Summary
granting summary judgment on misrepresentation claim where the agreement contained a clause waiving reliance upon any of the defendant's prior statements and the parties were "sophisticated business entities"
Summary of this case from 4 MVR, LLC v. Warren W. Hill Constr. Co.Opinion
13-P-1320
06-26-2015
ADAR INVESTMENTS, LLC, & others v. BAYVIEW LOAN SERVICING, LLC, & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Adar Investments, LLC (hereinafter the plaintiff) and Bayview Loan Servicing, LLC (hereinafter the defendant), sophisticated parties experienced in commercial real estate transactions, entered into an agreement at arm's length for the purchase of four rental properties. The properties proved unprofitable and the plaintiff brought an action in Superior Court claiming the defendant misled it during the sales process. The Superior Court entered summary judgment in favor of the defendant, which the plaintiff now appeals. Reviewing the grant of summary judgment de novo, and considering the evidence in the light most favorable to the plaintiff, we conclude that the defendant was entitled to judgment as a matter of law. We affirm.
Background. In May 2005, the defendant financed the $2.6 million sale of four multi-unit rental properties at issue in this appeal to a previous purchaser. In connection with that sale, the defendant had appraisals performed indicating the value of the properties as of that time (May 2005 appraisals). The defendant subsequently foreclosed on the properties in December, 2005, after the prior purchaser defaulted on the loans. The defendant prepared a report (December 2005 report) relating to the properties' values, which it used in connection with its purchase of the properties at the foreclosure sale for nearly $1.68 million.
In 2005 and 2006, the plaintiff worked with a real estate broker to purchase investment properties. This resulted in the plaintiff's purchase of a rental property (unrelated to this case) in Springfield. The broker subsequently informed the plaintiff of the four rental properties in Holyoke, which are the properties at issue in this appeal. The broker provided the plaintiff with the May 2005 appraisals, which the defendant had given to the broker. The broker also provided the plaintiff a report prepared by the broker himself that contained an analysis of the properties' values, including rental income projections (2006 projections). The plaintiff toured every rental unit of the properties, but did not conduct any further inspection of the premises or obtain up-to-date appraisals.
The plaintiff's attorney sent the defendant a purchase and sales agreement on February 15, 2006, specifying that the properties were to be sold "as is, where is, with all faults" and that the plaintiff was waiving all inspections. Moreover, the offer disclaimed any warranties and acknowledged the plaintiff was not relying on "any information provided or to be provided by seller or any other party." The offer also provided that the defendant, as seller, was to pay the broker's commission.
The defendant also financed the sale. To that end, the defendant prepared conditional preapproval letters dated February 24, 2006 (preapproval letters), which included information about the values of the properties that were based on the plaintiff's purchase price. At about the same time, the defendant prepared an internal document including value estimates and projections about the properties (February 2006 report).
On March 6, 2006, the plaintiff signed an agreement to purchase the four properties from the defendant for $1.93 million. The final agreement also included language indicating the plaintiff was not relying on any representations made by the defendant. The plaintiff additionally signed personal guaranties for the loan.
On February 3, 2009, the plaintiff brought a nine-count complaint in Superior Court after the properties did not prove to be as profitable as hoped. The claims included fraud (count I), negligent misrepresentation (count II), breach of fiduciary duty (count III), breach of the covenant of good faith and fair dealing (count V), and violations of G. L. c. 93A (count VIII). The plaintiffs additionally sought a declaratory judgment "of the rights, liabilities and obligations of the parties. . ." (count IX). The Superior Court granted summary judgment in favor of the defendant, and the plaintiff timely filed this appeal.
The plaintiff also made promissory estoppel (count IV), equitable estoppel (count VI), and civil conspiracy (count VII) claims, but does not make appellate arguments concerning the promissory estoppel and civil conspiracy claims. Accordingly, they are waived. See Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975). The only argument as to equitable estoppel is contained in a footnote. Arguments raised only in a footnote do not rise to the level of appellate argument. See Providence & Worcester R.R. Co. v. Energy Facilities Siting Bd., 453 Mass. 135, 140 n.10 (2009).
Discussion. We review de novo the grant of summary judgment, Miller v. Cotter, 448 Mass. 671, 676 (2007), and determine "whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). In making this determination, we "consider the record and the legal principles involved without deference to the motion judge's reasoning." Clean Harbors, Inc. v. John Hancock Life Ins. Co., 64 Mass. App. Ct. 347, 357 n.9 (2005).
Counts I and II rely on two separate theories of fraud and misrepresentation. First, the plaintiff alleges the defendant is liable for statements made by the broker to the plaintiff, specifically those in the 2006 projections. Second, the plaintiff alleges the defendant is liable for failing to disclose the December, 2005, and February, 2006, reports after sending the preapproval letters. Both claims fail for multiple reasons.
