In thе Circuit Court for Howard County, James and Linda Rhee, the appellants, sued Highland Development Corporation, Richard Demmitt, Fisher Collins & Carter, Inc., and Ronald Carter, the appellees, for fraud. The Rhees are subsequent purchasers of a house the appellees built and sold to initial purchasers. The Rhees alleged that, when the appellees originally built and sold the house, they fraudulently concealed, by desecration and other acts of misconduct, the presence of an abandoned cemetery on the property. The appellees filed a motion to dismiss, which the circuit court granted, with prejudice, on the ground that the appellees did not owe the Rhees a legal duty. 1
On appeal, the Rhees challenge the court’s decision to dismiss the fraud claim, posing two questions for review, which we have consolidated and rephrased: 2
Did the circuit court err in granting the appellees’ motion to dismiss the appellants’ claim for fraudulent concealment?
For the following reasons, we shall reverse the judgment of the circuit court and remand the case to that court for further proceedings not inconsistent with this opinion.
FACTS AND PROCEEDINGS
The first amended complaint is the operative pleading for our purposes. It contains the following allegations of fact.
The Rhees own and live in a single-family house at 13809 Lakeside Drive, in Clarksville (“the Property”). The Property is part of Brighton Pines, a residential housing development. It is identified as “Lot 20” in the subdivision plan for Brighton Pines filed in the Howard County Land Records.
“In the 1980’s,” Highland Development Corporation (“Highland”) and Fisher, Carter & Collins (“FCC”) oversaw construction
When the appellees were in the process of developing Brighton Pines, they discovered on the land comprising Lot 20 a small cemetery consisting of more than twenty headstones, many dating to the 1700’s. The cemetery, which appeared to have been abandoned, is not depicted in the Howard County Land Records.
Demmitt and others acting at his direction removed the headstones so the area no longer was identifiable to the naked eye as a cemetery. Carter then moved the “building restriction lot lines for Lоt 20 so that the [now desecrated and not visible] cemetery was included in an area where no construction was allowed.” Finally, “[i]n order to fraudulently conceal that there was a cemetery” on Lot 20, Carter “removed any references to the cemetery before the worksheets [necessary for the subdivision approval] were submitted to any State or County agencies. As such, nothing in connection with the subdivision is recorded with any ... agency reflecting the presence of the cemetery” on Lot 20.
Lot 20 was sold to the initial purchasers as the Property. 4 The initial purchasers never knew that there was a desecrated cemetery on the Property. On March 14, 1991, the initial purchasers sold the Property to the Rhees. When the Rhees purchased the Property, they knew nothing about the desecrated cemetery. ’
Thirteen years later, on May 24, 2004, the Rhees learned there was a desecrated cemetery on the Property from a person who had been involved in developing Brighton Pines. 5 According to the Rhees, the appellees’ fraudulent concealment of the desecrated cemetery induced the Rhees to рurchase the Property; and the value of the Property with the desecrated cemetery is “significantly less than it otherwise would be absent the cemetery being located thereon.”
In dismissing the Rhees’ fraud claim, the court reasoned:
It is clear that with a fraud, whether it be misrepresentation or a concealment claim, there has to be a duty to the particular plaintiff. There needs to be, certainly, statements made to a particular- plaintiff and I think that to extend that beyond to a class of plaintiffs is certainly not appropriate in this case.
The Rhees noted a timely appeal.
DISCUSSION
Contentions
The Rhees contend the appellees’ duty, as developer/sellers of the Property, not to fraudulently conceal the presence of the cemetery on the Property extended to them, as subsequent purchasers. They argue that, just as the Court of Appeals held in
Diamond Point Plaza Ltd. Partnership v. Wells Fargo Bank, N.A.,
The appellees respond first that, in Maryland, an essential element of a cause of action sounding in fraud is the communication, verbal or non-verbal, of a misrepresentation by the defendant to the plaintiff. Here, there was no such communication, and so the fraud claim must fail. They further argue that, if it were otherwise, a developer/seller’s liability in fraud would extend to any number of subsequent purchasers of real property with whom the developer/seller had no contact and who did not have an ownership or possessory interest in the property when the acts of fraudulent concealment took place. The appellees further maintain that the presence of the cemetery on the Property was not a material defect affecting valuation, and for that reason they did not owe any duty to disclose it, either to the initial purchasers or to any subsequent purchasers. Finally, the appellees argue that in any event the Rhees did not sufficiently plead damages so as to state a claim for fraudulent concealment.
