          IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON



SHANE and AMY WATTS,                             NO. 68067-6-1
                                                                                  1> :•
                                                                                            C/J.

                                                                                  i-r-,r

                     Respondents,                DIVISION ONE                               ~:.\


                     v.                                                                     -••   •-



                                                                                  " '.'Ml   (./.'r

MARY P. DUNPHY and MARK L.
DUNPHY,                                          UNPUBLISHED OPINION              V?        -     •




                                                                                            f.;--
                     Appellants.                 FILED: August 26, 2013
                                         .)


       Lau, J. — Generally, a home buyer's duty to inquire further of a seller about a

home's defect arises upon notice of the defect. Mary Dunphy, an experienced real

estate agent, sold her condominium unit to Shane Watts. Dunphy knew her unit's lack

of weather resistant barrier (WRB) made it vulnerable to water leaks and damage. She

intentionally lied about it on the form 17 disclosure statement.1 As part of the sale
documents, Watts reviewed homeowners' association Board meeting minutes that

mentioned "inspections," "envelope studies," a "defect attorney," and other issues but

made no mention of particular defects, Dunphy's unit, or any other individual unit. Watts


       1The trial courtfound Dunphy "lied" about the defect.
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discovered the defect after the sale closed and sued Dunphy. The trial court found

Dunphy liable for fraudulent concealment and fraud. Because the meeting minutes

triggered no duty flowing to Watts to inquire further under these circumstances, we

affirm and award Watts attorney fees and costs under the purchase and sale

agreement.

                                         FACTS

      The trial court's factual findings are undisputed. In 2006, Mary Dunphy

purchased a condominium unit at 13020 102nd Lane Northeast #3, in Kirkland,

Washington. On July 27, 2006, Dunphy became vice president of the Kirkland Village

Homeowners' Association (HOA).

       In October 2006, Dunphy arranged for Darrel Hay to inspect the buildings in

Kirkland Village. Hay checked three buildings and found that all three lacked tar paper

or weather resistant barrier (WRB). Hay opined that the lack of WRB was problematic

because it made the buildings vulnerable to water leaks and damage. He noted no

specific damage. Hay gave his report to Dunphy, who read it.

       Dunphy attended all HOA Board meetings—some of which were held in her

home—through May 2007. In February 2007, the Board asked construction inspection

firm Corke Amento Inc. (Corke) to prepare a presentation regarding Kirkland Village.

During its February 2007 meeting, the Board heard Corke's presentation and discussed

Hay's report.

       Based on the information it received, the Board decided to further pursue its

ongoing disputes with Kirkland Village's developer, Center Bay. The Board hired a new

property manager, Suhrco Management, which recommended a thorough inspection of

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the complex so that the Board could give Center Bay a list of problems that needed to

be fixed. The lack of WRB was one of the issues to consider.

      In March 2007, Corke prepared a "Scope of Limited Investigation" showing its

plan for inspecting the complex. Among other things, the plan showed that Dunphy's

unit would have its siding removed. The proposal was circulated among the Board

members, and Dunphy read it.

      In April 2007, the Board hired Corke to inspect the complex. This decision was

discussed and approved by all Board members, including Dunphy. Lack of WRB was

among the problems Corke was hired to investigate. The inspection began on May 1,

2007. Corke removed siding on the majority of the complex buildings, and 75 percent of

the buildings either lacked WRB altogether or had incorrectly installed WRB. Removal

of siding on Dunphy's unit revealed that it lacked WRB. Dunphy saw that her unit

lacked WRB.

       On May 4, 2007, Corke (including Corke's lead engineer Mark Cress and

president Steven Amento), defects attorney David Onsager (hired by the Board to

recommend legal action against Center Bay), Board president Craig Cleaver, and

Dunphy met to walk through the Kirkland Village complex and view the buildings. Some

portions of the buildings still had siding removed, so that the Board and its attorney

could see what was underneath the siding. The walk through revealed that the majority

of the buildings lacked WRB. Dunphy witnessed the lack of WRB. To summarize,

Dunphy—as a member of the Board who participated in the walk through—was aware

of significant material problems with the missing WRB under the siding on the buildings

throughout the complex, including her own unit. Dunphywas also aware that Corke

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would soon produce a written report that, when given to the Board, would have to be

disclosed to potential buyers.

      The next month (June 2007), Dunphy and her husband purchased a single family

home in Juanita for $473,000. Dunphy needed cash to close the sale. The only way for

her to close the sale and move was to sell her Kirkland Village unit at full market value.

Buyer Shane Watts signed a purchase and sale agreement for Dunphy's unit, providing

for attorney fees to the prevailing party in case of a dispute involving the agreement. As

part of the agreement, Dunphy completed a seller's disclosure statement (form 17), as

required under chapter 64.06 RCW. Around July 23, 2007, the parties agreed that

Watts would purchase the unit for $273,000.

