Tuesday, December 04, 2007, 1:02 PM

Split COA Cabins Negligent Misrepresentation On MLS Listing

In a split decision, Crawford v. Mintz, the NC COA today limited a plaintiff's ability to claim negligent misrepresentation on a Multiple Listing Service property listing, at least one that doesn't look exactly like what the seller, or seller's agent, posted to the MLS.

In Crawford, the property as originally listed by the seller's broker indicated the property was connected to the city sewer, when actually it had a septic tank. The listing also stated, though, that the listing's information was "reliable but not guaranteed."

After the plaintiffs bought the property, the septic tank leaked, and they wound up with raw sewage in their yard. Plaintiffs sued, among others, the seller's agents, who did business as Re/Max, for negligent misrepresentation.

The COA majority, written by Judge McGee, held that the plaintiffs couldn't show reliance on the alleged misrepresentation, a requisite element of negligent misrepresentation, where the plaintiffs hadn't relied on the defendants' version of the statement, which had included the qualifying "not guaranteed" language. In this case, plaintiffs had instead relied on a printout of the listing that did not include the defendants' qualification, and the trial court therefore should have granted the defendants' motion for directed verdict.

Judge Steelman disagreed and dissented. Judge Steelman noted that the Crawford majority relied on Raritan River Steel Co. v. Cherry, Bekaert & Holland, a case materially different from this case. Judge Steelman noted that in Raritan, the purported reliance was on Dunn & Bradstreet reports not only not from the defendant auditor but relying on the auditor's opinion of management's financial statements. Judge Steelman noted that such auditor opinions cannot be fully understood in isolation but rather only in the context of the auditor's entire report, with all qualifications and footnotes. Judge Steelman noted that in this case, the defendants' misstatement about the property's sewage can be understood in isolation and was undisputedly false. Therefore, regardless of the presence or absence of the defendants' qualification, there was enough there to send the negligent misrepresentation claim to the jury.

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