Wade v. Touchdown Realty Grp., LLC

386 F.Supp.3d 56

Gregg WADE, Karin Wade, Plaintiffs,

v.TOUCHDOWN REALTY GROUP, LLC, Thomas Clayton, Julian Lewis, Defendants/Third-Party Plaintiffs,

v.Commonwealth Realty Group, LLC d/b/a Century 21 and Lisa Paulette, Third-Party Defendants.

Civil Action No. 17-10400-PBS

United States District Court, D. Massachusetts.

Filed June 7, 2019

Robert N. Meltzer, The Mountain States Law Group, Concord, MA, for Plaintiff.

Philip T. Soloperto, Law Offices of Philip T. Soloperto, Worcester, MA, for Defendants/Third-Party Plaintiffs.

Julian Lewis, Cambridge, MA, pro se.

Amy M. McCallen, Moriarty Troyer & Malloy LLC, Braintree, MA, for Third-Party Defendants.

MEMORANDUM AND ORDER

Saris, C.J.

INTRODUCTION

This dispute arises out of a home sale in Foxborough, Massachusetts. Plaintiffs Gregg and Karin Wade allege that the home they purchased from Defendant Touchdown Realty Group, LLC ("Touchdown") did not comply with building codes in breach of the purchase agreement and that Touchdown and Defendant Thomas Clayton falsely represented that the home was a three-bedroom house, not a two-bedroom house, and that it was code-compliant. Plaintiffs assert claims for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), fraud/fraudulent inducement (Count III), and violations of Chapter 93A (Count V). They also seek a declaratory judgment that Touchdown is an alter ego of Clayton (Count IV).

Defendants filed a third-party complaint impleading Plaintiffs' real estate agent, Lisa Paulette, and her employer Commonwealth Realty Group, LLC ("Commonwealth"), seeking contribution and indemnification for Counts III and V. Defendants and Third-Party Defendants have moved for summary judgment. Defendants also have moved to strike Plaintiffs' opposition to their motion for summary judgment.

After hearing, the Court ALLOWS IN PART AND DENIES IN PART Defendants' motion for summary judgment (Dkt. No. 100); ALLOWS Third-Party Defendants' motion for summary judgment (Dkt. No. 110); and DENIES Defendants' motion to strike (Dkt. No. 118).

FACTUAL BACKGROUND

The following facts are undisputed except where otherwise stated.

I. The Parties

In August 2018, Plaintiffs, who were moving from Michigan with their two children, one of whom is disabled, purchased from Touchdown the property located at 32 Oak Street, Foxborough, Massachusetts ("32 Oak Street"). Touchdown is a Rhode Island limited liability corporation, with its principal place of business at 12 E. Cottage Street, Smithfield, Rhode Island. Touchdown is in the business of buying and renovating residential real estate for resale. Clayton's wife, Kelly Clayton, is Touchdown's sales manager and sole shareholder. The company address is also the Claytons' home address in Rhode Island.

Clayton, a former professional football player, is a vice president of Better Living Real Estate, LLC ("Better Living"). He is a licensed home improvement contractor and real estate agent who sometimes oversees the renovation, and brokers the sales, of properties owned by Touchdown.

Commonwealth is a foreign limited liability corporation registered to do business in Massachusetts, and doing business under the trade name Century 21 Commonwealth ("Century 21"). Paulette is a real estate agent who works for Century 21. Paulette served as Plaintiffs' real estate agent in connection with their purchase of 32 Oak Street.

II. 32 Oak Street

Touchdown purchased 32 Oak Street on April 6, 2016. At that time, it was listed as a three-bedroom home; it had historically been taxed as a three-bedroom home; and the Title V report referred to it as a three-bedroom home. Touchdown began renovations on 32 Oak Street shortly after the purchase. Julian Lewis was the general contractor responsible for the renovations. Clayton was involved in overseeing the renovations, but the parties dispute the extent of his involvement.

Defendants were granted a permit by the Town of Foxborough for the renovations. The permit did not authorize any electrical or plumbing work. The parties hotly dispute the extent of the renovations performed by Touchdown and whether these renovations were consistent with the applicable building codes. On August 15, 2016, the Town of Foxborough building inspector, Thomas Wrynn, sent a letter to Clayton notifying him that Touchdown was in violation of the town's building codes because it failed to pull plumbing and electrical permits as part of the initial renovation of 32 Oak Street. Defendants subsequently hired a plumber, Mark Mason, and an electrician, Erik Wilkinson, to perform additional work on 32 Oak Street. Mason and Wilkinson pulled permits for the additional work they performed.

