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2011-UP-289 - Alpha Contracting Services v. Household Finance Corp

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Alpha Contracting Services, Inc., Appellant,

v.

Household Finance Corp., II; John W. Harris, d/b/a S.C. Corporate Real Estate Service; and S.C. Corporate Real Estate Service, Respondents.


Appeal From Richland County
Benjamin H. Culbertson, Circuit Court Judge


Unpublished Opinion No. 2011-UP-289
Submitted May 4, 2011 – Filed June 13, 2011


AFFIRMED


Donald E. Jonas, of Columbia, for Appellant.

Thad H. Westbrook and Candace C. Jackson, both of Columbia, for Respondent Household Finance Corporation, II.

Kevin A. Hall and Matthew Todd Carroll, both of Columbia, for Respondent John W. Harris, d/b/a SC Corporate Real Estate Service.

PER CURIAM: Alpha Contracting Services, Inc. (Alpha) brought this negligent misrepresentation action against Household Finance Corp., II (Household) and John W. Harris, d/b/a S.C. Corporate Real Estate Service, (Harris) (collectively Respondents) after discovering that a residence it purchased had approximately 1,000 square feet less than the amount represented in a multiple listing service (MLS).  Alpha seeks review of the circuit court's order granting summary judgment to Respondents.  We affirm.

FACTS/PROCEDURAL HISTORY

On June 7, 2005, Harris, a real estate broker, entered into an Exclusive Right to Sell Agreement with Household concerning one of its foreclosure properties at 6 Rice Mill Ferry Road in Richland County.  Unbeknownst to Harris, sometime in June 2005, Household received a copy of a private appraisal it had commissioned.  The appraisal indicated that the house contained 3,043 square feet of heated living space.  Household did not provide a copy of the appraisal to Harris. 

Harris advertised the property in an MLS listing, which stated that the property contained approximately 3,916 heated square feet of living space and the information in the listing was "Deemed Reliable, but Not Guaranteed."  Harris had obtained the information regarding square footage from the Richland County tax assessor's office.  The amount indicated was consistent with the square footage noted in the 2005 Richland County tax appraisal for the property. 

In November 2005, Alpha was incorporated for the purpose of renovating and reselling homes.  In January 2006, Alpha entered into a contract of sale for Household's property on an "as is where is" basis.  The contract included the following provision regarding inspection of the property: 

The Listing and Selling Broker(s) recommend that Purchaser obtain a home inspection.  Purchaser has the right within ten (10) business days after acceptance of contract, to have home inspected by qualified professional inspectors of his choice . . . Purchaser's failure to notify Seller or Seller's Agent in writing of any defect found by the home inspection within the time limits herein provided, or Purchaser's acceptance of the deed at closing, shall constitute Purchaser's full acceptance of the condition of the property and a waiver of Purchaser's right to object to any defects found by the home inspection(s).

The contract also contained the following disclaimers: "The parties acknowledge that the Listing and Selling Broker(s) and their Agent(s):  (A) Give no warranty of any kind, express or implied, as to the physical condition of the property or as to [the] condition of or existence of improvements, services or systems thereto . . . ; (B) Give no warranty, express or implied, concerning . . . the accuracy of the square footage[,] heated or unheated . . . (D) Give no warranty, express or implied, as to the fitness for a particular purpose of the property or improvements thereto . . . ."  An addendum to the contract included the following language: "Buyer acknowledges . . . that Buyer has been given a reasonable opportunity to inspect and investigate the property and all improvements thereon . . . and that in purchasing the property[,] Buyer is not relying on Seller, or its agents, as to the condition or safety of the property and/or any improvements thereon . . . ."    

Alpha does not dispute the fact that it did not measure the home before closing on the purchase for $205,000.  After purchasing the home, Alpha renovated it and placed it on the market.  Alpha then commissioned an appraisal of the property, which indicated that it had 2,942 square feet of heated living space instead of 3,916 square feet as indicated by the MLS listing.  Alpha later sold the property for $280,000. 

Alpha then filed this action against Respondents, asserting claims for negligence, negligent misrepresentation, breach of contract, and breach of implied warranty.  The circuit court granted Respondents' summary judgment motions, and this appeal followed.

ISSUES ON APPEAL

1. Did the circuit court properly grant summary judgment to Respondents when they were entitled to judgment as a matter of law on each of Alpha's claims?

