Gray v. First NH Banks

Peter Gray and his family (plaintiffs) worked with La-Sal Properties of New Hampshire, Inc. (La-Sal) (defendant), a real-estate agency, to purchase a lakefront bowling alley owned by First NH Banks (NH) (defendant). After Gray offered $225,000 for the property, NH countered with a price of $325,000, which Gray did not accept. Thereafter, Gray’s coworker and former employee of the bowling alley, Philip Stone, told Gray about significant defects in the bowling alley’s septic system. Gray said that he would use the septic issues in negotiations with NH to drive down the price of the property. Gray then submitted a purchase proposal, offering $275,000 and acknowledging the septic-system defects. Days later, Gray and NH executed a sales agreement, which did not explicitly acknowledge the septic issues. The Grays closed on the property and received title from NH. Shortly thereafter, the Grays began experiencing the septic-system problems, including terrible odors. The Grays soon learned that a local statute, RSA 485-A:39, mandated a seller of waterfront property to prepare a site evaluation of the property’s sewage system before the property could be put up for sale. After requesting a copy of the evaluation, the Grays found that the evaluation was dated only one day prior to closing. The Grays filed suit against NH and La-Sal, contending that (1) NH’s violation of RSA 485-A:39 in not preparing the site assessment before offering the property for sale constituted sufficient grounds for rescission of the contract and (2) NH’s and La-Sal’s fraudulent misrepresentations about the property entitled the Grays to money damages. The trial court concluded that the Grays’ knowledge of the septic system before the sale negated all claims, and dismissed the suit. The Grays appealed.