Homeowners discover false wall concealing foundation damage: Fraud: Repair costs: Verdict: Punitive damages

Law Reporter, Nov 2004

Axtmann v. Bailey, N.D., Morton County Bist. Ct., No. 02-C-1652,May7,2004.

The Axtmanns bought a house from the homeowner, who was also a real estate agent, for $59,500. Two years later, they discovered a false wall disguising several cracks in the wooden basement foundation, which were causing the foundation to crumble. The house was uninhabitable, forcing the Axtmanns to move out. They incurred repair costs of about $75,000.

The Axtmanns sued the homeowner, alleging fraud in not disclosing the defects in the house during negotiations. Plaintiffs alleged the homeowner had been sued for the false wall once before and had settled by agreeing to repossess the house. Plaintiffs also sued the homeowner's employer, alleging he had been acting in his capacity of agent for the real estate company.

The homeowner contended he informed plaintiffs about the lawsuit. However, plaintiffs argued that, when the homeowner mentioned the previous lawsuit, he told them it was about a broken drain pipe and failed to mention the false wall.

A jury awarded plaintiffs $140,000. It found the homeowner and his employer jointly and severally liable for $75,000 in compensatory damages. It also awarded $65,000 in punitive damages, including $45,500 against the homeowner and $19,500 against his employer.

Plaintiffs' expert was James Martin, advanced engineering, Bismarck, N.D.

Plaintiffs' Counsel

*Lawrence R. Klemin, Bismarck, N.D.