2. Did the circuit court properly grant summary judgment to Respondents without first requiring Household to comply with Alpha's discovery requests?

STANDARD OF REVIEW

On appeal from the grant of a summary judgment motion, this court applies the same standard as that required for the circuit court under Rule 56(c), SCRCP.  Brockbank v. Best Capital Corp., 341 S.C. 372, 379, 534 S.E.2d 688, 692 (2000).  Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.  Rule 56(c), SCRCP; Adamson v. Richland Cnty. Sch. Dist. One, 332 S.C. 121, 124, 503 S.E.2d 752, 753 (Ct. App. 1998).  "To determine if any genuine issues of fact exist, the evidence and all reasonable inferences must be viewed in the light most favorable to the non-moving party."  Sauner v. Pub. Serv. Auth. of S.C., 354 S.C. 397, 404, 581 S.E.2d 161, 165 (2003).  Further, "in cases applying the preponderance of the evidence burden of proof, the non-moving party is only required to submit a mere scintilla of evidence in order to withstand a motion for summary judgment."  Hancock v. Mid-South Mgmt., Inc., 381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009).

"The purpose of summary judgment is to expedite disposition of cases [that] do not require the services of a fact finder."  George v. Fabri, 345 S.C. 440, 452, 548 S.E.2d 868, 874 (2001).  "Summary judgment is appropriate in those cases in which plain, palpable and undisputable facts exist on which reasonable minds cannot differ."  Priest v. Brown, 302 S.C. 405, 408, 396 S.E.2d 638, 639 (Ct. App. 1990).  "It is not sufficient that one create an inference [that] is not reasonable or an issue of fact that is not genuine."  Id.  Once the moving party meets the initial burden of showing an absence of evidentiary support for the opponent's case, the opponent cannot simply rest on mere allegations or denials contained in the pleadings but must come forward with specific facts showing there is a genuine issue for trial.  Rule 56(e), SCRCP; Boone v. Sunbelt Newspapers, Inc., 347 S.C. 571, 579, 556 S.E.2d 732, 736 (Ct. App. 2001). 

LAW/ANALYSIS

I.   Judgment as a Matter of Law

Alpha maintains that the circuit court erred in granting summary judgment to Respondents because Alpha presented more than a scintilla of evidence showing that Respondents grossly misstated the square footage of the house Alpha purchased and intentionally withheld information as to the actual square footage.  We believe the circuit court correctly granted summary judgment to Respondents regardless of any evidence of Respondents' intent to withhold information because the contract of sale expressly disclaimed any warranty as to the home's square footage and because Alpha failed to measure the square footage before closing on the purchase.  We will address each of Alpha's causes of action in turn.

          A.  Negligent Misrepresentation

To establish a claim for negligent misrepresentation, a plaintiff must show: 

(1) the defendant made a false representation to the plaintiff; (2) the defendant had a pecuniary interest in making the statement; (3) the defendant owed a duty of care to communicate truthful information to the plaintiff; (4) the defendant breached that duty; (5) the plaintiff justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary loss as a result of such reliance. 

Schnellmann v. Roettger, 368 S.C. 17, 20-21, 627 S.E.2d 742, 744 (Ct. App. 2006), aff'd as modified on other grounds, 373 S.C. 379, 645 S.E.2d 239 (2007). 

In Schnellmann, two home purchasers asserted a negligent misrepresentation claim against a real estate listing agent based on the discrepancy between the square footage indicated in an MLS listing and the actual square footage.  Id. at 20, 627 S.E.2d at 744.  This court noted:

The Schnellmanns could have discovered the misstatement by simply requesting a copy of the appraisal or by having someone come in to measure the property. They were informed via the MLS listing that the measurements were not precise. The Schnellmanns viewed the house, and proceeded with the purchase without finally determining the exact square footage. In light of the evidence presented, we agree with the trial court's conclusion that if the Schnellmanns relied on the approximation of the square footage contained in the listing, such reliance was unreasonable as a matter of law.

Id. at 21, 627 S.E.2d at 745 (emphasis added).

