Driver v Bagley, (02-363) 05/06/2003

Appeal by defendants from judgment entered 20 August 2001 by Judge J.B. Allen, Jr. in Superior Court, Wake County. Heard in the Court of Appeals 23 January 2003.

Browne, Flebotte, Wilson & Horn, P.L.L.C., by Daniel R. Flebotte, for plaintiffs-appellees.

Wallis & Morton, P.A., by Joseph H. Mitchiner, for defendants- appellants.

    McGEE, Judge.

    Ron and Phyllis Driver (plaintiffs) filed a verified complaint against defendants dated 15 June 1999 alleging that C.G. Bagley (Bagley) and Southern Marketing Group (collectively defendants) made both false representations with the intent to deceive plaintiffs and negligent misrepresentations concerning access rights to real property that plaintiffs purchased from Southern Marketing Group. Defendants answered the complaint and moved to dismiss on 27 August 1999. A bench trial was held on 1 August 2001. The trial court entered judgment on 20 August 2001 finding that defendants made negligent misrepresentations to plaintiffs andthat plaintiffs justifiably relied on these misrepresentations. The trial court awarded plaintiffs $15,020.71 in actual damages and costs. Defendants appeal.
    Phyllis Driver testified at trial that she and Ron Driver looked at a 14.97 acre lot in Fuquay-Varina, North Carolina in mid- 1995 with John Cooper, Jr. (Cooper), the real estate agent who had listed the property for sale. Plaintiffs were given a survey of the area that showed an access easement that extended from Dickens Road to the Town of Fuquay-Varina's lift station. Plaintiffs and defendants entered into an offer to purchase the property on 17 August 1995. As part of the purchase contract, defendants agreed to extend the driveway that was located on the access easement from the lift station to plaintiffs' building site. Defendants were unable to complete construction of the driveway before closing due to weather conditions and the $6,000 estimated price of the driveway was deducted from the purchase price.
    Ms. Driver testified she visited the property in 1998 and found no trespassing signs posted at the entrance of the driveway. She testified that on another occasion, she found a truck blocking the driveway. Plaintiffs also received a letter from the adjoining Magnolia Ridge Subdivision asking plaintiffs to cease use of the driveway. Ms. Driver testified that plaintiffs met with neighbors and the Town of Fuquay-Varina and concluded that plaintiffs were not entitled to use the driveway. Plaintiffs subsequently constructed a driveway extension alongside the existing driveway at a cost of $13,720.71.    Ms. Driver testified she believed plaintiffs had a right to use the existing driveway because the purchase contract stated that "[s]ellers will complete driveway beyond the lift station back to the building site. Driveway extension to be done similar to the existing driveway." She testified that plaintiffs did not make an effort to locate the property line of the adjacent Magnolia Ridge Subdivision or conduct their own individual lot survey because they relied on Bagley's survey. Ms. Driver also stated that plaintiffs received a copy of the Fuquay-Varina zoning ordinance before signing the purchase contract.
    Mr. Driver testified that he was a licensed real estate agent in North Carolina from 1985 to 1986 and received training concerning boundary lines. He testified he knew that a buyer of property needed to exercise reasonable diligence. However, plaintiffs chose not to order their own survey of the property. Mr. Driver also stated that he was familiar with the terms "let the buyer beware" and "caveat emptor."
    Bagley testified that, based on his conversations with the Town of Fuquay-Varina, he told Cooper that the driveway could be used to access the property. He also stated that this information was not based upon his own authority because he did not control the easement. He further testified that he told plaintiffs and Cooper that the Town of Fuquay-Varina was the source of the representation that plaintiffs could use the driveway and that he relied on this information in labeling the survey map. Bagley also testified that the survey map shown to plaintiffs did not show the actualdriveway.
    "The standard of review on appeal from a judgment entered after a non-jury trial is 'whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment.'" Cartin v. Harrison, 151 N.C. App. 697, 699, 567 S.E.2d 174, 176 (quoting Sessler v. Marsh, 144 N.C. App. 623, 628, 551 S.E.2d 160, 163, disc. review denied, 354 N.C. 365, 556 S.E.2d 577 (2001)), disc. review denied, 356 N.C. 434, 572 S.E.2d 428 (2002). The trial court in a non-jury trial serves as both the judge and jury and is responsible for resolving all conflicts in the evidence. G. R. Little Agency, Inc. v. Jennings, 88 N.C. App. 107, 110, 362 S.E.2d 807, 810 (1987). "Findings of fact made by the court in a non-jury trial have the force and effect of a jury verdict and are conclusive on appeal if supported by competent evidence, even though the evidence could support a contrary finding." Childers v. Hayes, 77 N.C. App. 792, 795, 336 S.E.2d 146, 148 (1985), disc. review denied, 316 N.C. 375, 342 S.E.2d 892 (1986).
    Defendants argue the trial court erred in entering judgment on plaintiffs' claim for negligent misrepresentation. Defendants contend that plaintiffs did not justifiably rely on Bagley's statements.
        "One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, ifhe fails to exercise reasonable care or competence in obtaining or communicating the information."

