Hizer v. Holt
2010 Ind. App. LEXIS 1957
| Ind. Ct. App. | 2010Background
- Hizers agreed to buy the Holts' Mishawaka home in 2008 and reserved inspection rights; they did not inspect the home themselves before closing.
- Prior to closing, Holts completed a Sales Disclosure Form listing only a few non-working appliances and denying defects like mold or water problems.
- After closing, Hizers found extensive defects including mold, plumbing issues, a faulty irrigation system, and a leaking basement, among others.
- Hizers allege the form contained fraudulent misrepresentations about defects the Holts knew about; they sue for fraud and breach of contract.
- Trial court granted summary judgment for the Holts; Indiana Court of Appeals reverses, finding genuine issues about Holts' actual knowledge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether actual knowledge of defects supports fraud under the disclosure statute | Hizers rely on I.C. 32-21-5 to hold Holts liable for knowing misrepresentations. | Dickerson holds no liability where buyer had opportunity to inspect; rely on caveat emptor. | Yes—SSI: seller can be liable if actual knowledge exists; statute abrogates strict caveat emptor in this context. |
| Whether the Sales Disclosure Form liability requires reliance independent of inspection opportunity | Disclosures misleadingly omit known defects despite a buyer's ability to inspect. | Buyer had reasonable opportunity to inspect, undermining reliance on disclosures. | Reliance may be shown under statute; genuine fact issue exists about Holts' knowledge and disclosure. |
| Whether summary judgment was improper given genuine issues of material fact | Evidence shows Holts knew of basement mold, water issues, and other defects listed as nondefective. | Disclosure form and lack of inspection negate material factual disputes. | Summary judgment improper; remand for proceedings consistent with opinion. |
| Whether Indiana Code chapter 32-21-5 abrogates the common-law caveat emptor rule | Statute supersedes Cagney-based rule allowing seller to misrepresent when buyer could inspect. | Dickerson controls; statute does not override common-law principles. | Chapter 32-21-5 abrogates that common-law rule; seller may be liable for fraudulent misrepresentation if actual knowledge exists. |
Key Cases Cited
- Dickerson v. Strand, 904 N.E.2d 711 (Ind.Ct.App.2009) (caveat emptor not absolute after disclosure framework; factual issues may preclude summary judgment)
- Cagney v. Cuson, 77 Ind. 494 (Ind. 1881) (purchaser cannot rely on seller if reasonable inspection possible)
- Verrall v. Machura, 810 N.E.2d 1159 (Ind.Ct.App.2004) (buyers must prove seller's actual knowledge where disclosures were at issue)
- Reum v. Mercer, 817 N.E.2d 1267 (Ind.Ct.App.2004) (buyers must prove seller's actual knowledge of defects at time of disclosure)
- Kashman v. Haas, 766 N.E.2d 417 (Ind.Ct.App.2002) (affirming requirement to prove actual knowledge for fraud via disclosure form)
- Pennycuff v. Fetter, 409 N.E.2d 1179 (Ind.Ct.App.1980) (early standard on reliance in real estate transactions)
- Ind. Bank & Trust Co. of Martinsville, Ind. v. Perry, 467 N.E.2d 428 (Ind.Ct. App.1984) (sellers' duty to disclose; concealment may be fraudulent)