Glover v. Dailey

254 N.C.App. 46

802 S.E.2d 136

David K. GLOVER, Jr. and Ashley L. Glover, Plaintiffs,

v.Charles E. DAILEY and Sherma R. Dailey, Defendants.

No. COA16-1108

Court of Appeals of North Carolina.

Filed: June 20, 2017

Pinto Coates Kyre & Bowers, PLLC, by Jon Ward and Adam L. White, Greensboro, for plaintiffs-appellants.

Arroyo Law Practice, by Shauna A. Guyton, for defendants-appellees.

ELMORE, Judge.

After purchasing their home, David and Ashley Glover (plaintiffs) incurred significant expenses in mold remediation, restoration, and repair. They filed an action against the former homeowners, Charles and Sherma Dailey (defendants), for fraud, negligent misrepresentation, and unfair and deceptive trade practices. Plaintiffs alleged that defendants failed to disclose a prior insurance claim to repair water damage in the master bedroom, which plaintiffs maintain was the source of the mold growth. After a bench trial, the trial court dismissed plaintiffs’ claims against defendants. We affirm.

I. Background

In May 2005, defendants purchased a single-family home located at 9 Avonlea Court in Durham. The first-floor master bedroom is on the right side of the house. The garage, laundry room, and kitchen are on the left side. The house is situated on a low-lying lot relative to an adjacent property.

In March 2008, Mrs. Dailey noticed a thin trickle of water—no wider than a pencil—running down the wall in the master bedroom. Defendants contacted Nationwide Insurance to inspect and repair the leak. The trial court found that "[t]he leak was probably caused by debris which accumulated against or in the area of the flashing where the one-story bedroom roof butted against the two-story wall of the house." Portions of the dry wall, ceiling, and insulation were cut out, removed, and replaced. The wet carpet was pulled back and a portion of the padding underneath the carpet was also replaced. An antimicrobial agent was then applied and fans were used for twenty-four hours to complete the drying process. No mold was detected during the inspection and repair.

In July 2009, Mr. Dailey accepted an employment transfer to Atlanta. Defendants listed their home for sale with the help of Altair Global Relocation. Altair offered to purchase defendants’ home at a guaranteed price while granting defendants the option to sell to another buyer for 120 days.

Defendants completed a two-page property disclosure form regarding the condition of the property. On the first page, defendants responded "No" when asked if "Insurance/individual claims have been asserted against the Property to remedy any physical condition of the Property." Mrs. Dailey understood the question to be couched in current terms, as in "something that was currently going on or something that had gone on, like, within the last couple of weeks or months." On the second page of the disclosure form, defendants responded "Yes" when asked if "Draining, flooding, moisture, mold, water penetration, and/or sewer malfunctions previously and/or currently affect any portion of the interior and/or exterior of the Property," and if "Previous corrections have been performed or current problems exist with drainage, flooding, moisture, mold, water penetration, and/or sewer malfunctions on the Property." Defendants underlined the foregoing portions to clarify their responses and included an explanation thereof: (1) "Had excess water around front and side of house. Re-worked drain and pipes front and side"; (2) "Pipe from crawl space outside damaged Centex replaced no further issues [sic]. Had water under house briefly. No [sic] corrected." Altair signed and acknowledged the disclosure form as the buyer.

On 17 December 2009, Lindsley Waterproofing, Inc. performed a property inspection at defendants’ request. The inspection revealed problems with "a foundation drain and coatings." According to the inspection report, "water intrusion had been going on for a long time" but mold and fungus were not detected. Mr. Lindsley indicated that either exterior or interior waterproofing was necessary. Mrs. Dailey testified that she had the exterior waterproofing performed but did not know who made the repairs or how much they cost.

Shortly thereafter, plaintiffs became interested in the property. On 12 January 2010, plaintiffs contracted with Altair, acting on behalf of defendants, to purchase the property. The contract included a $10,000.00 repair contingency. The contract addendum and paperwork related to the purchase referenced both Altair and defendants as the sellers.

On 15 January 2010, plaintiffs obtained a professional home inspection of the property. The inspection report identified several issues, including standing water and poor drainage in the back yard. No mold test was performed. Plaintiffs sent their repair requests to defendants, which were completed before closing on 13 February 2010.

