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IN THE COURT OF APPEALS OF IOWA No. 0-255 / 09-1554 Filed May 26, 2010

RANDALL E. LOWE AND CHERYL S. LOWE, Plaintiffs-Appellants, vs. JIMMIE L. MYERS AND DIANA D. MYERS, Defendants-Appellees. ________________________________________________________________

Appeal from the Iowa District Court for Tama County, Robert E. Sosalla, Judge.

Plaintiffs appeal from a district court ruling on their claims alleging the defendants failed to disclose certain problems with the property the plaintiffs purchased from them. AFFIRMED.

D. Raymond Walton of Beecher Law Offices, Waterloo, for appellants. Patrick C. Galles of Correll, Sheerer, Benson, Engels, Galles & Demro, P.L.C., Cedar Falls, for appellees.

Heard by Vaitheswaran, P.J., Doyle, J., and Schechtman, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).

2 DOYLE, J. This case arises from the sale of an 1880s farmhouse with a leaky basement. The buyers of the house, Randall and Cheryl Lowe, appeal from a district court ruling on their claims alleging the sellers, Jimmie and Diana Myers, failed to fully disclose certain problems with the house. We affirm the judgment of the district court. I. Background Facts and Proceedings.

During a torrential downpour in May 2004, the Lowes were sitting in the living room of the house they purchased from the Myers in April 2002 when they heard a loud noise. They then felt the house quiver. The Lowes went into the basement to investigate and discovered a large crack had appeared in the west wall. Water was pouring in through the crack and coming up through already existing cracks in the concrete floor. After the storm, the Lowes hired a home inspector who observed the foundation of the home was constructed with limestone, which typically results in moisture problems. The inspector noted the west wall of the basement had a vertical and horizontal crack, which he believed resulted from "excessive water pressure and the structural weight of the original limestone foundation." He also observed cracks in the floor that he suspected were caused by water pressure from under the slab. Finally, he noted the north wall of the basement was

leaning. The inspector summarized: All interior walls [of the basement] are showing signs of water seepage. At some point in the past, a water proofing paint was applied to the interior concrete and block surfaces, which appears to be an attempt to solve the water seepage problems in the basement. . . . There is a good chance that the water proofing

3 actually added to the problem by holding the water back and thus increasing the hydrostatic pressures behind the walls. This increase in pressures event[u]ally cracked the concrete surfaces and allowed the free flow of water into the basement. He believed the wall movement and failure has been worsening over a long period of time. The history of water seepage has slowly eroded the soil under and behind the limestone walls. This has caused the interior walls, that were not built with any load bearing capabilities, to fail. All of the affected walls will need to be re-built or replaced. An adequate drainage system will also need to be installed to prevent any future water seepage. Due to the scope of the failure, a complete basement replacement appears to be needed. Further evaluation from a struct[ur]al engineer is needed. A structural engineer examined the basement in August 2004. His report states, "A horizontal crack was observed approximately 1-6" up from the base of the concrete block wall at the southwest and west walls of the basement. According to Mr. Lowe these cracks occurred immediately after the heavy rain." He further observed "the top of the foundation is tilting in approximately 1-inch" along the north wall. There were "many cracks observed in the basement floor slab-on-grade. It appeared that the majority of the cracks have been there prior to the recent heavy rains although it is likely that new cracks have developed." His report concluded: The southwest and west walls with visible opened horizontal cracks along the base of the wall have failed and need to be repaired. . . . Although no cracks were observed in the north wall of the foundation, there does appear to be movement occurring in the structure. The foundation wall was observed to be tilting in at the top at mid-span of the wall. . . . Removal and replacement of this wall should be considered to minimize further damage to the structure. ....

4 Consideration should also be given to removal and replacement of the cracked floor slab to help minimize the potential for groundwater to enter the structure during heavy rains. In summary, portions of the basement walls have failed but not collapsed. Recent heavy rains appear to have contributed to some of the failure by increasing the exterior horizontal wall pressure. The Lowes hired a contractor to repair the basement. The contractor lifted the house, removed the old limestone walls, and poured a new foundation. The Lowes also added a geothermal heating and cooling system, a bedroom with an egress window, a half-bath, a family room with a fireplace, and heated floors to the previously unfinished cellar-like basement. During the renovations, the

Lowes discovered the septic system for the house was illegal because it discharged into a ditch. They consequently upgraded to a new septic system. The Lowes filed suit against the Myers in March 2006, alleging the following theories of recovery: (1) violation of Iowa Code chapter 558A (2005), (2) fraudulent misrepresentation, and (3) breach of contract. They asserted the Myers "failed to disclose a problem with the foundation walls other than the Northeast wall that had created conditions for and caused water leakage and flooding in the basement of the home." They further asserted the Myers "failed to disclose that the septic system for the home was dumping sewage into the ditch in front of the home." The Lowes sought $83,832.12 in compensatory damages and $85,000 in punitive damages, plus attorney fees and court costs. The case proceeded to a bench trial, following which the district court entered a ruling denying all of the Lowes claims as to the basement of the home, but granting their chapter 558A and breach of contract claims as to the septic system. The court found the Myers failed to exercise ordinary care in

5 determining and disclosing whether the septic system met code requirements. The court awarded the Lowes $5740 in compensatory damages for the septic system replacement and denied their claim for punitive damages. The Lowes appeal. II. Scope and Standards of Review.

The parties agree this case was tried as a law action. We accordingly review for errors at law. Iowa R. App. P. 6.907; Hammes v. JCLB Props., L.L.C., 764 N.W.2d 552, 555 (Iowa Ct. App. 2008). The district courts findings of fact are binding upon us if supported by substantial evidence. Iowa R. App. P.

6.904(3)(a). Evidence is substantial when a reasonable mind would accept it as adequate to reach the same findings. Hendricks v. Great Plains Supply Co., 609 N.W.2d 486, 490 (Iowa 2000). Evidence is not insubstantial simply because it would have supported contrary inferences. Id. III. A. Discussion. Chapter 558A.

The Lowes first claim the district court erred in failing to find the Myers did not fully disclose the true condition of the basement as required by Iowa Code chapter 558A and that the Myers nondisclosure was the proximate cause of their damages. We disagree. Chapter 558A is Iowas Real Estate Disclosure Act. Sattler, 696 N.W.2d 582, 585 (Iowa 2005). See Jensen v.

It requires persons who are

interested in transferring real estate to deliver a written disclosure statement to prospective buyers. Iowa Code

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