Court Opinion

ID: 3007607
Source: CourtListenerOpinion
Date Created: 2015-10-06 22:06:38.570775+00
Date Added: 2024-06-11T09:33:00.592622
License: Public Domain

October 6 2015
                                            DA 15-0234

              IN THE SUPREME COURT OF THE STATE OF MONTANA                                  Case Number: DA 15-0234

                                            2015 MT 288

COREY WATTERUD, LISA WATTERUD, Personally
and as parent and general guardian of J.F., E.W.,
and KENDALL WATTERUD,

               Plaintiffs and Appellants,

         v.

JOSHUA GILBRAITH, JANET GILBRAITH,
AMBER UHREN, HOMEFRONT PROPERTY
INSPECTIONS, LLC and STEVE SMITH,

              Defendants and Appellees.

APPEAL FROM:           District Court of the Thirteenth Judicial District,
                       In and For the County of Yellowstone, Cause No. DV 14-0850
                       Honorable Ingrid G. Gustafson, Presiding Judge

COUNSEL OF RECORD:

                For Appellants:

                       Tucker Gannett, Donald L. Harris, Harris & Associates, PLLC, Billings,
                       Montana

                For Appellees:

                       Richard E. Gillespie, Keller, Reynolds, Drake, Johnson & Gillespie, P.C.,
                       Helena, Montana

                                                    Submitted on Briefs: August 26, 2015
                                                               Decided: October 6, 2015

Filed:

                       __________________________________________
                                         Clerk
Justice Patricia Cotter delivered the Opinion of the Court.

¶1     Joshua and Janet Gilbraith hired Amber Uhren as their real estate agent to sell

their home in Billings. Two days later, the Gilbraiths entered into a buy-sell agreement

with potential buyers Corey and Lisa Watterud. The parties signed several property

disclosure statements in which the Gilbraiths disclosed to the Watteruds that the

basement of the property had flooded in 2005 but had been redone in 2008, and that no

further problems had arisen. The Gilbraiths also disclosed that the home had not been

tested or treated for mold. The Gilbraiths did not mention that they had performed the

flood remediation work themselves. The disclosures affirmatively stated that seller and

seller’s agent made no representations or warranties about the presence or absence of

mold, and both parties agreed it was the responsibility of the buyers to obtain a mold

inspection by a qualified inspector. The Watteruds obtained a home inspection, but chose

not to obtain a mold inspection.

¶2     After the sale of the property closed and the Watteruds moved into the home, they

became ill and discovered mold growing in the basement. The Watteruds sued the

Gilbraiths, Amber Uhren, the home inspection company, and the home inspector for

negligence. The Gilbraiths, the home inspection company, and the home inspector were

eventually dismissed from the action.       The Watteruds maintained that Amber was

obligated to discover adverse material facts about the property—including the existence

of mold in the basement and details about the remediation efforts undertaken by the

Gilbraiths—and to disclose those facts to the Watteruds. Amber filed a motion for

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summary judgment, arguing that the Watteruds’ negligence claim was premised upon

inspection and discovery duties that do not exist. The District Court granted Amber’s

motion for summary judgment. We affirm.

                                          ISSUE

¶3     We restate the issue on appeal as follows:

¶4     Did the District Court err in granting summary judgment in favor of Amber Uhren

because the Watteruds’ negligence complaint against her was premised upon alleged

duties that do not exist?

                  FACTUAL AND PROCEDURAL BACKGROUND

¶5     On September 3, 2013, Joshua and Janet Gilbraith retained Amber Uhren as their

real estate agent to sell their home at 4109 Murphy Avenue in Billings. That day the

parties signed a “Relationships/Consents in Real Estate Transactions” agreement and a

“Residential Listing Contract.” In the latter, the Gilbraiths disclosed that the property

had not been tested for mold and had not received mitigation or treatment for mold.

¶6     On September 5, 2013, Corey and Lisa Watterud entered into a “Buy-Sell

Agreement” with the Gilbraiths, and both couples signed an “Owner’s Property

Disclosure Statement” and a “Mold Disclosure” form. The property disclosure statement

required the Gilbraiths to describe any adverse material facts about various features of the

property. Under the heading “Basement: (Leakage, Flooding, Moisture, or Evidence of

Water, and Fuel Tanks),” the Gilbraiths wrote “back in 2005 issue has been handled &

taken care of.” The Gilbraiths also checked the box next to “Flooding, draining, grading

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problems, or French drains,” to indicate that those items occurred or existed on the

property. On additional lines they wrote, “water damage to carpet and walls sheetrock

whole basement redone back in 2008 been fine since.” The Gilbraiths had undertaken to

repair the water damage themselves instead of hiring professionals, although this fact was

not included in the disclosures.

