Thorsten P. Sundberg v. TTR Realty, LLC , 109 A.3d 1123 ( 2015 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 14-CV-374
THORSTEN P. SUNDBERG, et al., APPELLANTS,
v.
TTR REALTY, LLC, et al., APPELLEES.
Appeal from the Superior Court
of the District of Columbia
(CAB-4366-13)
(Hon. Judith N. Macaluso, Trial Judge)
(Argued December 11, 2014 Decided February 12, 2015)
Timothy R. Clinton, with whom Matthew J. Peed was on the brief, for
appellants.
Dale K. Cathell, pro hac vice, by special leave of court, with whom J. Hess
and Richard M. Kremen were on the brief, for appellee David Winer.
Spencer K. Stephens for appellees TTR Realty, LLC, and Mansour Abu-
Rahmeh.
Before WASHINGTON, Chief Judge, BLACKBURNE-RIGSBY, Associate Judge,
and OKUN, Associate Judge, Superior Court of the District of Columbia.

Sitting by designation pursuant to D.C. Code § 11-707 (a) (2012 Repl.).
2
OKUN, Associate Judge, Superior Court of the District of Columbia: We
live in an age of seemingly boundless information, and this information serves as
one of our most vital currencies. In this case, the purchasers of a residence allege,
in effect, that they were deprived of this currency because they were not provided
with accurate information concerning an impending construction project at a
neighboring building. With one exception, the trial court found that the purchasers
failed to sufficiently allege a cause of action in their complaint and granted the
seller‟s and realtor‟s motions to dismiss. In granting the motions to dismiss, the
trial court found that the purchasers could not establish that they detrimentally
relied on the seller‟s and realtor‟s alleged misrepresentations and omissions, and
could not establish a breach of the covenant of good faith and fair dealing, because
the alleged misrepresentations and omissions occurred after the purchasers signed
the contract to buy the property. Although we believe that there may be cases
where a cause of action can properly be based on the failure to provide accurate
information about a property, even if the misrepresentations or omissions occur
after the sales contract is signed, this case is not one of them. Accordingly, for the
reasons set forth below, we affirm.
3
PROCEDURAL AND FACTUAL BACKGROUND
In the fall of 2012, appellants Thorsten P. Sundberg (“Sundberg”) and Debra
T. Huang (“Huang”) purchased a residence from appellee David Winer (“Winer”),
who sold the residence by using the services of a realty company and realtor,
appellees TTR Realty, LLC (“TTR Realty”), and Mansour Abu-Rahmeh (“Abu-
Rahmeh”). According to the complaint filed by appellants, after the parties signed
a contract for the sale of the property, but before the parties actually transferred
title to the property, appellees intentionally provided false information and
withheld material information from appellants about a construction project that
was scheduled to occur at the Old Pawn Shop, a building across the street from
their residence. The complaint further alleged that the construction project began
shortly after appellants moved into their residence, and that this construction
substantially and permanently diminished the value of their property. Finally,
appellants claimed that they would not have purchased the property, and instead
would have breached the contract and been subject to the contract‟s remedies for
breach of contract, had they been truthfully informed of the impending
construction project. The appellants alleged that appellees‟ actions violated the
Consumer Protection Procedures Act (“CPPA” or the “Act”) and the covenant of
4
good faith and fair dealing, and involved fraudulent and negligent
misrepresentations and omissions.
Appellees TTR Realty and Abu-Rahmeh filed a motion to dismiss the
complaint, arguing that the complaint failed to state a cause of action for two
reasons. First, they argued that all the components of the sales contract were
subsumed into the deed that was signed by the parties more than two months after
the contract was signed, and that the deed did not contain any false statements
concerning the construction plans of the Old Pawn Shop. Second, they claimed
that their disclosure obligations were limited to disclosures concerning the physical
condition of the property purchased by appellants, and did not extend to the
condition of neighboring properties. The trial court rejected these arguments and
denied the motion to dismiss.
Appellee Winer, meanwhile, filed a motion to dismiss on very different
grounds. Winer argued that the trial court should dismiss the counts alleging
fraudulent and negligent misrepresentations and omissions because the alleged
misrepresentations and omissions occurred after the execution of the sales contract
and appellants, therefore, could not have relied on them at the time they signed the
contract. In addition, Winer asserted that the CPPA count should be dismissed
5
because the statute only applies to merchants and he was not a merchant as defined
by the Act. Finally, Winer claimed that the count alleging a breach of the covenant
of good faith and fair dealing should be dismissed because he fully performed his
obligations under the contract when he conveyed good title to the purchasers and
vacated the premises in a timely manner.
