Club Valencia Homeowners Ass'n, Inc. v. Valencia Associates, s. 83CA0528

• Decision Date: 04 April 1985
• Docket Number: Nos. 83CA0528,83CA1398,s. 83CA0528
• Citation: 712 P.2d 1024
• Parties: CLUB VALENCIA HOMEOWNERS ASSOCIATION, INC., a Colorado corporation, P.J. Scardino, Robert J. Krusemark, and Robert Fitzgerald, Plaintiffs-Appellees, v. VALENCIA ASSOCIATES, a General Partnership, Defendant-Appellant. and VALENCIA ASSOCIATES, a General Partnership, Plaintiff-Appellant, v. PODOLL AND PODOLL, P.C., Defendant-Appellee. . III
• Court: Colorado Court of Appeals

Page 1024

712 P.2d 1024

CLUB VALENCIA HOMEOWNERS ASSOCIATION, INC., a Colorado

corporation, P.J. Scardino, Robert J. Krusemark, and Robert Fitzgerald, Plaintiffs-Appellees, v. VALENCIA ASSOCIATES, a General Partnership, Defendant-Appellant. and VALENCIA ASSOCIATES, a General Partnership, Plaintiff-Appellant, v. PODOLL AND PODOLL, P.C., Defendant-Appellee.

Nos. 83CA0528, 83CA1398.

Colorado Court of Appeals,

Div. III.

April 4, 1985.

As Modified on Denial of Rehearing

Oct. 3, 1985.

Certiorari Denied (Valencia) Jan. 21, 1986.

Podoll & Podoll, P.C., Richard B. Podoll, Robert C. Podoll, Denver, for plaintiffs-appellees and defendant-appellee.

James R. Benson, P.C., James R. Benson, Jr., Denver, for Valencia Associates.

METZGER, Judge.

Defendant Valencia Associates, a General Partnership (Valencia) appeals the trial court's judgment (1) dismissing its counterclaim for fraud against plaintiffs, Club Valencia Homeowners Association, Inc. (association), P.J. Scardino, Robert J. Krusemark, and Robert Fitzgerald (three individual homeowners) and (2) dismissing its libel claim against Podoll and Podoll, P.C., the association, and P.J. Scardino. We affirm.

In March 1982, the association and three individual homeowners sued Valencia seeking damages resulting from alleged breaches of implied and express warranties relating to the sale of condominium units at Club Valencia. Shortly thereafter, Richard Podoll, an attorney representing the association, wrote a letter jointly with the association to its members advising them of the existence of the lawsuit, and requesting that the causes of action belonging to the individual homeowners be assigned to the association. The letter stated in pertinent part:

"As you may be aware, at the time Valencia Associates transferred control of the Club Valencia Homeowner's Association it became apparent that there were substantial sums of money unaccounted for, substantial problems with the common elements of the Club Valencia Condominiums which had not been disclosed to the unit owners, and considerable maintenance and repair which Valencia Associates had not undertaken.

After several months of negotiation Valencia Associates did make an offer to the Club Valencia Homeowner's Association which, considering the magnitude of the problems which exist was deemed unacceptable by the Homeowner's Association. As a result, civil litigation was commenced to seek redress from Valencia Associates for the defects, deficiencies and missing sums of money to which the Homeowner's Association is entitled."

In October 1982, Valencia filed a counterclaim against the individual homeowners, based on their misrepresentations of intent to disclaim warranties when they purchased the condominium units at Club Valencia. Valencia also filed a separate action for libel against Podoll, alleging that he maliciously published his March 1982 letter to the Club Valencia homeowners. This libel claim was asserted against the association and P.J. Scardino by means of a counterclaim in the initial action.

The trial court dismissed Valencia's counterclaim in March 1983, and held that the homeowners' execution of the warranty disclaimer and agreement to purchase the condominium units in an "as is" condition were not misrepresentations that could constitute the basis of a fraud claim. It also granted defendant Podoll's C.R.C.P. 12(b)(5) motion to dismiss on the basis that the statements in the March 1982 letter to the homeowners were absolutely privileged. Valencia's motion to consolidate both cases was granted in May 1983, and this appeal followed after the trial court's C.R.C.P. 54(b) certifications.

I.

Valencia first argues that the purchase contracts and disclosure statements signed and delivered by the individual homeowners disclaimed all warranties expressed and implied and that, therefore, the homeowners made false representations of material existing facts regarding their intention to disclaim all warranties and purchase the condominium units "as is" by later filing suit. We disagree.

The disclosure statement provides, in pertinent part:

"Purchaser acknowledges and agrees that he is purchasing the above described condominium 'as is' and that seller has made no representations, warranties expressed or implied, or warranties as to fitness or condition of said condominium unit."

The purchase agreement provides, in pertinent part:

"Purchaser acknowledges that seller did not construct the improvements being converted to condominium ownership and that the same are approximately seven (7) years old. Purchaser acknowledges that in the event he purchases the condominium unit hereinabove described that he shall purchase the same in an 'as is' condition without any warranties, express or implied, or warranties as to the fitness or condition of the condominium unit purchased or any or all of the general common elements comprising said condominium unit. Purchaser acknowledges that it is the intent of purchaser and seller that purchaser is purchasing said condominium unit and any undivided interest in the common elements appurtenant thereto in it current condition and state of repair and without any warranties in regard to the fitness or habitability of said condominium unit or common elements."

In order to sustain an action for fraud, there must be an allegation of a misrepresentation of fact, and that such representation was known to be untrue by the party making it, or else that it was recklessly made. The misrepresentation must be made with the intent to deceive and for the purpose of inducing the other party to act upon it, and there must be evidence that the other party did in fact rely on it and was induced thereby to act to his injury or damage. Knight v. Cantrell, 154 Colo. 396, 390 P.2d 948 (1964).

Valencia contends that the homeowners, by signing contracts of sale containing warranty disclaimers, in effect promised not to sue Valencia for breach of warranty. Valencia misconstrues this disclaimer, for it is a disclaimer by the seller, Valencia, not by the buyers. The buyers' signatures constitute an...