¶7     Above the sellers’ signatures on the mold disclosure form is the sentence: “[t]he

seller, landlord, seller’s agent, buyer’s agent, or property manager cannot and does not

represent or warrant the absence of mold. It is the buyer’s or tenant’s obligation to

determine whether a mold problem is present. To do so, the buyer or tenant should hire a

qualified inspector . . . .” And above the buyers’ signatures on the mold disclosure, the

form reads “[t]he undersigned Buyer/Tenant agrees that it is their responsibility to hire a

qualified inspector to determine if a significant mold problem exists or does not exist on

the property.” The Watteruds requested various inspections in the buy-sell agreement,

including a home inspection, a covenant and easement inspection, and a radon inspection,

but they did not request a mold inspection.

¶8     Steve Smith of Homefront Property Inspections, LLC inspected the property. As a

result of the inspection, the Watteruds requested and the Gilbraiths agreed to make

several repairs, including covering an exposed wire, fixing a broken garage door opener,

and painting exposed wood over the basement door. The Watteruds did not request any

repairs related to flood damage, restoration, or mold.

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¶9     The sale of the property closed on October 16, 2013. After the sale had closed and

the Watteruds had moved into the home, the Watteruds became ill and discovered mold

growing in the basement of the property. The Watteruds sued the Gilbraiths, Amber

Uhren, Homefront Property Inspections, LLC, and Steve Smith for negligence and

negligent misrepresentation. The Gilbraiths, Homefront Property Inspections, LLC, and

Steve Smith were later dismissed from the action. Amber Uhren attests that she had no

personal knowledge about the existence of mold on the property or any repair or

treatment efforts undertaken to eradicate the mold. Amber filed a motion for summary

judgment, arguing that she had no duty to the Watteruds to discover adverse material

facts about the property. The District Court granted Uhren’s motion, and the Watteruds

filed a timely appeal.

                              STANDARD OF REVIEW

¶10 We review summary judgment rulings de novo. Estate of Willson v. Addison,

2011 MT 179, ¶ 11, 361 Mont. 269, 258 P.3d 410 (citing Goettel v. Estate of Ballard,

2010 MT 140, ¶ 10, 356 Mont. 527, 234 P.3d 99). Applying the same M. R. Civ. P. 56

criteria as the district court, we determine whether the moving party has established both

the absence of any genuine issues of material fact and entitlement to judgment as a

matter of law. Estate of Willson, ¶ 11 (citing Goettel, ¶ 10).

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                                       DISCUSSION

¶11 Did the District Court err in granting summary judgment in favor of Amber Uhren
because the Watteruds’ negligence complaint against her was premised upon alleged
duties that do not exist?

¶12    The Watteruds argued to the District Court and now on appeal that as the sellers’

agent, Amber Uhren owed a duty of care to discover and disclose to them adverse

material facts about the property. The Watteruds cite the REALTOR® Code of Ethics

and testimony from another realtor in an attempt to establish a common law duty of a

seller’s agent to discover adverse material facts about a property and disclose those facts

to the buyer. However, the Montana Code abolished all common law duties:

       [t]he provisions of this chapter and the duties described in this section
       govern the relationships between brokers or salespersons and buyers or
       sellers and are intended to replace the duties of agents as provided
       elsewhere in state law and replace the common law as applied to these
       relationships. . . . The duties of a broker or salesperson vary depending
       upon the relationship with a party to a real estate transaction and are as
       provided in this section.

Section 37-51-313(1), MCA.

¶13    The duties a seller’s agent owes a buyer are now codified:

       [a] seller agent is obligated to the buyer to:

       (a) disclose to a buyer or the buyer agent any adverse material facts that
       concern the property and that are known to the seller agent, except that the
       seller agent is not required to inspect the property or verify any statements
       made by the seller; [and]

       (b) disclose to a buyer or the buyer agent when the seller agent has no
       personal knowledge of the veracity of information regarding adverse
       material facts that concern the property . . . .

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Section 37-51-313(3), MCA. Nevertheless, the Watteruds contend that the principles of

the common law were incorporated into administrative regulations and case law and

eventually into the current statute as § 37-51-313(13).1               Subsection (13) says,

“[c]onsistent with the licensee’s duties as . . . a seller agent, . . . a licensee shall endeavor

to ascertain all pertinent facts concerning each property in any transaction in which the

licensee acts so that the licensee may fulfill the obligation to avoid error, exaggeration,

misrepresentation, or concealment of pertinent facts.” Section 37-51-313(13), MCA.

