Antantis, W. v. Kolarosky, P. ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WILLIAM H. ANTANTIS, JR. AND : IN THE SUPERIOR COURT OF
JENNA ANTANTIS : PENNSYLVANIA
:
:
v. :
:
:
PAUL D. KOLAROSKY, AMERICAN :
DREAM SETTLEMENT, INC., JULIE : No. 1311 WDA 2019
ANN GRAHAM, REMAX AND REMAX :
COMMUNITY REAL ESTATE :
:
:
APPEAL OF: JULIE ANN GRAHAM, :
REMAX AND REMAX COMMUNITY :
REAL ESTATE :
Appeal from the Order Entered July 25, 2019
In the Court of Common Pleas of Washington County Civil Division at
No(s): 2017-6100
BEFORE: BENDER, P.J.E., BOWES, J., and PELLEGRINI, J.*
MEMORANDUM BY PELLEGRINI, J.: FILED MARCH 11, 2020
This appeal involves the sale of a house and lot located at 332 McCarrell
Road, Mount Pleasant Township, Washington County, Pennsylvania (the
Property). In that transaction, Julie Ann Graham, Remax (Graham) and
Remax Community Real Estate (Remax) served as the agent of the buyers,
William H. Antantis, Jr. and Jenna Antantis (Buyers), as well as the seller, Paul
D. Kolarosky (Kolarosky). The Buyers prevailed at trial against Graham on
counts of misrepresentation and breach of contract and against Remax on a
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* Retired Senior Judge assigned to the Superior Court.
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count of misrepresentation. Graham and Remax now appeal the denial of
their post-trial motions by the Court of Common Pleas of Washington County
(trial court). We affirm.
I.
The Buyers purchased the Property in 2015 for $149,500. Soon after,
the Buyers came to believe that its condition did not correspond with what
Graham and Remax had previously represented to them. In 2017, the Buyers
filed a complaint, asserting that Graham and Remax1 each committed a breach
of contract and fraud by making statements about the Property relating to the
absence of mold, access to public water sources, and the size of the lot.2
Graham and Remax answered, denying the Buyers’ allegations. Further,
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1 The caption of the Buyers’ complaint named the following parties as
defendants: Graham, Kolarosky, “American Dream Settlements, Inc., a
corporation,” and “RE/MAX, a corporation.” In paragraph 5 of the complaint,
the Buyers specified that “Defendant, Re/Max Community Real Estate, is a
corporation with a Pennsylvania address[.]” Complaint, 12/1/2017, at
paragraph 5. Remax noted in its answer that the caption of the complaint had
incorrectly designated it, omitting the words, “Community Real Estate.”
However, Remax did not specifically deny paragraph 5 of the complaint, and
its answer addressed the substance of the claims against it. The Buyers did
not amend their complaint to conform the caption to paragraph 5, and Remax
did not seek relief on that basis until its post-trial motion was filed – after the
verdict had already been entered against “Remax Community Real Estate.”
2 The Buyers also asserted the same claims against Kolarosky and the land
surveying company, American Dream Settlements, Inc., a corporation (ADSI).
Prior to trial, ADSI and Kolarosky settled with the Buyers and were granted
leave to file a new matter to plead the settlement as a defense. ADSI and
Kolarosky did not participate in the present appeal.
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Remax independently asserted that it did not employ Graham and could not
be held liable for her representations. The matter then proceeded to a jury
trial.
The trial court summarized the facts adduced at trial in its 1925(a)
opinion. As to the description of the acreage, the trial court set forth evidence
that the Buyers were induced to purchase the Property by being led to believe
that the lot was a greater size than it actually was:
According to Mr. Antantis, prior to closing, he had several
conversations with [Graham] concerning the amount of acreage
to be purchased and the quality of the Kolarosky home. With
regard to a home inspection, Mr. Antantis stated he did not obtain
one, because he relied upon advice from [Graham] that an
inspection was unnecessary. Mr. Antantis stated that [Graham]
offered to provide him a copy of an inspection report from a prior
potential buyer who chose not to purchase the property. With
regard to the acreage, Mr. Antantis stated that [Graham] told him
a “survey” showing the property contained 4.46 acres was
available from Mr. Kolarosky and would be provided at closing.
