Mathews v. Court St. Realty

• Court: Superior Court of Maine
• Decided: November 11, 2009
• Docket: SAGre-07-012
• Status: Unpublished

Opinion

STATE OF MAINE

Sagadahoc, 55.

JOYCE MATHEWS

v. Docket No. SAG-RE-07-012

COURT STREET REALTY and KYLE ROGERS

Defendants

ORDER AND rUDGMENT

TIlis civil action came before the court for a bench trial on November 6, 2009. TIle

parties were present and presented evidence. PlaintiffJoyce Mathews represented herself, and the

Defendant Court Street Realty and Kyle Rogers appeared with their counsel, Ivy Frignoca, Esq.

Based on the entire record, this court adopts the following findings of fact and conclusions of law

and renders judgment as follows.

Background

This case arises out of the Plaintiffs purchase of real property in West Bath in July 2005.

Soon after the purchase, she discovered various problems with the property, and brought suit in

2007 against the sellers and the real estate agency and broker who represented the sellers in the

transaction.

Initially, the complaint included claims made by or on behalf of the Plaintiff as well as

mother and minor son, but dle modler's and son's claims have been dismissed. The sellers have

been dismissed as defendants. The only remaining claims are dlOse of dle PlaintiffJoyce Madlews

against dle seller's real estate agency, Court Street Realty, and Kyle Rogers, dle real est..1.te broker

who handled dle sale. At the trial, the parties agreed to the admission of the discovery deposition testimony of

Plaintiff and her mother, with dle exception of certain portions objected to by the Defendants on

grounds of hearsay and/or relevance.' Plaintiff testified on cross-examination, and Defendant

Rogers also testified on direct and cross-examination. Plaintiffs Exhibits 1-5 were admitted over

objection, and Defendants' Exhibits 1-14 were admitted by agreement.

The remaining claims alleged fraud and misrepresent-1.tion, and negligent representation.

Specifically, according to the complaint, the Plaintiff alleges that the Defendants are liable to her

because':

• They led Plaintiff' to believe they were representing her as well as the sellers, and breached the duties associated with a "dual agency" relationship, and prevented her from hiring her own real est-1.te agent

• They caused her to believe she did not need to obtain a building inspection and that they would arrange for one if needed

• They misrepresented the acreage of the property she was buying.

• They failed to disclose that the water supply to the properly was undrinkable.

• They failed to disclose the existence of mold in the home.

• rO ley failed to disclose that a death had occurred in the home.

1 Those objections are resolved as follows: the text at page 40, line 23 to page 41, line 3 are excluded on hearsay grounds. The text at page 58, lines 12-15 is admitted, not for its truth, but for the limited purpose of the Plaintilrs state of mind. The text at page 59, lines 2-4 is excluded as hearsay. The court will also exclude the st-1.tements of others (except statements of Kyle Rogers, which remain as party admissions) cant-lined in the text at pages 101-115. The Defendant's other objections are overruled. 2 The complaint also makes reference to a bottle containing kerosene, presumably in the context

of a claim against the sellers, who have been dismissed as parties. In any case, the Plaintiff at trial did not refer to the bottle in describing her claims against tile remaining Defendants, and tllere is no evidence tllat eitller Court Street Realty or Mr. Rogers at any time was aware of, or should have been aware of, dle bottle or tile kerosene, so dle bottle and kerosene are not discussed furtller.

2 Findings of Fact

PlaintiffJoyce Mathews purchased a doublewide mobile home anclland at 62 Ledgewood

Road, West Bath in July 2005. TIle sellers were Sharon and Gary Gaudette. Defendant Court

Street Realty, a local real estate agency, was ret..-uned by the Gaudettes to h~lp them sell the

property. At all times relevant to this case, Court Street Realty acted through its principal, Kyle

Rogers, so all references to Mr. Rogers in these findings and conclusions apply to Court Street

Realty as well.