       Watts hired a home inspector to inspect the unit. The inspector did not look

under the siding or inspect any other buildings in the complex. The inspection did not

reveal the missing WRB on Dunphy's unit or the problems with the buildings in the rest

of the complex. The evidence was uncontroverted that a normal, routine home

inspection of a condominium would not have revealed any of the problems in the

complex or the missing WRB in Dunphy's unit. The trial court found that Watts did a

reasonably diligent inspection of the property.

       Dunphy filled out two form 17s on July 9 and 25.2 In the July 25 form 17, in
response to question 4(F), "Are there any defects with the following: . . .

Siding . . . Interior Walls . . . Exterior Walls . . . Other", Dunphy answered, "No." This


      2The trial court found that Watts had the right to rely on Dunphy's disclosures on
form 17, that Dunphy had a duty to fill out form 17 completely and correctly, and that the
July 25 form 17 controlled with respect to disclosures.

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was a lie. Dunphy knew about the missing or incorrectly installed WRB in multiple

buildings in the complex—including her own unit—but she represented that there were

no defects in the siding or external and internal walls. No evidence indicated any defect

in the siding itself, but a substantial question existed regarding whether the lack of vapor

barrier or moisture barrier was a defect. Notices, studies, and oral reports well known to

Dunphy indicated the moisture barrier did not exist and that future damage was likely if

the problem went untreated.

      Also in the July 25 form 17, in response to question 10(A) "Are there any other

existing material defects affecting the property that a prospective buyer should know

about?", Dunphy answered, "Don't know." This was also a lie. Dunphy was well aware

of the Corke inspection and the problems pointed out during the May 2007 walk

through. Dunphy's misstatements were intentional. Dunphy intended to mislead Watts

to ensure the condominium sale closed for full price in a timely manner.3
       Dunphy arranged for property manager Suhrco to produce a resale certificate

and a series of required documents. These documents included a copy of the HOA

Board's meeting minutes for the past 6 to 12 months.4 Watts received the minutes and
read them enough to comment on the parking situation. The minutes contain a list of

the issues the Board addressed in its monthly meetings. Included among those issues




       3As the trial court later found in granting partial summary judgment in Watts's
favor, Dunphy also lied regarding whether any study, survey project, or notice existed
that would adversely affect the property. We address the partial summary judgment
order below.


       4 It is undisputed that the meeting minutes consist of 33 pages. Watts received
25 pages (through July 2007) covering numerous issues.
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are mentions of inspections, envelope studies, Hay's report, and other items. The

meeting minutes were admitted at trial as exhibit 3.

       The October 16, 2006 meeting minutes mention "[cjoncerns about the moisture

barrier under siding." Ex. 3 at 7. The December 12, 2006 meeting minutes state, "Vinyl

siding is held off until the rain is more cooperative, so large portions can be pulled back

to insure no damage underneath." Ex. 3 at 8.

       The February 13, 2007 meeting minutes contain the following notations:

       1. Envelop[e] Study was discussed by Mark Cress; an overview of the
           independent inspection report by Darrell Hays was commented by Mark.
       2. Mark Cress presented his findings with photo of the property which included
           siding, moisture barrier.
       3. Discussed options on how to proceed depending on what the POS states
          about envelop[e] study. Two options are proposed: 1. Intrusive Investigation
          or 2. Envelop[e] Study
       4. Envelop[e] study was the recommendation
       5. David Onsager (another attorney) at Stafford Frie Law Firm was mentioned as
          another option.


Ex. 3 at 11.

       The March 13, 2007 meeting minutes include the notation, "Update on

inspection. Deferred until next meeting, no response from Mark W. of Corke-Amento."

Ex. 3 at 12. The minutes also note, "Inspection—find a second company." Ex. 3 at 14.

       The April 10, 2007 meeting minutes include the notation, "Craig/Terry spoke to

Corke Amento and we are moving ahead with the envelope/invasive inspection. Center

[B]ay wanted to use their inspector, Craig declined that offer, but accepted the offer for

Center [B]ay to pay 50% of the cost." Ex. 3 at 15.

       The May 8, 2007 meeting minutes include the following notation:



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       2) Discussion of Intrusive Study
              a. Need David Onsager to weigh in on the moisture barrier and whether
                 or not there is significant damage.
              b. Waiting for results from Corke Amento and David Onsager
             c. David Onsager will provide recommendation in the report
             d. Terry to call David's assistant in order to get the date the report will be
                 ready

Ex. 3 at 17.


       On June 12, 2007, the Kirkland Village HOA held its annual meeting for all unit

owners. Ex. 3 at 19. The meeting minutes include the notation, "Discussed envelope

study and possible assessments. Informed that we are working with Center [B]ay and

trying to resolve issues and working on not going into a legal battle." Ex. 3 at 20. The

minutes also contain the following notation:

       IV. New Business (8:19-8:24)
             a. Inspection/Construction Defect
                     i. Corke Amento performing inspection
                             1. Currently waiting for report
                     ii. Asked owners to inform board of any [] defects or issues
                     iii. Timeline—depends on cooperation of builder

Ex. 3 at 20.


