___________________________

Rockingham

No. 97-288

RICHARD S. SNIERSON & a.

v.

ROBERT T. SCRUTON & a.

April 12, 2000

Backus, Meyer, Solomon, Rood & Branch, of Manchester (Robert A. Backus on the brief and orally), for the plaintiffs.

McKittrick Law Offices, of North Hampton (J. Joseph McKittrick on the brief and orally), for defendants Robert T. and Janet E. Scruton.

Law Office of Rodney L. Stark, P.A., of Manchester (Sherry M. Hieber on the brief and orally), for defendants Tate & Foss, Inc. and Barbara Dunkle.

HORTON, J. The plaintiffs, Richard and Alexandria Snierson, appeal the decision of the Superior Court (McHugh, J.) dismissing their petition in equity for failure to state claims upon which relief could be granted. We affirm in part, reverse in part, and remand.

In August 1994, the plaintiffs entered into a sales agreement to purchase a residence from defendants Robert and Janet Scruton. The closing occurred on September 27, 1994. The plaintiffs allegedly encountered subsequent difficulties with the septic system. They contend that the Scrutons, the Scrutons' realtor, defendant Tate & Foss, Inc. (Tate & Foss), and the real estate agent, defendant Barbara Dunkle, misrepresented and withheld facts relating to the septic system and various other deficiencies in the property in a seller's disclosure form and in oral communications. Based primarily on these allegations, the plaintiffs filed a lengthy petition in superior court requesting rescission of the real estate conveyance, disgorgement of the realtor's commission, and other relief.

The petition contains the following counts: count I (against the Scrutons), entitled "Rescission [B]ased Upon Common Law Fraud and Misrepresentation and Fraud in the Inducement"; count II (against Tate & Foss and Dunkle), entitled "Rescission [B]ased Upon Common Law Fraud and Misrepresentation and Fraud in the Inducement by the Scrutons' Agent"; count III (against the Scrutons), entitled "Rescission for Failure of Consideration"; count IV (against Tate & Foss and Dunkle), entitled "Re[s]cis[s]ion Based Upon Violation of Consumer Protection Act, RSA Ch[apter] 358-A"; count V (against the Scrutons), entitled "Rescission Based Upon Written Misrepresentations"; count VI (against the Scrutons), entitled "Rescission Based Upon Violation of Duties Under RSA 477:4-c and RSA 4[7]7:4-d"; count VII (against the Scrutons), entitled "Rescission [B]ased Upon Common Law Negligent Misrepresentation"; count VIII (against the Scrutons), entitled "Rescission Based Upon Violation of Implied Covenant [t]o Act in Good Faith and [t]o Deal Fairly"; count IX (against Tate & Foss and Dunkle), entitled "Rescission Based Upon Violation of Implied Covenant [t]o Act in Good Faith and [t]o Deal Fairly"; count X (against Tate & Foss and Dunkle), entitled "Violation of Duty under RSA Chapter 331-A"; count XI (against Tate & Foss and Dunkle), entitled "Violation of Duty under RSA Chapter 331-A and N.H. Real Estate Commission Rule Rea 701.02"; count XII (against Tate & Foss and Dunkle), entitled "Violation of Duty under RSA Chapter 331-A and N.H. Real Estate Commission Rule Rea 701.05"; and count XIII (against Tate & Foss and Dunkle), entitled "Negligence."

The defendants moved to dismiss the petition. The court dismissed all counts for failure to state a claim upon which relief could be granted, and the plaintiffs unsuccessfully moved for reconsideration. The court also denied the plaintiffs' motion to amend because, among other reasons, the petition was a "blatant abuse of the system."

Both structurally and substantively, the plaintiffs' petition is onerous. It is forty-four pages long and contains nearly two hundred paragraphs. The first twenty-four pages are an amalgam of diverse factual and legal assertions relating to the property at issue. In the remaining twenty pages of the petition, the plaintiffs plead thirteen counts. Several counts are repetitious, most are captioned in a confusing fashion, and many lack elements and/or sufficient supporting factual allegations. We do not condone pleadings that reach such a level of prolixity. See Green v. Shaw, 114 N.H. 289, 291, 319 A.2d 284, 285 (1974); Morency v. Plourde, 96 N.H. 344, 346, 76 A.2d 791, 792 (1950). When faced with an excessively burdensome and muddled pleading, the trial court may require the submitting party to file a more orderly and concise pleading. See Porter v. Dziura, 104 N.H. 89, 90, 179 A.2d 281, 282 (1962).

The plaintiffs argue on appeal that certain of their claims were sufficiently pleaded. When reviewing a decision of the trial court dismissing a cause of action for failure to state a claim, we assume all allegations in the plaintiffs' pleadings to be true and construe all reasonable inferences therefrom in the light most favorable to the plaintiffs. Thompson v. Forest, 136 N.H. 215, 216, 614 A.2d 1064, 1065 (1992). We will not, however, "assume the truth or accuracy of any allegations which are not well-pleaded, including the statement of conclusions of fact and principles of law." ERG, Inc. v. Barnes, 137 N.H. 186, 190, 624 A.2d 555, 558 (1993). We will reverse the trial court when the allegations in the plaintiffs' pleadings are reasonably susceptible of an interpretation that would permit recovery. Thompson, 136 N.H. at 216, 614 A.2d at 1065.

