897 N.W.2d 356
S.D.2017Background
- Dwight and Mary Oxton contracted to buy a Rapid City house from Eugene and Cathy Rudland; after their original purchase fell through, they executed a contract for deed on April 12, 2013 for the house "as is," with an integration clause and a warranty disclaimer.
- The Rudlands had bought the same house months earlier from the Wangs for $165,000 and listed it for resale at $262,500; the Wangs’ earlier disclosure indicated major settling, expansive soils, and a prior lawsuit about settling.
- The Rudlands’ property disclosure (delivered to the Oxtons) omitted those material facts (e.g., they checked "no" for expansive soils) and included a handwritten note the house was sold "as is."
- Within a year the Oxtons observed new sheetrock cracking; they later learned of the Wangs’ prior disclosure and that the house had expansive-soil damage and had been litigated; Wojtanowicz (the agent) had been involved in the prior lawsuit.
- The Oxtons sued the Rudlands for violation of SDCL 43-4-38 (disclosure statute), fraudulent misrepresentation, and fraudulent concealment; the circuit court granted partial summary judgment for the Rudlands, excluding parol evidence and finding the "as is" contract and integration clause barred the claims.
- The South Dakota Supreme Court reversed and remanded, holding that (1) parol evidence may be considered for fraud claims and summary judgment was improper on those claims, and (2) waiver of the statutory disclosure duty was not established on these facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parol evidence may be used to prove fraud & fraudulent concealment | Oxton: parol evidence is admissible for fraud in inducement; "as is" and integration can't shield fraud | Rudland: contract for deed superseded earlier disclosure; buyer knew "as is" and waived reliance | Court: Parol evidence admissible for fraud; genuine fact issues exist, so summary judgment on fraud was improper |
| Whether "as is" clause bars fraud/reliance | Oxton: "as is" does not bar fraud claims; reliance is a factual issue | Rudland: buyer acknowledged "as is," inspected property, and agreed no representations were made | Court: "as is" does not preclude fraud; reliance is question of fact and cannot be resolved on summary judgment |
| Whether SDCL 43-4-38 disclosure duty was waived by the contract for deed | Oxton: duty not waived; giving a disclosure form shows no intent to waive | Rudland: Lucero allows waiver where contract for deed and "as is" used | Court: Waiver of SDCL 43-4-38 requires clear, unequivocal act; facts here do not establish waiver; summary judgment improper |
| Whether trial court abused discretion by denying Rudlands' attorney fees under SDCL 43-4-42 | Rudland: entitled to fees as prevailing party on disclosure claim | Oxton: opposing view (not directly argued here) | Court: Did not rule because reversal/remand on the disclosure claim means prevailing-party status unsettled; issue unnecessary to decide now |
Key Cases Cited
- Lucero v. Van Wie, 598 N.W.2d 893 (S.D. 1999) (SD law allows waiver of disclosure statute but waiver must be shown on the facts)
- Poeppel v. Lester, 827 N.W.2d 580 (S.D. 2013) (parol evidence rule does not bar claims of fraudulent inducement; disclaimers cannot shield fraud)
- Auto-Owners Ins. Co. v. Hansen Hous., Inc., 604 N.W.2d 504 (S.D. 2000) (parol evidence rule is substantive law barring extrinsic evidence to vary integrated contracts)
- Engles v. Ranger Bar, Inc., 604 N.W.2d 241 (S.D. 2000) ("as is" clause does not confer blanket immunity from fraud claims)
- Holmes v. Couturier, 452 N.W.2d 135 (S.D. 1990) (buyer’s acceptance of property "as is" does not bar fraud claims)