Hoel v. Rose
Court of Appeals Division I
State of Washington
Opinion Information Sheet
Docket Number: 52860-2-I
Title of Case: Betty Jo Rose, et al., Appellants v. Dale
M. Hoel, et al., Respondents
File Date: 11/01/2004
SOURCE OF APPEAL
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Appeal from Superior Court of Skagit County
Docket No: 01-2-00837-7
Judgment or order under review
Date filed: 07/18/2003
Judge signing: Hon. Michael E Rickert
JUDGES
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Authored by Ronald Cox
Concurring: Ann Schindler
William Baker
COUNSEL OF RECORD
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Counsel for Appellant(s)
Kenneth Wendell Masters
Attorney at Law
241 Madison Ave N
Bainbridge Island, WA 98110-1811
Craig David Sjostrom
Attorney at Law
411 Main St
Mount Vernon, WA 98273-3837
Counsel for Defendant(s)
John William Hicks
Attorney at Law
1603 S 3rd
PO Box 1165
Mount Vernon, WA 98273-1165
Counsel for Respondent(s)
David Lawrence Day
Fairhaven Legal Associates. PS
816 E Fairhaven Ave
PO Box 526
Burlington, WA 98233-0526
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
)
DALE M. HOEL, a single man; ) No. 52860-2-I
MICHELLE D. JONES, a single )
woman, both as their separate ) ORDER GRANTING MOTION
property, ) FOR PUBLICATION
)
Respondents, )
)
v. )
)
BETTY JO ROSE and JOHN DOE )
ROSE, husband and wife, and )
the marital community )
composed thereof; NANCY )
HUDSON and JOHN DOE HUDSON )
#1, husband and wife, and the )
marital community composed )
thereof; DONNA HUDSON and )
JOHN DOE HUDSON #2, husband )
and wife, and the marital )
community composed thereof; )
and TROY ROSE and JANE DOE )
ROSE, husband and wife, and )
the marital community )
composed thereof,
Appellants.
Betty Jo Rose moved for publication of this court's decision filed
November 1, 2004. A majority of the panel hearing the case has considered
the motion and has determined that the motion should be granted. Now,
therefore, it is hereby
ORDERED that the motion for publication is granted.
DATED this day of 2004.
FOR THE PANEL:
Judge
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
)
DALE M. HOEL, a single man; ) No. 52860-2-I
MICHELLE D. JONES, a single )
woman, both as their separate ) DIVISION ONE
property, )
)
Respondents, )
)
v. )
)
BETTY JO ROSE and JOHN DOE )
ROSE, husband and wife, and )
the marital community ) UNPUBLISHED
composed thereof; NANCY )
HUDSON and JOHN DOE HUDSON ) FILED: November 1,
#1, husband and wife, and the ) 2004
marital community composed )
thereof; DONNA HUDSON and )
JOHN DOE HUDSON #2, husband )
and wife, and the marital )
community composed thereof; )
and TROY ROSE and JANE DOE )
ROSE, husband and wife, and )
the marital community )
composed thereof,
Appellants.
COX, C.J. - In an action for negligent representation arising from a
real estate sale, the purchaser must prove that he or she justifiably
relied on alleged material misrepresentations by the seller about the
property.1 Here, the dispositive issue is whether Dale Hoel and Michelle
Jones (Hoel) justifiably relied on representations of Betty Jo Rose that
the lot they ultimately purchased from her contained 6.43 acres and had
dimensions of 330 feet by 820 feet. On this record, the court's
determination that Hoel justifiably relied on these representations and
thus were entitled to damages and other relief cannot be sustained.
Accordingly, we reverse.
The facts are generally undisputed. In 1977, Rose and her husband
purchased the lot that is the subject of this litigation and the lot
directly to the east of it. Both lots were undeveloped at the time of the
purchases. Rose sold the adjacent lot to her parents, the Hudsons, in
1977. Between 1977 and 1979, Rose and the Hudsons built houses and other
buildings on their respective properties. Without conducting a survey, the
parties set the boundary between their lots based on purported boundary
markers on the properties. They erected a fence along a portion of the
eastern boundary of the Rose lot in 1977 or 1978. From that point on, the
common boundary between the lots remained unchanged.
In 2000, Rose marketed her property, first through a realtor and later
by herself. She placed advertisements on the Internet and posted flyers
around Darrington, Washington. Hoel learned of the property from one of
the flyers, met with Rose, and viewed the house and property.
Rose told Hoel that the lot size set forth in her flyers was 6.43
acres based on information she had obtained from the county tax statement.