Standard of Review
On appeal from a decision to grant a motion to dismiss for failure to state a claim upon which relief can be granted, “ ‘we must determine whether the [operative] complaint, on its face, discloses a legally sufficient cause of action.’ ”
Schisler v. State,
Analysis
In Maryland, the essential elements of a causе of action for fraudulent concealment are:
“(1) the defendant owed a duty to the plaintiff to disclose a material fact; (2) the defendant failed to disclose that fact; (3) the defendant intended to defraud or deceive the plaintiff; (4) the plaintiff took action in justifiable reliance on the concealment; and (5) the plaintiff suffered damages as a result of the defendant’s concealment.”
Lloyd v. Gen. Motors Corp.,
In the context of the sale of real property, nondisclosure of a material fact
Non-disclosure is a failure to reveal facts. It may exist where there is neither representation nor concealment. Except in a few special types of transactions, such as insurance contracts and transactions between a fiduciary and his beneficiary, there is no general duty upon a party to a transaction to disclose facts to the other party. To create a cause of action, concealment must have been intentional and effective — the hiding of a material fact with the attained object of creating or continuing a false impression as to that fact. The affirmative suppression of the truth must have been with intent to deceive.
Fegeas v. Sherrill,
In discussing the fraudulent concealment of a cause of action, the Court of Appeals has observed:
“Absent a fiduciary relationship ... a plaintiff seeking to establish fraudulent concealment must prove that the defendant took affirmative action to conceal the cause of action and that the plaintiff could not have discovered the cause of action despite the exercise of reasonable diligence and that ... the affirmative act on the part of the defendant must ... be some act intended to exclude suspicion and prevent injury, or there must be a duty on the part of the defendant to disclose such facts, if known.”
Id.
(quoting
Frederick Road v. Brown & Sturm,
In other words, “fraudulent concealment — without any misrepresentation or duty to disclose — can constitute common-law fraud.... Although silenсe as to a material fact (nondisclosure), without an independent disclosure duty, usually does not give rise to an action for fraud, suppression of the truth with the intent to deceive (concealment) does.”
United States v. Colton,
See also Hoffman v. Stamper,
Thus, in Maryland, a cause of action for fraudulent concealment will lie in favor of a purchaser of real property against the seller when, in the absence of any independent duty' to disclose, the seller actively and with the intent to deceive сonceals a material fact about the property; the purchaser justifiably relies upon the concealment in buying the property; and, as a proximate result, the purchaser suffers damages. Here, apart from the disputed issues of extension of duty, materiality of defect, and damages, the factual allegations in the first amended complaint — that the appellees desecrated the cemetery and then affirmatively acted to hide its presence on Lot 20, intending to conceal, and in fact concealing, its presence — sufficiently state a cause of action for fraudulent concealment.
See Elsey v. Lamkin,
1. Scope of Duty not to Conceal
The primary issue in this appeal is whether a real property developer/seller’s duty to refrain frоm actively, intentionally concealing a material defect in the property can extend beyond his immediate purchaser, to a subsequent purchaser. That question is one of law.
Gourdine v. Crews,
As noted, the Rhees rely upon
Diamond Plaza Ltd. Partnership v. Wells Fargo Bank, N.A., supra,
In
Diamond Point,
a partnership that owned a shopping center was seeking to refinance a loan when it learned that one of its anchor tenants was planning to move out. As part of its loan application, it submitted a “Certificate of Borrower,” falsely asserting that, among other things, it had no knowledge that any current tenant intended to vacate the premises. On the basis of the information submitted in the loan application, the lender extended a non-recourse loan to the partnership. After the loan closed, the lender assigned it
to Paine Webber Real Estate Securities, Inc., which, in turn, bundled it with similar
Wells Fargo sued the partnership alleging breach of contract and several tort claims, including fraudulent misrepresentation. It claimed that the partnership had intentionally omitted the negative information about the anchor tenant from its “Certificate of Borrower.” The partnership defended on the ground that it had had no communication with Wells Fargo and there was no evidence that Wells Fargo rеlied on the “Certificate of Borrower.” The circuit court rejected that argument and, in a bench trial, rendered a verdict in favor of Wells Fargo on the fraud claim.