After signing a listing agreement with the Gaudettcs, Mr. Rogers met with the Gaudettes to

get information about the property for purposes of preparing a listing and to complete the Seller's

Property Disclosure fonn required by law. (TIle disclosure form is cont.--uned in Defendant's

Exhibit 4). Mr. Rogers believed the information he was provided to be true, and the infonnation

the Gaudettes provided to him is accurately shown in the listing and in the Seller's Property

Disclosure fonn.

With respect to the water supply to the Gaudette home, which was made available through

a drilled well, Sharon Gaudette told Mr. Rogers the water was "hard" but drinkable. She told Mr.

Rogers there had been a water test in 2000, but that the result of the test was unavailable. Mr.

Rogers noticed a Poland Spring water dispenser in the kitchen, but did not have any reason to

believe the water was in fact unsafe or undrinkable.

Ms. Mathews found the property on-line through the listing that described the property as

being located on a 2 acre lot and the property being for sale "as is." She contacted Mr. Rogers

and also went to the property on her own. Sharon Gaudette showed her the house, and told Ms.

Mathews that the water supply was "hard" but drinkable, essentially as she had told Mr. Rogers.

Ms. Mathews went back to the house twice with Mr. Rogers for a second and third showing.

3 Each time Ms. Madlews went to dle home, dlere were a number of people in dle Gaudette

home, so Ms. Madlews did not get dle opportunity to inspect dle property as thoroughly as she

would have liked. However, she never asked Mr. Rogers to arrange for dle occupants of dle

home to leave during any of her visits. She and Mr. Rogers saw nodling in dle home during any

of dleir visits to dle Gaudette home dlat suggested dlere was mold in dle home.

When Ms. Mathews decided to buy dle property, she and Mr. Rogers met to go over and

sign a purchase and sale agreement. The signed agreement is contained in Defendants' Exhibit 4.

It contains specific provisions about dle nature of Court Street Realty's involvement in dle

transaction, and also provisions giving Ms. Mathews as buyer dle right to have dle property

inspected. The dual agency provisions in dle agreement were not filled out

Ms. Madlews and Mr. Rogers went over the agreement in detail, and he even read portions

of dle agreement word for word. Ms. Madlews did not indicate she had any difIiculty reading or

understanding the agreement, dle Seller's Property Disclosure fonn, or odler documents Mr.

Rogers may have reviewed with her.

Ms. Madlews signed dle agreement on May 1, 2005, offering to buy dle house for a tol:ctl of

$145,000, putting $5,000 down. The Gaudettes accepted her ofTer. Widlin a few days of signing

dle agreement, she received a survey depicting dle property. The survey actually was

commissioned for an adjacent property, but dle property she was buying is shown on dle survey.

The purchase and sale agreement contains

page number for dle deed relating to the property. The reason for dle error is dIat the Gaudettes

were selling anodler lot, and dle deed reference for dle odler lot erroneously appears in dle

purchase and sale agreement. However, dle error is immaterial because dle sellers at dle closing

executed dle correct deed.

4 The property listing indicated that the Gaudette properly was being sold "as is," and the

purchase and sale agreement penllitted the Plaintiff to have the property inspected before closing.

However, she chose not to arrange for any home inspection. The Defendants did nothing to

discourage her from doing so, nor did they tell her they would arrange for a home inspection.

After her offer was accepted and before closing, Ms. Mathews asked John Davies, another

real estate broker, to represent her as a buyer's agent. Mr. Davies then contacted Mr. Rogers

about sharing the sales commission, and Mr. Rogers offered to split the commission he and his

agency expected from the sale, to give Mr. Davies or his agency $2,000. Presumably because his

share of the split was too low, Mr. Davies declined lD represent Ms. Mathews.

The dosing on Ms. Mathews's purchase of the Gaudette property occurred on July 12,

2005. 11le Defendants were not responsible for preparing or reviewing the deed or any odler

documents for the closing. A title company representative appears to have conducted the closing.

The original deed went to tlle reiistry for recording before being mailed back to Ms. Matllews.

There was a two-week delay between the date of closing and the date on which Ms.

Matllews moved into the home. The delay appears to have resulted from the Gaudettes' failure

to move out when they were supposed to. In any case, tlle Defendants were not at fault for the

delay.

