David E. Svendsen v. Gregg N. Stock et al.

Consumer Protection Act - In October of 1995, David Svendsen purchased a house near Lake Sammamish from Gregg and Randi Stock. Connie Edwards of John L. Scott, Inc., was the listing agent representing the Stocks. Some years before the sale the Stocks had experienced flooding on their property as a result of a blocked storm drain on an uphill neighbor's property. In November 1994, the neighbor's drain again overflowed, but on this occasion did not flood the Stock's property. The neighbors and the Stocks complained to the King County officials, and as a result, the county came out and cleared the storm drain in March 1991, January 1992, and November 1994. However, no additional assurances were made that the drain would not flood again.

IN August of 1995, the Stocks listed their house for sale with Connie Edwards of John L. Scott. At the time, the Stocks completed a seller's disclosure statement (Form 17), as required under RCW 64.06. Question 7A on the form refers to any possible settling, soil, standing water, or drainage problems that might be present on the property. Originally, Mr. Stock answered "yes" to this question, but at the urging of Edwards, changed his answer to "no". After Stock had explained the history of the flooding to Edwards, she explained to him that he was not required to disclose a past defect that had been corrected. Nevertheless, Mr. Stock asked Edwards to disclose the flooding problem to any prospective buyer and to tell them to notify King County with any problems. Despite his request, Edwards did not disclose the problem to Svendsen of his agent.

Form 17 contained and additional question regarding any material defects that might exist on the property that the buyer should be aware of. This question was answered "no" as well.

Trail testimony revealed that Edwards had independent knowledge of the drainage problem. Mr. Stock's information about the problem was not the only time that Edwards had heard about the problem. She had been involved in a sale of another property that also concerned the standing water.

On September 25, 1995, Svendsen and the Stocks entered in to a purchase and sale agreement. Svendsen had the home inspected, and the inspector did not note a potential problem with flooding from the neighbor's property.

Soon after Svendsen purchased the home, in November 1995, and February 1996, the storm drain on the neighbor's property overflowed and flooded Svendsen's garage and driveway. King County once again cleared the drain.

In the summer of 1997, the county dug up the drain, and removed two large obstructions from the pipe. Nevertheless, the County could not assure the homeowners that the drain would not become clogged again.

Svendsen sued the sellers, the homeowners association, the home inspector, and John L. Scott. The sellers filed bankruptcy, Svendsen settled with the homeowners association, and the trial court dismissed the charges against the inspector on summary judgment. The remaining claims of fraudulent concealment, negligent misrepresentation, and violation of the Consumer Protection Act against John L. Scott were tried to a jury. The jury found Scott liable for fraudulent concealment and violation of the Consumer Protection Act, but not for negligent misrepresentation. The jury also found that there was an "error, inaccuracy, or omission in the Form 17" and that Scott had actual knowledge of it at the time of the sale. The jury found Scott 95% at fault and the sellers 5% at fault.

Svendsen's claimed damages included damage to his property and the cost of cleanup, plus $32,600 for the estimated cost of installing a gravity flow drainage system on his property.

The jury awarded Svendsen damages of $38,298. The court awarded punitive damages of $6,500, and attorney fees of $17,500 under the Consumer Protection Act.

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Affirmed in part, reversed in part, by The Court of Appeals of Washington, Division 1. See: 979 P2d. 476 (Wash.App. Div.1 1999). The date above is the date of the appellate court decision and not the trial date. Reported by EMDH.