The opinion
Judgment rendered August 14, 2019.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.
No. 52,802-CA
COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA
*****
RICHARD MURRAY AND Plaintiffs-Appellants
HEATHER DUKES WARD
MURRAY
versus
TERRILL CLARK BOSTWICK Defendants-Appellees
AND DEBORAH KAY REED
BOSTWICK
*****
Appealed from the
First Judicial District Court for the
Parish of Caddo, Louisiana
Trial Court No. 599,188
Honorable Craig O. Marcotte, Judge
*****
SHUEY SMITH, LLC Counsel for Appellants
By: Richard E. Hiller
DAVID L. WHITE Counsel for Appellees
*****
Before COX, STEPHENS, and THOMPSON, JJ.
THOMPSON, J.
This matter arises from the purchase and sale of a residence which
Plaintiffs, Richard and Heather Murray (“The Murrays”), assert contained
defects which were concealed or not disclosed by Defendants, Terrill and
Deborah Bostwick (“The Bostwicks”). Plaintiffs appeal from the trial
court’s judgment in favor of Defendants in which the court found that
Plaintiffs failed to meet their burden of proof to establish: (1) that there was
a willful misrepresentation of the truth in order to gain an advantage; (2) the
elements of detrimental reliance; and (3) fraud. For the following reasons,
we affirm the trial court’s judgment.
FACTS AND PROCEDURAL HISTORY
In 2012, the Bostwicks placed their house on the market to sell
through realtor Chuck Horne. On August 12, 2012, the Bostwicks filled out
a Property Disclosure Statement (“the Statement”) with the assistance of Mr.
Horne. On May 10, 2013, the Murrays and Bostwicks entered in a
Louisiana Residential Agreement to Buy or Sell (“the Agreement”). After
two counteroffers, the parties agreed upon the purchase conditions, which
included the condition that a home inspection be completed prior to closing
the sale and that the sale would include a waiver of redhibition. Both parties
signed page six (6) of the Agreement, which included an explanation that the
home would be sold without any warranties in “as is” condition:
SELLER and BUYER hereby acknowledge and recognize that
the Property being sold and purchased is to be transferred in “as
is” condition and further BUYER does hereby waive, relieve
and release SELLER from any claims or causes of action for
redhibition pursuant to Louisiana Civil Code Article 2520, et
seq. and Article 2541, et seq. or for reduction of Sale Price
pursuant to Louisiana Civil Code Article 2541, et seq.
Additionally, BUYER acknowledges that this sale is made
without warranty of fitness for ordinary or particular use
pursuant to Louisiana Civil Code Article 2524. SELLER and
BUYER agree that this clause shall be made a part of the Act of
Sale.
On May 31, 2013, American Dream Home Inspection Service issued
an inspection report on the subject property. There were no issues noted on
the inspection report with regard to pinhole leaks or improper grade of
copper piping. On July 11, 2013, the parties executed a Cash Sale Deed
(“the Deed”) which also expressly stated that the home would be sold
without warranties:
It is expressly agreed that the immovable property herein
conveyed and all improvements and component parts,
plumbing, electrical systems, mechanical equipment, heating
and air conditioning systems, built-in appliances, and all other
items located thereon are conveyed by Seller and accepted by
Buyer “AS IS, WHERE IS,” without any warranties of any kind
whatsoever, even as to the meets and bounds, zoning, operation,
or suitability of the property for the use intended by the Buyer,
without regard to the presence of apparent or hidden defects and
with the Buyer’s full and complete waiver of any and all rights
for the return of all or any part of the purchase price by reason
of any such defects. Buyer acknowledges and declares that
neither the Seller nor any party, whomsoever, acting or
purporting to act in any capacity whatsoever on behalf of the
seller has made any direct, indirect, explicit or implicit
statement, representation or declaration, whether by written
or oral statement or otherwise, and upon which the Buyer has
relied, concerning the existence or non-existence of any
quality, characteristic or condition of the property herein
conveyed. Buyer has had, complete and unlimited access to the
property herein conveyed for all tests and inspection which
Buyer, in Buyer’s sole discretion, deems sufficiently diligent
for the protection of Buyer’s interests. Buyer expressly waives
the warranty of fitness and the warranty against redhibitory
vices and defects, whether apparent or latent, imposed by
Louisiana Civil Code Articles 2520 through 2548, inclusive,
and any other applicable state or federal law and the
jurisprudence thereunder (emphasis added).
