Plaintiff brought this fraud action against defendant, alleging that he had relied on statements by one of defendant’s claims adjusters in entering a contract with a contractor for repair work on plaintiff’s rental property and, as a consequence, had been damaged by the contractor’s failure to obtain the building permits necessary to perform the repairs and to make the repairs in conformance with the Grants Pass building code. The trial court granted defendant’s motion for summary judgment on plaintiff’s fraud claim on three grounds: plaintiff had not timely filed his claim; plaintiff had failed to adduce evidence on an element of fraud, viz., that plaintiff’s reliance on the claim adjuster’s statements was justified; and plaintiff had failed to plead and to adduce evidence on the existence of a special relationship between himself and defendant that would entitle him to recover damages against defendant for fraud. Plaintiff appeals the general judgment, advancing two assignments of error that together challenge all three of the court’s reasons for granting summary judgment.
Plaintiff owns a residential rental property in Grants Pass that suffered extensive water damage on January 18, 2007. Pursuant to his homeowner’s insurance policy with defendant, plaintiff filed a claim with defendant for the damage, and defendant accepted the claim and agreed to pay for the repairs. Roughly a week after the damage occurred, plaintiff met Gould, one of defendant’s claims adjusters, and Stewart, a contractor who owns a company that performs restoration work and whom Gould had invited to the property.
Before signing the contract, plaintiff asked Gould and Stewart whether Stewart’s proposed repair work would require building permits, pointing out that it seemed to plaintiff that the job would require electrical permits because water had damaged light fixtures in the ceiling of the house. Specifically, plaintiff asked Gould, “[D]o we need any permits to do this job and do it right so we can get it done?” Gould responded, “No, we don’t,” and Stewart added, “No, we don’t need any, it’s just a normal restoration job, water damage.” Also, at some point during the initial inspection of the home, Gould told plaintiff, regarding Stewart’s qualifications, that defendant “use[s] [Stewart] quite often here in town and other places on all our jobs.”
During the course of Stewart’s ensuing repair work, the issue whether the work had to be performed pursuant to building permits came up twice. First, plaintiff testified at his deposition that he had had a meeting with a Grants Pass building inspector about the need for some type of building permit “probably within a few months” of Stewart’s initial inspection of the house on January 25, 2007.
“Stewart to fix the subflooring and the stringer in the house. [Gould said,] “Whatever it takes, just do it, get it done.’
“And he looked right at me, and I said, ‘[Gould], now we are going to have to have a permit.’
“And he goes, ‘No, we don’t need [a] permit.’ He says, “We are not doing any structural changes.’
“I said, ‘[Gould], you are up, underneath the floor, you are lifting the main frame of the house, you are building this header, you don’t need any?’
“He says, ‘No, they are just going to put a couple pier blocks, that’s it, I’m gone.’”
Plaintiff also asked. Stewart during the meeting if a building permit would be needed to perform the work, and Stewart told him that a permit would not be necessary. However, plaintiff testified that he still had his doubts.
Stewart completed the work in May 2008, but, at some point after October 1, 2008, a Grants Pass building inspector told plaintiff that he believed that substantial portions of the repair work that Stewart had performed required a building permit. On February 11,2009, the Grants Pass building safety department issued a notice to plaintiff that asserted that the restoration work had violated the city building code because it had been performed without the required building permits. As a result of the violation, no one could occupy the property and plaintiff had to pay a fine of $495 per day for a period that started on February 2 and ended when plaintiff obtained the required permits, if he did so within 14 days of the notice.
Plaintiff filed this action against defendant for fraud on April 13,2009, alleging that he had relied on Gould’s false statements — viz., that no building permits were required for the repair work and that Stewart was experienced in and knowledgeable about restoration work — in signing the work-authorization contract with Stewart, which resulted in the
Defendant moved for summary judgment in its favor on plaintiff’s claim on, as pertinent to this case, three grounds. First, defendant contended that plaintiff’s claim, which he filed on April 13, 2009, is time barred by the applicable two-year statute of limitation, ORS 12.110(1), because, under the discovery rule incorporated in the statute, plaintiff should have discovered “at least within three months of entering into [the] contract with Stewart,” viz., by April 25, 2007, that Gould’s statements were fraudulent — at which point the two-year limitation period would have commenced.
I. STATUTE OF LIMITATION
Afraud action must be commenced within two years of the date on which the cause of action accrues. ORS 12.010; ORS 12.110(1).
