Joseph McNulty v. Kristen Chip
116 A.3d 173
| R.I. | 2015Background
- Joseph and Elizabeth McNulty bought a house at 5 Meadowbrook Road in 2005; a pre‑purchase home inspection reported high basement moisture, water penetration evidence, efflorescence, and recommended a new sump pump. Plaintiffs did not pursue further investigation or remediation before closing.
- The purchase and sales agreement contained an "AS IS" / merger and disclaimer clause stating buyer had not relied on oral representations as to the character or quality of the property and included language about inspections.
- Soon after closing (October 2005) plaintiffs experienced major flooding (2–3 feet in the basement) and multiple subsequent flooding/water‑penetration events culminating in a severe storm in March 2010.
- Plaintiffs sued seller Kristen Chip, agent Michael Pinelli, RPZ Realty, RE/MAX, and others asserting fraudulent misrepresentation, negligent misrepresentation, negligence, breach of contract, breach of implied covenant, deceptive trade practices, and breach of fiduciary duty.
- The Superior Court granted summary judgment to defendants on contract and negligence claims (statute of limitations/discovery rule) and—relying on an "AS IS" disclaimer—dismissed the fraud claim; the Supreme Court affirmed dismissal of contract and negligence claims but vacated the fraud dismissal and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants waived statute of limitations defense | McNulty: defendants failed to plead it as an affirmative defense, so waived | Defendants: raised the defense by motion for summary judgment well before trial; no surprise | Defense not waived — raising by motion was timely; summary judgment appropriate on negligence claims under limitations law |
| Whether discovery rule tolled negligence claims beyond three‑year limitations | McNulty: discovery rule or fraudulent concealment delayed accrual until 2010 (post‑March flood) | Defendants: numerous earlier floods, inspection report, and developer’s warning put plaintiffs on notice well before 2007 | Discovery rule not available — reasonable diligence would have revealed claim earlier; negligence claims time‑barred |
| Whether merger/"AS IS" disclaimer barred fraudulent‑misrepresentation claim as matter of law | McNulty: disclaimer insufficiently specific to bar fraud; factual disputes exist about seller/agent statements and knowledge | Defendants: disclaimer + inspection report preclude justifiable reliance as a matter of law (or, seller lacked knowledge) | Disclaimer held too general to bar fraud as matter of law; genuine issues of material fact exist regarding Chip’s knowledge and agent’s statements; fraud claim survives summary judgment |
| Whether breach of implied covenant is independent cause of action | McNulty: claim for implied covenant (count 4) stands against Chip | Defendants: covenant claim is not independent of contract claim | Covenant claim is not independent of contract; summary judgment on that claim affirmed |
Key Cases Cited
- LaFazia v. Howe, 575 A.2d 182 (R.I. 1990) (specific merger/disclaimer language can bar fraud claim)
- Travers v. Spidell, 682 A.2d 471 (R.I. 1996) (general merger clause does not bar fraud when it fails to address the specific subject matter)
- Lee v. Morin, 469 A.2d 358 (R.I. 1983) (statute of limitations for latent defects begins when injury is sufficiently significant to alert party to possible defect)
- Martin v. Howard, 784 A.2d 291 (R.I. 2001) (discussing discovery rule tolling until reasonable diligence would reveal injury)
- Brown v. State, 32 A.3d 901 (R.I. 2011) (statute of limitations is affirmative defense that generally must be raised or is waived)