Opinion
No. CV 03 0071650
October 12, 2005
MEMORANDUM OF DECISION
ISSUE
The defendants have moved for summary judgment as to all four counts of the plaintiff's complaint. The plaintiff has filed an objection to the defendants' motion for summary judgment as to all four counts.
FACTS
On November 19, 2002, the plaintiff, Mary Brown, filed a four-count complaint against the defendants, Edward J. Esposito, and Donna M. Esposito. This action arises out of the conveyance by warranty deed from the defendants (the sellers) to the plaintiff (the buyer) of the premises located at 218 Green Hollow Road, Danielson, Connecticut ("the property"). The plaintiff alleges that, approximately two months after the closing, the basement suffered substantial water leakage and flooding, causing extensive and ongoing monetary damages.
Count one alleges misrepresentation in that the defendants made misrepresentations of material fact in the Residential Property Disclosure Report ("the disclosure report") regarding water drainage problems, and that the plaintiff purchased the house in reliance on those misrepresentations. Count two alleges negligent misrepresentation in that the defendants' misrepresentations were supplied for the purpose of inducing the plaintiff to purchase the premises, and that the defendants knew or should have known at the time of making the representations that they were false and failed to exercise reasonable care or competence in CT Page 13351-ad making them. Count three alleges fraudulent misrepresentation in that the defendants' misrepresentations were false, the defendants knew or should have known that they were false, and they were made by the defendants to induce the plaintiff to purchase the property in excess of its value. Count four alleges a violation of the Connecticut Unfair Trade Practices Act ("CUTPA") in that the defendants engaged in the foregoing acts in the conduct of trade or commerce, and that the misrepresentations were unfair or deceptive and constitute a violation of General Statutes § 42-110a et seq. The complaint further alleges that, as a result, the plaintiff suffered an ascertainable loss of money or property.
On February 11, 2004, the defendants filed an answer denying the substantive allegations of the complaint, eight special defenses, and two counterclaims. On October 6, 2004, the plaintiff denied all substantive claims of the defendants' special defenses and filed two of her own special defenses to the defendants' counterclaims. On January 24, 2005, the defendants denied all the allegations of the plaintiff's special defenses. A certificate of closed pleadings was filed on February 2, 2005.
On March 29, 2005, the defendants filed a motion for permission to file for summary judgment, which was granted by this court on April 27, 2005. On May 27, 2005, the defendants moved for summary judgment as to all claims set forth in the plaintiff's complaint, accompanied by a memorandum in support. On June 7, 2005, the plaintiff filed an objection to the defendants' motion for summary judgment, accompanied by a memorandum in support. The matter was heard on the short calendar on June 14, 2005. Trial is scheduled for November 1 and 2, 2005.
DISCUSSION
"Summary judgment is a method of resolving litigation when 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 . . . The motion for summary CT Page 13351-ae judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "A motion for summary judgment shall be supported by such documents as may be appropriate, including but not limited to affidavits, certified transcripts of testimony under oath, disclosures, written admissions and the like . . . The adverse party may, within ten days of the filing of the motion with the court, file a request for extension of time to respond to said motion. The clerk shall grant such request and cause the motion to appear on the short calendar not less than thirty days from the filing of the request. The adverse party shall at least five days before the date the motion is to be considered on the short calendar file opposing affidavits and other available documentary evidence. Affidavits, and other documentary proof not already a part of the file, shall be filed and served as are pleadings." Practice Book § 17-45. "The movant shall file and serve a memorandum of law with the motion for summary judgment, briefly outlining the legal claims and pertinent authority." Practice Book § 11-10. "The existence of the genuine issue of material fact must be demonstrated by counteraffidavits and concrete evidence." (Internal quotation marks omitted.) DeCorso v. Watchtower Bible Tract Society of New York, Inc., 78 Conn.App. 865, 871, 829 A.2d 38, cert. denied, 266 Conn. 931, 837 A.2d 805 (2003). "The courts hold the [summary judgment] movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are CT Page 13351-af insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book §§ [17-45]." Internal quotation marks omitted.) Boone v. William W. Backus Hospital, 272 Conn. 551, 558-59, 864 A.2d 1 (2004).
