## Facts

- Home sellers listed a single-family residence through a real estate brokerage (Smith Bell) using a salesperson supervised by the firm’s officer-broker.
- Marketing materials (MLS and brokerage fact sheet), reviewed by the sellers, represented the home as in “pristine condition” and described features including “new oak-pegged floors throughout first floor,” among other amenities.
- The supervising broker had substantial prior familiarity with the neighborhood and knew it experienced frequent, severe winds; he also knew of wind-related damage to the subject home and nearby properties.
- The broker did not disclose the wind condition to the salesperson or the buyer, and the buyer was told there had been “full disclosure.”
- After closing, the buyer discovered discrepancies in represented features (including flooring and heating) and experienced severe windstorms that caused significant property damage.
- The buyer sued the sellers and the brokerage, asserting fraud, negligent misrepresentation, and violations of the Vermont Consumer Fraud Act (VCFA).
- After a bench trial, the superior court held the brokerage liable under the VCFA, imputing the broker’s wind knowledge to the firm, but awarded damages the buyer challenged as inadequate.

## Issues

1. Whether the Vermont Consumer Fraud Act applies to deceptive acts or practices by real estate brokers in residential home sales.
2. Whether a brokerage is charged with notice of material facts known to its officer-broker, including neighborhood conditions learned through personal experience and other roles.
3. Whether the trial court applied the correct measure of damages for misrepresentations and nondisclosure affecting value and loss.

## Decision

- The Vermont Supreme Court held the VCFA applies to real estate brokerage services and broker communications made to home buyers in the course of a residential transaction.
- The Court held the brokerage was charged with the supervising broker’s knowledge of the severe wind condition because the knowledge was materially connected to the brokerage’s duties in listing and marketing the property.
- The Court affirmed liability against the brokerage under the VCFA.
- The Court reversed the damages award and remanded for recalculation under the proper framework.

## Legal Principles

- The VCFA is a remedial statute construed broadly; deceptive statements and material omissions in consumer-facing marketing of brokerage services may violate the Act.
- Real estate brokerage activity in connection with a home purchase may constitute “trade or commerce” covered by consumer fraud legislation.
- Under agency law, a principal is charged with notice of facts known to its agent when those facts are material and closely connected to the subject matter of the agency, even if the agent learned them through experience outside a specific transaction.
- A broker’s nondisclosure of a known, material condition affecting a property’s value or habitability may support statutory consumer-fraud liability when the buyer relies on affirmative representations and assurances of disclosure.
- Damages must be recalculated using an appropriate measure that accounts for the economic effect of the misrepresentation and omission, including diminution in value and/or repair-related components as supported by the record.

## Conclusion

The court treated a brokerage’s marketing representations and nondisclosure to a home buyer as actionable under the Vermont Consumer Fraud Act, imputed an officer-broker’s local knowledge of a material wind hazard to the firm, affirmed liability, and required a remand to reassess damages under a legally correct measure.


Carter v. Gugliuzzi, 168 Vt. 48, 716 A.2d 17 (Vt. 1998)