Mr. Antantis stated that [Graham] never advised him to obtain a
survey. Prior to closing, Mr. Antantis received information that
the property may only contain 3 acres. Mr. Antantis discussed
this discrepancy with [Graham], who indicated that she would
discuss the matter with the “mapping department.” Mr. Antantis
reiterated that he and his wife were not interested in buying a
property that had only three acres. According to Mr. Antantis, at
closing, [Graham] assured him that the property included 4.46
acres.
[Graham] admitted that she changed the property listing acreage
from 3 acres to 4.4 acres at the insistence of Mr. Kolarosky.
[Graham] testified that she forwarded to the Antantis[es] the
drawings Mr. Kolarosky provided to her indicating the acreage of
the property. [Graham] testified that Mr. Kolarosky’s deed
indicated a 4.486 parcel that had a prior sale and reservation of a
1.463 parcel, but she did not understand the deed.
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Mr. James Noble, a certified real estate appraiser with over 16
years of experience . . . testified that he first completed an
appraisal on February 3, 2015. This first appraisal indicated that
[the property] consisted of 4.46 acres with three contiguous acres
and 1.46 acres across the road. Mr. Noble also identified a second
appraisal he completed for the property. The second appraisal
was dated February 9, 2015. In the second appraisal, Mr. Noble
described the property as being approximately 2.81 acres. Mr.
Noble testified that [Graham] provided the survey for the property
to generate the revision. Mr. Noble testified that [Graham]
contacted him to make the revision. Mr. Noble testified that he
learned the acreage of the property through the multi-list
statement from [Remax]. Mr. Noble further testified that he
believed [Graham] contacted him regarding making the revision
to his first appraisal.
Trial Court Opinion, 7/25/2019, at 5-7 (citations omitted).
As to the presence of black mold on the Property, the trial court outlined
evidence that the Buyers were misled about that defect, which was prevalent
due to serious water intrusions:
Shortly after occupying their new home, [the Buyers] encountered
several problems that were water related. They learned that they
did not own the spring from which their water supply was being
drawn. They discovered a large amount of invasive black mold in
their home. The persistence of the mold requires heavy cleaning
of the Antantis Home two times per week by Mrs. Antantis. Their
son often stays several days per week with his grandparents to
avoid the effects of mold.
Mr. Gregory Wilson, a representative of Royal Recovery Services,
Incorporated which does property preservation and mold
remediation, testified. Mr. Wilson was contacted and visited the
subject property twice. Mr. Wilson noted that there was water
laying along the driveway in the back of the house, there was a
lot of water on the rear wall of the house, mold in the rafters, and
some mold on the walls. Mr. Wilson testified that there was an
old well under the addition to the house and that water either
overflowed from the well or seeped out of the well. Further, Mr.
Wilson stated that there was mud that had entered the basement
as a result of the water. Mr. Wilson observed mold on the exterior
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walls. Mr. Wilson opined that the gutters of the house needed [to
be] rerouted away from the house. Mr. Wilson opined that the
house needed a French drain to curtail the water running into the
house.
Overall, Mr. Wilson indicated that the house needed the gutters
rerouted, French drain installed, a water prevention membrane, a
sump pump, a dehumidifier, removal of paneling upstairs, and
removal of insulation from affected walls. Mr. Wilson testified that
the cost to do the mold work would be over $52,000.
Id. at 7-9 (citations omitted).
After its deliberations began, the jury sent a message to the trial court
asking if it had “to attach a specific dollar amount for damages, or . . . just
specifying what damages are relevant.” Trial Transcripts, 3/21/2019, at 88.
The trial court responded:
[I]f you get to the point of damages, you are to determine a
specific amount of damages, and you’re to specify those damages
that are relevant. That’s in a dollar amount. So if you are
considering damages, you should be considering matters that are
relevant to the case, and that alone.
Id.
