Worley v. City of Jonesboro

2011 Ark. App. 594

385 S.W.3d 908

Ronald WORLEY and Meryl Worley, Appellants

v.CITY OF JONESBORO, Arkansas; Mary Jo Drum; Crye–Leike of Arkansas, Inc.; and Joyce Isbell, Appellees.

No. CA 10–468.

Court of Appeals of Arkansas.

Oct. 5, 2011.

Jim Lyons, Jonesboro, for appellants.

Douglas R. Kennedy, Poplar Bluff, MO, Paul D. McNeill, Dustin Heath Jones, Jonesboro, for appellees.

DOUG MARTIN, Judge.

[Ark. App. 1]Appellants Ronald and Meryl Worley appeal from the Craighead County Circuit Court's granting of summary judgment to appellees, Crye–Leike of Arkansas, Inc.; its agent, Joyce Isbell; and the seller, Mary Jo Drum. The Worleys argue that the trial court erred in granting summary judgment to appellees and further erred in its award of attorney's fees. The Worleys also assert that, if the trial court is reversed on its summary-judgment decision, the jury verdict against the City of Jonesboro should be vacated. On cross-appeal, appellees argue that the trial court erred in limiting their verified claims for attorney's fees. We affirm on direct and cross-appeal.

The Worleys bought a house in Jonesboro from Drum in July 2002. Drum had listed the house with Crye–Leike and Isbell. The Worleys contacted Crye–Leike and Isbell when [Ark. App. 2]they were looking for a house. The real-estate contract provided that Crye–Leike and Isbell were representing both the seller and the buyers. The contract also contained the following “as-is” clause:

Buyer agrees to accept the Property “as is” at closing....

IN THE EVENT BUYER DOES NOT MAKE THE NECESSARY REQUIRED INSPECTION AND DOES NOT PRESENT THE INSPECTION TO THE SELLER IN THE ALLOTTED TEN (10) BUSINESS DAY TIME PERIOD, BUYER WAIVES ALL RIGHTS TO RE–INSPECTION AND ASSUMES COMPLETE RESPONSIBILITY FOR ANY AND ALL FUTURE REPAIRS AND THE CONDITION OF THE PROPERTY.

The contract referred to a “Seller Property Disclosure,” which provides: “Seller will provide to Buyer a written disclosure about the condition of the Property which will contain information that is true and correct to the best of the Seller's knowledge.” On the disclosure form, which was “to be completed by owner,” Drum checked “yes” in response to the question: “Has there been any flooding, drainage, grading problems, or has water ever stood on the Property or under any improvement constructed thereon?” In the space provided on the form for further explanation, Drum wrote: “Some water temporarily stands on back of property during heavy rain—quickly drains unless very heavy rain.... All questions answered to best of my knowledge.”

The contract also provided:

BUYER'S DISCLAIMER OF RELIANCE: BUYER CERTIFIES THAT BUYER HAS PERSONALLY INSPECTED OR WILL PERSONALLY INSPECT, OR HAS HAD OR WILL HAVE A REPRESENTATIVE INSPECT, THE PROPERTY AS FULLY AS BUYER DESIRES AND IS NOT RELYING AND SHALL NOT HEREAFTER

RELY UPON ANY WARRANTIES, [Ark. App. 3]REPRESENTATIONS OR STATEMENTS OF THE SELLER, LISTING AGENT FIRM, THE SELLING AGENT FIRMS, OR ANY AGENT, INDEPENDENT CONTRACTOR OR EMPLOYEE ASSOCIATED WITH THOSE ENTITIES, REGARDING THE AGE, SIZE[,] QUALITY, VALUE OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION ALL IMPROVEMENTS, ELECTRICAL OR MECHANICAL SYSTEMS, PLUMBING OR APPLIANCES, OTHER THAN THOSE SPECIFIED HEREIN (INCLUDING ANY WRITTEN DISCLOSURES PROVIDED BY SELLER AND DESCRIBED IN PARAGRAPH 16 OF THIS REAL ESTATE CONTRACT), IF ANY, WHETHER OR NOT AN [sic] EXISTING DEFECTS IN ANY SUCH REAL OR PERSONAL PROPERTY MAY BE REASONABLY DISCOVERABLE BY BUYER OR A REPRESENTATIVE HIRED BY BUYER. NEITHER LISTING AGENT FIRM NOR SELLING AGENT FIRM CAN GIVE LEGAL ADVICE TO BUYER OR SELLER. LISTING AGENT FIRM AND SELLING AGENT FIRM STRONGLY URGE THAT STATUS OF TITLE, PROPERTY CONDITION, QUESTIONS OR SURVEY AND ALL REQUIREMENTS OF SELLER AND BUYER HEREUNDER SHOULD EACH BE INDEPENDENTLY VERIFIED AND INVESTIGATED.

On June 16, 2005, the Worleys sued Drum, Crye–Leike, Isbell, and the City of Jonesboro, alleging that the house's garage had flooded on August 13, 2002, and at least five additional times thereafter, as a result of inadequate drainage for heavy rain. They further alleged unlawful taking by the city; misrepresentation by Drum in the “Owner Property Disclosure” form; that Isbell assisted Drum in completing the disclosure form and fraudulently failed to disclose the drainage problem in order to induce the Worleys to buy the property; and breach of fiduciary duty by Crye–Leike and Isbell. The Worleys sought damages, injunctive relief directing the city to correct the drainage problem, and costs and attorney's fees.

