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Aspen American Insurance Co. v. Covenant Fire Protection, Inc.

United States District Court, D. Massachusetts

February 26, 2019

ASPEN AMERICAN INSURANCE COMPANY as subrogee of 5515 D STREET 339 BOSTON, LLC, Plaintiff,
v.
COVENANT FIRE PROTECTION, INC., et al., Defendants.

          MEMORANDUM AND ORDER ON CITY POINT'S MOTION FOR SUMMARY JUDGMENT AND ASPEN'S MOTION FOR LEAVE TO AMEND

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

         Plaintiff Aspen American Insurance Company, as subrogee of 5515 D Street 339 Boston, LLC (“Aspen”) filed suit against Defendants Covenant Fire Protection, Inc. (“Covenant”), City Point Capital 339 D Street LLC (“City Point”), City Point Capital III GP, LLC, City Point Capital III, Limited Partnership, City Point Capital Investments, LLC, City Point Capital V GP, LLC, City Point Capital V Limited Partnership, City Point Capital V LP, City Point Capital West Broadway, LLC, Zade Associates, LLC, Zade Company, Inc., and Muzaffer Muctehizade, P.E.

         Aspen claims that Defendants failed to appropriately approve, design, and install a sprinkler system in a 24-unit residential apartment building located at 339 D Street, South Boston, Massachusetts (the “Property”) and seeks to recover from Defendants amounts paid to 5515 D Street 339 Boston, LLC pursuant to an insurance policy for water damage to the Property.[1] [ECF No. 1 (the “Complaint” or “Compl.”)]. Currently pending are City Point's motion for summary judgment and Aspen's motion for leave to amend the Complaint. [ECF Nos. 41, 51]. For the following reasons, City Point's motion for summary judgment is GRANTED and Aspen's motion for leave to amend is DENIED with leave to renew.

         I. BACKGROUND

         The following facts are either uncontroverted pursuant to Federal Rule of Civil Procedure 56 and Local Rule 56.1 or stated in the light most favorable to Aspen, as the non-moving party.[2]

         City Point developed the Property, a 24-unit residential apartment building located at 339 D Street, South Boston, Massachusetts. Compl. ¶ 18. Construction on the Property was completed on or about July 1, 2014. Id. ¶ 19.

         On July 24, 2015, City Point, as the seller, and Akelius U.S. LLC (“Akelius”), as the purchaser, executed a Purchase and Sale Agreement for the sale of the Property. [ECF No. 41-2 (the “Purchase and Sale Agreement” or the “Agreement”); ECF No. 42-1, Affidavit of Francis Adams (“Adams Aff.”) ¶ 4]. Akelius is a “knowledgeable owner and operator of real estate properties.” Purchase and Sale Agreement ¶ 5. Both City Point and Akelius negotiated the terms of the Purchase and Sale Agreement and were represented by counsel during those negotiations. Adams Aff. ¶¶ 3, 5. Paragraph 5 of the Agreement contains the following “as is” provision and disclaimer of warranties:

Purchaser . . . has previously reviewed and considered the nature of this transaction, and has been afforded the opportunity to thoroughly investigate the Property and all aspects of the transaction. In electing to proceed with the transaction after the expiration of the Review Period, Purchaser shall be deemed to have determined that the Property . . . is satisfactory to Purchaser in all respects and is purchasing the Property in “as is” condition. Purchaser acknowledges and agrees that the Purchase Price was negotiated on the basis of this being an “as is” transaction; and the “as is” nature of the transaction was a material inducement for Seller to enter into this Agreement. Purchaser has and will rely solely on Purchaser's own independent investigations and inspections, and Purchaser has not relied and will not rely on any representation of Seller other than as expressly set forth in this Agreement. Purchaser further acknowledges and agrees that, except for the specific representations made by Seller in this Agreement, Seller has made no representations, is not willing to make any representations, nor held out any inducements to Purchaser other than those (if any) exclusively set forth in this Agreement; and Seller is not and shall not be liable or bound in any manner by any express or implied warranties, guaranties, statements, representations or information pertaining to the Property, except as may be specifically set forth in this Agreement. . . .
Except as specifically set forth herein, Seller makes no representations or warranties as to the truth, accuracy, completeness, methodology of preparation or otherwise concerning any engineering or environmental reports or any other materials, data or other information supplied to Purchaser in connection with Purchaser's inspection of the Property (e.g., that such materials are complete, accurate or the final version thereof, or that such materials are all of such materials as are in Seller's possession). . . . Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller. Purchaser expressly disclaims any intent to rely on any such materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information.

