Case Title: BOWMAN v. PRESLEY

Citation: 

Docket Number: 105727

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2009-06-30T00:00:00Z

Document:
BOWMAN v. PRESLEY  BOWMAN v. PRESLEY 2009 OK 48 212 P.3d 1210 Case Number: 105727 Decided: 06/30/2009 THE SUPREME COURT OF THE STATE OF OKLAHOMA RICHARD BOWMAN and DANA BOWMAN Plaintiffs/Appellants v. MICHAEL PRESLEY; HEIDI PRESLEY; LINDA PRESLEY and CENTURY 21 BOB CROTHERS REALTY, INC. Defendants/Appellees ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIV. I ¶0 Buyers of a home, claiming the amount of square footage of the house they had recently purchased had been misrepresented to them, brought an action against the sellers of the house, the real estate broker, and the real estate sales associate. The buyers sought damages, alleging fraud on the part of all defendants along with violation of the Oklahoma Real Estate License Code by the broker and sales associate. Upon motions by defendants' counsel, the District Court, Pottawatomie County, Douglas L. Combs, Judge, gave summary judgment to the defendants. The Court of Civil Appeals, Division I, affirmed that disposition. On certiorari granted upon plaintiff's petition, THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE TRIAL COURT'S SUMMARY DISPOSITION IS REVERSED; AND THE CAUSE IS REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH TODAY'S PRONOUNCEMENT. Jeff L. Hartmann, Kerr, Irvine, Rhodes & Ables, Oklahoma City, Oklahoma, for Plaintiffs/Appellants. Jon D. Flowers, Shawnee, Oklahoma, for Defendants/Appellees Michael and Heidi Presley. Hugh A. Baysinger, Kimberly A. Stevens, Pierce, Couch, Hendrickson, Baysinger & Green, for Defendants/Appellees Century 21 Bob Crothers Realty, Inc. and Linda Presley. OPALA, J. ¶1 The dispositive issue tendered on certiorari is whether summary judgment was erroneously given to the defendant realtors and sellers. We answer this question in the affirmative. A buyer of real property may rely upon the positive representations of realtors and sellers about the size of the property to be conveyed. When a realtor or seller of real property makes material representations to a purchaser about the property's size, a determination of whether those representations were fraudulently or substantially misrepresented and whether the purchaser may have thereby been harmed lie within the arena of disputed facts to be found by trial of the issues. In holding that plaintiffs could not prove fraud as a matter of law and affirming summary judgment, the Court of Civil Appeals (COCA) erred. The presence of disputed material facts in this litigation makes summary relief impermissible. We hence vacate the appellate court's opinion and reverse the trial court's disposition. I. ANATOMY OF THE LITIGATION ¶2 ¶3 Buyers' satisfaction with their newly acquired house ended abruptly when shortly after closing on the home Buyers received a copy of a mortgage appraisal prepared by Grace and Sons Appraisal Service (Grace). The appraisal gave the actual size of the house not as 2890, but rather as 2187 square feet: a difference of 703 square feet below the size represented to Buyers. Following this discovery, Buyers obtained from Grace a copy of another appraisal made by them when seller Michael Presley first purchased the house in 2000. This appraisal also gave the home's size as 2187 square feet. ¶4 Broker and Realtor moved for summary judgment and Sellers likewise sought that disposition shortly afterwards. Movants argued that Buyers' reliance on the representation of size was misplaced, urging instead that prior to purchase Buyers bore a duty independently to determine the property's correct size. ¶5 The trial court gave summary judgment to all defendants. The Court of Civil Appeals, Division I, affirmed. We granted certiorari to clarify the relative duties of buyers and sellers of real estate and their agents when positive representations are made about the size of property to be conveyed. II. STANDARD OF REVIEW ¶6 Summary process - a special pretrial procedural track pursued with the aid of acceptable probative substitutes ¶7 The purpose of summary process is not to deprive parties of their right to have the disputed facts of the case tried by a jury, but rather to decide the legal sufficiency of the evidentiary materials presented to determine whether a triable case is tendered. ¶8 Issues in summary process stand before us for de novo review. III. THE COURT OF CIVIL APPEALS' OPINION AND THE PARTIES' ARGUMENTS ON CERTIORARI ¶9 The Court of Civil Appeals (COCA) affirmed the decision of the trial