Anshuman Bhatia, et al., Appellants,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A24-0489

Anshuman Bhatia, et al.,
Appellants,

vs.

Joseph Anderson, et al.,
Respondents.

Filed February 10, 2025
Affirmed
Smith, Tracy M., Judge

Hennepin County District Court
File No. 27-CV-22-15189

Carl E. Christensen, Christopher J. Wilcox, Robert Kouba, Christensen Sampsel PLLC,
Minneapolis, Minnesota (for appellants)

Karl J. Yeager, Louise A. Behrendt, Meagher + Geer, P.L.L.P., Minneapolis, Minnesota
(for respondents)

Considered and decided by Smith, Tracy M., Presiding Judge; Schmidt, Judge; and
Reilly, Judge.
∗
NONPRECEDENTIAL OPINION
SMITH, TRACY M., Judge
Appellants Anshuman Bhatia and Jayati Saha challenge the district court’s summary
judgment dismissing their claims for damages and rescission based on alleged fraudulent

∗ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
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misrepresentation, negligent misrepresentation, and violation of the seller’s disclosure
statute, Minnesota Statutes sections 513.52-.61 (2024), in connection with their purchase
of a home from respondents Joseph and Molly Anderson. We conclude that summary
judgment on appellants’ damages claims is proper because damages for misrepresentation
or nondisclosure in the sale of property cannot be proved by repair costs alone and, by
submitting evidence of only repair costs, appellants failed to present evidence sufficient to
prove damages. We also conclude that summary judgment is proper on appellant’s claim
for rescission because, based on the undisputed facts, the claim was untimely as a matter
of law. We therefore affirm.
FACTS
In June 2021, appellants entered into an agreement to purchase a home from
respondents for $710,000. As part of the purchase agreement, appellants waived a home
inspection. Appellants assert that their offer and waiver of inspection were based on
respondents’ disclosure statement, which purported to describe the property’s condition
and any existing issues known to respondents and stated that respondents were not in
possession of any past seller’s disclosure statements. The appellants closed on the property
in July 2021.
The appellants moved into the property in early August 2021. Appellants assert that
they began experiencing issues with the property immediately after moving in, starting
with water intrusion and leakage. Appellants state that these issues were omitted from
respondents’ seller’s disclosure statement. Appellants assert that, about one month after
moving in, they were provided a copy of the prior seller’s disclosure statement—which
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respondents had received when they moved into the home about 16 months prior to the sale
to appellants—and that the prior seller’s disclosure statement disclosed many of the issues
that appellants were experiencing with the home.
In September 2021, appellants had an inspection of the property and a
comprehensive moisture inspection completed. According to a declaration filed by Bhatia,
reports from both inspections “determined the presence of major and continuous issues
with the Property.” Bhatia stated that, after receiving results from the initial inspections,
appellants continued to have inspections completed and sought bids and quotes to install,
replace, or repair various items in the house.
According to a declaration filed by appellants’ attorney, appellants sent a demand
letter to respondents toward the end of February 2022. Though the letter is not attached to
the declaration, the attorney averred that the letter “outlin[ed] the issues with the Property
and inform[ed] [respondents] that if the issues [were] not resolved, [appellants] would seek,
among other things, rescission of the Purchase agreement.” The record does not show that
respondents replied to or otherwise acted in response to the letter.
In October 2022, appellants filed a complaint against respondents alleging claims
for fraud/intentional misrepresentation, negligent misrepresentation, and failure to disclose
under the seller’s disclosure statute. They sought both damages and rescission. In their
complaint, appellants alleged that it would cost them $216,961.10 “to fix the issues
misrepresented and omitted by [respondents].”
At the close of discovery, the parties filed cross-motions for summary judgment.
Appellants sought partial summary judgment on liability for all counts in the complaint.
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They also asserted that they were entitled to the equitable relief of rescission as a matter of
law, but they asked that the issue of damages be determined at trial. With their motion,
appellants submitted a declaration from Bhatia detailing the inspections that appellants had
had completed and their estimate of the total cost to repair the issues based on the bids and
quotes they received, which was $221,576.16.
Respondents sought summary judgment on all of appellants’ claims. Respondents
argued, in relevant part, that (1) appellants had failed to produce evidence of recoverable
damages for the claims of fraudulent misrepresentation, negligent misrepresentation, and
statutory nondisclosure because the evidence they submitted showed only repair costs and
not the diminished value of the property and (2) appellants’ claim for rescission should be
dismissed as untimely because appellants waited over a year after noticing issues with the
property in August 2021 before initiating their action for rescission in October 2022.
In their reply memorandum in support of their motion for partial summary judgment
on liability and rescission, appellants maintained that damages were a fact issue for the
jury. With their reply memorandum, appellants also filed a supplemental declaration from
Bhatia, which states, “I believe the value of the Property is worth less as a result of the
issues not disclosed to us. I believe the value of the Property is the cost we paid for it minus
the cost necessary to repair it.”
In an amended order, the district court denied appellants’ motion for partial
summary judgment and granted respondents’ motion for summary judgment, dismissing
all of appellants’ claims. As for appellants’ claims for damages for fraudulent
misrepresentation, negligent misrepresentation, and statutory nondisclosure, the district
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court ruled that all three causes of action required proof of damages as calculated under the
out-of-pocket-loss rule and that appellants, by submitting only repair costs and not
evidence of diminution in value of their property, “failed to provide evidence of
recoverable damages.” As for appellants’ claim for rescission based on those same causes
of action, the district court determined that appellants’ claim was untimely because
appellants commenced their suit more than a year after discovering a significant portion of
the alleged misrepresentations and omissions and the undisputed evidence did not support
a determination that the delay was reasonable.
This appeal follows.1
DECISION
Summary judgment is appropriate when “the movant shows that there is no genuine
issue as to any material fact and the movant is entitled to judgment as a matter of law.”
Minn. R. Civ. P. 56.01. Appellate courts review a grant of summary judgment “de novo to
determine whether there are genuine issues of material fact and whether the district court
erred in its application of the law.” Montemayor v. Sebright Prods., Inc., 898 N.W.2d 623,
628 (Minn. 2017) (quotation omitted). In doing so, appellate courts “ view the evidence in
the light most favorable to the party against whom summary judgment was granted.” STAR
Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002). To create a
genuine issue of material fact, a nonmoving party must submit evidence that is “sufficiently

