Opinion ID: 2144415
Heading Depth: 1
Heading Rank: 3

Heading: Did James Powers carry his burden of proving fraud and was it proper for the trial court to deny the defendants' motion for a directed verdict?

Text: Martinson contends that it was error for the trial court to deny his motion for directed verdict. The motion was made at the close of the plaintiff's case and again at the close of the defendants' case on the grounds that the plaintiff had failed to meet his burden of proof and had not produced sufficient evidence to warrant sending the case to the jury. Martinson argues that Powers had to prove the existence of fraud with clear and convincing evidence. He asserts that Powers failed to meet that burden of proof and had not produced sufficient evidence to warrant sending the case to the jury. Martinson's motion for directed verdict was based on the following facts: ... Mr. Powers was aware of the delamination of the siding, even before he entered into purchase money agreement; that he hired his own appraiser to advise him as to the condition and value of the premises; that his appraiser pointed out various water problems as well as the siding deterioration; that GM Enterprises did not own the 12-plex; that Mr. Powers and/or his agents had complete and total access to every portion of the building including those tenants in whose apartments the problems supposedly existed; and further, that Plaintiff never attempted to produce any evidence suggesting that Mr. Martinson was engaged in a course of deception with Mr. Powers. In Frank v. Daimler-Benz, A. G., Stuttgart, 226 N.W.2d 143, 147 (N.D.1975), we said that the granting of a motion for a directed verdict should be exceptional, rather than common .... In paragraph 9 of the syllabus we said: A motion for directed verdict is to be granted only when the moving party is entitled to judgment as a matter of law, upon considering the evidence in a light most favorable to the party against whom the motion is made. It should be granted only when, without weighing the credibility of witnesses, only one reasonable conclusion can be reached. Id. at 144-145. Actual fraud is defined in Section 9-03-08, N.D.C.C., as a suggestion, assertion, suppression, or promise made by a party to the contract, ..., with intent to deceive another party thereto or to induce him to enter into the contract. [2] Constructive fraud consists: 1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him; or 2. In any such act or omission as the law specially declares to be fraudulent without respect to actual fraud. § 9-03-09(1) and (2), N.D. C.C. When the evidence in this case is viewed in a light most favorable to Powers, the party against whom the motion was made, we believe that the trial court did not err in denying the motion for a directed verdict. It cannot be said when viewing the testimony presented to the jury that the only reasonable conclusion that could be drawn therefrom is that Powers was not defrauded. The testimony disclosed that Martinson was aware of the problems with the building. He may have made some efforts to alleviate the problems but he was quite unsuccessful. There is much testimony which indicates that there were many latent defects in the building. Although Powers had an appraiser inspect the building, the testimony indicates that he could not have discovered many of the latent defects. The walls of the building were in some instances saturated to the extent that water collected inside the globes of light fixtures. Water accumulated in the walls to the extent that some became discolored around the windows. Martinson assured Powers that these water problems had been taken care of by cementing around three sides of the building. There is testimony to the effect that similar water problems persisted after the sale. The caretaker testified that the sheetrock on the walls was very mushy ... like a sponge. He said that he lightly placed his hand on the wall and it went through the sheetrock. Through the hole in the wall he noticed water running down the inside of the outside wall of the apartment building. The testimony indicates that the water problems were finally solved by Builders Management, Inc. (BMI), a firm hired by Powers. An employee of BMI, Gary Kraemer, testified that he traced the water problems to several defects. He testified that he discovered the facia board at the edge of the roof was too high, creating a valley on the edge of the roof where water would leak in and run down the inside of the walls. The shingles in this valley cracked so water could get through them. Kraemer testified that the facia board should have been installed flush with or below the roof board. He testified that this defect contributed to ruined sheetrock and carpeting. Kraemer also testified that the staples in the roof shingles were not set deep enough, and they had worked through the tops of the tabs on the shingles causing them to leak. Apparently, someone tried to repair the defect by caulking over the top of some of the shingles. Kraemer testified that he found evidence that water had been getting in through the shingles. Kraemer testified that the windows in the building did not have drip caps to prevent water from entering them. He testified that after he installed drip caps, which required some residing, the windows stopped leaking. Kraemer discovered a hole in a drain pipe in one of the walls. He found it because there was a wet spot on the wall even at times when there had been no rain. He testified that the hole was caused by a nail which was apparently pounded through the drain pipe when a kitchen cabinet was being installed. Kraemer testified that a roof jack installed to cover a sewer vent stack was improperly installed so water could get in near it. After he repaired it, it stopped leaking. He testified that the leaking roof jack contributed to the deterioration of the wallboard and carpeting. Kraemer testified that when he was called back to the building in early winter, he discovered there was not sufficient ventilation in the attic, therefore causing a frost buildup, and when the frost melted, water ran inside the building causing some of the problems in some of the ceilings in the building. He also discovered that vents from the upper apartment were vented into the attic. Besides the water problems, there was testimony that the hot water heater was faulty. James Hunkins, an appliance repairman and serviceman in electric maintenance for Wahpeton Electric testified that he discovered that the lower element of the water heater was burned out and that it could not be fixed. In helping to replace the water heater, he discovered that it had been improperly wired. Wayne Nordick, an electrician for Wahpeton Electric, installed the new water heater. He testified that the fuse box handling the old water heater was just literally burnt up, because the wiring supplying it was undersized and overfused. He had to put in a new fuse box and run a new feeder into it. Powers hired a general contractor to re-side the north and south ends of the apartment building. The testimony indicates that the work was done because the T-111 siding was installed with staples that had broken the outside veneer allowing water to get in between the plys. The contractor testified that normally this type of siding should last the life of the building. Additionally, it was undisputed that Powers had to install smoke detectors to satisfy a city ordinance which was in effect when the building was built and should have been installed when the building was originally erected. Because most of the defects in the building were latent, neither the plaintiff nor his appraisers were able to detect them. Although Powers' appraiser mentioned that there was evidence of delamination of the siding and concern for leakage in a lower apartment, the testimony also indicates that Martinson had told Powers that the water seepage problem had been corrected by pouring concrete around the foundation. Furthermore, the appraiser testified that he didn't inspect the roof, crawl into the attic, inspect the hot water heater, or open up the walls. He did assume building codes had been complied with. The Metropolitan Federal Savings and Loan Association also did an appraisal. Their appraiser testified that he was not told about any shortcomings in the building. He testified that he didn't go up on the roof or into the attic, didn't inspect the hot water heater or examine windows for any signs of leakage. He said he saw no evidence of water leakage on the upper floors. He testified that he depreciated the building at 25 percent because of housekeeping problems and an unattractive back entry-way, but that the percentage would have been greater had he been aware of the problems with the roof. One of the attendants, Izetta Reilley Rummel, didn't tell Powers about the water collecting in her light fixtures because she was not asked. She did testify, however, that her apartment was repainted [i]n the end of September just as Jim [Powers] bought the building. The existence of fraud is ordinarily a question of fact. Watkins Products, Inc. v. Stadel, 214 N.W.2d 368, 373 (N.D.1974). Viewing the testimony in the light most favorable to Powers, we conclude that the trial court did not err in submitting this case to the jury for its determination of questions of fact in light of the law relative to fraud.