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LLC v. Hill

United States District Court, D. Massachusetts

June 24, 2015

4MVR, LLC, Plaintiff,
v.
WARREN W. HILL, Defendant. WARREN W. HILL, Third-Party Plaintiff,
v.
DONALD BURNS, Third-Party Defendant.

MEMORANDUM AND ORDER

DENISE J. CASPER, District Judge.

I. Introduction

4MVR, LLC ("4MVR") filed this lawsuit against Defendant Warren H. Hill ("Hill") alleging misrepresentation and violation of Mass. Gen. L. c. 93A, § 9 or § 11 ("Chapter 93A"). D. 81. Hill asserts third-party claims against Donald Burns ("Burns") for contribution, violation of Mass. Gen. L. c. 93, § 11, misrepresentation and fraud.[1] D. 82 at 20-22. Burns moves for judgment on the pleadings with respect to the third-party claims asserted against him by Hill. D. 120. Hill moves for leave to amend his third party complaint to assert claims for contribution against Burns and Jacobsen Architecture, LLC ("Jacobsen"), D. 150, and Jacobsen moves to intervene to oppose this motion, D. 153. 4MVR moves for partial judgment on the pleadings and to dismiss certain of Hill's affirmative defenses. D. 123. Finally, Hill moves to compel the parties to participate in mediation. D. 115. For the reasons stated below, the Court ALLOWS the motion for judgment on the pleadings with respect to Hill's third-party claims against Burns and DENIES Hill's motion to amend the third party complaint.[2] The Court also DENIES as moot Jacobsen's motion to intervene. The Court also DENIES 4MVR's motion for partial judgment on the pleadings as to Hill's affirmative defenses and DENIES Hill's motion to compel mediation.

II. Factual Background

The following facts are drawn from the Second Amended Complaint ("SAC"), D. 81, and Hill's third-party complaint, D. 82. 4MVR is a limited liability company that owns the property located at 4 Middle Valley Road in Nantucket. D. 81 ¶ 1. Hill is the principal and sole stockholder of Warren H. Hill Construction Company, Inc. ("Hill Construction") which filed a voluntary petition for Chapter 7 bankruptcy relief. Id . ¶¶ B, 3. The Donald Alan Burns Revocable Trust is the sole member of 4MVR. Id . ¶ 4a.

In 2010, 4MVR solicited bids to build a residence for Burns on the Nantucket property. Id . ¶¶ A, 6. Hill Construction was the low bidder, at just over $22 million, and Burns and Hill Construction engaged in negotiations to reach a final contract. Id . ¶ 9, 11. During the negotiations, Burns stressed the importance of Hill Construction having adequate financing to undertake the project. Id . ¶ 12, 15. Although Hill initially told Burns that he did not have sufficient borrowing capability and could not proceed, 4MVR alleges that Hill ultimately told Burns, Hugh Jacobsen, the architect, and others that he had arranged financing sufficient to assume the project. Id . ¶¶ 13, 18-20.

According to 4MVR, Hill made false representations to 4MVR regarding Hill Construction's financial ability to undertake the construction project. Id . ¶ 33. The contract signed by Hill on behalf of Hill Construction indicated that Hill Construction was financially solvent, able to pay its debts, and possessed sufficient working capital to complete the work. Id . ¶ 26. 4MVR alleges that, when Hill Construction entered into the contract with 4MVR, Hill Construction had only $25, 000 in available working capital even though Hill knew the project required more than a million dollars. Id . ¶¶ 29, 31. 4MVR further alleges that Hill did not obtain an oral agreement for a personal loan of an additional $400, 000 as Hill later represented. Id . ¶¶ 30, 32.

Hill Construction submitted 42 pay applications to 4MVR during the course of the project. Id . ¶¶ 35, 68. On each pay application, Hill certified, on behalf of Hill Construction, that the work covered by the particular application had been completed, that Hill Construction had paid for work by subcontractors for which 4MVR had already issued payment, and that the amount requested was currently due. Id . ¶ 34. 4MVR alleges that some pay applications overstated how much work had in fact been completed, see e.g., id. ¶ 53, and falsely indicated that Hill Construction's subcontractors and suppliers had been paid., see e.g., id. ¶ 61. 4MVR also asserts that Hill lied about having performed all of the work billed on certain change orders. Id . ¶ 41.