After moving in, Ms. Mathews discovered mold in tlle home and learned that tllere had

been a deadl in dle home. Her evidence plainly shows dlat dlere was mold in dle home at dle

time she moved in. When dle mold originated is not clear, but it seems likely dlat it started

growing sometime after tlle property went under contract at the end of May, 2005. It was not

evident to eidler Ms. Madlews or Mr. Rogers during any of their visits to the property, or odlerwise

5 known to eitiler of tilem. The evidence did not indicate tilat Mr. Rogers ever went to tile

Gaudette home during tile interval between tile signing of tile contract and tile closing.

It is undisputed tilat a relative of tile Gaudettes died in tile home at some point, but tilere is

no evidence tilat tile Defendants had any reason to suspect or know of tile deatil at any time before

tile closing.

After moving in, the Plaintilf also had tile water tested, and tile results came back indicating

higher tilan recommended levels of iron, copper and manganese, none of which render tile water

unsafe or undrinkable, altilOugh tiley can affect ta.ste and render tile water "hard."

Plaintiff also came to believe timt she had been sold tilree-tentils of an acre less tilan she

was supposed to obtain. However, tile Defendants never represented tilat tile area of tile property

was anything otiler tilan tile two acres indicated in tile listing agreement. Plaintitl also did not

prove the actual area of tile property she purchased.

Since buying tile property, she has listed tile property for sale for $140,000. Her listing

does not suggest tile water supply to tile property is undrinkable, and tile evidence did not show it

to be, altilOugh it may be undesirable in terms of its L-'lste. She has received three ofTers, but none

resulted in a sale.

Conclusions ofLa.w

The complaint appears to allege fi·aud and negligent misrepresenL-'ltion, and breach of

fiduciary duty.

Brea.cll of Duly ofRepresenfr1lion

The breach of fiduciary duty claim, which admittedly is not clearly pleaded in the

complaint drafted by Ms. Matilews's fanner attorney, rests mainly on her testimony tilat Court

Street and Mr. Rogers assured her tilat tiley would "take care of her." She claims she understood

6 tJle statement to be tJlat tJley would represent her. The Defendants deny tJlat such a statement

was made, and tJle court is unable to make any afIinnative finding tJlat it was. They also rely on

tJle dual agency provisions of tJle purchase and sale agreement, which are plainly not applicable to

tJle transaction in question. The fact tJlat Ms. MatJlews tried to arrange for Mr. Davies to become

involved in tJle sale on her behalf indicates quite clearly tJlat, at least at some point before closing,

she knew tJlat Court Street and Mr. Rogers were representing tJle sellers, not her.

The duties of a seller's agent are outJined in tJle Maine Real Estate Brokerage License Act,

32 M.R.S. § 11273. A seller's agent can assist tJle buyer witJl what tJle Act refers to as "ministerial

acts," WitJlOUt assuming any obligation to tJle buyer. The evidence does not indicate tJlat Mr.

Rogers assisted Ms. MatJlews at any time in tJle transaction except WitJl ministerial acts. Id. §

11273(2)(C). The Act does prohibit seller agents from cert-1.in conduct in tJle nature of

misrepresenta.tion and failure to disclose, and tJlOse provisions will be considered in tJle context of

tJle fraud and negligent misrepresentation claims.

For tJlese reasons, tJle court concludes tJlat tJle Plaintiff has failed to prove by a

preponderance of tJle evidence tJlat eitJler Court Street Realty or Mr. Rogers ever acted in any way

beyond serving as a seller's agent, or tJlat eitJler Defendant led her to believe tJlat it or he was

representing her, or otJlerwise assumed any duty or obligation to her of a fiduciary nature.

Fraud and Negligent Misrepresen&-1t.ion

The elements of fraud and negligent misrepresentation are different in some respects,

primarily having to do witJl tJle state of mind of tJle person who makes tJle representation at issue.