According to the Watteruds, subsection (13) imposes an affirmative duty to discover

adverse material facts and subsection (3) imposes a duty to disclose those facts to the

buyer.     This is the first time we have been asked to interpret these subsections in

conjunction.

    ¶14 In interpreting these subsections, we are guided by canons of statutory

    construction:

          [i]n the construction of a statute, the office of the judge is simply to
          ascertain and declare what is in terms or in substance contained therein, not
          to insert what has been omitted or to omit what has been inserted. Where
          there are several provisions or particulars, such a construction is, if
          possible, to be adopted as will give effect to all.

Section 1-2-101, MCA. Also, “[w]ords and phrases used in the statutes of Montana are

construed according to the context . . . .” Section 1-2-106, MCA. In this case, we must

give effect to subsections (1), (3), and (13) together. Subsection (1) did away with the

common law duties of realtors and replaced them with codified duties. Among those

1
 The parties discuss § 37-51-313(12) MCA, in their briefs, but the statute was amended in 2015,
and the former §§ (10) through (12) were redesignated as (11) through (13).
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codified duties are those listed in subsection (3), including the duty to disclose to a buyer

any adverse material facts about the property that are known to the seller’s agent. This

duty is followed by an important limitation: the seller’s agent is not required to inspect

the property or verify statements made by the seller. However, a seller’s agent must

disclose when he or she has no personal knowledge of the veracity of statements about

the property made by the seller. Consistent with these duties to disclose, but not in

addition to or instead of these duties, a seller’s agent must “endeavor to ascertain all

pertinent facts” concerning the property so as to avoid “error, exaggeration,

misrepresentation, or concealment of pertinent facts.” Section 37-51-313(13), MCA.

¶15 Read in the context of the preceding subsections, the duty to “endeavor to

ascertain all pertinent facts” is not a reinstatement of common law duties or a

contradiction of the limitation in subsection (3)(a) that a seller’s agent need not inspect

the property or verify the seller’s statements. Rather, it is a duty to acquire enough

information about any adverse material facts concerning the property to fulfill the

agent’s disclosure obligation under subsection (3)(a). According to the statute then, a

seller’s agent need not inspect the property herself and need not verify the seller’s

statements about the property, but she must disclose any adverse material facts about

which she is aware (and she must ascertain enough about these facts to avoid error,

exaggeration, misrepresentation, or concealment), and she must inform a buyer when

she has no personal knowledge of the veracity of the seller’s statements.

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¶16 In this case, Amber Uhren, as the sellers’ agent, had a duty to disclose to the

Watteruds any adverse material facts concerning the property about which she was

aware and a duty to disclose when she had no personal knowledge of the veracity of the

Gilbraiths’ statements. We analyze this two-part duty as it applies to the mold problem

before us. First, Amber has sworn under oath that she was not aware of any adverse

material facts concerning mold in the home, nor have the Watteruds claimed that she

was. Turning to her second duty, this absence of knowledge regarding the presence of

mold was disclosed to the Watteruds in the mold disclosure form which stated that the

seller’s agent “cannot and does not represent or warrant the absence of mold” and

advised that it was the buyer’s obligation to determine whether mold was present.

Amber thus squarely complied with her statutory duty. Amber had no duty to inspect

the property, to independently discover adverse material facts about the property, or to

verify the Gilbraiths’ statements.

¶17 The existence of a legal duty and the scope of that duty are questions of law.

Willden v. Neumann, 2008 MT 236, ¶ 14, 344 Mont. 407, 189 P.3d 610 (citing Webb v.

T.D., 287 Mont. 68, 72, 951 P.2d 1008, 1011 (1997)). If a defendant owes no duty to a

plaintiff, the defendant is entitled to judgment as a matter of law. Willden, ¶ 14. The

District Court in this case correctly determined that the scope of Amber’s duty to the

Watteruds is prescribed by § 37-51-313, MCA, and that Amber did not owe the

Watteruds a duty to inspect the property or to discover any adverse material facts about

it, including the existence of mold or the fact that the Gilbraiths attempted to remediate

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the water damage in the basement themselves instead of hiring a professional. Amber is

entitled to judgment as a matter of law on the question of duty because the Watteruds’

negligence claim against her is premised upon inspection and discovery duties that do

not exist under the statute setting forth the duties of a seller’s agent to a buyer.

                                      CONCLUSION

¶18   For the foregoing reasons, we affirm the District Court’s October 15, 2014 Order

granting Uhren’s motion for summary judgment.

                                                   /S/ PATRICIA COTTER

We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ JAMES JEREMIAH SHEA
/S/ MICHAEL E WHEAT
/S/ LAURIE McKINNON

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