Zappacosta v. McAvoyZappacosta v. McAvoy
I. INTRODUCTION
Plaintiffs Jason Zappacosta and Joy Godowski (the “Zappacostas” or “Plaintiffs“) move pursuant to
As discussed below, Plaintiffs have met their burden to establish that there is no genuine dispute as to certain material facts that entitle Plaintiffs to judgment as a matter of law on three
However, genuine disputes of material fact remain as to whether Plaintiffs justifiably relied on Defendant‘s false representations, and therefore necessarily also as to whether damages were a proximate result of those false representations.
Accordingly, the Motion for Summary Judgment will be granted in part and denied in part. The Motion will be granted in favor of Plaintiffs and against Defendant on the first three requisite elements of
II. UNDISPUTED FACTS
In June of 2018, Plaintiffs purchased certain residential real property located at 2841 Cambridge Street in Philadelphia, Pennsylvania, 19130 (the “Cambridge Property“) from Defendant‘s single-member limited liability company, Gentian Capital, LLC (“Gentian“). Case No. 24-87, ECF 1, ¶ 13(a); ECF 1-3, Ex. C, ¶ 1.2
On June 9, 2020, Plaintiffs commenced a civil action against Defendant and Gentian, captioned Jason Zappacosta, et al. v. Cozette McAvoy, et al. (Pa. C.P., Philadelphia Cty., Civ.
On June 2, 2023, default judgment was entered in the State Court Action in favor of Plaintiffs and against Defendant and Gentian (the “Default Judgment“). Case No. 24-87, ECF 1, ¶ 13(q-r).
On July 24, 2023, the Philadelphia Court of Common Pleas entered a molded verdict in the State Court Action, awarding Plaintiffs damages against Defendant and Gentian, jointly and severally, in the amount of $1,441,162.92, with post-judgment interest accruing at a daily rate of $175.67 from June 15, 2023 (the “Default Judgment Damages Amount“). Case No. 24-87, ECF 1-7, Ex. G.
On May 9, 2024 (the “Petition Date“), during the pendency of the First Appeal, Defendant filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code (the “Bankruptcy Case“). Case No. 24-11597, ECF 1.
On May 24, 2024, Plaintiffs filed a proof of claim in the Bankruptcy Case for a secured claim in the amount of $1,470,324.14 based on the Default Judgment and the Default Judgment Damages Amount (the “Original Zappacosta Claim“).5 See Case No. 24-11597, Claims Docket, Proof of Claim No. 2.
On June 13, 2024, Plaintiffs initiated this adversary proceeding (the “Adversary Proceeding“) by filing a complaint (the “Adversary Complaint“), seeking: (i) exception to discharge of the debt owed to Plaintiffs (the “Zappacosta Debt“) pursuant to
On September 27, 2024, in the First Appeal, the Superior Court struck the Default Judgment and remanded the State Court Action to the Philadelphia Court of Common Pleas for a trial on the issues of liability and damages. See Case No. 24-11597, ECF 57, ¶ 8.
On March 10, 2025, trial was held in the remanded State Court Action in the Philadelphia Court of Common Pleas (the “Trial“). See Case No. 24-87, ECF 13-6, Ex. B. During the Trial, the Philadelphia Court of Common Pleas deemed admitted all factual averments in the State Court Complaint.7 See Case No. 24-87, ECF 13-6, Ex. B, 66:11-15. Accordingly, this Court observes that the following factual averments in the State Court Complaint relevant to this
15. Plaintiffs [...] are the present owners and were, at all times relevant hereto, the bona fide buyers and purchasers of the Cambridge Property.
16. Defendant [...] is the managing-member and/or controlling member of Gentian. Defendant [...] is also a member of [...] Montevista[,] [LLC, a business entity organized under the laws of the Commonwealth of Pennsylvania]. [...]
19. At all times material hereto, [...] Gentian and Montevista are the developers, builders, owners, sellers, and/or contractors responsible for the construction, development, design, structural integrity, marketing, and sale of the Cambridge Property. [...]
30. [...] Montevista purchased the Cambridge Property on February 8, 2010[,] as an empty and vacant lot of land.
31. [Defendant, Gentian, Montevista, and Co-Defendant Tioga D. Patricio (“Patricio“), a member of Montevista (collectively, the “Seller Defendants“)] subsequently sought to obtain permits necessary to develop, construct, and erect a new three-story residential dwelling.
