Alpha Contracting Serv. Inc. v. Household Finance Corp.

Alpha Contracting Services, Inc., Appellant,

v. Household Finance Corp., II; John W. Harris, d/b/a S.C. Corporate Real Estate Service;and S.C. Corporate Real Estate Service, Respondents.

Unpublished Opinion No. 2011-UP-289

THE STATE OF SOUTH CAROLINA In The Court of Appeals

Submitted: May 4, 2011

Filed: June 13, 2011

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

Appeal From Richland County

Benjamin H. Culbertson, Circuit Court Judge

AFFIRMED

Donald E. Jonas, of Columbia, for Appellant.

Thad H. Westbrook and Candace C. Jackson, both of Columbia, for Respondent Household Finance Corporation, II.

Rex Casterline and Douglas E. Leadbitter, both of Columbia, for Respondent John W. Harris, d/b/a SC Corporate Real Estate Service.

PER CURIAM: Alpha Contracting Services, Inc. (Alpha) brought this negligent misrepresentation action against Household Finance Corp., II (Household) and John W. Harris, d/b/a S.C. Corporate Real Estate Service, (Harris) (collectively Respondents) after discovering that a residence it purchased had approximately 1,000 square feet less than the amount represented in a multiple listing service (MLS). Alpha seeks review of the circuit court's order granting summary judgment to Respondents. We affirm.

FACTS/PROCEDURAL HISTORY

On June 7, 2005, Harris, a real estate broker, entered into an Exclusive Right to Sell Agreement with Household concerning one of its foreclosure properties at 6 Rice Mill Ferry Road in Richland County. Unbeknownst to Harris, sometime in June 2005, Household received a copy of a private appraisal it had commissioned. The appraisal indicated that the house contained 3,043 square feet of heated living space. Household did not provide a copy of the appraisal to Harris.

Harris advertised the property in an MLS listing, which stated that the property contained approximately 3,916 heated square feet of living space and the information in the listing was "Deemed Reliable, but Not Guaranteed." Harris had obtained the information regarding square footage from the Richland County tax assessor's office. The amount indicated was consistent with the square footage noted in the 2005 Richland County tax appraisal for the property.

In November 2005, Alpha was incorporated for the purpose of renovating and reselling homes. In January 2006, Alpha entered into a contract of sale for Household's property on an "as is where is" basis. The contract included the following provision regarding inspection of the property:

The Listing and Selling Broker(s) recommend that Purchaser obtain a home inspection. Purchaser has the right within ten (10) business days after acceptance of contract, to have home inspected by qualified professional inspectors of his choice . . . Purchaser's failure to notify Seller or Seller's Agent in writing of any defect found by the home inspection within the time limits herein provided, or Purchaser's acceptance of the deed at closing, shall constitute Purchaser's full acceptance of the condition of the property and a waiver of Purchaser's right to object to any defects found by the home inspection(s).

The contract also contained the following disclaimers: "The parties acknowledge that the Listing and Selling Broker(s) and their Agent(s): (A) Give no warranty of any kind, express or implied, as to the physical condition of the property or as to [the] condition of or existence of improvements, services or systems thereto . . . ; (B) Give no warranty, express or implied, concerning . . . the accuracy of the square footage[,] heated or unheated . . . (D) Give no warranty, express or implied, as to the fitness for a particular purpose of the property or improvements thereto . . . ." An addendum to the contract included the following language: "Buyer acknowledges . . . that Buyer has been given a reasonable opportunity to inspect and investigate the property and all improvements thereon . . . and that in purchasing the property[,] Buyer is not relying on Seller, or its agents, as to the condition or safety of the property and/or any improvements thereon . . . ."

Alpha does not dispute the fact that it did not measure the home before closing on the purchase for $205,000. After purchasing the home, Alpha renovated it and placed it on the market. Alpha then commissioned an appraisal of the property, which indicated that it had 2,942 square feet of heated living space instead of 3,916 square feet as indicated by the MLS listing. Alpha later sold the property for $280,000.

Alpha then filed this action against Respondents, asserting claims for negligence, negligent misrepresentation, breach of contract, and breach of implied warranty. The circuit court granted Respondents' summary judgment motions, and this appeal followed.

ISSUES ON APPEAL

1. Did the circuit court properly grant summary judgment to Respondents when they were entitled to judgment as a matter of law on each of Alpha's claims?

