Basso v. Campos

Deborah S. Eyler, J. In 2011, Joseph Basso, the appellant, purchased a home in Hyattsville from appellees Javier Szuchman and Jose Rodriguez, both licensed real estate agents, who were agents of appellee Juan Campos, d/b/a Campos & Associates Realty, a real estate broker. Within weeks of the closing, Basso’s basement flooded, and it continued to flood regularly in the following months and years. Basso sued the appellees in the Circuit Court for Prince George’s County for negligent misrepresentation, fraudulent misrepresentation, violations of the Maryland Consumer Protection Action (“CPA”), Md. Code (1975, 2013 Repl. Vol.), sections 13-101-13-501 of the Commercial Law Article (“CL”), and, as to Campos, negligent hiring and supervision and vicarious liability for the tortious conduct of Szuchman and Rodriguez.

The appellees’ motion for summary judgment was denied. The case was tried to a jury. At the close of Basso’s case, the court granted the appellees’ motion for judgment on all counts. Basso appeals, presenting two questions, which we have reordered and rephrased: I. Did the trial court err by precluding his expert home inspector from expressing an opinion on whether the basement of the home would have flooded during the period when Szuchman and Rodriguez owned the property?

II

Did the trial court err by granting the appellees’ motion for judgment? For the following reasons, we answer the first question in the affirmative and shall reverse the judgment of the circuit ⁴⁶⁴ court and remand for further proceedings. In light of our resolution of that issue, we need not address the second question. FACTS AND PROCEEDINGS On July 29, 2011, Szuchman and Rodriguez purchased a 2-story single-family home at 6010 39th Avenue in Hyattsville (“the Property”)- They bought the Property for $119,000, at a foreclosure sale.

The Property, built in 1938, is a 1,300 square-foot bungalow-style home that had an unfinished walk-up basement. Szuchman and Rodriguez planned to renovate and resell the Property for a profit. They hired contractors who replaced the roof and all the windows, remodeled the kitchen, and refinished the hardwood floors. In the basement, they installed drywall, replaced and relocated the sump pump, constructed a bathroom, and installed wall-to-wall carpeting.

Szuchman and Rodriguez listed the Property for sale on September 25, 2011, roughly two months after they bought it. Basso viewed the Property at the end of September, made an offer, and, on October 2, 2011, entered into a contract to purchase the Property for $260,000. The contract was contingent upon a home inspection. Also on October 2, 2011, Szuchman and Rodriguez signed the Maryland Residential Property Disclosure and Disclaimer Statement (“Disclosure Statement”).

As pertinent, they represented that they had owned the Property for 3 months and had no “actual knowledge” of any “leaks or evidence of moisture” in the basement. On October 13, 2011, Basso’s home inspection was completed. His home inspector did not note in his report that there was any evidence of flooding or water seepage in the basement. He did note, however, that the exterior basement stairwell drain should be kept clear of debris to prevent water from entering the basement under the exterior basement door. ⁴⁶⁵ The sale closed on November 14, 2011 and Basso moved in, along with a housemate.

On December 7, 2011, while Basso was traveling for work in San Diego, his housemate called to alert him that “there was water in the basement.” The housemate believed that the water was entering from under the exterior basement door jamb, at the bottom of the exterior stairwell. Basso hired MCC Services, a water remediation company, to clean up the basement. Four months later, on March 1, 2012, Basso noticed that the carpeting in the basement was “wet along the ... back wall and the side wall.” He pulled up the carpet and could see “areas where there was obviously water seeping in from the foundation.” He also noticed upon pulling up the carpet that there was “an area of concrete that[ was] a different color,” with some of the concrete appearing to be “newer.” Basso was not aware that any concrete work had been done in the basement during the renovation. On April 18, 2012, Basso obtained from the Bartley Corporation an estimate of $19,649 for concrete work on the Property to address the water infiltration problems.

He decided not to go forward with the work at that time. During 2012 and 2013, the basement at the Property flooded “[e]very time there was a substantial rainstorm or, ... continued [sic] rain over a few days, any time that ... [it rained] a half inch ... and up[.]” The water would “seep in from ... numerous places along the back wall and the wall where the door was ... [a]nd depending on the amount of rain or the amount of ground saturation, it would just keep going.” In July 2013, Basso became concerned about mold in his basement and hired Larry Hammond, a certified home inspector and certified mold remediation contractor, to perform a “General Grading and Water Infiltration Inspection.” Hammond did not detect any mold in the basement. The cost for the inspection was $350. ⁴⁶⁶ In April 2014, Basso contracted for B-Dry, a water-proofing company, to install French drains along the inside of the exterior walls of the basement and to take other measures to permanently solve the water infiltration issues. 1 B-Dry offers a lifetime warranty for its services. In May 2014, Basso hired another company to replace the exterior basement door and door frame.

