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Lawley v. Northam

United States District Court, Fourth Circuit

April 24, 2013

PAUL E. NORTHAM, ET AL, Defendants.


Ellen Lipton Hollander United States District Judge

This case arose from a real estate transaction consummated in September 2008, involving the purchase and sale of a single family home in Worcester County, Maryland (the “Property”), pursuant to a Residential Contract of Sale (the “Contract”) executed in July 2008. Dona May Willoughby, plaintiff, was the purchaser, and her daughter and son-in-law, Misha and Darren Lawley (the “Lawleys”), plaintiffs, were to reside at the Property. Paul Northam and Lynn Immell, defendants, were the sellers (“Sellers”). Debora Hileman (“Ms. Hileman”) and Hileman Real Estate, Inc. (“Hileman, Inc.”) (collectively, the “Hilemans”), defendants, were the Sellers’ real estate agent and broker. Claiming that the house was defective, and that defendants failed to disclose latent defects of which they had knowledge, plaintiffs filed a fourteen-count Complaint (ECF 1), seeking $1, 000, 000 in compensatory damages and $2, 000, 000 in punitive damages.[1] In particular, plaintiffs claimed the house was filled with mold that caused Ms. Lawley to become ill, and that it was subject to severe water intrusion in the basement. They sold the Property in February 2012, at a loss, which they attributed to the defects in the Property.

Following plaintiffs’ filing of an Amended Complaint, see ECF 43, the defendants filed several motions for summary judgment, culminating in two judicial opinions that resolved a few of the claims. See ECF 67; ECF 75. Thereafter, plaintiffs filed a Second Amended Complaint. See ECF 84. After a flood of pretrial motions, see ECF 88; ECF 89; ECF 90; ECF 92; ECF 93; ECF 94; ECF 108, the case was tried to a jury, commencing October 31, 2012, on five counts: Negligence (Count I); Negligent Misrepresentation (Count II); Fraud (Count III); Unfair or Deceptive Trade Practices under the Maryland Consumer Protection Act, Md. Code (Repl. Vol. 2005), Com. Law § 13-101 et seq. (Count IV, against Sellers only); and Loss of Consortium (Count V).

At the close of the evidence, the defendants moved for judgment under Fed.R.Civ.P. 50(a). I reserved ruling on the motion. See Fed. R. Civ. P. 50(a) (indicating that a court need not decide a Rule 50(a) motion before the jury’s ruling, and can instead consider a renewed motion under Rule 50(b), if necessary); Fed.R.Civ.P. 50(b) (“If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court’s later deciding the legal questions raised by the motion.”); e.g. E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009) (“If the judge denies or defers ruling on the motion, and if the jury then returns a verdict against the moving party, the party may renew its motion under Rule 50(b).”).

On November 16, 2012, the jury initially found in favor of the plaintiffs and against the Hilemans as to negligence (Count I), but also found that plaintiffs had “assumed the risk of purchasing property with knowledge of the defects that they allege.” See Verdict ¶¶ 7-7A (ECF 168). It awarded $33, 600 to plaintiffs in connection with the Property.[2] See Id . ¶ 16. As to all other claims, the jury found in favor of the Hilemans as well as the Sellers.