       The July 12, 2007 meeting minutes include the following notation:

       Bill from Corke Amento, inspectors for Envelope inspection came in at $9350.03
       We are holding Center Bay to their offer to pay for half of this inspection.
       David Ansager defect Attorney has billed us 1792.00 for 5.6 hours of work.
       Missing insulation is an issue the Board will be going after Center Bay for.

Ex. 3 at 23.

       After the sale closed,5 Watts discovered the condominium's lack of WRB. Watts

sued Dunphy for damages in February 2010, alleging breach of warranties, negligent


       5Although the trial court made no findings on this issue, the bench trial testimony
indicates that the sale closed on August 20, 2007. The testimony also indicates that the
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misrepresentation, intentional misrepresentation, and breach of duty of good faith.

Watts amended his complaint in July 2010, voluntarily dismissing the negligent

misrepresentation claim but adding claims for breach of contract, fraudulent

concealment, and fraud.

      The HOA sued Center Bay, and that lawsuit settled for a little over a million

dollars. The HOA also has a bankruptcy court claim against Center Bay's owner that

was pending at the time Watts and Dunphy went to trial. The HOA has collected

approximately $1.3 million. At the time of trial, no repairs had begun and no plan

existed for when repairs would start. Some testimony addressed the repair cost, but

"there was no definite plan on what would be done; how much it would cost." The court

found the future possible repairs too speculative to use in determining the effect on the

current value of Watts's unit. The court found that the "current value of the unit, by

clear, cogent, and convincing evidence, is $132,000." The court also found that without

damage, "the condominium would have been worth a minimum of $170,000," meaning

damages were $38,000.

       In December 2010, Watts moved for partial summary judgment, requesting the

court to find that Dunphy committed fraudulent concealment and fraud in selling the

condominium to Watts.6 In February 2011, the court granted in part Watts's motion


HOA Board did not receive Corke's final report regarding the missing or defective WRB
until September 2007.

       6 Regarding fraudulent concealment, Watts argued that (1) the condominium had
a concealed defect, (2) Dunphy knew about the defect, (3) the defect presented a
danger to the purchaser's property, health or life, (4) the defect was unknown to the
purchaser, and (5) the defect would not be disclosed by a careful, reasonable inspection
by the purchaser. Regarding fraud, Watts claimed that (1) Dunphy represented that
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for partial summary judgment in making the following finding of fact: "1. The court

finds that when on the Form 17 dated July 25, 2007, Mary Dunphy answered

Question No 1.(G), 'Is there any study, survey project, or notice that would adversely

affectthe property,' as 'Don't know,' this was a false statement."7

       During the bench trial, Dunphy argued that the meeting minutes put Watts on

inquiry notice of the condominium's lack of WRB, thus triggering Watts's duty to inquire

further. The court disagreed and found Dunphy liable for fraudulent concealment and

fraud. In its conclusions of law, U 3.4(5), the court stated:

               Additionally, [Dunphy's] argument is that the HOA meeting minutes in and
       of themselves [were] sufficient to put [Watts] on notice and that they had no right
       to rely on the Form 17 representations and their own Homeowner's inspection
       report.
               But if the Watts had read the [HOA] meeting minutes, what would it have
       told them? Although the words "defect," "envelope studies," "Investigation," and
       "defect attorney" were mentioned several times, there is no context or
       explanation for the brief references buried in a maze of other irrelevant
       information. Only with the use of 20/20 hindsight and specialized knowledge can
       we pick out the significance of these words.
              The court does not find persuasive the argument that meeting minutes
       alone are sufficient to give Mary Dunphy the same level of knowledge that we are
       imputing to the Watts. Although the Watts had the minutes, Ms. Dunphy not only
       had the minutes for her review, but actually attended all the HOA meetings,
       except for possibly the June meeting. She was also the Vice President of the
       Board, and therefore had the opportunity and could reasonably understand what
       was in those Minutes. She actually lived through them. She experienced it. She
       was there, and she was present for at least part of the walk through inspection in
       May 2007. She was aware that the complex did not have a vapor or water


there were no defects, among other material facts, (2) the defects were material,
(3) Dunphy's answers were false, (4) Dunphy knew her answers were false, (5) Dunphy
intended Watts to rely on her false answers, (6) Watts did not know Dunphy's answers
were false, (7) Watts relied on the false answers, (8) Watts had a right to so rely, and
(9) Watts suffered severe damages.

       7 Dunphy does not appeal the trial court's grant of partial summary judgment, and
she agrees on appeal that she lied on the form 17.
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       resistant barrier; and was aware that the engineer and a defect attorney was
       present on the walk through.
               Much has been made of the fact that the engineer only made factual
       comments and did not offer any conclusions. But that is beside the point. Mary
       Dunphy knew that a defect attorney and an engineer were looking at several
       issues in the complex, including the lack of a vapor resistant barrier; and that part
       of the reason that Ms. Dunphy knew the investigation was going on, was to go
       [to] the developer and seek to have the developer pay for any cost required to fix
       the problem. Ms. Dunphy also knew the report would be completed soon, and
       once the report was done it would have to be disclosed.