court. COCA concluded that Buyers had offered no evidentiary materials showing they had suffered any detriment from the misrepresentation, if any there was, because the value of their home was later appraised at an amount greater than its purchase price. Finding this fact dispositive of the lawsuit, COCA held as a matter of law that the supposed inability of Buyers to prove damages raised an insurmountable barrier to maintaining a claim for fraud ¶10 On certiorari, Buyers urge that (a) COCA erred in finding that Buyers suffered no detriment as a result of the misrepresentation and (b) the statutory directive of the Oklahoma Real Estate License Code ¶11 Broker, Realtor, and Sellers, for their part, contend that COCA correctly affirmed summary judgment because (a) Buyers are unable to satisfy the elements required to prove fraud as a matter of law, (b) the language of the purchase contract serves as a waiver barring Buyers' recovery, and (c) the doctrine of caveat emptor IV. THE EXISTENCE OF DISPUTED MATERIAL FACTS MAKES SUMMARY RELIEF IMPERMISSIBLE A. THE QUESTION OF DAMAGES REMAINS IN DISPUTE AND MUST BE RESOLVED BY THE TRIER OF FACT ¶12 ¶13 The common law, which remains in force unless a legislative enactment expressly states otherwise, ¶14 The material controversy hinges upon the true nature of the bargain struck by Buyers in purchasing Sellers' home. In support of their claim for damages, Buyers correctly advance the "benefit of the bargain" doctrine. This rule of recovery, adopted in Oklahoma as a measure of damages in fraud cases, allows a plaintiff to recover the difference between the actual value received and the value the defrauded party would have received had the value actually been as represented. ¶15 Buyers desire to obtain that value for which they in fact were bargaining when they purchased Sellers' home. No single, clear, and undisputed answer to this question can be drawn from the parties' evidentiary substitutes found in the record. Resolution of this uncertainty is a task that must fall upon the trier of fact. In short, based upon the record no one can properly conclude that damages remain unprovable as a matter of law. ¶16 Buyers claim they bargained for a house containing 2890 square feet, to be obtained for a price ($145,000) calculated at an agreed-upon amount ($50) per square foot. In receiving instead a house appraised as having only 2187 square feet, Buyers argue they have been damaged to the extent the square footage received by them falls short of the square footage represented to them - a gap of 703 square feet, almost 25% less than advertised. Looking to the asserted measure of the house's purchase price - $50 per square foot - Buyers compute the amount of their injury at $35,150 - the value of the missing 703 square feet which were represented by Broker, Realtor, and Sellers, were paid for by Buyers at $50 per square foot, but not thereafter received. ¶17 Appellees dispute Buyers' characterization of a bargain driven by square footage. Rather, appellees claim Buyers simply bargained for a home valued at and purchased for $145,000, not a home with 2890 square feet valued at $50 per square foot. Appellees argue that a house's size is but one of numerous factors taken into consideration when deciding whether to purchase a home. Appellees urge that Buyers' specific emphasis on square footage cannot be sufficiently demonstrated to support a finding of damages. More importantly, appellees attach overriding significance to the fact that, despite the diminished size appraisal of 2187 square feet, the later appraised value of the home ($146,697) nevertheless exceeded the purchase price. For this reason appellees assert that far from suffering injury, Buyers have in fact received more than was represented to them. ¶18 The question of damages cannot be resolved based upon the estimations of value contained in the mortgage appraisal alone. An appraisal can give only an approximate value that is perceived by its author. Appraisals merely offer scenarios suggesting what a thing might be worth, not infallible indicia of fixed categorical worth. The precise value of the thing in litigation must be determined by the trier of fact. The jury is the sole and final arbiter. Because any appraisal that antedates the jury's verdict is but an item of evidence, the increased home value indicated by the mortgage appraisal, though probative of damages, is not dispositive of the issues. Neither are the appraisals of square footage in themselves conclusive evidence of damage. Buyers need not explicitly controvert