Title: ROGERS v. MEISER
Citation: 2003 OK 6, 68 P.3d 967
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: February 4, 2003

ROGERS v. MEISER Annotate this Case ROGERS v. MEISER 2003 OK 6 68 P.3d 967 Case Number: 96885 Decided: 02/04/2003 THE SUPREME COURT OF THE STATE OF OKLAHOMA STEVEN M. ROGERS and ELLEN M. ROGERS, husband and wife, Plaintiffs/Petitioners, v. CHARLES A. MEISER and BARBARA S. MEISER, husband and wife, Defendants/Respondents. CERTIORARI TO REVIEW CERTIFIED INTERLOCUTORY ORDER FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, STATE OF OKLAHOMA HONORABLE KARL GRAY, TRIAL JUDGE ¶0 Plaintiffs, purchasers of a house sued defendants, sellers, for common law actual fraud and violation of the Residential Property Condition Disclosure Act (RPCDA), CERTIORARI PREVIOUSLY GRANTED; TRIAL COURT ORDER REVERSED. Edward O. Lee and Cara Jenkins Raney, Edmond, Oklahoma for Plaintiffs/Petitioners. Timothy A. Mitchell, Edmond, Oklahoma and Libby A. Mercer, Bethany, Oklahoma for Defendants/Respondents. LAVENDER, J.: ¶1 Plaintiffs, Steven M. and Ellen M. Rogers purchased a house from defendants, Charles A. and Barbara S. Meiser. After experiencing flooding problems they sued defendants for common law actual fraud and violation of the Residential Property Condition Disclosure Act (RPCDA), ¶2 Upon defendants' motion, the trial court, in effect, dismissed any theory of liability and any remedy not arising under or permitted by the RPCDA on the basis that Act abrogated/supplanted any such theory or remedy, which would include the common law actual fraud claim pled by plaintiffs. PART I. STANDARD OF REVIEW. ¶3 The first impression question before us is one of law because its resolution will come from interpretation of the RPCDA to decide if that Act can be held to have been legislatively intended to supplant/abrogate a common law actual fraud claim and the remedies available upon proof of such a claim. A legal question involving statutory interpretation is reviewed de novo, i.e. by a non-deferential, plenary and independent examination of the trial court's legal ruling. Samman v. Multiple Injury Trust Fund, PART II. BACKGROUND. ¶4 The pertinent allegations of plaintiffs' trial court petition follow. In 1999 plaintiffs and defendants entered into a written contract for the purchase and sale of residential real property located in Edmond, Oklahoma. During the period of their ownership defendants experienced repeated and heavy flooding of the residential structure and defendants tried to stop the flooding problems by installing a small french drain system and a barricade on the property's east boundary. The repairs were inadequate to cure the flooding problems and defendants knew the repairs were inadequate, having experienced flooding after the repairs were completed. In order to deceive plaintiffs, defendants deliberately concealed the nature and scope of the flooding problems during the pre-sale negotiations by, among other devices, stating on a disclosure statement that, although the property had experienced flooding, it had been repaired. ¶5 The real estate purchase contract and a residential property condition disclosure statement form are attached to the petition. The latter bears Mr. Meiser's signature and that of both plaintiffs as having received a signed copy. Questions numbered 5 and 6 on the form, which are answered yes, ask: "[a]re you aware of water seepage or leakage in any of the improvements on the property[]" and "[h]as the property been damaged or affected by flood, storm run-off, sewer backup, drainage or grading problems?" In part of the form allowing explanation of a "yes" answer this hand-written language appears: "#5 & #6 storm run off on East Side of home repaired by retaining wall, sidewalk and french drain about 3 years ago". ¶6 Plaintiffs' petition also alleges they bought the property believing the flooding had been repaired, but after the purchase the property flooded on numerous occasions. They assert the cost to stop the flooding will exceed $10,000.00. They also claim defendants' conduct was fraudulent, deceitful, willful and intentional. The petition seeks the contract's rescission and restoration of all monies paid by them, including funds sufficient to discharge their liability on the note and mortgage used to pay the balance of the purchase price. ¶7 Defendants moved to dismiss any theory of liability or remedy not brought under or allowed by the RPCDA. PART III. ANALYSIS. ¶8 The RPCDA was passed in 1994, effective July 1, 1995 [1994 Okla Sess. Laws, Ch.198, § 10 (West)], and has since remained unchanged.10 We must decide if the Legislature intended the RPCDA to abrogate or supplant the common law actual fraud claim and the potential exemplary damage recovery pled in plaintiffs' suit. The question needs resolution because the RPCDA precludes a punitive damage award for its violation [§ 837(B) - as already noted], while in certain statutorily-defined circumstances such damages are recoverable in a common law actual fraud case. 23 O.S.Supp.2002, § 9.1.11 Under § 9.1 punitive damages are allowed (assuming the statutorily-designated level of proof is shown) where a defendant has acted: 1) in reckless disregard for the rights of others [§ 9.1(B)], 2) intentionally and with malice toward others [§ 9.1(C)], or 3) intentionally and with malice, while at the same time engaging in conduct life-threatening to humans [§ 9.1(D)]. There is no doubt a common law claim for actual fraud is a type of claim that holds the potential for properly falling under one or more of the specified provisions of § 9.1. See Z.D. Howard Company v. Cartwright, 1975 OK 89, 537 P.2d 345 (recognizing punitive damages may be recovered where a defendant has engaged in wanton, malicious and intentional fraudulent acts). ¶9 The common law remains in force in Oklahoma unless modified by our constitution, statutes, judicial decisions and the conditions and wants of the people.12 Brown v. Founders Bank and Trust Co., 1994 OK 130, 890 P.2d 855 , 863. A presumption favors preservation of common law rights [Satellite System, Inc. v. Birch Telecom of Oklahoma, Inc., 2002 OK 61, ¶ 7, 51 P.3d 585 , 588] and the common law may not be abrogated by mere implication; rather, its alteration must be clearly and plainly expressed by the Legislature. Greenberg v. Wolfberg, 1994 OK 147, 890 P.2d 895 , 900. Also, an ambiguous, doubtful or inconclusive legislative text is insufficient upon which to rest a presumption of an intent to abrogate. Tate v. Browning-Ferris, Inc., 1992 OK 72, 833 P.2d 1218 , 1225. Only by express language or by necessary implication may legislative abrogation be found. Roxana Petroleum Co. v. Cope, 1928 OK 442 , 269 P. 1084, 1085 Third Syllabus by the Court; see also National Trailer Convoy, Inc. v. Oklahoma Turnpike Authority, 1967 OK 15, 434 P.2d 238 , 244 (citing Roxana Petroleum Co. v. Cope for proposition that valuable right existing by virtue of common law will not be abrogated by a subsequent statute which does not expressly or by necessary implication destroy such previously existing right). Implied abrogation of a common law right will only be found where a statute is enacted which undertakes to cover the entire subject treated and is clearly/unmistakably designed as a substitute for the common law or where the common law and statutory law are so repugnant that both in reason may not stand or coexist. Nicholas v. Baldwin Piano Co., 71 Ind.App. 209, 123 N.E. 226 (1919). ¶10 We also note a distinction exists, in terms of an exclusivity resolution, between the situation where a court is considering the question of whether there has been legislative abrogation of an existing common law right and one where a statutory enactment appears to create both a new right and a new remedy. See Tate v. Browning-Ferris, Inc., supra, 833 P.2d at 1225-1226 and f.n.36. When an enactment imposes some new duty and fashions a remedy for the enforcement of a new right, the statutorily-designated remedy may be deemed the exclusive means by which a breach of the new right becomes redressible. Id. at f.n. 36; see Alfe v. New York Life Ins. Co., 1937 OK 243, 67 P.2d 947 ; Ewing v. Cadwell, 1925 OK 751, 247 P. 665; Lavery v. Brigance, 1925 OK 702, 242 P. 239. In the latter situation, of course, no common law right was preexistent and an exclusivity determination cannot be said in any normal sense to have abrogated or supplanted a right recognized by the common law. ¶11 The RPCDA applies to residential real property with not less than one nor more than two dwelling units [§ 832(8)], i.e. to single family residences and duplexes only. Also, it does not apply to the sale of newly constructed, previously unoccupied dwellings [§ 838(A)(9)] or to various other transfers of residences detailed in § 838(A)(1)-(8), e.g. transfers pursuant to court order, between co-owners, to or from government entities, or between spouses resulting from divorce or legal separation decrees. The RPCDA defines the word seller at § 832(2) as follows: 2. "Seller" means