Sunday, September 4, 2011

Pennsylvania Fraud in Home Purchase Plaintiffs' Verdict

Civil fraud in Pennsylvania often comes up in real estate transactions, specifically the sale of homes.  I am currently handling a number of residential fraud cases where my clients, the purchasers, received homes with significant defects that were not disclosed to them at the time of the sale.  Read my other posts on civil fraud in Pennsylvania at  Pennsylvania Civil Fraud Law and Pennsylvania Civil Fraud.

A good example of civil fraud claims in the purchase of a home happened in the case of Gonzalez v. Craig.  On Aug. 29, 2003, plaintiffs Steven R. Gonzalez and Wendy A. Clayton-Gonzalez paid $290,000 to defendants John J. Craig and Dana W. Craig for title to a residential property on the 4700 block of West Barlind Drive in Whitehall. In the disclosure statement, the Craigs indicated that they were aware of dampness in the basement laundry area after heavy rain, and that they attempted to repair or control the dampness by painting it with waterproof sealant paint.

According to the Gonzalezes, however, the Craigs failed to tell them of an inspection that they had conducted upon purchasing the residence in March 1999. The report cited signs of water penetration at the back foundation of the basement, evidenced by stains and mildew on the wall, and a damp odor which appeared to be pervasive throughout the house (a condition generally indicative of rotted and damp wood). Additionally, an electronic moisture reading indicated the paneling on one of the basement walls was wet at inspection. The inspection recommended that these areas be removed to eliminate the damp odor and the rotting, as well as the installation of a French drain.

The Gonzalezes sued the Craigs, claiming negligent and fraudulent misrepresentations and violation of the Unfair Trade Practices and Consumer Protection Law (fraud).

The Gonzalezes claimed that none of the conditions noted in the 1999 inspection were revealed in the sellers' disclosure statement and none of the suggested remedies to address those conditions were ever undertaken by the Craigs. Plaintiffs' counsel argued that the defendants' representations with regard to the condition of the basement and their experience with water infiltration were totally and completely false and designed to mislead the plaintiffs.

The plaintiffs' engineering expert, Jack G. Murray, opined that the Craigs had knowledge that the water problems existed from the 1999 inspection report and four years of residence. During those four years, the couple made no substantive steps to remedy the problems identified in the report, said Murray.

The defendants denied the allegations. Defense counsel contended that the plaintiffs were advised of water-infiltration issues on the disclosure statement, conducted numerous walk-throughs of the subject property, hired a professional to conduct an inspection of the subject property, attended the inspection with the retained professional, and were advised by the professional in the inspection report of various defects and/or deficiencies regarding the property.

The jury found that the defendants did not make fraudulent misrepresentations, but that they did made negligent misrepresentations. Jurors found that the plaintiffs justifiably relied upon the negligent misrepresentations, which were a factual cause of the plaintiffs' alleged damages. The jury further found that the plaintiffs were 30 percent contributorily negligent and awarded them $61,195.84, which was reduced to $42,837.09 after comparative liability was applied.

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1 comment:

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