       The court entered judgment against Dunphy and awarded Watts $38,000 in

damages and over $55,000 in attorney fees and costs. Dunphy appeals.

                                         ANALYSIS


       Standard of Review


       Following a bench trial, we review factual findings for substantial evidence and

legal conclusions de novo, determining whether the findings support the conclusions.8
Sunnvside Valley Irrigation Dist. v. Dickie. 149 Wn.2d 873, 880, 73 P.3d 369 (2003).

              The standard of review for a trial court's findings of fact and conclusions of
       law is a two-step process. First, we must determine if the trial court's findings of
       fact were supported by substantial evidence in the record. Ifso, we must next
       decide whether those findings of fact support the trial court's conclusions of law.

Landmark Dev.. Inc. v. City of Roy. 138 Wn.2d 561, 573, 980 P.2d 1234 (1999). Ifthe

trial court mislabels a factual finding or legal conclusion, we consider it for what it really

is. Willenerv. Sweeting, 107Wn.2d 388, 394, 730 P.2d 45 (1986). "Substantial

evidence is evidence sufficient to persuade a fair-minded, rational person of the

declared premise." Douglas v. Visser, 173 Wn. App. 823, 829, 295 P.3d 800 (2013). In


       8 Dunphy's reliance on Speelman v. BeHingham/Whatcom County Housing
Authorities, 167 Wn. App. 624, 273 P.3d 1035 (2012), is misplaced. Speelman involves
due process notice requirements. Dunphy also cites bona fide purchaser doctrine
applicable to real estate transactions but fails to explain why those cases control.
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determining the sufficiency of evidence, an appellate court need only consider evidence

favorable to the prevailing party. Bland v. Mentor, 63 Wn.2d 150, 155, 385 P.2d 727

(1963). We defer to the trial court's assessment of witness credibility and evidence

weight. In re Welfare of Sego. 82 Wn.2d 736, 739-40, 513 P.2d 831 (1973).

Unchallenged findings of facts are verities on appeal. Cowiche Canyon Conservancy v.

Boslev, 118 Wn.2d 801, 808, 828 P.2d 549 (1992).

       Fraudulent Concealment


       On a claim for fraudulent concealment, the seller's duty to speak arises

       where (1) the residential dwelling has a concealed defect; (2) the vendor has
       knowledge of the defect; (3) the defect presents a danger to the property, health,
       or life of the purchaser; (4) the defect is unknown to the purchaser; and (5) the
       defect would not be disclosed by a careful, reasonable inspection by the
       purchaser.

Aleiandrev. Bull, 159 Wn.2d 674, 689, 153 P.3d 864 (2007). Failure to disclose a

material fact where there is a duty to disclose is fraudulent. Stieneke v. Russi, 145 Wn.

App. 544, 560, 190 P.3d 60 (2008). The plaintiff must establish each element of

fraudulent concealment by clear, cogent, and convincing evidence. Stieneke, 145 Wn.

App. at 561.

       The parties dispute the fourth requirement—that the defect is unknown to the

buyer. Dunphy contends certain HOA Board meeting minute excerpts triggered Watts's

duty to inquire about the condominium's latent WRB defects. Watts responds that the

meeting minutes' intermittent mention of inspections and defects "buried in a sea of

other problems" is insufficient to trigger a duty to inquire. Resp't's Br. at 16

(capitalization omitted). Watts also contends that these minutes provided no specific

notice about a specific problem to their specific condominium unit.

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       Our Supreme Court discussed a buyer's duty to inquire further in the fraudulent

concealment context:

             Although a fraudulent concealment claim may exist even though the
      purchaser makes no inquiries which would lead him to ascertain the concealed
      defect, in those situations where a purchaser discovers evidence of a defect, the
      purchaser is obligated to inquire further. Simply stated, fraudulent concealment
      does not extend to those situations where the defect is apparent.

Atherton Condo. Apartment-Owners Ass'n Bd. of Directors v. Blume Dev. Co., 115

Wn.2d 506, 525, 799 P.2d 250 (1990) (citations omitted): see also Douglas. 173 Wn.

App. at 830 ("When a buyer is on notice of a defect, it must make further inquiries of the

seller"); Puget Sound Serv. Corp. v. Dalarna Mgmt. Corp., 51 Wn. App. 209, 214-15,

752 P.2d 1353 (1988) (same; if the buyer fails to inquire, he cannot later argue that he

knew nothing about the extent of the problem).

       Dunphy claims, "This is one of those rare appeals that can be decided entirely on

the basis of a single recent Supreme Court case, Aleiandre v. Bull. 159Wn.2d674, 153

P.3d 864 (2007)."9 Appellant's Br. at 14. Dunphy argues that under Aleiandre, the
meeting minutes constitute constructive notice of the condominium defect. Watts

responds that any "notice" contained in the meeting minutes is factually distinguishable

from the notice in Aleiandre.

