Court Opinion

ID: 2781949
Source: CourtListenerOpinion
Date Created: 2015-02-25 16:04:17.787759+00
Date Added: 2024-06-11T11:28:21.839959
License: Public Domain

MEMORANDUM DECISION
                                                                    Feb 25 2015, 9:55 am
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT
Jane Dall Wilson
Andrew M. McCoy
Faegre Baker Daniels LLP
Indianapolis, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Rachel Staggs,                                            February 25, 2015

Appellant-Defendant,                                      Court of Appeals Case No.
                                                          47A01-1406-PL-254
        v.                                                Appeal from the Lawrence Circuit
                                                          Court.
                                                          The Honorable Andrea K. McCord,
Corena Buxbaum,                                           Judge.
Appellee-Plaintiff                                        Cause No. 47C01-0912-PL-1522

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015    Page 1 of 9
[1]   Rachel Staggs appeals the trial court’s order ruling in favor of Corena

      Buxbaum’s complaint against Staggs for fraudulent misrepresentation and

      awarding damages of $94,798.32. Staggs raises the following arguments:

      (1) there is insufficient evidence supporting the trial court’s finding that Staggs’s

      representations regarding the condition of her residence’s septic system were

      fraudulent; (2) the trial court should reconsider its exemplary damages award in

      light of a recent Indiana Supreme Court opinion; and (3) the trial court

      erroneously calculated Buxbaum’s damages. We affirm with respect to the

      finding of fraudulent misrepresentation and remand with instructions to

      reconsider and recalculate the damages award.

                                                     Facts
[2]   In 1998, Staggs married Dwight Staggs and moved into his residence (the

      Property). In 2005, Dwight passed away and Staggs became the sole owner of

      the Property.

[3]   In 2008, Staggs decided to sell the Property. On the Seller’s Residential Real

      Estate Sales Disclosure Form, Staggs indicated that the septic field/bed was not

      defective, that she did not know the condition of the septic and holding

      tank/septic mound, and that there were no moisture or water problems in the

      basement.

[4]   Buxbaum was interested in purchasing the Property. She visited the house

      twice and did not notice any moisture problems in the basement. Buxbaum

      Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 2 of 9
      hired an inspector, who identified a radon problem on the Property but did not

      identify any other problems.

[5]   On August 27, 2008, Buxbaum purchased the Property from Staggs. Shortly

      thereafter, Buxbaum attempted to locate the septic system on the Property as

      she planned to build a garage and did not want to build above the septic tank.

      Eventually, Buxbaum learned that there was no septic system on the Property.

      Instead, sewage was expelled through a sewage pipe that traversed several

      hundred feet across the Property and terminated at the back of the Property.

[6]   In November 2008, Buxbaum learned that there was a leak in the basement.

      An employee of the company Buxbaum hired to remedy the moisture problems

      stated that he believed the basement had been leaking for years, as he observed

      water stains and noticed that the floor had been pushed up because of

      hydrostatic pressure.

[7]   On December 14, 2009, Buxbaum filed a complaint against Staggs, alleging a

      single count of fraudulent misrepresentation. A bench trial took place on May

      12 and December 12, 2013. On the first day of the trial, Staggs was represented

      by attorney Philip Chamberlain. Between the first and second days of trial, Mr.

      Chamberlain’s license to practice law was suspended, so Staggs appeared pro se

      at the second day of trial.

[8]   Over the course of the trial, the following evidence was submitted to the trial

      court:

      Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 3 of 9
           Staggs’s stepdaughter testified that she had grown up in the house on the
            Property. She knew that there was no septic system and stated that she
            was present for multiple conversations between her father and Staggs in
            which her father told Staggs that there was no septic system and that one
            would need to be installed before attempting to sell the Property.
           Staggs’s stepdaughter also testified that the basement was wet all the
            time, that Staggs was aware of that fact, and that at one point in time, the
            family needed to rent a machine to pump water out of the basement.
           Staggs’s stepson testified that he was also present for multiple
            conversations between his father and Staggs in which his father stated
            that the Property had no septic system. He also testified that he and
            Staggs had actually walked through the Property several times and seen
            the pipe out of which the sewage drained.
           Staggs’s stepson also testified that the basement frequently had two to
            four inches of standing water and that Staggs had moved things out of
            the basement to avoid water damage.
           In 2007, Scott Nordhoff of Hydra Stone viewed the Property with
            potential interest of buying it. At that time, he spoke with Staggs about
            water problems in the basement and Staggs told him that it was a good
            thing that he was in the waterproofing business. Nordhoff did not buy
            the Property but did end up waterproofing the basement in 2009 when
            Buxbaum hired Hydra Stone to solve the problem. Nordhoff testified
            that he believed the basement had been leaking for years.