In Maryland, “[i]f established by the evidence, assumption of the risk functions as a complete bar to recovery.” Poole v. Coakley & Williams Constr. Inc., 423 Md. 91, 110, 31 A.3d 212, 224 (2011). Accordingly, the jury’s verdict was inconsistent. See Smith v. Jefferson Cnty. Chamber of Commerce, Inc., 885 F.2d 866, 1989 WL 106803, at *2 n.1 (4th Cir. 1989) (unpublished per curiam) (explaining that a jury’s finding for plaintiffs on a claim of negligence, while simultaneously finding assumption of the risk as to that claim, “would be an inconsistent verdict”). Therefore, before the verdict was entered, the Court provided supplemental jury instructions, explaining that assumption of the risk is a complete bar to recovery. The jury was then instructed to reconsider the issues of negligence and the affirmative defense of assumption of the risk. A supplemental verdict sheet was also submitted to the jury (“Supplemental Verdict, ” ECF 168-1). See Bristol Steel & Iron Works v. Bethlehem Steel Corp., 41 F.3d 182, 190-91 (4th Cir. 1994) (explaining that “the district court exercises the discretion to determine whether the jury’s findings as evidenced by the special verdicts will support the verdict rendered or whether certain issues should be resubmitted to the jury, ” and the court may “‘give such supplemental instructions as may be necessary’”) (citations omitted); see e.g., Kerman v. City of New York, 261 F.3d 229, 242-44 (2d Cir. 2001) (finding trial judge exercised discretion properly in accepting partial verdict as to eight of nine defendants, while returning verdict sheet to the jury to resolve inconsistent verdict as to remaining defendant).

Thereafter, the jury again found against the Hilemans as to negligence, and also found that plaintiffs did not assume the risk. See Supplemental Verdict. It again awarded $33, 600 in connection with the sale of the Property. See id.[3] Although plaintiffs argued at trial that the Hilemans were negligent based on the presence of mold and the history of water intrusion, the jury was not asked to specify the basis on which it found the Hilemans negligent. Nonetheless, the parties seem to agree that water intrusion was the sole basis on which the verdict was rendered.

The Court issued an Order of Partial Judgment on November 20, 2012, see ECF 170, entering partial judgment in favor of plaintiffs and against the Hilemans, in the amount of $33, 600.00, with costs, and entering partial judgment in favor of Sellers and against plaintiffs, with costs. Id. ¶¶ 1-2. It stated: “If any party intends to file a renewed motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(b), that party is instructed to submit such motion within 28 days after this Order is docketed.” Id. ¶ 5. The Order of Partial Judgment also stated that final judgment would be entered “after determination of the parties’ entitlement to attorneys’ fees.” Id. ¶ 6 & n.2.

The Hilemans subsequently filed a Motion for Judgment (“Brokers’ Motion, ” ECF 178), and a supporting memorandum (“Brokers’ Memo, ” ECF 178-1), seeking judgment under Fed.R.Civ.P. 50(b), on the grounds that the verdict against the Hilemans on Count I (negligence) was contrary to the evidence. Plaintiffs filed an opposition, focusing on the Hilemans’ failure to disclose material facts as to the history of water intrusion in the basement. See ECF 183.[4]

Additionally, in accordance with the Order of Partial Judgment, Local Rule 109.2, and Appendix B: Rules and Guidelines for Determining Attorneys’ Fees in Certain Cases (“Appendix B” or “App. B”), the Sellers filed a motion to recover $240, 015.31 in attorneys’ fees, pursuant to the Contract. See Motion for Attorneys’ Fees (“Sellers’ Motion, ” ECF 171); Memorandum in Support of Motion for Attorneys’ Fees (“Sellers’ Memo, ” ECF 171-1); Supplemental Memorandum in Support of Defendants’ Motion for Attorneys’ Fees (ECF 176). In support of Sellers’ Motion, the Sellers submitted two affidavits of Thomas P. Bernier, Esq., one of the attorneys for the Sellers. See Affidavit of Thomas P. Bernier, Esq., (“Bernier Aff., ” ECF 171-7); Second Affidavit of Thomas P. Bernier, Esq. (“Bernier Aff. II, ” ECF 176-3). On behalf of himself, his co-counsel, Susan Smith, Esq., as well as an associate attorney and two paralegals, Mr. Bernier claimed legal fees and expenses of $131, 036.31 for the period of July 20, 2010, through September 28, 2012, Bernier Aff. ¶ 7, and $108, 979 for the period of October 1, 2012, through November 31, 2012. Bernier Aff. II ¶ 7.[5] Pursuant to Fed.R.Civ.P. 54(d)(1) and Local Rule 109.1, the Sellers also claimed $6, 610.80 in costs, to be taxed against plaintiffs. See ECF 172 (Sellers’ bill of costs); ECF 172-1 (Sellers’ memorandum in support of bill of costs). Plaintiffs opposed the Sellers’ Motion, see ECF 179, and Sellers’ claim for costs, see ECF 181, and Sellers replied. See ECF 182 (reply as to attorneys’ fees); ECF 184 (reply as to costs).