the mortgage appraisal's value estimate to raise a conflicting inference as to damages. Inconsistent appraisals of square footage define this litigation. The fact that two conflicting appraisals emanate from the same source - Grace, a professional appraiser - only clouds the issues to be considered. ¶19 The existence of significantly disparate appraisals of size raises a reasonable inference that appraisals of value might be similarly inconsistent, especially since no real certainty exists about the house's actual size, which will be linked inextricably to its value. Summary judgment is proper only when undisputed material facts support but a single inference that favors a movant's quest for relief. ¶20 The fact that Buyers purchased a house advertised as double the size of their former home raises a sufficient countervailing inference suggesting Buyers were at least in some part motivated to purchase Sellers' home because of its greater size. The extent to which this motivation possibly drove towards or even defined the bargain struck by Buyers and Sellers cannot be discerned from the record alone. The question must be resolved by the trier of fact. ¶21 In our review of summary process this court must assess all facts and inferences raised by a motion for summary judgment in the light most favorable to the non-moving party. B. OKLAHOMA REAL ESTATE LICENSEES HAVE A DUTY NOT TO MAKE SUBSTANTIAL MISREPRESENTATIONS IN THE CONDUCT OF BUSINESS AND MAY BE HELD LIABLE FOR SUCH MISREPRESENTATIONS ¶22 In addition to their claim of fraud, Buyers also allege that Broker and Realtor violated provisions of the Oklahoma Real Estate License Code (the Code) Making substantial misrepresentations or false promises in the conduct of business, or through real estate licensees, or advertising, which are intended to influence, persuade, or induce others;*** 59 O.S. 2001 § 858-312(2) or for: Any other conduct which constitutes untrustworthy, improper, fraudulent, or dishonest dealings. 59 O.S. 2001 § 858-312(8). Real estate licensees also have an affirmative duty "[t]o treat all parties with honesty and exercise reasonable skill and care." 59 O.S. Supp. 2005 § 858-354(B)(1). ¶23 Broker and Realtor, for their part, urge that any misrepresentation of size was neither substantial nor intentionally deceptive, claiming reliance upon the figure provided by the Pottawatomie County Assessor's office and pointing also to the disclaimer in the Multiple Listing Service (MLS) description and the waivers in the purchase contract and closing agreement. Moreover, Broker and Realtor argue for the continued relevance and applicability of the doctrine of caveat emptor, maintaining that the ultimate duty of determining the correct square footage properly devolves upon Buyers. ¶24 For reasons explained in Part IV-C of this opinion, sellers of real property and their agents may not resort to the doctrine of caveat emptor to avoid liability for fraudulent misrepresentations made to purchasers about the size of property to be conveyed. We also dispense with appellees' contention that Buyers waived their right to pursue a claim through the terms of the purchase contract and closing agreement. Buyers allege fraud in the making of the contract. A whisper of fraud can topple the pillars of even the most impregnable contract, for to base a contract upon fraud is to build it upon sand. This court has repeatedly stated that: The purpose and effect of the evidence introduced in the case at bar is not to contradict or vary the terms of the written contract, but to show that the plaintiff was imposed upon, and the fraud was practiced in obtaining his signature thereto. Fraud vitiates everything it touches, and a contract obtained thereby is voidable. And evidence is always admissible to show that contracts have been fraudulently obtained.32 We honor this rule because "the public policy fostering the certainty and stability of contracts gives way to the public policy against fraud." ¶25 To define the parameters of a real estate licensee's duties when making material representations to purchasers, we turn to the relevant language of the Code pertaining to a licensee's obligation to deal honestly with all parties to a real estate transaction. The terms of ¶26 This essential obligation of truthfulness operates independently of, though not always separately from, a heightened professional duty to confirm the accuracy of representations made about things offered for sale. Significantly, Buyers have not brought actions against Broker and Realtor for professional negligence, but