Rose also indicated that the lot dimensions (330 feet by 820 feet) were
derived from a realtor in connection with her previous listings of the
property. She also stated that she had not had the property surveyed
during the period of her ownership. When Hoel toured the property with
Rose, she pointed out the landmarks constituting the boundaries of the
property. Among them, she pointed out the fence built in the late 1970's
that marked the common boundary of the property between her lot and the
Hudsons' lot to the east. Hoel also examined the property without Rose,
but did not inspect all the property, as Rose encouraged.
Hoel did not commission a survey, measure the lot dimensions, or undertake
any investigation or verification of the information provided concerning
the boundaries or lot size prior to closing. But Hoel obtained a pre-
closing appraisal that valued the property at $167,000. The appraisal
contained a diagram of the property that was admitted into evidence as
Exhibit 14. The boundaries shown in this diagram differed significantly
from what Rose had represented.
The sale closed on October 1, 2003. Rose conveyed the property by
statutory warranty deed for $165,000.
Several months after the closing, Hoel conducted an investigation of the
location of the boundaries. Hoel commissioned a survey that disclosed that
the legal description of the purchased property appeared to vary from the
common boundary between the former Rose property and the Hudsons' property
to the east. Specifically, the Hudsons' house, driveway, and a significant
portion of their property was inside the easterly portion of the legal
description of Hoel's lot. This survey showed the lot size to be 5.04
acres. The appraisal valued the property with the boundaries Rose had
pointed out at $210,000.
After discovering this information, Hoel placed fencing along the surveyed
boundary and removed trees and underbrush in that area. Hoel also removed
portions of the fence that had stood between the Hudson's property and his
lot at the time of sale. These actions led to confrontations between Hoel
and members of the Rose family.
Hoel brought this action, which included a claim against Rose for negligent
misrepresentation. After a bench trial, the trial court concluded that
Rose negligently and unintentionally misrepresented the size of the parcel
conveyed to Hoel. The court also determined that Hoel justifiably and
reasonably relied on statements by Rose concerning the size and boundary
locations of the property. In addition, the court determined that Hudson
had either adversely possessed the easterly portion of the property
described in the legal description that Rose had used to convey to Hoel or
that Rose and Hudson had established the common boundary between the
properties by mutual recognition or acquiescence prior to the sale to Hoel.
The trial court entered a judgment against Rose in the amount of $33,301,
plus attorney fees of $10,000 and costs.
Rose appeals.
NEGLIGENT MISREPRESENTATION
Rose does not challenge either the court's determination that Hudson
adversely possessed the easterly portion of the property sold to Hoel or
that she and Hudson had established a common boundary between their
respective properties. Likewise, she does not challenge the court's
determination that she supplied erroneous information to Hoel in connection
with the sale of the property.
The threshold issue that she does argue is that there is no substantial
evidence to support the trial court's finding that Hoel justifiably relied
on her representations concerning the size and dimensions of the lot. We
agree and so hold.
We analyze a negligent misrepresentation claim by asking whether: (1)
the defendant made a negligent misrepresentation; (2) a party relied on the
misrepresentation causing the party harm; and (3) the party was justified
in relying on the misrepresentation.2 To prevail on a claim of negligent
misrepresentation, a plaintiff must prove by clear, cogent, and convincing
evidence that he or she justifiably relied on the information that the
defendant negligently supplied.3 Reliance is justifiable if it is
reasonable under the circumstances.4 The question of whether a party
justifiably relied is a question of fact.5 We review a finding of fact
that is incorrectly designated as a conclusion of law for substantial
evidence.6
The findings of fact in this case are largely undisputed and to that
extent are verities on appeal.7
Reasonable Reliance
Rose first cites MacKay v. Peterson,8 for the proposition that Hoel's
reliance was not reasonable under the circumstances and the judgment of the
trial court should be reversed. Alternatively, Rose argues that if this
court does not reverse, then the court should assign a percentage of fault
to Hoel for unjustifiable reliance. We agree with the first argument and
need not reach the alternative one.
In MacKay, the buyer inspected the land, and the seller stated that 16
acres of land had been cleared on the property, but in reality only 9.86
acres had been cleared.9 The buyer was an experienced farmer who had ample
opportunity to inspect the land, and could have determined the cleared area
did not measure 16 acres. The entire parcel could not be viewed at one
time, but the cleared area was not obscured.10 The buyer, through his
familiarity with land, by estimating the area, or by roughly measuring it
by 'stepping' off the distance, could have determined the cleared area was
much smaller than represented.11 The court determined that the buyer's
reliance on the seller's representation was not reasonable given the
buyer's experience, and his opportunity to inspect the land.12
Here, there is no substantial dispute over the facts. Rather, the
question is whether the essentially undisputed facts support the
determination that Hoel reasonably relied on the representations of Rose as
to the size and dimensions of the property.
