Alexander v. Meduna

James and Rita Alexander (defendants) sold their home to Donald and Linda Meduna (plaintiffs). While initially showing their home, the Alexanders told the Medunas that the basement had sustained water damage from a leak that had been repaired, the garden was viable, and water service could be obtained for $3,500. There were no visible signs of water damage. The parties signed a purchase agreement that disclosed the previous leak and affirmed that the Alexanders had reasonably disclosed all information regarding the condition of the property. After the Medunas took possession of the property, the Medunas discovered that there was substantial water damage in the basement from groundwater seepage, the garden had been treated with a sterilizing weed killer, and water service would cost over $8,000. The Medunas sued the Alexanders for fraudulent misrepresentation, among other claims. At trial, the Medunas testified that the Alexanders knew that the Medunas intended to grow and sell produce on the property to generate income. The Alexanders admitted that they were aware of salt buildup on the walls of the basement, indicating ongoing water damage, which they failed to disclose. The Medunas’ expert witness testified that the property had sustained significant structural damage from migrating groundwater over a period of several years. The trial court found that the Medunas had proved by clear and convincing evidence that the Alexanders had made material misrepresentations regarding structural defects verbally and through the purchase agreement’s property-condition statement, and that the Medunas had detrimentally relied on those statements. The Alexanders appealed.