The Court of Appeals affirmed the fraudulent misrepresentation judgment. In doing so, it adopted the principles set forth in sections 531 and 533 of the Restatement (Second) of Torts. Section 531 states, as a general rule:
One who makes a fraudulent misrepresentation is subject to liability to the persons or class of persons whom he intends or has reason to expect to act or to refrain from action in reliance upon the misrepresentation, for pecuniary loss suffered by them through their justifiable reliance in the type of transaction in which he intends or has reason to expect their conduct to be influenced.
(Emphasis added.) Section 533 states with respect to a representation made to a third person:
The maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transaction involved.
(Emphasis added.)
The
Diamond Point
Court noted that the partnership was a sophisticated real estate investor and the mortgage documents
it executed expressly stated that the loan
might
be sold on the secondary market. Thus, the Court held, the partnership “had more than good reason to expect” that the misrepresentation (by omission) in its “Certificate of Borrower” would be relayed to and relied upon by future purchasers of the mortgage in that market. For that reason, it could be held liable for pecuniary loss sustained by a future purchaser (Wells Fargo) in justifiable reliance upon the misrepresentation.
Diamond Point, supra,
In response, the Rhees point to the following out-of-state cases in which courts have held developers or contrаctors liable for pecuniary loss to subsequent purchasers of real property for the tort of fraudulent concealment.
In
Barnhouse v. City of Pinole,
Here, the jury could have inferred that [the developer] failed to make the initial disclosures [i.e., to the initial purchasers] with the intention that subsequent purchasers would also act in ignorance. It was foreseeable that in a development of relatively inexpensive suburban tract homes, some would change hands. While an affirmative misrepresentation might not be repeated, a nondisclosure must necessarily be passed on. Only [the developer] knew what his soils engineers had found and it was unlikely that others would find out on their own. It was also possible that resulting damage would be delayed depending on the extent of rainfall. Under these circumstances it would be anomalous if liability for damages resulting from fraudulent concealment were to vanish simply because of the fortuitous event of an intervening resale. Ultimately in such a case it is the subsequent purchaser who is directly damaged by the initial nondisclosure.
We find no difficulty in extending the law of deceit to the situation presented here. Although a developer does not know that there will be subpurchasers, it is foreseeable that there will be and that they will be the ones to suffer damage. The developer has every reason to expect that if there are subpurchasers, a nondisclosure abo,ut subsurface soil conditions will be passed on to them. Perhaps most important, the rule we announce does not extend the vendor’s liability at all — it merely fails to reduce it. At the same time, without such a rule, the subpurchaser has no remedy because he or she can only turn to the vendor with knowledge for recovery.
Id.
at 192-93,
The holding in
Bamhouse
was modified somewhat in
Geernaert v. Mitchell,
The appellate court reversed. Noting that the standard for imposing liability under section 531 of the Restatement is more than mere “foreseeability,” the court quoted comment d, as follows:
“Virtually any misrepresentation is capable of being transmitted or repeated to third persons, and if sufficiently convincing may create an obvious risk that they may act in reliance upon it.... This risk is not enough for the liability covered in this Section. The maker of the misrepresentation must have information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach those persons and will influence their conduct.”
Id.
at 607,
The
Geemaert
court held that, for a seller of real property to be liable for pecuniary loss caused by fraudulent concealment or misrepresentation, it is not sufficient that it merely is foreseeable that his concealment or misrepresentation will be
passed on to subsequent purchasers. The seller must have special reason to expect that the concealment or misrepresentation will be passed on to, and relied upon by, the subsequent purchaser. “[W]ith each intervening resale and with each passing year between the occurrence of the original fraud and the lawsuit,” that will be more difficult to prove.
Id.
at 608,
In an analogous situation, in
Woodward v. Dietrich,
The Superior Court of Pennsylvania reversed. It cited sections 531 and 533 of the Restatement (Second) of Torts and traced the erosion of the early common law requirement that tort liability for fraud depend upon privity of contract. The court observed that,
[i]n оur present mobile society, estates in land are transferred freely and regularly. Thus, while [the contractor] may not have known that the [owners with whom he dealt] would sell their home, the possibility of such a sale during the useful lifetime of a sewer connection was certainly quite foreseeable.
