Lawsuit claims fraudulent home sale

GREENWICH -- A lawsuit filed against the sellers of a home found to have sustained water damage and mold -- conditions the home buyers allege they were unaware of at the time of the purchase -- could be headed for a trial or an out-of-court settlement of $1.4 million, documents show.

The case is pending against the sellers of an Old Greenwich home purchased in September 2021 by Karl Robinson and Niamh Bonus. According to the court filings, the couple bought the home from Edward and Patricia McCullogh through the Berkshire Hathaway listing agent, Michelle Nygard, who is the daughter of the McCulloghs. The lawsuit names CTRE LLC, which does business as Berkshire Hathaway Home Services in Connecticut.

The seller, the agent and the company were sued by Robinson and Bonus in summer 2022 after a number of problems were found in the home, including a substantial amount of black mold, flooding damage and leaks, according to the court filings. Water was leaking into the home from both chimneys, the lawsuit stated.

The lawsuit alleges negligent and fraudulent misrepresentation and unfair trade practices. The homebuyers are seeking $1.4 million in the case.

Their argument was echoed by a state Superior Court judge, who ruled in a memorandum this month that there was probable cause for a case to be made that the home sale was based on fraudulent representations.

Ryan Tougias, a lawyer representing the McCulloghs, declined comment. He said the court records spoke for themselves.

Tom Crosby, the lawyer representing Berkshire Hathaway, did not respond to a request for comment.

The home on Deepwoods Lane was purchased in late 2021 for $2.8 million, roughly $300,000 over the original price, court documents stated. The home was marketed as "built and meticulously cared for by one owner," according to the legal complaint. Edward McCullogh has built a number of homes in the area. The house in question was built in the mid 1980s.

Robinson and Bonus claim the property condition report that was filed by the sellers during the sale process did not indicate serious problems with the house, only that a leaky roof had been fixed in the past.

According to Phil Russell, the lawyer representing the home-buyers, "This case stands out for the brazen nature of the conduct," a contention disputed by the defendants' legal team.

Russell said his clients are not alone in their situation and that a rush of home buyers into the region following the COVID-19 pandemic resulted in lawsuits now being litigated over the purchase of homes that have been found to have defects or maintenance problems.

"I think this is a warning to anyone to exercise great care for a-once-in-a-lifetime investment," he said.

According to a memorandum issued this month by state Superior Court Judge Yamini Menon, the McCullochs, Nygaard and her family were still living in the house at the time of the home inspection. The home inspection was cut short by Nygard, the filing said.

"The report that was prepared was an abbreviated and incomplete report, missing multiple sections," the judge noted.

Before closing, Robinson and Bonus had a contractor, architect and interior designer visit and inspect the property. None of them had any indication that the condition of the property was anything other than as it appeared, the suit states.

After Robinson and Bonus moved in, they hired a flooring contractor who found extensive water damage in the home. Later inspectors found mold. The house also leaked during rainstorms. The new homeowners said they found that paint had covered over sections of the house damaged by water, according to the lawsuit.

In one of Tougias' court filings, it was noted that that a contractor, architect and interior designer visited pre-sale, and "none of them had any indication that the condition of the property was anything other than as it appeared."

According to the filing by Tougias, when the new homeowners found the mold, they went ahead with a substantial renovation.

"Instead of performing a relatively straightforward remediation at a relatively modest cost, plaintiffs completely gutted the property from the attic to the basement, including the wiring, appliances and mechanicals, and rebuilt it into a house that is not even remotely the same," the defendants' lawyer stated.

He called the lawsuit "an ill-advised and improper attempt by plaintiffs to recover the cost of the expansive gut renovation and reconstruction of their house." The $1.4 million being sought by the plaintiffs was an excessive amount, as well, the lawyer argued.

Tougias said it was a mistake to assume "that the McCullochs knew what was going on behind walls, under insulation and under wood flooring and wall-to-wall carpeting based on the conditions occurring within those encapsulated areas."

The lawyer also noted that the McCulloughs introduced them to neighbors and took them to dinner at their club and gave them an invoice for the roofing materials from repairs in 2001, actions inconsistent with bad intent, he argued.

Menon issued a finding this month that the case could proceed to trial. The judge ruled that a $1.4 million payment would be granted to the plaintiffs in "a pre-judgement remedy." Russell and his clients have filed an offer of compromise, offering to to settle the case with the $1.4 million payout to end the suit. Court papers note that an insurance company has the resources to pay for the defendants legal costs and potential damages associated with the case.

A court trial could still be held if the offer of compromise is rejected.

In the memorandum allowing the case to go forward, the judge said Robinson and Bonus "have demonstrated probable cause that they will be able to prove at trial that the defendants committed intentional misrepresentation, fraudulent concealment and negligent misrepresentation through their actions in the sale of the home."

If a settlement has not been reached, a pretrial conference has been set for March 2025, according to the judicial calendar.