Blaine v. J.E. Jones Construction Co.

841 S.W.2d 703, 1992 Mo. App. LEXIS 1520
CourtMissouri Court of Appeals
DecidedSeptember 29, 1992
Docket59307, 59308
StatusPublished
Cited by39 cases

This text of 841 S.W.2d 703 (Blaine v. J.E. Jones Construction Co.) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blaine v. J.E. Jones Construction Co., 841 S.W.2d 703, 1992 Mo. App. LEXIS 1520 (Mo. Ct. App. 1992).

Opinion

SATZ, Judge.

This is a tort action in fraud. Plaintiffs are owners of homes in Westglen Farms Subdivision in St. Louis County. They purchased their homes from defendant, J.E. Jones Construction Company (Jones Company), the company that developed the subdivision and constructed their homes. Plaintiffs sued the Jones Company for fraud, alleging they were induced into purchasing their homes by the Jones Company’s fraudulent concealment of its intent to build an apartment complex in the subdivision near their homes.

In several amended petitions, plaintiffs also attempted to establish themselves as the proper representatives of an association or of a class of other purchasers of homes in the subdivision to sue the Jones Company for fraud. The Jones Company’s several motions to dismiss the relevant counts in the amended petitions were granted.

Plaintiffs also attempted to join Gordon A. Gundaker Real Estate Company, Inc. (Gundaker) as a defendant, alleging Gun-daker acted as the sales agent for the Jones Company, or, in the alternative, alleging Gundaker and the Jones Company conspired to defraud plaintiffs. Gundaker’s motions to dismiss the counts containing these allegations were granted.

Plaintiffs submitted their separate claims of fraud to the jury based upon fraudulent concealment. The jury returned separate verdicts for the plaintiffs and judgments were entered accordingly. The Jones Company appeals from these verdicts and judgments. Plaintiffs appeal from the court’s dismissal of their representative counts, their conspiracy count and additional counts against Gundaker.

We reverse the judgments in favor of plaintiffs, affirm the court’s dismissals of the noted counts, and direct the court to enter judgment in favor of the Jones Company and Gundaker.

Plaintiffs’ claim of fraud against the Jones Company was based upon “fraudulent concealment”, as alleged in plaintiffs’ eighth and final amended petition and as submitted to the jury. Plaintiffs’ contention on appeal, as it was at trial, is that the Jones Company owed them the duty to disclose its intent to build an apartment complex in their subdivision near their homes. The Jones Company’s failure to disclose the plan, plaintiffs now contend, as they alleged at trial, was a “fraudulent concealment”. The Jones Company responds that it did not have this duty to disclose. We agree with defendant.

*705 Fraudulent Concealment/Passive Nondisclosure

A purchaser induced into a contract of sale of land or of a chattel by the fraud of the seller may affirm the contract and sue in fraud for damages or may disaffirm the contract and sue for recission and restitution. E.g., Denny v. Guyton, 327 Mo. 1030, 40 S.W.2d 562, 591 (banc 1931). Whether the particular action for fraud involves land or a chattel and regardless of the remedy chosen, our courts, at times, use the same general definitions of the substantive elements of fraud and of the procedural rules governing that action. The general policy consideration cutting across all these lines is fair conduct.

Generally, then, in law and in equity, one of the essential elements of fraud is a false representation. E.g., Grindley v. Blankenship, 671 S.W.2d 393, 395 (Mo.App.1984). The false representation may be made by spoken words or meaningful affirmative conduct. E.g., Wion v. Carl I. Brown & Co., 808 S.W.2d 950, 954-955 (Mo.App.1991). The spoken words may be completely false or half-truths which convey or create the same impression. E.g., Maples v. Charles Burt Realtor, Inc., 690 S.W.2d 202, 209 (Mo.App.1985). A party who speaks must speak truthfully. Id.

Silence or a passive failure to disclose facts is another matter. Early on, it was said that fraud will not lie for “tacit nondisclosure”. Prosser and Keeton, The Law of Torts, § 106 at 737 (5th ed. 1984). This statement reflects the business ethic of caveat emptor “together with a touch of the old tort notion that there can be no liability for nonfeasance, or merely doing nothing.” Id.

This statement has been mitigated by limitations and exceptions which almost swallow it up. Thus, we do impose a duty to disclose information where a classical fiduciary relationship exists, or, in an extension of that relationship, where one party expressly or by clear implication places a special confidence in the other. See, e.g., Jones v. Arnold, 359 Mo. 161, 221 S.W.2d 187, 193 (1949); Centerre Bank of Independence v. Bliss, 765 S.W.2d 276, 284 (Mo.App.1988); Fairmont Foods Co. v. Skelly Oil Co., 616 S.W.2d 548, 550-551 (Mo.App.1981). The latter exception is quite often loosely characterized as a relationship where one of the parties has superior knowledge which is not within the fair and reasonable reach of the other. See, e.g., Fairmont Foods, supra, at 550. In these situations, the passive nondisclosure of information, one party has an affirmative duty to disclose information, and that party’s failure to disclose the information serves as a substitute for the false representation element required in fraud. Triggs v. Risinger, 772 S.W.2d 381, 382 (Mo.App.1989); see, also, Scott v. Hill, 330 Mo. 490, 50 S.W.2d 110, 111 (1932). But, in these situations, the real question is, as it is here, when is there a duty to speak and disclose.

Duty of the Jones Company/Plaintiffs’ Theory of Recovery

Plaintiffs filed eight petitions in this cause, their original petition and seven amended petitions. In their original petition, as we read it, plaintiffs base their claim of fraud on alleged false representations made by the Jones Company or by its agent Gundaker. More specifically, plaintiffs allege: In July 1979, the Jones Company recorded a plan to develop the Westglen Farm Subdivision which permitted the construction of single family homes, as well as 150 multi-family units and about 6 acres of commercial units at the entrance to the subdivision. “At the time the plat was recorded, The Jones Company planned to construct commercial buildings and apartments on the tract of property at the entrance to the subdivision ....” From 1979 through 1986, however, the Jones Company, itself or through its agent Gundaker, allegedly “made representations” to plaintiffs that this tract of land “was to be common ground to the subdivision; was to be condominiums; was to be single family homes; or had not been planned for development.” In 1985, the Jones Company allegedly began to construct an apartment complex on the tract in question. The Jones Company had an alleged duty to disclose “its intent to construct apartments and commercial buildings” on this tract. *706 This claim of fraud is clearly based upon false representations, and the claim remains the same through plaintiffs’ next five amended petitions.

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Bluebook (online)
841 S.W.2d 703, 1992 Mo. App. LEXIS 1520, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blaine-v-je-jones-construction-co-moctapp-1992.