Real Estate Broker Not Liable for Frogs, Hookers

HONOLULU (CN) - A realtor did not dupe customers who bought a million-dollar property for its views of waterfalls, only to find the area was infested with screaming frogs and "populated by drug dealers and hookers," a Hawaii appeals court ruled.

James Clay and James Singleton paid a $25,000 "initial earnest money deposit" in 2005 on a $1.9 million, 4-acre parcel of undeveloped land in Hilo. The men said they were initially attracted to the property "because they liked the description of the property as being in close proximity to 'the views and sounds of waterfalls and Pukihae Stream.'" But the contract also included a "frog pest alert," regarding a population of coqui frogs.

The buyers did not realize what made coqui frogs a pest until after they had formed and incorporated Brinkwood Land Equities to develop the property, and canceled the escrow with the intention of signing a new deal with the individual seller.

Singleton, Brinkwood's president, visited the property at night and "realized how loud" the coqui frogs chirped. He also learned that the area near the property was "populated by drug dealers and hookers."

Brinkwood sued Hilo and the broker, Kelly Moran, for misrepresentation. "Instead of being in an area 'where one could hear the flow of water falls and a stream ... all one could hear is the sound of dying and tortured animals (which is the sound of the frogs occupying the area) and [the property] was in a neighborhood where drug dealers and prostitutes frequented,'" according to the amended complaint, filed in 2007 in the Third Circuit. (Parentheses and brackets in original.)

Judge Glenn Hara entered summary judgment for the defendants last year, leading Brinkwood to appeal.

In addition to the pest and "as-is" disclosures in the contract, the former owner also informed Singleton "that the frogs croak all night." Singleton claimed the disclosures "talk[ed] about chirping little frogs."

The U.S. Department of Agriculture's Animal and Plant Health Inspection Service Pest Alert acknowledges that non-native coqui frog and greenhouse frog populations have been "burgeoning" Hawaii's islands for 10 years. It describes the male coqui frog's chirping as "beginning at dusk and continuing until dawn" to attract coqui females. "The noise from a group of frogs can exceed 70 decibels, rivaling the sound of a lawnmower or chainsaw," according to the pest alert, which the court reproduced in a footnote.

A three-judge panel of Hawaii's Intermediate Court of Appeals affirmed Wednesday.

The brokers and seller met minimum state requirements by providing the pest disclosures, a list of 26 questions concerning the property and advice to further investigate, the decision states.

As to the "off-site social conditions" in the neighborhood, the panel said a broker must disclose "any fact, defect or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale [...] within the seller's or his agent's knowledge or control or must be able to be seen from visible, accessible areas."

The panel turned to Strawn v. Canuso, in which the New Jersey Supreme Court said a seller should have disclosed the existence of a nearby hazardous waste landfill, unobservable to the buyer. But the Strawn court held that the disclosure duty did not extend to conditions that were not "root[ed] in the land," such as the presence of a group home "or the existence of a school in decline."

The Hawaii court agreed. "We find nothing in Hawaii statute or case law to support Brinkwood's contention that defendants had a duty to inspect and/or disclose facts about transient social conditions in the neighborhood," the decicions states.

Wednesday's ruling does not clarify if Brinkwood ever paid an additional optional "consideration" of $75,000 to Hilo Brokers, but the acceptance agreement allowed for the defendants to retain Brinkwood's initial deposit in the event of breach.

Presiding Judge Daniel R. Foley, Associate Judge Alexa D. M. Fujise and Associate Judge Lawrence M. Reifurth signed the opinion.

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