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In Masters v. Visual Building Inspections, Inc., the Supreme Court of New York addressed a buyer’s claims of fraud and negligent inspection against a seller and inspection company. The court dismissed the case as to all defendants, holding that the merger clause in the contract precluded any claim of fraud, misrepresentation, or negligent inspection.
Masters (Buyer) purchased a home in West Nyack from Serpati (Seller). Prior to contract, Buyer had Visual Building Inspections (Inspector) view the home. Inspector certified that the roof was free of leaks. Buyer also alleged that Seller represented that the roof was leak-free. The contract between Buyer and Seller contained a merger clause that provided that no representations would survive the closing. Shortly after closing, Buyer discovered leaks in the roof and sued Seller and Inspector for fraud and negligent inspection. Seller filed a motion to dismiss which was denied. Seller then appealed.
The Supreme Court of New York, Appellate Division, stated that “while it is true that a general merger clause is ineffective to exclude parol evidence of fraud in the inducement, a specific disclaimer defeats any allegation that the contract was executed in reliance upon the representations to the contrary. (Citing Couch v. Schmidt, 204 A.D.2d 951, 612 N.Y.S.2d 511 (1994); Weiss v. Shapolsky, 161 A.D.2d 707, 555 N.Y.S.2d 843 (1990); Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 157 N.E.2d 597, 184 N.Y.S.2d 599 (1959); LaBarbera v. Marino, 192 A.D.2d 697, 597 N.Y.S.2d 137 (1993)). The court noted that this contract, in addition to stating that all prior writings were merged therein, provided that no representations would survive the closing; that the purchaser had inspected the property and were entering into the contract based on the purchaser’s own investigation; that the purchaser was taking the property as is, without any reliance upon, among other things, any oral representations, and that the acceptance of the deed was to be considered full performance of all obligations. Also the contract clearly stated that “this representation [that the roof is free of leaks] shall not survive the later of closing or delivery of possession of the premises to purchaser.” The court held that these clauses were sufficiently specific to bar the allegations that Buyer was induced to enter into the contract by oral misrepresentations about the status of the roof. Thus, the court dismissed the case.
Masters v. Visual Building Inspections, Inc., 227 A.D.2d 597, 643 N.Y.S.2d 599 (N.Y. App. Div. 1996).
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