On November 13, 2014, Basso filed suit against the appel-lees. The operative complaint is the third amended complaint, filed on February 16, 2016. Basso alleges that when Szuchman and Rodriguez signed the Disclosure Statement on October 2, 2011, they had actual knowledge that the basement area flooded repeatedly and that they had attempted to conceal this defect by removing bushes that lined the side of the home and replacing them with poured concrete. Counts I and II asserted claims for negligent and fraudulent misrepresentations, respectively; Counts III, IV, and V asserted claims for breach of the CPA; and Counts VI and VII asserted claims against Campos for vicarious liability and negligent hiring and supervision.

Basso sought more than $260,000 in compensatory damages and $800,000 in punitive damages, plus attorneys’ fees. On July 17, 2016, Basso designated two expert witnesses: Howard Phoebus, a real estate agent, as an expert on valuation of real property, as well as the standard of care; and Larry Hammond, who, as mentioned, is a certified home inspector, as a standard of care and causation expert. Basso specified that Hammond was expected to testify that the appellees “knew about the regular water intrusions into the basement area ... and [that] rather than try to appropriately put money to fix the problem, adopted the strategy to ‘temporarily’ conceal the flooding, by pouring concrete around a significant portion of the stairwell.” ⁴⁶⁷ The appellees moved for summary judgment, arguing that there was “no admissible competent evidence that either Rodriguez or Szuchman were aware of any flooding in the [Property] prior to sale.” Basso opposed the motion, attaching, among other exhibits, excerpts of Rodriguez’s and Szuchman’s depositions, in which they testified that they were present at the Property every day during the 4-5 week renovation period, and an affidavit by Hammond, opining that it was “virtually impossible that Mr. Rodriguez and [Mr.] Szuchman would not have experienced [during that time period] the same significant level of flooding problems that Mr. Basso first experienced on or about December 7, 2011, about 3 weeks after the ... closing took place.” Hammond further opined that there was no “justified reason” for concrete to have been poured around the basement stairwell except to “conceal (temporarily and ineffectively) the flooding problems.” By order entered March 16, 2016, the court denied the motion for summary judgment, ruling that Szuchman’s and Rodriguez’s deposition testimony that they were present at the Property nearly every day for a month during the renovation created a genuine dispute of material fact about their knowledge of flooding in the basement when they signed the Disclosure Statement. A jury trial commenced on March 28, 2016.

Over two days, Basso testified and called five witnesses: Szuchman, Campos, Phoebus, Hammond, and Daniel Seger, a neighbor who lived directly across the street. He introduced into evidence certified records from the Storm Events Database for the National Climatic Data Center (“NCDC”), a division of the National Centers for Environmental Information at the United States Department of Commerce. Those records covered storm events in Prince George’s County and surrounding areas over 184 days between July 1, 2011, and December 31, 2011. The records reflected that during the period between July 29, 2011, when Rodriguez and Szuchman purchased the Property, and September 25, 2011, when the Property was listed for sale, there were multiple storm events involving significant rainfall.

Most notably, on August 27-28, 2011, Hurricane Irene ⁴⁶⁸ “tracked up the Mid-Atlantic Coast ... passing] by just to the east of Ocean City, Maryland,” resulting in tropical storm conditions throughout Maryland, including in Prince George’s County, and causing 12 inches of rain to fall in some areas. Also, on September 7-8, 2011, “the remnants of Tropical Depression Lee interacted with a nearly stationary boundary near the Mason-Dixon Line” and resulted in “[m]ajor flooding and flash flooding” around Maryland. As a result of the “record-setting rainfall” on those days, the “[gjround across Maryland was saturated” leading to additional flooding on September 9, 2011, from thunderstorms and showers. No storm events involving heavy rainfall were reported after September 9, 2011, until December 7, 2011, the day Basso’s basement flooded for the first time after he took title.

On that date, rainfall totals in the area were as high as 4.36 inches. Basso testified consistent with the above stated facts. He further testified that he learned for the first time during Szuchman’s and Rodriguez’s depositions that they had poured concrete “on the side of the house” during the renovation. On cross-examination, Basso was asked whether it was his understanding that when the basement flooded on December 7, 2011, the water came in under the basement door.

