Opinion
No. WD68188
December 11, 2007
Appeal from the Circuit Court of Benton County, Missouri, Honorable John W. Sims, Judge.
J. Eric Mitchell, Clinton, MO, Counsel for Appellants.
James O. Kjar, Warsaw, MO, Counsel for Respondents.
Before: Harold L. Lowenstein, P.J., Joseph M. Ellis, and Thomas H. Newton, JJ.
Plaintiffs, Steven and Frances Larabee (Larabees) appeal the summary judgment in favor of defendants Buddy and Dorothy Eichler (Eichlers). This was a misrepresentation cause of action brought by the Larabees; and the Eichlers argued in defense that the action was barred by the statute of limitations.
On March 1, 1998 the Larabees and the Eichlers entered into an amended Proposal and Contract for the purchase of a parcel of real property, Lot 403. Subsequently, the Larabees and Eichlers entered into an agreement to purchase another parcel of property, Lot 402, next to Lot 403. The Warranty Deeds issued for these sales indicated that both parcels were located in Sterett Creek Village, a subdivision in Benton County, Missouri, and subject to easements and restrictions of record. The Larabees alleged that the Eichlers misrepresented the property by indicating that the lots as well as the property surrounding them were located in Sterett Creek Village and subject to covenants and restrictions, limitations the Larabees desired. These representations were made orally and in writing, and as a result they have suffered a loss in value to the property, because the surrounding property is not subject to the restrictions of the Sterett Creek Village Subdivision, although the property they purchased is located within the subdivision.
The Larabees built and lived in a home on lot 403. Until 2002, the Larabees enjoyed the use of Sterett Creek Village's amenities, including the swimming pool and pavilion; they also attended and voted in the annual meetings of the Sterett Creek Village Trusteeship. Additionally, they were billed and paid assessments to the subdivision and paid well hook-up fees. In 2003, the Eichlers began to use the adjoining property notated as future development in the documents given to the Larabees, in violation of the represented restrictions. The Larabees claim that a mobile camper and brush pile were placed in front of their residence on undeveloped land owned by the Eichlers, to detract from the beauty of their property, to harass them, and to devalue their property. The Larabees sued the Eichlers for breach of the restrictive covenants and the suit was dismissed for lack of standing.
The Larabees filed suit for misrepresentation on March 29, 2004. The petition alleged that the Eichlers misrepresented the property to them, stating that the purchased parcels were in Sterett Creek Village, and that the property surrounding the purchased lots was subject to all restrictive covenants of Sterett Creek Village, that the surrounding lots were owned by the Eichlers and would be used for additional development and would be subject to the same restrictions. These alleged false representations were made orally, and in the form of documents given to the Larabees. The documents included a copy of the Sterett Creek Village Subdivision, and a copy of the plat of the surrounding property, which denoted the surrounding property owned by the Eichlers as future development areas and also as being located within Sterett Creek Village. Further, oral representations were made that the Eichlers owned the undeveloped lots in Sterett Creek Village, and they would be subject to the restrictive covenants.
Although the petition is denoted a "Petition for Misrepresentation," the misrepresentation claim is synonymous with fraudulent misrepresentation. The elements for fraudulent misrepresentation are:
"(1) a false, material representation; (2) the speaker's knowledge of its falsity or his/her ignorance of the truth; (3) the speaker's intent that his/her representation should be acted upon by the hearer in the manner reasonably contemplated; (4) the hearer's ignorance of the falsity of the representation; (5) the hearer's reliance on the representation being true; (6) the hearer's right to rely thereon; and (7) the hearer's consequent and proximately-caused injuries." BMK Corp. v. Clayton Corp., 226 S.W.3d 179, 193 (Mo.App.E.D. 2007) (quoting Murray v. Crank, 945 S.W.2d 28, 31 (Mo.App.E.D. 1997)).
In their first point, the Larabees contend that the statute of limitations did not bar the action. They entered the contract for lot 403 on March 1, 1998. The Eichlers argue that any alleged misrepresentation that was relied on occurred at the closing of the real estate transaction on April 10, 1998, because the Larabees had constructive notice of the misrepresentation due to the record of deed at the county recorder's office.