Plaintiffs filed a motion for attorneys’ fees and expenses as to the Hilemans, in the amount of $173, 590, also pursuant to the Contract. See Plaintiffs’ Motion for Attorneys’ Fees (“Plaintiffs’ Motion, ” ECF 173); Memorandum in Support of Motion for Attorneys’ Fees (“Plaintiffs’ Memo, ” ECF 173-1); Affidavit of Samuel L. Riley, Esq., Plaintiffs’ Counsel (“Riley Aff., ” ECF 173-4).[6] And, plaintiffs claimed $11, 116.29 in costs, to be taxed against the Hilemans. See ECF 172 (plaintiffs’ bill of costs). The Hilemans opposed the Plaintiffs’ Motion, see ECF 180, and plaintiffs replied. See ECF 185. However, the Hilemans did not oppose plaintiffs’ claim for costs.

The issues have been fully briefed, and the Court now rules pursuant to Local Rule 105.6, as no hearing is necessary. For the reasons that follow, I will deny the Brokers’ Motion; I will grant, in part, the Sellers’ Motion; and I will deny the Plaintiffs’ Motion. I will also award costs to plaintiffs and against the Hilemans, and to the Sellers and against plaintiffs, as set forth herein.

Factual Background[7]

On or about September 5, 2008, Ms. Willoughby purchased the Property from Northam and Immell for $192, 450, pursuant to the Residential Contract of Sale executed in July 2008. See Exh. 2.[8] As noted, she purchased it for her daughter and son-in-law, the Lawleys, who wanted to move to the Eastern Shore of Maryland to lead a sustainable lifestyle as organic farmers.

The home was built in 1957 by David Northam[9] and his wife, Irene Northam, the parents of the Sellers and the aunt and uncle of Ms. Hileman. David Northam died in 1979. Irene Northam moved from the Property in 2002, and died in 2005.[10] Her son, Paul Northam, has lived in Texas for approximately twenty years, and her daughter, Lynn Northam Immell, has lived in Pennsylvania since 1984. After Irene Northam moved from the Property, her children arranged with Hileman, Inc. to rent out the Property. Between 2003 and 2008, Margaret “Peggi” Bortz, then a real estate broker at Hileman, Inc., and her daughter, Debora Hileman, also a real estate broker, were involved with managing the Property as a rental. Bortz is the sister of David Northam and the Sellers’ aunt. She is presently employed as an administrative assistant at Hileman, Inc. At the relevant time, she lived in a house adjacent to the Property.

The Lawleys testified at length regarding their discovery of the alleged defects in the Property. Soon after the Lawleys moved to the Property in September 2008, Misha Lawley began to experience respiratory problems. Believing that these symptoms were the result of pervasive mold in the house, the Lawleys moved out on or about April 19, 2009. On December 16, 2009, Mr. Lawley returned to check on the Property and discovered about five or six feet of water in the basement, which reached the base of the electrical box. See Exh. 41 (photographs of Dec. 16, 2009 basement flood). The electrical power was on at the time. See Id . However, Mr. Lawley turned off the power because he was concerned about water coming into contact with the electrical box.

The Lawleys hired Derrick Largent to pump the water from the basement. Largent testified that it took him approximately twelve hours to do so, using two sump pumps and a generator. He stated that the existing basement sump pump was not operational. Largent had to return the next day because water had again flooded the basement to about the same height. According to Largent, the basement had to be pumped out three times. Although a new sump pump was installed, Largent testified that a year after installation, he had to install another sump pump, because the sump pump had “worked so hard that it burned out.”

