Stephens v. Sponholz

—Order unanimously modified on the law and as modified affirmed without costs in accordance with the following Memorandum: Plaintiff commenced this action alleging causes of action for fraud, negligence and negligent misrepresentation and asserting a derivative cause of action on behalf of her daughter. The action arises from defendants’ sale of a house to plaintiff. Supreme Court properly granted that part of defendants’ motion for summary judgment seeking dismissal of the negligence cause of action but erred in granting that part of defendants’ motion seeking dismissal of the fraud and negligent misrepresentation causes of action. The “as is” and general merger clauses of the parties’ agreements are not specific disclaimers and do not preclude a cause of action based on fraud in the inducement of the contract (see, George v Lumbrazo, 184 AD2d 1050, lv dismissed 81 NY2d 759, rearg denied 81 NY2d 835). Plaintiff raised issues of fact whether defendants made express fraudulent representations concerning water in the basement of the house or actively concealed the extensive water problems in the basement by constructing false walls, and there is a further issue of fact whether plaintiff could have discovered the defect by the exercise of reasonable diligence. Thus, summary judgment is precluded on those causes of action (see, George v Lumbrazo, supra; O’Keeffe v Hicks, 74 AD2d 919, 920; see also, Hauser v Lista, 201 AD2d 873, 874-875). The court properly dismissed the derivative cause of action asserted by plaintiff on behalf of her daughter (see, De Angelis v Lutheran Med. Ctr., 58 NY2d 1053). Consequently, we modify the order by denying in part defendants’ motion for summary judgment and reinstating the [1062] first and third causes of action. (Appeal from Order of Supreme Court, Erie County, Flaherty, J. — Summary Judgment.) Present — Green, J. P., Lawton, Wisner, Callahan and Boehm, JJ.