Opinion ID: 2276565
Heading Depth: 1
Heading Rank: 4

Heading: Fraudulent or Negligent Misrepresentation Section 11-135

Text: As we indicated, the District Court found no liability on the part of LLVC for fraud or negligent misrepresentation on two groundsthat (1) as a matter of statutory construction, a Council of Unit Owners is not liable under § 11-135 for concealing information or misrepresenting facts on the Certificate it is required to provide to the seller of a unit, and (2) in any event, the information supplied by LLVC in this case was sufficient to alert petitioner to the problems and was not, therefore, misleading. The Circuit Court did not address the statutory construction question, but affirmed on the alternative ground that the information supplied was adequate to place petitioner on notice of the potential defects. Section 11-135 itself addresses the issue only by implication. As we indicated, § 11-135(a) makes a contract for the resale of a condominium unit unenforceable unless the seller provides certain information, including the existence of health or building code violations known to LLVC and pending litigation, to the buyer. Section 11-135(c)(1) requires the Council of Unit Owners to furnish a certificate containing the information necessary to enable the unit owner to comply with subsection (a) of this section and states that [a] unit owner providing a certificate under subsection (a) of this section is not liable to the purchaser for any erroneous information provided by the council of unit owners and included in the certificate. Section 11-135(c)(2) provides, however, with certain enumerated exceptions, that, with respect to the remaining information that a unit owner is required to disclose under § 11-135(a), the unit owner is liable to the purchaser for damages proximately caused by an untrue statement about a material fact or an omission of a material fact that is necessary to make the statements made not misleading, in light of the circumstances under which the statements were made. As the District Court pointed out, the statute addresses specifically the liability of the seller, but is silent as to the liability of the Council of Unit Owners with respect to information supplied by it. We are aware of no cases construing either the Maryland provision or similar provisions in other States in this context. This appears to be a case of first impression. [5] Petitioner's action, however, is not one of statutory liability. It is for fraud or negligent misrepresentation. Section 11-135 is relevant only to the extent that it provides a duty of care to a prospective purchaser such as petitioner and does not limit or abrogate any tort liability arising from the violation of such a duty. To recover in a tort action for fraudulent misrepresentation, a plaintiff must prove that a false representation was made, that its falsity was either known to the maker or that the representation was made with such reckless indifference to the truth as to be equivalent to actual knowledge of falsity, that the representation was made for the purpose of defrauding the plaintiff, that the plaintiff not only relied on the representation but had a right to rely on it and would not have done the thing from which the injury arose had the misrepresentation not been made, and that the plaintiff actually suffered damage directly resulting from the misrepresentation. See Gittings v. Von Dorn, 136 Md. 10, 15-16, 109 A. 553, 553-54 (1920); Martens Chevrolet v. Seney, 292 Md. 328, 333, 439 A.2d 534, 537 (1982). To prevail in an action for negligent misrepresentation, the plaintiff must show that (1) the defendant, owing a duty of care to the plaintiff, negligently asserted a false statement; (2) the defendant intended that the statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, took action in reliance on the statement, and (5) the plaintiff suffered damage proximately caused by the defendant's negligence. See Martens Chevrolet v. Seney, supra, 292 Md. at 337, 439 A.2d at 537; Gross v. Sussex, 332 Md. 247, 259, 630 A.2d 1156, 1162 (1993); Sheets v. Brethren Mutual, 342 Md. 634, 657, 679 A.2d 540, 551 (1996). The courts below did not address whether LLVC owed any duty to petitioner with respect to the information it supplied to Ms. Dickison, but there can be no doubt that such a duty was owed. As a general rule, when the failure to exercise due care creates a risk of economic loss only, and not the risk of personal injury, we have required an intimate nexus between the parties as a condition to the imposition of tort liability. Jacques v. First Nat'l Bank, 307 Md. 527, 534-35, 515 A.2d 756, 759-60 (1986); Village of Cross Keys v. U.S. Gypsum, 315 Md. 741, 753, 556 A.2d 1126, 1134 (1989). That intimate nexus may be satisfied by contractual privity, which did not exist between LLVC and petitioner, or its equivalent. Id. One equivalent is stated in § 552 of the RESTATEMENT (SECOND) OF TORTS (1965), which, in relevant part, provides that (1) a person who, in the course of its business, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance on that information, if the person fails to exercise reasonable care or competence in obtaining or communicating the information, and (2) the liability of a person who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them. Those principles have been adopted by this Court and are a part of the Maryland law. See Village of Cross Keys v. U.S. Gypsum, supra, 315 Md. 741, 556 A.2d 1126; Gross v. Sussex, supra, 332 Md. 247, 630 A.2d 1156. LLVC supplied the information concerning code violations and pending litigation for the guidance of others in their business transactions. Indeed, it was under a public duty, imposed by statute, to provide that information to a unit owner for the express purpose of allowing that unit owner to transmit the information to a prospective buyer. As a prospective buyer, petitioner was clearly within the class of persons for whose benefit the duty was created. The duty to provide accurate and non-misleading information extended to petitioner. The principal problem for petitioner, at least with respect to the Violation Notice, arises from a circumstance that neither the parties nor the lower courts appear to have recognized. As we indicated, Item 8 of the Certificate of Resale declared that LLVC had no knowledge of any violation of the health or building codes. That statement, as we further indicated, implemented §§ 11-135(a)(4)(x) and 11-135(c), which mandate the disclosure of known violations of the  health or building codes . (Emphasis added). The only violation apparently known to LLVC, however, did not concern the health or building codes, but was of the county housing code. Unless § 11-135(a)(4)(x) can reasonably be read as including a housing code, notwithstanding that the statute refers only to health or building codes, the statement made by LLVC in Item 8 was neither false nor misleading. In construing statutes, we obviously begin with the language of the statute. If that language, both on its face and in context, is clear and unambiguous, we need go no further. We give the language its plain meaning. We do not add or delete words in order to reflect an intent not evidenced by what the Legislature actually said and we do not construe statutes with  `forced or subtle interpretations' that limit or extend its application. Condon v. State, 332 Md. 481, 491, 632 A.2d 753, 758 (1993), quoting in part Tucker v. Fireman's Fund Ins. Co., 308 Md. 69, 73, 517 A.2d 730, 732 (1986). See also C &P Telephone Co. v. Director of Finance, 343 Md. 567, 578-79, 683 A.2d 512, 517 (1996). The requirements now embodied in § 11-135(a)(4)(x) and (c) first came into the Maryland law in 1981 with the enactment of the initial condominium law by 1981 Md. Laws, ch. 246. The requirement and the language used to express it apparently were taken from §§ 4-107(a)(11) and 4-107(b) of the Uniform Condominium Act proposed by the National Conference of Commissioners on Uniform State Laws in 1977. See HANDBOOK OF THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND PROCEEDINGS OF THE ANNUAL CONFERENCE MEETING IN ITS EIGHTY-SIXTH YEAR at 314-15 (1977). Those sub-sections of the proposed Uniform Act contained language almost identical to that placed in §§ 11-135(a)(4)(x) and 11-135(c) of the Maryland Condominium Act. Like the Maryland Condominium Act, they required the disclosure of known violations of  the health or building codes . When the Maryland Condominium Act was first enacted in 1981 and when it was rewritten in 1982 and 1986, most, if not all, of the counties in Maryland had building codes patterned principally on a national model building code that, since 1950, has been promulgated and updated by the Building Officials and Code Administrators International, Inc. (BOCA). That remains the case today. In accordance with empowering provisions in the Maryland Code (1957, 1998 Repl.Vol.), art. 25A, § 5(J) and art. 25B, § 13, most, if not all, of the home rule or charter counties have adopted health-related ordinances of one kind or another, although not all have adopted separate health codes. In enacting their local building codes, the counties ordinarily adopted the BOCA building code by reference, subject to such particular modifications that the county government desired, and added, from time to time, other provisions. In addition to the model building code, BOCA developed and published in 1964 a separate model housing code which, from and after its 1975 revision by BOCA, has been titled by BOCA as the Basic Property Maintenance Code. There is no BOCA model health code. Unlike the situation with respect to building and housing laws, most of the health laws in Maryland are State laws, enacted by the General Assembly or by regulation of the Secretary of Health and Mental Hygiene. The local health codes, to the extent they exist in Maryland, tend to vary from county to county. They usually supplement State laws and regulations and may cover such things as local hospitals, food service facilities, pest and animal control, refuse disposal, reporting communicable diseases, swimming pools, and air pollution. Although there may be some overlap among some of their provisions, the health, building, and housing codes generally deal with different matters and are found in separate parts of the county codes. The BOCA building code specifies substantive and procedural construction requirements for all types of structures, including standards and requirements relating to building heights, setbacks and lot lines, provisions for light and ventilation, structural loads and stresses, construction materials, mechanical systems, building floor area, egress facilities, landings, railings, slope of ramps and stairways, wall thicknesses, and fireproofing. Local building codes may add requirements relating to grading, drainage, and plumbing and electrical work and materials. The local housing codes, on the other hand, principally concern the maintenance and habitability of residential structures. They may include provisions dealing with landlord-tenant regulations, trash and litter, pest control, yard maintenance, minimum standards for light, ventilation, and heating, exterior walls, and unsafe conditions. Some of the Maryland subdivisionsincluding Baltimore City and Anne Arundel, Montgomery, and Prince Georges Countieshad adopted a separate housing code by 1981; others had not. In those counties that had a housing code, the housing code provisions were usually self-contained in a title, subtitle, or chapter separate from the building code. To the extent that the subdivisions had enacted health codes, they, too, were separate from the building codes. It seems clear, therefore, that, when the General Assembly chose to specify the disclosure of health and building code violations, it was presumably aware that there were separate housing codes in existence, both nationally and in some of the major Maryland subdivisions, and yet it omitted to require disclosure of known violations of housing codes. Whether that omission was deliberate or merely an oversight is not for us to determine; the important fact is that housing code violations are not currently required to be disclosed and LLVC did not purport to disclose any such violation. [6] The answer given in Item 8, therefore, was not false or misleading and in no way concerned the housing code violation referenced in the County's Violation Notice. We turn, then, to the response in Item 5 concerning litigation. All that the law requires in that regard is a statement of any judgments against the condominium and the existence of any pending suits to which the council of unit owners is a party. § 11-135(a)(4)(vii). The letters attached to the Resale Certificate revealed the existence of the only lawsuit to which LLVC was then a party. It is true that the answer, which comprised only those letters, revealed nothing about the current status of the litigation, but the law does not require information about current statusonly the existence of the litigation. Accordingly, that answer too was in conformance with the statute and was neither false nor misleading. Because the information supplied by LLVC was not false or misleading, petitioner failed to establish an action of either fraud or negligent misrepresentation. Whether she reasonably relied upon the information given is therefore irrelevant. JUDGMENT AFFIRMED, WITH COSTS.