1 In their complaint, a ppellants asserted claims in addition to those described in this
opinion, but they do not challenge the district court’s summary judgment against them on
those other claims.
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probative with respect to an essential element of the nonmoving party’s case to permit
reasonable persons to draw different conclusions.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71
(Minn. 1997).
Appellants contend that (1) because they submitted sufficient evidence of damages
to survive summary judgment, the district court erred by dismissing their damages claims
for fraudulent misrepresentation, negligent misrepresentation, and statutory nondisclosure
and (2) because they did not unreasonably delay in seeking rescission, the district court
erred by dismissing as untimely their claim for rescission based on those same causes of
action. We address each argument in turn.2

2 As a preliminary matter, we note that, while the district court dismissed appellants’
negligent-misrepresentation claim for damages and for rescission for the reasons described
above, it also dismissed the negligent-misrepresentation claim for a separate and
independent reason. Specifically, the district court concluded that, as a matter of law,
appellants’ negligent-misrepresentation claim failed because respondents did not owe
appellants a duty since appellants were represented in the transaction by their own real -
estate agent. Respondents argue that appellants forfeited any challenge to the lack-of-duty
reason for dismissing the negligent -misrepresentation claim because appellants did not
argue the issue in their principal appellate brief. In their reply brief, appellants respond that
they preserved the argument because, in their principal brief, they stated the five elements
of a misrepresentation claim as outlined in Valspar Refinish, Inc. v. Gaylord’s, Inc., 764
N.W.2d 359, 368 (Minn. 2009), and those elements do not include the element of duty.

