Waddell v. Ferguson Home Builders, LLC
2017 Ark. App. 66
| Ark. Ct. App. | 2017Background
- In April 2003 Ferguson (builder) completed construction and sold a Timberlake subdivision home to Waddell; Ferguson completed a Seller Disclosure Statement answering “no” to questions about flooding, floodplain/wetlands, and water intrusion.
- In April 2008 heavy rain flooded the house; Waddell evacuated and asked Ferguson to repurchase the home; Ferguson refused.
- Waddell sued for rescission in 2008 (nonsuited), refiled in 2013, alleging constructive fraud/misrepresentation because the disclosure did not reveal the lot was in a floodplain and homeowners could not inspect before closing.
- The City of Haskell’s 1985 flood-prevention ordinance required BFEs for certain developments; the FEMA FIRM for Haskell (1987) showed Zone C (minimal flood) and Zone A (special flood hazard) but did not contain BFEs for the area.
- Ferguson moved in limine to exclude a 2010–ongoing engineering study (by Thomas Black) that established BFEs after the sale; the trial court excluded that study as irrelevant to the 2003 disclosure period but admitted the 1987 FIRM and city ordinance evidence.
- The bench trial court found Waddell failed to prove fraud (including that Ferguson knew the representations were false or lacked a sufficient basis) and dismissed the claim; Waddell appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of post-sale expert study | Waddell: trial court erred excluding Black’s 2010 study and related expert testimony about floodplain status | Ferguson: Black’s study post-dates the disclosure and is irrelevant and prejudicial | Court: Exclusion proper — relevance limited to facts available when disclosure made; study prepared after sale excluded |
| Applicability of Haskell flood ordinance | Waddell: ordinance required BFEs be determined pre-development, so property should have been studied and disclosure was false | Ferguson: relied reasonably on 1987 FIRM and city’s pre-development determinations that ordinance did not apply | Court: Whether ordinance applied is not dispositive to fraud claim; factual finding that city/floodplain admin relied on 1987 FIRM and did not require BFEs is not clearly erroneous |
| Sufficiency of evidence that representations were false | Waddell: disclosure statements (no floodplain/wetlands) were false and misleading | Ferguson: disclosures were consistent with available FEMA maps and surveys (Zone C); no known falsity | Court: Waddell did not prove the disclosures were false by clear and convincing evidence; trial court’s finding stands |
| State of mind / sufficient basis for representation (fraud element) | Waddell: Ferguson lacked sufficient information to state property was not in floodplain; thus fraud or lack of basis | Ferguson: had reasonable basis (1987 FIRM, plats, city inspections); no knowledge of falsity | Court: Plaintiff failed to prove Ferguson knew statements were false or lacked sufficient basis; burden met by defendant; judgment affirmed |
Key Cases Cited
- Tadlock v. Moncus, 428 S.W.3d 526 (Ark. App. 2013) (standard of review for bench trials — clearly erroneous)
- Benson v. Shuler Drilling Co., 871 S.W.2d 552 (Ark. 1994) (trial court’s evidentiary rulings reviewed for abuse of discretion)
- Schichtl v. Slack, 737 S.W.2d 628 (Ark. 1987) (use of motions in limine contrasted with summary judgment; admissibility procedure)
- Neal v. Sparks Reg’l Med. Ctr., 422 S.W.3d 116 (Ark. 2012) (summary judgment addresses material fact issues)
- Clark v. Ridgeway, 914 S.W.2d 745 (Ark. 1996) (truth of representation judged as of time made and intended reliance)
- Muccio v. Hunt, 490 S.W.3d 310 (Ark. 2016) (elements required to prove fraud)
- Bolstad v. Pergeson, 806 S.W.2d 377 (Ark. 1991) (failure to follow ordinance is prima facie evidence of negligence)