Crye–Leike and Isbell moved for summary judgment on March 29, 2006, asserting that they did not assist Drum in completing the disclosure form or make any representation [Ark. App. 4]concerning drainage to the Worleys. They pointed out language in the disclosure form providing that the statements contained therein were based on the owner's knowledge and were made by the owner, not the agents of the owner. They also attached to the motion affidavits of Isbell and Brian Robinson, senior vice-president of Crye–Leike, both averring that they did not make any representations to the Worleys regarding drainage problems; that they had no knowledge of any drainage problems other than those disclosed by Drum; and that they did not assist Drum in completing the disclosure form and were not present when she did so. Crye–Leike and Isbell also filed with the motion a copy of an appraisal of the property dated July 1, 2002, setting the property's value at $220,000, and a copy of the inspection report provided to the Worleys by Dan Melton on June 25, 2002. The inspection report noted that the site was at a “[l]ow point for area drainage.” The report also recommended that fencing be placed around an open drain on the property “to prevent child falling into and being washed away.”

Finally, Crye–Leike and Isbell filed with the motion a copy of the “Inspection, Repair and Survey Addendum” reflecting that the Worleys had used an inspector of their choice and that no list of repairs was “noted at this time.” This document included the Worleys' agreement to the property conditions at the time of their final walk-through prior to closing and stated in relevant part:

BUYER UNDERSTANDS THAT THE RECEIPT OF A HOME INSPECTION AND AN OWNER PROPERTY DISCLOSURE DOES NOT RELIEVE BUYER FROM THE RESPONSIBILITY OF PERSONALLY INSPECTING THE PROPERTY UNTIL THE BUYER IS FULLY SATISFIED. BUYER [Ark. App. 5]WARRANTS, REPRESENTS AND ACKNOWLEDGES THAT BUYER AND ALL PERSONS OR ENTITIES DESIRED BY BUYER HAVE INSPECTED THE PROPERTY TO THE FULLEST EXTENT DESIRED BY BUYER AND FIND THE CONDITION OF THE PROPERTY ACCEPTABLE IN ALL RESPECTS. BUYER REAFFIRMS ALL DISCLAIMERS SET FORTH WITHIN PARAGRAPH 25 OF THE REAL ESTATE CONTRACT BETWEEN BUYER AND SELLER. BUYER HAS HAD AN OPPORTUNITY TO INSPECT, REVIEW AND VISIT THE PROPERTY AND TO OBTAIN A BOUNDARY SURVEY OF THE PROPERTY TO DETERMINE THAT THE PROPERTY ACTUALLY CONVEYED IS THE PROPERTY THE BUYER UNDERSTANDS IS BEING CONVEYED, AND BUYER IS NOT RELYING ON ANY STATEMENT (WRITTEN OR ORAL) OF LISTING AGENT FIRM, SELLING AGENT FIRM, OR SELLER CONCERNING THE SIZE, DIMENSIONS, ACREAGE, AREA OR LOCATION OF THE PROPERTY. THE FACT THAT THE BUYER COMPLETES THE PURCHASE OF THIS PROPERTY WARRANTS THAT THE BUYER IS COMPLETELY SATISFIED WITH THE CONDITION OF THE PROPERTY.

In response to Crye–Leike and Isbell's motion for summary judgment, Ronald and Meryl Worley filed affidavits of their own. Mr. Worley's affidavit states in part:

10. That the first time we looked at the Property, I asked Defendant Isbell about drainage and she said that she did not know anything about the drainage. However, in their Brief in Support of their Motion for Summary Judgment, the Defendants admit that “they had sufficient information upon which to make a representation” concerning the drainage on the Property....

11. That Defendant Isbell told my wife and me that Defendant Drum was having trouble filling out the property disclosures and that Defendant Isbell was having to help Defendant Drum fill out the Property Disclosures.

12. That in fact, Defendant Isbell told my wife and me that she was having to “coach” Defendant Drum on what to say on the Property Disclosures.

....

17. That we would not have purchased the Property if we had been informed of the true extent of the flooding or drainage problems which actually existed on the [Ark. App. 6]Property. Further, we would not have purchased the Property if we had been informed that the flooding or drainage problems caused water to enter the garage.

18. That the estimated material cost, without any labor, to correct the flooding or drainage problem properly is approximately $20,000.00. Further, without doing substantial work to correct the flooding or drainage problems, we cannot sell the Property without disclosing that the garage regularly floods.Mrs. Worley's affidavit contains the same statements.

Crye–Leike and Isbell subsequently supplemented their summary-judgment motion with their answers to interrogatories and requests for production of documents, as well as those of Drum, wherein Drum stated that she “may have filled [the disclosure form] out in the presence of Joyce Isbell, but [she didn't] believe anyone helped” her. Crye–Leike and Isbell further supplemented their motion with the affidavits of real-estate agents, Bob Harrison and Bill Hester, who stated that they had previously listed the property for sale and had no knowledge of drainage problems.

Drum moved for summary judgment on October 5, 2006. She attached to the motion her affidavit, excerpts from her deposition, and the deposition of Ronald Worley. In her affidavit, Drum stated that she purchased the house with her husband and sister and moved there in December 1999; that, in 2000, she went “back and forth” between the house and her residence in Poplar Bluff, Missouri; that her sister lived at the house in Jonesboro until...