From September 2008, when the Lawleys moved to the Property, until the flood was discovered in December 2009, the Lawleys did not experience water intrusion in the basement. During their absence after April 2009, the Lawleys had someone check on the house every one-to-two weeks, and there were no issues with flooding, nor had the power been out during any of these inspections. Plaintiffs introduced evidence that the Property had such a high water table that the sump pump had to operate on a daily basis to keep the basement dry, and that during prior tenancies the sump pump needed numerous repairs and service calls, discussed infra.

On or about February 10, 2012, the Property was sold to Donald Shockley for approximately $100, 000—a little more than half of the original purchase price. See Exh. 52 (residential contract of sale); Exh. 53 (settlement documents). Thus, plaintiffs claimed a total loss in property value of $92, 450. According to Shockley, the basement has been dry since he purchased the Property.

1. Prior Water Intrusion

At Bortz’s deposition, portions of which were read into evidence at trial, Bortz indicated that she managed the Property while it was rented, and also lived next door. She stated that she knew the house “about as well as I know my own.” See also Exh. 76 (email dated March 4, 2008, from Bortz to Cindy Crockett regarding the Property). According to Bortz, the basement of the Property had flooded years ago. The first flood occurred in 1989, when the entire town of Snow Hill was inundated with water. At that time, water accumulated in the basement to a height of between three and four feet. Bortz explained that, after that flood, a sump pump system was installed in the basement, which pumped water into a drainage ditch. It operated on a daily basis, and had to be replaced on a number of occasions. When Bortz did not see water flowing into the drainage ditch, she would get concerned that water was accumulating in the basement. According to Bortz, the sump pump had been an ongoing problem—sometimes it worked, sometimes it did not work. Bortz also testified that another flood occurred in 2004, when the sump pump was disconnected and thus not operational.

Plaintiffs introduced several exhibits reflecting ongoing issues with the sump pump, including an invoice dated February 12, 2004, for repairs after the basement flooded due to a “disconnected” sump pump, directed to Bortz, Hileman, Inc., and Northam, see Exh. 58; an email from Bortz to Northam and Ms. Hileman dated June 20, 2005, regarding installation of a sump pump, indicating that the plumber “had not been able to find one that had enough horsepower to suit him, ” see Exh. 61; an invoice to Bortz for a new sump pump, dated December 31, 2006, see Exh. 64; an e-mail from Bortz to Ms. Hileman and Northam, dated February 26, 2007, noting continuing problems with the sump pump, see Exh. 69; a letter from Bortz and Hileman, Inc. to Royal Plus, Inc., dated February 28, 2007, requesting an assessment of “the sump pump operation, ” and stating that “this is a system that is needed on a daily [sic] to keep the basement dry, ” see Exh. 70; and an email dated March 14, 2007, from Ms. Hileman to Sharon Donahue, Esq., an attorney for the tenant then residing at the Property, requesting assistance in scheduling service calls for the sump pump, and stating: “This is a rather important issue as there is currently no water coming from the drain which could mean that it’s not pumping properly and could be filling up the basement.” See Exh. 71. A battery-operated backup sump pump was installed in 2007. See Exh. 74 (invoice from Royal Plus, Inc.).

Arlene Schneider, a former tenant at the Property, resided there for approximately a year and a half, beginning in November 2003. She testified that when she moved in, Bortz had recommended not to leave anything of value in the basement because it had a history of flooding. Schneider also testified that, twice during her tenancy, “quite a bit” of water had accumulated in the basement, and that it was deep enough for her belongings to float. Schneider reported the incidents to Bortz, who, as noted, managed the Property at that time.

Kelly Carrigan, also a former tenant, lived at the Property between May 2005 and June 2008. Carrigan testified that he saw water on the basement floor on several occasions, and that, at one point, it accumulated to a level between the first and third step of the basement stairs. He reported this information to the Hilemans. He claimed that he used his own pump several times to remove the water. Eventually, he decided to replace the sump pump in the basement, and sent Bortz an invoice for the cost and labor. See Exh. 64. Between January 2007 and April 2008, Carrigan’s son, David Corey Carrigan, [11] also lived at the Property. He confirmed that there had been high levels of water in the basement on several occasions, including one instance when it came close to the height of the electrical panel, i.e., five or six feet high. However, he did not report this to the Hilemans.

