Facts

In 1982, Warren and Gloria Hill (buyers) (plaintiffs) entered into an agreement to purchase the residence of Ora and Barbara Jones (sellers) (defendants). The purchase agreement required sellers to pay for and place in escrow a termite inspection report stating that the property did not have a termite infestation. Before executing the purchase agreement, buyers visited the residence on multiple occasions. During one visit, buyers noticed a small “ripple” in the wood floor that they believed could be termite damage, but were assured by sellers it was water damage. When completed, the termite inspection report said that no visible evidence of termite infestation existed, and the realtor informed buyers that the property passed termite inspection. Buyers executed the purchase agreement and moved into the residence. After moving in, however, buyers learned that sellers had actually experienced termite infestation on several prior occasions, and had paid for several termite infestation treatments. A neighbor also pointed out several examples of termite damage throughout the residence and the surrounding fence. Finally, on a second inspection, a termite inspector confirmed evidence of termite infestation. Sellers did not share any of this information with buyers, the realtor, or the termite inspector. Buyers brought suit alleging that sellers made misrepresentations and failed to disclose material facts to them about termite damage. The trial court granted summary judgment for sellers, and both parties appealed.

Rule of Law

Issue

Holding and Reasoning (Meyerson, J.)