Plaintiffs bought a farm, mobile homes, and a migrant camp from defendants. They later obtained a judgment in the trial court, following a jury trial, for damages caused by defendants’ fraudulent misrepresentations in connection with that purchase. Defendants appeal, asserting that the trial court erred in denying their motions to dismiss the complaint and for a directed verdict, both based on statute of limitations grounds. They contend that plaintiffs’ action was untimely because plaintiffs waited to file it until more than two years after they should have discovered that defendants’ representations were false. Defendants also argue that the trial court erred in denying their motion for a directed verdict, because plaintiffs waived their right to sue when they sold the property to a third party before trial. We disagree that the complaint and the evidence at trial, as a matter of law, compel the conclusion that plaintiffs’ complaint was untimely, reject the waiver argument, and therefore affirm the judgment for plaintiffs.
Defendants first assign error to the trial court’s denial of their ORCP 21 A(9) motion to dismiss the complaint.
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We review to determine whether the face of the complaint demonstrates that the action was untimely.
Durham v. City of Portland,
The complaint alleges that, in April 2000, defendants sold plaintiffs a farm in Woodburn, together with four mobile homes and a migrant camp. At the time of the sale, defendants represented to plaintiffs that the mobile homes and camp were “legal” and could be used to secure income from the property. Plaintiffs were counting on income from rental of the mobile homes and camp to help them service the debt on the farm. However, in August 2003, plaintiffs learned from Marion County that the placement and occupancy of the mobile homes as rental dwellings and the occupancy of the camp were not permitted uses of the property and were in violation of the applicable zoning ordinance. A month later, they also learned that, in the 1980s, defendants had applied for and been denied permits for the mobile homes and camp. Plaintiffs filed their complaint in July 2004.
Defendants contend that the face of the complaint demonstrates that plaintiffs began this action outside the time limits prescribed by ORS 12.110(1), which provides:
“An action for * * * any injury to the person or rights of another, not arising on contract, and not especially enumerated in this chapter, shall be commenced within two years; provided, that in an action at law based upon fraud or deceit, the limitation shall be deemed to commence only from the discovery of the fraud or deceit.”
A fraud is discovered when a plaintiff learns either of the misrepresentation itself or of facts sufficient to “excite attention and put [the plaintiff on] guard or call for an inquiry,” if reasonable inquiry would then reveal the fraud.
Mathies v. Hoeck,
Defendants next contend that the discovery rule in ORS 12.110(1) did not extend the time for plaintiffs to file their complaint because the legal status of the mobile homes and camp was “apparent and inherently discoverable at the time of the property sale.” Quoting
Gehrke v. CrafCo, Inc.,
The reference to facts that are “inherently discoverable” in
Gehrke
does not support the result for which defendants advocate. In that action for negligence, the issue was whether the discovery rule applied to toll the applicable limitations period during the time it took the plaintiff to determine the identity of the actual owner of the store where she slipped and fell.
Unlike in
Gehrke,
the complaint here does not establish that the plaintiffs were aware of all the elements of their cause of action at the time that the tort at issue (that is, the fraudulent misrepresentation) was committed. Moreover, in the absence of actual knowledge of the misrepresentation, the elements of a fraudulent misrepresentation claim cannot be said to be “inherently discoverable” before the plaintiff knows of facts that would put her on notice of the need to make such an inquiry.
See Mathies,
In their second assignment of error, defendants challenge the trial court’s denial of their motion for a directed verdict. We address two of their arguments.
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First, they contend that the evidence demonstrates that, as a matter of law, plaintiffs were on notice more than two years before filing their complaint that defendants had misrepresented the legal status of the mobile homes and migrant camp. Second, defendants contend that plaintiffs waived their right to sue for misrepresentation when they sold the farm to a third party after filing their complaint. We review for any evidence to support the verdict and will not set that verdict aside unless there is no evidence from which the jury could have found the facts necessary to establish the elements of plaintiffs’ cause of action.
Woodbury v. CH2M Hill, Inc.,
In support of their first argument, defendants contend that plaintiffs had sufficient notice at the time of closing that they should inquire further about the accuracy of defendants’ representations — or, if not at closing, then plaintiffs had such notice when they learned later that the county had never issued a septic permit for one of the mobile homes. We address first the information that plaintiffs had at the time of closing.
The earnest money agreement contained the following disclaimer language pursuant to ORS 93.040(2):
“THE PROPERTY DESCRIBED IN THIS INSTRUMENT * * * IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE * * *. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES * * *.”
