386 F. Supp. 3d 56
D.D.C.2019Background
- In August 2016 Gregg and Karin Wade purchased 32 Oak Street (Foxborough, MA) from Touchdown Realty Group, LLC; Thomas Clayton was involved in the renovation and sale. Plaintiffs sought a three-bedroom home for their disabled child.
- Touchdown renovated the house after buying it in 2016; the town required a deed restriction limiting the property to two bedrooms because the septic supported only two bedrooms. That deed restriction was recorded July 15, 2016.
- The MLS listing described the property as a three‑bedroom house but also noted a “current design two bed.” Clayton emailed the buyer’s agent that the house was “obviously a 3 bed dwelling” but the septic was “grandfathered in as 2 bedroom design.” The town had repeatedly told Clayton the property could only be used as a two‑bedroom dwelling.
- The purchase agreement (signed Aug. 2, 2016) contained warranties that the property was not in violation of building and zoning codes; the sale closed Aug. 31, 2016. Plaintiffs later discovered alleged code violations during renovations and could not use the lower-level room as a bedroom due to the deed restriction.
- Procedurally: Plaintiffs sued for breach of contract, breach of the covenant of good faith and fair dealing, fraud/fraudulent inducement, alter-ego (piercing) and Chapter 93A violations; Defendants impleaded the buyer’s agent and her broker for contribution/indemnity. The court dismissed a non-diverse defendant (general contractor Lewis) to preserve federal diversity jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction / misjoinder of Lewis | Lewis is a defendant but dismissal would prejudice plaintiffs | Lewis is dispensable; his dismissal cures lack of diversity | Court dismissed claim against Lewis under Rule 21 to restore diversity jurisdiction |
| Breach of contract & covenant (code compliance) | Wades contend the house violated building codes and Touchdown warranted compliance | Defendants say plaintiffs lack admissible proof—no qualified expert to opine on code compliance | Summary judgment denied; court found Wades’ contractor (Schadler) may offer lay "experiential" testimony but admissibility of technical opinions requires later Daubert analysis |
| Fraud: nondisclosure of code violations & bedroom-count representations | Wades: Defendants knew of code violations and failed to disclose; Clayton guaranteed 3-bed use by asserting "grandfathering" | Defendants: nondisclosure alone is not fraud; any oral assurance conflicted with written appraisal/deed showing two bedrooms | Court granted summary judgment on common-law fraud claims based solely on nondisclosure of code violations (mere nondisclosure insufficient). But factual disputes about Clayton’s statements re: "grandfathering" preclude summary judgment on fraud based on bedroom-count misrepresentation and on reasonableness of reliance |
| Third-party claims / contribution & indemnity (agent & broker) | Defendants seek contribution/indemnity from buyer’s agent and broker | Third-Party Defendants argue they settled with plaintiffs in good faith (Chap. 231B), extinguishing contribution; also no basis for vicarious indemnity | Court granted summary judgment for Third-Party Defendants: their good‑faith settlement bars contribution; common-law indemnity fails because no vicarious/derivative liability was shown |
Key Cases Cited
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (court allowed dropping nondiverse party to preserve federal jurisdiction)
- Cason v. P.R. Elec. Power Auth., 770 F.3d 971 (Rule 21 dismissal of dispensable nondiverse party to cure jurisdictional defect)
- United States v. Vega, 813 F.3d 386 (lay witness "experiential expertise" permissible under Rule 701)
- United States v. Maher, 454 F.3d 13 (Rule 701 admits lay testimony based on job experience)
- Int'l Totalizing Sys., Inc. v. PepsiCo, Inc., [citation="29 Mass. App. Ct. 424" ] (seller’s knowledge and misrepresentation principles in Massachusetts fraud law)
- Solomon v. Birger, 19 Mass. App. Ct. 634 (mere nondisclosure by vendor not fraud absent duty to disclose or affirmative concealment)
- Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 (reasonableness of reliance where oral statements conflict with written disclosures)
- Noyes v. Raymond, 28 Mass. App. Ct. 186 (requirements and burden-shifting for Chapter 231B good-faith settlements)
- Ferreira v. Chrysler Grp. LLC, 468 Mass. 336 (indemnity limited to vicarious/derivative liability situations)
- Attorney Gen. v. M.C.K., Inc., 432 Mass. 546 (factors for piercing corporate veil)