"A party who moves for summary judgment on the basis of a statute of limitations bears the burden of showing that the statute bars the plaintiff's claims." White v. Zubres, 222 S.W.3d 272, 274 (Mo. banc 2007). An action for fraud must accrue under the statute of limitations within ten years of the fraud. § 516.120(5). Once the action accrues it must be brought within five years. § 516.120. "A cause of action for fraud accrues at the time the defrauded party discovered or in the exercise of due diligence should have discovered the fraud." Graf v. Michaels, 900 S.W.2d 659, 661 (Mo.App.S.D. 1995). The plaintiff has a duty of inquiry to discover the fraud. Id. "Where the means of discovery exist, the plaintiff will be deemed to have known of the fraud so as to begin the running of the statute." Id.
All statutory references are to RSMo (2000) and the Cumulative Supplement (2006).
Where the running of the statute of limitations depends upon when the plaintiff discovered or by reasonable diligence could have discovered the fraud, a question of fact is presented. Thus, summary judgment [is] only proper where it is shown that there is no genuine issue of material fact as to whether the fraud was capable of ascertainment more than five years prior to the filing of the petition.
Taryen Dev., Inc. v. Phillips 66 Co., 31 S.W.3d 95, 103 (Mo.App.E.D. 2000) (internal citation omitted); Bueneman v. Zykan, 181 S.W.3d 105, 112 (Mo.App.E.D. 2005) (citing Brown v. Scheible, 814 S.W.2d 5, 7 (Mo.App.E.D. 1991)). A defrauded party does not have notice based on a recording in the county recorder's office, because the recording law was "not [intended] to give security to the perpetrators of fraud as against their victims." Bueneman, 181 S.W.3d at 111.
The only evidence supporting the Eichler's claim that the Larabees had notice is from the recorded plats in the county recorder's office. Because recordings made under the recording statute cannot be used to perpetuate fraud, this information is inappropriate for use in determining notice. The only remaining evidence is that the Larabees did not know and had no reason to know of the true nature of the property until the Eichler's began to use it in a manner inconsistent with their representations, which occurred in 2003, less than five years prior to the filing of the suit in 2004. Thus, it was improper to grant summary judgment based on the statute of limitations. This point is granted.
In their second point, the Larabees claim that a genuine issue of material fact existed regarding damages, and, therefore, summary judgment was inappropriate. The Eichler's motion for summary judgment stipulated that all the elements of the Larabees' petition could be proven except for damages.
In an action for fraud, pecuniary damages must be pled. Collins v. Mo. Bar Plan, 157 S.W.3d 726, 734 (Mo.App.W.D. 2005). We review the grant of a summary judgment de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Co., 854 S.W.2d 371, 376 (Mo. banc 1993). "Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion." Id. The non-movant gets the benefit of all reasonable inferences. Id.
In this case, the Larabees pled damages and they related it to the fraud in their petition. Although they responded to discovery requests that they had no idea how much the lots were actually worth at the time, because they did not have the subdivision's restrictions, they subsequently filed an affidavit based on a new appraisal. The new appraisal evaluated the market value of damages due to the lack of subdivision restrictions and measured the combined market value of their loss for both lots at $17,200. Thus, they corrected the uncertainty they had at the time of the discovery request.
The property evaluated in the appraisal totaled approximately 2.38 acres, which was a combination of Lots 402 and 403.
Taking all reasonable inferences in the Larabee's favor and treating their affidavit as true, summary judgment was inappropriate on this basis. They have shown that a genuine issue of material fact existed, and summary judgment was incorrect. This point is granted.
The summary judgment is reversed and the cause is remanded to the trial court for further proceedings consistent with this opinion.
Harold L. Lowenstein, P.J., and Joseph M. Ellis, J. concur.
Steven and Francis Larabee appeal a summary judgment in favor of Buddy and Dorothy Eichler.
The Larabees contend that a genuine issue of material fact existed which precluded the summary judgment. We reverse. The Larabees brought a misrepresentation action against the Eichlers and claim that they did not have notice of the misrepresentation until after another lawsuit was dismissed related to restrictive covenants on property purchased from the Eichlers. The Eichlers contend that the Larabees had notice at the time of the sale because all the information was recorded at the county recorder?s office. This is incorrect, because the representations made about the property were allegedly false and the recording statute may not be used to further a fraud. Furthermore, there was a genuine issue of material fact in the amount of damages due to the alleged misrepresentation. The Larabees pleaded damages and provided an affidavit to support that pleading, which was sufficient to create a genuine issue of material fact.
THIS SUMMARY IS UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.