The trial court granted Winer‟s motion, dismissing the CPPA and breach of
good faith and fair dealing counts with prejudice, and dismissing the
misrepresentation and omission counts without prejudice. More specifically, the
trial court rejected appellants‟ argument that the CPPA applied to Winer, even
though he was not a merchant, because Winer conspired with TTR Realty and
Abu-Rahmeh, and aided and abetted their violations. The court held that a non-
merchant could not be vicariously liable under the CPPA, noting that a contrary
result would establish a cause of action against a non-merchant even though the
CPPA excluded non-merchants from its coverage.1 The trial court also dismissed
the breach of good faith and fair dealing count with prejudice, rejecting appellants‟
argument that the withholding of accurate information about the construction plans
1
Although appellants argued that Winer could be liable under both
conspiracy and aider and abettor theories, the trial court only addressed appellants‟
conspiracy theory in its order granting Winer‟s motion to dismiss. However, the
trial court explicitly rejected appellants‟ aider and abettor theory when it denied
appellants‟ subsequent motion for reconsideration.
6
at the Old Pawn Shop deprived appellants of the fruits of the contract, and agreeing
with Winer that appellants received the fruits of the contract when they received
title to the property at settlement.
Finally, the trial court held that the fraudulent and negligent
misrepresentation and omission counts should be dismissed, finding that appellants
failed to show detrimental reliance because the alleged misrepresentations and
omissions occurred after the contract was signed. The court rejected appellants‟
argument that appellees‟ misrepresentations and omissions deprived them of the
opportunity to not purchase the property and instead face the remedies provided in
the contract for breach of contract. The trial court dismissed these counts without
prejudice, providing appellants the opportunity to allege with more particularity
any misrepresentations or omissions that occurred prior to the signing of the sales
contract.
After the trial court granted Winer‟s motion to dismiss, TTR Realty and
Abu-Rahmeh filed a motion for judgment or, in the alternative, for reconsideration.
The trial court granted this motion in part, dismissing the fraudulent
misrepresentation and omission counts, without prejudice, and dismissing the
breach of good faith and fair dealing count with prejudice, for the reasons set forth
7
in the order granting Winer‟s motion to dismiss. However, the trial court did not
dismiss the CPPA count against TTR Realty and Abu-Rahmeh, finding that they
were merchants under the CPPA and also noting that the complaint adequately
alleged a violation of the CPPA because the Act does not require detrimental
reliance as an element of a claim.
Following the trial court‟s grant of Winer‟s motion to dismiss and its partial
grant of TTR Realty‟s and Abu-Rahmeh‟s motion for judgment, appellants filed a
motion to certify the case for appeal and to stay the trial proceedings, pursuant to
Super. Ct. Civ. R. 54 (b). The trial court granted appellants‟ motion, and this
appeal followed.2
2
Rule 54 (b) authorizes the trial court to enter a final appealable judgment
in cases involving multiple claims or multiple parties, even if some claims in the
case remain pending, upon a finding that there is no just reason to delay the appeal
and upon an express direction for entry of judgment. Because the trial court
entered such an order in this case, we have jurisdiction over this appeal. See, e.g.,
Dyhouse v. Baylor, 455 A.2d 900, 901 (D.C. 1983).
8
ANALYSIS
Motion to Dismiss Standard
We review de novo the dismissal of a complaint under Super. Ct. Civ. R. 12
(b)(6) for failure to state a claim upon which relief can be granted. Potomac Dev.
Corp. v. District of Columbia, 28 A.3d 531, 543 (D.C. 2011); Grayson v. AT&T
Corp., 15 A.3d 219, 228 (D.C. 2011) (en banc). In determining whether a
complaint sufficiently sets forth a claim, the court must construe the complaint in
the light most favorable to the plaintiff and must take the facts alleged in the
complaint as true. Casco Marina Dev., L.L.C. v. District of Columbia
Redevelopment Land Agency, 834 A.2d 77, 81 (D.C. 2003). However, “the tenet
that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice,” and “unadorned,
the-defendant-unlawfully-harmed-me accusation[s]” also are insufficient. Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (“a plaintiff‟s obligation to provide the „grounds‟ of his
„entitlement to relief‟ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.”).
