Latson v. Plaza Home Mortgage, Inc., 2013 U.S. App. LEXIS 4071

Latsons bought a three-family Dorchester home in March 2006, financed by two Plaza loans totaling $525,000: $367,500 at 6.75% (adjustable to 11.75%) and $157,500 at 11.5% (fixed).
In August 2011, Latsons, through counsel, sent a Massachusetts Chapter 93A demand alleging pre-signing nondisclosures and misstatements and seeking damages, interest, costs, and fees.
Latsons filed a diversity action in federal court alleging breach of the implied covenant of good faith and fair dealing under Massachusetts law and Chapter 93A violations, based on pre-closing conduct.
The district court dismissed the complaint for failure to state a claim and as time-barred on the 93A claim; Latsons sought reconsideration but were denied.
The First Circuit reviews de novo, accepts well-pleaded facts as true, and affirmatively held the covenant of good faith applies post-formation and only to the contract, while the 93A claim is untimely; the Latsons did not plead tolling that would salvage the claim.
The judgment affirmed the district court’s dismissal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the implied covenant claims survive after contract formation	Latsons relied on pre-signing conduct as a basis for an ongoing duty.	Covenant governs post-formation conduct to preserve the contract's fruits.	No viable post-formation breach claim under Massachusetts covenant.
Whether the 93A claim is time-barred	Discovery toll or fraud toll could save timely filing.	Four-year limit from injury; August 2011 filing was untimely.	Time-barred; 93A claim properly dismissed.

Uno Rests., Inc. v. Boston Kenmore Realty Corp., 805 N.E.2d 957 (Mass. 2004) (covenant cannot create duties beyond contract terms; post-formation duties)
Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 412 F.3d 215 (1st Cir. 2005) (covenant interpretation and contract framework in MA law)
Levenson v. L.M.I. Realty Corp., 575 N.E.2d 370 (Mass. App. Ct. 1991) (covenant scope after contract formation)
Anthony's Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806 (Mass. 1991) (implied covenant framework in MA law)
Finard & Co. v. Sitt Asset Mgmt., 945 N.E.2d 404 (Mass. App. Ct. 2011) (cited for proposition on relevant factual scope)
Cambridge Plating Co. v. Napco, Inc., 991 F.2d 21 (1st Cir. 1993) (statute-of-limitations considerations in MA claims)
Patsos v. First Albany Corp., 741 N.E.2d 841 (Mass. 2001) (discovery rule considerations in limitations)
St. Fleur v. WPI Cable Sys./Mutron, 879 N.E.2d 27 (Mass. 2008) (reading of contract terms and reading requirement)
Carroll v. Xerox Corp., 294 F.3d 231 (1st Cir. 2002) (limits on tolling and 93A procedural posture)
Int'l Mobiles Corp. v. Corroon & Black/Fairfield & Ellis, Inc., 560 N.E.2d 122 (Mass. App. Ct. 1990) (Mass. contract-related limitations analysis)