Bloor v. Fritz, 143 Wash. App. - 718, 180 P.3d 805 (2008)

Rule:

Under Wash. Rev. Code § 18.86.030(1)(d), a real estate agent has a duty to disclose all existing material facts known by the agent and not apparent or readily ascertainable to a party; provided that Wash. Rev. Code § 18.86.030(1)(d) shall not be construed to imply any duty to investigate matters that the agent has not agreed to investigate. A material fact is an information that substantially adversely affects the value of the property or a party's ability to perform its obligations in a real estate transaction, or operates to materially impair or defeat the purpose of the transaction. Wash. Rev. Code § 18.86.010(9). That property is or was the site of illegal drug activity not adversely affecting the physical condition of or title to the property is not a material fact. Wash. Rev. Code § 18.86.010(9).

Facts:

Respondent buyers Eddie and Eva Bloor purchased a home from Appellants Robert and Charmaine Fritz through Lance Miller, an agent at LC Realty, Inc. After learning that the home was contaminated by a methamphetamine lab, respondents sued appellants; the former owners, the real estate agent, the realty company, and defendant county. The trial court found that appellant-former owners negligently misrepresented the condition of the property and that the real estate agent failed to disclose a known material fact about the property and negligently misrepresented its condition, thereby violating the Consumer Protection Act (Act). The agent and realty company argued that substantial evidence does not support the trial court's findings that the agent knew of the illegal drug manufacturing on the property and failed to disclose it. They also argue that the respondent buyers failed to prove an Act violation. Appellant-former owners argued that the trial court erred in failing to dismiss the negligent misrepresentation claim and rescinding the real estate purchase and sale agreement. Appellants challenge the trial court's damage and attorney fee awards.

Issue:

1. Did the appellant-agent violate the Consumer Protection Act?

2. Did the appellant former owners negligently misrepresent the property's condition?

Answer:

1. Yes. 2. Yes.

Conclusion:

The appellate court affirmed the trial court's judgment, but vacated the damage award and remanded that issue to the trial court to enter a new judgment for the respondents. Because substantial evidence supported the trial court's finding that appellant-agent knew of the methamphetamine manufacturing on the property, the agent violated his duty to disclose known material facts about the property under Wash. Rev. Code § 18.86.030. Also, the trial court did not err in concluding that the agent negligently misrepresented a material fact in failing to disclose the illegal drug manufacturing on the property. Furthermore, listing and showing the property without disclosing its history of illegal drug manufacturing had the capacity to deceive any member of the public who used the listing directory or expressed interest in the property. In addition, the agent's conduct impacted the public interest. Thus, appellant-agent violated the Washington Consumer Protection Act. In the suit against appellant- former owners, the trial court did not err in rescinding the real estate purchase and sale agreement. To restore the respondent buyers to their pre-contract position, appellant- former owners had to pay the debt together with the unpaid interest that actually accrued, penalties, and foreclosure costs that the lender assessed against the respondent buyers.