32. [T]he Seller Defendants served as the owners, general contractors, supervisors, builders, and developers of the Cambridge Property throughout its construction.
33. [S]ometime during the early phases of development, [...] Montevista transferred title of the Cambridge Property to [...] Gentian via $1 quitclaim deed transfer.
34. [...] Montevista and Gentian were controlled and operated by the same individuals, including specifically Defendant[.]
35. [T]he construction of [the] Cambridge Property was completed on or around November 2011.
36. [I]n 2011 through 2012, following the completion of construction, the Seller Defendants actively marketed and listed the Cambridge Property for sale.
37. [T]he Seller Defendants could not sell the property, and ultimately, in 2014, began seeking a tenant to occupy and rent the Cambridge Property.
38. [T]he Seller Defendants served as landlords and/or property managers over the Cambridge Property during any time which it was occupied by tenants.
39. [T]he property was occupied by one or more tenants between 2014 through 2018.
40. On May 2, 2018, the Seller Defendants [...] listed the Cambridge Property [...] and marketed the property for sale. [...]
43. [After visiting the Cambridge Property on May 3, 2018,] Plaintiffs offered to purchase the Cambridge Property at its full ask listing price of $489,900.
44. On May 4, 2018, Plaintiffs and [...] Gentian entered [into] an Agreement of Sale for the Purchase of the Cambridge Property.
45. Prior to the execution of the Agreement of Sale, Plaintiffs were provided with the Seller‘s Disclosure related to the Cambridge Property.
46. The Seller‘s Disclosure was executed by Defendant [...], on behalf of [...] Gentian.
47. In the Seller‘s Disclosure, the [Defendant] indicated that (a) the seller does not possess any expertise related to the construction and condition of the Cambridge Property[...]; (b) the seller has occupied the property since 2016 [...]; the seller was not aware of any current/past problems with the roof, gutters, flashing, or downspout [...]; the roof has never leaked [...]; the seller was not aware of any past or present water infiltration in the house [...]; and the seller was not aware of any mold tests or issues[.] [...]
51. [Gentian] was an entity formed for the purpose of constructing, developing, and profiting off the property. [...]
54. In 2015, the Cambridge Property was occupied by tenants.
55. [D]uring the period of time which the Cambridge Property was occupied, Defendant [...] had personal interactions with the tenants in her capacity as landlord, property manager, and/or owner/owner‘s representative.
56. [At] various times in 2015 and 2016, Defendant [...] and the Seller Defendants were personally made aware of mold complaints brought about by the tenants of the Cambridge Property.
57. [B]y 2016 at a minimum, the Seller Defendants were made aware of issues related to water infiltration and water leakage near or around the roof.
58. Finally, the Seller Defendants are related individuals and entities, of which Defendant [...] was the representative, managing, and controlling member.
59. Despite the relatedness of the entities, Defendant [...] never disclosed that she was the developer and builder of the Cambridge Property and a member of both [...] Montevista and [...] Gentian. [...]
61. On May 17, 2018, Plaintiffs conducted a home inspection of the property.
62. As a result, there were major concerns raised regarding: (1) the condition of the roof downspout; (2) suspected soft spots and concealed damage to the front balcony fiberglass roof/decking; (3) concerns surrounding the installation and condition of the stucco. [...]
65. On May 24, 2018, the Seller Defendants agreed to, inter alia, repair the spots on the roof and front deck and unclog and clear the drains and roof downspout. [...]
71. [...T]he Seller [Defendants] agreed to repair the roof issues and the purported aesthetic stucco issues.
74. On June 14, 2018, despite having certain repairs outstanding, Plaintiffs were required to close and settle on the Property.
75. On June 14, 2018, Plaintiffs and Seller Defendants executed an escrow agreement outlining the remaining repairs that would be completed and remedied by June 24, 2018.
76. On June 14, 2018, Plaintiffs settled on the property and became the owners of the Cambridge Property.
77. On June 25, 2018, Plaintiffs moved into the property and learned that some of the repairs were not yet completed.
78. [T]he repairman retained by the Seller Defendants abandoned and/or failed to complete all the repairs agreed upon prior to settlement.
79. As a result, Plaintiffs were required to retain their own repairman to complete some of the outstanding items designated for repair.
80. From August 2018 through September 2018, Plaintiffs made several attempts to communicate with Defendant [...] about the status of the repairs.
81. On October 8, 2018, Defendant [...] finally responded to Plaintiffs indicating that the repairs were not complete because of actions taken by Plaintiffs’ realtor[.] [...]
