222 N.E.3d 1025
Ind. Ct. App.2023Background
- Buyers Zachary and Lauren Zitzka purchased a house whose 1988 three-season room had a corner that had sunk and the floor sloped.
- Sellers William and Jill Brogdon answered "No" to "Are there any structural problems with the building?" on the statutorily required Seller’s Residential Real Estate Sales Disclosure.
- Buyers sued for fraudulent misrepresentation based on the Disclosure Form; at trial the court gave Indiana Model Civil Jury Instruction 3109 (buyers must use reasonable care in guarding against fraud).
- The jury returned a verdict for the Sellers; the trial court awarded the Sellers $80,770 in attorney’s fees under Paragraph U of the Purchase Agreement.
- On appeal, Buyers argued the disclosure statutes (per Johnson v. Wysocki) eliminate the reasonable-reliance element for claims based on the disclosure form and challenged the fee award; the court affirmed the verdict, affirmed fees as to Zachary, and reversed fees as to Lauren (she was not a signatory to the Purchase Agreement).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether giving Model Jury Instr. 3109 (reasonable care/reliance) was proper in a disclosure-form fraud claim | Johnson eliminated reliance requirement for disclosure-form claims, so instruction was improper | Reliance remains an element; statutes create a rebuttable presumption of reliance but do not eliminate the element | Court: Reliance remains required; Johnson creates a rebuttable presumption; giving unmodified 3109 was not error because Buyers did not request an instruction explaining the presumption |
| Sufficiency of evidence on reliance | Only challenged falsity of Disclosure; argued instruction likely led jury astray | Evidence (engineer testimony) showed defect was visibly apparent, supporting lack of reasonable reliance | Court: Sufficiency argument depended on claimed instructional error; no error shown, verdict stands |
| Applicability of Paragraph U fee clause to this suit | Buyers: suit is tort based on disclosure form, not contract, so Paragraph U inapplicable | Sellers: clause covers any legal proceeding "brought under or with relation to the Agreement or transaction," and the Disclosure Form was part of the transaction | Court: Paragraph U applies to proceedings related to the transaction; fee award valid against contracting party |
| Whether Lauren (not a signatory) is liable for attorney’s fees under Paragraph U | Lauren: not listed or a signatory, so not bound by fee provision | Sellers: argued transaction-based coverage (but court analyzed signatory issue) | Court: Lauren was not a party to the Purchase Agreement; reversed fee award as to her |
Key Cases Cited
- Johnson v. Wysocki, 990 N.E.2d 456 (Ind. 2013) (Disclosure statutes create a presumption of reasonable reliance but the presumption is rebuttable)
- Boehringer v. Weber, 2 N.E.3d 807 (Ind. Ct. App. 2014) (seller liable for errors within seller's actual knowledge under disclosure statutes)
- Heyser v. Noble Roman’s Inc., 933 N.E.2d 16 (Ind. Ct. App. 2010) (elements of common-law fraudulent misrepresentation)
- Morgan v. Dickelman Ins. Agency, Inc., 202 N.E.3d 454 (Ind. Ct. App. 2022) (fraud elements and reasonable-reliance discussion)
- Cagney v. Cuson, 77 Ind. 494 (Ind. 1881) (historical common-law rule that a buyer with reasonable opportunity to inspect may not rely on vendor representations)