National Groups, LLC v. Nardi
2013 Conn. App. LEXIS 424
Conn. App. Ct.2013Background
- The Nardis (defendants) leased an office building; a separate ground-lease dispute with the ground lessor over parking was pending when The National Groups, LLC (plaintiff) negotiated to buy the building.
- Plaintiff's attorney, Kenneth Grader, contacted defendants’ attorney, Daniel Mara, on March 4, 2009 and expressed interest in purchasing and concern about the pending litigation; Mara memorialized this contact.
- Counsel collaboratively drafted a multi-document agreement executed March 16, 2009 that (inadvertently) included paragraph 10(d) stating defendants had no knowledge of pending litigation concerning the premises.
- The pending litigation later concluded that only 48 of 88 parking spaces were available; plaintiff declined to exercise its purchase option and sued for negligent misrepresentation based on paragraph 10(d).
- Trial court found the plaintiff did not actually or reasonably rely on the misstatement because Grader (the plaintiff’s agent) knew of the litigation and the court was not convinced the plaintiff’s principal read and relied on the single, inconspicuous paragraph; judgment for defendants affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parol evidence barred using pre-contract communications (Grader–Mara call) to show knowledge/reliance | Parol rule prevents using the March 4 call to negate reliance as a matter of law | Parol rule inapplicable to tort claims about inducement; extrinsic evidence may disprove misrepresentation/reliance | Parol evidence rule did not bar use of the March 4 communication for the negligent misrepresentation inquiry |
| Whether reliance on a contractual term (paragraph 10(d)) must be found reasonable as a matter of law | A contractual representation imputes reliance; court must treat reliance as established when the term is in the contract | Contract principles do not automatically establish reasonable reliance in a tort claim; tort inquiry is distinct | Contract doctrine does not compel a legal conclusion of reasonable reliance for negligent misrepresentation |
| Whether attorney Grader’s knowledge is imputed to the plaintiff and defeats reasonable reliance | Plaintiff argued it (or its principal) did not rely; timing and other facts could make reliance reasonable despite counsel’s knowledge | Attorney is agent; knowledge of an agent acting within authority is imputed to principal and negates reasonable reliance | Grader’s knowledge was imputed to plaintiff and defeated the claim of reasonable reliance |
| Whether the trial court’s finding that reliance was not reasonable was clearly erroneous | Plaintiff: factual finding was wrong; Arate credibly testified she read and relied on paragraph 10(d) | Defendants: trial court credited Mara, found Grader knew, and disbelieved reliance testimony; factual findings entitled to deference | Appellate court found ample record support and deferred to credibility findings; no clear error |
Key Cases Cited
- Savings Bank of Manchester v. Ration Financial Services, Inc., 91 Conn. App. 386 (plaintiff must prove justifiable reliance for negligent misrepresentation)
- Glazer v. Dress Barn, Inc., 274 Conn. 33 (innocent misrepresentation can give rise to liability; reliance requirement)
- Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559 (reasonableness of reliance is determined from all circumstances)
- Gibson v. Capano, 241 Conn. 725 (plaintiff’s knowledge of underlying facts can preclude reasonable reliance)
- Sovereign Bank v. Licata, 116 Conn. App. 483 (negligent misrepresentation tort distinct from contract enforcement; extrinsic defenses may not bar tort claim analysis)
- Ackerman v. Sobol Family Partnership, LLP, 298 Conn. 495 (attorney’s knowledge is imputed to client)
- Visconti v. Pepper Partners Ltd. Partnership, 77 Conn. App. 675 (reliance and knowledge principles in negligent misrepresentation actions)