Summary
denying CUTPA in real estate transaction where buyers purchased property "as is" and there was no proof of fraudulent misrepresentation
Summary of this case from Foley v. the Huntington Co.Opinion
(8487)
The plaintiffs, who had purchased certain real property from the defendants, C and A, sought to recover for a defective well supplying water to that property. The plaintiffs alleged, inter alia, that C and A, through their agent, fraudulently misrepresented that the property was in good condition and fraudulently concealed the defects in the well. They also alleged that the defendant relocation company, C Co., committed fraud by obscuring its legal relationship to the subject property, thereby engaging in unfair trade practices within the meaning of the Connecticut Unfair Trade Practices Act ( 42-110a et seq.) (CUTPA). The trial court rendered summary judgment in favor of C and A on the counts of the complaint alleging fraudulent misrepresentation and fraudulent concealment and in favor of C Co. on the allegation of violation of CUTPA. On the plaintiffs' appeal to this court, held: 1. Because the pleadings, affidavits and other proof submitted by the parties left open for resolution by a trier of fact whether the well's condition had been concealed or misrepresented, genuine issues of material fact remained unresolved, and the trial court should not have granted summary judgment on those counts. 2. The trial court properly granted summary judgment on the plaintiffs' CUTPA claim; even when read in a light most favorable to the plaintiffs, the uncontested facts demonstrated that C Co. was candid in its role as the contractual seller and gave full notice to the plaintiffs regarding its role.
Argued April 4, 1990
Decision released September 11, 1990
Action to recover damages for fraudulent misrepresentation in connection with the sale of certain real property, and for other relief, brought to the Superior Court in the judicial district of Litchfield, where the court, Pickett, J., granted the motion for summary judgment filed by the named defendant et al. and rendered judgment thereon, from which the plaintiffs appealed to this court. Reversed in part; further proceedings.
Mark V. Oppenheimer, with whom was Judith S. Nickse, for the appellants (plaintiffs).
Brendan J. O'Rourke, with whom, on the brief, was Edward V. O'Hanlan, for the appellees (named defendant et al.).
The plaintiffs appeal from the trial court's decision granting summary judgment in favor of the defendants J. Christine Mangano, James A. Mangano and ChemExec Relocations Systems, Inc. (hereinafter the defendants), as to counts one, two and four of the plaintiffs' substitute complaint. The plaintiffs brought suit against the defendants for damages arising out of a contract to buy the defendants' property. Shortly after taking up residence, the plaintiffs discovered that the well on the property failed to produce sufficient water for their needs. In response to the plaintiffs' substituted complaint, the defendants filed a motion for summary judgment on April 18, 1989, only as to counts one, two and four. In the first count, the plaintiffs alleged that the defendants, through their agent, had fraudulently misrepresented that the defendants' property was in good condition and not in need of any major repairs, whereas the defendants knew that the well was faulty. The plaintiffs relied upon this misrepresentation, purchasing the property to their detriment. In the second count, the plaintiffs alleged that the defendants had fraudulently concealed the defects in the well. The fourth count is directed solely against ChemExec Relocation Services, Inc. (ChemExec), alleging a violation of the Connecticut Unfair Trade Practices Act (CUTPA). General Statutes 42-110a et seq. In this count, the plaintiffs alleged that ChemExec obscured its legal relationships, obligations, and duties in real estate transactions, thereby engaging in unfair trade practices.
The defendants Emmett M. Westfall, doing business as Westfall Realty, and D L Home Inspection Service Corporation were not parties to this summary judgment motion. Count one also names Westfall and count three is solely against D L Home Inspection Services Corporation.
After oral argument, the trial court granted the defendants' motion for summary judgment and issued a memorandum of decision dated September 18, 1989. The trial court considered the affidavits submitted by the plaintiffs as insufficient evidence to meet the high standard of proof required to prove fraudulent concealment and misrepresentation by clear, precise, and unequivocal evidence. See Bound Brook Assn. v. Norwalk, 198 Conn. 660, 666, 504 A.2d 1047, cert. denied, 479 U.S. 819, 107 S.Ct. 81, 93 L.Ed.2d 36 (1986); Rego v. Connecticut Insurance Placement Facility, 22 Conn. App. 428, 430, 577 A.2d 1105 (1990). This appeal ensued.
