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Amyot v. Luchini (2/14/97), 932 P 2d 244
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Notice: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring
errors to the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, phone (907) 264-0607, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
RAYMOND AMYOT, )
) Supreme Court No. S-7170
Appellant, )
) Superior Court No.
v. ) 4FA-94-1419 CIV
)
ROBIN LUCHINI and SHARON ) O P I N I O N
LUCHINI, )
)
Appellees. ) [No. 4480 - February 14, 1997]
)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Jay Hodges, Judge.
Appearances: Kenneth D. Lougee and John
Tiemessen, Hughes, Thorsness, Gantz, Powell &
Brundin, Fairbanks, for Appellant. Michael A.
Brain, Law Offices of Royce & Brain,
Anchorage, for Appellees.
Before: Compton, Chief Justice, Matthews,
Eastaugh, and Fabe, Justices. [Rabinowitz,
Justice, not participating.]
COMPTON, Chief Justice.
I. INTRODUCTION
The superior court held that a state statute requiring
good faith disclosure of defects in residential real property
transfers precludes a buyer from recovering from a seller under the
theory of innocent misrepresentation. We affirm.
II. FACTS AND PROCEEDINGS
Robin Luchini and Sharon Luchini owned a house on Penrose
Lane in Fairbanks. In preparation for the sale of the house, the
Luchinis hired Kenneth Rydberg, a professional engineer, to inspect
it. In an August 1993 letter, Rydberg opined that "the foundation
is stable and the floor framing is satisfactory." He further
asserted that "[w]ith continued normal maintenance, the building
should easily have a remaining useful life of over 35 years."
Raymond Amyot and Shari Luster were interested in
purchasing a home in which they could install a swimming pool.
They visited the Luchinis' house in August 1993, found that it
would accommodate an indoor pool, and shortly thereafter began
negotiating to purchase the house.
During the negotiation period, the Luchinis gave Amyot a
copy of Rydberg's letter. Mr. Luchini completed and gave to Amyot
a "Residential Real Property Transfer Disclosure Statement." In
this disclosure statement Mr. Luchini indicated that, to the best
of his knowledge, there were no defects in the walls or foundation
of the house. The Luchinis also gave Amyot a "Property Information
Profile"which they had completed for the real estate listing
service. In it they stated that the foundation was in "good"
condition. Amyot knew that the foundation was constructed of all-
weather wood. The Luchinis also had informed him that sometime
previously the fireplace had fallen through the floor and into the
basement. (EN1)
In October Amyot and the Luchinis entered into an earnest
money receipt and purchase agreement; the purchase price was
$181,500. In December the parties closed the sale.
While preparing the basement for installation of the
pool, Amyot and Luster discovered that the foundation was
defective. Amyot hired Bryan Borjesson, a professional engineer,
to inspect the house, which he did on February 14, 1994. Borjesson
informed Amyot that the foundation had completely failed.
Soon thereafter Amyot demanded that the Luchinis rescind
the sale. They refused. Amyot obtained two repair estimates, both
for approximately $100,000, and began replacing the failed
foundation with a concrete foundation. (EN2)
Amyot sued the Luchinis for the cost of the repairs under
innocent, negligent, and intentional misrepresentation theories.
Following briefing by the parties, the superior court concluded
that innocent misrepresentation claims were precluded by
AS 34.70.010 et seq.
After a two-week trial of Amyot's other claims, the jury
returned a verdict in favor of the Luchinis. On the special
verdict form the jury answered "no"to these questions: (1) "Were
the defendants negligent in not disclosing the condition of 2142
Penrose Lane?"and (2) "Did the defendants misrepresent the
condition of 2142 Penrose Lane?" The superior court awarded the
Luchinis attorney's fees in the amount of $26,087.60, forty percent
of their attorney's fees.