Hoel had a full opportunity to inspect the Rose property. While choosing
not to inspect all of it, in spite of Rose's suggestion to do so, there was
nothing to inhibit Hoel from investigating the accuracy of the
representations. And there is no suggestion from the evidence that
anything material about the property was hidden from discovery by Hoel.
We note that Hoel obtained a pre-closing appraisal (Exhibit 14) that
contained information at variance with the representations of Rose. First,
the map that was part of the appraisal showed the property's dimensions as
725 feet by 375 feet. This varied from Rose's representation that the
boundaries were 820 feet by 330 feet. Second, the same map showed the
Hudsons' driveway (as well as the house and other improvements associated
with that driveway) to be within the eastern boundary of the property Hoel
was to purchase from Rose. Third, assuming the property dimensions shown
on the map were correct, they did not show a lot size of 6.43 acres - as
Rose represented.13 Rather, they indicated a lot size of something much
less than that acreage. Despite this information, Hoel did nothing to
reconcile the differences between what he was able to discover on his own
by examining the property or by attempting to reconcile the differences
between the appraisal and the representations of Rose.
The property boundary pointed out by Rose also clearly conflicted with the
map in Hoel's appraisal. Hoel could have further investigated the
description offered by Rose. But Hoel took no steps to investigate or
resolve the conflict between the actual boundaries of the property pointed
out by Rose and the 6.43 acres estimate contained in both the county
record, and Hoel's own pre-closing appraisal.
Hoel cites Hoffman v. Connall,14 for the proposition that a buyer has a
cause of action against any seller of realty who innocently misrepresents
the quantity, boundaries, or location to a purchaser. Hoffman states,
'{t}he owner is held liable because he is presumed to know the character
and attributes of the land conveyed, and the buyers are entitled to rely
upon the owner's reasonable representations of the premises.'15
The court in Hoffman, however, did not explain how the buyer's reliance was
justifiable. Here, we do. Hoffman is not helpful here.
Neither is Algee v. Hillman16 to which Hoffman cites for the proposition
that the seller is presumed to know the character of the land and is
subject to a cause of action for misrepresentation is helpful here.
Nothing in it explains why in this case Hoel has met the requirement of
justifiable reliance on representations about the land that the seller
makes.
Moreover, the cases upon which the court in Hoffman relies are factually
distinct from the present case. The clearly defined boundaries pointed out
by Rose in this case present a different scenario compared to other cases
where the court determined a negligent representation occurred. For
example, in Alexander Myers & Co. v. Hopke,17 the property in question had
irregularly shaped borders and there were no landmarks delineating
boundaries. There, the court concluded that the buyer could not have
determined the actual size of the property and could only rely on the
seller's representations.
A similar unclear boundary problem existed in Dixon v. MacGillivray.18 In
both situations the property boundaries were not clearly ascertainable by
an average buyer, but rather a survey was required to determine the actual
boundaries. In those cases, the court held that reliance by the purchaser
upon misrepresentations of acreage by the vendor is justifiable when the
boundaries were not reasonably ascertainable and the purchaser could not
have determined them without a survey.
Dixon went on to distinguish itself from situations where inspections
occurred and boundaries are marked. Citing Conta v. Corgiat,19 the Dixon
court stated:
We held, in that case, that the purchaser twice visited and inspected the
lot, its boundaries were plainly marked and there was no concealment or
pointing out of false lines, hence rescission of the sale for fraud on the
ground that the vendor misrepresented the area was denied because of the
application of the rule of caveat emptor. That is, where the boundaries
are reasonably ascertainable, the rule of caveat emptor applies, but where,
as in the case at bar, there was no defined physical boundary on the
northwesterly side of the lots and there was no way respondents could have
determined the true boundary in the absence of a survey, respondents had a
right to rely upon the representation of appellants.{20}
Here, Hoel inspected the property, boundaries were clearly marked, there
was no concealment or pointing out of false lines, and no survey was
required to determine the true boundary. Moreover, Hoel had specific
information in his appraisal that conflicted with the very representations
on which the cause of action is based. Under the law and facts in Conta,
Dixon and Alexander Myers, Hoel's reliance was not justifiable.