The plaintiffs' claim that the trial court decided issues of material fact in favor of the defendants and thus improperly granted the defendants' motion for summary judgment. We agree as to counts one and two, and disagree as to count four.
This court reviews the propriety of a summary judgment by examining whether "the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Practice Book 384; Maruca v. Standard, 19 Conn. App. 16, 18, 559 A.2d 1167 (1989).
To support their motion for summary judgment, the defendants offered the inspection report of Bruce P. Barber, the contract of sale, a letter dated July 28, 1987, from the defendants to the plaintiffs, the plaintiffs' answers to the defendants' interrogatories, the inspection report of D L Home Inspection Service Corporation performed at the plaintiffs' request, the affidavit of a ChemExec agent who coordinated the Manganos' property sale, and the affidavit of the defendants J. Christine Mangano and James A. Mangano. Barber inspected the property at the defendants' request and D L Home Inspection Service Corporation examined the property for the plaintiffs. Neither report noted any well capacity problems, although the Barber report specified that the water pressure fluctuated, indicating that some service was necessary. An addendum to the sales contract stipulated that the sale of the property was "as is." The letter from ChemExec accompanying the contract informed the plaintiffs that ChemExec was not the owner of record but the contract owner and thus could not make any representations about the property. In the interrogatories, the plaintiffs answered in the negative when asked whether the defendants told them that the well was in good condition and not in need of any major repair. The affidavits of a ChemExec agent and the Manganos deny that any representations about the well were made to the plaintiffs and deny any knowledge that the well was failing. Furthermore, the Manganos assert that they never experienced a problem with the well producing sufficient water for their use.
The plaintiffs offered their own affidavit as well as affidavits by Joan Germano, a neighboring property owner, and Bill Melko, a professional well pump installer, to counter the defendants' motion. Germano acknowledged that while she had no direct knowledge of the well in September, 1987, the month the plaintiffs completed the purchase and took possession of the property, she stated that all the wells in the development could be considered "low producers." She also stated that during the prior year she and other neighbors had been obligated to replace their wells, and that they and the Manganos rented portable toilets when they had parties, primarily to conserve water. Germano also disclosed that J. Christine Mangano spoke to her about the defendants' water problem approximately one year before the sale. In his affidavit, Melko stated that he found the plaintiffs well dry on September 13, 1987, and that it was unlikely to have become dry in just a few months. He acknowledged that he had no direct knowledge of the well at the time of the alleged fraud and misrepresentation. The plaintiffs stated in their affidavit that the defendants' agents had, on several occasions prior to the sale, orally represented and assured them that the well was in good repair and adequate for their needs.
The trial court stated in its memorandum of decision that the plaintiffs' affidavits "fail to present evidence that clearly, precisely, and unequivocally supports the plaintiffs' claims of misrepresentation and fraudulent concealment. This lack of evidence is underscored when it is contrasted with the substantial evidence, e.g., the home inspection reports that accompany the defendants' motion for summary judgment. Under these circumstances, the plaintiffs have not presented `clear, precise, and unequivocal' evidence of fraudulent concealment and misrepresentation."
In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist. Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). If a genuine issue exists, it must be left to a later determination after a full hearing. Telesco v. Telesco, 187 Conn. 715, 718, 447 A.2d 752 (1982).
In dealing with the first two counts in the present case, the trial court did not confine itself to deciding whether material issues of fraudulent concealment and misrepresentation existed. Rather, the trial court weighed the plaintiffs' evidence against the defendants' evidence and found that the former did not meet the standard of "clear, precise and unequivocal evidence" necessary to prove fraudulent concealment. Bound Brook Assn. v. Norwalk, supra. The plaintiffs did not have to meet this standard of proof to survive a motion for summary judgment. On the contrary, the party moving for summary judgment has the burden of showing the absence of any genuine issue to all the material facts under the applicable principles of substantive law. D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980). As the burden of proof is on the moving party, the evidence must be viewed in the light most favorable to the opponent. Id. Here, the plaintiffs' evidence contradicted the defendants' assertions on several points.
