warranty that the dwelling is free from major structural defects and meets a standard of workmanlike quality is available only to the initial vendee-grantee against the vendor-builder. Warranties ensuring the fitness of a home have not been extended to protect remote purchasers.
There is no evidence that the defendants were the original vendor-builders of the subject property, or that the plaintiffs were the original vendee-grantees; therefore, the trial court appropriately granted the defendants’ motion for summary judgment as to the plaintiffs’ breach-of-warranty claims.
The plaintiffs argued that the trial court erred in granting the defendants’ motion for summary judgment as to their unfair-and-deceptive-trade-practices claim. To prevail on an unfair-and-deceptive-trade-practices cause of action, a plaintiff must present evidence of (1) an unfair or deceptive act or practice, or an unfair method of competition, (2) in or affecting commerce, (3) which proximately caused actual injury to the plaintiff or to his business.
The private sale of a residence by an individual is not an act in or affecting commerce and is thus beyond the purview of the unfair and deceptive trade practices act. The plaintiffs have failed to present any evidence that the defendants committed an act in or affecting commerce.
Finally, the plaintiffs appealed from the trial court’s decision to grant the defendants’ motion for summary judgment as to the plaintiffs’ constructive trust cause of action. Courts of equity will impose a constructive trust to prevent the unjust enrichment of the holder of the legal title to property acquired through a breach of duty, fraud, or other circumstances which make it inequitable for him to retain it against the claim of the beneficiary of the constructive trust.
But a constructive trust does not arise where there is no fiduciary relationship.
While the determination that a fiduciary relationship exists is a factual analysis, there is no evidence on the record that the plaintiffs placed such confidence in the defendants as to allow them “domination and influence” over their relationship with them such that a fiduciary relationship existed.
We affirm the trial court’s order granting the defendants’ motion for summary judgment.