On January 7, 2012, Hill notified 4MVR that Hill Construction required more time and money to complete the construction project. Id . ¶ 70. Hill stated that if Hill Construction and 4MVR could not revise the contract terms, Hill Construction would be forced to repudiate the contract. Id . ¶¶ 69-70. On January 11, 2012, 4MVR terminated the contract. Id . ¶ 73. 4MVR thereafter hired another contractor, Woodmeister, the second lowest bidder originally, to complete the project. Id . ¶¶ 14, 74. 4MVR alleges that it incurred $5.6 million in extra costs to complete the project with Woodmeister plus an additional $50, 000 in architect's fees. Id . ¶ 78.

In Count I for misrepresentation, 4MVR alleges that Hill made false statements of material fact regarding Hill Construction's financing to induce 4MVR to award the project to Hill Construction. Id . ¶¶ 81-82. Hill then allegedly delayed telling 4MVR about Hill Construction's deteriorating financial condition in order to obtain progress payments. Id . ¶ 84. Finally, 4MVR alleges that, in certain pay applications, Hill lied about the completion of work, about Hill Construction's payments to subcontractors and suppliers, and about the amounts due. Id . ¶¶ 85-86. In Count II for violations of Mass. Gen. L. c. 93A, § 9 or § 11, 4MVR contends that Hill's misrepresentations constituted unfair and deceptive acts and practices. Id . ¶ 91.

Not surprisingly, Hill's third-party complaint against Burns presents a differing account of the ill-fated relationship between Hill Construction and 4MVR. According to Hill, after Burns implored Hill to accept the contract terms, Burns's own conduct caused the construction project to be delayed and to incur cost overruns. D. 82 at 13 ¶ 1. Hill alleges that Burns refused to provide appropriate architectural plans and measurements for the foundation. Id . He also declined to specify an acceptable window design. Id . Hill further alleges that each application for payment and change order was submitted to Jacobsen, Burns's own agent, for verification and approval. Id. at 19 ¶¶ 36-37. Jacobsen approved the pay applications. Id . Finally, Hill alleges that, during contract negotiations, Burns created an arbitrary deadline to complete a set of secondary structures, including another dwelling, a pool house and a pool. Id. at 16 ¶ 21. Burns, however, never told Hill about the deadline and never provided adequate construction plans. Id. at 16-17 ¶¶ 21-22. Burns also withheld his approval of changes to the architectural plans, delaying the project. Id. at 17 ¶ 26. Although Burns took possession of the secondary structures, Burns refused to pay money then due, thereby endangering Hill's ability to complete the primary project. Id. at 19 ¶ 40. Hill alleges that Burns's failure to cooperate and termination of the contract deprived Hill of more than $2.75 million in profits. Id. at 20 ¶ 41.

In Count I of the third-party complaint, Hill claims that Burns is liable for contribution. Id. at 20 ¶¶ 42-44. Hill's theory is that, to the extent 4MVR has been injured, the damages were caused by Burns's own misrepresentations and misconduct. Id. at 20 ¶ 43. In Count II, Hill contends that Burns's alleged misconduct constitutes unfair or deceptive acts or practices and seeks to recover under Mass. Gen. L. c. 93A, § 11. Id. at 20-21 ¶¶ 45-50. In Count III, Hill claims that Burns made material misrepresentations concerning the architectural plans and concerning payments due to Hill. Id. at 21 ¶ 52. Lastly, in Count IV, Hill alleges that Burns fraudulently induced Hill to enter into the construction contract based on inadequate architectural plans and wrongfully deprived Hill of profits by withholding payments due. Id. at 22 ¶ 57-58.

III. Procedural History

In 2012, 4MVR asserted claims both against Hill and Hill Construction, D. 1, D. 29. 4MVR's misrepresentation claim was dismissed as to both defendants for failure to state a claim, resulting in Hill's dismissal from the action. D. 50. Hill Construction then answered and asserted counterclaims. D. 56. 4MVR moved to dismiss, D. 57, but, before the Court entertained the motion, Hill Construction filed a ...


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