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Wade v. Touchdown Realty Group, LLC

United States District Court, D. Massachusetts

June 7, 2019

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.

          MEMORANDUM AND ORDER

          Hon. Patti B. Saris Chief United States District Judge

         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 ...


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