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Supreme Court kicks ‘buyer beware’ vs. disclosure case back to trial court

June 25, 2013

A Lake County dispute over whether a buyer or seller is responsible for a few thousand dollars worth of home defects is headed back to the trial court after a divided Indiana Supreme Court ordered a legal do-over.

Justice Steven David wrote for the majority that the trial court applied the incorrect standard in ordering the sellers to pay the buyers a little more than $13,000 for repairs that had to be made after closing. The sellers represented in disclosure forms that they knew of no defects, and the buyers relied on that when they ordered a cursory inspection that turned up no problems.

The trial court found that the issues raised in the complaint “should have been obvious” to the sellers, a standard that David wrote was lower than “actual knowledge.” “This means that the trial court here applied the wrong legal standard to the facts, even assuming that those facts are sufficiently supported by the record. The judgment is therefore clearly erroneous,” David wrote in Barbara A. Johnson and William T. Johnson, Both Individually and as Trustees of the Barbara A. Johnson Living Trust Dated 12-17-1996 v. Joseph Wysocki and M. Carmen Wysocki, 45S04-1211-CT-634.

“We reverse the trial court and remand for new findings pursuant to this opinion,” David wrote for the majority, joined by Chief Justice Brent Dickson and Justices Mark Massa and Loretta Rush.

Justice Robert Rucker concurred in part and dissented in part. Agreeing that the trial court applied the wrong legal standards to facts of the case, and that Indiana’s Disclosure Statutes don’t trump the common law “caveat emptor” principle, Rucker said the trial court nevertheless decided the case on the facts and the matter didn’t merit revisiting.

“It is certainly true the trial court did not use the magic words ‘actual knowledge,’” Rucker wrote in the one-paragraph dissent of a 16-page opinion. “But as recounted in the Facts section of the majority opinion, the record before us is more than sufficient to support the conclusion that the Johnsons had such knowledge of the various defects prior to the time they sold the property to the Wysockis. I would therefore affirm the judgment of the trial court in all respects and put this litigation to rest.”

 


 

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