State of New York
Supreme Court : County of Monroe

- against -

Index No. 2001/10939

This opinion is uncorrected and is subject to revision in the official Reports

ANDREW V. SIRACUSE, J.

Near the beginning of the film version of The Grapes of Wrath a group of dispossessed farmers are told that the banks foreclosing on them have no choice; they too are subject to forces they can't control. "Well," says one farmer, holding his rifle, "who do we shoot?" Something similar must be going through the thoughts of the plaintiff here. All three defendants--the original owners of the property she bought, their realtor, and the relocation company that bought from the original owners and sold to the plaintiff--deny that they could have any responsibility for her damages.

The plaintiff has suggested, in her summary judgment motion, that the court grant her judgment and require the defendants to sort out liability questions later. This the court declines to do. It does not, however, find the arguments of all of the defendants equally persuasive. The original owners had known of preexisting ice damage to the roof and had been informed that this would require a special assessment. They concealed this information and misrepresented the damage to the roof to the relocation company and thus to the plaintiff, and the owners made these representations knowing they were false and knowing that they would be relied upon. They are liable to the plaintiff for their misrepresentations.

The relocation company, for its turn, made no representations upon which plaintiff relied. It was as much a victim of the owners' misrepresentations as the plaintiff was, and it properly claimed to be relying on the owners' statements. It is not required to vouch for the accuracy of those statements and is not liable.

The case of the realtor is more complicated factually, as the owners claim that they sent the realtor a copy of the letter disclosing the true state of affairs. The realtor denies this. The realtor's liability, therefore, cannot be resolved as a matter of law.

The underlying facts are simple. In June of 2000 the plaintiff bought a house on East Avenue, in a condominium development called the Crescent. A month later she received notice of a meeting to discuss the amount of a special assessment needed to repair ice damage to the complex's roof. A special assessment of $29,500 was eventually imposed in June of 2001, a year after closing. The plaintiff had not known anything about the ice damage, and in fact had been assured that there were no special assessments pending before she entered into the contract of sale.

There is something of a chain of parties among the defendants. One of the Olivers, the original owners, was being relocated by an employer. Because the property did not sell immediately, the Olivers sold it to Cendant Mobility Services, a relocation firm that buys properties in slow markets and then resells them. Cendant, in turn, sold it to the plaintiff.

The flow of information among the defendants is thus of great importance. The owners admit that they received a letter in April 2000, before the sale, which stated, in part:

In the fiscal year ending November 30, 1999, we spend over $20,000 *** Much of that expenditure is attributable to roof leaks. In the current year we have already spent over $9,000 on roof repairs alone. We expect this to continue at close to $2,000 a month. *** It is clear we have a problem that cannot be dealt with piecemeal.

We do not yet know what this will cost, but we have been told to expect it to be more than $5,000 per unit. This will require a special assessment.

The owners claim that they sent a copy of this letter to the realtor. The realtor, in turn, does not state whether or not she received this letter.

In spite of the utterly clear language in this letter, the Olivers filled out a disclosure form for the relocation firm that stated that no special assessment existed and which volunteered the statement that, while there had been moderate ice breakup on the roof and a leak in the last winter, the results were "very insignificant." This was absolutely false, and the Olivers' admitted receipt of the April letter establishes beyond any doubt that they knew this representation was false when they made it. The owners now claim that this letter merely suggested the possibility of an assessment; but this interpretation is simply inconsistent with the letter's plain language.

The disclosure form stated that "prospective Buyers may rely on this information in deciding whether and on what terms to purchase the property." Cendant, in turn, furnished this statement to the plaintiff, who acknowledged its receipt and also acknowledged her understanding that Cendant, as a relocation agent, "has limited first-hand knowledge of the property." The plaintiff agreed she was buying the property "in 'As-Is' condition, subject only to any specific items set forth in this agreement."

Upon whom does responsibility fall, if anyone? The defendants would prefer that the rule be one of caveat emptor; but the duty to inspect property before purchase does not relieve the seller of all liability:

It is well accepted that "the rule of caveat emptor *** is applied with certain restrictions, and is not permitted to obtain in a case where it is plain [that] it was the duty of the vendor to acquaint the vendee with a material fact known to the former and unknown to the latter" (Scharf v Tiegerman, 166 AD2d 697, citing Rothmiller v Stein, 143 NY 581, 592).

Cendant, for its part, clearly did nothing but pass on the Olivers' disclosure to the plaintiff, and it explicitly disclaimed any duty to investigate further. It assumed no responsibility and made no representations. The court declines to impose any such duty on Cendant, and holds that its cross-motion for summary judgment should be granted.

The Olivers, on the other hand, fraudulently misrepresented the condition of the roof and the likelihood of a special assessment. Their defence is contained in the two grounds upon which they move in turn for dismissal of the complaint. The first is the distinction between a present assessment and one in the future. It is true that a mere statement that no special assessment was pending in June 2000 might not have been actionable, because the question of the present existence of an assessment is different from that about the inevitability of one to be imposed in the future for expenses incurred in the past. But such logic chopping is not necessary here, because the Olivers made affirmative representations about the very subject matter of the upcoming assessment. The answer they gave to the form's question about special assessments is thus of secondary importance.

The Olivers also assert that there is no privity between them and the plaintiff. But it is well established that "[I]t is not necessary that there be privity of contract between the one committing a fraud and a person damaged as a result thereof, in order to entitle the latter to recover therefor" (60A NY Jur2d, Fraud and Deceit § 189, at 307). The Olivers benefitted from the valuation given their property by both Cendant and the plaintiff, and understood that Cendant, while technically a buyer, was in fact merely taking the property to sell to a third party. The deception practiced by the Olivers was meant to be relied upon not only by Cendant but by the ultimate purchaser or the property. The plaintiff, therefore, had a right to rely on their representations and to seek recovery upon the discovery of their falsity (see, also, op. cit. § 181). Viewing the evidence in the light most favorable to the Olivers, the court is nonetheless compelled to grant summary judgment to the plaintiff.

There remains one more group of defendants, the realtor and her firm. In general, realtors are not liable to buyers. However, realtors have "a duty not to conceal or misrepresent known facts, *** [though] no duty to investigate unknown facts and report them to plaintiffs" (Sirles v Harvey, 256 AD2d 1227, 1228; cf., Marcy v Roser, 269 AD2d 855). Whether or not the realtor knew of the April 2000 letter, and thus knew that the Olivers' disclosure form was false, is a question of fact. It cannot be decided, therefore, whether she concealed or misrepresented the status of the roof and the upcoming special assessment during the course of her representation of the Olivers.

The plaintiff is therefore entitled to summary judgment against the Olivers. Cendant is entitled to an order dismissing the complaint with respect to itself. The motion and cross-motion regarding the remaining defendants are both denied. Mr. Frank may prepare the order, with a single bill of costs payable by the Olivers to his client.

DATED: Rochester, New York

October 22, 2002

Andrew V. Siracuse, J.S.C.

This opinion is not available for publication in any official or unofficial reports, except the New York Law Journal, without the approval of the State Reporter or the Committee on Opinions (22 NYCRR 7300.1)

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