Pleasantdale Condominiums, LLC v. Wakefield

37 F.4th 728

PLEASANTDALE CONDOMINIUMS, LLC, Plaintiff, Appellant,

v.Thomas J. WAKEFIELD, Defendant, Appellee.

No. 21-1822

United States Court of Appeals, First Circuit.

June 21, 2022

Roy T. Pierce, with whom Jensen Baird was on brief, for appellant.

Daniel L. Cummings, with whom Norman, Hanson & DeTroy, LLC was on brief, for appellee.

Before Lynch, Selya, and Kayatta, Circuit Judges.

SELYA, Circuit Judge.

Following its purchase of an apartment complex, plaintiff-appellant Pleasantdale Condominiums, LLC (Pleasantdale) sued the seller, defendant-appellee Thomas J. Wakefield (Wakefield), alleging nondisclosure of material information under a Maine statute. Hidden within the penumbra of the complaint was what Pleasantdale now characterizes as an independent claim for fraud in the nature of active concealment. The district court entered summary judgment in Wakefield's favor on all claims. Pleasantdale appeals, asserting that the challenge to its independent claim for fraud in the nature of active concealment was not properly before the district court and that, if it was, summary judgment should not have entered on that claim. After careful consideration, we affirm the district court's entry of summary judgment.

I

We briefly rehearse the relevant facts and travel of the case. Our account is drawn from the summary judgment record, and we take the facts and the reasonable inferences therefrom in the light most flattering to the party against whom summary judgment was entered (here, Pleasantdale). See Mancini v. City of Providence, 909 F.3d 32, 37 (1st Cir. 2018) ; McKenney v. Mangino, 873 F.3d 75, 78 (1st Cir. 2017).

In 1975, Wakefield and a partner purchased real property located at 9 Cole Street, South Portland, Maine (the Property). About a year later, construction began for the first of two four-unit apartment buildings. After completion of the first building but prior to construction of the second building, Wakefield submitted a site plan (the Site Plan) to the city of South Portland. As relevant here, the Site Plan, which was recorded in the Cumberland County Registry of Deeds, designated an area on the Property "to be filled" (the Fill). The owners then proceeded to construct the second four-unit building on the Property. More than two decades after securing approval of the Site Plan (that is, around the early 2000s), Wakefield completed the Fill, using gravel and assorted debris.

We fast-forward to the spring of 2019. At that time, Fred Andrews (Andrews) of Spectrum Real Estate LLC contacted Wakefield (who by then had become the sole owner of the Property) and asked if he would sell the Property. Andrews had in mind a potential purchaser, Telos Capital (Telos). After Wakefield agreed to consider selling, Andrews served as the dual agent for both Wakefield and Telos during the ensuing negotiations.

On May 6, 2019, Telos tendered a signed purchase and sale agreement to Wakefield. That same day, Telos entered into a contract (the Assignment), assigning all of its rights under the prospective purchase and sale agreement to Pleasantdale. There is no evidence in the record that Wakefield knew of the Assignment at that time.

On May 7, Wakefield — still unaware of the Assignment — made a counteroffer to Telos, eliminating all contingencies (including an inspection contingency). Wakefield and Telos agreed to these amendments and signed the purchase and sale agreement, as amended (the Agreement), on May 8. The parties understood that the Property was being sold "as is." By virtue of the Assignment, Pleasantdale stepped into the shoes of Telos with respect to the Agreement. A closing took place on June 3, 2019, and Pleasantdale purchased the Property for $725,000. Pleasantdale had no direct communication with Wakefield and the only documents upon which it relied in purchasing the Property were the Agreement and the Assignment.¹

Some months after the closing, Pleasantdale began construction of additional apartment units on the Property. In the course of excavation, Pleasantdale's contractor uncovered the Fill. The existence of the Fill impeded Pleasantdale's plans for building additional apartment units on the Property. Pleasantdale cried foul, alleging that no one had ever disclosed to it that a portion of the Property had been filled.

Frustrated in its aspirations to construct additional apartment units, Pleasantdale sued Wakefield in a Maine state court. In its fifty-two-paragraph complaint, Pleasantdale alleged claims for fraud and negligent misrepresentation. As pleaded, both counts were based on the alleged violation of a Maine statute. See Me. Rev. Stat. Ann. tit. 33, § 173(5).² In the fraud count, Pleasantdale alleged (in paragraph 39) that section 173(5) imposed on Wakefield an "affirmative[ ] obligat[ion] to disclose ... ‘known defects.’ " In the negligent misrepresentation count, Pleasantdale alleged (in paragraph 49) that "Wakefield had a statutory duty" — under section 173(5) — "to disclose the presence of the ‘uncontrolled fills’ on the Property." Pleasantdale went on to allege that Wakefield breached that statutory duty.