2. Did the circuit court properly grant summary judgment to Respondents without first requiring Household to comply with Alpha's discovery requests?

STANDARD OF REVIEW

On appeal from the grant of a summary judgment motion, this court applies the same standard as that required for the circuit court under Rule 56(c), SCRCP. Brockbank v. Best Capital Corp., 341 S.C. 372, 379, 534 S.E.2d 688, 692 (2000). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), SCRCP; Adamson v. Richland Cnty. Sch. Dist. One, 332 S.C. 121, 124, 503 S.E.2d 752, 753 (Ct. App. 1998). "To determine if any genuine issues of fact exist, the evidence and all reasonable inferences must be viewed in the light most favorable to the non-moving party." Sauner v. Pub. Serv. Auth. of S.C., 354 S.C. 397, 404, 581 S.E.2d 161, 165 (2003). Further, "in cases applying the preponderance of the evidence burden of proof, the non-moving party is only required to submit a mere scintilla of evidence in order to withstand a motion for summary judgment." Hancock v. Mid-South Mgmt., Inc., 381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009).

"The purpose of summary judgment is to expedite disposition of cases [that] do not require the services of a fact finder." George v. Fabri, 345 S.C. 440, 452, 548 S.E.2d 868, 874 (2001). "Summary judgment is appropriate in those cases in which plain, palpable and undisputable facts exist on which reasonable minds cannot differ." Priest v. Brown, 302 S.C. 405, 408, 396 S.E.2d 638, 639 (Ct. App. 1990). "It is not sufficient that one create an inference [that] is not reasonable or an issue of fact that is not genuine." Id. Once the moving party meets the initial burden of showing an absence of evidentiary support for the opponent's case, the opponent cannot simply rest on mere allegations or denials contained in the pleadings but must come forward with specific facts showing there is a genuine issue for trial. Rule 56(e), SCRCP; Boone v. Sunbelt Newspapers, Inc., 347 S.C. 571, 579, 556 S.E.2d 732, 736 (Ct. App. 2001).

LAW/ANALYSIS

I. Judgment as a Matter of Law

Alpha maintains that the circuit court erred in granting summary judgment to Respondents because Alpha presented more than a scintilla of evidence showing that Respondents grossly misstated the square footage of the house Alpha purchased and intentionally withheld information as to the actual square footage. We believe the circuit court correctly granted summary judgment to Respondents regardless of any evidence of Respondents' intent to withhold information because the contract of sale expressly disclaimed any warranty as to the home's square footage and because Alpha failed to measure the square footage before closing on the purchase. We will address each of Alpha's causes of action in turn.

A. Negligent Misrepresentation

To establish a claim for negligent misrepresentation, a plaintiff must show:

(1) the defendant made a false representation to the plaintiff; (2) the defendant had a pecuniary interest in making the statement; (3) the defendant owed a duty of care to communicate truthful information to the plaintiff; (4) the defendant breached that duty; (5) the plaintiff justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary loss as a result of such reliance.

Schnellmann v. Roettger, 368 S.C. 17, 20-21, 627 S.E.2d 742, 744 (Ct. App. 2006), aff'd as modified on other grounds, 373 S.C. 379, 645 S.E.2d 239 (2007).

In Schnellmann, two home purchasers asserted a negligent misrepresentation claim against a real estate listing agent based on the discrepancy between the square footage indicated in an MLS listing and the actual square footage. Id. at 20, 627 S.E.2d at 744. This court noted:

The Schnellmanns could have discovered the misstatement by simply requesting a copy of the appraisal or by having someone come in to measure the property. They were informed via the MLS listing that the measurements were not precise. The Schnellmanns viewed the house, and proceeded with the purchase without finally determining the exact square footage. In light of the evidence presented, we agree with the trial court's conclusion that if the Schnellmanns relied on the approximation of the square footage contained in the listing, such reliance was unreasonable as a matter of law.

Id. at 21, 627 S.E.2d at 745 (emphasis added).

Like the purchasers in Schnellmann, Alpha failed to take its own measurements of the home's square footage. Therefore, Alpha's reliance on the square footage indicated in the MLS listing was unreasonable as a matter of law. Alpha cannot obtain compensation from Respondents if it has not exercised its own due diligence. See Schnellmann, id. at 21, 627 S.E.2d at 745 ("[T]here can be no liability for casual statements, representations as to matters of law, or matters which plaintiff could ascertain on his own in the exercise of due...