Like the purchasers in Schnellmann, Alpha failed to take its own measurements of the home's square footage.  Therefore, Alpha's reliance on the square footage indicated in the MLS listing was unreasonable as a matter of law.  Alpha cannot obtain compensation from Respondents if it has not exercised its own due diligence.  See Schnellmann, id. at 21, 627 S.E.2d at 745 ("[T]here can be no liability for casual statements, representations as to matters of law, or matters which plaintiff could ascertain on his own in the exercise of due diligence.") (citation and internal quotation marks omitted). 

Alpha argues that the determination of the right to rely on a defendant's representation necessarily requires weighing the evidence of whether the representation was material and intentional or insubstantial and inadvertent.  However, Alpha cites no authority for this proposition.  Therefore, Alpha has abandoned this argument.  See Rule 208(b)(1)(D), SCACR (requiring the citation of authority in the argument portion of an appellant's brief); First Sav. Bank v. McLean, 314 S.C. 361, 363, 444 S.E.2d 513, 514 (1994) (noting that when a party fails to cite authority or when the argument is simply a conclusory statement, the party is deemed to have abandoned the issue on appeal).

Alpha cites the following language from section 40-57-137(F) of the South Carolina Code (2011) in support of its argument that the evidence of Respondents' intent precluded summary judgment: 

A seller's agent, the company, and the broker-in-charge are not liable to a buyer for providing the buyer with false or misleading information if that information was provided to the licensee by his client and the licensee did not know or have reasonable cause to suspect the information was false or incomplete.

(emphasis added).[1]  Admittedly, this statute creates a duty of care on the part of a real estate broker toward a purchaser to avoid burying his head in the sand with regard to the condition of the property.[2]  This would establish the third element of the negligent misrepresentation claim.  However, section 40-57-137(F) does not suggest that a plaintiff has established all of the elements of a negligent misrepresentation claim if the plaintiff merely presents evidence that the broker had reasonable cause to suspect information provided to him by his client was false or incomplete.  The language in subsection (G) of the statute lends support to this conservative interpretation of subsection (F): "Nothing in this chapter limits the obligation of the buyer to inspect the physical condition of the property which the buyer may purchase."[3]  

Here, Alpha relied on an MLS listing that expressly stated that the information was not guaranteed.  Further, the parties' contract expressly disclaimed any warranty as to square footage.  Alpha, therefore, cannot show even a scintilla of evidence as to the fourth element of the negligent misrepresentation claim—a breach of the duty of care. 

Moreover, Alpha failed to take its own measurements of the home, and, thus, its reliance on the MLS listing was unreasonable as a matter of law.  This precluded showing even a scintilla of evidence on the justifiable reliance element, the fifth element, of its negligent misrepresentation claim.    

Based on the foregoing, Respondents were entitled to judgment as a matter of law on Alpha's negligent misrepresentation claim. 

     B. Negligence

Alpha's negligence claim and its negligent misrepresentation claim should have been treated as solely one claim for negligent misrepresentation.  See Rule 220(c), SCACR (stating that this court may affirm the circuit court's ruling upon any ground appearing in the record); Quail Hill, L.L.C. v. Cnty. of Richland, 387 S.C. 223, 240, 692 S.E.2d 499, 508 (2010) (holding that a plaintiff's negligence claim against a county for its employee's mistake in advising the plaintiff's agent regarding a zoning classification was subsumed in its negligent misrepresentation claim); id. ("We agree with County that Quail Hill's claims of negligence and negligent misrepresentation should be treated as solely one for negligent misrepresentation.").  Because Respondents were entitled to judgment as a matter of law on Alpha's negligent misrepresentation claim, they were likewise entitled to judgment as a matter of law on Alpha's negligence claim.

Even if we were to examine the negligence claim independently, Respondents were entitled to judgment as a matter of law on this claim because they expressly disclaimed any warranty as to square footage and thus did not breach any duty to give truthful information to Alpha.  

     C. Breach of Contract

Alpha's complaint states that Respondents' representation regarding square footage constituted a condition of the contract of sale.  The complaint further states that despite this condition, the house contained only approximately 75% of the stated square footage, and, therefore, Respondents breached the contract of sale.

