## Facts

- Patrick B. Gibb agreed to purchase a residence owned by Citicorp Mortgage, Inc., marketed through Citicorp’s listing agent.
- Before closing, a termite company informed the listing agent that the property had a prior termite infestation and “extensive damage.”
- Gibb alleged the agent knew the damage was widespread, including concealed areas, but showed him only a limited damaged area.
- Gibb alleged the agent represented that the visible area was the only damage and that all necessary repairs had been made.
- Gibb alleged Citicorp and its agent repaired only visible damage, left concealed damage unremedied, and provided a termite report at closing that misled him about the home’s true condition.
- The purchase agreement included a clause disclaiming reliance on representations by the seller’s agent and an “as is” provision stating the buyer accepted the property in its present condition.
- After discovering extensive termite damage, Gibb sued for fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and breach of contract.

## Issues

1. Whether the petition alleged sufficient facts to state claims for fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and breach of contract to withstand a general demurrer.
2. Whether an “as is” clause and a contractual nonreliance disclaimer defeat, as a matter of law at the pleading stage, the element of reasonable or justifiable reliance.
3. Whether the petition adequately alleged a basis for holding the seller liable for misstatements or concealment by its listing agent under agency principles.

## Decision

- The Nebraska Supreme Court reversed the order sustaining the demurrer and dismissing the petition, and remanded for further proceedings.
- The court held the petition sufficiently pleaded causes of action for fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and breach of contract.
- The court held the “as is” and disclaimer provisions did not bar the claims as a matter of law on demurrer and did not conclusively negate reliance at the pleading stage.
- The court held allegations regarding the agent’s role were sufficient to leave agency and apparent authority as factual matters not resolvable on demurrer.

## Legal Principles

- Whether a petition states a cause of action is a question of law reviewed independently on appeal.
- On demurrer, courts accept as true all well-pleaded facts and reasonable inferences, construe the petition liberally, and do not resolve factual disputes or consider evidence.
- Fraudulent misrepresentation requires allegations of: a false representation; knowledge or reckless disregard of falsity; intent to induce reliance; reasonable reliance; and damages.
- Fraudulent concealment requires allegations of: concealment of a material fact known to the defendant; the fact not being within the plaintiff’s reasonably diligent observation; intent to mislead; reasonable deception; and damages.
- “As is” and nonreliance clauses may be relevant to reliance and risk allocation but do not automatically preclude fraud or misrepresentation claims at the pleading stage.
- A principal may be liable for an agent’s fraud when the agent acts with actual or apparent authority and the third party reasonably relies on the agent’s representations.

## Conclusion

The court held that the buyer’s detailed allegations of affirmative misstatements and concealment of extensive termite damage stated actionable claims that could not be dismissed on demurrer, and that contractual “as is” and nonreliance provisions did not conclusively defeat reliance or insulate the seller from alleged fraud and misrepresentation at the pleading stage.


Gibb v. Citicorp Mortg., Inc., 246 Neb. 355, 518 N.W.2d 910 (Neb. 1994)