Woodward, supra,
no reason why the ... sale of the home to the [new owners] should absolve [the contractor] from liability.... When fraud creates or conceals a, latent defect, transfer of the defective chattel or realty to an innocent third party should not absolve the wrongdoer from liability for damages caused by that undiscovered fraud.
Id.
at 141,
The appellees argue that
Bamhouse
and
Geemaert
are not persuasive because in California, unlike in Maryland, the seller of real property has a duty to disclose all material facts to his immediate purchaser, and therefore may be held liable to that purchaser for damages caused by a mere non-disclosure.
Compare Fegeas, supra,
Assuming this distinction in the laws of the two states exists, it is not dispositive. The factual allegations here are not of a mere non-disclosure, so that, in the absence of a legal duty to the initial purchaser to disclose a material defect, there would be no foundation to extend such a legal duty to a subsequent purchaser. The allegations are of intentional (and as we shall discuss, illegal) conduct actively undertaken to conceal the existence of the cemetery on Lot 20: Removing the headstones, redrawing the building envelope so as to avoid construction in the area of the desecrated cemetery, thereby hiding it further, and removing all reference to the cemetery from the worksheets necessary for subdivision approval, so that its existence would not become known to any State or County agencies involved in approving construction in Brighton Pines. These are not alleged acts of non-disclosure but of active suppression.
To be sure, in a state that has abolished the doctrine of caveat emptor and will impose liability against a seller of real property for mere non-disclosure of a material defect in real property, then when a plaintif&'purchaser later learns of the defect in the property, he likewise has a duty to disclose it upon re-sale to a subsequent purchaser (assuming it has not been corrected). For that reason, as long as the defect continues to exist, all future purchasers will be entitled to recover for non-disclosure if disclosure is not made. But in Maryland, as we have explained, ordinarily there is no duty to disclose and mere non-disclosure is not actionable. In this case, this distinction only will matter in the event that the Rhees prevail in the case and recover damages for fraudulent concealment, leave the desecrated cemetery in place (i.e., concealed), and then re-sell the Property without disclosing the cemetery’s existence or discounting the sales price to account for the cemetery’s presence. In that circumstance, the Rhees possibly could expose themselves to liability, however, for constructive fraud, based on passive concealment. 9
First, as we have discussed, the common law causes of action for fraudulent misrepresentation and fraudulent concealment are substantively indistinct.
[T]he concealment or suppression [of a material fact] is in effect a representation that what is disclosed is the whole truth. The gist of the action [for fraud] is fraudulently producing a false impression upon the mind of the other party; and if this result is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant....
Stewart,
supra,
Second, in bоth contexts, parties to subsequent transactions involving the
The maker [of the misrepresentation] may have reason to expect that his misrepresentation will reach any of a class of persons, although he does not know the identity of the person whom it will reach or indeed of any individual in the class — The class may include a rather large group, such as potential sellers, buyers, creditors, lenders or investors, or others who may be expected to enter into dealings in reliance upon the misrepresentation.
We agree with the observation of the court in
Barnhouse v. City of Pinole, supra,
that when concealment of a defect in real property is the seller’s (or seller/developer’s) intended objective, and he takes active measures to hide the defect, he is expecting that in the ordinary course of events the dеfect will remain concealed, not only from the initial purchasers but also from future purchasers,
i.e.,
that, absent an intervening
event, the concealment will be passed on.
Bamhouse, supra,
That equitable concept is no different than the one underlying limitations statutes that toll causes of action concealed by fraud. See Md.Code (1974, 2006 RepLVol.), section 5-203 of the Courts and Judicial Proceeding Article. When a fraud tortfeasor has so successfully carried out his plan that his victim does not even know he has been victimized, and therefore cannot know to pursue him in court, it would be unjust to bar the victim from suing because of the passage of time. Likewise, when a seller/developer of real property successfully conceals a defect from his initial purchaser, so that the defect is reconveyed with the property to a new purchaser, it would be unjust to bar that subsequent purchaser, who unknowingly purchased the defective property, from suing because the original victim did not know he had been defrauded.
