Day on Torts
Where the correct acreage of a piece of real property was contained on a publicly recorded plat, plaintiffs could not maintain a cause of action for misrepresentation or concealment based on the seller or realtor stating that the property was larger than it actually was.
In Archer v. The Home Team, Inc., No. M2019-01898-COA-R3-CV (Tenn. Ct. App. Oct. 15, 2020), plaintiffs alleged that the seller and realtor of a piece of property they purchased represented that the property was 1.9 acres, when it was actually 1.16 acres. They filed suit against both the seller and realtor for multiple causes of action, including misrepresentation, concealment, and breach of contract. The trial court granted summary judgment to the defendants based on the fact that the correct acreage was listed on a publicly recorded plat, and the Court of Appeals affirmed.
For claims of either intentional or negligent misrepresentation, a plaintiff must show that he reasonably relied on the alleged misrepresentations. (internal citations omitted). In relation to the seller, plaintiffs alleged that the seller made one oral misrepresentation that the property was around 2 acres, but testimony showed that this statement was made “between middle of March to sometime before closing.” Plaintiffs, however, had signed the purchase and sale agreement on February 23rd, which was well before this oral statement was made. The Court thus ruled that “no reasonable trier of fact could find that Plaintiffs relied on [the seller’s] alleged misrepresentation of the acreage when deciding to purchase the property” and affirmed summary judgment.
In relation to the realtor, plaintiffs claimed that he misrepresented the acreage both orally and through the MLS listing. The realtor admitted that he “negligently misrepresented the acreage” as he referred to the wrong lot in the listing, but he asserted that the Disclaimer Notice that plaintiffs signed refuted any claims that they relied on his representations. This disclaimer contained language advising the buyer/ plaintiffs not to rely on MLS listings for acreage information and encouraging them to “secure the services of a licensed surveyor.” Further, just above plaintiffs’ signatures there was a bold paragraph stating that “the buyers and sellers acknowledge that they have not relied upon the advice, casual comments, or verbal representations of any real estate licensee relative to any of the matters itemized above or similar matters.” Based on this Disclaimer Notice signed by plaintiffs, the Court ruled that “no reasonable juror could find that Plaintiffs relied on [the realtor’s] representations or that Plaintiffs’ reliance on the MLS data was justified,” and summary judgment was affirmed.
Next, the Court considered plaintiffs’ claim for fraud by concealment based on the assertion that defendants “hid the correct acreage from Plaintiffs by failing to inform Plaintiffs of the recorded plat’s existence and by withholding pertinent information needed to locate the plat.” Plaintiffs also argued that even if they had seen the plat, they would not have received the correct information because the realtor had referred to lot 1 in the MLS listing, but the property they purchased was actually lot 2.
The Court explained:
A defendant is liable for non-disclosure or concealment when the defendant has a duty to disclose a known fact, the defendant fails to disclose that fact, and the plaintiff reasonably relies on the resulting misrepresentation, which causes injury. There is no duty to disclose a fact where ordinary diligence would have revealed the undisclosed fact. …Concealment is withholding information asked for, or making use of some device to mislead, thus involving act and intention. …[W]hen one who is in possession of all material facts, either actually or constructively, proceeds with the purchase of realty, notwithstanding such knowledge, such a person cannot thereafter recover on the basis of fraud, misrepresentation, or concealment of the information to which all parties had equal access. …All recorded instruments such as deeds and judgments shall be notice to all the world from the time they are noted for registration and shall take effect from such time.
(internal citations and quotations omitted).
In its analysis, the Court pointed out that ten months before plaintiffs entered into the purchase agreement, a plat was recorded at the local register of deeds showing the property and stating that lot 2 contained 1.16 acres. Further, the Court stated that it was “disingenuous” for plaintiffs to assert that they did not know they were purchasing lot 2, as the only erroneous reference to lot 1 was in the MLS listing, but all site visits and conversations had been about lot 2 and “it was undisputed that plaintiffs knew the physical location of the property.” Based on these facts, the Court ruled that plaintiffs’ concealment claim failed because “defendants did not have a duty to disclose the acreage of the property because publicly recorded information is discoverable through ordinary diligence” and because plaintiffs had constructive knowledge of the accurate acreage though the recorded plat. Summary judgment on this claim was therefore affirmed.
After determining that the doctrine of merger applied to plaintiff’s breach of contract claim, the Court of Appeals also affirmed summary judgment on that allegation and the trial court’s judgment was affirmed.
This case illustrates that justifiable reliance is an important element in a misrepresentation case. When evaluating a misrepresentation or concealment case, it is important to consider what information was publicly available regarding the alleged misstatement.
NOTE: this opinion was released a little over three months after oral argument.