84. On December 21, 2018, Plaintiffs discovered water damage stemming from the roof of the Cambridge Property.
85. Believing that the roof had been repaired, Plaintiffs sought an alternative explanation as to the cause of the water infiltration.
86. On January 4, 2019, Plaintiffs retained a mason to inspect and remove several bricks to determine whether the water damage was a masonry issue.
87. A result of the mason‘s inspection suggested that the water damage was a result of leaks in the roof.
88. Based on that information, Plaintiffs then contacted one of the repairmen previously retained by the Seller Defendants who had purportedly repaired the soft spots along the roof.
89. Subsequently, Plaintiffs discovered that the roofer who was retained by the [Seller Defendants] to make repairs to the roof[] did not actually repair any of the soft spots along the fiberglass, and, in fact, was not familiar with fiber glass [sic] roofing. [...]
91. In March 2019, Plaintiffs continued to experience water infiltration through the roof.
92. As a result, Plaintiffs retained a roofing company to make the necessary repairs to the roof, including, but not limited to; [sic] removal of the existing fiberglass system, installation of new AC sheathing, installation of lumber throughout the roofline and installation of a new parapet wall.
93. Following the repairs to the fiberglass, Plaintiffs continued to experience water infiltration and leaking issues.
94. As a result, Plaintiffs retained a home inspector to conduct a[n] in depth review of the stucco. [...]
95. The Stucco Inspection Report concluded that the stucco cladding was improperly installed, did not contain the appropriate sheathing behind the stucco to prevent moisture damage, and caused moisture intrusion to come through the windows and interior wood areas on the first and second floor of the property.
96. The report recommended the removal of the stucco in the front and rear of the property, however, following the repairs to the stucco, it was discovered that there were water intrusions coming from all sides of the property.
97. As a result, Plaintiffs were required to remove the entire stucco and reframe the property and conduct a full stucco remediation.
98. Subsequently, the removal of the stucco revealed several other concealed defects with the property, including, but not limited to: wood deterioration around the supporting deck area; no flashing around a door; and mold infested pipes and vents.
99. As a result of the additional defects, Plaintiffs [were] required to replace the windows and remove the flooring throughout the house due to water and mold contamination.
See ECF Case No. 24-87, ECF 1-3, Ex. C.
On August 19, 2025, following the Trial, the Philadelphia Court of Common Pleas entered a verdict in favor of the Zappacostas and against Defendant and Gentian, finding Defendant and Gentian jointly and severally liable for: (i) State Court Count I for breach of contract; (ii) State Court Count II for breach of warranties; (iii) State Court Count VI for fraudulent misrepresentation; (iv) State Court Count VII for fraudulent concealment; and (v) State Court Count VIII for violation of Pennsylvania‘s Unfair Trade Practice and Consumer Protection Law (the “Trial Verdict“). See Case No. 24-87, ECF 13-7, Ex. C. The Trial Verdict did not include an accompanying opinion explaining the basis on which the Trial Verdict was reached. See id.
On September 5, 2025, Plaintiffs filed the instant Motion for Summary Judgment pursuant to
On September 19, 2025, Defendant filed a Response to the Motion for Summary Judgment (the “Response“), discussed below in more detail. See Case No. 24-87, ECF 16.
On October 16, 2025, the Philadelphia Court of Common Pleas entered a molded verdict in the amount of $1,498,333.35 in connection with the Trial (“Trial Verdict Damages Amount“). See Case No. 24-11597, Claims Docket, Proof of Claim No. 2-2.
On November 13, 2025, Defendant appealed the Trial Verdict to the Superior Court, which appeal currently remains pending (the “Second Appeal“).8 See Case No. 24-11597, ECF 150, ¶ 7.
On January 21, 2026, Plaintiffs filed an amended Proof of Claim 2-2 for a secured claim in the amount of $1,498,333.35, based on the Trial Verdict Damages Amount (the “Amended Zappacosta Claim“). See Case No. 24-11597, Claims Docket, Proof of Claim No. 2-2.
