Richard v. A. Waldman & Sons, Inc.
155 Conn. 343 (1967)
Rule of Law:
A seller of real estate who makes a material misrepresentation of fact is liable for damages, even if the misrepresentation was not made with knowledge of its falsity, when the seller has special means of knowing the truth and the buyer reasonably relies on the representation.
Facts:
- A developer corporation (defendant) entered into a written agreement to sell a model home and lot to the plaintiffs.
- The sales agreement stated the sale was subject to zoning ordinances.
- At the closing, the defendant provided the plaintiffs with a plot plan, prepared by a surveyor, showing the house was located 20 feet from the southern property line, in compliance with zoning regulations.
- Both the defendant and the plaintiffs were unaware that the plot plan was incorrect.
- Approximately four months after the sale, the defendant discovered that the house was actually only 1.8 feet from the southern boundary line, which violated the town's sideyard zoning requirement.
- The misplacement of the house resulted in trespass upon the adjoining property when using the back door.
Procedural Posture:
- The plaintiffs sued the defendant corporation in a trial court on three counts: rescission, damages for false representations, and breach of warranty.
- The plaintiffs withdrew the rescission and breach of warranty counts at trial.
- The trial court found for the plaintiffs on the count of false representation and awarded damages.
- The defendant corporation, as appellant, appealed the trial court's judgment to this court.
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Issue:
Does a developer's material misrepresentation of fact regarding a property's compliance with zoning ordinances give rise to liability for damages, even if the developer was unaware of the representation's falsity at the time it was made?
Opinions:
Majority - Cotter, J.
Yes, a developer's material misrepresentation of fact gives rise to liability for damages even if made without knowledge of its falsity. An innocent misrepresentation is actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth. Here, the defendant, as a professional real estate developer, had special means of knowledge regarding the location of the structure on the lot. The plaintiffs were entitled to rely on the defendant's representations, which were a matter peculiarly relating to its business. The misrepresentation was akin to a breach of warranty, and it would be unjust to permit the defendant to retain the benefits of a bargain induced by a material misrepresentation upon which the plaintiffs relied. The merger doctrine does not bar this claim, as the action is based on a misrepresentation that induced the contract, not a breach of the contract itself.
Analysis:
This decision solidifies the principle that professional sellers in specialized fields, such as real estate development, are held to a higher standard of accuracy in their representations to buyers. It blurs the line between innocent and negligent misrepresentation by imposing liability on a seller who 'ought to know' the truth, regardless of actual knowledge or fraudulent intent. The case serves as a strong protection for consumers, affirming their right to rely on the expertise of professional vendors. Future cases involving misrepresentation by experts will likely cite this case to argue that a claim of 'innocent mistake' is not a sufficient defense when the fact was within the expert's special means of knowledge.
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