Breach Of Fiduciary Duty/Fraudulent Misrepresentation
The plaintiff corporation consisted of two individuals who purchased the Continental Inn, a motel in Niagara Falls, from Walter Surma in February, 2002. Neelam Bhalla, a sales representative with Sutton Group ("SG"), acted on behalf of both the vendor and purchaser; in doing so, she was assisted by her husband, Narinder Bhalla who-while not a registered real estate agent-misrepresented himself as such to the plaintiffs. Based on representations by Surma regarding revenues and operational costs, the plaintiff believed that the motel was a sound investment. Shortly after taking possession, the plaintiff learned that the business' revenue had been grossly overstated; after having expended nearly a million dollars, the plaintiff eventually defaulted on the mortgage.
Madam Justice Baltman found that, because Surma knowingly misrepresented the motel's revenue, he was liable for fraudulent misrepresentation. In addition, she held that "the Bhallas failed miserably in carrying out their fiduciary duties"-having known that the validity of Surma's representations of the motel's revenue was highly suspect, yet having failed to advise the plaintiffs, and having "recommended a purchase price that they knew or should have known far exceeded the motel's value." Therefore, Justice Baltman found "that the Bhallas and SG breached their fiduciary duty to the plaintiff and thereby caused it to suffer damages." Having concluded that "the essence of the claim in issue goes well beyond mere negligence or breach of contract," Justice Baltman found that the "defendants are jointly and severally liable for damages ...."
Damages: $946,579 (Surma); $946,881 (Neelam and Narinder Bhalla, Sutton Group)