III. DISCUSSION
For the reasons that follow, the Motion will be granted in part and denied in part. The record reveals that there is no genuine dispute as to material fact and that Plaintiffs are entitled to judgment as a matter of law on three of the five elements necessary to succeed on a nondischargeability claim pursuant to
A. Applicable Legal Principles
i. Federal Rule of Civil Procedure 56
Pursuant to
A genuine issue of material fact arises when there is sufficient evidence that would permit a reasonable fact finder to return a verdict for the non-moving party. Odom v. Philadelphia Parking Auth. (In re Odom), 571 B.R. 687, 692 (Bankr. E.D. Pa. 2017) (citing Anderson, 477 U.S. at 248). A material fact is one which could alter the outcome of the case, and a dispute is genuine when reasonable minds could disagree on the result. Burtch v. Detroit Forming, Inc. (In re Archway Cookies), 435 B.R. 234, 238 (Bankr. D. Del. 2010) (citing Horowitz v. Fed. Kemper Life Assur. Co., 57 F.3d 300, 301 (3d Cir. 1995)).
The moving party has the burden of showing there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant meets its initial burden, the burden shifts to the non-moving party to go beyond the pleadings to provide counterevidence indicating there is a genuine issue to be resolved at trial. See Celotex Corp., 477 U.S. at 324.
B. Analysis
i. Collateral Estoppel
It is well-established that preclusion principles apply in bankruptcy proceedings. See, e.g., In re Adesanya, 613 B.R. 808, 826 (Bankr. E.D. Pa. 2020), aff‘d sub nom. Novartis Pharms. Corp. v. Adesanya, 645 B.R. 733 (E.D. Pa. 2022) (citing Murphy v. Snyder (In re Snyder), 939 F.3d 92, 100 (2d Cir. 2019)). A trial court has “broad discretion to determine if collateral estoppel should apply.” In re Kamps, 575 B.R. 62, 75 (Bankr. E.D. Pa. 2017) (citing In re Cunningham, 526 B.R. 578, 583 (Bankr. E.D. Pa. 2015), aff‘d sub nom. In the Matter of Cunningham, 541 B.R. 792 (E.D. Pa. 2015)). “The party seeking to effectuate an estoppel has the burden of demonstrating the propriety of its application.” Id. (citing Suppan v. Dadonna, 203 F.3d 228, 233 (3d Cir. 2000) (cleaned up)).
In determining whether collateral estoppel applies, the court should “examine the trial record ‘with an eye to all the circumstances of the proceedings.‘” Bravo-Fernandez v. United States, 580 U.S. 5, 5-6 (2016) (quoting Ashe v. Swenson, 397 U.S. 436, 444 (1970)); see also Spilman v. Harley, 656 F.2d 224, 228 (6th Cir. 1981) (“[B]efore applying the doctrine of collateral estoppel, the bankruptcy court must determine if the issue was actually litigated and was necessary to the decision in the state court. To do this, the bankruptcy court should look at the entire record of the state [court] proceeding, not just the judgment[.]“). “[W]hen a court cannot ascertain what was litigated and decided, issue preclusion cannot operate.” 18 Moore‘s Federal Practice § 132.03[2][g], at 132-83 (3d ed.) (citing cases).
In the context of dischargeability proceedings, collateral estoppel permits a court to accept findings established by a previous judgment as evidence of nondischargeability. In re Adesanya, 613 B.R. at 826 (citing In re Docteroff, 133 F.3d 210, 215 (3d Cir. 1997) (citing In re Halpern, 810 F.2d 1061, 1064 (11th Cir. 1987))). In other words, where a trial court has made detailed factual findings underpinning a ruling, a bankruptcy court may give preclusive effect to those detailed factual findings and, “accepting them as true, determine independently whether the findings establish the elements of nondischargeability[.]” In re Jacobs, 381 B.R. 128, 143 (Bankr. E.D. Pa. 2008).
Because the Trial Verdict was rendered by the Philadelphia Court of Common Pleas, Pennsylvania law on collateral estoppel must be applied. See, e.g., Est. of Tyler ex rel. Floyd v. Grossman, 108 F. Supp. 3d 279, 289 (E.D. Pa. 2015) (“[A]s the prior forum is the Pennsylvania Court of Common Pleas for Philadelphia County, Pennsylvania preclusion law applies.“) (citing Heck v. Humphrey, 512 U.S. 477, 480 n.2 (1994)).
Under Pennsylvania law, collateral estoppel precludes relitigation of an issue of fact or law determined in a prior action if the following conditions are met:
- the issue decided in the prior case is identical to the one presented in the later action;
- there was a final adjudication on the merits;
- the party against whom the plea is
asserted was a party or in privity with a party in the prior case; - the party or person privy to the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding; and
- the determination in the prior proceeding was essential to the judgment.