I. Fraud and Negligent Misrepresentation as to the Scrutons

The plaintiffs first argue that their petition states a claim of fraud against the Scrutons. We agree.

To establish fraud, a plaintiff must prove that the defendant made a representation with knowledge of its falsity or with conscious indifference to its truth with the intention to cause another to rely upon it. Patch v. Arsenault, 139 N.H. 313, 319, 653 A.2d 1079, 1083-84 (1995). In addition, a plaintiff must demonstrate justifiable reliance. Gray v. First NH Banks, 138 N.H. 279, 283, 640 A.2d 276, 279 (1994). A plaintiff cannot allege fraud in general terms, but must specifically allege the essential details of the fraud and the facts of the defendants' fraudulent conduct. Proctor v. Bank of N.H., 123 N.H. 395, 399, 464 A.2d 263, 265 (1983).

The plaintiffs allege in count V that: (1) the Scrutons made written misrepresentations to them in a disclosure form regarding their septic system and compliance with various legal requirements with knowledge of the falsity of the representations or with conscious indifference to the truth; (2) the Scrutons intended to induce their reliance; and (3) the plaintiffs reasonably relied on the Scrutons' misrepresentations to their detriment. The plaintiffs specifically allege that, in a form entitled "REPRESENTATIONS BY SELLER," the Scrutons represented that: (1) they had had no problems with their septic tank or leaching field; (2) there had been no room additions, structural modifications, or other alterations or repairs made to the property without the necessary permits or that were noncompliant with building codes; (3) there were no zoning violations, non-conforming uses, or set-back requirement violations; and (4) the septic system was neither installed nor modified after August 30, 1977. The plaintiffs allege that, in fact, the Scrutons had encountered difficulties with their septic system, and that they had built an addition to the home and modified its plumbing in violation of the Rye Building Code, Rye Zoning Ordinance, and other provisions of law. They further allege that the septic system was modified by the Scrutons after August 30, 1977, and that the property does not actually contain a leach field. Finally, they allege that the Scrutons knew or should have known about the property's defects because they lived there for nineteen years. Further supporting the plaintiffs' allegation that the Scrutons knew or should have known of the septic defects are specific allegations that the septic tank has a working capacity substantially smaller than that required when the Scrutons obtained the building permit for their addition in 1977, that the Scrutons themselves had problems with the septic tank, and that the plaintiffs have noticed a foul odor from time to time since they moved in.

The plaintiffs have sufficiently pleaded the elements of fraud by specifically alleging the "essential details of the fraud" and "the facts of the defendant's fraudulent actions." Proctor, 123 N.H. at 399, 464 A.2d at 265. The plaintiffs' petition is, therefore, reasonably susceptible of a construction that would permit recovery for fraud against the Scrutons.

The plaintiffs next argue that the petition states a claim of negligent misrepresentation against the Scrutons. We agree.

The elements of that cause of action are a negligent misrepresentation of a material fact by the defendant and justifiable reliance by the plaintiff. Hydraform Prods. Corp. v. American Steel & Alum. Corp., 127 N.H. 187, 200, 498 A.2d 339, 347 (1985). "It is the duty of one who volunteers information to another not having equal knowledge, with the intention that he [or she] will act upon it, to exercise reasonable care to verify the truth of his [or her] statements before making them." Patch, 139 N.H. at 319, 653 A.2d at 1084 (quotation omitted).

As outlined in our analysis of the fraud claim, the allegations in count V include that the representations made by the Scrutons were false and that the Scrutons should have known of their falsity. In addition, the plaintiffs allege that the representations were integral to the sales agreement and that they reasonably relied to their detriment on the false representations. Accordingly, the plaintiffs have sufficiently pleaded negligent misrepresentation against the Scrutons.

The Scrutons argue that because the seller's disclosure form expressly warned that it did not constitute a warranty and was not a substitute for a buyer's inspection, it would be "illogical to conclude that [they] intended the [plaintiffs] to rely upon their statements" in the form. We disagree. The warning in the disclosure form does not preclude the finder of fact from determining in the context of a fraud or negligent misrepresentation claim that the Scrutons intended to induce the plaintiffs' reliance with their written disclosures.

The Scrutons also argue that because the disclosure form required them to reveal only known "significant" defects, they did not misrepresent facts when they answered questions in the form. The plaintiffs allege that the Scrutons knew or should have known of the alleged defects and that their disclosures were misrepresentations. The plaintiffs also allege defects in the property that could be considered significant. Whether the Scrutons' written disclosures constitute misrepresentations, and whether the language of the disclosure form is pertinent to those determinations, are questions for the fact finder on remand.

The plaintiffs argue that the trial court erroneously dismissed their claim, set forth in count II of the petition, for rescission as to Tate & Foss and Dunkle based on their fraud and misrepresentation. The plaintiffs elected to seek rescission as to these defendants in lieu of seeking damages. Specifically, they seek the disgorgement of the real estate commission paid by the Scrutons to Tate & Foss and Dunkle. According to the plaintiffs' prayer for relief, the disgorged commission, plus interest, is to be paid directly to them, whereupon they will credit the Scrutons with that amount against the amount due them from the Scrutons.

We conclude that the plaintiffs have no legal interest in any commission paid to Tate & Foss and Dunkle by the Scrutons, and thus they have no standing to seek its repayment. See 59 Am. Jur. 2d Parties