Shortly after moving in the Sullivans discovered various defects in the property: principally that the ceilings in the kitchen and Tuscan-style room were in danger of collapsing. The Sullivans also discovered that the Gagliardis never obtained required building permits for the renovations. The Sullivans were informed that it would cost less to demolish and rebuild the Tuscan-style room than to attempt to fix it, and the cost to rebuild would be $211,000.
The Sullivans sued the Gagliardis in 2014, alleging failure to deliver a habitable property and unfair and deceptive acts or practices in the conduct of business. A jury awarded the Sullivans $211,153.38 on the unfair-acts-in-business claim and $250,000 on the habitability claim and $461,000 in attorneys’ fees and costs.
The Gagliardis appealed.
The Supreme Judicial Court first considered whether the Gagliardis’ sale was “conduct of business.” The court considered that the Gagliardis renovated the home themselves, promoted the renovations when showing the home to prospective purchasers, and performed the renovations for the purpose of increasing the value of the home and selling the home at a profit. Nevertheless, the court concluded that a sale of a long-term residence is not a business transaction; and the court set aside the $211,000 award on the unfair-acts-in-business claim.
With respect to the habitability claim, the court observed that such claims are applicable only to “new” residential construction. While the Sullivans contended that the Gagliardis renovations amounted to new (seemingly meaning recent) construction, the court concluded that "new" construction contemplates building a new residence--not new renovations to an existing building. The court set aside the $250,000 award on the habitability claim. Because ultimately the Gagliardis did not prevail on any claim, the court set aside the attorneys fee award as well.
The Sullivans responded that even if the Gagliardis' conduct did not amount to an unfair business practice or the sale of an uninhabitable home, the Gagliardis nevertheless engaged in fraud when they failed to disclose the defects in the home and failed to disclose that the renovations were performed without required building permits. The court concluded that the Gagliardis did not commit fraud because “silence does not constitute . . . fraud . . . even where a seller may have knowledge of some weakness in the subject of the sale and fails to disclose it." While sometimes “half truths” may amount to fraud, the Gagliardis--by keeping silent rather than providing partial information--could not speak a half-truth--the court noting that a half truth occurs when one makes a representation that is intended to cause the buyer to believe something that was untrue, which does not occur when one remains silent.
The moral: When purchasing a home you may be purchasing someone else’s problems. Proceed with caution.