He replied, “On the 7th, yes.” He further testified that he did not recall having cleared the drain in the exterior basement stairwell between the date he settled on the house (November 14, 2011) and December 7, 2011. Basso recalled that upon returning from his business trip in December 2011, he observed “debris in the stairwell.” He agreed that if the basement drain was clogged, water may have come in through the basement door as a result. Two remediation reports prepared by MCC regarding the December 2011 and March 2012 flooding incidents were introduced into evidence. The first report specified that MCC had taken steps to address “loss resulting from the water that was entering the house from underneath the door jamb at the bottom of the [basement] stairwell where water was coming ⁴⁶⁹ through cracks that had formed over the newly repaired and painted sides of the exterior stairwell.” Even after the rain stopped, MCC had to suspend its remediation efforts for some time because water still was being “released from the ground, through the cracks in the sides of exterior[] walls and then coming in underneath the doorway into the house.” After the water stopped entering the house, MCC returned to redo its extraction process and then to dry the basement with heaters and fans.

The total cost for MCC’s services in December 2011 was $4,552.55. The second MCC report reflected that it performed remediation services in March 2012 after water “seeped through the wall of the basement underneath the side door of the house.” The total cost for those services was $1,000.87. Szuchman testified that within a few days of purchasing the home, he and Rodriguez hired three men to begin the renovations. 2 The men began work within “[a] couple days,” in early August 2011. At his deposition, Szuchman had testified that the contractors began work within a “week or ten days.” According to Szuchman, the contractors started with the basement.

The entire renovation was complete within four to five weeks, and the Property was listed for sale “a week or ten days” after completion. Szuchman and Rodriguez were present at the Property nearly every day during that renovation period. Szuchman testified about concrete being poured around the exterior of the Property, on the left side if facing it from the street. He explained that there was a “cracked—cracking walkway [to the left of the house] ... [a]nd in between the walkway and the house was a like—two feet of bushes or something like that.” He and Rodriguez decided to remove the bushes “[t]o make the house look better.” After the bushes were removed, a subcontractor poured concrete on the cracked walkway to repair it.

The subcontrac ⁴⁷⁰ tor had extra concrete and asked if he should also pour it in the area where the bushes had been. Szuchman explained that he had noticed that the water flowed in the direction of the home, so he thought it “was [a] good idea [to] make [it] level to keep the water coming out the house .... [b]ecause ... if not, in the future you can have pooling inside the house.” Szuch-man believed that the concrete was poured at the end of August, 2011. Szuchman did not recall any major rainstorms during the renovation period, but was sure it had rained some days. He testified that there was “no flooding” in the basement while he was present at the Property and that none of the workers ever told him about flooding in the basement.

According to Szuchman, he and Rodriguez were working for Campos at the time of the renovation subject to a flat-fee agreement whereby Campos would receive $500 at settlement. Campos never came to the Property and knew “nothing about [it],” however. Campos testified that he had been a real estate broker since 1998 or 1999. Szuchman and Rodriguez were real estate agents affiliated with his brokerage company.

He estimated that over the last decade he had received brokerage commissions on more than 25 homes sold by Szuchman and Rodriguez. He trained all of his agents about latent defects disclosures that sellers must make under Maryland law. Because in this case Szuchman and Rodriguez were the agents and the sellers, it was their obligation to complete the Disclosure Statement. Phoebus was accepted as an expert in the field of real estate ethics. 3 He testified about the relationship between a real estate broker and real estate agents, and about duties relative to the latent defects disclosure.

Seger testified that he had lived in the house across the street from the Property for 16 years. He recalled that five or ⁴⁷¹ six years earlier, the Property had been vacant for about a year. Around the end of August 2011, Seger saw workers “coming up with concrete out of the basement” and “putting it underneath the front porch.” He assumed that the basement was being dug out and remodeled. He also observed workers pouring fresh “concrete[ ] all around the front porch and down to the basement where it used to be—flower beds and mulch, from the basement steps all the way around to the front entrance.” Hammond was admitted as an expert in home inspection and water infiltration.

He testified that the bills submitted by the company that replaced the exterior basement door and by MCC all were fair and reasonable. He testified that the $8,150 bill for the waterproofing by B-Dry was too high and that a fair and reasonable price for the services performed would have been $7,200. In Hammond’s opinion, the only way to permanently correct the water infiltration problems at the Property would be to “dig down all the way around it, like four to six inches below the footings .... [and] put a drain pipe,” followed by “re-parg[ing] and re-tar[ing] the walls” and covering the tar with plastic sheeting. In addition, he would recommend “elevat[ing] the grades” to prevent water from “ponding” on the Property.

Hammond also testified about his observations of the Property in 2013. He had immediately noticed that the “driveway ... close[ ] to the basement areaway was very low and pond-ing”; that the downspouts on an adjacent house “discharge[ed] towards [the Property,]” and that the drain at the bottom of the basement stairwell “did not have the capacity to carry water away in any large amount.” Hammond was asked whether there was a “way ... to know