may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Colleen Crews, et al.,
Laura Jordan, et al.,
Filed August 19, 1997
Ramsey County District Court
File No. C6945788
Ernest F. Peake, Karen J. Bjorkman, Petersen, Tews & Squires P.A., 4800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402-2208 (for respondents)
Considered and decided by Schumacher, Presiding Judge, Kalitowski, Judge, and Holtan, Judge.[*]
Colleen and James Crews appeal from the district court's judgment in favor of respondents Laura and Scott Jordan in a fraud action where the Crewses sought rescission of the contract to purchase the Jordans' home. The Crewses argue they proved fraud by a preponderance of the evidence. They further allege the district court erroneously denied their motion to amend the complaint and their posttrial motions and was improperly biased against them. We affirm.
After the Crewses moved into the home in late January 1994, they began experiencing water problems. They sued the Jordans for damages, alleging intentional misrepresentation, negligent misrepresentation, and breach of warranty, and, in the alternative, for rescission of the purchase agreement. The district court granted summary judgment in favor of the Jordans, and the Crewses appealed to this court. We remanded the case to the district court on the Crewses' rescission claim, holding they were entitled to a trial on whether the Jordans fraudulently misrepresented: (1) the condition of the roof; (2) that the basement did not leak; (3) that the walls were new; and (4) that there was a water problem in the kitchen.
The district court ruled that the Crewses failed to prove their claims at trial, and denied their posttrial motions. This appeal followed.
Fraudulent misrepresentation consists of the following elements: (1) a false representation of a material fact that is susceptible of knowledge; (2) made with knowledge of the falsity or without knowing it to be false or true; (3) an intent to induce an act in reliance on the false representation; and (4) actual and justifiable reliance on the false representation. Berryman v. Riegert, 286 Minn. 270, 275, 175 N.W.2d 438, 442 (1970). An omission of a material fact constitutes fraudulent misrepresentation if "one party has special access to the facts and the other does not, or omitting the fact in question is misleading." Sit v. T & M Properties, 408 N.W.2d 182, 186 (Minn. App. 1987) (citing Klein v. First Edina Nat'l Bank, 293 Minn. 418, 421, 196 N.W.2d 619, 622 (1972)). A plaintiff must prove the elements of fraud by a preponderance of the evidence. Dowden v. Kanuch, 158 Minn. 75, 76, 196 N.W. 819, 819 (1924).
The Crewses allege the Jordans fraudulently misrepresented the condition of the roof in the Real Estate Transfer Disclosure Statement (RETDS). In that document, the Jordans stated they "replaced" the roof in 1988 and experienced "no problem since." The Crewses claim this was a misrepresentation because the Jordans added a second layer of shingles to the roof instead of performing a "tear-off" of existing shingles and repairing underlying roofing materials. They also claim the Jordans' repairs did not effectively prevent water from leaking into the home. Their construction expert testified at trial he believed a problem with the roof caused a leak in the basement.
The record supports the district court's finding that the Crewses failed to prove by a preponderance of the evidence the first element of fraud, that the Jordans falsely represented the roof's condition. Several witnesses familiar with the roofing industry testified that adding a second layer of shingles is an appropriate method of repairing a roof with one existing layer of shingles, and the term "replacement" is acceptable terminology for this practice. The Jordans testified they did not experience leaks after repairing the roof. Their civil engineering expert testified the roof likely was not the source of water in the home's basement.
The Crewses allege the Jordans fraudulently misrepresented in the RETDS and in the purchase agreement that the basement of the home did not leak.
The district court concluded the Crewses failed to prove by a preponderance of the evidence that the Jordans falsely represented the condition of the basement. The Jordans testified they observed no water leaking into the basement while they lived in the home. Others, who spent considerable time in the basement during the Jordans' tenure there testified they observed no leaking. Although some rotting wood in the area indicated a long-term leak, the Jordans' expert testified the insulation, acting like a sponge, likely masked any signs of water. The district court found the Jordans did not know water was leaking into the basement, rendering their representation truthful.
The Crewses argue the district court erred in holding the Jordans could not be liable for misrepresentation because they lacked knowledge of the leak. They cite Berryman, where the Minnesota Supreme Court held the law does not require a plaintiff in a fraud action to prove a defendant's actual knowledge of a representation's falsity. 286 Minn. at 275-276, 175 N.W.2d at 442.
The district court's finding is consistent with Berryman. The court's decision did not hinge on whether the Jordans knew about the leak, but rather on whether the leak was susceptible of knowledge. The district court concluded any leaking that occurred when the Jordans lived in the home was not susceptible of knowledge.
The Crewses claim the Jordans fraudulently misrepresented, in the MLS listing advertising the home, that the home had been "gutted." The Crewses understood the term to mean all the walls had been replaced.
The record supports the district court's finding that the Crewses failed to prove by a preponderance of the evidence that the Jordans falsely represented the condition of the walls in the MLS listing. At trial, the Jordans conceded they did not replace all the walls. They completed extensive work on the home, however, before selling it.
The record also supports the district court's conclusion that the Crewses did not prove the third element of fraud, their actual and justifiable reliance on the MLS listing. The listing contained a disclaimer stating that information was not guaranteed. The term "gutted" was not included in any other documentation concerning the home, and the Crewses did not discuss this representation with the Jordans at any time. Moreover, the district court found the Crewses knew the walls were not new before purchasing the home. The Crewses argue the record does not support this finding. The trial court, however, may draw all reasonable inferences from the evidence. Hoiby v. Federal Motor Truck Sales Corp., 185 Minn. 361, 365, 241 N.W. 58, 60 (1932).
The Crewses allege the Jordans fraudulently failed to disclose a defect in the kitchen floor that caused the tiles to buckle near a sliding glass door leading outside.
The district court determined the defect did not exist when the Jordans lived in the home. This finding is adequately based on the record. The Crewses admitted the sliding glass door in the kitchen malfunctioned after they moved to the home, and they failed to repair it. The door was left partially open at all times exposing the kitchen tiles to the elements. An expert witness testified he believed the cause of the buckling tiles was water coming through the open door.
Based on our review of the record and our analysis above, we conclude the district court did not err in concluding that the Crewses did not prove fraud by a preponderance of the evidence.
2. The Crewses argue the district court erred in denying their posttrial motions for amended findings of fact or for a new trial. A reviewing court shall reverse a district court's denial of posttrial motions only upon a finding of an abuse of discretion. Halla Nursery v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).
The district court did not abuse its discretion in denying the Crewses' posttrial motions. The record adequately supports its findings of fact and its conclusion that the Crewses failed to prove fraud by a preponderance of the evidence.
3. The Crewses allege the district court erred in denying their motion to amend the complaint to include a statutory claim for attorney fees. Because the Crewses did not prevail at trial, the issue of attorney fees is moot and need not be addressed.
4. The Crewses claim the district court was unfairly biased against them. In reviewing such a claim, we must consider whether the alleged misconduct is "so serious that it denies the litigants a fair trial." Uselman v. Uselman, 464 N.W.2d 130, 139 (Minn. 1990). The record indicates the district court directed several remarks to both parties' attorneys concerning settlement as opposed to proceeding to trial. The record does not show a pattern of comments demonstrating bias. The Crewses' counsel did not object to the district court's comments or seek recusal during the two-day trial. We note that both parties agreed to a court trial.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.