About two years later, on 12 March 2012, Lindsley Waterproofing, Inc. performed another inspection, this time for plaintiffs. Mr. Lindsley noted in his report that the property had "concealed water (subsurface)." He informed plaintiffs that "concealed water results in damp walls, damp soil, and an excessively humid crawlspace; and that lends itself to mold infestation." Despite Mr. Lindsley's report, plaintiffs took no action for nineteen months until Mrs. Glover found black mold in the laundry room and kitchen.

In September 2013, plaintiffs contacted Cathy A. Richmond of LRC Indoor Testing and Research to conduct a mold investigation in the kitchen and laundry room. The trial court accepted Richmond as an expert in the field of environmental testing and mold. During her investigation, Richmond found Stachybotrys and Chaetomium in the air inside the home. Each genus usually requires water to grow and has the potential to release mycotoxins which can cause respiratory problems. Richmond suspected that "somewhere, somehow, sometime" the mold "got into the ductwork." She was aware of the Nationwide claim but, even without evidence of another active water loss, she could not conclude within a reasonable degree of scientific certainty that the 2008 water loss caused the mold growth.

After Richmond's inspection, plaintiffs retained David W. Cotton of AdvantaClean to perform mold remediation. At his deposition, plaintiffs tendered Cotton as an expert in mold and water remediation. Cotton testified that he took an air sample and found Stachybotrys in the first and second floor of the home. He did not detect any moisture intrusion but did find that the HVAC system was contaminated with mold. Based upon his review of the Nationwide claim, Cotton opined that the 2008 water loss caused the mold growth. His deposition transcript was admitted into evidence but Cotton did not testify at trial and the court did not explicitly accept him as an expert.

On 12 November 2015, plaintiffs filed a complaint against defendants alleging fraud, negligent misrepresentation, and unfair and deceptive trade practices based on defendants’ failure to disclose the Nationwide claim in the property disclosure form. The parties stipulated to a trial without a jury, which was held at the 5 July 2016 Civil Session of the Durham County Superior Court. Before trial, the court ruled that defendants were the "sellers" and plaintiffs had not failed to join Altair as a necessary party. At the close of the evidence, the trial court granted defendants’ motion for directed verdict on the unfair and deceptive trade practices claim because, as "homeowners selling their personal residence," defendants are not subject to unfair and deceptive trade practice liability.

After the bench trial, the court entered a judgment dismissing plaintiffs’ remaining claims, concluding that plaintiffs failed to prove fraud and negligent misrepresentation by a preponderance of the evidence.¹ Most notably, the court found Cotton's opinion regarding the source of the mold to be "without factual basis, speculative, and not credible" because "his opinion was based upon insufficient facts or data." As to the disclosure form, the court found that defendants had no intent to deceive and "they believed the question regarding an insurance claim applied to current conditions." In light of the other disclosures made by defendants and the house inspection report, the court could not find that "plaintiffs were justified in relying on the disclosure regarding insurance claims," or that any reliance on the disclosure form "proximately cause[d] plaintiffs’ damages." Plaintiffs timely appeal.

II. Discussion

During a bench trial, "the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment." N.C. Gen. Stat. § 1A-1, Rule 52(a)(1) (2015). In its role as the fact-finder, "the trial judge considers ‘the credibility of the witnesses and the weight to be given their testimony.’ " Terry's Floor Fashions, Inc. v. Crown Gen. Contractors, Inc. , 184 N.C. App. 1, 10, 645 S.E.2d 810, 816 (2007) (quoting Knutton v. Cofield , 273 N.C. 355, 359, 160 S.E.2d 29, 33 (1968) ). " ‘If different inferences may be drawn from the evidence, the trial judge determines which inferences shall be drawn and which shall be rejected.’ " Id. (quoting Knutton , 273 N.C. at 359, 160 S.E.2d at 33 ).

We review the resulting judgment from a bench trial to determine whether the findings of fact are supported by competent evidence, and whether the conclusions of law are "proper in light of such facts." Shear v. Stevens Bldg. Co. , 107 N.C. App. 154, 160, 418 S.E.2d 841, 845 (1992) (citation omitted). While an appellant may challenge "the sufficiency of the evidence" supporting the findings of fact, N.C. Gen. Stat. § 1A-1, Rule 52(c) (2015), we are bound by the trial court's findings so long as "there is some evidence to support" them—even if " ‘the evidence might sustain findings to the contrary,’ " Chicago Title Ins. Co. v. Wetherington , 127 N.C. App. 457, 460, 490...