Legal Update 2020
Instructor: John Henderson JT@grar.com
Buyers Reasonably Relied on Misrepresentations
Briggs v. Kidd & Leavy Real Estate Co., 2018 Mich. App. LEXIS 3226 (Ct. App. Mich., Sept. 25, 2018) (2018)
Court of Appeals of Michigan
Facts: Buyers thought that the home they purchased was built over two lots (lots 5 and 6) and included an adjacent garden lot (lot 7). The MLS posting indicated that all three lots were included and contained photographs of the garden. The buyers alleged that their real estate agent confirmed that the “additional” garden lot was included and later sent them an email addressing its potential future value. However, the purchase contract included only lots 5 and 6. The previous owners had sold lot 7 the year before. Apparently, the listing broker did not update the MLS listing or remove the garden lot pictures. After closing, the buyers sued their agent and brokerage company for fraud, negligent misrepresentation, breach of fiduciary duty, and violation of state consumer protection and real estate licensing laws. A trial court entered a $100,000 judgment for the buyers. The brokerage company appealed.
Issue: Whether the buyers justifiably relied on the misrepresentations.
Held: Judgment affirmed, in part. Generally, there can be no fraud if the complaining party had the means to determine the truth, but only when the party is presented with information that it chose to ignore or there is some other indication that further inquiry was needed. The buyers’ agent confirmed that the garden lot was included and provided an analysis of its value. After receiving a preliminary title report the buyers asked why only two lots were being conveyed, but the buyers’ agent provided incorrect information that “would have caused a reasonable person to conclude that the garden lot was included ....” Therefore, the buyers met their burden of proving fraud and negligent misrepresentation. The $100,000 damage award was correct because the previous sale of the garden lot to the neighbors at that price was an open market, arms-length transaction. However, summary disposition should have been granted to the brokerage company on the buyers’ consumer protection and real estate licensing law claims because those statutes do not confer a private right of action.