The defendants move for summary judgment on the grounds that there are no genuine issues of material fact and they are entitled to judgment as a matter of law because: (1) the plaintiff's misrepresentation claims set out in counts one, two, and three are barred as a matter of law by the terms of the Purchase and Sale Agreement ("the Agreement"), Residential Property Condition Disclosure Report ("the disclosure report"), and General Statutes § 20-327b; and (2) the plaintiff's CUTPA claim set out in count four is barred as a matter of law because CUTPA does not apply to individuals selling their own residence.
In support of their motion, the defendants argue that there is no genuine issue of material fact as to any of the four counts in the plaintiff's complaint. As to the innocent misrepresentation claim, the defendants argue that the plaintiff was in fact informed before the closing of the conditions she now complains of, that the disclosure report cannot serve as a warranty, and that the plaintiff cannot claim that she relied on or was induced by the representations of the buyer once she obtained her own inspection, which suggested various repairs and consultations. Finally, the defendants argue without citation that because the parties agreed to a reduction in sales price at the closing, such reduction reflected the plaintiff's agreement to purchase the property in its then condition. The defendants make the same arguments as to the second and third counts (negligent misrepresentation and fraudulent misrepresentation), adding that General Statutes § 20-327b does not govern a negligent misrepresentation action under these facts. Finally, as to the CUTPA claim, the defendants cite to a line of superior court cases concluding that, as a matter of law, CUTPA does not apply to the private sale of one's residence when such seller is not engaged in the business of selling real estate. CT Page 13351-ag
In support of their motion for summary judgment, the defendants have submitted the following evidence: (1) the signed and sworn affidavit of the defendants; (2) a copy of the purchase and sale agreement signed by the plaintiff and defendants; (3) a copy of the Residential Property Condition Disclosure Report signed by the plaintiff and the defendants; (4) a copy of the home inspection report signed by the plaintiff and dated August 14, 2002; and (5) a copy of the addendum to the purchase and sale agreement signed by the plaintiff and defendants, dated September 23, 2002.
In response, the plaintiff argues that the motion for summary judgment should be denied because genuine issues of material fact exist as to all four counts in the complaint. Specifically, the plaintiff disputes the characterization of the disclosure report, claiming that the basement condition now complained of was never revealed. The plaintiff also disputes that her home inspection report negates reliance on the disclosure report as a matter of law because her inspection was expressly unable to conclude anything about water penetration and suggested relying on the sellers' representations. As to the CUTPA claim, the plaintiff argues that there is a split of authority in Connecticut on the statute's application to private sales of real estate, and the defendants have failed to show that they are entitled to judgment as a matter of law.
In support of her objection, the plaintiff has submitted the following evidence: (1) a copy of the purchase and sale agreement signed by the plaintiff and defendants; (2) a copy of the home inspection report dated August 14, 2002 and signed by the plaintiff; (3) a copy of the Residential Property Condition Disclosure Report signed by the plaintiff and defendants; (4) the signed and sworn affidavit of Steve Jaworski, a heating technician for the plaintiff who observed the basement flooding; and (5) the signed and sworn affidavit of the plaintiff.
There are no allegations of oral misrepresentations in this case; the only representation that the plaintiff relies upon in her complaint are those in the disclosure CT Page 13351-ah report, which is a written report from the seller to the buyer required under General Statutes § 20-327b. "Our legislature enacted § 20-327b, otherwise known as the Uniform Property Disclosure Condition Act, to reduce the risk of miscommunication regarding residential property between a vendor and a prospective purchaser. The statute requires a vendor of such property to provide `a written residential condition report to the prospective purchaser at any time prior to the prospective purchaser's execution of any binder [or] contract to purchase . . .' General Statutes § 20-327b(a). Such a report must include a provision informing the purchaser that any representation made by the vendor in the § 20-327b report is limited to the vendor's actual knowledge. General Statutes § 20-327b(d)(2)(A). The statute requires every report to include a provision that encourages the potential purchaser to have the property inspected by a professional inspector. General Statutes § 20-327b(d)(2)(B). Furthermore, the § 20-327b report must inform the purchaser that any representation made by the vendor does not constitute a warranty by the vendor. General Statutes § 20-327b(d)(2)(D).