Based on these essentially undisputed facts and the relevant case
authority, we must conclude that there is no substantial evidence to
support the decision that Hoel justifiably relied on Rose's representations
regarding acreage and dimensions. Reversal is appropriate.
Because we reverse, we need not reach either apportionment of fault or the
question of merger that Rose argues on appeal.
ATTORNEY FEES
Hoel argues that the trial court abused its discretion when it awarded
fees less than the full amount claimed for reasonable attorney fees and
costs at trial. We disagree.
A party seeking cross review must file a notice of appeal.21 Hoel did not
do so. Thus, we need not address Hoel's argument.
Moreover, because Hoel should not have prevailed below he was not entitled
to be designated the prevailing party under the terms of the purchase and
sale agreement. Thus, the award of attorney fees and costs to Hoel below
must be reversed.
We reverse the judgment.
/s/ rec
WE CONCUR:
/s/ as /s/ wwb
1 See Lawyers Title Ins. Corp. v. Baik, 147 Wn.2d 536, 545, 55 P.3d 619
(2002).
2 Restatement (Second) of Torts sec. 552 (1977); Lawyers Title Ins. Corp.,
147 Wn.2d at 545.
3 Lawyers Title Ins. Corp., 147 Wn.2d at 545.
4 See Lawyers Title Ins. Corp., 147 Wn.2d at 551.
5 ESCA Corp. v. KPMG Peat Marwick, 135 Wn.2d 820, 828, 959 P.2d 651 (1998)
(quoting Barnes v. Cornerstone Investments, Inc., 54 Wn. App. 474, 478, 773
P.2d 884 (1989)).
6 Willener v. Sweeting, 107 Wn.2d 388, 393-94, 730 P.2d 45 (1986).
7 See Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 808, 828 P.2d
549 (1992) (citing Nearing v. Golden State Foods Corp., 114 Wn.2d 817, 818,
792 P.2d 500 (1990)).
8 122 Wash. 550, 211 P. 716 (1922).
9 MacKay, 122 Wash. at 552.
10 MacKay, 122 Wash. at 552.
11 MacKay, 122 Wash. at 552.
12 MacKay, 122 Wash. at 552-53. See also Fleischman v. Hockett, 49 Wn.2d
328, 301 P.2d 166 (1956) (Where purchasers of a cattle ranch and farm had
many years experience in farming, there was no confidential or fiduciary
relation existing between vendors and purchasers. They dealt with each
other at arm's length. Vendors did not represent that they had made a
survey of the ranch and farm. Purchasers made a careful and unhurried
examination of the ranch and farm before making the purchase, and the
plowable acreage was only 64.1 acres instead of 158 acres as allegedly
represented by vendors. Purchasers were not justified in relying on
alleged fraudulent representations of vendors and were not entitled to
recover damages from vendors because of alleged fraud.).
13 Assuming the largest dimensions shown on the map (375 feet by 725 feet),
the area of the lot was 271,875 square feet or 30,208 square yards. There
are 4,840 square yards in an acre. Thus, the acreage, including the Hudson
driveway and improvements, was about 6.24 acres. Exclusion of the land
containing the Hudson driveway and improvements would, of course, have
yielded even less than 6.24 acres and much less than the represented area
of 6.43 acres on which Hoel claims to have justifiably relied on when
purchasing from Rose.
14 43 Wn. App. 532, 538-39, 718 P.2d 814 (1986) (reversed on other grounds,
108 Wn.2d 69 (1987) (citing Algee v. Hillman Inv. Co., 12 Wn.2d 672, 674-
75, 123 P.2d 332 (1942). See also Alexander Myers & Co. v. Hopke, 88 Wn.2d
449, 455, 565 P.2d 80 (1977); Darnell v. Noel, 34 Wn.2d 428, 431-32, 208
P.2d 1194 (1949); Dixon v. MacGillivray, 29 Wn.2d 30, 35, 185 P.2d 109
(1947); Lyall v. DeYoung, 42 Wn. App. 252, 258-59, 711 P.2d 356 (1985),
review denied, 105 Wn.2d 1009 (1986)).
15 Hoffman, 43 Wn. App. at 538 (citing Thompson v. Huston, 17 Wn.2d 457,
461, 135 P.2d 834 (1943)).
16 Algee, 12 Wn.2d at 674-75.
17 88 Wn.2d 449, 455, 565 P.2d 80 (1977).
18 29 Wn.2d 30, 35, 185 P.2d 109 (1947).
19 74 Wash. 28, 132 P. 746 (1913).
20 Dixon, 29 Wn.2d at 35-36.
21 RAP 5.1(d).