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HomeMy WebLinkAbout97-5886 equityCARRIE E. ROUSH, Plaintiff VS. MICHAEL J. JANESKO and E. JADE JANESKO, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 97-5886 EQUITY CIVIL ACTION - EQUITY IN RE: TRIAL IN EQUITY BEFORE HESS, J.. VERDICT AND NOW, this day of November, 1999, after trial without a jury and careful consideration of the testimony adduced, on the causes of action of the plaintiff against the defendants, we find in favor of the defendants. On the cause of action of the defendants against the plaintiff, we find in favor of the plaintiff. BY THE COURT, Richard C. Snelbaker, Esquire William S. Daniels, Esquire For the Plaintiff ss, J. Benjamin Warner, Esquire For the Defendants Court Administrator CARRIE E. ROUSH, Plaintiff VS. MICHAEL J. JANESKO and E. JADE JANESKO, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 97-5886 EQUITY CIVIL ACTION- EQUITY IN RE' TRIAL IN EQUITY BEFORE HESS, J. OPINION AND ORDER In the original complaint filed in this case, the plaintiff sought specific performance of a contract to convey the property located at 3960 Enola Road in Upper Frankford Township, Cumberland County. The complaint has been amended to aver fraud and the plaintiff no longer seeks specific performance. Following a nonjury proceeding, we find the following to be the facts. The plaintiff and defendants executed the sales agreement for the property located at 3960 Enola Road on or about July 9, 1999. Pursuant to the agreement, settlement was scheduled for September 30, 1997. The parties did not settle on that date and an action in specific performance was filed approximately one month later. In the meantime, the defendants had professed to have concems that the sales agreement inadequately reserved a right-of-way through the subject property to their upper tract of land. Eventually, however, the defendants advised the plaintiff that they would perform under the contract and sell the subject property. The plaintiff declined on the grounds that financing had lapsed and that she had since learned that the septic system servicing the property was defective. It is the defective septic system which is the subject of the 97-5886 CIVIL fraud in this case. The defendants purchased the Enola Road property from the Estate of Richard P. Goerlitz by agreement dated June 14, 1994. Representatives of the estate had become aware of problems with the septic system and were willing to sell the property "as is" for a much reduced price. The agreement reflected that the defendants were "aware of the septic problems." An addendum to the June 14th agreement provided, explicitly, a confirmation of the knowledge of the buyers that "the septic problems may not be repairable." There is no indication that the defendants received copies of reports on the septic system. After their purchase of the property, the defendants utilized the structure located on the property as a "tack" store. In April of 1997, they listed the subject property for sale with B & H Agency. In their disclosure statement, a copy of which was made available to and signed by the plaintiff, the defendams revealed that the septic system was clogged with a very large amount of roots, that crystals were being used to dissolve the roots and that the septic system did not pass inspection. This information comported with their then current understanding of the existing septic problems. After the commencement of the initial equity action, the defendants procured the services of D.E.W. and Sons Septic Service. That service pumped the tank and inspected the system and certified that it was in "good working order." On or about December 22, 1998, the plaintiff filed an amended complaint alleging separate counts for specific performance, fraud, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. Section 201-1 et seq., and statutory attorneys' fees pursuant to 42 Pa.C.S.A. Section 2503(7). The defendants thereafter filed an answer with 97-5886 CIVIL new matter and counterclaims for intentional infliction of emotional distress, rescission and trespass. The trespass claim contended that in September of 1997, the plaintiff, her real estate agent and appraiser emered the defendants' property without authorization or permission. The defendants further contend that in the course of this trespass, damage was done to the screens and aluminum siding of the building. They also claim that there was damage done to a metal mg rack. In early May of 1999, the defendants filed a praecipe voluntarily withdrawing their claim for intentional infliction of emotional distress and rescission. On June 6, 1999, the plaintiff withdrew her claim for specific performance. The remaining claims, therefore, have to do with the plaintiff' s contentions of fraud with regard to the septic system and the defendants' counterclaim for trespass upon the property. As important as the claims which remain are the claims that do not. We underscore that this is not an action for breach of contract or rescission. In these kinds of cases, the remedy would involve the return of purchase money or a claim for damages relating to the septic system. The claim before the court is that by engaging in fraudulent conduct the defendants caused the plaintiff to expend monies and incur other losses in connection with the real estate contract ~vhich, but for the fraud, she would not have suffered. We note that if the plaintiff had not wished to take a chance on a septic system which had not passed inspection and/or on a septic system which the sellers were not willing to repair, she could have, according to the terms and conditions of the on-site sewage addendum to her sales agreement, declared the agreement to be null and void. That is not, however, what happened in this case. The legal principles which govern in this action were summarized in the case of Sewak v. 97-5886 CIVIL Lockhart, 699 A.2d 755,759 (Pa. Super. 1997), as follows: In real estate transactions, fraud arises where a seller knowingly makes a misrepresentation, undertakes a concealment calculated to deceive, or commits non- privileged failure to disclose. DeJoseph v. Zambelli, 392 Pa. 24, 25-26, 139 A.2d 664, 647 (1958). Fraud is a generic term used to describe "anything calculated to deceive, whether by single act or combination, or by suppression of truth, or suggestion of what is false, whether it be by direct falsehood or by innuendo, by speech or silence, word of mouth, or look or gesture." Moser v. DeSetta, 527 Pa. 157, 163,589 A.2d 679, 682 (1991). To recover on a claim of fraud a plaintiff must prove by clear and convincing evidence six elements: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5)justifiable reliance on the misrepresentation; and (6) the resulting injury was proximatey caused by the reliance. Gibbs v. Ernst, 538 Pa. 193,207, 647 A.2d 882, 889 (1994) (footnote omitted). Concealment of a material fact can amount to actionable fraud if the seller intentionally concealed a material fact to deceive the purchaser. Moser, 589 A.2d at 682; Wilson v. Donegal Mutual Insurance Company, 410 Pa. Super. 