rather for fraud and violations of a Code whose provisions are defined by a responsibility to avoid fraudulent conduct. This court has previously declined, under facts distinguishable but not dissimilar from those in the present case, to impose upon real estate licensees "an independent, higher standard of care to investigate property offered for sale" in suits brought against brokers and realtors claiming professional negligence. ¶27 Because Buyers' arguments are anchored in an action for fraud, we do not today reach the question of whether a real estate licensee bears a heightened duty independently to ascertain the size of a property represented to potential purchasers, the breach of which would support a cause of action for professional negligence. In this case the relevant duty of a real estate licensee is to treat all parties with honesty. A licensee may incur liability for failure to uphold that duty when lay persons such as Buyers rely upon their representations made as licensed professionals. The question of whether Broker and Realtor represented the property size reasonably, recklessly, or with intentional dishonesty must be resolved by the trier of fact. C. A BUYER OF REAL PROPERTY MAY RELY UPON THE POSITIVE REPRESENTATIONS OF SELLERS AND THEIR AGENTS ABOUT THE SIZE OF PROPERTY TO BE CONVEYED, EVEN THOUGH THE BUYER'S INVESTIGATION COULD HAVE REVEALED THE NONEXISTENCE OF THE MATERIAL FACT REPRESENTED ¶28 The common-law doctrine of caveat emptor does not reach situations where a purchaser of real property has relied upon a positive representation of material fact. A representation of size, such as a firm figure of square footage, constitutes a statement of material fact the assertion of which serves as a positive assurance upon which a purchaser may rely without being compelled independently to determine the truth or falsity of the fact represented. ¶29 This court's jurisprudence allows the doctrine of caveat emptor to bar recovery for fraudulent misrepresentation only in cases where the reasonably diligent purchaser of property would have uncovered some obvious defect or discerned the falseness of some misleading opinion offered as to the property's value. We have thus limited the doctrine's application to cases involving a plaintiff's unjustified reliance on: 1) misrepresentations of patent defects ¶30 The representation of a building's dimensional size, capable of precise expression in square feet, involves neither a readily discoverable defect or flaw nor "the mere expression of an opinion." V. SUMMARY ¶31 Buyers of real property may rely on positive representations made by realtors and sellers about the property's size. Representations of the size of real property are statements of material fact, not expressions of opinion, and a buyer need not conduct a separate investigation to ascertain their truth. If the buyer later alleges fraudulent misrepresentation against the realtor or seller, questions of whether the buyer was in fact deceived and suffered detriment because of the misrepresentation must be decided by the trier of fact. A real estate licensee is in such instances also bound by a professional duty to treat all parties with honesty. ¶32 A real property appraisal is not an incontestible scientific verity that may be accepted in summary process as rising to the level of an undisputed fact proffered by evidentiary materials. Raised against the plaintiffs' quest for trial is nothing more than a set of legal arguments. These are dressed up to look as though they were resolving fact issues. But the latter will not vanish when driven solely by legal rhetoric. They must be settled by trial. The contentions of Sellers do not by themselves give support to summary judgment, and the issues raised by Buyers cannot be resolved by summary process. The existence of disputed material facts that call for resolution of issues makes summary relief impermissible. The use of summary process may not be extended to swallow triable issues of fact. Inclusion of the latter within that process would violate the state's fundamental right to both a trial by jury at common law and due process by orderly trial before a court in equity. ¶33 On certiorari granted upon plaintiff's (Buyers') petition, the Court of Civil Appeals' opinion is vacated; the trial court's summary disposition is reversed; and the cause is remanded for further proceedings to be consistent with today's pronouncement. ¶34 EDMONDSON, C.J., TAYLOR, V.C.J., HARGRAVE, OPALA, WATT, WINCHESTER, COLBERT AND REIF, JJ., CONCUR ¶35 KAUGER, J., NOT PARTICIPATING FOOT