Since both parties have attached the same uncertified copies of the disclosure report and Purchase and Sale Agreement, there is no dispute as to the authenticity of their substance.
"At the same time that the legislature enacted this statute, it also enacted §§ 20-327d and 20-327e. These statutes underscore the legislature's intent with respect to statements in a § 20-327b report. Section 20-327d provides that § 20-327b does not create any new express or implied warranties by the vendor. It states that a vendor is not required to obtain a preconveyance inspection or a test with respect to the physical condition of the property. Moreover, § 20-327e reiterates that the representations made by the vendor are limited to information about which the vendor has actual knowledge.
"The legislative history of § 20-327b reinforces the conclusion that the information to be disclosed is limited to representations of fact about which the vendor has actual knowledge. Representative Mary V. Eberle stated that `[t]his bill will help to resolve many problems of miscommunications which frequently complicate and sometimes prevent residential closings from going forward by making it clear what a seller has disclosed to the buyer about the property." 32 H.R. CT Page 13351-ai Proc., Pt. 19, 1995 Sess., p. 6966. Representative Michael C. Fedele also explained that `this bill will resolve some of the communication issues that occur between a seller and a buyer and hopefully, loss of litigation occurs there . . .' Id., p. 6969. Additionally, Senator Louis C. DeLuca stated that a § 20-327b report `would be related to the seller's actual knowledge of the property only.' 38 S. Proc., Pt. 16, 1995 Sess., p. 5893.
"In sum, the function of a § 20-327b report is to diminish the risk of litigation by facilitating meaningful communications between a vendor and a prospective purchaser. It does not, however, require a vendor to assume the role of warrantor of conditions of which the vendor was in fact unaware." (Emphasis in original.) Giametti v. Inspections, Inc., 76 Conn.App. 352, 358-60, 824 A.2d 1 (2003).
I. Fraudulent Misrepresentation
The elements of fraudulent misrepresentation, are: "(1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment . . . Additionally, [t]he party asserting [fraud] must prove the existence of the first of the three elements by a higher standard than the usual fair preponderance of the evidence, which . . . [has been] described as clear and satisfactory or clear, precise and unequivocal." (Internal quotation marks omitted.) Miller v. Guimaraes, 78 Conn.App. 760, 780, 829 A.2d 422 (2003). "Fraud by nondisclosure, which expands on the first three of these four elements, involves the failure to make a full and fair disclosure of known facts connected with a matter about which a party has assumed to speak, under circumstances in which there is a duty to speak." Gelinas v. Gelinas, 10 Conn.App. 167, 173, 522 A.2d 295, cert. denied, 204 Conn. 802, 525 A.2d 965 (1987). The legislature has made it clear that § 20-327b imposes a duty on the seller of real estate to disclose those conditions that he has actual knowledge of and that the buyer has a cognizable claim for fraudulent CT Page 13351-aj misrepresentation if, despite that actual knowledge, there was a material nondisclosure and the buyer relied on that nondisclosure to her detriment.
In count three of the complaint, the plaintiff has alleged that the defendants did have actual knowledge of the defects, that they knew their representations were untrue, and that she relied on the representations to her detriment. In their motion for summary judgment, the defendants have argued that the plaintiff has not complained of any conditions that were not revealed to her in the disclosure report. Specifically, they reference paragraph 17 of the disclosure report where, under the heading "BASEMENT Water/Seepage/Dampness," the defendants wrote "Garage Door." Further, the defendants argue that there is no genuine issue of material fact as to her reliance (or, according to the defendants, her nonreliance) on those statements because she obtained her own home inspection which alerted her to the conditions she complains of prior to the closing. Specifically, they reference various sections of the inspection that report water damage to various parts of the house, including the basement windows, walls, floors, and water heater.