Amyot appeals. He argues that the superior court erred
in (1) ruling that AS 34.70.010 - 34.70.200 precludes innocent
misrepresentation claims; (2) failing to grant his motion for
summary judgment on the innocent misrepresentation claim; (3)
failing to instruct the jury on innocent misrepresentation; (4)
instructing the jury "that misrepresentations made on prescribed
disclosure forms are not actionable unless such misrepresentations
were negligent or willful"; and (5) granting enhanced attorney's
fees to the Luchinis.
III. DISCUSSION
A. Standard of Review
Whether AS 34.70.010 - 34.70.200 preclude innocent
misrepresentation claims is a question of law to which the court
applies its independent judgment. See Odum v. University of
Alaska, Anchorage, 845 P.2d 432, 434 (Alaska 1993). "On questions
of law, this court is not bound by the lower court's
decision. . . . [Its] duty is to adopt the rule of law that is
most persuasive in light of precedent, reason, and policy." Guin
v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
B. Innocent Misrepresentation in Alaska
We first recognized the claim of innocent
misrepresentation in Cousineau v. Walker, 613 P.2d 608 (Alaska
1980). We held that false statements as to the road frontage of
the land and its gravel content made by a seller in a real estate
listing could provide the basis for rescission of the sales
contract, even if the statements were innocently made, and even if
the buyer was negligent in relying on them. Id. at 616.
In Bevins v. Ballard, 655 P.2d 757, 762-63 (Alaska 1982),
we extended innocent misrepresentation liability to real estate
brokers, and reaffirmed Cousineau:
We have recognized a cause of action
against the owner of realty who innocently
misrepresents its condition to the purchaser.
Cousineau v. Walker, 613 P.2d 608 (Alaska
1980). . . . In so doing, we held that an
owner guilty of even innocent misrepresenta-
tion could not hide behind the doctrine of
caveat emptor. Id. at 614-16. This is so
because owners are presumed to know the char-
acter and attributes of the land conveyed and
buyers are consequently entitled to rely on
the seller's reasonable representations.
Bevins, 655 P.2d at 762 (emphasis omitted). (EN3)
C. Effect of AS 34.70 on Innocent Misrepresentation Claims
Effective July 1, 1993, AS 34.70 governs disclosures in
transfers of interests in residential real property. It provides:
Sec. 34.70.010. Disclosures in residential
real property transfers. Before the
transferee of an interest in residential real
property makes a written offer, the transferor
shall deliver by mail or in person a completed
written disclosure statement in the form
established under AS 34.70.050. . . .
. . . .
Sec. 34.70.030. Liability after disclosure.
A transferor is not liable for a defect or
other condition in the real property or the
real property interest being transferred if
the transferor discloses the existence of the
defect or condition in the disclosure
statement.
. . . .
Sec. 34.70.050. Form of disclosure statement.
The Real Estate Commission established under
AS 08.88.011 shall establish the form of the
disclosure statement required by AS 34.70.010.
Sec. 34.70.060. Good faith. A person who
makes a disclosure or performs an act under
this chapter shall do so in good faith.
Sec. 34.70.070. Effect on other required
disclosures. The requirements of this chapter
do not affect other obligations for disclosure
required by law.
. . . .
Sec. 34.70.090. Failure to comply. (a) A
transfer that is subject to this chapter is
not invalidated solely because a person fails
to comply with this chapter.
(b) A person who negligently violates
this chapter or fails to perform a duty
required by this chapter is liable to the
transferee for the amount of actual damages
suffered by the transferee as a result of the
violation or failure.
(c) A person who wilfully violates this
chapter or fails to perform a duty required by
this chapter is liable to the transferee for
up to three times the actual damages suffered
by the transferee as a result of the violation
or failure.
. . . .
Amyot argues that the claim of innocent misrepresentation
recognized in Cousineau and Bevins survived the enactment of
AS 34.70. Thus inaccurate representations in the disclosure
statement, even if made in good faith, are actionable. We
disagree.