Appellants’ argument is unconvincing. The elements that appellants listed in their
principal brief are the elements of a fraud claim as outlined in Valspar, not the elements of
a negligent-misrepresentation claim, which are also outlined in that case. Valspar, 764
N.W.2d at 368-69. And, significantly, the Valspar court referenced the issue of whether a
negligent-misrepresentation claim is actionable if the defendant did not owe a duty of care
to the other party to the transaction, although it determined that, in the circumstances of
that case, it did not need to decide the issue. Id. at 369-70 & n.7. Despite this reference in
Valspar to the question of duty, a ppellants did not address the district court’s ruling
regarding lack of duty in their principal brief. Merely stating the elements of a claim is not
the same as arguing that the district court’s determination about those elements was
erroneous. Appellants therefore forfeited the argument that the district court erred by
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I. Summary judgment is proper because appellants failed to submit sufficient
evidence of recoverable damages to survive summary judgment.

Appellants argue that they submitted sufficient evidence of damages to survive
summary judgment. They make three arguments to support that claim. First, they contend
that repair costs may suffice to establish recoverable damages for fraud or
misrepresentation in the context of a residential real-estate transaction and thus their
evidence of repair costs is sufficient to survive summary judgment. Second, they argue that
the opinion of Bhatia —that the value of the home is the purchase price less the repair
costs—suffices to establish recoverable damages . Third, they assert that a claim for
damages under the seller’s disclosure statute is not subject to the same measure of damages
as a fraud or misrepresentation claim. None of the arguments are persuasive.
A. Appellants’ evidence of repair costs is insufficient to survive summary
judgment under the out-of-pocket-loss rule for damages.

Appellants argue that evidence of repair costs may establish recoverable damages
for claims based on fraud or misrepresentation in the sale of residential real estate and that
they therefore submitted sufficient evidence to survive summary judgment.
When evaluating damages resulting from a contract for the purchase of real property
induced by fraud or misrepresentation, Minnesota courts apply the out-of- pocket-loss