The plaintiff counters that genuine issues of material fact exist as to both actual knowledge and reliance. Specifically as to actual knowledge, the plaintiff references paragraphs 29 and 30 of the disclosure report, where, under the headings "ROT AND WATER DAMAGE problems? Explain," and "WATER DRAINAGE problems? Explain," the defendants checked "no." As to the disclosure in paragraph 17, the plaintiff, in her affidavit, testifies that she interpreted the words "garage door" to mean only a minor problem, rather than the 200 gallons of water she allegedly had to remove from the basement on December 20, 2002. As to reliance, the plaintiff cites to sections of her inspection report that encourage relying on the sellers' disclosure. Most relevantly for the purposes of this motion, she cites to Item 33 on the report, which states that "the potential for water in basement is not normally evident during a home inspection. Home-Work makes no evaluation about basement flooding. The Seller's disclosure is the best source regarding water in basement." CT Page 13351-ak
Genuine issues of material fact exist both as to whether the plaintiff had actual knowledge of the conditions complained of prior to the closing and whether the plaintiff reasonably relied on the representations of the disclosure report. Each party relies upon a different section of the disclosure report to support the proposition that the buyer did or did not have actual knowledge of the conditions complained of prior to closing. Similarly, each party relies upon a different section of the buyer's home inspection to support the proposition that the buyer did or did not reasonably rely on the disclosure report. See McClintock v. Rivard, 219 Conn. 417, 427, 593 A.2d 1375 (1991) ("[W]hether evidence supports a claim of fraudulent or negligent misrepresentation is a question of fact.") Under the standard of review for summary judgment, the plaintiff's claim is not barred as a matter of law and she has met her burden of showing there exists a genuine issue of material fact as to whether the plaintiff reasonably relied on those representations.
II. Negligent Misrepresentation
Connecticut has "long recognized liability for negligent misrepresentation. [Our courts] have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth . . . The governing principles are set forth in similar terms in § 552 of the Restatement (Second) of Torts (1977): `One who, in the course of his business, profession or employment . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." (Citations omitted; internal quotation marks omitted.) Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 575, 657 A.2d 212 (1995). "The plaintiff need not prove that the representations made by the [defendant] were promissory. It is sufficient . . . that the representations contained false information." (Internal quotation marks omitted.) Citino v. CT Page 13351-al Redevelopment Agency, 51 Conn.App. 262, 274, 721 A.2d 1197 (1998). "Accordingly, an action for negligent misrepresentation requires a plaintiff to prove that (1) the defendant made a misrepresentation and (2) the plaintiff reasonably relied upon that misrepresentation." Giametti v. Inspections, Inc., 76 Conn.App. 352, 364, 824 A.2d 1 (2003). "Whether evidence supports a claim of . . . negligent misrepresentation is a question of fact." (Internal quotation marks omitted.) Id.
In Giametti, the appellate court ruled that despite the fact that § 20-327b does not govern them, "[t]he legislative history clearly demonstrates that the legislature did not intend the enactment of § 20-327b to eliminate existing obligations of a vendor under Connecticut law." Giametti v. Inspections, Inc., 76 Conn.App. 362. See also Armin v. White, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 01 0275718 (March 9, 2004, Tanzer, J.) ("General Statutes § 20-327b does not support an action unless it is based on a seller's actual knowledge of a defect, but it does not preclude the common-law action of negligent misrepresentation.") Nevertheless, the court found that factually, it was clearly erroneous for the trial court to find that the plaintiff had reasonably relied on the seller's disclosure report. There, it was undisputed between both parties that while the plaintiff did obtain a home inspection, it did not uncover the condition complained of (ants) because the inspector was rushed and only spent an hour and twenty minutes in the home. Giametti v. Inspections, Inc., 76 Conn.App. 364.
