Title: Silva v. Stevens

State: vermont

Issuer: Vermont Supreme Court

Document:

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
40 as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-197


Amaro Silva and Jean Silva                   Supreme Court

                                             On Appeal From
     v.                                      Orleans Superior Court

John Stevens, Glendon McAllister and         September Term, 1990
Joyce McAllister


John P. Meaker, J.

Charles D. Hickey, St. Johnsbury, for plaintiffs-appellees

Montgomery L. Moore, Island Pond, for defendant-appellee Stevens

Rexford & Kilmartin, Newport, for defendants-appellants


PRESENT:  Allen, C.J., Peck, Gibson, Dooley and Morse, JJ.


     DOOLEY, J.   Plaintiffs, Amaro and Jean Silva, purchased an earth-
sheltered home from  defendants, Glendon and Joyce McAllister, through
defendant John Stevens, a local realtor.  On finding defects in the home,
plaintiffs sued defendants for damages caused by misrepresentations made
prior to the sale.  The McAllisters appeal from a jury verdict awarding
damages against them for fraudulent misrepresentation, fraudulent
nondisclosure and negligent misrepresentation.  We affirm.  Plaintiffs cross
appeal from the trial court's grant of a motion for judgment   notwithstanding
the verdict in favor of Stevens after the jury returned a verdict holding
him liable for negligent misrepresentation.  We reverse and remand.
     In 1977, the McAllisters built and occupied an earth-sheltered home in
Coventry, Vermont.   During the seven years they lived in the home they
experienced leaks in the ceiling, moisture problems around a picture window,
and seepage around the chimney.  They also experienced difficulties with a
garage they had added in 1979.  After they had the rear wall of the garage
backfilled, the wall bowed inwards and developed cracks.  When the
McAllisters discovered the problem, they braced the wall with I-beams.
    In May 1984, the McAllisters decided to sell the home.  They contacted
Stevens, and on May 13, 1984, Stevens and the McAllisters signed a listing
agreement.  Stevens drafted an advertisement for an "open house" on June 3
at the McAllister home and ran it in a local paper.  Stevens based the
advertisement on information he obtained in conversations with Mr.
McAllister.  The advertisement stated, in part:
                              -Sale Includes-

          A 28' x 60' Earth Sheltered Home built to the strictest
          standards with 4,000 feet of steel in the roof, on 10" x
          24" footings, and 12" x 48" frost wall.  The home is
          fully insulated in and out. . . .  Also a three-car
          garage and shop with full second floor.  Functional and
          well-constructed. . . .  EVERYTHING WILL BE SOLD FOR
          JUST $64,000 - please come out and look -

