Appeals court reverses dismissal of noise-disclosure lawsuit

A lawsuit over the alleged inadequacy of jet-noise disclosures from Whidbey real estate companies is back. A state court of appeals this week reversed a lower court’s dismissal of the lawsuit and remanded it back to Superior Court for further proceedings.

Attorneys representing Coupeville residents Jonathan Deegan and Alice O’Grady filed the complaint for damages and injunctive relief against Windermere Real Estate and Acorn Properties on Nov. 18, 2014. The lawsuit alleges violations of the Consumer Protection Act.

The complaint was filed in Island County Superior Court as a possible “class-action lawsuit,” but the plaintiffs haven’t yet sought or received class-action certification. The plaintiffs purchased homes on Whidbey and said they were given an abbreviated noise disclosure form regarding jet noise by their listing agents, the lawsuit states.

Island County commissioners had previously adopted an ordinance requiring real estate agents to provide clients with a longer, more detailed disclosure about the noise from jets associated with Naval Air Station Whidbey Island. A superior court judge dismissed the case under the state Consumer Protection Act, finding that the disclosure provided was enough to alert prospective homeowners to the noise impacts and that a reasonable inspection would have revealed the facts available in the other disclosure statement.

The judge also found that the plaintiffs “failed to state a claim upon which relief can be granted.” Additionally, the judge found that the statute of limitations had run out on Deegan’s claim.

The appeals court, however, disagreed with the judge. Its published opinion states that, in this case, the prospective homeowners did not have a duty to inquire further about the noise issue. This duty to inquire, described in Douglas v. Visser, does not apply when there’s “an omission of material fact,” according to Mike Daudt, an attorney for the plaintiffs.

The appeals court also found that rebuttable presumption of reliance is applicable in a Consumer Protection Act case.

The statute of limitation decision was reversed by the court because the defendants didn’t establish when Deegan “reasonably should have known” about the jet noise.

In December 2013, the then-Island County planning director wrote a memorandum to the board of commissioners noting that sellers were not providing buyers with the lengthier disclosure statement. In response, the Whidbey Island Association of Realtors took “prompt action to correct its standard disclosure,” according to the motion to dismiss.

Eric Mitten, broker and owner of Windermere Real Estate/Whidbey Island, points out that the appeals court decision essentially says that it was a mistake of the trial court to dismiss the case so early.

“In other words the plaintiffs haven’t won yet, and we haven’t lost,” Mitten said in an email. “The court of appeals has simply decided that the case should be allowed to proceed further before a decision is made whether to dismiss it.”

Daudt said the appeals court decision strengthens their case, however, especially on the issue of rebuttable presumption of reliance. He said the precedent-setting decision shifts the burden to the defendant to disprove reliance, which is good for the plaintiffs.

The attorneys representing the plaintiffs don’t yet know the scope a class-action lawsuit would take, but it could potentially involve many homeowners, Daudt said.

The case will head back to superior court unless the defendants ask for reconsideration or appeal to the state Supreme Court.

“We think the trial court made the right decision in the first place,” Mitten said, “but we respect the Court of Appeals’ decision and we are prepared to defend the case on the merits.”

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