determining that their negligent-misrepresentation claim fails for lack of duty. See Melina
v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982) (holding that issues not briefed on appeal are
waived); Ward v. El Rancho Manana, Inc., 945 N.W.2d 439, 449 (Minn. App. 2020)
(declining to address an argument that “appellants failed to argue . . . in their principal
brief”), rev. denied (Minn. Sept. 29, 2020). As a result, even if we were to conclude that
the district court erred in its rulings about damages or rescission, the district court’s
dismissal of appellants’ negligent-misrepresentation claim would stand.
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measure of damages. Marion v. Miller, 55 N.W.2d 52, 55 (Minn. 1952). Out-of-pocket loss
“is the difference between the actual value of the property received and the price paid for
it.” Yost v. Millhouse, 373 N.W.2d 826, 830- 31 (Minn. App. 1985) (quoting Lowrey v.
Dingmann, 86 N.W.2d 499, 501-02 ( Minn. 1957)). In cases of alleged misrepresentation
in a real-estate transaction, “the measure of damages is the amount paid less the fair market
value of the property.” Peterson v. Johnston, 254 N.W.2d 360, 362 (Minn. 1977). When
there is no difference between the actual value of the property and the price paid, the
defrauded party “has suffered no damage and therefore cannot recover.” Berg v. Xerxes-
Southdale Off. Bldg. Co., 290 N.W.2d 612, 615 (Minn. 1980) (quotation omitted).
Here, the district court relied on, and the parties discuss, two cases in which this
court explained that repair costs alone are insufficient to show a diminution in value in a
real-estate transaction under the out-of-pocket-loss rule.
In Lobe Enterprises v. Dotsen, the buyer of a commercial building sued to recover
the cost of a new roof, claiming that the seller had misrepresented the state of the roof. 360
N.W.2d 371, 372 (Minn. App. 1985). The district court found against the buyer. Id. On
appeal, the buyer asserted that the district court had erred by applying the out-of-pocket-
loss rule. Id. We affirmed, holding that “the ‘out-of-pocket-loss rule’ rather than the costs
of repair” was the proper measure of damages and that the buyer “did not fulfill their burden
of proving damages under the ‘out-of-pocket- loss’ rule by subtracting the cost of repairs
from the purchase price of the property.” Id. at 371. We explained that the cost of a new
roof does not establish the market value of the building, observing that “[t]he installation
price of a new roof includes cost factors which have no effect upon the market value of the
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building.” Id. at 373. We stated that “the actual value of the property in the condition
received” is “essential to prove loss.” Id.
In Bryan v. Kissoon, a home buyer sued the seller, claiming that the seller’s failure
to disclose that the house had suffered a fire caused her to incur damages because, had she
known about the fire, she would have had a water-intrusion inspection performed and
would have discovered unrelated structural defects that cost $400,000 to remedy. 767
N.W.2d 491, 493-94 (Minn. App. 2009). The district court excluded the buyer’s evidence
of repair costs because the alleged misrepresentation had not proximately caused the
damages. Id. at 494. Without evidence of damages, the district court then granted the
sellers’ motion for judgment as a matter of law. Id. We affirmed. Id. at 497. In so doing,
we reiterated the holding in Lobe that, under the out-of-pocket-loss rule, “repair costs alone
are not sufficient to show damages for fraudulent misrepresentation in a real-estate
transaction.” Id. at 496 (citing Lobe, 360 N.W.2d at 373).
Appellants challenge the application of Lobe and Bryan here for several reasons.
They contend that Lobe does not apply because it dealt with a commercial, not residential,
buyer of real estate. But, while the appellant in Lobe was a commercial buyer, there is no
indication in the opinion that the holding should be limited to commercial buyers. See Lobe,
360 N.W.2d 371. And in Bryan, we rejected the argument that Lobe does not apply to a
residential-real-estate purchase, noting that “Lobe did not limit its holding to buildings that
are commercial in nature.” 767 N.W.2d at 496 n.2.
Appellants also assert that Lobe does not establish a bright-line rule that repair costs
may never reflect diminution in value because Lobe states, “Under these circumstances,
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repair costs do not accurately reflect appellants’ loss proximately arising from the
misrepresentation.” 360 N.W.2d at 373 (emphasis added). But, even if that phrase implies
that, in some cases, repair costs alone are sufficient, appellants have not distinguished the
circumstances of their case from those in Lobe. Appellants’ repair costs, like the repair
costs asserted in Lobe, include other costs that do not affect the market value of the
building, such as the cost of installing new fixtures in the home. As a result, as in Lobe, the
repair costs asserted by appellants are insufficient to show the diminished value of the
building under the out-of-pocket-loss rule.
As for Bryan, appellants assert that our statement that repair costs are insufficient
to prove recoverable damages is dicta. It is true that our decision in Bryan turned on
whether the asserted repair costs were proximately caused by the alleged fraud, not whether
repair costs can be evidence of damages. 767 N.W.2d at 496. But, even if we were to
consider the Bryan court’s discussion of the out-of-pocket-loss rule to be dicta, it is still
persuasive authority, especially when, as is the case here, the dicta discuss the law at issue
on appeal. See In re Est. of Bush, 224 N.W.2d 489, 501 (Minn. 1974) (“Even dictum, if it
contains an expression of the opinion of the court, is entitled to considerable weight.”); see
also Sanchez v. Dahlke Trailer Sales, Inc., 897 N.W.2d 267, 277 n.9 (Minn. 2017) (relying
on dictum as “persuasive” where the analysis focused on the same statutes at issue on
appeal).
Appellants further argue that Lobe and Bryan “went before the factfinder” and
therefore cannot be relied on to establish that repair costs are insufficient as a matter of law
and that doing so would result in “a conflation of the admissibility of evidence with its
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weight.” But, as stated above, Lobe establishes that the actual value of the property cannot
be determined by repair costs that include other cost factors that do not affect market value.
360 N.W.2d at 373. Accordingly, without evidence that the actual value of the property
diminished as a result of the alleged problems, appellants, as a matter of law, did not
establish a genuine issue of material fact as to the element of damages under the out- of-
pocket-loss rule.
B. Bhatia’s declaration provides insufficient evidence to survive summary
judgment.