It is unclear whether Mr. McAllister used the specific terms "strictest
standards" and "well constructed" in describing the property to Stevens.
    The McAllisters sent a copy of the advertisement directly to plaintiffs,
who had visited the home in the past and had asked Mr. McAllister about the
possibility of his building an earth-sheltered home for them.  Mr.
McAllister had planned to build the Silvas a home, but decided "we might as
well sell [them] this one."
     Plaintiffs received the ad and thought that the home "sounded good," so
they called the McAllisters.  They agreed on a sales price of $60,000.  On
June 9, plaintiffs drove to Coventry and were shown around the property by
the McAllisters.  During the visit, Mr. McAllister told plaintiffs that
there had been a leakage problem with the skylight and the chimney in the
past, but that he had repaired the problem.  Mr. McAllister also showed Mr.
Silva the garage and told him that the I-beams were there to reinforce the
rear wall.  Mr. Silva apparently accepted these explanations and did not
inquire further.  In response to a question from Mrs. Silva, Joyce
McAllister said that they did not have any dampness problems with the home.
     Immediately after the visit, plaintiffs and the McAllisters went to
Stevens' office.  Plaintiffs had brought a check for $5,000 as a deposit.
Stevens offered to show them the property, but they declined.  Stevens had
the parties sign a sales agreement which included a provision that "[t]he
property and furnishings and appliances are sold as is and no representation
has been made by the broker regarding the age or condition of the same."
The parties differ as to whether plaintiffs were aware of, or whether the
parties ever discussed, this language.
    The sale was closed on August 31, 1984, and plaintiffs' daughter and her
family took occupancy the following day.  Within two months they began to
have difficulties.  They discovered mold in closets, rot beneath carpeting,
and leaks in the middle bedroom ceiling, around the skylight, and around the
chimney.  They found water pooling in the garage, and found that the rear
wall of the garage had cracked and bowed in until it put pressure on the I-
beams.
    Plaintiffs hired an architect, Don Metz, to inspect the home.  Metz
determined that the roof of the home was improperly sealed and was,
therefore, not waterproof; there was insufficient insulation; there was
inadequate ventilation to provide for air exchange; and there were no
secondary exits for escape in case of fire.  He also determined that the
rear wall of the garage was not designed to support the weight pressing
against it from backfill.  Plaintiffs hired local contractors to repair the
roof of the home and to repair the garage.  They also had an air exchanger
installed.
    In 1985, plaintiffs brought suit against defendants McAllister and
Stevens.  The complaint, as eventually amended, alleged that the
representations in the advertisement that the home was built to the
"strictest standards" and that the garage was "well constructed" were
false, had been made fraudulently, and were relied upon by plaintiffs.
Plaintiffs sought compensatory and punitive damages based on the fraud.
Plaintiffs also alleged that the misrepresentations were made in a careless
and negligent manner and sought damages for this negligence.  In two
additional counts, plaintiffs alleged that the McAllisters had stated that
they had fixed a roof leak prior to closing, when they had not, and that a
suspended ceiling had been erected to fraudulently conceal the actual
condition of the roof.  Damages were sought under each of these counts.
     Defendants were granted a directed verdict on the fraudulent
concealment count at the close of the plaintiffs' case.  The trial was
lengthy, extending over a month.  The court charged the jury on three
"counts," each based on a separate theory of recovery:  (1) fraud based on
fraudulent misrepresentations; (2) fraud based on fraudulent nondisclosure;
and (3) negligent misrepresentation.  The court drafted a set of special
interrogatories to present the issues to the jury.  For each of the three
counts, the court asked whether the jury found each of the defendants
guilty.  However, for the second count of fraudulent nondisclosure, the
interrogatories allowed the jury to find liability only for Glendon
McAllister and Joyce McAllister.  Two additional interrogatories asked the
jury to specify the amount of plaintiffs' recovery for compensatory and
punitive damages if the jury found liability with respect to any defendant
on any count.
     The jury returned a verdict against the McAllisters on all three
counts, and against Stevens on the claim of negligent misrepresentation.
The jury assessed compensatory damages at $21,000 and punitive damages at
$15,000.
    The trial court denied all post-verdict motions filed by the
McAllisters, but granted Stevens' motion for judgment notwithstanding the
verdict.  The trial court found that the "as is" clause in the sales
contract established an affirmative defense for Stevens to the negligent
misrepresentation claim.
    The McAllisters' appeal raises the following issues:  (1) whether the
trial court erred in failing to grant the McAllisters' motion for a directed
verdict; (2) whether the trial court erred in its charge and interrogatories
to the jury; (3) whether liability on the negligent misrepresentation theory
was barred by the "as is" clause in the listing agreement; (4) whether an
evidentiary ruling or the comment of a court officer to a juror warrant a
new trial; and (5) whether the jury's answers to the interrogatories are
internally inconsistent.  Plaintiffs' cross-appeal contests the grant of the
judgment notwithstanding the verdict in favor of Stevens on the claim for
negligent misrepresentation.  In the following discussion, we refer to the
McAllisters as "defendants" and to Stevens by name.
                                    I.
     Defendants first contest the trial court's refusal to grant them a
directed verdict on all three counts.  They argue that there was
insufficient evidence to reach the jury on most of the elements of the
counts.
     In reviewing a trial court's denial of a directed verdict, this Court
will view the evidence in the light most favorable to the nonmoving party,
excluding the effect of any modifying evidence.  Cushman v. Kirby, 148 Vt.
571, 574,