After moving into the home, the Murrays began to experience pinhole
leaks in the pipes of the house. The Murrays hired plumbers and
2
construction companies to fix the damage caused by each of the leaks. In
June 2016, the Murrays contacted Robert Brown Plumbing to complete an
inspection of the pipes to determine the cause of the pinhole leaks.
According to Mr. Brown, the wrong copper piping was installed in the
house, and this was at least part of the cause of the pinhole leaks. It was the
opinion of Mr. Brown that the only way to fix the pinhole leak problem was
to replace all of the copper piping in the house.
On March 9, 2017, the Murrays filed suit against the Bostwicks
claiming breach of contract, fraud, and detrimental reliance. This case was
tried on July 31 and September 18, 2018. The trial court issued its written
ruling on September 28, 2018, finding that the Murrays had failed to carry
their burden of proof to establish: (1) that there was a willful
misrepresentation of the truth in order to gain an advantage; (2) the elements
of detrimental reliance; and (3) fraud. Judgment was signed on October 17,
2018, and the Murrays filed the instant appeal.
DISCUSSION
Louisiana’s Residential Property Disclosure Act, La. R.S. 9:3196 et
seq. (the “RPDA”), inter alia, requires a seller of residential property to
complete and deliver a property disclosure form as provided in La. R.S.
9:3198, which provides in pertinent part:
(A)(1) The seller of residential real property shall complete a
property disclosure document in a form prescribed by the
Louisiana Real Estate Commission or a form that contains at
least the minimum language prescribed by the commission.
. . .
(B)(1) The seller shall complete the property disclosure
document in good faith to the best of the seller’s belief and
3
knowledge as of the date the disclosure is completed and
signed by the seller. If the seller has no knowledge or
information required by the disclosure document, the seller
shall so indicate on the disclosure statement and shall be in
compliance with this Chapter.
. . .
(D)(1) A property disclosure document shall not be considered
as a warranty by the seller. The information contained within
the property disclosure document is for disclosure purposes
only and is not intended to be a part of any contract between the
purchaser and seller.
. . .
(E) A seller shall not be liable for any error, inaccuracy, or
omission of any information required to be delivered to the
purchaser in a property disclosure document if either of the
following conditions exists:
(1) The error, inaccuracy, or omission was not a
willful misrepresentation according to the best
of the seller’s information, knowledge, and
belief (emphasis added).
In the statement executed by the Bostwicks in the instant case, they
indicated that their home’s plumbing system and water piping were free of
any defects. A “known defect” is defined as a “condition found within the
property that was actually known to the seller and that results in any of the
following: (a) has a substantial adverse effect on the value of the property;
(b) significantly impairs the health or safety of future occupants of the
property; or (c) if not repaired, removed, or replaced, significantly shortens
the expected normal life of the property.” La. R.S. 9:3196(1).
While the Murrays have urged three assignments of error, we note that
the claims have some of the same elements. Thus, much of the evidence to
prove (or disprove) these theories of recovery is the same.
4
Willful Misrepresentation
The Murrays contend the trial court erred in its factual findings that
the Bostwicks did not knowingly and intentionally misrepresent the
condition of the plumbing and piping in the home. The elements of a claim
for intentional misrepresentation are: (1) a misrepresentation of a material
fact; (2) made with the intent to deceive; and (3) causing justifiable reliance
with resultant injury. Benton v. Clay, 48,245 (La. App. 2 Cir. 08/07/13), 123
So. 3d 212, citing Kadlec Med. Center v. Lakeview Anesthesia Assocs., 527
F. 3d 412 (5 Cir. 05/08/08), cert. denied, 555 U.S. 1046, 129 S. Ct. 631
(2008).