one or more persons who are attempting to transfer a possessory interest in property and who are either: a. represented by a real estate licensee; or b. not represented by a real estate licensee but receive a written request from the purchaser to deliver or cause to be delivered a disclaimer statement or disclosure statement as such terms are defined in [§ 833.] A "real estate licensee" for purposes of the RPCDA is "a person licensed under the Oklahoma Real Estate License Code[.]"13 Thus, the Act is also inapplicable if property owners market their house without using a real estate licensee and buyer - presumably unaware of the RPCDA or for other reason - fails to request a disclosure statement.14 The parties here do not dispute the RPCDA's applicability in that defendants were represented by a real estate licensee and a disclosure statement was provided to plaintiffs.15 ¶12 Defendants primarily rely on portions of § 837 of the RPCDA to support their abrogation argument, as well as the Act's title. In relevant part § 837 provides: A. The purchaser may recover in a civil action only in the event of any of the following: 1. The failure of the seller to provide to the purchaser a disclaimer statement or a disclosure statement and any amendment prior to acceptance of an offer to purchase; 2. The failure of the seller to disclose in the disclosure statement or any amendment provided to the purchaser a defect which was actually known to the seller prior to acceptance of an offer to purchase; or * * * B. The sole and exclusive civil remedy for a failure under subsection A of this section by the seller or the real estate licensee shall be an action for actual damages, including the cost of repairing the defect, suffered by the purchaser as a result of a defect existing in the property as of the date of acceptance by the seller of an offer to purchase and shall not include the remedy of exemplary damages. * * * F. This act applies to, regulates and determines rights, duties, obligations and remedies of the seller, the real estate licensee and the purchaser with respect to disclosure of defects in property. (Emphasis added.) The RPCDA's title provides: An Act relating to property; providing short title; defining terms; requiring seller of residential real property to deliver disclaimer or disclosure statement to purchaser; specifying contents of statements; requiring disclosure statement include certain notices; specifying time period for completing statements; requiring Oklahoma Real Estate Commission develop and amend forms by rule and make forms available to certain persons; requiring statements be delivered prior to acceptance of offer; requiring certain actions if statements are provided or defects become known after offer is accepted; requiring certain written acknowledgment; providing immunity from liability for stated defects and inaccurate information under certain conditions; allowing certain information to satisfy requirements of disclosure; stating duties of real estate licensees; limiting recovery in civil action to certain events; limiting remedy; stating statute of limitation; providing for certain costs and fees; limiting effect of noncompliance; stating application of act and exempting certain transfers; construing act; stating standard for notices and acknowledgments; providing for codification; and providing an effective date. (Emphasis added.) Okla.Stat.Ann. tit. 60, § 831, Historical and Statutory Notes (West 2003 pocket part). In addition § 835(A)-(B) arguably lends, at least, some support to an abrogation/supplantation intent. Section 835(A)-(B) provide in pertinent part: A. The seller shall not be liable for a defect or other condition in the property if the existence of the defect or other condition in the property was disclosed in the disclosure statement or any amendment delivered to the purchaser before acceptance of the offer to purchase. B. The seller shall not be liable for any erroneous, inaccurate or omitted information supplied to the purchaser as a disclosure required by this act if: 1. The error, inaccuracy or omission results from an approximation of information by the seller, provided: a. accurate information was unknown to the seller at the time the disclosure was made, b. the approximation was clearly identified as such and was reasonable and based on the best information available to the seller, and c. the approximation was not used to circumvent the disclosure requirements of this act; 2. The error, inaccuracy or omission was not