Carroll v. Bergen: Court Considers Inspector's Liability for Report
A Wyoming court has considered whether a home inspector was liable to a buyer for stating in his report that a house was "structurally sound" when it was later discovered that the home's structure was unstable.
Thomas W. Bergen ("Buyer") retained real estate licensee Mary Fahringer ("Buyer's Representative") to help him find a home to purchase. The Buyer made an offer on a home, and the offer gave the Buyer the right to perform an inspection of the property. After the offer was accepted, the Buyer asked the Buyer's Representative to arrange an inspection. The Buyer's Representative contacted a home inspector that she knew. He was unable to perform the inspection, but recommended Dale Carroll ("Inspector") to her.
The Buyer's Representative arranged for the Inspector to inspect the home, with the agreement being that the Inspector would receive reimbursement for his mileage as well as a fee. The Buyer's Representative was present for the inspection, after which the Inspector wrote a report advising the Buyer of a cracked window and leaky bathtub. The Buyer's Representative had alerted the Inspector to both of these defects, although the Inspector identified the wrong bathtub in his report. He wrote in his report that the home was otherwise "structurally sound...[r]oof supports strong. 12" log construction, caulked where necessary." The Buyer's Representative contacted the Inspector to alert him that the roof was actually constructed out of insulated panels with log facing, and so the Inspector amended his report to reflect this fact. He submitted his report to the Buyer, along with a bill for his services.
Following his receipt of the Inspector's report, the Buyer completed his purchase of the home. After taking possession of the property, the Buyer noticed numerous problems with the property, such as gaps in the logs supporting the roof and lack of insulation around the windows. The Buyer had a builder ("Builder") look at the house, and he noted numerous other problems with the property that he estimated would "not exceed" $15,000 to repair. The Buyer brought a lawsuit against the Inspector for breach of contract, and the trial court awarded the Buyer $14,954. The Inspector appealed.
The Supreme Court of Wyoming reversed the trial court's award and sent the case back to the lower court for further proceedings. The court first considered whether a contract existed between the Buyer and the Inspector. The Inspector argued that there was no contract because the Buyer's Representative had made all of the arrangements for the inspection and he also based his argument on the agreement between the Buyer and the Buyer's Representative. The agreement provided that the Buyer's Representative "would not obtain or order products or services from outside sources unless Buyer has previously authorized the services in writing and agreed to pay for those services promptly when due." The court found that the Buyer's Representative had the necessary authority to retain the Inspector on behalf of the Buyer, and the court also stated that the Buyer did not dispute that he had given the Buyer's Representative the authority to retain the Inspector. Thus, the court ruled that the Buyer's Representative had the authority to secure the inspection on behalf of the Buyer.
Next, the Inspector argued that there was no consideration to support the alleged contract between the Buyer and the Inspector because the Buyer never paid any money to the Inspector. Contract formation requires an offer and acceptance, along with an exchange of consideration. Consideration is usually in the form of money but can be mutual promises which impose legal obligations on the parties. The court ruled that the Buyer's promise to pay the Inspector's fees constituted sufficient consideration to support the contact between the parties. The only remaining issue was the terms of the contract between the parties, but the court found that the language in the Inspector's report demonstrated that he understood that he was retained to evaluate the structural soundness of the home. Thus, the court ruled that a contract existed between the parties for the Inspector to inspect the structural soundness of the home.
The final issue before the court was the Inspector's argument that the Buyer had failed to produce expert testimony in support of his damage claims. The Buyer had failed to identify an expert during the discovery process. However, during trial the Builder had testified as a lay witness about the costs of repairs which needed to be undertaken on the home. The Inspector had objected to this testimony, on the grounds that it constituted expert testimony and the Builder's testimony had not been properly identified as expert testimony. The court agreed with the Inspector that the trial court had improperly allowed the Builder to testify about the costs of repair, and ruled this testimony inadmissible. Since the Buyer had submitted no other evidence of his damages, the court reversed the trial court and sent the case back to the trial court for further proceedings.
Two judges dissented from the majority opinion. The judges agreed with everything in the majority except for the remanding of the case back to the trial court, as the dissenters stated that since the Buyer had failed to offer admissible evidence on the extent of his damages, judgment should be entered on behalf of the Inspector.
Carroll v. Bergen, 57 P.3d 1209 (Wyo. 2002).