      Buxbaum had to hire professionals to install a septic system, remedy the

      moisture issues in the basement, and waterproof the basement. The total cost

      to her of making these changes was $21,939.58.

[9]   On March 4, 2014, the trial court ruled in favor of Buxbaum. Among other

      things, the trial court found as follows:

              2.       . . . [Staggs] had actual knowledge of the defects in both the
                       basement and the septic system prior to filling out the

      Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 4 of 9
                        disclosure form and selling the home and made false statements
                        of important past and existing facts regarding the basement and
                        septic system.
               3.       The court finds that it was not an error, inaccuracy or omission
                        by [Staggs] that was not within her actual knowledge and
                        would keep her from liability.
                                                        ***
                                                    Damages
                                                        ***
               3.       . . . The court finds that there was the requisite specific intent to
                        make a finding of fraud for the purposes of awarding treble
                        damages. . . . The Court now awards [Buxbaum] her request for
                        treble damages.
       Appellant’s App. p. 14-15 (emphasis original). The trial court calculated

       damages as follows: (1) out-of-pocket costs of $21,939.58; (2) treble damages of

       $65,818.74; and (3) attorney fees of $7,040. The trial court added all of those

       amounts for a total damages award of $94,798.32. Staggs filed a motion to

       correct errors, which the trial court denied. Staggs now appeals.

                                    Discussion and Decision
[10]   Initially, we note that Buxbaum has not filed a brief in this appeal. When an

       appellee does not submit a brief, we do not undertake the burden of developing

       arguments for that party. Thurman v. Thurman, 777 N.E.2d 41, 42 (Ind. Ct.

       App. 2002). Instead, we apply a less stringent standard of review and may

       reverse if the appellant establishes prima facie error. Id.

       Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 5 of 9
                       I. Fraudulent Misrepresentation Claim
[11]   First, Staggs argues that the trial court erroneously found in favor of Buxbaum

       on her claim of fraudulent misrepresentation. In considering this claim, we will

       only set aside the trial court’s judgment if it is clearly erroneous, which occurs

       only when there is no evidence supporting the factual findings or the findings

       fail to support the judgment. Reum v. Mercer, 817 N.E.2d 1267, 1271 (Ind. Ct.

       App. 2004). We will neither reweigh the evidence nor assess witness credibility

       in our review of the trial court’s judgment, and will consider only the evidence

       supporting the judgment and the reasonable inferences that may be drawn

       therefrom. Id.

[12]   To succeed in a claim for fraudulent misrepresentation, a claimant must prove

       the following by a preponderance of the evidence:

               “(i) material misrepresentation of past or existing facts by the party to
               be charged (ii) which was false (iii) which was made with knowledge
               or reckless ignorance of the falseness (iv) was relied upon by the
               complaining party and (v) proximately caused the complaining
               party[’s] injury.”
       Reed v. Reid, 980 N.E.2d 277, 292 (Ind. 2012) (quoting Rice v. Strunk, 670
N.E.2d 1280, 1289 (Ind. 1996)). A seller of a home “may be held liable for

       fraudulent misrepresentations made on the Sales Disclosure Form if the buyer

       can prove the seller’s actual knowledge of the defect at the time the form is

       completed.” Hizer v. Holt, 937 N.E.2d 1, 7-8 (Ind. Ct. App. 2010).