For example, one defendant allegedly discussed her well problem with a neighbor during the year prior to the sale. Further, the evidence of the Barber inspection, viewed in a light most favorable to the plaintiffs indicates that there were water pressure problem known to the defendants prior to the sale. In contrast the Manganos deny ever having problems with the well In light of the plaintiffs' pleadings and affidavits opposing the defendants' motion, and the inferences that could reasonably be drawn therefrom, the material issue of the defendants' knowledge of the well problems prior to the sale is unresolved. See De Dominicis v. American National Fire Ins. Co., 2 Conn. App. 686, 687, 483 A.2d 616 (1984). The defendants' knowledge is an element of both fraudulent misrepresentation and fraudulent concealment. See Marchand v. Presutti, 7 Conn. App. 643, 645, 509 A.2d 1092 (1986); Kavarco v. T.J.E., Inc., 2 Conn. App. 294, 295-96, 478 A.2d 257 (1984).
Another unresolved material issue is the nature of the agency relationship between the defendants an Westfall Realty and the extent to which the defendants are liable for any misrepresentations made by their alleged agent. The plaintiffs' first count alleges that Westfall was the agent acting on behalf of the defendants. The defendants have not addressed these issue and thus have not met their burden in moving for summary judgment. D.H.R. Construction Co. v. Donnelly, supra. The material issues of the agent's authority and the facts misrepresented are unresolved and require a full hearing. See, e.g., Nowak v. Capitol Motors, Inc., 158 Conn. 65, 255 A.2d 845 (1969); Presta v. Monnier, 145 Conn. 694, 146 A.2d 404 (1958).
Because the pleadings, affidavits and other proof submitted by the parties leave open for resolution by a trier of fact the question of whether the defendants or their agents fraudulently concealed or misrepresented the well's condition, genuine issues of material fact remain unresolved and the trial court should not have granted summary judgment for the defendants as to counts one and two.
The plaintiffs also claim that the trial court should not have granted summary judgment for the defendant ChemExec on count four, the plaintiffs' CUTPA allegation. We disagree. The gravamen of the plaintiffs' allegation in this count is that ChemExec committed fraud by obscuring its relationship to the subject property as a contract owner, when the Manganos were the record title owners. The plaintiffs allege that ChemExec schemed to sell the property as an owner without making the "representations normally given to residential home buyers," and that this alleged scheme was an unfair trade practice in violation of CUTPA. The trial court considered the pleadings, affidavits and other proof submitted by the parties, concluding that ChemExec did not engage in conduct that could be considered a violation of CUTPA.
Adopting the federal "cigarette rule" to determine whether certain business practices violate CUTPA, Connecticut courts have examined the following factors: "`(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).'" FTC v. Sperry Hutchinson Co., 405 U.S. 233, 244-45 n. 5, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972); McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558. 567-68, 473 A.2d 1185 (1984); Conaway v. Prestia, 191 Conn. 484, 492-93, 464 A.2d 847 (1983).
The federal "cigarette rule" derives its name as a result of the rule's being articulated for the first time in Statement of Basis and Purpose of Trade Regulation Rule 408, Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking. 29 Fed. Reg. 8355 (1964).
Here, the trial court found uncontested facts that defeated the plaintiffs' allegations. First, the plaintiffs reviewed the sale contract with their attorney and were legally counseled prior to its execution. Second ChemExec explicitly advised the plaintiffs that it was a relocation company and not in a position to make any representations about the property. Finally, the plaintiffs conceded that they purchased the property "as is." Even when read in a light most favorable to the plaintiffs, these facts demonstrate that ChemExec was candid in its role as the contractual seller and gave full notice to the plaintiffs regarding its role. As alleged by the plaintiffs, there did not exist any material fact before the trial court to support their fourth count Accordingly, the trial court properly granted summary judgment on that claim.