Hutchison v. Pyburn

William and Jo Lynn Hutchison (plaintiffs) bought a house with a sewage problem from Robert and Carol Pyburn (defendants). The Pyburns had bought the house from builder Jack Williams (defendant), whose brother, real estate agent John Williams (defendant) helped the Pyburns sell the house to the Hutchisons. Within six months, the Hutchisons noticed seepage from the sewage system and discovered the property lacked the soil and overflow field necessary for proper sewage disposal. The city knew about the problem but issued a building permit by mistake. Evidently Robert Pyburn discovered the problem after buying the property and asked the builder to release him from the deal, and the two negotiated a resale to the Hutchisons. The Hutchisons sued, alleging that failure to disclose the problem amounted to fraud and deceit and that the condition of the property breached warranties in the deed. The judge dismissed the claims against the real-estate-agent brother but ruled in the Hutchisons’ favor against the builder and the sellers. The decree allowed the Hutchisons to rescind the contract and awarded incidental damages, moving costs, and attorney fees, less the reasonable rental value while the Hutchisons lived there. The judge also assessed $5,000 in punitive damages against the builder and sellers, specifically finding their misrepresentation fraudulent. The builder and sellers appealed, challenging the award of punitive damages when the judge also decreed rescission of the contract and deed.