Williams v. White Oak Builders, Inc., (read opinion here.) In this Chancery Court case, a homeowner sought specific performance of an alleged covenant, or alternatively rescission of a contract for the sale of a townhouse. The claims also included intentional misrepresentation, negligent misrepresentation or alternatively, mutual mistake. With the consent of the parties, the Vice Chancellor actually visited the premises for a visual inspection of the basement of the home that the plaintiff claimed had a serious water infiltration problem which the builder refused to fix.
In the course of finding in favor of the builder, the court noted that equitable fraud, unlike common law fraud, does not require that the person making the statement knew that it was false at the time it was made. However, the false fact must be material.
The court also found that the plaintiff did not prove damages with a reasonable degree of precision. The court observed that reasonable estimates that lack mathematical certainty are permissible so long as the court has a basis to make a reasonable estimate of damages (citing In Re: Fuqua Industries, Inc., 2005 WL 1138744, at *8 (Del. Ch. 2005)).
Another important aspect of the opinion dealt with the remedy of rescission. Rescission must be based on fraud, misrepresentation or mistake but it is a remedy rarely granted and requires that the court be given a “high degree of confidence in order to employ this extreme remedy that returns the parties to the status quo.” The court also noted that intentional misrepresentation need not be overt– and deliberate concealment of material facts or silence in the face of a duty to speak also may constitute intentional misrepresentation.
Importantly, the Chancery Court also ruled that in its role as a fact finder, the vice chancellor (or chancellor) is free to reject expert testimony even if it is uncontradicted.