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COA invites high court to revisit Indiana law

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In a case involving the purchase of a home, Indiana Court of Appeals judges today disagreed as to whether the home sellers should be granted summary judgment in a fraud suit. The judges unanimously did agree to encourage the Indiana Supreme Court to re-evaluate a rule that protects a seller from a lawsuit, even if he lies about a property, as long as the prospective buyer had a reasonable opportunity to inspect the property.

At issue in Drew and Donna Dickerson v. Donna Strand and Gloria German, No. 54A01-0807-CV-334, is whether Donna Strand and Gloria German can be held liable for fraud arising from the sale of their house to the Dickersons.

When Strand and German bought their home, it had termite damage, which the seller paid to treat. When Strand and German went to sell the home five years later, termite damage was found again and disclosed in a home inspection report. They claimed to have fixed the issue and said there were no structural problems with the building. The Dickersons bought the home, relying on disclosures and documents from Strand and German and never had their own inspection done.

After discovering more termite damage than what was revealed to them, the Dickersons filed a complaint against Strand and German alleging they falsely represented the property hadn't suffered structural termite damage. The trial court granted summary judgment in favor of Strand and German.

Under Indiana law, the appellate court didn't need to decide whether Strand and German's representations in the documents were fraudulent because the Dickersons had no right to rely on those representations, wrote Judge Patricia Riley. The majority relied heavily on the Indiana Supreme Court ruling in Cagney v. Cuson, 77 Ind. 494, 1881 WL 6689 (1881), in which the high court held even as to fraudulent representations operating as an inducement to the sale or exchange of property, a purchaser has no right to rely on those representations when he has had reasonable opportunity to examine the property and judge for himself its qualities.

"The fact that the Dickersons did not actually inspect the house is irrelevant; under Cagney, it is the opportunity to inspect that matters," wrote the judge. "We encourage our supreme court to reevaluate the social value of a rule allowing a seller of property to lie with impunity as long as the prospective buyer had a reasonable opportunity to inspect the property. But until then, we are bound by that rule."

In her dissent, Judge Nancy Vaidik agreed that the Supreme Court needs to examine the common law rule that a residential real estate buyer may not rely upon a seller's assertions regarding the property where the buyer has a reasonable chance to inspect the property in light of Indiana's disclosure form statute, Sections 32-21-5-1 to -13.

"From my reading of Indiana Code Sections 32-21-5-1 to -13, I agree with (cases Reum v. Mercer and Verrall v. Machura) that the relevant question now is whether the seller of covered residential real estate actually knew about the property's defects when filling out the disclosure form," wrote Judge Vaidik.

Because the record shows genuine issue of material fact whether the sellers had actual knowledge of the structural damage at the time they completed the disclosure form, she would reverse the grant of summary judgment and remand for further proceedings.

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  1. For many years this young man was "family" being my cousin's son. Then he decided to ignore my existence and that of my daughter who was very hurt by his actions after growing up admiring, Jason. Glad he is doing well, as for his opinion, if you care so much you wouldn't ignore the feelings of those who cared so much about you for years, Jason.

  2. Good riddance to this dangerous activist judge

  3. What is the one thing the Hoosier legal status quo hates more than a whistleblower? A lawyer whistleblower taking on the system man to man. That must never be rewarded, must always, always, always be punished, lest the whole rotten tree be felled.

  4. I want to post this to keep this tread alive and hope more of David's former clients might come forward. In my case, this coward of a man represented me from June 2014 for a couple of months before I fired him. I knew something was wrong when he blatantly lied about what he had advised me in my contentious and unfortunate divorce trial. His impact on the proceedings cast a very long shadow and continues to impact me after a lengthy 19 month divorce. I would join a class action suit.

  5. The dispute in LB Indiana regarding lake front property rights is typical of most beach communities along our Great Lakes. Simply put, communication to non owners when visiting the lakefront would be beneficial. The Great Lakes are designated navigational waters (including shorelines). The high-water mark signifies the area one is able to navigate. This means you can walk, run, skip, etc. along the shores. You can't however loiter, camp, sunbath in front of someones property. Informational signs may be helpful to owners and visitors. Our Great Lakes are a treasure that should be enjoyed by all. PS We should all be concerned that the Long Beach, Indiana community is on septic systems.

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