within the actual knowledge of the seller[.] (Emphasis added.) ¶13 The Oklahoma Association of Realtors played an active role in development and passage of the RPCDA. Gatlin, Reforming Residential Real Estate Transactions: An Analysis of Oklahoma's Disclosure Statute, 22 Okla. City U. L. Rev. 735, 744 (1997). One of the main purposes of the Act appears to be placing a limitation on the doctrine of caveat emptor in real estate sales and expanding the situations in which a seller will be liable for structural or other covered defects. Id. at 745 and 748. ¶14 Under the common law, as a general rule, the doctrine of caveat emptor applies where a buyer inspects property prior to sale and silence on a seller's part does not constitute fraud where it relates to conditions that buyer, through the exercise of reasonable diligence, could discern upon the inspection. Gutelius v. Sisemore, ¶15 Under the RPCDA the seller appears liable even if a covered defect is patent (i.e. readily observable) if he/she has actual knowledge of the defect and either does not disclose it in the disclosure statement or does not provide buyer a disclosure statement. § 837(A)(1)-(2). ¶16 Of course, as the pertinent portions of the RPCDA's title and § 837 plainly set forth, another purpose of the Act is limiting the remedy available to a buyer and providing a certain amount of immunity to a seller. It is not clear, however, that the immunity granted and the concomitant limit of remedy has as its intent so broad a sweep as to engulf all previously existing common law claims. Neither the title's language nor that in § 837 unequivocally expresses such an intent. Instead, the language employed may just as easily be read to have been intended to merely limit the scope of recovery in a civil action brought under and sanctioned by the RPCDA itself, but not intended to reach a previously existing common law claim of actual fraud. ¶17 The elements of common law fraud are: 1) a false material misrepresentation, 2) made as a positive assertion which is either known to be false, or made recklessly without knowledge of the truth, 3) with the intention that it be acted upon, and 4) which is relied on by the other party to his/her own detriment. Gay v. Akin, ¶18 Examples of legislative language that unambiguously express an intent to abrogate or supplant a common law claim or remedy are found in the Oklahoma Workers' Compensation Act (WCA), "The liability prescribed ... shall be exclusive and in place of all other liability of the employer ... at common law or otherwise, for such injury ... ." (Emphasis added.) Title "The liability of the state or political subdivision under this act shall be exclusive and in place of all other liability of the state, a political subdivision or employee at common law or otherwise." (Emphasis added.) The RPCDA, unlike the WCA and GTCA, has no express language supplanting all common law liability, but does contain language one might say was intended to replace all previously recognized common law theories or remedies. However, the RPCDA's text is ambiguous and inconclusive as showing intent to abrogate/supplant all common law claims and remedies. Also, allowing a common law actual fraud claim and the RPCDA to coexist does not necessarily result in repugnant remedial structures. Thus, we ultimately decide a finding of legislative abrogation of such a claim is not warranted and a more cogent expression of legislative intent to abrogate/supplant all common law liability or remedies is required before abrogation/supplantation may be given our judicial imprimatur. PART IV. SUMMARY. ¶19 The trial judge dismissed any theory of liability and any remedy raised by plaintiffs' petition not arising under or permitted by the RPCDA. He did so on the basis the RPCDA abrogated or supplanted any such theory or remedy. In doing so the trial judge dismissed the common law actual fraud claim pled by plaintiffs. In that the RPCDA neither expressly nor by necessary implication can be found to have been legislatively intended to supplant or abrogate a common law actual fraud claim anchored on alleged misrepresentations concerning material defects in residential real property made in connection with its sale, or the remedies associated with such a claim, including the potential of a punitive damage award, the trial judge erred. ¶20 The trial court order is REVERSED. ¶21 WATT, C.J., OPALA, V.C.J., HODGES, LAVENDER, HARGRAVE, KAUGER and WINCHESTER, JJ., concur. ¶22 SUMMERS and BOUDREAU, JJ., dissent. FOOT