Appeals from the Judgment entered October 22, 1985, in the Court of Common Pleas, Civil Division, of Allegheny County, No. GD83-20637.
Raymond G. Hasley, Pittsburgh, for appellant (at 1508 and 1509).
James N. Perich, Pittsburgh, for appellant (at 1572) and for appellee (at 1508 and 1509).
Kirby L. Boring, Pittsburgh, for appellee.
Brosky, Rowley and Popovich, JJ.
[ 366 Pa. Super. Page 563]
In March, 1982, Louise Barbagallo, executrix of the Estate of Carl Barbagallo, deceased, executed an exclusive real estate listing agreement with Northwood Services, Inc. (Northwood) for Northwood to sell a residence which was owned by the Decedent and which had been occupied by himself and his sister, Louise Barbagallo (Miss Barbagallo), until his death. Northwood was a member of the West Penn Multilist Group (West Penn) which in turn was a member of the Greater Pittsburgh Board of Realtors (Board of Realtors). In early December, 1982, a sales representative for Northwood showed the residence to Miss Pamela Roberts two times. On neither occasion was Miss Barbagallo at home. Upon viewing the property it was apparent that the second floor of the house was equipped to be used as a separate apartment, and there was some discussion between Miss Roberts and Northwood's representative concerning the use of the property as a duplex dwelling. On December 22, 1982, Miss Roberts signed an agreement of sale to buy the property. The closing was set for March 1, 1983.
Previously, in April, 1982, the U.S. Consumer Products Safety Commission had issued a ban on the future use of ureaformaldehyde foam insulation (UFFI), effective August 1, 1982.*fn1 Northwood received notice of the ban through the Board of Realtors and West Penn. Northwood also received an Advisory, sent by the National Association of Realtors to its members, that contained suggested forms to be used to determine from owners/sellers the type of insulation used in a house which was listed for sale. The members were advised to disclose to both buyers and sellers the presence of UFFI, if known, and the possible effects of UFFI. The Advisory specifically stated that "the existence
[ 366 Pa. Super. Page 564]
of a potential health hazard from U.F.F.I. is a material fact concerning the condition of property . . . ."
Beginning on January 1, 1983, West Penn Multilist supplied its members, including Northwood, with forms requiring the owner of property to indicate whether or not the house to be sold contained UFFI and to sign the form. This form was much simpler than the forms accompanying the National Association of Realtors' Advisory and did not indicate what UFFI is or what potential risks were involved with its use. The form also contained no place for a buyer's signature indicating that the buyer had been informed of the nature of UFFI or of the seller's knowledge or lack of knowledge as to its presence in the property to be purchased. West Penn required that its members have the forms completed for any new property listing to be included in the multilist catalogue after January 1, 1983. In addition, during January, 1983, the Northwood sales representatives were directed to have the disclosure forms completed for properties listed prior to January 1, 1983. Also at the beginning of 1983, the Allegheny County Health Department issued a guideline which stated that .1 ppm. of formaldehyde fumes may cause irritation to normally healthy people.
In February, 1983, The Northwood listing agent for the Estate property, Miss DiPasquale, contacted Miss Barbagallo to ascertain what type of insulation was in the residence. Miss Barbagallo did not know what kind of insulation had been used, but she did know that Decedent had contracted to have it blown into the walls. On February 10, 1983, the disclosure form showing that Miss Barbagallo did not know the type of insulation was placed in Northwood's file for the Estate property. The certificate contained the name, initials and purported signature of Miss Barbagallo. However, the signature was misspelled and was not written by Miss Barbagallo.
On March 5, 1983, following the March 1, 1983 closing, Miss Roberts had a contractor examine the house to estimate the cost of certain renovations. In examining the
[ 366 Pa. Super. Page 565]
house to make his bid, the contractor noted that the insulation looked like UFFI, and he notified Miss Roberts of his suspicions and of what he knew about UFFI. Miss Roberts immediately had the insulation tested and the tests confirmed that the insulation was UFFI. On March 14, 1983, Miss Roberts sent a letter to the Estate demanding rescission of the deed on the basis of the existence of UFFI, but the Estate refused. Thereafter, on March 19, 1983, Miss Roberts had the air inside the house tested for formaldehyde fumes. The test results showed that there were .1 ppm. formaldehyde fumes inside the house. Miss Roberts and her mother, who suffered from sinus problems and allergies and with whom Miss Roberts had intended to occupy the house, never moved into the residence.
Following the Estate's refusal to rescind the deed, Miss Roberts filed, in the Orphans' Court Division, a claim against the Estate based on the seller's failure to disclose the presence of UFFI. She sought rescission of the sale and the deed, reimbursement of the closing costs, and such additional relief that the Court deemed necessary to make her whole. In the alternative, if the property were sold, she claimed damages for all of her losses resulting from the sale. The case was transferred from the Orphans' Court Division to the Civil Division of the Court where the claim was treated as a complaint in equity. The Estate joined Northwood as an additional defendant alleging that if the Estate were found liable, the Estate was entitled to contribution and indemnity. The Estate also requested that punitive damages be assessed against ...