       In Aleiandre. defendant Mary Bull owned a single family residence that was

served by a septic system. Aleiandre, 159 Wn.2d at 678. The year before she put the

house up for sale, she noticed soggy ground over the septic system. Aleiandre, 159

Wn.2d at 678. She hired William Duncan of Gary's Septic Tank Service to pump the

septic tank and also hired Walt Johnson Septic Service to empty the tank and repair a

       9 Dunphy's opening brief relies exclusively on Aleiandre.
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broken pipe leading from the tank to the drain field. Aleiandre. 159 Wn.2d at 678. Bull

also applied for a connection to the city sewer, but abandoned the idea after learning

she would have to pay a $5,000 hook-up fee. Aleiandre, 159 Wn.2d at 678.

       Bull placed her home on the market in June 2000. Aleiandre, 159 Wn.2d at 678.

In September 2001, Bull and Arturo and Norma Alejandre entered into an agreement for

the sale of Bull's home to the Alejandres. Aleiandre, 159 Wn.2d at 678. The agreement

required Bull to pump the septic tank before closing and conditioned the sale on a septic

system inspection. Aleiandre, 159 Wn.2d at 678.

       As provided for in the agreement, Walt's Septic Tank Service pumped the tank

and sent the Alejandres a copy of the bill. Aleiandre, 159 Wn.2d at 679. The bill stated,

"[T]he septic system's back baffle could not be inspected but there was '[n]o obvious

malfunction of the system at time of work done." Aleiandre, 159 Wn.2d at 679 (second

alteration in original) (quoting Ex. 6). Bull gave the Alejandres a seller's disclosure

statement indicating that the house had a septic tank system that was last pumped and

inspected in fall 2000 and that "'Walt Johnson Jr. replaced broken line between house

and septic tank . . . .'" Aleiandre, 159 Wn.2d at 679 (quoting Exhibit 5). Bull answered

"no" to the inquiry whether there were any defects in the septic system's operation.

Aleiandre, 159 Wn.2d at 679.

       A month after the sale closed, the Alejandres smelled an odor inside the home

and heard water gurgling. Aleiandre, 159 Wn.2d at 680. They also noticed a foul odor

outside the home and believed it came from the ground around the septic tank, which

they said was soggy. Aleiandre, 159 Wn.2d at 680. By chance, they hired William

Duncan of Gary's Septic Tank Service—the same person who pumped the system for

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Bull in 2000. Aleiandre, 159 Wn.2d at 680. Duncan told the Alejandres that he could

pump the tank, but he could not fix the underlying problem because the drain fields

were not working. Aleiandre, 159 Wn.2d at 680. He also informed them that he

previously told Bull that the drain fields were not working and that she should connect to

the city's sewer system. Aleiandre, 159 Wn.2d at 680.

      The Alejandres hired another company to connect to the city sewer system.

Aleiandre, 159 Wn.2d at 680. During this work, the company found that the baffle to the

outlet side of the septic system was missing, thus allowing sludge from the septic tank

to enter and plug the drain field. Aleiandre, 159 Wn.2d at 680.

       The Alejandres sued Bull for fraud and misrepresentation, claiming costs and

damages totaling nearly $30,000. Aleiandre, 159 Wn.2d at 680. After they rested their

case, Bull moved for judgment as a matter of law. Alejandre. 159 Wn.2d at 680. The

trial court granted the motion, ruling that the economic loss rule barred the Alejandres'

claims and that they failed to present sufficient evidence supporting their claims.

Aleiandre, 159 Wn.2d at 680. We reversed, holding that the Alejandres presented

sufficient evidence to warrant the jury's consideration. Aleiandre, 159 Wn.2d at 680-81.

       Our Supreme Court reversed. Although Aleiandre is better known for its

economic loss rule discussion—which is not relevant here—the court also affirmed the

trial court's decision to dismiss the Alejandres' fraudulent concealment and fraud claims.

Regarding fraudulent concealment, the issue in Aleiandre concerned element five—

whether the buyers had shown that the defect in the septic system would not have been

discovered through a reasonably diligent inspection. Aleiandre. 159 Wn.2d at 689-90.

Our Supreme Court concluded they had not met their burden:

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      The Alejandres failed to meet their burden of showing that the defect in the septic
      system would not have been discovered through a reasonably diligent inspection.
      In fact, the Alejandres accepted the septic system even though the inspection
      report from Walt's Septic Tank Service disclosed, on its face, that the inspection
      was incomplete because the back baffle had not been inspected. The testimony
      at trial showed that this part of the septic system was relatively shallow and
      easily accessible for inspection. A careful examination would have led to
      discovery of the defective baffle and to further investigation.

Aleiandre, 159 Wn.2d at 689-90.

