978-1285770178 Case Printout Case CPC-29-09 Part 2

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court, it would appear he agrees that if his interpretation does not prevail,

then it is necessary to determine whether Carpenter provided Dantinne

with the December 1998 rent roll prior to closing.

In , the court held that the buyer had to prove a breach of the warranty of a

property condition as of the date of closing because, even though the

a fact upon which the other party may rely. It is intended to relieve the

promisee of any duty to ascertain the fact for himself, and amounts to a

promise to indemnify the promisee for any loss if the fact warranted

proves untrue.

(citation omitted). In we held that a warranty that the soil “will

the property defect from their own inspection. However, the court relied

on the language in the accepted offer to purchase providing that a buyer’s

failure to submit a written disapproval of the Seller’s Property Condition

Report within a specified period after conducting an inspection constituted

acceptance of the property “as is.” . There is no similar language in the

¶ 27 The economic loss doctrine is a judicially created doctrine under which a

purchaser of a product cannot recover from a manufacturer on a tort theory for

damages that are solely economic. . When contractual expectations are

frustrated because of a defect in the subject matter of the contract and the only

damages are economic losses, the exclusive remedy lies in contract. See id.

subject of the contract. .

Since commercial parties are capable of bargaining to allocate the risk

inherent in any commercial transaction, an absence of comprehensive

warranties is presumably reflected in the purchase price. . The

economic loss doctrine was extended to consumer transactions in to bar

proceed on the latter at trial. The seller argued on appeal that under the

economic loss doctrine, the purchaser was limited to contract damages. **145 .

We held that the economic loss doctrine did not apply when there was an

intentional misrepresentation fraudulently inducing a party to enter into a

contract. . Our rationale was that when an intentional misrepresentation

doctrine … which requires that the *701 contract be affirmed.” . Finally, we

pointed out that when a party is dishonest about the subject matter of the

contract, the party best situated to assess and allocate the risk is the seller, not

the buyer, and that is contrary to the premise of the economic loss doctrine. .

¶ 29 The Kailins are asking us to broaden the exception in Douglas-Hanson to

¶ 30 In we specifically limited our holding to intentional misrepresentations that

fraudulently induced a party to enter into a contract. We will therefore apply the

economic loss doctrine in this case to any misrepresentations that occurred after

the contract was formed on December 9, 1998. None of the reasons for our

holding in Douglas-Hanson applies when a misrepresentation is made after the

loss and assume, allocate, or insure against that loss.

¶ 31 We limit our analysis, then, to the Kailins’ claim that Armstrong made

intentional misrepresentations that induced them to enter into the contract. The

elements of this claim-which we will refer to as fraud in the inducement-are: a

statement of fact that is untrue, made **146 with the intent to defraud, and for the

Douglas-Hanson we carefully limited the available claim to intentional

misrepresentations, and we applied the economic loss doctrine to bar a

negligent misrepresentation that induced a contract. We see no reason

to depart from our reasoning in Prent Corp. with respect to the Kailins’

claims for negligent misrepresentation or strict liability misrepresentation.

her] that he [or she] knows to be necessary to prevent his [or her] partial or

ambiguous statement of the facts from being misleading.” , quoted in .

¶ 33 The two documents that Armstrong or his agents provided the Kailins or

their agents prior to December 9, 1998, were the Lease Information and the

Estimated Income and Expense. To prevail on their claim for fraud in the

reasonable fact finder could find in the nonmoving party’s favor. . In our inquiry,

we are to draw all reasonable inferences in the Kailins’ favor. See . Applying

this standard, we conclude there is a genuine dispute of material fact.

¶ 34 The Estimated Income and Expense document does not contain a date.

However, because it was provided in late 1998, it is reasonable to infer that

agents, and also that he had no reason to expect that he would not receive any

rental income due before the end of 1998. We therefore conclude that a

reasonable fact finder could decide that the Estimated Income and Expense

document was ambiguous as to whether it was representing that there were no

actual or anticipated rent delinquencies for the year 1998; a reasonable fact

documents in support of his position that neither makes any representations

about actual rental income: **147 “Information deemed reliable but not

guaranteed. The information contained herein was provided by the seller and/or

other third parties and has not been verified by the Broker unless otherwise

indicated.” However, this language does not remove the ambiguity in the

¶ 36 We conclude that genuine issues of material fact preclude summary

judgment on the Kailins’ claim for fraud in the inducement.

