Allegations of fraud appear to be viable issues for trial if nondisclosure of a known material defect in the lots constitutes actionable fraud as to the appellants.
Plaintiff home buyers selected the location of the home site and defendant builders bought the site, constructed the home, and sold it to the buyers. The buyers sued builders for damages because of soil saline conditions, alleging breach of an implied warranty of fitness and fraud by concealment. The district court granted summary judgment in favor of the builders.
Was privity essential to the home buyers' fraud claims?
Court held where delivery and acceptance of warranty deed occurred any implied warranties were invalid. On issue of fraud court reversed lower court's ruling. Court found that privity was not essential in fraud claim as third party may sue on contract made for his benefit and the builder who made fraudulent misrepresentation or concealment would be subject to pecuniary loss to persons who he intended or had reason to expect would reply on misrepresentation. Summary judgment on action reversed, as the home buyers had produced sufficient evidence to defeat the summary judgment motion.