Question

Misrepresentation. W. B. McConkey owned commercial property, including a building that, as McConkey knew, had experienced flooding problems for years. McConkey painted the building, replaced damaged carpeting, and sold the property to M&D, Inc., on an "as is" basis. M&D did not ask whether there were flooding problems, and McConkey said nothing about them. M&D leased the property to Donmar, Inc., to operate a pet supply store. Two months after the store opened, the building flooded following heavy rain. M&D and Donmar filed a suit in a Michigan state court against McConkey and others, claiming in part that McConkey had committed misrepresentation by silence. Based on this claim, will the court hold McConkey liable? Why or why not? [M&D, Inc. v. McConkey, 585 N.W.2d 33 (Mich.App. 1998)]

FACTS-W. B. McConkey owned commercial property, including a building that, as McConkey knew, had experienced flooding problems for years.  McConkey painted the building, replaced damaged carpeting, and sold the property to M&D, Inc., on an "as is" basis. M&D did not ask whether there were flooding problems, and McConkey said nothing about them. M&D leased the property to Donmar, Inc., to operate a pet supply store. Two months after the store opened, the building flooded following heavy rain. M&D and Donmar filed a suit in a Michigan state court against McConkey and others, claiming in part that McConkey had committed misrepresentation by silence.

ISSUE-Based on this claim, will the court hold McConkey liable? Why or why not?

RESOLUTION-[M&D, Inc. v. McConkey, 585 N.W.2d 33 (Mich.App. 1998)] How did the court answer the questions? What did the court decide?

EXPLANATION-Do you agree with the court? Why or why not? Can you change any facts to give a different result?

Answer 1

The trial court dismissed M&D Inc claims of fraud and innocent misrepresentation. They were found as the  guilty of misrepresentation by the court. Such misrepresentation lay in the positive misstatements made and in the failure to give the true facts while ostensibly doing so.

Supreme Court said that, in order to prove a claim of silent fraud, M&D Inc must show that some type of representation that was false or misleading was made and that there was a legal or equitable duty of disclosure. Supreme court explained that according to "as in" clause operates to walves those implied warranties accompany the sale of property and this clause it will impose upon the purchaser the assumption of risk of latent defects. However, due to the existence of "as in" clause it does not preclude a purchaser in real estate transaction from alleging fraud or misrepresentation.

Mc Conkey made no material representation of fact to M&D Inc and Donmar upon which a common-law fraud claim could rest. Indeed, M&D Inc failed to present evidence that defendants made any affirmative representations concerning the nature of the flooding problem on the subject property.

Only M & D was in privity of contract with McConkey and, therefore it is the only M&D Inc that could raise an innocent misrepresentation claim against McConkey .Moreover, as the trial court concluded, because McConkey made no false or other representation regarding the condition of the property, neither corporate M&D Inc could maintain a claim of innocent misrepresentation.

M & D and Donmar argue that dismissal of their fraud and misrepresentation claims was improper because W.B. McConkey knew about the history of the flooding problem and its severity and failed to disclose this concealed condition to plaintiffs before the sale of the property. A fraud claim can be maintained where the purchaser is able to prove that the vendor knew about a defective condition and did not disclose it to the purchaser. So, even supreme court did not supported this.