¶ 37 The Kailins contend the trial court erred in concluding that the economic

loss doctrine applied to their claim under , the false advertising statute.

Armstrong responds that the trial court correctly ruled that simply provides

under , just as it does to common law misrepresentation claims, that

doctrine would not bar the Kailins’ claim under insofar as it is based on

intentional misrepresentations that induced them to enter into the contract.

However, because does not require an intent to defraud, only an intent “to

sell … or … induce … to enter into any contract or obligation,” and because

intent. . We begin with the language of the statute and if that plainly conveys

the intent of the legislature, we apply that language to the facts at hand. Id.

¶ 39 provides in relevant part:

Fraudulent representations. (1) No person, firm, corporation or association, or

agent or employee thereof, with intent to sell … real estate …, or with intent to

deceptive or misleading.

2 and 3 provides in part:(b) 2. Any person suffering pecuniary loss because of a

violation of this **148 section by any other person may sue in any court of

competent jurisdiction and shall recover such pecuniary loss, together with costs,

including reasonable attorney fees, except that no attorney fees may be

States or of this state.

¶ 40 Read together, the above subsections plainly define the elements for a

cause of action, with its own statute of limitations, 3, and without reference to

common law misrepresentation claims. The elements of this cause of action

differ from those of the common law claims of intentional misrepresentation, strict

for common law misrepresentation claims rather than to create a distinct

statutory cause of action.

The three classifications of torts-intentional misrepresentation, strict

liability misrepresentation, and negligent misrepresentation-all require the

following elements: (1) the representation must be of a fact and made by

representation with the intent to deceive and to induce the plaintiff to act

upon it to the plaintiff’s pecuniary damage. Strict liability

misrepresentation also requires: (1) the representation be made on the

defendant’s personal knowledge or under circumstances in which he or

she necessarily ought to have known the truth or untruth of the statement;

That case simply holds that because, in the course of proving its common law

negligent misrepresentation claim at trial, the plaintiff had proven all the elements

for a claim under , the trial court properly exercised its discretion in amending the

pleadings to conform to the proof at trial, thereby allowing the plaintiff post-trial to

request attorney fees under . The fact that two different claims may be proved

a new cause of action, but simply provides a remedy for common law claims–

there is nothing supporting his conclusion that the economic loss doctrine applies

to claims under . He develops no argument to link *709 the rationale for the

economic loss doctrine to the purpose of , and we can see none. The legislature

has plainly chosen in to provide protection and remedies for false advertising

For the reasons we have discussed in the preceding section, we conclude there

are genuine issues of material fact whether the documents Armstrong or his

agents provided the Kailins or their agents on or before December 9, 1998,

contained statements or representations that were misleading. However, with

respect to statements or representations made after that date, we conclude they

“the public” is “whether there is some particular relationship between the parties.”

*710. Once the contract was made, the Kailins were no longer “the public”

under the statute because they had a particular relationship with Armstrong-that

of a contracting party to buy the real estate that is the subject of his post-

contractual representation. The purpose of is aimed at untrue, deceptive, or

the contract. We see no indication in the language of that the legislature

intended to address untrue, deceptive, or misleading assertions, representations,

or statements of fact made by one party to another after they have entered into a

contract.

¶ 45 Therefore, we conclude that the Kailins’ claim under is limited to

Armstrong contends expert testimony is *711 needed on these issues: (1)

whether Armstrong followed the usual customs and practices of the industry in

connection with the sale; (2) whether the Kailins exercised proper due diligence;

(3) whether the materiality of the information not provided was significant enough

to affect the purchase offer; and (4) whether the Kailins had the ability to obtain

Kailins’ claim for intentional misrepresentation. However, we are not persuaded

that resolution of the claim requires “special knowledge or skill or experience on

subjects which are not within the realm of the ordinary experience of mankind.” .

Therefore, we conclude Armstrong is not entitled to dismissal of any claim on this

ground.

*712 Therefore, we confine our analysis to the claims for fraud in the inducement

and a violation of .

¶ 48 First Weber and Carpenter argue that their duty to disclose is defined by

statute, not by common law, , and they did not have a statutory duty to disclose

Ring Karate’s rent arrearage under , because the rent arrearage is not a material

the claim under for representations made on or before December 9, 1998, and

we remand for further proceedings on those claims. We affirm the summary

judgment insofar as it dismisses all other claims against Armstrong and

dismisses all claims against First Weber and Carpenter.

Judgment affirmed in part; reversed in part and cause remanded with directions.