Chopp v. Welbourne & Purdy Agency, Inc.

• Decision Date: 17 December 1987
• Citation: 522 N.Y.S.2d 367,135 A.D.2d 958
• Court: New York Supreme Court — Appellate Division
• Parties: William R. CHOPP, Respondent, v. WELBOURNE & PURDY AGENCY, INC., et al., Defendants, and Joan M. Rickett, Appellant.

Page 367

522 N.Y.S.2d 367

135 A.D.2d 958

William R. CHOPP, Respondent, v. WELBOURNE & PURDY AGENCY, INC., et al., Defendants and Joan M. Rickett, Appellant.

Supreme Court, Appellate Division Third Department.

Dec. 17, 1987.

Della Ratta & Palmiotto (Michael J. Palmiotto, of counsel), Schenectady, for appellant.

Gibbons & Burke (Kenneth T. Gibbons, of counsel), Scotia, for respondent.

Before MAHONEY, P.J., and KANE, WEISS, MIKOLL and LEVINE, JJ.

MAHONEY, Presiding Justice.

Appeal from a judgment of the Supreme Court (Graves, J.), entered December 18, 1986 in Schenectady County, upon a decision of the court, without a jury, in favor of plaintiff.

In December 1980, defendant Joan M. Rickett listed her home, located in Schenectady County, for sale with defendant Welbourne & Purdy Agency, Inc., a real estate brokerage firm. The listing described the condition of the house as "excellent". Plaintiff expressed an interest in buying the home, had several discussions with Rickett and defendant Corrine J. Cazer, the real estate agent, and visited the home on a number of occasions. According to plaintiff, there were discussions concerning the roof of the house and the heating/air conditioning system. The parties agreed to a sale of the house and executed a contract which contained an "as is" clause. Soon after the parties closed in January 1981, plaintiff discovered serious problems with the heating/air conditioning system and the roof, which necessitated substantial repairs.

Plaintiff commenced this action against defendants alleging that they had made knowingly false representations regarding the roof and the heating/air conditioning system which induced him to purchase the house. After a nonjury trial, Supreme Court found that closer examination by plaintiff of the heating/air conditioning system might well have revealed the problems and, accordingly, rejected plaintiff's claim regarding this matter. Plaintiff does not appeal from this finding. The court further found that Rickett misrepresented the condition of the roof and that plaintiff could not reasonably have discovered such a fact. Thus, Rickett was found liable to plaintiff for the cost of repairing the roof. Rickett appeals from the judgment, claiming that there was insufficient proof of fraud and that the "as is" clause bars the action.

To establish a cause of action for actual fraud, a plaintiff must establish a representation of material fact which is untrue and known to be untrue or recklessly made, offered to deceive the other party and induced the other party to rely upon it to his injury (Jo Ann Homes at Bellmore v. Dworetz, 25 N.Y.2d 112, 119, 302 N.Y.S.2d 799, 250 N.E.2d 214; Bailey v. Diamond Intl. Corp., 47 A.D.2d 363, 365, 367 N.Y.S.2d 107). The party alleging fraud in the inducement bears the burden of proving the above elements by clear and convincing evidence (Mix v. Neff, 99 A.D.2d 180, 183, 473 N.Y.S.2d 31). Further, "as is" or general merger clauses in a contract do not shield a defendant from judicial inquiry into specific allegations of fraud in the inducement of the contract (Caramante v. Barton, 114 A.D.2d 680, 682, 494 N.Y.S.2d 498).

Plaintiff testified that when he inquired as to water stains on a wall of the house near the ceiling, Rickett told him that there had been a leak, but the roof had subsequently been...