The Indiana Supreme Court affirmed a trial court’s decision to not impose Crime Victims Relief Act liability on a couple who sold their home knowing it had defects. And although the Indiana Court of Appeals also affirmed, Chief Justice Loretta Rush pointed out the high court has different reasons for leaving the trial court’s judgment in place.
Barbara and William Johnson deeded their home to a trust in 1996 and sold it to Joseph and Carmen Wysocki in 2006. Most of the work done on the home through the years had been done by William Johnson. When they sold their house, Barbara Johnson signed the seller’s residential real estate sales disclosure form stating there were no building code violations or foundational, structural or other problems with the home.
But shortly after moving in, the Wysockis discovered leaks and structural problems. They sued the Johnsons for fraudulently failing to disclose those defects on the disclosure form. The Wysockis advanced several theories, including damages under the CVRA. But the trial court only awarded them the amount of damages they incurred in fixing the problems – $13,805.95 – instead of those damages plus witness fees and attorney fees.
The COA affirmed the couple was not entitled to an additional award under the CVRA because 1) they had only established common-law fraud, the elements of which differ from the statutory elements of criminal fraud; (2) criminal fraud requires proof beyond reasonable doubt; and (3) “the Johnsons were not charged with [a] crime ..., much less convicted of it in a court of law” and“[i]n the absence of such a conviction, the CVRA does not apply.”
The Supreme Court declined to adopt a bright-line rule that every knowing misrepresentation on a sales disclosure form constitutes criminal deception and gives rise to CVRA liability – at least where the claimants plead to other grounds for liability in the alternative.
The justices ruled that the trial court’s findings that the statements on the disclosure form were false and that the Johnsons had actual knowledge of their falsity appear to support the first two elements of the crime of knowingly or intentionally making a false written statement.
“We therefore disagree with the Court of Appeals that the different elements are dispositive, because these findings would have been sufficient to support a CVRA award—if the court’s judgment had actually included such an award,” Rush wrote.
In addition, a CVRA claim requires the proving of the elements of a criminal offense, but only by the civil preponderance standard. It does not depend on whether the defendant has been charged with or convicted of any criminal offense, the justices ruled.
“Though we agree with the Court of Appeals that denial of relief under the CVRA should be affirmed, we reiterate that CVRA liability is civil, not criminal, and does not require criminal charges or proof beyond reasonable doubt,” Rush wrote.
“When a court does impose CVRA liability, an award of costs and reasonable attorney fees is mandatory by the terms of the statute, even though additional exemplary damages remain discretionary. But when given a choice, the court need not impose CVRA liability when it believes ordinary tort liability will do. The trial court acted well within its discretion to make that judgment in this case, and we affirm its judgment.”
The case is Joseph Wysocki and M. Carmen Wysocki v. Barbara A. Johnson and William T. Johnson, both Individually and as Trustees of the Barbara A. Johnson Living Trust dated 12-17-1996, 45S03-1407-CT-459.