Prior to the enactment of AS 34.70, sellers of real
property were not required to make any representations about the
property. However, sellers were strictly liable for those
representations they made. See Cousineau, 613 P.2d at 616. Under
the disclosure statute a seller is now required to make
representations about a wide range of the property's features and
characteristics. We conclude that the legislature intended to
offset the seller's increased disclosure responsibilities by the
lower liability standard for misrepresentations. (EN4)
Several factors point to this conclusion. First,
AS 34.70.090(b) subjects to liability "[a] person who negligently
violates this chapter or fails to perform a duty required by this
chapter[.]"AS 34.70.090(b) (emphasis added). By explicitly
adopting a negligence standard of liability in this subsection, the
legislature has implicitly rejected liability based on lesser
gradations of fault. See Sprague v. State, 590 P.2d 410, 415
(Alaska 1979) (in a statutory scheme the exclusion of absent
remedies is to be inferred from the inclusion of specified
remedies).
Similarly, the requirement that sellers make disclosures
"in good faith,"AS 34.70.060, indicates that the legislature
intended no liability to attach for an inaccurate statement on the
disclosure form if made in good faith. By its plain language, the
provision establishes the standard of conduct to which those making
disclosures must conform. The legislature did not include a
definition of "good faith"in chapter 70. See AS 34.70.200. In
the chapter dealing with residential landlord and tenant relations,
the legislature has defined good faith as "honesty in fact in the
conduct of the transaction concerned." AS 34.03.360(5). In the
adverse possession context, we have defined good faith as "an
honest and reasonable belief." Ault v. State, 688 P.2d 951, 956
(Alaska 1984). Whatever the precise definition, it is clear that
innocent misrepresentations do not violate the good faith standard.
By definition, the only standard of liability such representations
can offend is strict liability.
Consistent with the good faith standard of AS 34.70.060,
the disclosure form established by the Real Estate Commission, see
AS 34.70.050, seeks responses made "[t]o the best of [the seller's]
knowledge." Like "good faith,"this language is not consistent
with a strict liability standard for innocent misrepresentations.
The superior court correctly concluded that AS 34.70
precludes claims of innocent misrepresentation rm. To be
actionable, misrepresentations in the disclosure form must at least
be negligently made.
D. Other Issues
Based on our conclusion that AS 34.70 precludes a claim
of innocent misrepresentation, Amyot's arguments that the superior
court should have granted him summary judgment or instructed the
jury on his innocent misrepresentation claims must fail.
Amyot amended his points on appeal to include the issue
of whether the superior court's attorney's fees award was error.
He also listed it among the "Issues Presented For Review"in his
opening brief. Nevertheless, Amyot failed to discuss the issue in
his opening brief. The appellees noted this failure in their
brief. In his reply brief Amyot offered neither explanation for
his failure nor argument on the attorney's fees issue. He has
waived the issue. See Adamson v. University of Alaska, 819 P.2d
886, 889 n.3 (Alaska 1991).
IV. CONCLUSION
The judgment of the superior court is AFFIRMED.
ENDNOTES:
1. Amyot visited the house on at least three occasions. He also
had Craig Robinson, a contractor he previously had employed,
inspect the house. Prior to purchase, Amyot was aware of a number
of defects in the house including unevenness in the floor in the
bedroom over the garage; "sponginess"in the floor in the sunroom;
"irregularities"in the east wall of the foundation and the garage;
and cracked beams in the garage.
2. At the Luchinis' request, Rydberg, the engineer who earlier
had concluded that the foundation was satisfactory, drafted a
repair design and estimate. Rydberg's repair estimate was for
approximately $20,000. Amyot decided against using a Rydberg
design.
3. Bevins involved a misrepresentation as to the adequacy of a
well serving an unfinished residence.
4. The actual result in Cousineau would be unchanged even if the
statute had been in existence at the time of the sale, for the sale
was not residential property and, in addition, road frontage and
gravel content are not conditions covered in the disclosure
statement mandated by AS 34.70.
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