Fraud requires intentional, knowing or reckless misrepresentation:

[AI defendant is liable for fraud or deceit if he (1) makes a false representation (2) of a material fact (3) witJl knowledge of its falsity or in reckless disregard of whetJler it is true or false (4) for tJle purpose of inducing anotJler to act or to refrain from acting in reliance

7 upon it, and (5) the plaintiff justifiably relies upon the represent-1.tion as true and acts upon it to his damage.

Letellier v, Small, 400 A.2d 371, 376 (Me. 1979),

Proof of fraud must be by clear and convincing evidence, meaning that it is "highly

probable", not merely probable, that the fact to be proved is true. See Maine Eye Care Assocs. v.

Connan, 2006 ME 15, 1[19, 890 A.2d 707, 711.

As to negligent misrepresent-1.tion, the Law Court has adopted the Restatement

fonnulation, as follows:

One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false infonnation for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by dleir justifiable reliance upon dIe information, if he fails to exercise reasonable care or competence in obtaining or communicating dIe infonllation.

Rand v. Badl Iron Works Corp, 2003 ME 122,1[13,832 A.2d 771,774, quoting Restatement (Second) of Torts § 552(a)(l).

Negligent misrepresentation must be proved by a preponderance of dIe evidence.

The Maine Real Estate Brokerage License Act is relevant in determining whetIler a

real estate agent acted negligentIy, because the Act reflects the Legislature's view of the

extent of a seller agent's duty of care in conveying infonnation to a buyer:

A seller agent shall treat all prospective buyers honesdy and may not knowingly give false infonnation and shall disclose in a timely manner to a prospective buyer all material defects pertaining to tile physical condition of tile property of which tile seller agent knew or, acting in a reasonable manner, should have known. A seller agent is not liable to a buyer for providing false infonnation to tile buyer if dIe false infonnation was provided to tile seller agent by tile seller agent's client and tile seller agent did not know or, acting in a reasonable manner, should not have known dlat tile infonnation was false. A seller agent is not obligated to discover latent defects in tile property.

32 M.R.S. § 11273(2)(A).

Thus, tile Act's requirement dlat a seller's agent "act in a reasonable manner" in obtaining

and communicating information seems similar to the "reasonable care or competence" element of

8 the tort of negligent misrepresentation. The provision relieving a seller's agent of any duty "to

discover latent defects in the property" is at least relevant to the scope of the agent's common law

duty, if indeed it does not define the scope of duty as to latent defects.

As to the fraud claim, the court has found that Court Street and Mr. Rogers believed that

the infonnation they had received from the sellers about the acreage and the water supply to the

property was true. The Plaintiff has not proved that either Defendant misled her into not getting a I

home inspection, or that either promised to arrange for an inspection. For purposes of

intentional or knowing conduct, Plaintiff has not proved that either of the Defendants was aware of

any of the defects or other issues that she now claims to have discovered at !lIe home. For

purposes of reckless conduct, she has not proved !llat either Defendant was aware of any risk that

were defects in !lIe home, or that !lIe infonnation provided by !lIe sellers was untrue. Thus, the

Plaintiff has not proved by clear and convincing evidence any intentional, knowing or reckless

misrepresent-1.tion by either Defendant for purposes of her fraud claim.

The Plaintiff did not present any evidence as to !lIe st-1.lldard of care for a seller's agent.

TIle Act's provision that a seller agent is "not obligated to discover latent defects"-considered

alongside !lIe absence of any independent evidence of !lIe standard of care-rules out Defendants

being found liable for negligent misrepresent-1.tion, because !lIe mold, the water problem, !lIe death

(assuming it was even a defect),

!llat is, not visible or apparent.

For these reasons, !lIe court concludes !llat !lIe Plaintiff has failed to meet her burden of

proof on !lIe claims set forth in !lIe complaint.

9 Judgment

Defendants Court Street Realty and Kyle Rogers are hereby granted judgment against

Plaintiff Joyce Mathews on all claims in the complaint. The Defendants are hereby awarded their

costs. Pursuant to M.R. Civ. P. 79(b), the clerk is hereby directed to incorporate this Order and

._~1if~_. Judgment by reference in the docket.

Dated November 17,2009 i~£~~ Justice, Superior Court