## Facts

- Louis Kabatchnick leased first-floor and basement retail space in Boston under a written lease at $4,500 per year, expiring March 1, 1947.
- In November 1946, Hanover-Elm Building Corporation and an associated defendant acquired the building.
- The defendants told Kabatchnick they had a bona fide offer from a third party to lease the premises at $10,000 per year and that Kabatchnick would be evicted at the end of his existing term unless he matched the offer and signed a twelve-year lease at $10,000 per year.
- Relying on the statement, Kabatchnick executed a new twelve-year lease on December 6, 1946, commencing January 1, 1947, at $10,000 per year payable monthly.
- As a condition of execution, the defendants required immediate payment of the monthly rent beginning in December 1946; Kabatchnick paid and continued paying.
- Kabatchnick alleged the purported third-party offer was false, was known by defendants to be false, and was made to induce him to sign the lease and make the higher payments.
- Kabatchnick alleged he recently discovered the falsity, would not have signed had he known the truth, and that the premises’ rental value was only $4,500 per year.

## Issues

1. Whether a landlord’s false statement that a third party has made a bona fide offer to lease at a specified higher rent is a misrepresentation of existing fact actionable in deceit, rather than nonactionable bargaining talk.
2. Whether the declaration adequately alleged damage for deceit by claiming the tenant was induced to pay rent above fair rental value under a long-term lease.

## Decision

- The Supreme Judicial Court of Massachusetts reversed the order sustaining the defendants’ demurrer.
- The court held the declaration stated a cause of action for deceit.
- The alleged statement about a bona fide third-party offer at a fixed rental was treated as a representation of existing fact, susceptible of knowledge.
- Allegations that the tenant agreed to and paid rent substantially above fair rental value sufficiently pleaded pecuniary loss.

## Legal Principles

- A knowingly false representation that a specific third party has made a bona fide offer at a stated price or rent is a misrepresentation of existing fact and may support an action for deceit if relied upon to the plaintiff’s detriment.
- The “puffery” or “dealer’s talk” concept does not bar liability where the statement asserts a concrete, objectively verifiable fact (such as the existence of a particular competing offer at a specified amount).
- A deceit claim is sufficiently pleaded where it alleges a material false statement, scienter and intent to induce reliance, actual reliance (entering the contract and making payments), and resulting pecuniary damage (paying above fair value).

## Conclusion

The court allowed the tenant’s deceit claim to proceed because the alleged false claim of a bona fide competing lease offer at a specified rent was an actionable misrepresentation of existing fact, and the tenant’s allegations of reliance and overpayment adequately stated damages.


Kabatchnick v. Hanover-Elm Bldg. Corp., 328 Mass. 341, 103 N.E.2d 692 (1952)