         Purchase and Sale Agreement ¶ 5. The language of Paragraph 5 was not “boilerplate.” Adams Aff. ¶ 6. Rather, the parties and their respective attorneys specifically negotiated that, inter alia, the Property was being sold “as is, ” that the Purchaser had the opportunity to thoroughly investigate all aspects of the Property, and that the Purchase Price was negotiated on the basis of the “as is” nature of the sale. Id. ¶¶ 6-7. Pursuant to the Purchase and Sale Agreement, on October 15, 2015, City Point sold the Property to 5515 D Street 339 Boston, LLC (“5515 D Street”) as Akelius' assignee. See Purchase and Sale Agreement; [ECF No. 41-3 at 5-6; ECF No. 41-4].

         The Property was equipped with a wet fire sprinkler system. Compl. ¶ 20. On or about January 6, 2016 and February 15, 2016, the pipes to the Property's sprinkler system froze, causing flooding that damaged the Property. Id. ¶ 23. Aspen, 5515 D Street's insurer, reimbursed it for the damage caused by the flooding to the Property, and now brings this action against Defendants to recover those amounts paid. Id. ¶¶ 24, 29-30. In three identical counts, Aspen alleges that City Point, Covenant, Zade Associates, LLC, Zade Company, Inc., and Muzaffer Muctehizade, P.E. were “negligent, reckless, and/or otherwise failed to use due care during the course of” their “construction and installation of a fire sprinkler system” at the Property. See id. ¶¶ 25-42.

         On May 24, 2018, City Point moved for summary judgment on the only claim against it. [ECF No. 41]. On June 14, 2018, Aspen filed an opposition to City Point's motion and moved for leave to amend its Complaint. [ECF No. 51].

         II. CITY POINT'S MOTION FOR SUMMARY JUDGMENT

         A. Standard of Review

         Summary judgment is appropriate where the movant can show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is material if its resolution might affect the outcome of the case under the controlling law.” Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted). “A genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way.” Id. (citation omitted).

         “To succeed in showing that there is no genuine dispute of material fact, ” the moving party must point to “specific evidence in the record that would be admissible at trial.” Ocasio-Hernandez v. Fortuño-Burset, 777 F.3d 1, 4 (1st Cir. 2015). “That is, it must ‘affirmatively produce evidence that negates an essential element of the non-moving party's claim,' or, using ‘evidentiary materials already on file . . . demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.'” Id. (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000)). “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Once the movant takes the position that the record fails to make out any trialworthy question of material fact, “it is the burden of the nonmoving party to proffer facts sufficient to rebut the movant's assertions.” Nansamba v. No. Shore Med. Ctr., Inc., 727 F.3d 33, 40 (1st Cir. 2013).

         In reviewing the record, the court “must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor.” Cochran, 328 F.3d at 6 (citation omitted). The First Circuit has noted that this standard “is favorable to the nonmoving party, but it does not give him a free pass to trial.” Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). “The factual conflicts upon which he relies must be both genuine and material, ” Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 397 (1st Cir. 2012), and the court may discount “conclusory allegations, improbable inferences, and unsupported speculation.” Cochran, 328 F.3d at 6 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Medina-Munoz, 896 F.2d at 8 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)).

         B. Discussion

         City Point argues that it is entitled to summary judgment because the Purchase and Sale Agreement contains an “as is” provision that forecloses a claim against City Point for negligence or recklessness as a matter of law. [ECF No. 43 at 8-13]. As set forth supra, Paragraph 5 of the Purchase and Sale Agreement provides that the Property was sold “as is, ” without any reliance on representations of City Point outside of the Agreement:

Purchaser is a knowledgeable owner and operator of real estate properties, has previously reviewed and considered the nature of this transaction, and has been afforded the opportunity to thoroughly investigate the Property and all aspects of the transaction. In electing to proceed with the transaction after the expiration of the Review Period, Purchaser shall be deemed to have determined that the Property, including without limitation, the environmental condition of the Property, is satisfactory to Purchaser in all respects and is purchasing the Property in “as is” condition. Purchaser acknowledges and agrees that the Purchase Price was negotiated on the basis of this being an “as is” transaction; and the “as is” nature of the transaction was a material inducement for Seller to enter into this Agreement. Purchaser has and will rely solely on Purchaser's own independent investigations and inspections, and Purchaser has not relied and will not rely on any representation of Seller other than as expressly set forth in this Agreement. . . .

         Purchase and Sale Agreement ¶ 5. City Point contends that, pursuant to Paragraph 5, 5515 D Street assumed the risk of all defects and shortcomings of the Property, including any defects in the design, construction, and installation of its sprinkler system, and is bound ...


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