Watterud v. Gilbraith

Watterud v. Gilbraith, 2015 MT 288 (Oct. 6, 2015) (Cotter, J.) (6-0, aff’d)

Issue: Whether the district court erred in granting summary judgment to sellers’ real estate agent on the basis that the buyers’ negligence claim is premised on duties to inspect and discover, which do no exist under the statute.

Short Answer: No.

Affirmed

Facts: Gilbraiths retained Amber Uhren to sell their home in September 2013. The GIlbraiths disclosed in the listing contract that the property had not been tested for mold nor treated or mitigated for mold.

Two days later, the Watteruds entered into a buy-sell with the Gilbraiths, and both couples signed a property disclosure statement and a mold disclosure form. The Gilbraiths disclosed that there had been leakage, flooding, moisture or evidence of water in the basement in 2005, and that the “issue has been handled & taken care of.” They also checked the box next to flooding, draining, grading problems, or French drains, and wrote that there was water damage and the whole basement was redone in 2008, but had “been fine since.” Both parties agreed it was the buyers’ responsibility to obtain a mold inspection. Watteruds obtained a home inspection but not a mold inspection.

After Watteruds moved into the home, they became ill and discovered mold in the basement. The sued the Gilbraiths, Uhren, the home inspection company and the home inspector for negligence. All defendants except Uhren were eventually dismissed.

Procedural Posture & Holding: Uhren moved for summary judgment, arguing that Watteruds’ negligence claim was premised on duties to inspect and discover, which do not exist. The district court granted the motion, and Watteruds appeal. The Supreme Court affirms.

Reasoning: The duties a seller’s agent owes to a buyer are codified. § 37-51-313(3), MCA. Watteruds argue that the common law principles were incorporated into the statute, and that subsection 13 imposes an affirmative duty on the agent to discover adverse material facts, which must then be disclosed. Interpreting these provisions together for the first time, the Court holds that the sellers’ agent, Uhren, had a duty to disclose adverse material facts that she knew of, and a duty to disclose when she had no personal knowledge of the truth of the sellers’ statements. Uhren had no knowledge of mold in the home, and stated in the mold disclosure form that she could not and did not represent or warrant the absence of mold. Amber complied with her duties, and had no additional duty to inspect, independently discover adverse material facts, or verify the sellers’ statements.