Of course, as the admonition in comment d to section 531 directs, to owe a legal duty to a subsequent purchaser to refrain from fraudulently concealing a material defect in real property, the seller (or developer/seller)
must have information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach those persons and will influence their conduct. There must be something in the situation known to the maker that would lead a reаsonable man to govern his conduct on the assumption that this will occur.
Restatement (Second) of Torts, § 531 cmt. d.
Finally, we note that this case is distinguishable from the recent decision in
Gourdine v. Crews, supra,
in which the Court of Appeals held that a manufacturer of insulin medications did not owe a legal duty to warn of the dangers of the medications
The Court determined that the drug manufacturer did not owe a legal duty to the decedent non-user of the medications under any of the theories alleged. Observing that “[d]uty requires a close or direct effect of the tortfeasor’s conduct on the injured party,”
Gourdine, supra,
746,
[TJhere was no direct connection between [the manufacturer’s] warnings, or the alleged lack thereof, and [the decedent’s] injury. In fact, there was no contact between [the manufacturer] and [the decedent] whatsoever. To impose the requested duty ... would expand traditional tort concepts beyond manageable bounds, because such duty could apply to all individuals who could have been affected by [the user driver] after her ingestion of the drugs. Essentially, [the manufacturer] would owe a duty to the world, an indeterminate class of people, for which we have “resisted the establishment of duties of care.”
Id.
at 750,
In the case at bar, as in Diamond Point, the class of people to whom the duty not to defraud was owed was not indeterminate; rather, it was especially foreseeable to the tortfeasor that the representation or concealment would be received by the person defrauded, as a member of a limited and defined class of people. The facts alleged in Diamond Point permitted a reasonable inference that the defrauding party knew that its written omission of fact would be transmitted to, and relied upon, by purchasers in the secondary market, such as Wells Fargo. Likewise, the facts alleged in the case at bar permit a reasonable inference that the appellees knew that the concealed defect in the Property would remain concealed, as the Property changed hands as it would be expected to do. Indeed, the class of people — future purchasers of the Property — the appellees would have reason to expect would be defrauded by the concealment is small in comparison to the secondary mortgage market class the Court of Appeals held was owed a fraud duty in Diamond Point.
The factual allegatiоns in the first amended complaint were sufficient, if proven, to allow a trier-of-fact to find that the appellees concealed the presence of the cemetery on the Property, intentionally and with the purpose to deceive, by desecrating it and then taking steps through the construction and platting process to further conceal its (now hidden) presence on the Property; and that they did so in circumstances in which there was reason to expect that the condition would remain concealed on the Property, the Property would change hands, and the subsequent purchaser would take ownership without
2. Materiality of Presence of Hidden Desecrated Cemetery on Property
Because we have held that thе appellees owed a legal duty to the Rhees, we turn to alternative arguments the appellees advance in their quest for an affirmance of the circuit court’s dismissal order. One such argument is that the allegations in the first amended complaint are legally insufficient to establish the materiality element of fraudulent concealment. The appellees maintain that the presence of long-ago buried human remains on real property simply is not a material fact about the property, i.e., one that would influence a reasonable prospective purchaser’s buying decision. Because human beings have been burying their dead forever, it is the expected state of affairs, for most property, that some human remains will be underground, and that state of affairs will not influence a reasonable person’s decision whether to purchase. Therefore, they did not owe anyone (the initial purchasers or any subsequent purchasers) a duty to refrain from concealing the desecrated cemetery’s existence on the property. In other words, a seller of property would not have reason to expect that the presence of a desecrated, not visible cemetery on real property would influence the purchasing decisions of an immediate, or • a subsequent potential, buyer. If it is a defect in the Property at all, it is not material.
As the Court of Appeals has recognized, cemeteries carry a cultural significance that argues traditionally for non-disturbance: “ ‘A place for the burial of the dead ... has characteristics differing from those of an ordinary tract of land. To many it is sacred ground which should not suffer intrusion from mundane objects.’ ”
Hickman v. Carven, supra,
Certain conduct relating to human remains has been criminalized, in statutes presently codified in Md.Code (2001, 2007 Supp.), sections 10-401 et seq. of the Criminal Law Article (“CL”). CL section 10-404(a)(l) prohibits the destruction, damaging, defacement, or removal of an “associated funerary object ... placed in a cemetery,” which includes a gravestone. See CL § 10-401(c)(2) (defining “associated funerary object” to include “a gravestone”). Doing so is a misdemeanor that subjects the violator to a prison term not exceeding 5 years or a fine not exceeding $10,000 or both. CL § 10-404(d)(l).