Carrigan presented the Hilemans with a variety of complaints, ranging from nitrates in the drinking water to possible asbestos and mold growth. See Exh. 65 (letter from Carrigan to the Hilemans, dated Jan. 23, 2007). Through his lawyer, Sharon Donahue, Esq., Carrigan pursued the issue of nitrates in the drinking water. See, e.g., Exh. 106 (letter from Donahue to Mr. Northam, the Hilemans, and Bortz, dated March 19, 2007); Exh. 111 (letter from Donahue to Spencer Stevens, Esq., counsel for the Hilemans, dated April 19, 2007); Exh. 114 (letter from Donahue to Ms. Hileman dated Sept. 27, 2007). Notably, Carrigan’s written correspondence with the Hilemans did not mention water intrusion in the basement.

On or about May 29, 2008, Carrigan filed a nuisance complaint with Worcester County, raising several concerns as to the Property. Just prior to his moving from the Property, [12]Carrigan met with Bruce Miller, of the Worcester County Department of Development Review and Permitting. Carrigan voiced his concerns regarding the Property, and Miller inspected it for possible violations of the Worcester County Rental Housing Code. Carrigan also hired an industrial hygienist, Susan White, Ph.D., to conduct a “limited fungal growth evaluation” of the Property, which took place on June 3, 2008. See Exh. 83 at P0007-11. Dr. White issued a Report dated June 9, 2008. See Id . On August 6, 2008, Miller sent a letter to Northam and Immell, on behalf of the Worcester County Department of Review and Permitting, with a copy to Ms. Hileman as the listing agent, regarding Carrigan’s concerns, in which he enclosed Dr. White’s report. See Id . at P0001-02. The County’s letter did not mention water intrusion in the basement. Dr. White’s report indicated the presence of “excessive moisture in [the] basement, ” on which plaintiffs relied at trial as to their mold claim. See Id . at P00010.[13]

Ms. Hileman, who has lived in the town of Snow Hill, where the Property is located, since 1984, testified that she lived next door to the Property for several years, and acted as the Property’s rental manager for Northam and Immell between 2003 and 2008. Ms. Hileman testified that she did not recall any complaints regarding flooding during the five years that the Property was rented, and that she had no personal recollection of basement flooding. According to Ms. Hileman, the sump pump did not run all the time. Additionally, she claimed that Carrigan had fabricated his concerns about the Property, and that Carrigan “complained a lot.”

2. Plaintiffs’ Purchase of the Property

Willoughby, who resided in Hawaii at the relevant time, did not visit the Property before she purchased it. Nor did she attend the closing. Moreover, she had no contact with the Sellers or the Hilemans. Instead, Ms. Lawley signed the necessary documents pursuant to a power of attorney (“POA”). On July 31, 2008, Misha Lawley signed the Contract on behalf of Ms. Willoughby, along with the various addenda thereto, by way of the POA. See Exh. 2.

Willoughby testified that she regarded the Property as Ms. Lawley’s inheritance, and the Lawleys, as the intended occupants, took responsibility for choosing the house and negotiating the price. The Lawleys traveled from Colorado to Maryland in July 2008 to look at houses in the town of Snow Hill with a real estate agent, Elaine Gordy. They negotiated the price of the Property, attended the home inspection on August 11, 2008, and identified numerous repairs that they wanted the Sellers to perform as a condition of the purchase.[14] As discussed, infra, Mr. Lawley’s father also attended the home inspection, which was conducted by a home inspector selected by plaintiffs.

