Holcomb v. Hoffschneider - 297 N.W.2d 210 (Iowa 1980)

Rule:

Generally speaking, a recovery of exemplary or punitive damages in an action based on a fraudulent sale will be allowed only where the fraud is an aggravated one, as where it is malicious, deliberate, gross, or wanton.

Facts:

The sellers listed their house and lots for sale with the realtor. The size of the lots was stated as 6.8 acres. The realtor's salesman stated at various times prior to the sale that he would guarantee the property contained at least 6.6 acres. It actually contained 4.6 acres. The purchasers brought a complaint for fraudulent misrepresentation and made a demand for exemplary damages. The trial court withdrew the issue of exemplary damages from the jury, and the jury awarded the purchasers actual damages. The sellers and the realtor sought review of the decision which awarded purchasers damages as to their claim of fraudulent misrepresentation in the sale of real estate. The purchasers sought review of the trial court judgment that granted the realtor's motion to withdraw the issue of exemplary damages from the jury.

Issue:

1. Under the circumstances, could the purchaser be awarded actual damages for the fraudulent misrepresentation employed by the seller and the realtor? 
2. Did the trial court err in granting the realtor’s motion to withdraw the issue of exemplary damages from the jury? 

Answer:

1) Yes. 2) No.

Conclusion:

The court affirmed the trial court’s judgments, holding that the purchasers generated a jury issue on reliance because a jury could have said that although the purchasers doubted the representations as to acreage they took the salesman's repeated assurances. Moreover, the court held that a jury could reasonably find on the evidence that the purchaser was damaged where a seller fraudulently misrepresented the acreage or dimensions; the purchaser was not bound to show that he instituted inquiry by consulting records or plats, or employing a surveyor. Anent the second issue, the court held that the trial court properly withdrew the purchaser's punitive damages claim from the jury because "ordinary" or "simple" fraud alone was not enough for exemplary or punitive damages; rather, the fraud had to be an aggravated one, as where it was malicious, deliberate, gross, or wanton.