The jury then entered a verdict in favor of the Buyers on their claim of
breach of contract against Graham. The jury awarded “$25,000 to
compensate for the absence of the 1.46 acres[,] determined by the
percentage breakdown from the tax assessment applied to the [Property’s]
appraisal value of $150,000.” Id. at 93. The jury also found that both
Graham and Remax committed fraud regarding the mold on the Property and
awarded the Buyers damages of “$52,008 as outlined on [a mold remediation]
plan[,]” as well as all court costs the Buyers had incurred. Id. at 94.
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Regarding the lack of a water source on the Property, the jury wrote on
the verdict form that the issue would “be remediated by [Graham] by incurring
all costs associated with the installation of running city water to [the
Property.]” Id. at 93. No dollar amount was entered on the verdict form as
to that item.
Because the jury could not award an indefinite amount and no evidence
was offered as to the cost of that connection, the trial court struck that portion
of the jury verdict requiring Graham to pay for the cost of connecting the
Property to a “city” water source. The final verdict totaled $77,008, plus court
costs, with $52,008 allotted for mold remediation on the fraud count and
$25,000 for diminished lot size on the breach of contract count.3
Graham and Remax filed post-trial motions seeking a new trial and
judgment notwithstanding the verdict. They argued that the evidence of fraud
and breach of contract was legally insufficient, that the verdict was against
the weight of the evidence, and that the jury’s verdict on damages had
resulted from confusion about the issues it was supposed to resolve. Remax
also argued that it was not a proper party to the Buyers’ action and that it was
not liable for Graham’s conduct. The trial court denied the post-trial motions.
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3Prior to entry of the verdict, Remax had filed a motion for nonsuit, which
was granted as to the breach of contract claim.
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Graham and Remax timely appealed and both they and the trial court complied
with Pa.R.A.P. 1925.
II.
A.
Graham first contends that the jury’s verdict on the breach of contract
count (regarding the Property’s lot size) is not supported by sufficient evidence
and is contrary to the weight of the evidence.4
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4 When reviewing the sufficiency of the evidence, this Court must
determine whether the evidence and all reasonable inferences
therefrom, viewed in the light most favorable to the verdict
winner, was sufficient to enable the factfinder to find against the
losing party. We note that, [a] challenge to the sufficiency of the
evidence in a civil case is reviewed on appeal as a claim that the
trial court erred in denying a motion for judgment notwithstanding
the verdict[.]
Krishnan v. Cutler Group, Inc., 171 A.3d 856, 879 n.14 (Pa. Super. 2017)
(citations and quotations omitted).
The decision to grant or deny a motion for a new trial based upon
a claim that the verdict is against the weight of the evidence is
within the sound discretion of the trial court. Thus, the function
of an appellate court on appeal is to review the trial court’s
exercise of discretion based upon a review of the record, rather
than to consider de novo the underlying question of the weight of
the evidence. An appellate court may not overturn the trial court’s
decision unless the trial court palpably abused its discretion in
ruling on the weight claim. Further, in reviewing a challenge to
the weight of the evidence, a verdict will be overturned only if it
is so contrary to the evidence as to shock one’s sense of justice.
Tong-Summerford v. Abington Memorial Hosp., 190 A.3d 631, 659 (Pa.
Super. 2018) (quoting Commonwealth v. Cash, 137 A.3d 1262, 1270 (Pa.
2016)) (quotations omitted).
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To prove their breach of contract claim, Buyers had the burden of
showing by a preponderance of the evidence that a contract between them
and Graham existed; that Graham breached a duty imposed by the contractual
terms; and that damages resulted from the breach. See Hart v. Arnold, 884
A.2d 316, 332 (Pa. Super. 2005). At trial, the parties agreed that the Buyers
had a contract with Graham and that factual issue was not put before the jury.
See Trial Transcript, 3/21/2019, at 50. Nonetheless, Graham asserts that the
breach of contract claim could not be proven as a matter of law because the
written contract between her and the Buyers was never introduced into
evidence.
Even though the written contract was never admitted at trial, there was
sufficient evidence to make out the breach of contract claim. Graham testified
that she acted as the Buyers’ real estate agent, and that she had explained to
them how it would be possible to serve in a dual capacity as an agent of both
a buyer and a seller. The written sales agreement for the Property between
the Buyers and the seller, Kolarosky, also established that a contract existed
between Graham and the Buyers. There was also evidence that the Property’s
lot was only three acres despite the fact that Graham had represented to the
Buyers that it was 4.46 acres.
