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Beaux v. Jacob9/7/2001
No. 5463
I. INTRODUCTION
The superior court awarded damages to purchasers of a home after finding that the sellers violated the Disclosures in Residential Real Property Transfers Act. We hold that it did not clearly err in so finding and that it implicitly addressed the sellers' allegations of comparative fault and failure to mitigate damages. But largely because the damages awarded exceeded the cost of putting the home in the condition the disclosure form represented, we reverse the damage award and remand for further proceedings. We also remand because prejudgment interest must be recalculated to distinguish between damages for economic loss and damages for harm to property.
II. FACTS AND PROCEEDINGS
In 1976 Wiley Beaux, a licensed engineer and real estate developer, subdivided a parcel of real property on the north shore of Campbell Lake in Anchorage. Beaux selected the lot at 3300 North Shore Drive for his family home. Construction began in 1976, with Beaux serving as the general contractor.
The original design called for a one-floor, ranch-style home with a crawl space, but Beaux decided to build a full basement beneath the first floor. Because excavation of the lot extended several feet below the lake level, groundwater was a concern.
To control the groundwater underneath the basement slab, Beaux installed a sump in the basement mechanical room. The sump was equipped with an automatic pump activated by a flotation device, and was connected by a permanent outlet to the municipal sewer system. The Beauxs refer to this arrangement as the "main sump."
During construction, Wiley Beaux also installed a vertical eight-inch diameter corrugated aluminum pipe extending four feet below the basement concrete slab. This pipe was originally designed to aid in the installation of a jacuzzi pool. But after the pool was installed, Beaux decided to leave the pipe in place.
The Beauxs resided in the house from 1978 until 1994. They controlled the groundwater level under the house by using both the main sump in the mechanical room and a portable pump to drain water out of the eight-inch pipe in the pool room. The Beauxs called the latter arrangement the "deep sump." They did not experience any groundwater infiltration in the basement.
In February 1994 Wiley and L'Marie Beaux listed the house for sale. Soon thereafter, Jack and Janet Jacob visited the house for a preliminary view. After a series of offers and counteroffers, the parties executed an earnest money agreement for the sale of the house on March 23, 1994.
Before the sale, the Beauxs gave the Jacobs a real property transfer disclosure form as required by AS 34.70.010 of the Disclosures in Residential Real Property Transfers Act. A question on the disclosure form asked: "Is there any indication of water/seepage/dampness in basement/crawl space? If yes, explain." In response, the Beauxs checked "NO," but also wrote by hand that "Sump Pumps must be maintained and used." (Emphasis added.)
After the Jacobs moved in, they used the automatic sump pump in the mechanical room to control the water table under the basement; they did not use the eight-inch pipe in the pool room as a sump.
In 1995 the Jacobs experienced three episodes of water infiltration in the basement. On each occasion the basement carpet was soaked.
In August 1995 the Jacobs hired Greg Carpenter, a geotechnical engineer, to review the water infiltration problem. Carpenter opined that precipitation and the proximity of the house to Campbell Lake caused the water table to rise to (or above) the level of the basement slab, res
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