A New York appellate court has considered whether a trial court had properly allowed to proceed to the jury a buyer’s lawsuit involving the presence of a seasonal bat colony in the attic.
Stephen T.B. Jablonski ("Buyer") was interested in purchasing residential property owned by Jane and Donald Trost ("Sellers"). The Buyer first visited the property in July 1993 with Linda Piermarini ("Broker"), a licensed real estate broker with Robert A. McCaffrey Realty, Inc. ("Brokerage") and the listing broker for the Sellers' property. During this visit, he inspected the attic of the house due to a stain he noticed on the outside of the house. While in the attic, he noticed the smell of animal excrement and urine. When he asked about these smells, he was allegedly told that the smell was from the Sellers' pets. The next time he visited the house, he noticed animal droppings in the attic as well as evidence of "sweeping" around the droppings; he was allegedly told that these droppings were bird droppings. Photographs were taken of the droppings.
Following these visits to the property, the Buyer then submitted a list of 23 questions to the Sellers about the property. None of the Buyer’s questions addressed the condition of the attic. The Sellers answered the Buyer's questions, and the Buyer made an offer to purchase the property, contingent upon an engineer's inspection of the property. The Buyer and the inspector ("Inspector") visited the property, and the Buyer once again noticed a mothball smell in the attic. The Buyer asked the Broker for an explanation of the earlier presence of animal feces in the attic, and the Broker allegedly told the Buyer that a bird was entering the attic through a broken pipe and that this would be repaired prior to the closing.
The Buyer moved onto the property two months before the closing. He claims he was told not to store anything in the attic prior to the closing, but he claimed that the smell of urine returned to the attic prior to closing. The closing took place in January 1994. Following his purchase, the Buyer discovered that the attic was home to a seasonal bat colony. The Buyer eventually filed a lawsuit against the Sellers, the Broker, the Brokerage, and the Inspector, claiming that they had failed to disclose the presence of a seasonal bat colony on the premises and fraudulently tried to conceal the evidence of infestation by claiming that it was birds in the attic. All of the defendants filed a motion with the trial court seeking judgment in their favor and the trial court denied this motion, sending the case to a jury for resolution. The defendants appealed.
The New York Supreme Court, Appellate Division, reversed the ruling against the Inspector but otherwise affirmed the rulings of the trial court. New York is a "caveat emptor" state, meaning that there is no duty for a seller or the seller's agents to disclose property defects in an arms length transaction, unless there is conduct on the part of a seller or the seller's agents which constitutes active concealment. In order to recover damages for active concealment, a party will need to show that the seller and the seller's agents prevented the buyer from discovering the defects on the property.
The trial court had concluded that a jury, looking at the evidence presented by the Buyer, could conclude that the Seller and the Broker actively concealed the presence of a seasonal bat colony. The court agreed with the Buyer, as he had allegedly made inquiries about the smells and droppings in the attic, and no one had mentioned the presence of the bats. There was also testimony about attempts to allegedly cover up the presence of the bats, as the Buyer had noticed sweeping marks in the attic and other behavior which could be interpreted as evidence of a cover-up.
The court also found that the evidence supported fraudulent misrepresentation allegations against the Broker and the Brokerage. In order to prove fraudulent misrepresentation, a party must show a misrepresentation or omission of a material fact which was known to be false and that the misrepresentation was made for the purpose of having the other party rely upon it, and the other party justifiably relies upon the misrepresentation, causing them damage. The Brokerage claimed that they did not know about the bats in the attic, but one of the Sellers claimed to have told one of the Brokerage's representatives about the bats. Further, there were statements made by the Broker which could lead to the conclusion she had made misrepresentations, such as the statements that the droppings came from birds. The court did reverse the trial court's ruling with regard to the Inspector, as the Inspector had no duty to inspect the property for bats. However, the court affirmed the rulings against the Sellers and the Brokerage, and sent the case back to the trial court for additional proceedings.
One of the judges on the five judge appellate court panel filed a lengthy dissent to the majority opinion, and she was joined by one other judge. The dissent argued that the court should rule in favor of the Sellers, the Broker, and the Brokerage, as the Buyer had failed to demonstrate the elements of fraudulent concealment. The dissent stated that the Buyer had notice of the presence of animal activity in the attic through various smells and droppings, and thus he had a duty to investigate the origin of these things. Therefore, the dissent believed that the Buyer could not show justifiable reliance and so judgment should have been granted to the Brokerage and the Sellers.
Jablonski v. Rapalje, 788 N.Y.S.2d 158 (N.Y. App. Div. 2005).