      Aleiandre is not controlling based on the facts ofthis case.10 Our Supreme Court
faulted the buyers for failing to conduct a reasonably diligent prepurchase inspection of

their home's septic system in the face of an obvious, incomplete inspection report that

revealed no inspection of the back baffle. As the court observed, a reasonably diligent

and careful inspection of the septic system would have revealed the defective baffle that

was easily accessible for inspection.

       The present case involves no dispute over whether Watts undertook a

reasonably diligent prepurchase inspection of their condominium unit. Watts hired a

home inspector to conduct a prepurchase inspection of the condominium unit. That




       10 From the opinion, it appears the Alejandres did not hire their own home
inspector or septic system inspector. Instead, they relied on the report prepared by the
seller's septic tank service provider as well as a property inspection report—required by
the lending bank—that indicated the septic system "'Performs Intended Function'" and
stated that "'everything drains OK.'" Aleiandre, 159 Wn.2d at 680. The earnest money
agreement required the seller to pump the tank before closing.
        As provided in the earnest money agreement, a septic tank service (Walt's Septic
        Tank Service) pumped the tank, and the Alejandres received a copy of the bill.
       The bill stated on it that the septic system's back baffle could not be inspected
       but there was "[n]o obvious malfunction of the system at time of work done."
Aleiandre, 159 Wn.2d at 679. (quoting Ex. 6). As noted above, Watts hired and relied
on their home inspector's report as to the condition of their condominium unit.

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inspection revealed nothing to indicate the condominium's lack of WRB such as exterior

water damage. The court's unchallenged findings state:

      The Watts had a home inspection done by a home inspector. The inspection did
      not look under the siding, or inspect the rest of the complex. The inspection did
      not disclose any of the missing WRB on the Dunphy unit, or the missing [WRB]
      or the problems with the buildings in the rest of the complex. The evidence was
      uncontroverted that a normal, routine home inspection of a condominium would
      not have uncovered any of the problems in the complex or the missing WRB in
      the Dunphy unit. The court finds the Watts did a reasonably diligent inspection of
      the property.

Unlike the present case, the buyers in Aleiandre had prepurchase notice of an

incomplete inspection. They relied on an obvious, incomplete septic system report that

revealed the back baffle had not been inspected.

      Also, the Alejandres' prepurchase notice about the incomplete inspection

involved the specific property they purchased. In the present case, Dunphy relies

exclusively on 33 pages11 of meeting minutes to argue that Watts should have inquired
further after reviewing the minutes. To make this point, Dunphy relies on seven select

meeting minute excerpts quoted above. Even when viewed in complete context, no

mention or reference to WRB problems associated with Watts's condominium unit

appears in any of the meeting minutes. And there is no information identifying which of

the 64 units or 12 buildings are affected by the WRB problem.12


       11 We question whether Watts received the monthly meeting minutes from August
to December 2007 because the record shows they received the meeting minutes at the
end of July 2007, when they purchased the unit.

       12 The undisputed facts show the Kirkland Village Condominiums complex
consists of 12 buildings with each building comprised of 3 to 7 individual townhome
style units. Watts's unit is one of 7 in the 13020 building. Most of the units, including
Watts's, are two stories high. A trial court is not required to make findings on stipulated
or undisputed matters. Swanson v. May. 40 Wn. App. 148, 158, 697 P.2d 1013(1985).
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       It is true the meeting minute excerpts mention "inspection," "envelope

inspection," "invasive inspection," "moisture barrier," "intrusive study," "report," and

"defect." According to Dunphy, this notice triggered Watts's duty to inquire about the

WRB problem. The court's unchallenged finding of fact states:

       The Minutes contain a list of all the issues the Board dealt with. In there, among
       the other issues, are mentions of inspections; envelope studies, Darrel Hay's
       report, etc. The court looks at the minutes in the context of what the Watts knew
       at the time, not with the 20/20 hindsight at the time of trial. . . .

The court also ruled that this information triggered no duty to inquire further:

               But if the Watts had read the [HOA] meeting minutes, what would it have
       told them? Although the words "defect," "envelope studies," ['^Investigation," and
       "defect attorney" were mentioned several times, there is no context or
       explanation for the brief references buried in a maze of other irrelevant
       information. Only with the use of 20/20 hindsight and specialized knowledge can
       we pick out the significance of these words.[13]
       This ruling constitutes a finding of fact, not a conclusion of law. See Sweeting,

107 Wn.2d at 394 (if the trial court mislabels a factual finding or legal conclusion, we

consider it for what it really is). Substantial evidence supports this finding of fact. The

meeting minutes provide no details or explanation about the nature and extent ofthe
WRB defect and specific units affected. Review of the trial evidence and meeting

minutes establish substantial evidence to support the trial court's finding that the

disputed meeting minute "words" were "brief references buried in a maze ofother
irrelevant information." For example, HOA president Craig Cleaver described the


       13 The ruling appears under the heading "Conclusions of Law" in the court's
written findings offact and conclusions of law. Dunphy assigns error to this "conclusion
of law": "The trial court erred when it concluded as a matter of law that the meeting
minutes did not put the Watts on inquiry notice of the defects in the condominium
project." Appellant's Br. at 2.