Although the statutory disclosure requirement was the cornerstone of Pleasantdale's complaints, paragraph 42 of the complaint is of particular pertinence to the present proceeding. There, Pleasantdale alleged that:

42. Not only did Mr. Wakefield have an affirmative statutory duty to disclose the existence of the ‘uncontrolled fills’ on the Property, he actively concealed the presence of those ‘uncontrolled fills’ by (a) burying them so that they could not be seen by visual observation by prospective purchasers of the Property, including Pleasantdale; and (b) by lying about his knowledge of their presence on the Property Disclosure.

Paragraph 45 appeared to link this active concealment allegation to the statutory claim by averring that "[a]s a direct and proximate result of Pleasantdale's reliance on Mr. Wakefield's failure to disclose ... , Pleasantdale has sustained considerable pecuniary damage."

Wakefield answered Pleasantdale's complaint, invoked diversity jurisdiction, and removed the action to the United States District Court for the District of Maine. See 28 U.S.C. §§ 1332(a), 1441(b). The district court entered a scheduling order, which included a discovery period. See D. Me. R. 16.2. On the day that discovery closed, Wakefield filed a notice of intent to seek "summary judgment on the complaint." See id. 56(h)(2).

Wakefield proceeded to file his summary judgment motion. In it, he argued that he was entitled to summary judgment on both counts primarily because section 173(5) applied only to "residential real property," which the statute defined as "real estate consisting of one or not more than 4 residential dwelling units" (emphasis in original). Wakefield explained that the Property, when sold, comprised eight residential units and that, therefore, the strictures of section 173(5) were inapposite. He also argued that the doctrine of caveat emptor absolved him of any liability to Pleasantdale.

Wakefield accompanied his motion for summary judgment with a statement of material facts not in dispute (the Statement). See id. 56(b). Pleasantdale filed a counter-statement of material facts in which it "[a]dmitted solely for purposes of summary judgment" every fact set forth by Wakefield. See id. 56(g) (permitting admission of facts solely for purposes of summary judgment).

In its response to Wakefield's motion for summary judgment, Pleasantdale conceded that section 173(5) did not apply. It therefore acknowledged that it could not recover on its negligent misrepresentation claim but asserted that "the same [wa]s not true with respect to [its] fraud claim." To validate this assertion, Pleasantdale advanced an "alternate active concealment basis for [its] fraud claim," which — it maintained — "remain[ed] viable."

In his reply to Pleasantdale's response, Wakefield met the newly emergent active concealment claim head on. He argued both that fill is "[b]y definition ... placed underground and buried" and that, in any event, Pleasantdale had failed to submit any "evidence that Wakefield took steps to hide the fact that the Fill existed." Pleasantdale did not move to strike this portion of the reply, to file a sur-reply, to reopen discovery, or to supplement the summary judgment record.

On September 21, 2021, the district court decided the motion for summary judgment on the papers. See Pleasantdale Condos., LLC v. Wakefield, No. 21-00014, 2021 WL 4313859 (D. Me. Sept. 21, 2021). The court first determined that section 173(5) did not apply to the Property and, thus, afforded Pleasantdale no avenue for relief. Id. at *2. That determination disposed of the negligent misrepresentation claim. See id. The same reasoning also disposed of the fraud claim "to the extent that [the fraud claim] [wa]s based on the statutory duty to disclose." Id. As to the "second theory of fraud," the court noted that "[Pleasantdale] point[ed] to no facts that demonstrate that Mr. Wakefield ‘actively concealed’ (i.e., took steps to conceal) the debris." Id. Accordingly, the court held that "[Wakefield] [wa]s entitled to summary judgment on both counts." Id. Pleasantdale did not move for reconsideration, and this timely appeal followed.

II

Our standard of review is familiar: "[w]e review orders for summary judgement de novo."

Houlton Citizens' Coal. v. Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999) ; see Moore v. British Airways PLC, 32 F.4th 110, 114 (1st Cir. 2022). In conducting this review, we examine "the record and all reasonable inferences therefrom in the light most hospitable to the summary judgment loser." Houlton Citizens' Coal., 175 F.3d at 184.

To prevail on summary judgment, the movant must "show[ ] that there is no genuine dispute as to any material fact and [that he] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Morelli v. Webster, 552 F.3d 12, 18 (1st Cir. 2009). In order to trigger the...