Pursuant to § 10-702(c) of the Real Property Article (“R.P.”) of the Maryland Code (2003 Repl. Vol., 2008 Supp.), sellers of a single family residential real property[15] must either disclose certain aspects of the property’s physical condition, or make an “as is” disclaimer, using a standard form issued by the Maryland Real Estate Commission. The statement must be provided “on or before entering into a contract of sale by the vendor and the purchaser.” Id. § 10-702(f)(1). Regardless of whether sellers choose to disclose or disclaim, they are obligated to disclose “latent defects” “of which the vendor has actual knowledge.” Id. §§ 10-702(d)(1), (e)(2). R.P. § 10-702 defines “latent defects” as:

[M]aterial defects in real property or an improvement to real property that:

(1) A purchaser would not reasonably be expected to ascertain or observe by a careful visual inspection of the real property; and
(2) Would pose a direct threat to the health or safety of:
(i) The purchaser; or
(ii) An occupant of the real property, including a tenant or invitee of the purchaser.

In connection with the Contract, the Sellers provided the Maryland Residential Property Disclosure And Disclaimer Statement (the “Disclosure Statement, ” Exh. 1), which they completed and signed in April 2008. It is undisputed that the Lawleys received the Disclosure Statement from Elaine Gordy, their real estate agent, and from Ms. Hileman, prior to making an offer. The Disclosure Statement was also included as an addendum to the Contract. See Exh. 2 at HILE 0607, 0628-31.[16]

The Disclosure Statement explained the Sellers’ disclosure and disclaimer obligations under R.P. § 10-702, discussed supra. See Exh. 1 at HILE 0628. It stated that the owner of a property is not “required to undertake or provide any independent investigation or inspection of the property, ” and that “disclosure is based on [the owners’] personal knowledge of the condition of the property at the signing of this statement.” Id. Further, it advised that “[t]he information provided is the representation of the Owners and is based upon the actual knowledge of the Owners as of the date noted, ” and that “[d]isclosure by the Owners is not a substitute for an inspection by an independent home inspection company.” Id.

The form Disclosure Statement included nineteen pre-printed questions pertaining to the physical condition of the property, for which the sellers were instructed to “indicate . . . actual knowledge.” Id. at HILE 0629-30. Each question was followed by check-mark boxes for “Yes, ” “No, ” and “Unknown” (and, for some questions, “Does Not Apply”), as well as a line for comments. Id.

The following portions of the Disclosure State are relevant to the issue of basement water intrusion:

2. Basement: Any leaks or evidence of moisture? Yes.
Comments: Drainage system in place.
19. Are there any other material defects, including latent defects, affecting the physical condition of the property? No.
Comments: [blank]

Jim Newcomb conducted a five-hour inspection of the Property on August 11, 2008, on behalf of plaintiffs. Ms. Hileman described Newcomb as one of the best inspectors in the area. The Lawleys were both present, as were Ms. Hileman, Ms. Gordy, and Mr. Lawley’s father.[17]The Lawleys testified that they observed a sump pump in the basement, and that they understood it was used to prevent water from accumulating. They also acknowledged that they saw evidence of water damage along the basement walls, such as “step cracks, ” deterioration of the masonry, water stains, and salt and mineral residue. A detailed inspection report, introduced in evidence, noted the presence of basement “dampness, ” “efflorescence, ” and “water stains, ” as well as the sump pump. See Exh. 4 at P00036. In addition, the report noted “moderate fungal growth” in the basement. Id. The Lawleys did not ask the inspector or the Sellers’ agent, Ms. Hileman, any questions about water in the basement.

The Lawleys testified that the Disclosure Statement led them to believe that the Property was free of defects and deficiencies, aside from issues discovered during the home inspection or the Lawleys’ own observations. For those issues, the Lawleys requested an “Amendment/Addendum” to the Contract, identifying several “items to be completed by the sellers as a result of the home inspection performed on August 11, 2008.” See Exh. 2 at HILE 0592. The Sellers made the requested repairs or provided a monetary allowance for the Lawleys to do so. No requests were made pertaining to water intrusion.