Here, the facts of this case do not warrant such a finding by the court. In count two of the complaint, the plaintiff has alleged that there was a false statement of material fact made in the disclosure report, that the defendants knew or should have known that the statement was false, and that the plaintiff reasonably relied on the representations. As discussed supra, genuine issues of material fact exist as to the reasonableness of the plaintiff's reliance on the disclosure report. Accordingly, the motion for summary judgment is denied as to count two of the complaint. CT Page 13351-am
III. Innocent Misrepresentation
From the outset the plaintiff's first claim, while labeled `misrepresentation,' can only be described as `innocent misrepresentation' under Connecticut common law in order to set out a different cause of action from counts two and three (negligent misrepresentation and fraudulent misrepresentation). "A person is subject to liability for an innocent misrepresentation if in a sale, rental or exchange transaction with another, [he or she] makes a representation of a material fact for the purpose of inducing the other to act or to refrain from acting in reliance upon it . . . even though it is not made fraudulently or negligently." (Internal quotation marks omitted.) Gibson v. Capano, 241 Conn. 725, 730, 699 A.2d 68 (1997). In their motion for summary judgment, the defendants cite to Gibson for the proposition that when the buyer knows of a condition before signing the contract for purchase of a defendant's property, that buyer can no longer argue that they were induced to agree to a disclaimer clause as a result of the defendant's misrepresentation. In this case, as discussed supra, there exists a genuine issue of material fact as to whether the plaintiff knew of the condition before the closing. Further, the defendants have not met their burden of establishing that a clause disclaiming reliance by the buyer on the sellers' representations even exists in this purchase sale agreement. Therefore, the motion for summary judgment as to count one is denied.
IV. CUTPA
The Supreme Court has stated that "the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading . . . If it is clear on the face of the complaint that it is legally insufficient and that an opportunity to amend it would not help the plaintiff, we can perceive no reason why the defendant should be prohibited from claiming that he is entitled to judgment as a matter of law and from invoking the only available procedure for raising such a claim after the pleadings CT Page 13351-an are closed." (Citation omitted.) Larobina v. McDonald, 274 Conn. 394, 401-02, 876 A.2d 522 (2005).
In the plaintiff's objection to the defendant's motion for summary judgment as to count four (CUTPA), the plaintiff argues that summary judgment should not be granted because the majority of Connecticut superior courts have found that CUTPA applies to a single transaction. While this is a correct interpretation of the law, this analysis does not fully address the facts of the underlying case. "Although there is a split of authority in the Superior Court over whether or not CUTPA requires that there be more than one allegation of wrongdoing . . . the majority of superior court decisions . . . have held that a litigant does not need to allege more than a single act of misconduct in order to bring an action under CUTPA . . ." [U]sually, [however,] when CUTPA is held to apply to a single transaction the defendant is an entity or an individual engaged in a business activity which is at the heart of the complaint and the alleged violation . . . The split in authority is focused on whether CUTPA applies to a single private transaction by one who is not in the business of making such transactions . . ." (Emphasis added.) Advest, Inc. v. Carvel Corp., Superior Court, judicial district of Hartford, Docket No. CV 98 0585401 (September 21, 1999, Peck, J.) ( 25 Conn.L.Rptr. 518). Those selling their own personal residence in particular often fit into this latter category. While our supreme and appellate courts have not ruled on the issue, the majority of recent trial court decisions have found that CUTPA does not apply to the single sale of a personal residence by a seller not in the business of selling houses. See Zarikos v. Mannetti, Superior Court, complex litigation docket at Stamford, Docket No. CV 03 0196069 (October 4, 2004, Adams, J.); Henesy v. Quinn, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 02 0192664 (March 26, 2004, Lewis, J.) (noting that the Attorney General has taken the position that CUTPA does not apply to isolated non-business transactions); Gershberg v. Kean, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 99 0174316 (June 10, 2002, D'Andrea, J.) ( 32 Conn.L.Rptr. 305); Rancourt v. Janosko, Superior Court, judicial district of Fairfield, Docket No. CV 97 0339940 (February 4, CT Page 13351-ao 1999, Skolnick, J.) ( 23 Conn.L.Rptr. 73).
In the present case, it is undisputed that the conveyance of this property was a one-time sale of the defendants' residence, and that the defendants are not in the business of selling real estate. Therefore, it is clear on the face of the complaint that the claim is legally insufficient, and because such a defect could not be cured by repleading, the motion for summary judgment as to the CUTPA claim should be granted.
CONCLUSION
For the foregoing reasons, the evidence submitted by both parties shows material facts in dispute as to both actual knowledge by the defendant as well as reasonable reliance on the residential property disclosure report. However, it is undisputed that this action arises out of the single sale of a residence by the defendants who are not in the business of selling real estate. Accordingly, the defendants' motion for summary judgment as to the first three counts (misrepresentation) is denied, and the defendants' motion for summary judgment as to the fourth count (CUTPA) is granted.