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October 16, 2006 meeting minutes as a "laundry list" of issues affecting the

condominium complex, including homeowners complaining about several things,

especially parking and landscaping. The record evidence shows the HOA Board sought

to gather information on all complaints and issues about the condominium complex in

order to submit them to the developer for redress. The WRB problem was merely one

item in the developer "laundry list" during the condominium's conversion from developer

owner to a homeowners association structure. As Watts points out, these were simply

'"bullet points' in a long list of 'bullet points,'" none of which specifically related to

Dunphy's unit or any other unit. Resp't's Br. at 17. We conclude substantial evidence

supports the trial court's findings of fact and the findings support its conclusion of law

that no duty to inquire further flowed to Watts based solely on review of the HOA Board

meeting minutes.

       Dunphy also relies on other cases to support her duty to inquire claim. None of

those cases control for the reasons discussed above. Those cases involve buyers with

prepurchase notice of a particular obvious defect affecting the specific property

purchased. In Douglas,14 the buyers' inspector identified an area of rot and decay near
the roof line and caulking suggestive of a prior roof leak. He found an area of rotted sill

plate below the section of water-damaged exterior siding. A portion of sill adjacent to

the rotted section had recently been replaced and floor joists near the rotted area had

been sistered. Douglas, 173 Wn. App. at 831-32. The buyers argued that the area of

rot their inspector discovered was not unusual and they had no knowledge that 50 to 70

percent of the sill plate and rim joist were destroyed. We rejected that argument. Citing

       14 We decided Douglas after the close of appellate briefing.
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Dalarna. we stated the well-settled rule that "[w]hen a buyer is on notice of a defect, it

must make further inquiries of the seller." Douglas, 173 Wn. App. at 830. We

reasoned:


       The Douglases and their inspector were on notice of the defect and had a duty to
       make further inquiries. The Douglases argue that "they had no idea that 50 to
       70% of the sill plate and rim joist were destroyed" and that the area of rot [their
       inspector] discovered was not unusual. That, however, is the precise argument
       we rejected in Dalarna. Once a buyer discovers evidence of a defect, they are
       on notice and have a duty to make further inquiries. They cannot succeed when
       the extent of the defect is greater than anticipated, even when it is magnitudes
       greater.

Douglas, 173 Wn. App. at 832.

       We also noted that additional facts should have prompted the Douglases to

inquire further:

       Despite [the discovery of rot], on top of the Vissers' previous evasive and
       incomplete answers and the Vissers' on-going failure to provide their own
       prepurchase inspection report, either of which should have caused concern and
       further inguiry, there is no evidence that the Douglases made any inquiries
       whatsoever after the inspection.

Douglas. 173 Wn. App. at 834 (emphasis added).

       In Dalarna, a buyer purchased an apartment building and later sued the seller for

fraudulent concealment after discovering substantial water leakage problems. The

buyer's inspector noted water stains and loose tiles. Despite this prepurchase notice of

a water leak, the buyer closed on the sale. The buyer later discovered the water

damage was more extensive. The buyer claimed that the seller concealed the

extensive nature of the leak. Dalarna. 51 Wn. App. at 211-12. We held that due to the

buyer's prepurchase knowledge of the water leak, its severity was readily ascertainable

through further inquiries. Dalarna. 51 Wn. App. at 215.


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       In Jackowski v. Borchelt, 151 Wn. App. 1,209 P.3d 514 (2009), the buyers

purchased a waterfront home and later sued the sellers for fraud and fraudulent

concealment when soil instability caused the house to slide. Before the sale, the sellers

gave the buyers a form 17 disclosure statement that contained language referring the

buyers to a Mason County Department of Community Development letter. Jackowski,

151 Wn. App. at 8. The letter indicated that the "'following critical areas are present on

this property: . . . Landslide Hazard Areas.'" Jackowski, 151 Wn. App. at 8. The letter

also referenced an existing geotechnical report conducted by a geologist. Jackowski.

151 Wn. App. at 8. The sellers faxed a copy of the letter to their real estate agent.

Jackowski. 151 Wn. App. at 8. The fax included an addendum, provided by the

geologist, that again referenced the geotechnical report. Jackowski. 151 Wn. App. at 8.

The sellers' real estate agent then faxed the letter and addendum to the buyers' agent.

Jackowski, 151 Wn. App. at 8. The buyers received and read the letter and addendum.

Jackowski, 151 Wn. App. at 8. An addendum to the real estate purchase and sale

agreement provided that the sale was contingent on the buyers' inspection—including,

at the buyers' option, a soils/stability inspection. Jackowski. 151 Wn. App. at 8. The

buyers conducted no soil stability investigation before the sale closed. Jackowski, 151

Wn. App. at 8.