(Uppercase in original.) Similarly, the warranty deed contained the following statement, pursuant to ORS 93.040(1):
“THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES * *
(Boldface an uppercase in original.) Defendants contend that the disclaimers put plaintiffs “on notice to inquire into the approved uses.” Additionally, the flyer advertising the sale of the property described the zoning as “EFU” (exclusive farm use), which, in defendants’ view, further put plaintiffs on notice to check the property’s approved uses.
This court addressed a similar situation in
McGann v. Boyd,
“THIS INSTRUMENT DOES NOT GUARANTEE THAT ANY PARTICULAR USE MAY BE MADE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT. A BUYER SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES.”
(Uppercase in original.)
Two members of the panel agreed with the trial court that the plaintiffs complaint was untimely because, after receiving the zoning clearance notice, she had had sufficient notice more than two years before filing her complaint to trigger an inquiry into the possibility of a misrepresentation.
As we have recognized, then, the three opinions in
McGann
reached no agreement regarding the effect of notice under ORS 93.040 on a buyer’s remedies against a seller for misrepresenting the uses to which property could be put.
See DK Investment Co. v. Inter-Pacific Development
Co.,
We begin by addressing the statutory disclaimer language in the earnest money agreement and deed. Although the disclaimers may call into question whether plaintiffs’ reliance on defendants’ representations was reasonable — an issue not before us here — it does not suggest anything one way or the other about the accuracy of defendants’ representations themselves. The disclaimers advised plaintiffs to verify with the county and city the appropriate uses of the property, but a fact question remains about whether the disclaimers gave plaintiffs sufficient notice to call for an inquiry as to whether defendants had fraudulently misrepresented that the existing uses were legal.
See generally Soursby v. Hawkins,
We likewise reject defendant’s contention that the reference to the EFU zoning designation in the advertising flyers put plaintiffs on notice as a matter of law to inquire further about the accuracy of defendants’ representations. This case concerns the legality of uses already occurring on the property and, indeed, those uses arguably are farm-related and not such as would necessarily arouse a buyer’s suspicion. See ORS 215.213(l)(g) (authorizing “accessory dwellings” in exclusive farm use zones if “customarily provided in conjunction with farm use”). A jury could decide under these circumstances that the reference in the flyers did not provide plaintiffs with sufficient notice that they should inquire further.
We proceed to address defendants’ alternative argument that plaintiffs received sufficient notice of a need to inquire at the time they learned, more than two years before filing the complaint, of a problem with a septic tank for one of the mobile homes. A county inspector came out to the property after a sewage backup at one of the homes and later informed plaintiffs that they needed a “septic system repair permit” to correct the problem and that the county had never issued a permit for the septic system. Defendants contend that, at that point, plaintiffs had facts sufficient, as a matter of law, to excite their attention as to a need to inquire about the truth of defendants’ representations that the mobile homes and camp were legal uses of the property.
We disagree. Although a county official informed plaintiffs that no septic permit had been issued, the record does not establish that the official understood from that fact or intimated to plaintiffs that none of the mobile homes could be used legally under any circumstances. Although a jury could conclude that the incident put plaintiffs on notice that they should inquire as to the accuracy of defendants’ more general representation that the mobile home and camp were legal uses, it also could draw the opposite inference.
Finally, we address defendants’ argument that plaintiffs waived their fraudulent representation claim when they sold the property. Citing ORS 93.850(2), defendants contend that, in order to maintain their fraud action, plaintiffs “must have an interest in the real property.” According to defendants, the voluntary sale of the real property that is the subject of their claim constitutes a voluntary relinquishment of a known right precluding them from further asserting their fraudulent misrepresentation claim.
We disagree. ORS 93.850(2) merely provides that a warranty deed “convey[s] the entire interest in the described property at the date of the deed which the deed purports to conve/’ and estops the grantor and her heirs, successors, and assigns from asserting that the grantor had a lesser interest in the property than the deed purported to convey. It does not establish that a tort action related to the acquisition or possession of the real property is an interest that is conveyed or relinquished by the deed, and defendants cite
Affirmed.
Notes
That rule, in relevant part, authorizes a defendant to raise, by means of a motion to dismiss, the defense “that the pleading shows that the action has not been commenced within the time limited by statute.”
Defendants contend that, because the complaint demonstrates that plaintiffs filed this action more than four years after the misrepresentations were made, it must “state that plaintiffs are relying on the discovery rule” of OES 12.110(1). However, defendants offer no authority in support of that contention, which
appears to contradict the terms of the statute and the test for when the duty to make an inquiry arises as set forth in
Mathies,
We reject a third argument — that the trial court “impermissibly weighed evidence” — without discussion.
That subsection has since been amended by Or Laws 1985, ch 719, § 1; Or Laws 1989, ch 366, § 1; Or Laws 1993, ch 792, § 40; and Or Laws 2005, ch 311, § 1.