Sims v. Ryland Group, Inc.

Moylan, J., delivered the opinion of the Court. On January 8, 1972, the appellants, George Sims, Jr. and his wife, Geraldine, entered into an Agreement of Sale with ⁴⁷¹ the appellee, the Ryland Group, Inc., for the purchase of a home, which was then not yet fully constructed, located at 311 Tantallon Drive East, in Oxon Hill, Maryland. Prior to settlement, in September, 1972, an inspection was made of the premises by the appellants and some 39 items were found requiring correction or completion. The Ryland Group agreed to make these completions and corrections without undue delay.

In reliance on this agreement, the appellants agreed to proceed to settlement. At settlement, they were furnished with a “Warranty of Completion of Construction in Substantial Conformity with Approved Plans and Specifications.” Shortly after moving into the house, in addition to the defects discovered during the presettlement inspection, the appellants discovered other defects and began experiencing other problems with the house, including periodic sewage back-up, water leakage into the basement, and a defective sump pump. Despite numerous protestations, the repairs and completions were not made to the appellants’ satisfaction. As a result, they instituted suit in the Circuit Court for Prince George’s County.

A demurrer was sustained to their first declaration. An amended declaration was subsequently filed on September 13, 1974. The amended declaration consisted of five counts, alleging breaches of contract, breaches of warranty and fraud. The appellee demurred to Count V (fraud).

Its demurrer was sustained. When the appellants did not amend their declaration, a judgment of non pros was entered. After the filing of the ' appellants’ answers to interrogatories and the appellants’ depositions, the appellee moved for partial summary judgment as to the claims for punitive damages in Counts I through IV. This motion was also granted.

The case subsequently went to trial, and a jury awarded the appellants $8,700 in compensatory damages. This appeal does not involve the trial proper but is taken only from the sustaining of the demurrer as to Count V and the granting of summary judgment as to the claims for punitive damages in Counts I through IV. ⁴⁷² The appellants’ fifth count charging fraud alleges that the appellee, in order to induce the appellants to buy a house, falsely, wrongfully and fraudulently represented to them that the house would conform to the model home which they had been shown. The appellants allege that these representations were known to be false or were made with reckless indifference to the truth or falsity thereof and that they relied on these representations. The appellants maintain that these averments in the declaration are sufficient to state a cause of action for fraud.

A promissory representation made with an existing intention not to perform is actionable for fraud. Appel v. Hupfield, 198 Md. 374 , 84 A. 2d 94 ; Loyola Fed. S. & L. Ass’n v. Galanes, 33 Md. App. 559, 569 , 365 A. 2d 580 . To withstand demurrer, however, the allegation of an intention not to perform must be predicated on sufficient facts and not be phrased in merely conclusory terms. The situation herein is analogous to that in Edison Realty Co. v. Bauernschub, 191 Md. 451 , 62 A. 2d 354 .

In that case, Mr. and Mrs. Bauernschub entered into a contract on August 19, 1946, with the Edison Realty Company for the purchase of a house, when completed, at 2815 East Federal Street in Baltimore City. The Bauernschubs alleged in their bill that an agent of the company promised that the house would be completed and would contain all of the features that were contained in the sample house they had been shown. On January 15,1947, they were informed by an agent of the corporation that the house was substantially completed and that if any items were not completed, they would be completed promptly upon settlement. Mr. and Mrs. Bauernschub were not permitted to inspect the house before settlement, but, relying upon those assurances, they settled and received a deed for the property.

After settlement, they discovered that the house was not completed in accordance with the contract. After six months of futile demands upon the company to complete the house, they instituted suit against the company and its officers for specific performance of the contract or compensation in lieu thereof. The Bauernschubs alleged that the defendants had no ⁴⁷³ intention of performing the obligations when they promised to complete the house but had only made the promises to induce the Bauernschubs to pay for and accept an uncompleted house. The defendants demurred to the bill, and the chancellor overruled the demurrers.

While the Court of Appeals held that the bill stated a good cause of action against the corporation for specific performance, it ruled that the demurrers of the officers should have been sustained. The