       Jackowski addressed two issues relevant here—whether a reasonable inspection

would have disclosed the landslide risk (fraudulent concealment claim) and whether the

buyers established they had a right to rely on the sellers' fraudulent representations

(fraud claim). Jackowski. 151 Wn. App. at 17. The court affirmed summary judgment

dismissal of those claims:

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              Here, as we discussed above, the Jackowskis had prepurchase
       knowledge of the landslide hazard area and, thus, reliance on the Form 17
       disclosure could not be reasonable. A reasonable inspection would have
       disclosed the landslide risk. The Jackowskis acknowledge that they had read the
       letter indicating that the property that they were contracting to buy was in a
       landslide hazard area. Tim Jackowski read documents before closing that
       referenced an existing geotechnical report. Tim Jackowski acknowledged that he
       made the sale contingent on his ability to hire professionals to conduct property
       inspections including soil and slope stability. Nevertheless, he failed to utilize the
       contingency to request such inspections. The trial court did not err by granting
       summary judgment on the Jackowskis' fraudulent concealment claims based on
       the landslide risk.

Jackowski, 151 Wn. App. at 17-18 (emphasis added).

       Douglas. Dalarna. and Jackowski stand for the unremarkable proposition that a

buyer's failure to inquire further after prepurchase notice of a specific defect involving

the specific property purchased defeats a fraudulent concealment claim. These cases

are not controlling. The undisputed facts and reasonable factual inferences support the

conclusion that the meeting minutes triggered no duty flowing to Watts to make further

inquiry.

       Fraud

       To succeed on a fraud claim, the plaintiff must establish by clear, cogent, and

convincing evidence all nine elements of fraud:

       (1) representation of an existing fact; (2) materiality; (3) falsity; (4) the speaker's
       knowledge of its falsity; (5) intent of the speaker that it should be acted upon by
       the plaintiff; (6) plaintiffs ignorance of its falsity; (7) plaintiffs reliance on the truth
       of the representation; (8) plaintiff's right to rely upon it; and (9) damages suffered
       by the plaintiff.

Stilev v. Block, 130Wn.2d486, 505, 925 P.2d 194(1996). The sole issue on appeal is

element 8—whether Watts had a right to rely on Dunphy's form 17 disclosures.




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       As our Supreme Court noted in Williams v. Joslin, 65 Wn.2d 696, 698, 399 P.2d

308 (1965), "The right to rely on representations is inseparably connected with the

correlative problem of the duty of a representee to use diligence in respect of

representations made to him.'" (Quoting Puget Sound Nat'l Bank v. McMahon, 53

Wn.2d 51, 54, 330 P.2d 559 (1958)). A buyer who is on notice of a defect and has a

duty to make further inquiry cannot justifiably rely on the seller's misrepresentations.

Douglas, 173 Wn. App. at 834; see also Aleiandre, 159 Wn.2d at 690 ("Having failed to

exercise the diligence required, [the Alejandres] were unable to present sufficient

evidence of a right to rely on the allegedly fraudulent representations.").

       Dunphy's sole argument on appeal is that Watts failed to show he had a right to

rely on Dunphy's representations because "[t]he Watts' right to rely on any

representations made to them was tied to their diligence concerning the information

they had."15 Appellant's Br. at 20. As discussed above, the meeting minutes were
insufficient to put Watts on inquiry notice of the latent defect. Watts had no duty to

inquire further, and his reliance on Dunphy's form 17—a required disclosure form under

chapter 64.06 RCW —was not unreasonable. Substantial evidence supports the trial

court's findings and the findings support its conclusion that Dunphy was liable for fraud.

       Attorney Fees

       Dunphy and Watts each request attorney fees on appeal as the prevailing party

under the purchase and sale agreement. In Washington, parties may recover attorney

fees if allowed by statute, contract, or some well-recognized principle of equity.


       15 Dunphy does not challenge the trial court's conclusion that Watts met the other
eight elements of fraud.
                                           -22-
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Torgerson v. One Lincoln Tower, LLC. 166 Wn.2d 510, 525, 210 P.3d 318 (2009).

Here, although no copy of the real estate purchase and sale agreement appears in the

record on appeal, the parties agree—and the trial court found—that the purchase and

sale agreement provides for an award of fees to the prevailing party in a dispute

concerning the agreement. Because Watts is the prevailing party on appeal, he is

entitled to attorney fees and costs conditioned on his compliance with RAP 18.1.

                                      CONCLUSION


       For the reasons discussed above, we affirm and award reasonable attorney fees

and costs to Watts as the prevailing party conditioned on compliance with RAP 18.1.16


                                                                  ztM \ n ^
                                                                        1
WE CONCUR:




       16 In her reply brief, Dunphy moved to strike certain references to trial testimony
in Watts's response brief. The motion is denied under RAP 17.4(d) ("A party may
include in a brief only a motion which, ifgranted, would preclude hearing the case on
the merits. . . ."). In any event, this court is able to decide which portions of the record
to consider even without such a motion.

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