Hill v. Jones

725 P.2d 1115 (1986)

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Nature of the Case

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Facts

P entered into an agreement to purchase D's residence for $72,000. P had made several visits to the home prior to the contract. The agreement provided for a termite inspection report stating that the property was free from evidence of termite infestation. On a subsequent visit to the house, and when Ds were present, Ps noticed a small 'ripple' in the wood floor on the step leading up to the dining room from the sunken living room. P asked if the ripple could be termite damage. D answered that it was water damage. A few years previously, a broken water heater in the house had caused water damage in the area of the dining room and steps which necessitated that some repairs be made to the floor. P, through his job as maintenance supervisor at a school district, had seen similar 'ripples' in wood which had turned out to be termite damage. P was not satisfied, but he felt that the termite inspection report would reveal whether the ripple was due to termites or some other cause. The termite inspection report stated that there was no visible evidence of infestation. The report failed to note the existence of physical damage or evidence of previous treatment. The realtor notified the parties that the property had passed the termite inspection. Neither party actually saw the report prior to close of escrow. After moving in Ps found a pamphlet left in one of the drawers entitled 'Termites, the Silent Saboteurs.' They learned from a neighbor that the house had some termite infestation in the past. P also noticed that the wood on the steps leading down to the sunken living room was crumbling. She called an exterminator who confirmed the existence of termite damage to the floor and steps and wood columns in the house. The estimated cost of repairing the wood floor alone was approximately $5,000. P sued D for rescission. When Ds purchased the residence in 1974, they received two termite guarantees that had been given to the previous owner as well as a diagram showing termite treatment at the residence that had taken place in 1963. The guarantees provided for semi-annual inspections and annual termite booster treatments. The accompanying diagram stated that the existing damage had not been repaired. A second guarantee, dated 1965, reinstated the earlier contract for inspection and treatment. D admitted that he read the guarantees when he received them. D renewed the guarantees when they purchased the residence in 1974. They also paid the annual fee each year until they sold the home. A neighbor had also noticed 'streamers' evidencing live termites in the wood tile floor near the entryway. Booster treatments were given, and a hole was drilled through the floor to treat for termites. D had also seen termites on the back fence and had replaced and treated portions of the fence. Ds did not mention any of this information to buyers prior to close of escrow. The inspector indicated that he had not seen the holes in the patio because of boxes stacked there. He had not found the damage inside the house because a large plant, which P had purchased from D, covered the area. After investigating the second time, the inspector found the damage and evidence of past treatment. He acknowledged that this information should have appeared in the report. He complained, however, that he should have been told of any history of termite infestation and treatment before he performed his inspection and that it was customary for the inspector to be given such information. The trial court dismissed the claim for misrepresentation based upon a so-called integration clause in the parties' agreement. D sought summary judgment on the 'concealment' claim. The trial court awarded D $1,000.00 in attorney's fees. Ps have appealed from the judgment and Ds have cross-appealed from the trial court's ruling on attorney's fees.