Failure To Disclose: Wisconsin Appeals Court Affirms $50K Jury Verdict Against Bank Of America For Unloading Moldy REO Onto Unwitting Homebuyer w/out Disclosing Material Hidden Damage; Use Of "As-Is" Clause In Sales Contract Fails To Insulate Sneaky Bankster From Liability

From the Wisconsin Bar News:

• A bank is liable for a misrepresentation that induced a homebuyer to buy a foreclosure home with undisclosed water and mold damage, even though the sale contract said the buyer was purchasing the home “as is,” a state appeals court has ruled.
  
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  At trial, the trial judge informed the jury that an “as is” clause does not relieve a seller from disclosing material adverse facts about a property, though it was Fricano’s burden to prove the bank had knowledge of the property’s condition and did not disclose it.
  
  The jury awarded Fricano $50,000 in compensatory damages, ruling that the bank violated section 100.18(1). The court denied the bank’s motion for judgment notwithstanding the verdict and entered judgment for Fricano. The bank appealed.
  
  The bank noted the “as is” clause and said a violation of section 100.18(1) requires a misrepresentation to a member of “the public,” but Fricano’s negotiating position with the bank, through offers and counteroffers, created a “particular relationship.”
  
  But in Fricano v. Bank of America, 2015AP20 (Dec. 23, 2015), a three-judge panel for the District II Court of Appeals affirmed, upholding the jury verdict for Fricano.
  
  Jury Verdict Affirmed
  
  The panel noted that motions to change a jury’s verdict must be denied unless there is “no credible evidence to sustain a finding in favor of such party.” And trial courts that preside over trials are given substantial deference to make credibility determinations.
  
  The panel concluded that an “as is” provision in a sales contract between buyer and seller does not relieve the seller from liability for material misrepresentations.
  
  “We see no support for the Bank’s argument that the ‘as is’ provision, disclaimers, and waivers in the parties’ contract relieve it from Wis. Stat. § 100.18 (1) liability for its deceptive statement in the contract that it had little to no knowledge of the condition of the property,” wrote Chief Appeals Court Judge Lisa Neubauer.
  
  The panel also ruled that Fricano was a member of the “public” when the bank made its misrepresentation, because the sides had not yet reached a contractual agreement.
  
  “There was no contract between the parties when the Bank misrepresented its knowledge of the condition of the property,” Chief Judge Neubauer wrote.
  
  “[W]e fail to understand how the fact that parties are in negotiations over terms takes the potential purchaser out of the realm of ‘the public.’”
  
  The panel rejected the bank’s claim that Fricano lacked evidence to prove she was induced to purchase the home as a result of any misrepresentation by the bank.
  
  Fricano had testified that she believed the bank could not tell her anything about the property because it was a foreclosure and the bank had not been living there.
  
  “[T]here is more than sufficient credible evidence to believe that had the Bank not misrepresented its knowledge of the condition of the property, Fricano would not have gone forward,” wrote Neubauer, also rejecting the bank’s claim that Fricano had notice of possible defects through a home inspector and should have inquired further.

For more, see Despite “As Is” Clause, Homebuyer Wins Misrepresentation Appeal Against Bank.