60 A.3d 133 (Pa. Super. Ct. 2013)
On February 11, 2006, the owner of the property prior to the Jacono Defendants, Konstantinos Koumboulis, allegedly shot his wife and himself at that property.1 The Jacono Defendants purchased the property from the Koumboulis Estate at a real estate auction on September 23, 2006.2
Defendant Mr. Jacono spoke with Brian Collins and Judith Schulder, representatives of the Pennsylvania Real Estate Commission, who confirmed that the murder/suicide was not a material defect that needed to be disclosed.3 Mr. Jacono’s conversation with Ms. Schulder was later memorialized in electronic correspondence.4 After those conversations, the Jacono Defendants entered into a Listing Agreement for sale of the property with the Re/Max Defendants on June 4, 2007.5 After entering into the Listing Agreement, the Re/Max Defendants called the Pennsylvania Association of Realtors Legal Hotline and were told that the murder/suicide was not a material defect which required disclosure.67 They also performed internet research to confirm these findings.8
On June 17, 2007, an Agreement of Sale for 12 Pickering Trail was signed by Plaintiff Janet S. Milliken and the Jacono Defendants.9 The Seller Property Disclosure Statement dated June 17, 2007 does not disclose the murder/suicide as a known material defect and indicates that the property was last occupied in March 2006.10 On August 10, 2007, Plaintiff closed on the property for $610,000.00 but was not present at the closing.11
Plaintiff alleges that she was unaware of the murder/suicide until three weeks after she moved into the property, allegedly sometime in September 2007.12 On June 20, 2007, the Re/Max Defendants mailed the Thornbury Hunt Owners’ Association Documents to Plaintiff Milliken which listed Konstantinos Koumboulis as the owner of the Property.13 On July 6, 2007, Plaintiff Milliken signed an acknowledgement of receipt of those documents.14 Plaintiff admits at her deposition that she reviewed the Title Report from Trident dated July 18, 2007 before closing.15 The Title Report included a statement that this property was conveyed by the Estate of Kostantinos Koumboulis and Estate of Georgia Koumboulis to the Jaconos by Deed dated October 31, 2006 and recorded January 19, 2007.16 Plaintiff testified that she read the Title Report and recognized that the Jacono Defendants had purchased the property from the Koumboulis Estate but proceeded with the transaction.17
On November 24, 2008, Plaintiff Janet S. Milliken filed a Complaint against Defendants Kathleen Jacono and Joseph Jacono as well as the Re/Max Defendants.18 The Jacono Defendants filed motions for Summary Judgment on June 10, 2010, which the trial court granted.19 Plaintiff appealed.20
Whether the trial court erred in granting summary judgment in favor of Defendants on the claim of a violation of the Real Estate Disclosure Law because a material issue of fact existed as to whether the murder/suicide which occurred in the home constituted a material defect because it had a significant adverse impact on the value of the property?21
Under the Real Estate Seller Disclosure Law, a material defect is a problem with residential real property that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property.22 68 Pa.C.S.A. § 7102. The statute requires disclosure statements to address specific subjects including the physical structure of the house, its components, legal impairments attached to the property, and hazardous substances, but does not require disclosure of psychological stigma.23 68 Pa.C.S.A. § 7304(b). Section 7313 preserves other disclosure obligations but does not expand the enumerated categories to include reputational or psychological effects.24
No. The murder/suicide that occurred on February 11, 2006, constitutes psychological damage rather than a physical or legal defect listed in the statute.25 Mr. Jacono consulted representatives of the Pennsylvania Real Estate Commission who confirmed that the murder/suicide was not a material defect requiring disclosure, and this advice was memorialized in electronic correspondence.26 After receiving that confirmation the Jacono Defendants entered the listing agreement with the Re/Max Defendants on June 4, 2007.27 The Seller Property Disclosure Statement dated June 17, 2007, omitted any reference to the murder/suicide, consistent with the statutory categories limited to structural, legal, and hazardous conditions.28
The buyer received the Thornbury Hunt Owners’ Association Documents before closing which listed Konstantinos Koumboulis as the owner.29 Plaintiff also reviewed the Trident Title Report before closing and recognized that the Jacono Defendants had purchased the property from the Koumboulis Estate yet proceeded with the August 10, 2007 closing.30 Because the statute does not classify psychological stigma as a material defect, no genuine issue of fact existed and summary judgment was proper.31
The trial court correctly granted summary judgment on the Real Estate Seller Disclosure Law claim because the murder/suicide does not qualify as a material defect that sellers were obligated to disclose.32
Related opinions on this issue
Joined by Mundy And Wecht, Jj.
