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7. If the widow asserts a claim based on misrepresentation against the developer, will she prevail?
The widow then consulted her nephew, a law student, who researched the question and advised her that the developer had no power of condemnation under state law. The widow had been badly frightened by the developer's threat, and was outraged when she learned that the developer had lied to her.
A real estate developer was trying to purchase land on which he intended to build a large commercial development. An elderly widow had rejected all of the developer's offers to buy her ancestral home, where she had lived all her life and which was located in the middle of the developer's planned development. Finally, the developer offered her $250,000, which was the fair market value of the property. He also knowingly lied to the widow and told her that if she rejected it, state law authorized him to have her property condemned.
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D is correct. In this case, a developer attempted to induce the widow to sell her home by misrepresenting his legal power to have the property condemned. Although the developer clearly made a misrepresentation of material fact in order to induce the widow to sell, she would not prevail on a misrepresentation claim. She did not ultimately rely on the misrepresentation to her detriment. Instead, the widow consulted with her nephew, learned the truth, and acted accordingly. Thus, since the widow did not rely on the misrepresentation, and thereby avoided harm, she will not prevail on a misrepresentation claim.
A is incorrect. Although the developer knew he had no legal power of condemnation, he would not be liable for misrepresentation. Liability attaches for misrepresentation when a defendant makes a misrepresentation of material fact to induce behavior by the plaintiff, and the plaintiff relies on the misrepresentation to his detriment. Here, although the developer misrepresented his power of condemnation to induce the widow to sell her home, she did not rely on this misrepresentation to her detriment. Instead of accepting his claims at face value, she consulted with her nephew. Thus, because the widow was not ultimately harmed, she will not recover damages.
B is incorrect. Although the developer did try to take advantage of the widow by inducing her to sell through misrepresentation, she would not prevail, because she did not actually rely on the misrepresentation to her detriment. Further, unfair advantage due to differentials in knowledge is an element of a claim for misrepresentation of law, not misrepresentation of fact. To prevail on a claim for misrepresentation of law, the defendant must be in a fiduciary-like, special relationship with the plaintiff. Under the facts here, there was no such relationship between the developer and the widow.
C is incorrect. Although the widow will not prevail, because she did not ultimately rely on the developer's misrepresentations, the developer would not avoid liability on the basis that he had offered fair market value for the widow's home. Notwithstanding his willingness to pay fair market value, the developer sought to induce the widow to sell by falsely representing that he had the power to condemn the property and could have claimed her land without her consent. Had the widow not sought a second opinion and instead sold her property based on the developer's misrepresentation, she would have prevailed on her claim.