An obligor is in bad faith if he intentionally and maliciously fails to
perform his obligation. La. C.C. art. 1997, Revision Comment (b). The
term bad faith means more than mere bad judgment or negligence; it implies
the conscious doing of a wrong for dishonest or morally questionable
motives. Benton, supra; Bond v. Broadway, 607 So. 2d 865 (La. App. 2 Cir.
1992), writ denied, 612 So. 2d 88 (1993).
Our review of the record fully supports the trial court’s findings that
the Bostwicks did not knowingly and intentionally misrepresent the
condition of the plumbing and piping in the home. The representations to
which the Murrays refer to are checkmarks in the “N” or “no” column of the
Statement regarding plumbing and piping defects. Pursuant to La. R.S.
9:3198(E), “a seller is not liable for errors, inaccuracies, or
misrepresentations that were not willful misrepresentations,” in a Property
Disclosure Document. Stutts v. Melton, 13-0557 (La. 10/15/13), 130 So. 3d
808, 813. The Bostwicks testified that they had only experienced one
5
pinhole leak in the entire time they had lived in the home (approximately 15
years), they had the leak repaired by a plumber, and they had no more leaks
or issues since. Additionally, the Bostwicks testified that they asked Mr.
Horne whether they needed to disclose that leak on the Statement and he told
them not to include it.
The Murrays also contend that the Bostwicks knew or should have
known that the improper grade of copper piping was installed in the house.
However, the Murrays presented no evidence that the Bostwicks had any
idea that the improper copper piping was used. In fact, Mr. Bostwick
testified that he requested an upgraded quality of copper piping be used
throughout the house as opposed to what was typically installed in new
construction homes at that time. Therefore, he would have had no reason to
know that a different grade of copper piping was used in the home. Further,
Robert Brown, the Murrays’ plumbing expert, testified at trial that the grade
of copper piping was but one factor in the cause of the pinhole leaks.
According to Mr. Brown, the hard water in the Blanchard area also aided in
the wear-down of the pipes and was likely one of the causes of the pinhole
leaks. Years of trouble-free ownership was evidence of no deficiencies.
The Murrays continue to refer to “plumbing issues” experienced by
the Bostwicks as evidence that they knew about the pinhole leaks. However,
after review of the record, it appears that the “plumbing issues” to which the
Murrays are referring were actually a series of stopped-up toilets and an
overflowed bathtub caused by the Bostwicks’ special-needs son, and one
pinhole leak near the hot water heater. This pinhole leak was repaired by
Bobby Greene Plumbing and the Bostwicks had no further issues. The
6
Murrays failed to provide any evidence, other than their own assertions, that
the Bostwicks willfully misrepresented anything to them in the Statement or
otherwise. Therefore, we find that the trial court did not err in concluding
that the Murrays failed to carry their burden of proof with regard to their
claim of willful misrepresentation.
Detrimental Reliance
La. C.C. art. 1967 provides that “[c]ause is the reason a party
obligates himself.” A party may be obligated by a promise when he knew or
should have known that the promise would induce the other party to rely on
it to his detriment and the other party was reasonable in so relying. Id. To
recover under the theory of detrimental reliance, a plaintiff must prove the
following three elements by a preponderance of the evidence: (1) a
representation by conduct or work; (2) justifiable reliance thereon; and (3) a
change in position to one’s detriment because of the reliance. Belin v.
Dugdale, 45,405 (La. App. 2 Cir. 06/30/10), 43 So. 3d 272.