Marcus Bros. Textiles, Inc. v. Price Waterhouse, 350 N.C. 214, 218, 513 S.E.2d 320 323-24 (1999) (quoting Restatement (Second) of Torts § 552 (1977)). "The tort of negligent misrepresentation occurs when a party justifiably relies to his detriment on information prepared without reasonable care by one who owed the relying party a duty of care." Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 206, 367 S.E.2d 609, 612 (1988), rev'd on other grounds, 329 N.C. 646, 407 S.E.2d 178 (1991).
    In order to establish a claim for negligent misrepresentation, plaintiffs must prove that defendants owed them a duty of care and that plaintiffs justifiably relied upon the representations made by defendants at the time of purchase. Jordan v. Earthgrains Baking Cos., ___ N.C. App. ___, 576 S.E.2d 336 (2003) (holding that the defendants did not owe a duty to the plaintiffs to report accurate information about a plant's financial status); APAC-Carolina, Inc. v. Greensboro-High Point Airport Authority, 110 N.C. App. 664, 680, 431 S.E.2d 508, 517 (stating that the plaintiff unjustifiably relied on information because the plaintiff failed to "adequately inspect available information"), disc. review denied, 335 N.C. 71, 438 S.E.2d 197 (1993). "[W]here the evidence is clear and shows without conflict that the claimant had both the capacity and opportunity to discover the mistake or discrepancy but failed to do so the absence of reasonable diligence is established as a matter of law." Grubb Properties, Inc. v. Simms Investment Co., 101 N.C.App. 498, 501, 400 S.E.2d 85, 88 (1991). "'It is generally held that one has no right to rely on representations as to the condition, quality or character of property, or its adaptability to certain uses, where the parties stand on an equal footing and have equal means of knowing the truth.'" Harding v. Insurance Co., 218 N.C. 129, 135, 10 S.E.2d 599, 602 (1940)(quoting 12 R.C.L. 384); see also Olivetti Corp. v. Ames Business Systems, Inc., 319 N.C. 534, 542-43, 356 S.E.2d 578, 583 (1987); Calloway v. Wyatt, 246 N.C. 129, 134, 97 S.E.2d 881, 885-86 (1957).
    "'The recipient of a negligent misrepresentation is barred from recovery for pecuniary loss suffered in reliance upon it if he is negligent in so relying.'" Forbes v. Par Ten Group, Inc., 99 N.C. App. 587, 598, 394 S.E.2d 643, 649 (1990) (quoting Restatement (Second) of Torts § 552A), disc. review denied, 328 N.C. 89, 402 S.E.2d 824 (1991). Our Courts have held that when a purchaser of land has the opportunity to exercise reasonable diligence and fails to do so, the purchaser has no action for misrepresentation. See Hearne v. Statesville Lodge No. 687, 143 N.C. App. 560, 561-63, 546 S.E.2d 414, 415-16 (2001) (upholding summary judgment for the defendants where the plaintiffs failed to inspect property for sewer deficiencies that were discoverable upon reasonable inspection); Helms v. Holland, 124 N.C. App. 629, 635-36, 478 S.E.2d 513, 517-18 (1996) (holding that the plaintiffs unreasonably relied on the defendants' representation that problems with the septic system had been resolved); C.F.R. Foods, Inc. v. Randolph Development Co., 107 N.C. App. 584, 588-89, 421 S.E.2d 386, 389,disc. review denied, 333 N.C. 166, 424 S.E.2d 906 (1992) (holding that the plaintiff's reliance on the appearance of the land was unreasonable); cf. Deans v. Layton, 89 N.C. App. 358, 368, 366 S.E.2d 560, 566 (holding there was no material fact of misrepresentation when the parties were experienced businessmen and the purchaser declined to have the property surveyed and land inspected before purchase), disc. review denied, 322 N.C. 834, 371 s.E.2d 276 (1988); Williams v. Jennette, 77 N.C. App. 283, 291-92, 335 S.E.2d 191, 197 (1985) (upholding summary judgment for seller when buyer had ample opportunity to inspect the land and knew seller made representations based on secondhand knowledge).
    In the case before us, plaintiffs inspected the property before purchasing it from defendants. Bagley represented to plaintiffs that they could use the existing driveway and that defendants would construct an extension of the driveway back to the building site. Bagley testified that he based this representation on conversations he had with the Town of Fuquay-Varina. The evidence in the record supports the trial court's finding that defendants did not commit fraud or intentionally misrepresent the facts and that finding is conclusive on appeal. See Prime South Homes v. Byrd, 102 N.C. App. 255, 258, 401 S.E.2d 822, 825 (1991).
    The evidence in the record demonstrated that plaintiffs accepted the survey map Bagley provided and the representations therein as accurate and declined to order their own survey. Plaintiffs relied upon Bagley's representation concerning rights to use of the driveway and did not conduct reasonable diligenceconcerning access to the driveway until no trespassing signs were erected in 1998. Plaintiffs also did not discuss their right to use the driveway located on the access easement with the Town of Fuquay-Varina before closing, even though they possessed a copy of the Town's ordinances concerning driveways. Finally, plaintiffs did not present evidence that they justifiably relied on defendants' representations.
    After an examination of the record, we hold the record lacks sufficient competent evidence to support the trial court's conclusion that plaintiffs justifiably relied upon defendants' misrepresentations. There is no evidence in the record that plaintiffs exercised reasonable diligence to ascertain their rights to use of the driveway located on the access easement. The evidence shows that plaintiffs had sufficient opportunity and capacity to conduct reasonable diligence at the time of purchase of the real property but failed to do so. If plaintiffs had exercised reasonable diligence in purchasing the real property, plaintiffs would have learned they did not have access rights to the driveway prior to the August 1995 closing. We reverse the judgment of the trial court.
    Reversed.
    Judges HUNTER and CALABRIA concur.
    Report per Rule 30(e).

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