In addition to renovating the interior of 32 Oak Street, Touchdown installed a new distribution box and a 1500-gallon tank for the septic system. Even with this upgrade, 32 Oak Street's septic system only supported a two-bedroom home. Accordingly, the Town of Foxborough required Touchdown to record a deed restriction which limited the use of 32 Oak Street to two bedrooms. That deed restriction was recorded on July 15, 2016. Clayton requested the Town of Foxborough to treat the property as a three-bedroom dwelling, but the Town repeatedly told him that it could only be used as a two-bedroom dwelling.

Clayton claims that he always understood that 32 Oak Street could be used as a three-bedroom dwelling, notwithstanding the deed restriction.

III. Sale of 32 Oak Street

Plaintiffs began working with Paulette in their housing search in July 2016. Plaintiffs were looking specifically for a three-bedroom home. Touchdown first listed 32 Oak Street for sale on July 18, 2016. The listing for the property claimed it was a three-bedroom house but also disclosed that it was a "[c]urrent design two bed." Dkt. No. 105 (MLS Listing) at 2. On July 21, 2016, after seeing the listing for 32 Oak Street, Paulette contacted Clayton by email. Paulette asked Clayton whether he could "explain the 2 bedroom septic system for a 3 bedroom house." Dkt. No. 105-2 (July 21, 2016 Email) at 2. Clayton responded that "the house is obviously a 3 bed dwelling" but "the septic design is grandfathered in as 2 bedroom design." Id. at 3. Paulette subsequently forwarded this email chain to Plaintiffs.

On July 22, 2016, Plaintiffs submitted an offer to purchase 32 Oak Street, which Touchdown accepted. Plaintiffs subsequently received a copy of the appraisal report for 32 Oak Street which indicated that it was a two-bedroom dwelling. Attached to that appraisal report was a copy of the deed restriction. Plaintiffs only skimmed the appraisal report and did not look at its attachments.

On August 2, 2016, Plaintiffs signed a purchase agreement for 32 Oak Street. In relevant part, the purchase agreement warranted that "at the time of Closing [32 Oak Street was] not in violation of [the applicable] building and zoning codes." Dkt. No. 106 (Purchase Agreement) at 5. An addendum to the purchase agreement also warranted that "SELLERS have not received any notice that the property violates any municipal, state or federal law, rule, regulation or ordinance." Id. at 13. And a further addendum warranted that "[t]here is, to the best of the Seller's knowledge and belief, no notice, suit, order, decree, claim, writ, injunction or judgment relating to material violations of any laws[,] ordinances, codes, regulations or other requirements with respect to the premises in, of, or by any court or governmental authority having jurisdiction over the premises." Id. at 16.

The sale of 32 Oak Street to Plaintiffs closed on August 31, 2016. Following the closing, Plaintiffs hired Dennis Schadler to renovate 32 Oak Street's downstairs bedroom and bathroom for their disabled daughter and also to perform some work in the kitchen. Schadler claims that when he opened up the walls in the basement and kitchen, he discovered improper construction, insulation, electrical, plumbing, and fire stopping that violated the applicable building codes. The parties dispute whether these code violations were the product of Touchdown's renovation of 32 Oak Street or whether they predated Touchdown's ownership, and whether Touchdown knew of the violations.

Because of the deed restriction, Plaintiffs were not able to use the downstairs room as a bedroom for their daughter. They want to move.

JURISDICTION

Before the Court proceeds to the merits of the summary judgment motions, some housekeeping is in order. The amended complaint names four defendants: Touchdown, Clayton, Lewis, and Better Living. Plaintiffs voluntarily dismissed their claim against Better Living on March 9, 2018. Plaintiffs assert a claim for negligent supervision against Lewis (Count VII). Lewis, who was served, has not answered the amended complaint, and the other parties seem to be proceeding as if he is no longer part of the case. Yet Plaintiffs have not dismissed their claim against Lewis, nor have they filed a motion for default. He was deposed.

This is relevant here because, according to the amended complaint and Lewis's deposition testimony, he is a resident of Massachusetts. So are Plaintiffs. Therefore, the parties are nondiverse, and the Court currently lacks subject matter jurisdiction over this case. See 28 U.S.C. § 1332(a) ; Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). Pursuant to Federal Rule of Civil Procedure 21, "[m]isjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party." Fed. R. Civ. P. 21. "Dismissal of a nondiverse dispensable party has long been recognized as a way to cure a jurisdictional defect and Rule 21 explicitly vests district courts with authority to allow a dispensable non-diverse party to be dropped at any time." Cason v. P.R. Elec. Power Auth., 770 F.3d 971, 977 (1st Cir. 2014). Accordingly, the Court finds that Lewis is a dispensable party and dismisses the claim against...