3. Expert Testimony on Property Value and Standard of Care[18]

Colin F. McGowan testified for plaintiffs as an expert in the standard of care for licensed real estate agents and brokers in residential property transactions. He has been a licensed real estate broker since 1969, and owns a real estate brokerage company, CFM Enterprises, Inc., as well as the Frederick Academy of Real Estate, a school for real estate licensee training and education. In addition, McGowan is certified by the Maryland Real Estate Commission to train and conduct continuing education courses for real estate licensees, and he has been teaching real estate licensing courses since 1986. He has testified as an expert on the standard of care for real estate licensees before the Maryland General Assembly, Maryland State courts, and federal district and bankruptcy courts.

In particular, McGowan testified as to the duties owed by real estate licensees to buyers of real property under the Maryland Code (2004 Repl. Vol.), § 17-322(b)(4) of the Bus. Occ. & Prof. Article, and the Code of Maryland Administrative Regulations (COMAR), Title 9, Subtitle 11, Chapter 2, discussed infra. McGowan stated, inter alia, that if a licensee is aware of material facts that conflict with the information disclosed to a purchaser, the licensee has a duty to resolve the discrepancy with the seller, and to ensure that the correct information is disclosed. According to McGowan, a licensee is in violation of the standard of care if the licensee intentionally or negligently fails to disclose material facts that the licensee knows or should know. McGowan opined that the Hilemans breached their duty of care to plaintiffs by failing to disclose their knowledge as to the history of water intrusion in the basement, even if the buyers already had such knowledge.

Thomas Weigand testified for plaintiffs as an expert in real estate appraisal and appraisal review. Among other qualifications, Weigand is licensed in Maryland as a Certified Public Accountant. He is also a Certified General Appraiser in Maryland, Virginia, Delaware, and Washington, D.C., and has completed the testing required to become a member of the Appraisal Institute, an association of professional real estate appraisers. He owns the Treffer Appraisal Group, which appraises residential and commercial properties, where he oversees a staff of fourteen. And, he has previously testified as an expert in state and federal court.

Based on an exterior review of the home and printed materials describing the condition of the home’s interior, Weigand appraised the Property’s value as of February 2012, when plaintiffs sold it to Shockley, using a sales comparison methodology. In particular, he reviewed the sales of five comparable properties within the same year and, adjusting for differences such as living space, lot size, mold, and water intrusion, concluded that the Property’s fair market value was $90, 000. According to Weigand, the Property’s history of water intrusion influenced his estimate, because water-related issues are an item of concern for the buying public and have an effect on a property’s value. Weigand also reviewed all of the sales of real property in Worcester County, Maryland (excluding Ocean City) between 2008 and 2012. He calculated an overall decrease in value of 17.8 percent over that time period, attributable to general market conditions.

William O’Donnell testified for defendants as an expert in real estate appraisal. O’Donnell became an appraiser in 1984, and holds a certified residential appraisal license with the State of Maryland. He is also a licensed Maryland real estate sales person. He has testified as an expert several times in state court and at administrative hearings.

According to O’Donnell, the value of the Property as of February 2012 was $150, 000. O’Donnell also estimated the Property’s general decline in value due to market conditions. Based on his review, there was a 21 percent decrease in market value for homes in Worcester County between 2008 and 2012; a home valued at $192, 500 in 2008 would be worth approximately $158, 000 in 2012. O’Donnell criticized Weigand’s appraisal methodology, asserting that Weigand did not use appropriate properties for his comparison or make appropriate adjustments.

Gary Bullard, a construction contractor and consultant, testified for plaintiffs as an expert in basement waterproofing and remediation. He owns a home improvement business, has worked in the industry for thirty years, and is a certified home inspector in Maryland. He addressed the scope, methods, and expense of remediating the Property to prevent further severe water intrusion. According to Bullard, the cost would be approximately $66, 515, plus or minus $15, 000.

Additional facts are included in the Discussion.