Significantly, subsection (e) of CL section 10-404, entitled, “Construction of section,” states, in relevant part:
This section does not prohibit the removal of human remains or a funerary object from an abandoned cemetery if:
(1) the removal is authorized in writing by the State’s Attorney of the countyin which the cemetery ... is located; and
(2) the human remains or funerary object are placed in an accessible place in a permanent cemetery.
CL section 10-402(a) prohibits removing human remains without authority, except as provided in subsection (b), which establishes a procedure for obtaining written permission from the State’s Attorney for the county in which the remains are located. CL section 10-402(d) directs that any human remains so removed shall be reinterred, with one exception, in “a permanent cemetery that provides perpetual care.”
When Brighton Pines was under construction, the criminal statutes governing the destruction of funerary objects and the removal of human remains without authority were codified in Md.Code (1957, 1982 Repl.Vol.), article 27, sections 265 and 267. They were substantively the same as the statutes mentioned above. Thus, when the appellees discovered the abandoned cemetery on Lot 20, as alleged, they were prohibited by law from removing the gravestones and could have faced misdemeanor charges and, upon conviction, prison time and/or a fíne for doing so. 10 They could have accomplished their goal of developing Lot 20 but only with the authorization of the State’s Attorney for Howard County and by taking the measures required by statute to remove and rebury any human remains. It is implicit in the allegations in the first amended complaint that the appellees sought to circumvent that process, and the expenses they would incur, by engaging in criminal acts to cover up the cemetery’s existence.
If the appellees had abided by the statutes controlling the removal of funerary objects and reburial of human remains, the cemetery, including the remains, would not have been present on Lot 20 when it was developed and sold as the Property. In oral argument before this Court (although not in the first amended complaint), counsel for the Rhees alleged that their religious beliefs prohibit living on land where a cemetery ever has existed. On this point, we observe that, had the laws been followed and had the cemetery, including the human remains, been removed, legally, from Lot 20, the fact that a cemetery once had been located there would not be a material defect in the Property.
The facts asserted in the first amended complaint, that as a consequence of the appellees’ fraudulent concealment, the Rhees own land in which human remains are buried, are sufficient to allege a material defect in the Property and therefore to state a cause of action for fraudulent concealment.
3. Damages
As their second and last alternative argument for affirmance, the appellees maintain that the first amended complaint failed to state a claim for which relief could be granted because it did not adequately allege that the Rhees suffered any damages.
. Analogizing this case to
Rossaki v. NUS Corp.,
In Rossaki the plaintiffs purchased property from the owner, which had been leasing it for use as a gas station. Before closing, the plaintiffs had had the property inspected for contamination. There were numerous disputes over whether the plaintiffs or the owner and lessor were responsible for the inspections and over whether the inspections properly were carried out. In any event, after closing, another inspection, conducted by a potential new lessee, revealed extensive contamination that the earliеr inspection had not. The plaintiffs sued the owner and lessee, among others, asserting various causes of action based on nuisance, negligence, and strict liability, and seeking compensation for the property damage by way of a private cause of action under section 4-409(a) of the Environment Article (“EA”), which states:
Liability, generally. — The person responsible for the .oil spillage shall be liable to any other person for any damage to his real or personal property directly caused by the spillage.
EA §, 4-409(a). As to the owner and lessee, the court granted motions to dismiss the common law actions and the statutory cause of action.
On appeal, the plaintiffs did not contest the rulings below on the common law claims. The circuit court had dismissed those claims because, on the facts alleged, the plaintiffs had known, before the purchase, that the property had been operated as a gas station and therefore may have been contaminated and, with that knowledge, could have negotiated terms to the sales contract, such as express warranties, to protect them.
The case at bar does not concern damage to property of the sort involved in Rossaki Here, accepting the well-pleaded facts as true, the Property started off with a cemetery on it. The presence of the cemetery on the Property did not damage it; rather, it was a feature on the Property that could be observed by the naked eye, and likely would make the Property less desirable, because of the added expense required to move it, than the Property would be if the cemetery were not there. The appellees are accused of acting fraudulently to conceal that already-existing negative feature of the Property. That is not the same as being accused of causing property damage.