The overarching inquiry regarding the timeliness of plaintiff’s claim is when should plaintiff have discovered that he had suffered an actionable injury resulting from Gould’s alleged fraud — which is a determination that must be made by the factfinder unless the evidence compels a certain answer as a matter of law. See, e.g., Mathies,
Accordingly, our analysis begins with the predicate inquiry whether the evidence in the record presents a factual issue about whether, during the roughly two and one-half months between the day that Gould made the allegedly fraudulent statements about the building permits and Stewart’s qualifications and the outer limit of the two-year limitation period — viz., between January 25, 2007, and roughly April 13, 2007 — plaintiff learned sufficient facts to trigger a duty to investigate Gould’s alleged fraud.
Based on the record, there were two occasions during that time that the issue of building permits came to plaintiff’s attention.
Therefore, we conclude that the determination whether plaintiff should have discovered that he had suffered an actionable injury as a result of Gould’s allegedly fraudulent statements is one that must be made by the jury, and, accordingly, the court erred in granting summary judgment on the ground that plaintiff’s claim was not timely.
II. PLAINTIFF’S JUSTIFIABLE RELIANCE
We turn to the court’s conclusion that the evidence proffered by plaintiff failed to establish that plaintiff’s reliance on Gould’s statements was justified — that is, that plaintiff had a right to rely on the statements. To recover on a fraud claim, a plaintiff must prove the following elements:
“the defendant made a material misrepresentation that was false; the defendant did so knowing that the representation was false; the defendant intended the plaintiff to rely on the misrepresentation; the plaintiff justifiably relied on the misrepresentation; and the plaintiff was damaged as a result of that reliance.”
Strawn v. Farmers Ins. Co.,
There are two circumstances in particular on which Oregon courts have focused to make that determination. The first is the ability of the plaintiff to obtain information that would reveal the truth of the fraudulent statement— that is, the difficulty that a plaintiff would encounter in conducting an independent investigation of the truthfulness of the statement. See Miller et ux v. Protrka et ux,
Here, the critical inquiry is whether plaintiff had a duty to investigate the truth of Gould’s statements before plaintiff signed the work-authorization contract with Stewart in reliance on them — a determination that must be made by the factfinder unless the circumstances of the case compel the conclusion that plaintiff was not justified, as a matter of law, in so relying. See, e.g., Soursby v. Hawkins,
Three circumstances are pertinent to our analysis: (1) the availability of information about the need for building permits and about Stewart’s qualifications; (2) the relative sophistication of plaintiff and Gould; and (3) the pressure on plaintiff to sign the contract with Stewart almost immediately after Gould made the allegedly fraudulent statements.
First, the information that would reveal the truth of Gould’s statements was undoubtedly available; it was not exclusively in Gould’s control, and plaintiff certainly could have asked a city building inspector about the permit issue, which he eventually did as the work was progressing, and could have asked other clients or contractors in the area about Stewart’s qualifications to perform the restoration work. However, despite the general availability of the information, a jury could still reasonably infer that the information would have been unduly difficult to acquire and, therefore, that plaintiff need not have sought the information in order to justifiably rely on Gould’s statements. See Soursby,
Second, as to the relative sophistication of the parties, plaintiff testified at his deposition that he had asked Gould about the need for building permits because he had assumed that Gould, having been trained as a claims adjuster, would be familiar with that issue and would know the answer and that he had asked Gould about Stewart’s qualifications because Gould had brought him to the house to assess the water damage. Both statements could be taken to show that Gould was the more sophisticated party. However, plaintiff also testified that he had worked for most of his life as a construction worker, building dams and installing drywall depending on the time of year, and, based on his experience in that field, he knew that some construction projects require building permits. The jury could reasonably infer that plaintiff’s construction experience makes him a sophisticated party regarding the subject of Gould’s statements or it could reach the opposite inference based on the fact that nothing in the record suggests that plaintiff ever had to assess the need for building permits or had to obtain them as part of his construction employment.
Finally, and most importantly, plaintiff testified that both Gould and Stewart had exerted pressure on him to sign the work-authorization contract immediately to prevent further water damage to the house that would result were he to delay doing that. A jury could certainly infer that the pressure to sign the contract created a situation in which, no matter how available the information revealing the truth of Gould’s statements or how sophisticated the parties, plaintiff simply could not be said to have had any opportunity to conduct an independent investigation before signing the contract.