Appellants also argue that they submitted sufficient evidence to survive summary
judgment because Bhatia, as the homeowner, submitted a supplemental declaration stating
that he “believe[d] the value of the Property is the cost [appellants] paid for it minus the
cost necessary to repair it.” They argue that to hold otherwise would require homeowners
to obtain expert testimony to show a diminution in value, which would contradict the rule
that an “owner of property either real or personal is presumptively acquainted with its value
and may testify as to its value.” Lehman v. Hansord Pontiac Co. , 74 N.W.2d 305, 309
(Minn. 1955). We disagree. Caselaw states that, under the out- of-pocket-loss rule, “the
measure of damages is the amount paid less the fair market value of the property.”
Peterson, 254 N.W.2d at 362. A homeowner could submit testimony about the value of
their own property so long as the testimony addresses the market value of the home and is
based on evidence separate from or in addition to repair costs. Because Bhatia’s
supplemental declaration testimony does not address actual value but, instead, merely
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reiterates the repair costs identified in his initial declaration, it does not create a genuine
issue of material fact regarding damages.
C. The out-of-pocket-loss rule applies to claims for statutory nondisclosure.

Finally, appellants argue that the out-of-pocket -loss rule is not the proper measure
of damages for their claim of failure to disclose under Minnesota Statutes section 513.55.
Although Lobe and Bryant address claims of common-law fraud and
misrepresentation, we read the language of the seller’s disclosure statute to use the same
measure of damages as those common-law claims. The seller’s disclosure statute creates a
separate cause of action from common- law fraud and misrepresentation and requires a
seller to make written disclosures to the prospective buyer regarding material facts that the
seller knows may affect the buyer’s use or intended use and enjoyment of the property.
Minn. Stat. § 513.55, subd. 1. A person injured by a seller’s nondisclosure may “recover
damages and receive other equitable relief as determined by the court.” Minn. Stat.
§ 513.57, subd. 2. The statute does not “preclude[] liability for an action based on fraud,
negligent misrepresentation, or other actions allowed by law.” Id., subd. 3.
Appellants assert that the statute should not be limited to out-of-pocket loss because
section 513.55 mandates disclosures that impact the buyer’s “use and enjoyment of the
property” and because section 513.57 provides that a buyer may “recover damages and
receive other equitable relief.” But section 513.55 describes the disclosures that are
required, not the remedies available. And, while section 513.57 provides that an individual
injured by a failure to disclose can seek damages in addition to equitable relief, the statute
does not indicate that the legislature intended “damages” to be defined differently from
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common-law-fraud damages in real-estate cases. “[S]tatutes are presumed to be consistent
with the common law and will not be construed to modify or alter the common law unless
they expressly so provide.” Minn. Equal Access Network Servs. v. Burlington N. &
Santa Fe R.R. Co., 646 N.W.2d 911, 914 (Minn. App. 2002), rev. denied (Minn. Oct. 15,
2002). Accordingly, we conclude that the measure of common-law -fraud damages in
property cases, which is the out-of-pocket-loss rule, is the proper measure for damages
under the seller’s disclosure statute. See Peterson, 254 N.W.2d at 362 (measuring common-
law damages using the out- of-pocket-loss rule); see also Lawrence v. Forthun,
No. A09-0543, 2009 WL 4796754, at *8 (Minn. App. Dec. 15 , 2009) (“It is most logical
to use the same measure of damages in a real- estate transaction where injury is caused by
the seller’s failure to disclose, as required by the seller’s disclosure statute, as in an action
arising out of a real-estate transaction where the injury is caused by the seller’s fraud or
misrepresentation.”).3
In conclusion, because appellants failed to provide sufficient evidence of diminution
of value to create a genuine issue of material fact regarding damages, the district court did
not err when it granted respondents’ motion for summary judgment and dismissed
appellants’ claims for damages based on fraud, negligent misrepresentation, and statutory
nondisclosure.

3 We cite this nonprecedential opinion as persuasive authority. See Minn. R. Civ. App. P.
136.01, subd. 1(c).
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II. The district court did not err in determining that appellants’ rescission claim
was untimely.