Standard of Review

Rules 50(a) and (b) of the Federal Rules of Civil Procedure together govern motions for judgment as a matter of law. Under Rule 50(a), a party may submit a motion for judgment as a matter of law before the case is submitted to the jury, provided that the nonmoving party has been fully heard on the issue. Fed.R.Civ.P. 50(a); Robinson v. Equifax Information Servs., LLC, 560 F.3d 235, 240 (4th Cir. 2009). “A trial court may grant judgment as a matter of law when it ‘finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for’ the non-moving party.” Dotson v. Pfizer, Inc., 558 F.3d 284, 292 (4th Cir. 2009) (quoting Fed.R.Civ.P. 50(a)(1)). Under Rule 50(b), “[i]f the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court’s later deciding the legal questions raised by the motion.” Fed.R.Civ.P. 50(b). Following entry of the jury’s verdict, “the movant may file a renewed motion for judgment as a matter of law, ” governed by the standard set forth in Rule 50(a). Id. To avoid the burden of holding a new trial in the event that a Rule 50(a) motion is granted, but subsequently reversed on appeal, a district court is “encouraged” to exercise its discretion by deferring a Rule 50(a) motion, submitting the case to the jury, and then deciding the motion afterwards, should it be renewed. See Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 405 (2006).

“When a jury verdict has been returned, judgment as a matter of law may be granted only if, viewing the evidence in a light most favorable to the non-moving party (and in support of the jury’s verdict) and drawing every legitimate inference in that party’s favor, the only conclusion a reasonable jury could have reached is one in favor of the moving party.” Int’l Ground Transp. v. Mayor & City Council of Ocean City, Md., 475 F.3d 214, 218-19 (4th Cir. 2007) (emphasis added); see Anderson v. G.D.C., Inc., 281 F.3d 452, 457 (4th Cir. 2002) (“Judgment as a matter of law is proper only if ‘there can be but one reasonable conclusion as to the verdict.’”) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)). The Supreme Court has instructed that, “in entertaining a motion for judgment as a matter of law, the court should review all of the evidence in the record, ” and not limit its review to the evidence favoring the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). “In doing so, however, the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Id.


I. Brokers’ Motion for Judgment

In Maryland, “to assert a claim in negligence, the plaintiff must prove: ‘(1) that the defendant was under a duty to protect the plaintiff from injury, (2) that the defendant breached that duty, (3) that the plaintiff suffered actual injury or loss, and (4) that the loss or injury proximately resulted from the defendant’s breach of the duty.’” 100 Inv. Ltd. P’ship v. Columbia Town Ctr. Title Co., 430 Md. 197, 212-13, 60 A.3d 1, 10 (2013) (quoting Lloyd v. Gen. Motors Corp., 397 Md. 108, 131-32, 916 A.2d 257, 270-71 (2007)) (emphasis omitted); accord Schultz v. Bank of Am., N.A., 413 Md. 15, 27, 990 A.2d 1078, 1086 (2010) (“In a negligence case, there are four elements that the plaintiff must prove to prevail: ‘a duty owed to him [or her] (or to a class of which he [or she] is a part), a breach of that duty, a legally cognizable causal relationship between the breach of duty and the harm suffered, and damages.’”) (quoting Jacques v. First Nat’l Bank, 307 Md. 527, 531, 515 A.2d 756, 758 (1986)) (alterations in Schultz).

As indicated, the parties seems to agree that the Hilemans’ failure to disclose the basement’s history of water intrusion was the sole basis for the jury’s finding of negligence. To find the Hilemans liable on this basis, a reasonable jury must have had sufficient evidence to conclude that the Hilemans owed a duty to plaintiffs to disclose their knowledge as to the history of water intrusion in the basement; breached that duty by failing to disclose the information known to them; the failure to disclose was the proximate cause of the harm suffered by plaintiffs; and that damages resulted.

The Hilemans contend that a reasonable jury could not have returned a verdict against them on the negligence claim for three reasons: (1) the Hilemans did not breach a duty to disclose, because there was no material defect as to water intrusion; (2) the evidence does not support a finding of ...

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