Section 11 Cases in Which Buyers Do Not Prevail

• Library: Consumer Law and Practice 2010

In the cases discussed below, in which the buyers do not succeed in their misrepresentation claims, an unspoken balancing of the equities appears to influence the outcome, as the reader will discern.

The purchasers of a home that had disastrous damages from a broken water line, resulting in the collapse of the first floor of the home, lost their case alleging misrepresentation against the sellers when the court found that the statements in the sellers' disclosure statement that the house had not flooded in the past were not false. Sheppard v. East, 192 S.W.3d 518 (Mo. App. E.D. 2006). The sellers disclosed that: the basement was "[d]amp during 93 flood," "Property located in flood plain," "Did not flood in 93 - House has never had water." Id. at 520. More than a year after the closing, a water line burst, and water flooded the property for four days, causing the first floor of the property to collapse. The buyers sued the sellers, their own insurance company, and the property inspector, later dismissing all defendants except the seller. Without discussing the disconnect between the allegation that the seller failed to disclose prior flooding and the fact that the house was damaged by a broken water line (two apparently different causes), the court of appeals affirmed the trial court's determination that the seller had not made a false disclosure. The seller (actually the attorney in fact for the seller under a power of attorney) was also held to be entitled to an award of attorney fees under the sale contract's provision for fees to the prevailing party.

A buyer who did not have any actual damage to her house sued the seller of the lot on which she built her home for fraudulent misrepresentation and negligent misrepresentation because water flowed across her yard in wet weather. Wengert v. Thomas L. Meyer,Inc., 152 S.W.3d 379 (Mo. App. E.D. 2004). The buyer testified that the value of her property was "zero" because of the problem. The lot was sold without a disclosure statement, and the evidence at trial did not establish that the seller had any actual or constructive knowledge of the water problem. The court of appeals agreed with the buyer that, "[f]raudulent misrepresentation and negligent misrepresentation can arise from a person's affirmative misrepresentations or from passive nondisclosure." But the court went on:

But nondisclosure is only actionable when the defendant had a duty to disclose the information. . . . [T]o recover for nondisclosure, the...