In re Kamps, 575 B.R. at 76 (citing Off. of Disciplinary Couns. v. Kiesewetter, 585 Pa. 477, 487, 889 A.2d 47, 50-51 (2005)). If the above conditions are satisfied, the prior determination of the factual or legal issue is conclusive in a subsequent action, “whether on the same or a different claim.” Id. (quoting Pennsylvania State Univ. v. Cnty. of Ctr., 532 Pa. 142, 148, 615 A.2d 303, 306 (1992) (quoting Restatement (Second) of Judgments § 27 (1982))).
Through the Motion for Summary Judgment, Plaintiffs argue that Defendant is collaterally estopped by the Trial Verdict from relitigating the elements of false representation under
As noted above, the Trial Verdict issued by the Philadelphia Court of Common Pleas did not include an accompanying opinion explaining the factual findings and reasoning underpinning the decision. As such, the Trial Verdict, standing alone, does not contain sufficient findings to permit this Court to determine whether the issues necessary to sustain a
As discussed below, in applying the five elements of collateral estoppel, the Court concludes that Defendant is precluded from challenging the factual findings made by the Philadelphia Court of Common Pleas, consisting of the factual averments in the State Court Complaint deemed admitted through the Trial.
Regarding the first element of preclusion under Pennsylvania law, there is no question that the facts necessary to determine Defendant‘s liability for false misrepresentation in the State Court Action are identical to those this Court must determine to consider whether
As for the fourth element of preclusion, Defendant argues that she was not given a full and fair opportunity to litigate the issues underlying the Trial Verdict due to alleged procedural
Finally, as for the fifth element of preclusion, the determination by the Philadelphia Court of Common Pleas to deem admitted all facts in the State Court Complaint was clearly essential to reaching the Trial Verdict, because the court necessarily relied on those deemed admissions as the operative facts establishing liability.
For the above reasons, Defendant is collaterally estopped from relitigating the factual findings by the Philadelphia Court of Common Pleas through the Trial, which factual findings consist of the factual averments set forth in the State Court Complaint.
ii. Nondischargeability Under § 523(a)(2)(A)
“Upon application of collateral estoppel in a nondischargeability action, the Court must determine whether a judgment entered in a prior proceeding and the accompanying underlying findings are sufficient to render a debt nondischargeable.” In re Adesanya, 613 B.R. at 826 (citing In re Aiello, 533 B.R. 494, 494-95 (Bankr. W.D. Pa. 2015)).
a discharge under [...] this title does not discharge an individual debtor from any debt [...] for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by [...] false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor‘s or an insider‘s financial condition[.]
To succeed on a false representation claim under
Once it is established that specific money, property, services, or an extension, renewal, or refinancing of credit has been obtained by false representations, false pretenses, or fraud, any debt arising therefrom is excepted from discharge. In re Hay Phat, 623 B.R. 371, 377 (Bankr. E.D. Pa. 2021) (citing Fledderman v. Glunk (In re Glunk), 343 B.R. 754, 758 (Bankr. E.D. Pa. 2006)).
a. False representations
First, based upon the factual averments in the State Court Complaint, given preclusive effect in this Adversary Proceeding, there is no genuine dispute that Defendant, the sole, controlling, and managing member of Gentian, who executed the Seller‘s Disclosure on behalf of Gentian as the seller of the Cambridge Property, falsely represented that Gentian had no knowledge or expertise in construction or real estate development in connection with the Cambridge Property. See Case No. 24-87, ECF 1-3, Ex. C, ¶ 46. Specifically, in the Seller‘s Disclosure, in response to the question, “[d]oes Seller12 possess expertise in contracting, engineering, architecture, environmental assessment or other areas related to the construction and conditions of the property and its improvements?” Defendant checked “[n]o.” Case No. 24-87, ECF 1-3, Ex. C, 53. This was categorically false in light of the record before the Court.13 Gentian, as the developer and builder of the Cambridge Property, was engaged in and responsible for the construction, development, design, and structural integrity of the Cambridge Property. See, e.g., Case No. 24-87, ECF 1-3, Ex. C, ¶¶ 19, 32, 58.
Second, based upon the factual averments in the State Court Complaint given preclusive effect in this Adversary Proceeding, there is no genuine dispute that Defendant falsely represented the roof of the Cambridge Property had never leaked during Gentian‘s ownership.