Once the existence of the contract between Graham and the Buyers was
established, it was not necessary for the exact written terms of the contract
to be introduced. Those terms were irrelevant for present purposes because
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the issue here involves not a breach of a specific term but rather a lack of
good faith. “Every contract imposes on each party a duty of good faith and
fair dealing in its performance and its enforcement.” Kaplan v. Cablevision
of Pa., Inc., 671 A.2d 716, 722 (Pa. Super. 1996) (quoting Restatement
(Second) of Contracts, §205). Good faith is defined as “honesty in fact in the
conduct or transaction concerned.” Kaplan, 671 A.2d at 722 (quoting 13
Pa.C.S. § 1201(b)(20)).
“The breach of the obligation to act in good faith cannot be precisely
defined in all circumstances, however, examples of ‘bad faith’ conduct include
‘evasion of the spirit of the bargain[.]’” Kaplan, 671 A.2d at 722 (quoting
Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. 1992)). This duty of
good faith and fair dealing may be enforced in a breach of contract action.
See LSI Title Agency, Inc. v. Evaluation Services, 951 A.2d 384, 391 (Pa.
Super. 2008).
The Buyers testified that they relied on Graham’s assurances that the
Property was 4.46 acres when, in fact, it was only about three acres. The jury
also heard testimony and received documentary evidence that Graham misled
the Buyers into believing that the Property’s lot size was much larger than it
actually was. The Buyers had stressed to Graham that they were only
interested in purchasing a lot containing five or more acres, so Graham’s
misleading conduct amounted to an evasion of the spirit of the bargain.
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The jury’s verdict slip specifically refers to the “the absence of the 1.46
acres” as the damages that flowed from Graham’s breach of contract. The
jury awarded the Buyers $25,000 as compensation for the missing land based
in part on evidence of the Property’s total assessed value. There is no
indication from this that the jury was confused about how to determine the
Buyers’ damages. The trial court did not abuse its discretion in denying
Graham’s sufficiency claim as to the breach of contract count because there
was competent evidence as to all essential elements of that cause of action.
Moreover, taking in mind the evidence set forth above, the trial court
acted within its discretion in finding that the verdict was not against the weight
of the evidence. Primarily, Graham seems to argue that the lack of a written
contract in the record should have precluded the jury’s finding that she
breached a contractual duty to the Buyers but, as already discussed, the
existence of that contract was not in dispute, and regardless of whether it was
formally admitted into evidence, Graham had a contractual duty of good faith.
See Trial Transcript, 3/21/2019, at 50. Nothing in the record is so contrary
to the jury’s verdict as to shock one’s sense of justice and, thus, the trial court
did not abuse its discretion in denying Graham’s post-trial motions for a new
trial or judgment notwithstanding the verdict on the breach of contract count.
B.
As to the fraud claim, Graham and Remax challenge the sufficiency of
the evidence, asserting that the Buyers did not carry their burden of proving
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that a misrepresentation ever occurred. In their complaint, the Buyers stated
in pertinent part that Graham and Remax “intentionally or recklessly made
false statements and representations” to them that “the property was free of
black mold when in fact black mold [was present on the Property] . . . prior
to sale[.]” Complaint, 12/1/2017, at Paragraph 15(c). Graham and Remax
argue that any misrepresentation that the Buyers received about mold
originally came from the seller and was not intentionally conveyed to them by
Graham, who never claimed to have personal knowledge of the Property’s
condition.
Real estate agents are responsible for misrepresentations, both willful
and negligent. See Aiello v. Ed. Saxe Real Estate, Inc., 499 A.2d 282 (Pa.
1985). For a claim of intentional misrepresentation, a plaintiff has the burden
of proving by clear and convincing evidence the six elements of fraud:
(1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or
recklessness as to whether it is true or false; (4) with the intent
of misleading another into relying on it; (5) justifiable reliance on
the misrepresentation; and (6) the resulting injury was
proximately caused by the reliance.
