Business Law 12th Edition by Roger LeRoy Miller ,Frank Cross

Exercise 1

Fraudulent Misrepresentation Charter One Bank acquired a fifteen-story commercial building in Cleveland, Ohio, through a foreclosure proceeding. Kaczmar Architects, Inc., inspected the building and recommended changes to the sprinklers, fi re standpipe, fi re hose cabinet, and fi re pump system. No action was taken. Charter One hired Ehle Morrison Group, Ltd. (EMG), to sell the building. Tenants complained to EMG about the taste and odor of the water. A fi re inspector told EMG that the fi re standpipe was cut and capped, that there was no fi re pump, that the drinking-water and fi re-suppression systems were linked, and that the water gauge on the top floor showed the pressure was not sufficient to run the sprinklers on that floor. EMG sold the building to Northpoint Properties, Inc., without disclosing Kaczmar's recommendations or the fi re inspector's report. Northpoint spent $280,000 to repair the water and fi re-suppression systems and then fi led a suit in an Ohio state court against Charter One, alleging fraud. Is the seller liable for not disclosing the building's defects? Discuss. [Northpoint Properties, Inc. v. Charter One Bank, __ Ohio App.3d __, __ N.E.2d __ (8 Dist. 2011)]