Kampschroeder v Bruce, 162 NC App 180 (03-308) 01/06/2004

Appeal by plaintiffs from order entered 13 November 2002 by Judge W. Allen Cobb, Jr., in the Superior Court in Pender County. Heard in the Court of Appeals 20 November 2003.

James, McElroy & Diehl, P.A., by Richard B. Fennell, John R. Buric and Preston O. Odom, III, for the plaintiff-appellants.

Clark, Newton, Evans & Craige, L.L.P., by Lawrence S. Craige, for defendant-appellees.

    HUDSON, Judge.

    On 2 January 2001, plaintiffs filed a complaint alleging fraud, constructive fraud, negligent misrepresentation, breach of contract, unfair or deceptive trade practices and punitive damages arising from their purchase of residential real estate. Defendants moved for summary judgment, contending that plaintiffs were on record notice concerning the nature and condition of the property in question. The court granted the motion for defendants on 13 November 2002. Plaintiffs appeal, arguing that the grant of summary judgment was error. For the reasons discussed below, we reverse the order for summary judgment.    In the spring and summer of 1999, plaintiffs were looking for a house with acreage to buy in Pender County, and learned that defendants had listed their property for sale. Defendants provided plaintiffs with a copy of a fact sheet and survey, which described the property and indicated that the land was not located in a flood hazardous area. Later, plaintiffs asked defendants directly whether flooding had been a problem, focusing specifically on defendants' experience during Hurricane Fran. Defendants replied that flooding had never been a problem and that high water had never reached the house. Plaintiffs then purchased the property.
    In September 1999, Hurricane Floyd hit the coastal regions of North Carolina, causing widespread flooding and resulting in extensive damage to plaintiffs' home, outbuildings and personal property. In making repairs, plaintiffs discovered that the property had previously flooded, and that the home sustained damage from Hurricane Fran in 1996. As a result, plaintiffs sued, contending that they had relied on defendants' misrepresentations in purchasing the property. The trial court granted summary judgment to defendants, and plaintiffs appeal that order as to their claims for fraud and negligent misrepresentation.
    The standard of review for summary judgment is well- established and this Court has frequently summarized its elements. Recently, we stated:
        The standard of review on appeal from the granting of a motion for summary judgment is whether there is any genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. The moving party has the burden of establishing the lackof any triable issue of fact. A defendant may show entitlement to summary judgment by (1) proving that an essential element of the plaintiff's case is non-existent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense. Summary judgment is not appropriate where matters of credibility and determining the weight of the evidence exist.

Draughon v. Harnett County Bd. of Educ., ___ N.C. App. ___, 582 S.E.2d 343, 345 (2003) (internal quotation marks and citations omitted). Plaintiffs contend that whether defendants misrepresentated their experience with flooding at the property and whether plaintiffs relied on those misrepresentations in making the decision to purchase the land were factual questions for the jury. We agree.
    Defendants argue that plaintiffs' forecast of evidence is insufficient to support their claims for fraud and negligent misrepresentations because the plaintiffs could not, as a matter of law, have reasonably relied on defendants' representations. Reliance is one of the essential elements of fraud, and such “reliance on alleged false representations must be reasonable.” State Props., L.L.C. v. Ray, 155 N.C. App. 65, 72, 574 S.E.2d 180, 186 (2002), disc. review denied, 356 N.C. 694, 577 S.E.2d 889 (2003). Further, “[t]he reasonableness of a party's reliance is a question for the jury, unless the facts are so clear that they support only one conclusion.” Id. at 73, 574 S.E.2d at 186.
    Defendant cites Clouse v. Gordon for the proposition that plaintiffs cannot maintain an action for fraud where they had anopportunity to discover the truth behind defendants' misrepresentations for themselves. 115 N.C. App. 500, 445 S.E.2d 428 (1994). However, this Court in Clouse makes clear that a purchaser's claims for fraud will not be barred even in the absence of investigation, when the purchaser has been induced to forego such investigation by the seller's actions. Id. at 507, 445 S.E.2d 432 (“Thus, a purchaser of real estate cannot maintain an action for fraud or misrepresentations concerning the value of the property or its condition and adaptability to particular uses when the purchaser has an opportunity to make full investigation and is not induced to forego investigation by artifice or fraud on the part of the seller.”) (quoting Strong's North Carolina Index 4th, vol. 29, Vendor and Purchaser § 65 (1994) (footnotes omitted)).
    Here, there are several questions of fact to be resolved, including the nature and scope of previous flood damage to the property in question, whether defendants knew and represented that history to plaintiffs, whether plaintiffs reasonably relied on defendants' alleged misrepresentations, and whether plaintiffs made reasonable efforts to determine the condition of the property prior to purchase or were prevented from doing so. Because of these factual issues, summary judgment for defendants on plaintiffs' claims for fraud, negligent misrepresentation and punitive damages was premature.
    Reversed and remanded.
    Judges TYSON and STEELMAN concur.
    Report per Rule 30(e).

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