Justice Bender dissents from the majority’s conclusion that psychological stigma from a murder/suicide cannot qualify as a material defect.33 He emphasizes that the RESDL definition in section 7102 focuses on significant adverse impact on value, which expert appraisers quantified here as a ten-to-fifteen-percent reduction.34 Section 7313 expressly provides that the enumerated disclosure items do not limit other obligations to avoid fraud or misrepresentation.35
Adopting the approach of Reed v. King, he concludes that reputation and history can produce measurable economic loss and that the gravity of the undisclosed multiple murder warrants disclosure rather than caveat emptor.36 He would vacate the summary judgment and remand for trial.37
Whether the trial court erred in granting summary judgment in favor of Defendants on the fraud claim because a material issue of fact existed as to whether their intentional concealment and nondisclosure of the murder/suicide led to a viable claim for fraud?38
To establish fraud in a real estate transaction a plaintiff must prove a knowing misrepresentation, concealment calculated to deceive, or non-privileged failure to disclose a material fact, together with justifiable reliance and resulting injury.39 Psychological stigma does not constitute an objective material defect that sellers are required to reveal.40
No. Mr. Jacono spoke with representatives of the Pennsylvania Real Estate Commission who confirmed that the murder/suicide was not a material defect that needed to be disclosed.41 The Re/Max Defendants called the Pennsylvania Association of Realtors Legal Hotline and were told that the murder/suicide was not a material defect which required disclosure. They therefore made no false representation and had no duty to reveal the psychological history.42 The buyer reviewed the title report showing conveyance from the Koumboulis estate yet completed the purchase.43
Because the underlying fact was not a material defect under Pennsylvania law, the elements of fraud cannot be satisfied.44
Summary judgment was properly granted on the fraud claim.45
Whether the trial court erred in granting summary judgment in favor of Defendants on the claim of negligent misrepresentation because a material issue of fact existed as to whether Mrs. Milliken had a viable claim for negligent misrepresentation?46
Negligent misrepresentation requires a misrepresentation of material fact made under circumstances in which the speaker should have known its falsity, an intent to induce reliance, justifiable reliance, and resulting injury, plus the existence of a duty owed by the defendant to the plaintiff.47
No. Sellers and agents owed no duty to disclose the murder/suicide because it was not a material defect under the Real Estate Seller Disclosure Law.48 The buyer cannot identify any independent source of duty that would require revelation of psychological history.49 Without a duty, the claim for negligent misrepresentation fails as a matter of law.50
The trial court correctly entered summary judgment on the negligent misrepresentation claim.51
Whether the trial court erred in granting summary judgment in favor of the Defendants on the claim of a violation of the Unfair Trade Practices and Consumer Protection Law because a material issue of fact existed as to whether Mrs. Milliken had a viable claim for common law fraud which would lead to a claim under the statute?52
The catch-all provision of the Unfair Trade Practices and Consumer Protection Law prohibits fraudulent or deceptive conduct creating a likelihood of confusion.53 Even under the post-amendment standard requiring only deceptive conduct, a seller who declines to disclose information it has no legal obligation to reveal does not engage in deceptive conduct.54
No. Because the murder/suicide was not a material defect that the Jacono Defendants or their agents were required to disclose, their silence cannot be characterized as deceptive conduct under the statute.55 The buyer therefore cannot establish a violation of the Unfair Trade Practices and Consumer Protection Law.56
Summary judgment was properly granted on the Unfair Trade Practices and Consumer Protection Law claim.57