The first theory fails because the evidence, when viewed in the light most favorable to the plaintiff, does not establish that the broker was the defendant's agent. No written agency agreement existed and both the broker and the defendant denied the existence of such a relationship. Nor are we persuaded by the plaintiff's argument that an agency relationship developed from the defendant paying the broker's commission. Sellers are typically liable for such commissions regardless of whether the broker is an independent broker or an exclusive agent of the seller. See Tristram's Landing, Inc. v. Wait, 367 Mass. 622, 625 (1975). The plaintiff's claim regarding the broker's commission is all the more dubious in light of the fact that it was the plaintiff who proposed that the defendant pay the commission. Moreover, plaintiff Roman Knop testified at a deposition that the broker represented only the plaintiff as the buyer in the previous, unrelated Springfield sale despite the fact that the seller paid the broker's commission there as well. As no agency relationship existed between the defendant and the broker, the defendant is not liable for any statements the broker made.
Even if the broker had been the defendant's agent, the broker's statements would not have created any liability on the part of the defendant. The 2006 projections constituted "seller's talk" and, as such, were not actionable. "Estimates of value by a prospective seller to a prospective customer, especially a sophisticated one, cannot be seriously considered as a representation." Schwanbeck v. Federal-Mogul Corp., 31 Mass. App. Ct. 390, 410 (1991), S. C., 412 Mass. 703 (1992). Indeed, the plaintiff Roman Knop testified at a deposition that the plaintiff understood what the broker provided to be mere projections of future income. Moreover, these projections were based in part on assumptions the plaintiff asked the broker to make. The 2006 projections, therefore, were not false factual statements upon which liability for fraud or misrepresentation may be based. See Hogan v. Riemer, 35 Mass. App. Ct. 360, 365 (1993) (fraud requires "misrepresentation of a material fact"); Nota Constr. Corp. v. Keyes Assocs., Inc., 45 Mass. App. Ct. 15, 19-20 (1998) (negligent misrepresentation requires supplying "false information").
The May, 2005, appraisals the broker provided the plaintiff also fail to form the basis for liability on the part of the defendant, as the plaintiff acknowledged not relying on them in purchasing the properties. Reliance is an essential element of both fraud and negligent misrepresentation. See Hogan v. Riemer, supra (fraud); Nota Constr. Corp. v. Keyes Assocs., supra (negligent misrepresentation).
The plaintiff's second fraud and misrepresentation theory also fails. The preapproval letters were not misleading, as the information they included was based entirely on the plaintiff's purchase price. Furthermore, the letters made clear that they were based solely on information the plaintiff provided. "This was not a case of a partial disclosure that is deceptive unless the whole story is told." Greenery Rehabilitation Group, Inc. v. Antaramian, 36 Mass. App. Ct. 73, 77 (1994), citing Maxwell v. Ratcliffe, 365 Mass. 560, 562-563 (1969). The defendant, therefore, had no duty to disclose the December, 2005, and February, 2006, reports, which were themselves also merely projections and estimates.
Finally, even if counts I and II had merit, the plaintiff waived reliance on any statements by the defendant. The plaintiff knew the property was being purchased "as is." Both the plaintiff's offer and the final agreement included exculpatory clauses waiving reliance. Such clauses are enforceable where, as here, sophisticated business entities agree to them. Cone v. Ellis, 59 Mass. App. Ct. 748, 751 (2003). McCartin v. Westlake, 36 Mass. App. Ct. 221, 232-233 (1994) ("Business people understand that much of what is said during the negotiation of a business agreement never becomes part of the final bargain. Only what matters is reduced to writing and signed").
As to count III, it fails because no fiduciary relationship existed between the plaintiff and the defendant. The plaintiff's argument that it trusted and relied on the defendant because of the defendant's superior knowledge is unavailing. "A business relationship is not transformed into a fiduciary relationship merely because trust was reposed by one party in the other party." Davidson v. General Motors Corp., 57 Mass. App. Ct. 637, 643 (2003), citing Patsos v. First Albany Corp., 433 Mass. 323, 335-336 (2001). Counts V and VIII fail because both depend on the plaintiff's unsuccessful fraud and misrepresentation claims. Finally, count IX fails because there is no longer any uncertainty or controversy as to the liabilities or obligations of the defendant in light of our conclusion that the defendant was entitled to summary judgment on the other counts of the complaint that are the subject of this appeal. See G. L. c. 231A, § 3 ("The court may refuse to render or enter a declaratory judgment or decree where such judgment or decree . . . would not terminate the uncertainty or controversy").
Judgment dated November 19, 2012, affirmed.
By the Court (Rapoza, C. J., Carhart & Agnes, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: June 26, 2015.