Gentian owned the Cambridge Property by the time construction was completed in November 2011. Case No. 24-87, ECF 1-3, Ex. C, ¶¶ 33, 35. By at least 2016, Defendant and Gentian were made aware of issues related to water infiltration and water leakage involving the roof of the Property. Id. at ¶ 57. Nevertheless, in the Seller‘s Disclosure, in response to the question, “[h]as the roof ever leaked during your ownership?” Defendant checked “[n]o.” Case No. 24-87, ECF 1-3, Ex. C, 53. Given these facts, Defendant‘s assertion in the Seller‘s Disclosure that the roof had not leaked during Defendant‘s ownership of the Cambridge Property was false. Instead, the record reveals that the roof had leaked by at least 2016, approximately two years before Plaintiffs purchased the Cambridge Property from Defendant.
Plaintiffs have therefore established that Defendant falsely represented in the Seller‘s Disclosure that the roof of the Cambridge Property had not leaked during Gentian‘s ownership.
In summary, Plaintiffs have satisfied the first element of
b. Knowledge and Intent
To satisfy scienter or the knowingly false element of
§ 523(a)(2)(A) , a misrepresentation must be made with either actual knowledge of its falsity, or with such reckless disregard of the truth that the law will impute the knowledge to the responsible party. New York Life Ins. Co. v. Marotta, 57 F.2d 1038, 1039 (3d Cir. 1932). “In assessing a debtor‘s knowledge of the falsity of the representation... the Court must consider the knowledge and experience of the debtor.” FTC v. Duggan (In re Duggan), 169 B.R. 318, 324 (Bankr. E.D.N.Y. 1994). “A false representation made under circumstances where a debtor should have known of the falsity is one made with reckless disregard for the truth, and this satisfies the knowledge requirement.” Id.
In re Brown, 591 B.R. 587, 595 (Bankr. M.D. Pa. 2018) (citing In re Santos, 304 B.R. 639, 664 (Bankr. D.N.J. 2004)).
Furthermore, a plaintiff must also show that the debtor made the false representation with an intent to deceive the creditor. See
“[R]eckless disregard for the truth of a statement will fulfill both the knowledge element and the intent to deceive element.” In re Hay Phat, 623 B.R. at 380 (citing De La Cruz v. Cohen (In re Cohen), 185 B.R. 171, 177-78 (Bankr. D.N.J. 1994)).
Regarding Defendant‘s false representation in the Seller‘s Disclosure that Gentian possessed no expertise related to the construction and conditions of the Cambridge Property, as
Next, regarding Defendant‘s false representation in the Seller‘s Disclosure that the roof of the Cambridge Property did not leak during Gentian‘s ownership, the record supports a finding that Defendant made this statement with at least a reckless disregard for the truth. In the Seller‘s Disclosure, Defendant stated Gentian was the landlord for the Cambridge Property at the time of sale to Plaintiffs. Case No. 24-87, ECF 1-3, Ex. C, 53. Furthermore, as averred in the State Court Complaint and given preclusive effect in this Adversary Proceeding, “Defendant [] had personal interactions with the tenants in her capacity as landlord, property manager, and/or owner/owner‘s representative” on behalf of Gentian, and by 2016, Defendant and Gentian were made aware of issues related to water infiltration and water leakage near or around the roof. See Case No. 24-87,
Plaintiffs have therefore satisfied the second element of
c. Reliance
To satisfy the justifiable reliance element of
Given that Plaintiffs conducted a home inspection of the Cambridge Property between receiving the Seller‘s Disclosure and closing on the sale, and furthermore, given Plaintiffs’ admission in the State Court Complaint that “major concerns” were raised by the home inspection in specific regard to the condition of the roof, there remains in this case a genuine dispute as to whether Plaintiffs justifiably relied on Defendant‘s false representations in the Seller‘s Disclosure, or whether Plaintiffs relied on the statements in the Seller‘s Disclosure at all. On the record currently before the Court, it is not clear whether Plaintiffs relied on or were otherwise justified in their reliance on the false representations in the Seller‘s Disclosure, or if their independent inspection should instead have made the falsity of the statements readily apparent. See In re Dizinno, 532 B.R. at 238.
Therefore, Plaintiffs have failed at this stage to establish the requisite justifiable reliance to succeed on a claim under
d. Damages
IV. CONCLUSION
For the reasons stated above, the Motion for Summary Judgment will be granted in part and denied in part. The Motion will be granted in favor of Plaintiffs and against Defendant on the first three elements of
Date: May 7, 2026
Honorable Ashely M. Chan
United States Bankruptcy Judge