31, 41,598 A.2d 1310, 1315 (1991). "[A]ctive concealment of defects known to be material to the purchase is legally equivalent to an affirmative misrepresentation." Sevin v. Kelshaw, 417 Pa. Super. 1, 11,611 A.2d 1232, 1237-1238 (1992) (emphasis in original). However, mere silence without a duty to speak will not constitute fraud. Wilson, 598 A.2d at 1316. Section 550 of the Restatement (Second) of Torts provides that vendor of real property, or its agent, may be liable for failure to disclose "material information" 4 97-5886 CIVIL concerning the property. Roberts v. Estate of Barbagallo, 366 Pa. Super. 559, 569, 531 A.2d 1125, 1130 (1987). Section 550 reads' § 550 Liability for Fraudulent Concealment One party to a transaction who by concealment or other action intentionally prevents the other from acquiring material information is subject to the same liability to the other, for pecuniary loss as though he had stated the nonexistence of the matter that the other was thus prevented from discovering. {}550, Restatement (Second) of Torts. "Liability under this section is encompassed by the Supreme Court's rule that fraud may arise by: 1) the making of a knowingly false representation of fact; 2) an intentional concealment of true facts which is calculated to deceive the other party; or 3) a nonprivileged failure to disclose certain facts to the other party." Roberts, 531 A.2d at 1130. To be liable under section 550 of the Restatement, the concealment must be intentional and must relate to material information. Id. at 1130-1131. A misrepresentation or concealment will be considered "material" if "it is of such character that had it not been made, ... the transaction would not have been consummated." Sevin, 611 A.2d at 1237. Finally, liability for fraudulent concealment exists ifa defendant prevents a plaintiff from making an investigation he would have otherwise made. Roberts, 531 A.2d at 1131. Lockhart, 699 A.2d at 759-760. As noted above, a fraud claim must be established by "clear and convincing" evidence. "Clear and convincing evidence," in turn, is defined as testimony that is so "clear, direct, weighty, and convincing as to enable the trier of fact to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue." In the matter of Read, 693 A.2d 607, 609 (Pa. Super. 1997). 97-5886 CIVIL Were this a breach of contract action, the various contentions of the plaintiff with regard to misrepresentations having to do with the septic system could be established by a mere preponderance of the evidence. In this case, as the sale was never consummated, the plaintiff has sustained no damages by virtue of the ownership of a property with a defective septic system. Instead, the plaintiff claims damages by virtue of her reliance on misrepresentations which she claims are fraudulent. In this regard, she is put to a higher burden of proof and one which she has not met. It is true that when they purchased the property, the defendants were aware that something was seriously amiss with the septic system. During their tenancy of the property, the on-site sewer system was subject to only light use as the structure was a shop as opposed to a residence. In the end, the defendants disclosed that the septic field was clogged with roots, that chemicals were required to address the situation, and that the septic system had not passed inspection. It certainly can be argued that the defendants should have been more forthcoming and, perhaps, more proactive in warning the plaintiff concerning matters pertaining to the septic system. On the other hand, the statements which they made were not misrepresentations. To the contrary, their description of the septic system was accurate. In any event, the defendants are not guilty of the sort of concealment which would have prevented the plaintiff from making an investigation had she chosen to do so. We cannot rule out that the defendants attempted to underplay the problems with the septic 'system. By the same token, the testimony supporting a conclusion that they have perpetrated a fraud is not clear and convincing. The failure of the plaintiff to establish fraud precludes a recovery under the Unfair Trade 97-5886 CIVIL Practices and Consumer Protection Law, 73 P.S. 201-1 et seq. Moreover, we agree with the defendants that this Act permits a cause of action where a person suffers loss as a result of a purchase of goods or services. Here there was no purchase. As we have repeatedly observed, the sale in this case was not consummated. Finally, the plaintiff seeks attorney's fees under 42 Pa.C.S.A. 2503(7) for alleged obdurate, vexatious and dilatory conduct during the course of the litigation. While the plaintiff may have found the defendants' conduct vexing prior to suit, we are not satisfied that the defense of the instant litigation has been either obdurate or dilatory. In her brief, plaintiff complains, inter alia, that defense counsel refused to accept service of the complaint on behalf of his clients, that preliminary objections were filed, that a motion for summary judgment resulted in a denial by the court without opinion, and that the defendants refused to consent to the plaintiff' s request to file an amended complaint. Finally, the plaintiff contends that the defendants have filed a specious counterclaim. While we find the counterclaim to be unfounded, we are hard-pressed to categorize it as specious. Moreover, given the extent of damages claimed in the fraud case and the fact that we, today, find in favor of the defendants, their attempts to resolve this matter at an earlier stage by the filing of motions can hardly be said to have been dilatory. As we note above, we find in favor of the plaintiff on the defendants' counterclaim. If there was damage to any of the defendants' screens or siding, there is no proof that it was caused by the plaintiff. VERDICT AND NOW, this 30- et day of November, 1999, after trial without a jury and 97-5886 CIVIL careful consideration of the testimony adduced, on the causes of action of the plaintiff against the defendants, we find in favor of the defendants. On the cause of action of the defendants against the plaintiff, we find in favor of the plaintiff. BY THE COURT, Richard C. Snelbaker, Esquire William S. Daniels, Esquire For the Plaintiff K ss, J. Benjamin Warner, Esquire For the Defendants Court Administrator