The Murrays argue that they fulfilled the three requirements necessary
to show detrimental reliance. First, the Bostwicks’ representation that the
home contained no plumbing or piping issues was evidenced by their
checking “N” for “no” on the Statement. The Murrays next claim that they
relied on this representation in purchasing the home. Finally, they assert that
they suffered the detriment of recurring pinhole leaks in the home and the
expense of the repairs required by these leaks. For the reasons mentioned
above, the record does not support the Murrays’ argument that they relied to
their detriment on the representations made by the Bostwicks in the
Statement. Accordingly, we find no error in the trial court’s conclusion that
7
the Murrays failed to prove the elements of detrimental reliance. In addition
to the fact that the Murrays failed to meet their burden with respect to their
three claims against the Bostwicks, they purchased the home in “as is, where
is” condition and waived any claim of redhibition. Considering the
foregoing, we affirm in all respects the trial court’s findings.
Fraud
“Fraud is a misrepresentation or a suppression of the truth made with
the intention either to obtain an unjust advantage for one party or to cause a
loss or inconvenience to the other.” La. C.C. art. 1953. “Fraud may also
result from silence or inaction.” Id. The circumstances constituting fraud
must be alleged with particularity. La. C.C.P. art. 856.
There are three basic elements to an action for fraud against a party to
a contract: (1) a misrepresentation, suppression, or omission of true
information; (2) with the intent to obtain an unjust advantage or to cause
damage or inconvenience to another; and (3) the error induced by a
fraudulent act must relate to a circumstance substantially influencing the
victim’s consent to (a cause of) the contract. Shelton v. Standard/700
Associates, 01-0587 (La. 10/16/01), 798 So. 2d 60, 64.
In Stutts, supra, the supreme court held that by misrepresenting the
condition of the roof on their Residential Property Disclosure Statement, the
defendants had satisfied by a preponderance of the evidence the existence of
fraud under La. C.C. art. 1953. In Stutts, supra, the court noted that the
defendants’ knowledge of the condition of the roof was evidenced by a
previous claim they had filed in which they had asserted defects so severe
that the roof needed to be replaced. Id. After the defendants were paid to
8
have the roof replaced (on the condition that they replace the roof), they did
not do so. Instead, in their disclosure statement, they made a knowing
representation that the roof was free from defects and then covered up
evidence of the defect.
In the instant case, the Murrays argue that the Bostwicks engaged in
fraud because they indicated on their statement that no defects existed in the
plumbing of the property but had experienced at least one pinhole leak.
However, the Property Disclosure Statement does not guarantee that no
defects exist in the property, but rather requires disclosures of known defects
to the best of the seller’s knowledge, information, or belief. La. R.S.
9:3198(D) specifically states a property disclosure document is not a
warranty and is not part of any contract between the buyer and seller. In
addition, the Murrays failed to present evidence to establish that the
Bostwicks engaged in fraud by checking the “no” box on the Statement. At
trial, the Bostwicks testified that they had only experienced one pinhole leak
in all the time they owned the house. The leak occurred near the water
heater, they called a plumber, and had the leak repaired. They had no more
issues with regard to leaks after that time. There is no evidence that the
Bostwicks had any knowledge of the potential for future leaks. Therefore,
according to the Bostwicks’ knowledge, information, and belief, there were
no issues with the piping or plumbing in the house and they indicated as
much on the Statement.
When findings of fact are based on determinations regarding the
credibility of witnesses, the manifest error or clearly wrong standard
demands great deference to the findings, for only the fact-finder is cognizant
9
of the variations in demeanor and tone of voice that bear on the listener’s
understanding of what is said. Benton, supra. Thus, given the trial court’s
broad discretion as the fact-finder, upon review we find no error in the
court’s determination that the Bostwicks did not commit fraud against the
Murrays concerning the pinhole leak problems they experienced with the
home. The record does not reasonably support a finding that the Bostwicks
intended to obtain an unjust advantage or cause damage or inconvenience to
the Murrays.
CONCLUSION
For the reasons set forth above, the judgment of the trial court is
affirmed. Costs are assessed against Plaintiffs/Appellants, Richard and
Heather Murray.
AFFIRMED.
10