An appellate court has upheld a decision by a Westchester Supreme Court judge who found that a home inspection company was not grossly negligent when it failed to detect cracked concrete and termite infestation.
Jonathan Seti and Rorie Katz accused Carnell Associates Inc., Valhalla, of gross negligence in 2018 and demanded $250,000 to fix their new home in Rye Brook.
In 2017, the couple had paid Carnell Associates $525 to inspect a house they wanted to buy on Terrace Court.
The contract called for a limited visual inspection of apparent conditions in easily accessible areas, inside and outside, and included a certified termite inspection.
Seti and Katz accompanied inspector Edward von Briesen on the survey of the three bedroom, 2 bath, 1,522-square-foot house.
The following day, Carnell issued a report finding that “the structure appears to be in sound condition from visible evidence in accessible areas” and “no visible evidence of termite infestation.”
Relying on the inspection report, the couple stated in their lawsuit, they bought the house for $450,000.
They soon became aware of structural problems, according to their lawsuit, and six months after they bought the property they hired a structural engineer to inspect the house. The new inspector found cracks in a concrete slab, standing water in one room, a sagging ceiling  and signs of termite or insect damage in exterior walls.
The couple also claimed they had found layers of carpet padding that had been installed to conceal structural damage to the floors and foundation, and a can of paint that matched an area damaged by termites that had been painted over.
The structural engineer estimated that it would cost $250,000 to fix the house, according to the lawsuit, and the couple would have to leave for months while it was being repaired.
“But for the gross negligence of Carnell Associates,” the couple claimed, they “would not have purchased the premises.”
Carnell’s contract had limited its liability to the cost of its services, $525. But a party cannot insulate itself from damages, court records state, that are caused by grossly negligent conduct.
Seti and Katz claimed that Carnell Associates was grossly negligent.
Carnell broadly denied wrongdoing in its formal answer to the allegations and placed some of the blame for the conditions on the home’s previous owner.
The inspector explained that he did not see evidence of termite or concrete damage because of the placement of carpeting, according to court records, and he was prevented by industry standards and practices from pulling up carpet as part of an inspection.
Carnell’s expert witness asserted that the inspection was complete under industry standards and the contract limitations.
The couple’s expert witness concluded that the damages were readily apparent and observable, the inspector was reckless and the inspection report was inadequate.
Citing a legal precedent in a July 2020 decision, Westchester Supreme Court Justice Mary H. Smith noted that “gross negligence means a failure to use even slight care, or conduct that is so careless as to show complete disregard for the rights and safety of others.”
Seti and Katz, she said, had not established gross negligence. She granted summary judgement for Carnell and dismissed the case.
The couple appealed to the Second Appellate Division in Brooklyn.
On July 5, a panel of four appellate justices upheld Justice Smith’s decision.
“To constitute gross negligence, a party’s conduct must smack of intentional wrongdoing or evince a reckless indifference to the rights of others,” the justices said in quoting a 2010 decision by the court. The 2010 ruling, coincidentally, also concerned allegations against Carnell Associates about a home inspection.
In the current case, the justices ruled, the evidence submitted by Carnell demonstrated that the inspection “was not so defective as to evince a reckless indifference to the rights of others or a failure to exercise even slight care.”
White Plains attorney Andrew P. Tureaud represented the couple. Manhattan attorney Nelson E. Canter represented Carnell.