[13]   Staggs complains that much of the evidence supporting the trial court’s

       judgment should not have been admitted for various reasons, including the

       Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 6 of 9
       prohibition against hearsay testimony. Staggs acknowledges, however, that no

       objections to this evidence were raised at trial. Consequently, any argument

       related to the admission of this evidence has been waived for purposes of

       appeal.1

[14]   As noted above, Staggs’s stepdaughter and stepson both testified that she had

       actual knowledge of the lack of a septic system and of the frequent problem of

       water in the basement. And Nordhoff testified that in 2007, Staggs had made a

       comment to him implying that she was well aware of the problem with water in

       the basement. This evidence supports the trial court’s judgment in favor of

       Buxbaum on her claim of fraudulent misrepresentation. Staggs’s remaining

       arguments to the contrary amount to a request that we reweigh the evidence

       and assess witness credibility, which we decline to do. We find no error in the

       trial court’s judgment in favor of Buxbaum.

                                          II. Damages Award
                                          A. Treble Damages
[15]   Staggs next argues that the trial court should reconsider its award of treble

       damages in light of our Supreme Court’s recent decision in Wysocki v. Johnson,

       18 N.E.3d 600 (Ind. 2014), which was handed down after the trial court issued

       its order in this case. In reviewing a trial court’s damages award, we will

       1
         We express no opinion as to whether Staggs has a claim for legal malpractice against the attorney who
       represented her on the first day of the bench trial.

       Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015          Page 7 of 9
       neither reweigh the evidence nor assess witness credibility, and will reverse only

       if it is not within the scope of the evidence before it. Hooker v. Norbu, 899
N.E.2d 655, 658 (Ind. Ct. App. 2008).

[16]   In this case, the trial court awarded damages pursuant to the Crime Victim

       Relief Act (CVRA). Ind. Code § 34-24-3-1 et seq. Under the CVRA, a claimant

       may be entitled to treble damages under certain circumstances. In Wysocki, our

       Supreme Court clarified the circumstances that may lead to exemplary damages

       under the CVRA. While the trial court still retains the discretion to award

       exemplary damages, it must first determine the level of the defendant’s

       culpability. The Court emphasized that “not every intentional tort is

       necessarily ‘so heinous as to require exemplary damages,’ or as to warrant

       quasi-criminal CVRA liability at all.” Id. at 606 (quoting Citizens Nat’l Bank of

       Evansville v. Johnson, 637 N.E.2d 191, 195 (Ind. Ct. App. 1994)). Instead, such

       liability is “a matter of the factfinder’s discretionary judgment of whether the

       defendant is criminally culpable.” Id. (emphasis original). A plaintiff is not

       required to prove liability beyond a reasonable doubt, but the factfinder should

       make an “assessment of criminality” before imposing “quasi-criminal liability”

       for exemplary damages. Id. at 606.

[17]   In this case, the trial court did not have the guidance of our Supreme Court

       when it made its ruling herein. Instead, it merely found that Buxbaum had

       proved “that there was the requisite specific intent to make a finding of fraud

       for the purposes of awarding treble damages.” Appellant’s App. p. 15. Given

       that an additional finding of criminal culpability is now required to support an

       Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 8 of 9
       award of treble damages, we remand this cause to the trial court to reconsider

       its damages award in light of Wysocki.

                                  B. Calculation of Damages
[18]   Finally, Staggs argues that the trial court erred in calculating damages. We

       agree. The trial court calculated Buxbaum’s out-of-pocket damages as

       $21,939.58, tripled those damages for a total of $65,818.74, and then added

       those two figures (plus attorney fees) together. In effect, therefore, the trial

       court actually quadrupled, rather than tripled, Buxbaum’s actual damages. This

       Court has made clear that it is inappropriate under the CVRA to award

       “compensatory damages . . . plus . . . treble damages[.]” Storm Damages

       Specialists of Am. v. Johnson, 984 N.E.2d 660, 666-67 (Ind. Ct. App. 2013)

       (emphasis original). Consequently, we remand to the trial court with

       instructions to recalculate Buxbaum’s damages. If the trial court determines

       that Buxbaum is still entitled to treble damages in light of Wysocki, the

       maximum amount of damages to which she is entitled is $72,858.74 (three

       times the actual damages of $21,939.58 plus $7,040 in attorney fees).

       The judgment of the trial court is affirmed in part and remanded for further

       proceedings consistent with this opinion.

       Vaidik, C.J., and Riley, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 47A01-1406-PL-254 | February 25, 2015   Page 9 of 9