The appellees also argue that the Rhees could not have suffered a compensable injury because “[n]o living person could now have any possible property interest in this abandoned burial site, other than the Rhees themselves.” The injury the Rhees are claiming is not that other people may have rights, such as easements, that would allоw them to come upon the Property. It is that they purchased the Property at an inflated price because a significant defect in it had been concealed, by fraud. The injury they claim to have suffered has nothing to do with whether any other person would ever claim a right to come upon the Property because of the presence of the (now desecrated) cemetery.
JUDGMENT REVERSED. CASE REMANDED TO THE CIRCUIT COURT FOR HOWARD COUNTY FOR FURTHER PROCEEDINGS. COSTS TO BE PAID BY THE APPELLEES.
Notes
. The Rhees also sued for civil conspiracy. The court dismissed that count as well. The Rhees have not challenged that decision in this appeal.
. The questions as phrased by the appellants are as follows:
"1. Did the circuit court err in granting Appellees’ motions to dismiss Appellants’ fraud claims based on its determination that Appellees did not make any misrepresentations directly to Appellants, as subsequent purchasers?
"2. Can a fraudulent concealment claim be sustained, regardless of whether the parties have a confidential or fiduciary relationship, if the defendant remains silent regarding a fact that it has taken some affirmative act to suppress or conceal?”
. A more specific date is not alleged.
. The complaint does not identify the “initial purchasers” or disclose when they purchased the Property.
. The first amended complaint does not identify that person by name.
. The factual allegations made by the Rhees in the first amended complaint are well-pleaded and therefore have been accepted for purposes of appellate review. The appellees emphasize that they vigorously dispute all of the allegations against them.
. Section 532 provides:
One who embodies a fraudulent misrepresentation in an article of commerce, a muniment of title, a negotiable instrument or a similar commercial document, is subject to liability for pecuniary loss caused to another who deals with him or with a third person regarding the article or document in justifiable reliance upon the truth of the representation.
. The appellees do not discuss the Woodward case in their brief.
. Some states, most notably Georgia, have recognized the passive concealment theory of fraud as an exception to the
caveat emptor
doctrine, in the sale of real estate. The passive concealment fraud theory "places upon the seller a duly to disclose in situations where he or she has special knowledge not apparent to the buyer and is aware that the buyer is acting under a misapprehension as to facts which would be important to the buyer and would probably affect its decision.”
Wilhite v. Mays,
Where a buyer seeks to recover from a seller who has passively concealed a defect, "the buyer must prove that the vendor’s concealment ... was an act of fraud and deceit, including evidence that the defect could not have been discovered by the buyer by the exercise of due diligence and that the seller ... was aware of the problems and did not disclose them.”
Salinas v. Skelton,
. The “Maryland Cemetery Act” regulating the operations of cemeteries and cemetery companies presently is codified in Md.Code (1992, 2004 Repl.Vol., 2008 Supp.), sections 5-101 et seq. of the Business Regulations Article. When Brighton Pines was being developed, that act was codified in Md.Code (1957, 1981 Repl.Vol., 1986 Supp.), Art. 23, sections 162-165B. Section 165A, entitled "Pеrpetual care,” subjects owners and developers of cemeteries to a state regulatory scheme. Subsection (j), entitled "Exempt cemeteries,” stated:
The provisions of this section shall not apply to cemeteries containing less than one acre of land available for interment or owned and operated by any county, city, or town; by a church, synagogue or other religious or church organization; or by any nonprofit organization, which was created by an act of the General Assembly ... prior to 1900.
The appellees argue that, in the 1980’s, Article 23, section 165A(j) would have exempted the cemetery on the Property from regulatory control because it had less than one acre of land available for interment. However, this exemption only was from other regulations in sections 165A and 165B relating to the regulation of cemetery owners and funeral businesses. Section 165A(j) did not exempt the cemetery in this case from the criminal laws described above, nor did section 165A(j) exempt the cemetery owner from Article 16, section 119, which comprehensively regulated any sale of a cemetery and provide, inter alia, that the seller pay for the disinterment and reburial of the dead.