Moreover,
[i]n real estate transactions, fraud arises when a seller knowingly
makes a misrepresentation, undertakes a concealment calculated
to deceive, or commits non-privileged failure to disclose. Fraud is
a generic term used to describe anything calculated to deceive,
whether by single act or combination, or by suppression of truth,
or suggestion of what is false, whether it be by direct falsehood or
by innuendo, by speech or silence, word of mouth, or look or
gesture.
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Milliken v. Jacono, 60 A.3d 133, 140 (Pa. Super. 2012) (quoting Youndt v.
First Nat’l Bank of Port Allegany, 868 A.2d 539, 545 (Pa. Super. 2015)).
Even when a real estate broker's false statement is innocently made, a
“material misrepresentation may be found whether [the agent] actually knew
the truth or not, especially where, as here, it was bound to ascertain the truth
before making the representation.” Glanski v. Ervine, 409 A.2d 425, 430
(Pa. Super. 1979) (quoting Highmont Music Corp. v. J.M. Hoffman Co.,
155 A.2d 363, 366 (Pa. 1959)). This form of fraud – negligent
misrepresentation – requires proof of
(1) a misrepresentation of a material fact; (2) made under
circumstances in which the misrepresenter ought to have known
its falsity; (3) with an intent to induce another to act on it; and;
(4) which results in injury to a party acting in justifiable reliance
on the misrepresentation. The elements of negligent
misrepresentation differ from intentional misrepresentation in that
the misrepresentation must concern a material fact and the
speaker need not know his or her words are untrue, but
must have failed to make a reasonable investigation of the
truth of these words. Moreover, like any action in negligence,
there must be an existence of a duty owed by one party to
another. This Court has not specifically recognized this cause of
action in the situation of a real estate broker, but the Superior
Court has applied a negligence standard in a number of cases.
Bortz v. Noon, 729 A.2d 555, 560-61 (Pa. 1999) (emphasis added); see
also Highmont, 155 A.2d at 366 (“A material misrepresentation may be
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found whether [the seller] actually knew the truth or not, especially where, as
here, it was bound to ascertain the truth before making the representation.”). 5
In this case, the Buyers assert that Graham misinformed them by
advising, “there was no point” in having a home inspection, and that getting
one done prior to closing would be a “waste of money.” It is undisputed that,
while acting as the Buyers’ agent, Graham knew of prior water intrusions into
the home and yet made those comments. Graham further suggested that the
Property was mold-free by providing the Buyers with an inspection report from
a previous inquiry into the purchase of the Property – a report that neither
confirmed nor refuted the presence of mold.
Even if Graham did not know or explicitly claim to know whether the
house had mold, she still dissuaded the Buyers from having the home
inspected for that defect without making a reasonable investigation of the
truth of her advice. The Buyers followed that advice to their detriment, later
discovering mold that would cost them over $50,000 to remediate. Moreover,
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5 “A claim for an ‘innocent’ misrepresentation has been recognized in this
Commonwealth in order to rescind a real estate transaction that is based upon
a material misrepresentation, even if the misrepresentation is innocently
made.” Bortz v. Noon, 729 A.2d 555, 563–64 (Pa. 1999). Such a claim is
similar to negligent misrepresentation, but does not include the elements of
intent to induce and reliance. Id. This theory of recovery is inapplicable in
this case because the Buyers do not seek rescission of the contract for their
purchase of the Property. See id.- 13 -
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the Buyers’ reliance on Graham’s advice was justified in light of her status as
their agent and their own relative inexperience in the real estate industry.
Accordingly, there was sufficient evidence from which the jury could
conclude that the Buyers carried their burden of proving Graham’s negligent
misrepresentation, making Graham and Remax liable for the Buyers’ resulting
damages. See Highmont, 155 A.2d at 366 (“It is not necessary that absolute
proof of knowledge or of concealment be shown, for if the defendant had no
knowledge of the defective condition of the floors it should not have made the
statement that the floors were ‘very, very strong[.]’”); see also Glover v.
Severino, 946 A.2d 710, 713 (Pa. Super. 2008) (“A misrepresentation need
not be an actual statement; it can be manifest in the form of silence or failure
to disclose relevant information when good faith requires disclosure.”).