“Rescission is an equitable remedy,” SCI Minn. Funeral Servs., Inc. v. Washburn-
McReavy Funeral Corp., 795 N.W.2d 855, 861 (Minn. 2011), “which not only terminates
the contract but abrogates it and undoes it from the beginning,” Johnny’s, Inc. v. Njaka,
450 N.W.2d 166, 168 (Minn. App. 1990). The remedy of rescission “may be lost where
the buyer . . . fails to disaffirm the transaction within a reasonable time after discovery of
the fraud.” Hemming v. Ald, Inc., 155 N.W.2d 384, 386 (Minn. 1967).
Appellants argue that the district court erred by rejecting rescission as untimely as
a matter of law for two reasons: first, because the district court erred when it determined
that appellants did not disaffirm the transaction until filing suit in October 2022 and,
second, because the district court did not apply the relevant factors for determining whether
a party’s delay was unreasonable.4
Regarding their first argument, appellants assert that the record establishes that they
disaffirmed the transaction long before they filed suit in October 2022. Specifically, they
assert that they disaffirmed the transaction in February 2022 when their lawyer sent a

4 Appellants possibly assert a third reason why the district court erred when they state that
the district court “ignored that rescission is a remedy provided for by statute.” While it is
true that the seller’s disclosure statute permits an injured party to seek equitable remedies,
Minn. Stat. § 513.57, subd. 2, and those remedies presumably include rescission, appellants
do not explain how the district court ignored that remedy. Nor do appellants argue that the
statute alters how a court must analyze a claim for rescission. To the extent that appellants
are making such an argument here, it is for the first time since they did not assert that
argument before the district court. We therefore decline to consider the argument. See
Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (“ A reviewing court must generally
consider only those issues that the record shows were presented and considered by the trial
court in deciding the matter before it.” (quotation omitted)).
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“demand letter” to respondents. That letter, according to their lawyer, outlined the issues
with the property and informed appellants that “if the issues [were] not resolved, the
Bhatias would seek, among other things, rescission of the Purchase agreement.” Appellants
argue that the February letter disaffirmed the transaction and the district court erred by
determining that they did not seek rescission until October 2022.
We disagree that the February 2022 letter provides the endpoint for measuring
whether appellants timely sought rescission. In Holcomb & Hoke Manufacturing Co. v.
Osterberg, the buyer knew within a month of purchasing a machine from the seller that
there was an issue that could not be overcome. 233 N.W. 302, 302-03 (Minn. 1930). Three
months after purchasing the machine, the buyer sent a letter threatening to stop payments
unless the seller fixed the machine. Id. at 303. The seller did not fix the machine, but the
buyer waited another nine months before bringing a suit against the seller for rescission.
Id. The supreme court viewed the delay between the letter and the start of the lawsuit as
the buyer “deliberately abandon[ing] his efforts at rescission” and determined that the delay
from the time the issue was known until when the lawsuit was commenced— about 11
months— was unreasonable and rescission was no longer an appropriate remedy. Id. at 304.
Similarly, here, while appellants’ February 2022 letter referenced a possible action
for rescission, there is no evidence in the record suggesting that respondents responded to
the letter or repaired the property, and yet appellants waited an additional eight months
before commencing suit against respondents. Thus, even if we consider the February letter
as asserting a claim for rescission, the district court properly used the date of suit to measure
16
the delay because appellants, by waiting eight months between the demand letter and
bringing the suit, abandoned their efforts to rescind. See id. at 303-04.
Regarding appellants’ second argument, contrary to appellants’ assertion, the
district court properly considered the applicable factors for determining whether a party
seeking rescission acted within a reasonable time—including the relative knowledge of the
parties, the potential prejudice to the seller from the delay and fluctuations in the market,
and whether the seller induced the delay. See Hemming, 155 N.W.2d at 386-87 (setting
forth factors to determine a reasonable time to rescind). As noted in the district court’s
order, appellants admitted that they discovered key aspects of the alleged fraud by
September 2021, appellants had previously bought a house and knew of the importance of
an inspection, nothing in the record suggested that respondents acted in a way that would
dissuade or delay appellants from seeking res cission, and the parties did not dispute that
there had been fluctuations in the residential retail market that would impact rescission.
Under the applicable legal factors and based on the undisputed facts, a reasonable fact-
finder could not find that appellants’ delay of nearly 13 months between the time of the
inspections until the time of the lawsuit was reasonable. See id. Accordingly, the district
court did not err by determining that appellants’ delay was unreasonable as a matter of law.
Affirmed.