Therefore, we conclude that the question whether plaintiff reasonably should have investigated the need for building permits and Stewart’s qualifications before signing the work-authorization contract must be answered by the jury. Accordingly, the court
III. SPECIAL RELATIONSHIP
Finally, we turn to the court’s conclusion that, because plaintiff and defendant were parties to an insurance contract, plaintiff could not recover on his fraud claim without pleading and adducing evidence that he had a special relationship with defendant giving rise to a standard of care independent of the one imposed by the contract’s terms. As the Oregon Supreme Court has routinely stated in addressing a plaintiff’s choice between tort and contract remedies:
“When the relationship involved is between contracting parties, and the gravamen of the complaint is that one party caused damage to the other by negligently performing its obligations under the contract, then, and even though the relationship between the parties arises out of the contract, the injured party may bring a claim for negligence if the other party is subject to a standard of care independent of the terms of the contract. If the plaintiff’s claim is based solely on a breach of a provision in the contract, which itself spells out the party’s obligation, then the remedy normally will be only in contract, with contract measures of damages and contract statutes of limitation. That is so whether the breach of contract was negligent, intentional, or otherwise. In some situations, a party may be able to rely on either a contract theory or a tort theory or both.”
Georgetown Realty v. The Home Ins. Co.,
Therefore, and in the absence of case law extending the principle stated in Georgetown Realty to intentional torts,
In conclusion, the court granted summary judgment to defendant on three grounds. We conclude that each of the grounds is insufficient to support the court’s decision. Accordingly, we reverse and remand the general judgment.
Reversed and remanded.
Notes
Although plaintiff divides his challenge to the court’s summary judgment ruling into two assignments of error, because assignments of error target rulings and not the reasons for the rulings, Archambault v. Ogier,
On appeal of a grant of summary judgment, we review the record in the light most favorable to, and draw all reasonable inferences from the facts in favor of, the nonmoving party to determine whether there are any genuine issues of material fact and whether the moving party is entitled to judgment as a matter of law. Jones v. General Motors Corp.,
For convenience, we refer to Stewart and his company, Stewart Restoration Services, LLC, as Stewart throughout this opinion.
In an affidavit, plaintiff also asserted that Gould told him that Stewart was “very knowledgeable and [an] expert in reconstruction and repair work.” However, the affidavit does not specify whether Gould made that statement before or after the initial inspection.
The summary judgment record does not disclose any other details about that meeting.
Inexplicably, the record does not disclose the specific, or even an approximate, date on which the exchange between plaintiff and Gould took place.
Because plaintiff filed his claim on April 13, 2009, if the two-year limitation period started to run three months after the January 25, 2007, date that plaintiff entered into the contract with Stewart — viz., on April 25, 2007 — then the claim would have been timely filed. Therefore, taken literally, defendant’s statute of limitation argument fails by its terms. However, we give defendant the benefit of the doubt and assume that it was attempting to argue that plaintiff should have discovered the fraud, thereby triggering the two-year limitation period, before April 13, 2007.
ORS 12.010 provides, “Actions shall only he commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute.” ORS 12.110(1) provides:
“An action for assault, battery, false imprisonment, or 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.”
As we explained in Widing v. Schwabe, Williamson & Wyatt,
“The discovery rule [under ORS 12.110(1)], as it applies to the fraud claim, is essentially similar [to the discovery principle laid out in Gaston incorporating the three elements of an actionable injury], except that the actual or [imputed] knowledge that a plaintiff must have in order to start the running of the statute has sometimes been described as including the fact of the fraud itself.”
The record establishes that plaintiff had actual knowledge that he had suffered an actionable injury within two years of his April 13, 2009, filing of the claim.
On appeal, defendant argues, in essence, that plaintiff should have discovered that he had suffered an actionable injury at the point that Gould made the allegedly fraudulent statements because plaintiff at that point questioned whether permits were needed. However, the premise of defendant’s argument— viz., that plaintiff should have investigated whether permits were needed “so that he need not have relied on Gould’s statementEs]”' — speaks to whether plaintiff justifiably relied on the statements, not whether plaintiff should have discovered, after relying on them, that the statements were fraudulent. Therefore, we address that argument in our analysis of whether the court erred in granting summary judgment on the ground that plaintiff had failed to adduce evidence to prove that his reliance was justified.
See Johnson et ux v. Cofer,
Defendant’s contrary argument is unavailing. Specifically, defendant seizes on the use of the word “intentional” in the above-quoted portion of Georgetown Realty and contends that the court’s use of that word “necessarily connotes that the torts to which the rule applies include intentional torts.” However, the word “intentional” plainly refers to an intentional breach of a contract, not an intentional tort, and, therefore, the court’s use of the word provides no support for defendant’s argument.