Misrepresentation Claims. .

Buyer Permitted to Pursue Misrepresentation Claims Based Upon Seller’s Pre-contract Statements

The Court of Special Appeals of Maryland has allowed the purchasers of a home site to pursue a claim that the sellers had misrepresented the development plans for adjoining property which the sellers also owned.

In 1997, Udo Heckenbach and Cornelia Heckenbach ("Heckenbach") sold a 24.5 acre parcel of land in Talbot County known as Windrush Farm to Robert D. Greenfield and Marguerite Greenfield ("Greenfield") for 1.6 million dollars. Windrush Farm is adjoined by a parcel of land known as Windfield Farm containing 22 acres, also owned by Heckenbach.

Windrush Farm was listed for sale by a real estate broker who prepared a brochure that described the property as providing "incredible natural and unspoiled southwesterly views across Irish Creek from nearly every room. . ."

Prior to signing a contract to purchase Windrush Farm, the Greenfields had direct negotiations with the Heckenbachs. The Greenfields were told that the Heckenbachs owned the adjacent Windfield Farm and that they intended to build a house on that property. Since Windfield Farm was between Windrush Farm and Irish Creek, the Greenfields were concerned about the effect of the building project on their water view from Windrush Farm.

According to the Greenfields, they were told by the Heckenbachs that they would "not construct anything on [Windfield Farm] . . . that would obstruct clear view [from Windrush Farm] across Irish Creek and the Choptank River or significantly block the view down Irish Creek." According to the Greenfields, the Heckenbachs also said the pier would be built in a location that would not be visible from Windrush Farm, that the main house would be smaller than the one on Windrush Farm, and that the main house would be located where a grove of trees was then located on Windfield Farm so as to avoid interfering with the Greenfields’ water view down Irish Creek.

The Greenfields’ contract of sale was signed on August 11, 1997. The contract of sale contained an integration or merger clause that read as follows:

"This Contract and any Addenda thereto contain the final and entire agreement between the parties, and neither they nor their agents shall be bound by any terms[,] conditions, agreements, warranties or representations, oral or written, not herein contained."

The contract did not contain any of the alleged representations made by the Heckenbachs regarding their construction plans.

The Greenfields closed on Windrush Farm on December 16, 1997, and left the next day for Florida where they remained until April, 1998. When they returned, they discovered that a 170 foot pier had been constructed by the Heckenbachs in a location 150 feet west of where the Heckenbachs had represented that it would be located. This was significant because if the pier had been built where promised, it would not have been visible from the main house on Windrush Farm. According to the Greenfields, the pier destroyed the unobstructed water view across Irish Creek.

The Heckenbachs did not build the main house in the grove of trees on the eastern side of Windfield Farm as they said they would. They built the main house approximately 100 feet west of the grove of trees, and the main house was much larger than the main house on Windrush Farm. The size and location of the new main house impaired the Greenfields’ water view of Irish Creek. The main house was completed in October, 1998.

In 1999, while researching another matter at the Talbot County planning and zoning office, the Greenfields discovered that the application for a pier permit had been filed by the Heckenbachs prior to the date of the Greenfield contract. Upon learning this, the Greenfields filed suit against the Heckenbachs in September, 1999.

The suit included claims for fraud (Count I), negligent misrepresentation (Count II), violation of the building permits(Count III), violation of the wetlands license (Count IV) and unjust enrichment (Count V). The Heckenbachs denied making the alleged misrepresentations, and filed a motion for summary judgment. The trial judge granted Heckenbachs’ motion for summary judgment on all counts.

On appeal, the Greenfields challenged only the dismissal of the misrepresentation claims. The Court of Special Appeals agreed with the Greenfields that the integration clause in the contract did not prevent them from pursuing a claim based upon fraud. The Court of Special Appeals stated:

"[T]he law in Maryland ... is that a plaintiff can successfully bring a tort action for fraud that is based on false pre-contract promises by the defendant even if (1) the written contract contains an integration clause and even if (2) the pre-contractual promises that constitute the fraud are not mentioned in the written contract."

Further, the Court held:

"[I]n a suit for negligent misrepresentation, where equitable relief is prayed, the existence of a general merger clause, standing alone, will not prevent the plaintiff from introducing evidence concerning pre-contractual promises, which are not mentioned in the written contract."

The Court also rejected the sellers’ contentions that the Greenfields’ claims were barred by the statute of frauds, laches, estoppel and/or merger into the deed. Consequently, the case was sent back to the Circuit Court for Talbot County for further proceedings.

R. D. Greenfield v. Udo Heckenbach, No. 1779, September Term, 2000, in the Court of Special Appeals of Maryland, filed May 1, 2002.

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