Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Pa. Sup. Ct.: Failure to disclose occurrence of crime to home buyer not material defect, (Jul 22, 2014)

By Linda O’Brien, J.D., LL.M.

Home sellers’ failure to disclose the occurrence of a murder/suicide inside the home to a prospective purchaser did not constitute a material defect for purposes of the Pennsylvania Unfair Trade Practices and Consumer Protection Act, the Pennsylvania Supreme Court has held. The trial court order granting the sellers’ motion for summary judgment was affirmed (Milliken v. Jacono, July 21, 2014, Eakin, J.).

Kathleen and Joseph Jacono purchased a property from an estate at auction in September 2006. A few months before, an individual had killed his spouse and himself inside the home. The crime was highly publicized in the media and on the Internet. After making renovations, the Jaconos listed the property for sale. The Jaconos consulted their attorney, real estate agents, and representatives of the state real estate commission regarding whether the occurrence of the murder/suicide in the home required disclosure under the Real Estate Seller Disclosure Law (RESDL) and were advised that the murder/suicide was not a material defect because it would not impact the value of the property. The Jaconos signed a Seller’s Property Disclosure Statement and did not disclose the crime as a material defect.

Janet Milliken entered into an agreement with the Jaconos to purchase the property. Prior to the closing, Milliken received a title report and homeowner’s association documents that listed the prior owner’s name, as well as information on when the home was last occupied. After buying the home, Milliken learned of the murder/suicide from her neighbor. Milliken filed suit against the Jaconos and two realtors, alleging a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Act (UTPCPL), among other claims. The appellate court affirmed the trial court’s grant of the defendants’ motion for summary judgment, and Milliken appealed.

In a matter of first impression, the court determined that purely psychological stigmas were not material defects of the property that the sellers were required to disclose. The court noted that it could not quantify the psychological impact of different genres of murder, suicide, and other violent crimes. Although such events may be disturbing to a majority of the population and some percentage would not want to live in a house where such an event occurred, the events were defects in the structure itself. A finding that a criminal occurrence constituted a material defect would be impossible to apply consistently and would place an unmanageable burden on sellers.

Finally, the occurrence of the crime was well publicized, with coverage appearing in print and on the Internet. Under the doctrine of caveat emptor, there was no duty to disclose, since the occurrence of the murder/suicide was transparent. Milliken had to ability to discover the murder/suicide and did not do so. Thus, there were genuine issues of material fact and the grant of summary judgment was proper, the court concluded.

In a concurring opinion, Justice Todd stated, as additional support for the majority opinion, that a plaintiff must show that she justifiably relied on the defendants’ wrongful conduct or representation, and was harmed as a result of that reliance under the UTPCPL. The legislature’s consistent use and construction of the term “material defect” to refer to physical or structural issues with property that pose an unreasonable risk to persons on the property support a conclusion the occurrence of a murder/suicide on the property was not a material defect that the seller was required to disclose under the RESDL.

The case is No. J-87-2013.

Attorneys: Timothy F. Rayne (MacElree Harvey, Ltd.) for Janet S. Milliken. Timothy Joseph Bloh (Fox Rothschild, LLP) for Cascia Corporation, Fran Day, and Thomas O'Neill. J. Scott Watson (J. Scott Watson, PC) for Kathleen and Joseph Jacono.

Companies: Cascia Corporation

Cases: StateUnfairTradePractices PennsylvaniaNews