Petrucelli v. Palmer

Michael and Margaret Petrucelli (plaintiffs) purchased a small vacation property from Jeannine Palmer (defendant). Palmer had used the property with her late husband, and according to Palmer, her husband had taken care of any property issues. The property appeared to have a house and septic field located on it. In the sales contract with the Petrucellis, Palmer represented that any building and septic system were located entirely within the property’s lot lines. The Petrucellis believed Palmer’s representation and had no reason not to believe it. After the transaction’s closing, a land survey revealed that a corner of the house and most or all of the septic system were actually located beyond the rear boundary of the property, on property controlled by a power company. The power company would not agree to allow a septic-system encroachment. The Petrucellis sued Palmer alleging various theories of liability, including breach of contract, fraud, and equitable rescission, and wished to rescind the contract. The parties moved for summary judgment. Palmer conceded that the sales contract contained a material misrepresentation but disputed that it was intentionally made. In addition to contractual rescission, the Petrucellis sought an equitable recovery of the expenses they incurred from entering the sales contract, such as paying taxes and insurance, as well as their attorney’s fees from having to litigate the matter. The parties’ contract contained a clause that allowed for recovery of attorney’s fees in the event of litigation over the contract.