Opinion ID: 2624019
Heading Depth: 3
Heading Rank: 3

Heading: The Addendum

Text: It is now undisputed that Marcy was incorrect in asserting in the document entitled Addendum to Residential Real Property Transfer Disclosure Statement that there were no repairs in the two years before the sale. Marcy admits on appeal that this assertion was incorrect because the septic tank's pipe and wiring had been repaired in the two years before the sale. The trial court found that a reasonable buyer in Diblik's position would not have attached importance to the prior repairs to the pipe and wiring, and consequently ruled that any misrepresentation with regard to them was immaterial. It also found that those repairs were unrelated to the actual problem with the systemthe tank's defective condition. Diblik argues that the trial court clearly erred in making these findings because, he asserts, Marcy is liable for his misstatement under the common law tort of misrepresentation. Diblik seems to contend that there are three theories under which Marcy is liable for his misrepresentation: fraud, negligence, and strict liability. With regard to his strict liability theory, Diblik argues that the addendum was not required by AS 34.70 and was not part of the statutory disclosure statement. He therefore argues that the statute does not apply and that Marcy is strictly liable at common law for his misrepresentation under Cousineau v. Walker. [12] Marcy responds that because the addendum was incorporated into the disclosure statement, under Amyot v. Luchini, [13] any innocent misrepresentation claim regarding information contained therein is precluded by AS 34.70.010 et seq. For the reasons discussed below, we do not need to decide whether the addendum in this case, or the particular misstatement about prior repairs, should be considered part of the disclosure statement for purposes of applying AS 34.70. Despite the addendum's undisputed inaccuracy, under any misrepresentation theory, Diblik can succeed only if Marcy's misstatement was material. In a common law tort action for misrepresentation there must be justifiable reliance on the false information supplied. [14] Because an immaterial representation cannot induce justifiable reliance, [15] Diblik had to prove that Marcy's misrepresentation with regard to the two prior repairs was material. The trial court found following trial that a reasonable buyer in Diblik's position would not have attached importance to the two prior repairs. The court found that even if Mr. Diblik had known that there was an electrical problem and a pipe problem prior to [the engineer's certification], when the engineer gave his certification a reasonable buyer would have said I'm good to go, I'll buy the house. [16] Diblik appears to contest this finding. He argues that [t]he trial court erred as a matter of fact and law because the court failed to appreciate that the contract was based on substantial and material misrepresentations about the history and condition of the property. Diblik argues that the false statement regarding prior repairs was material because had he known about the repairs he might have done more investigation and altered his negotiation strategy. Diblik also asserts that knowledge of prior repairs would lead a person to suspect the workmanship and competence of the person who installed the sewage system. The plaintiff in a misrepresentation case bears the burden of establishing by a preponderance of the evidence that the misrepresentation was material. [17] We have described a material fact as one `to which a reasonable man might be expected to attach importance in making his choice of action.' It is a fact which could reasonably be expected to influence someone's judgment or conduct concerning a transaction. [18] The trial court's finding is supported by the evidence and reasonable inferences permissibly drawn from the evidence. Diblik testified at trial that he could have more thoroughly investigated whether the septic system was working properly had he known of the prior repairs. Also, Diblik's agent testified that if he had known about the prior repairs he would have recommended that Diblik get his own engineer to check out what was going on before he went further with the transaction. But the trial court found that once the septic tank was certified by the engineer a reasonable buyer in Diblik's position would have attached no importance to the repairs to the pipe and wires. This finding establishes that the misstatement about prior repairs was immaterial. Diblik has not convinced us that this finding was clearly erroneous. Absent clear error as to this finding, we conclude that the trial court did not err in failing to hold Marcy liable for the misstatement in the addendum.