“[A]s a matter of law, the house is haunted” — The Ghostbusters Case & Caveat Emptor
“Ghostbusters” was one of the defining movies of my childhood. I can still remember gong to a drive-in movie theater to see it in 1984. Bill Murray was rightfully the best part of the movie for most people, but, ever since Boba Fett, I always liked the bad guy. So, in “Ghostbusters”, it was William Atherton‘s EPA agent I loved to hate. It was the first in a series of classic heels turns by Atherton.*
Soon thereafter, I got the video game for my Commodore 64. I often spent my Saturday mornings playing the game and watching “The Real Ghostbusters” animated series on TV. In 1989, Ghostbusters II was released. It wasn’t as good as the original, but it still had some great scenes, including this one in the courtroom.
Now, 27 years later, Paul Feig, who captured childhood in the ’80s so well in “Freaks and Geeks,” has created an entirely new version of “Ghostbusters,” with the terrific cast of Kristen Wiig, Melissa McCarthy, Kate McKinnon, and Leslie Jones. If this reboot is successful, we can expect to the ghostbusters being part of the conversation for generations to come. Interestingly, they are already part of the conversation for many law students and judges.
In Stambovsky v. Ackley, 169 A.D.2d 254 (N.Y. 1991), Jeffrey M. Stambovsky, “to his horror, discovered that the house he had recently contracted to purchase [in Nyack, New York] was widely reputed to be possessed by poltergeists, reportedly seen by defendant seller and members of her family on numerous occasions over the last nine years.” Stambovsky then “promptly commenced [an] action seeking rescission of the contract of sale.” It was promptly dismissed by the trial court.
The appellate court disagreed. According to the court,
Not being a “local”, [Stambovsky] could not readily learn that the home he had contracted to purchase is haunted. Whether the source of the spectral apparitions seen by defendant seller are parapsychic or psychogenic, having reported their presence in both a national publication (Readers’ Digest) and the local press (in 1977 and 1982, respectively), defendant is estopped to deny their existence and, as a matter of law, the house is haunted. More to the point, however, no divination is required to conclude that it is defendant’s promotional efforts in publicizing her close encounters with these spirits which fostered the home’s reputation in the community. In 1989, the house was included in five-home walking tour of Nyack and described in a November 27th newspaper article as “a riverfront Victorian (with ghost).” The impact of the reputation thus created goes to the very essence of the bargain between the parties, greatly impairing both the value of the property and its potential for resale. (emphasis added)
In reaching this decision, the court had to dispense with the doctrine of caveat emptor, or “buyer beware.”
While I agree with [the trial court] that the real estate broker, as agent for the seller, is under no duty to disclose to a potential buyer the phantasmal reputation of the premises and that, in his pursuit of a legal remedy for fraudulent misrepresentation against the seller, plaintiff hasn’t a ghost of a chance, I am nevertheless moved by the spirit of equity to allow the buyer to seek rescission of the contract of sale and recovery of his down payment. New York law fails to recognize any remedy for damages incurred as a result of the seller’s mere silence, applying instead the strict rule of caveat emptor. Therefore, the theoretical basis for granting relief, even under the extraordinary facts of this case, is elusive if not ephemeral. (emphases added).
As you can see, the judge got a bit cheeky in his opinion, and ultimately, he invoked the most famous line from “Ghostbusters” to drive a stake through the heart of caveat emptor:
From the perspective of a person in the position of plaintiff herein, a very practical problem arises with respect to the discovery of a paranormal phenomenon: “Who you gonna’ call?” as a title song to the movie “Ghostbusters” asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man on an inspection of every home subject to a contract of sale. It portends that the prudent attorney will establish an escrow account lest the subject of the transaction come back to haunt him and his client–or pray that his malpractice insurance coverage extends to supernatural disasters. In the interest of avoiding such untenable consequences, the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and laid quietly to rest.
Based on this reference, Stambovsky is commonly known as the Ghostbusters ruling, and, “[b]ecause of its unique holding, the case has been frequently printed in textbooks on contracts and property law and widely taught in U.S. law school classes, and is often cited by other courts.” For more about the haunted host, you can check out this article in The Washington Post.
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*The others came in “Real Genius,” “Die Hard,” and “Die Hard 2.” Might as well throw “Bio-Dome” into the mix as well.
-CM