When the terms of a contract are clear, the interpretation of the contract is a question of law for the court.  Stribling v. Stribling, 369 S.C. 400, 404, 632 S.E.2d 291, 293 (Ct. App. 2006).  Here, the contract of sale has no provision stating the amount of the home's square footage.  In fact, it has a provision clearly stating that the listing and selling brokers give no warranty concerning the accuracy of the square footage.  Further, the parties' contract included an integration clause, stating "[t]he parties agree that this written contract expresses the entire agreement between the parties, and that there is no other agreement, oral or otherwise, modifying the terms hereunder . . . ."  Thus, the square footage representation in the MLS listing is not a part of the contract.  See Gilliland v. Elmwood Props., 301 S.C. 295, 302, 391 S.E.2d 577, 581 (1990) ("The parol evidence rule prevents the introduction of extrinsic evidence of agreements or understandings contemporaneous with or prior to execution of a written instrument when the extrinsic evidence is to be used to contradict, vary, or explain the written instrument."); id. ("This is especially true when the written instrument contains a merger or integration clause.").

Because the alleged breach is not based on any provision in the parties' contract, Respondents were entitled to judgment as a matter of law on Alpha's breach of contract claim.

D.  Breach of Implied Warranty

Alpha's complaint states that Respondents' representation regarding square footage constituted an implied warranty that the house would be fit for its intended use and the normal expectations of a purchaser.  The complaint further states "[d]espite such implied warranty of fitness and habitability, the Plaintiff's home was not as represented and actually contained only approximately 75% of the . . . heated living area represented."

Here, Alpha conceded in its complaint that it purchased a used home from Respondents.  "[N]o warranty attaches to sales of used homes."  Arvai v. Shaw, 289 S.C. 161, 164, 345 S.E.2d 715, 717 (1986).  Further, the contract of sale expressly disclaimed any warranties as to the accuracy of square footage, the property's physical condition, or its fitness for a particular purpose. 

Based on the foregoing, Respondents were entitled to judgment as a matter of law on Alpha's breach of implied warranty claim. 

II.  Discovery

Finally, Alpha asserts that the circuit court erred in granting summary judgment to Respondents without first requiring Household to comply with Alpha's discovery requests.  We disagree.

"A complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial."  Gauld v. O'Shaugnessy Realty Co., 380 S.C. 548, 559, 671 S.E.2d 79, 85 (Ct. App. 2008) (citation and internal quotation marks omitted).  Therefore, "the nonmoving party must demonstrate the likelihood that further discovery will uncover additional relevant evidence and that the party is not merely engaged in a fishing expedition."  Dawkins v. Fields, 354 S.C. 58, 69, 580 S.E.2d 433, 439 (2003) (citations and internal quotation marks omitted) (emphasis added). 

Here, the facts relevant to Alpha's claims are undisputed and are clearly reflected in the record.  Alpha closed on the sale of a used home without first measuring the home's heated square footage, despite the disclaimer in the MLS listing and despite the provisions of the contract disclaiming the accuracy of the square footage or any warranty of fitness for a particular purpose.  Therefore, further discovery will not uncover additional relevant evidence, as required by Dawkins

Based on the foregoing, the circuit court properly granted summary judgment to Respondents despite the fact that discovery had not yet been completed.

CONCLUSION

Accordingly, the judgment of the circuit court is

AFFIRMED.

SHORT, KONDUROS, and GEATHERS, JJ., concur.    


[1] Subsection (F) also states: "A licensee who represents a seller shall treat all prospective buyers honestly and may not knowingly give them false or misleading information about the condition of the property which is known to the licensee or, when acting in a reasonable manner, should have been known to the licensee."  The "condition of the property" includes square footage. 

[2] See Rayfield v. S.C. Dep't of Corr., 297 S.C. 95, 103, 374 S.E.2d 910, 914 (Ct. App. 1988) ("In order to show that the defendant owes him a duty of care arising from a statute, the plaintiff must show two things: (1) that the essential purpose of the statute is to protect from the kind of harm the plaintiff has suffered; and (2) that he is a member of the class of persons the statute is intended to protect."); id. ("If the plaintiff makes this showing, he has proven the first element of a claim for negligence: viz., that the defendant owes him a duty of care.").

[3] Also noteworthy is subsection (Q) of the statute, which states that the provisions of section 40-57-137 that are inconsistent with common law supersede common law and the common law may be used to aid in interpreting or clarifying the duties described in the statute.  The court's opinion in Schnellmann is consistent with section 40-57-137 and clarifies the scope of the buyer's duty to inspect to include measuring square footage.