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Property Law Keyed to Dukeminier

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Property Law Keyed to Singer

Johnson v. Davis

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Facts

The Plaintiffs entered into a contract to buy a house for $310,000. The Defendants knew that the roof leaked, but affirmatively represented to the Plaintiffs there was no problems with the roof. After the Plaintiffs paid the deposit, they discovered water gushing into their new home after a heavy rain. The Plaintiffs brought this action for rescission of the contract. The trial court held that the affirmative representation that the roof was fine was a false representation entitling the Plaintiffs to rescission. The Defendants appealed.

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Q.1 - A Florida residential sale contract contains an “AS IS” clause, an integration clause, and a specific non-reliance provision. The seller knows of intermittent roof failures, tells the buyers the stains are “old glue,” and closes. Under Johnson v. Davis, which statement most precisely captures how these clauses interact with the seller’s common-law duty?

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(A) The duty to disclose known, non-observable, material defects survives merger, “as is,” and non-reliance language; such clauses cannot shield fraudulent concealment or false assurance inducing reasonable reliance.

Correct! Johnson v. Davis imposes an affirmative duty to disclose known, latent, material defects not readily observable, and courts refuse to let as-is, integration, or non-reliance clauses insulate fraudulent concealment or calculated half-truths. The buyer’s reliance remains reasonable when the seller knows contrary facts and offers misleading assurances.

(B) The non-reliance clause defeats the element of reliance as a matter of law, thereby foreclosing rescission despite the seller’s knowledge.

Incorrect. Wrong: Non-reliance language cannot vitiate liability for fraud-inducing concealment or false assurance.

(C) The “as is” clause shifts the entire risk of latent defects to the buyer unless the seller signed a separate statutory disclosure.

Incorrect. Wrong: “As is” does not transfer the risk of known latent defects the seller fails to disclose.

(D) The integration clause bars any use of pre-contract representations, limiting the buyer to repair-and-deduct after closing.

Incorrect. Wrong: Integration does not bar equitable rescission premised on fraudulent nondisclosure.

Q.2 - Assume a later statute in the same jurisdiction narrows liability to “active concealment” only. A seller who knows of a structural leak answers, “I’m not sure,” paints over stains, and removes buckets before showings. Through the lens of Johnson v. Davis and the logic of half-truths, which option best states the liability outcome?

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(A) No liability because the seller made no categorical false statement and the buyer could have inspected.

Incorrect. Wrong: The law does not require buyers to ferret out defects the seller is actively hiding.

(B) Liability turns solely on proof of specific intent to defraud at the moment of the “I’m not sure” response.

Incorrect. Wrong: Specific intent is not the sole path; knowing concealment via deceptive conduct suffices.

(C) Liability attaches: evasive half-truth plus deceptive acts (covering evidence, staging) constitutes active concealment, satisfying the duty notwithstanding statutory narrowing.

Correct! The combination of evasive half-truths with affirmative masking (painting, removing buckets) satisfies “active concealment,” harmonizing statutory narrowing with Johnson’s core principle that misleading silence plus acts preventing discovery is actionable. Knowledge of material facts coupled with deceptive staging triggers liability even without an explicit false sentence.

(D) Liability fails because “active concealment” requires an express lie about the roof’s condition.

Incorrect. Wrong: “Active concealment” is broader than express lies and includes conduct that thwarts discovery.

Q.3 - After closing, the buyer proves nondisclosure of a material, latent defect and seeks (i) rescission with return of the price and (ii) benefit-of-the-bargain damages for diminished value. Under Johnson v. Davis and Florida’s equitable framework, which remedy architecture is doctrinally correct?

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(A) Award both rescission and full benefit-of-the-bargain damages; equity and law may be cumulated to deter misconduct.

Incorrect. Wrong: Cumulating rescission with expectancy produces an impermissible double satisfaction.

(B) Deny rescission once title has passed; the buyer is confined to statutory disclosure remedies.

Incorrect. Wrong: Johnson recognizes rescission after closing where nondisclosure induced the purchase.

(C) Grant specific performance with a seller-funded roof replacement as the exclusive equitable remedy.

Incorrect. Wrong: Specific performance is not the default and conflicts with the buyer’s election to unwind.

(D) Permit rescission with restitution (and compatible incidental/consequential damages necessary to restore the status quo), but bar inconsistent expectancy recovery to avoid double satisfaction.

Correct! Equity aims to restore the parties: rescission + restitution (and narrowly tailored incidentals to re-establish the status quo) is consistent with Johnson, while expectancy (benefit-of-the-bargain) is inconsistent with unwinding the deal. The election-of-remedies doctrine prevents double recovery and preserves the remedial coherence of rescission.

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Johnson v. Davis