C.
Remax argues on sufficiency grounds that it cannot be held liable on the
fraud count for Graham’s conduct because she was not an agent or employee
of Remax. Although Graham testified at trial that she was an independent
contractor, see Trial Transcript, 7/2/2019, at 199, we find that this argument
lacks merit because of the undisputed facts regarding Graham’s association
with Remax.
In Aiello v. Ed. Saxe Real Estate, Inc., 499 A.2d 282, 288 n.8 (Pa.
1985), our Supreme Court rejected a similar claim under analogous
circumstances. The real estate agency in that case had hired the broker who
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handled the transaction; the broker displayed his license in the agency’s
office; and the agency paid a commission to the broker from the proceeds of
the real estate sale. See Aiello, 499 A.2d at 288. The Aiello court held that
the broker was not an independent contractor of the real estate agency, and
that the agency could be liable for the broker’s misrepresentations. Id.
Graham’s testimony and supporting exhibits regarding her position with
Remax appear to coincide with the facts supporting an agency relationship in
Aiello. She maintained an office at Remax’s address at 1500 West Chestnut
Street, Washington, Pennsylvania. See Trial Transcript, 3/20/2019, at 95;
see also Graham and Remax Answer and New Matter, 2/2/2018, at
Paragraphs 4-5. Remax assigned Graham to the Property after the seller called
the Remax main office line. See Trial Transcript, 3/20/2019, at 96. The
contract between the seller and Remax authorized Remax to compensate its
“subagents, Buyer-Agents and Transactional Licensees including the share of
part of [its] commission.” Id. at Trial Transcript, Exhibit G-2, at p. 1.
These facts are sufficient to establish Aiello’s test for agency in the real
estate context.6 Thus, Remax could be held liable for Graham’s negligent
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6Regardless, Remax had an independent duty to the Buyers to disclose latent
defects on the Property prior to sale, and its inaction exposed it to liability.
See Roberts v. Estate of Barbagallo, 531 A.2d 1125, 1131 (Pa. Super.
1987) (finding listing office liable for non-disclosure of a latent defect in real
estate, regardless of salesperson’s status as an independent contractor
because it had not instructed the salesperson to make the disclosure and it
owed an independent duty to the buyer).
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misrepresentation regarding the presence of mold, and the trial court did not
err in rejecting the contrary claim in Remax’s post-trial motion.
D.
Finally, Remax contends that it cannot be held liable in this action
because the caption of the Buyers’ complaint identified it as “Remax, a
corporation” rather than its actual name, “Remax Community Real Estate,”
which appears correctly on the verdict slip. While Remax noted the incorrect
designation in its answer to the Buyers’ complaint, Remax never stated in its
answer, new matter or in a preliminary objection that it was not a proper party
in the litigation.7
Remax instead answered the allegations and participated in the case as
if it was a proper party, thereby acquiescing to the Buyers’ designation in the
caption of the complaint. The record indicates that Remax was duly served
with the Buyers’ complaint and received timely notice of all aspects of the
proceedings. As a result, Remax was a party to the Buyers’ suit, and the
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7 Had Remax objected to the designation and its status as a party rather than
simply providing the correct designation in its answer, the trial court would
have certainly permitted the Buyers to amend their complaint accordingly.
See generally Piehl v. City of Philadelphia, 987 A.2d 146 (Pa. 2009)
(“Pa.R.C.P. No. 1033 permits a party to correct the name of an adverse party
or amend a pleading at any time either by consent of the adverse party or by
leave of court.”); see also Papencordt v. Masterwork Paint Co., 194 A.2d
878, 881 (Pa. 1963) (“Defects in process or procedure may always be waived
provided there is general jurisdiction of the subject matter.”); Pa.R.C.P. No.
1032(a) (“A party waives all defenses and objections which are not presented
either by preliminary objection, answer or reply[.]”).
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correct designation, “Remax Community Real Estate,” was properly included
on the verdict slip. Thus, for all of the aforementioned reasons, the trial
court’s order denying Graham and Remax’s post-trial motion must stand.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/11/2020
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