9
Rather, “[t]o survive a motion to dismiss [under Rule 12 (b)(6)], a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face. A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged. The plausibility standard is not
akin to a „probability requirement,‟ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.” Potomac Dev. Corp., 28 A.3d at 544 (quoting
Ashcroft, 556 U.S. at 678); see also Bell Atl. Corp., 550 U.S. at 555 (“Factual
allegations must be enough to raise a right to relief above the speculative level.”).
Likewise, “[w]here a complaint pleads facts that are „merely consistent with‟ a
defendant‟s liability, it „stops short of the line between possibility and plausibility
of entitlement to relief.‟” Id.
CPPA
The CPPA is a “comprehensive statute designed to provide procedures and
remedies for a broad range of practices which injure consumers.” District
Cablevision Ltd. P’ship v. Bassin, 828 A.2d 714, 723 (D.C. 2003) (quoting Atwater
v. District of Columbia Dep’t of Consumer & Regulatory Affairs, 566 A.2d 462,
465 (D.C. 1989)). Indeed, we have long considered the CPPA to be a remedial
10
statute that must be “construed and applied liberally to promote its purpose.”
Grayson, 15 A.3d at 244-45 (quoting D.C. Code § 28-3901 (c) (2012 Repl.)).
Nonetheless, the CPPA does not cover all consumer transactions, and instead only
covers “trade practices arising out of consumer-merchant relationships.” Snowder
v. District of Columbia, 949 A.2d 590, 599 (D.C. 2008) (quoting Howard v. Riggs
Nat’l Bank, 432 A.2d 701, 709 (D.C. 1981)). The CPPA defines a “merchant” in
relevant part as a person who, in the ordinary course of business, sells or supplies
consumer goods or services. See D.C. Code § 28-3901 (a)(3).
In this case, appellants acknowledged that Winer was not a “merchant”
under the CPPA because he was not in the business of selling residential
properties. Nonetheless, they argued that Winer‟s actions were covered by the
CPPA because he conspired with and aided and abetted TTR Realty and Abu-
Rahmeh, who indisputably were merchants. See, e.g., Gomez v. Independence
Mgmt. of Delaware, Inc., 967 A.2d 1276, 1287 n.12 (D.C. 2009). The trial court
rejected this argument because it would extend liability beyond that authorized by
the CPPA. We agree with the trial court for the following reasons.
First, we have not recognized the tort of aiding and abetting in the District,
see Flax v. Schertler, 935 A.2d 1091, 1107 (D.C. 2007), and we likewise have
11
cited authority suggesting that “a claim of civil conspiracy does not lie for
violation of a statute” absent statutory language to the contrary. See Executive
Sandwich Shoppe, Inc. v. Carr Realty Corp., 749 A.2d 724, 739 (D.C. 2000)
(citing Monsanto v. Electronic Data Sys. Corp., 529 N.Y.S.2d 512 (N.Y. App. Div.
1988)); see also Findlay v. CitiMortgage, Inc., 813 F. Supp. 2d 108, 122 (D.D.C.
2011) (rejecting civil conspiracy claim under CPPA and noting that “the District of
Columbia Court of Appeals has expressed skepticism about statutory violations
serving as underlying torts for civil conspiracy claims where the statutory right at
issue has no common law tort analogue”); Armstrong v. Accrediting Council for
Continuing Educ. & Training, Inc., 832 F. Supp. 419, 425 (D.D.C. 1993) (“[T]he
court holds that the CPPA creates only those causes of action specifically
enumerated within its provisions; a cause of action creating liability for aiders and
abettors of those who allegedly violate the CPPA is not included.”), vacated on
other grounds, 84 F.3d 1452 (D.C. Cir. 1996).
Second, as the trial court noted, if we were to allow a non-merchant to be
held liable under the CPPA either as an aider and abettor or a co-conspirator, we
would be extending the liability specifically authorized by the CPPA to cover the
actions of a wide variety of people or entities, such as appellee Winer, who are not
within the category of people or entities covered by the Act. Although the CPPA
12
“was intended to be a far-reaching consumer protection law,” Howard, 432 A.2d at
710, there is no provision in the Act that either explicitly or implicitly authorizes
aider and abettor liability or civil conspiracy liability to be imposed upon a non-
merchant. See Armstrong, 832 F. Supp. at 425 (“[N]o provision of the CPPA
creates a cause of action for aider-and-abettor liability[;] . . . it is not clear from the
language of the statute why a „person‟ not subject to primary liability should be
subject to secondary liability.”). 3 Thus, we conclude that the CPPA does not
authorize liability to be imposed on non-merchants for either aiding and abetting or
civil conspiracy, and we uphold the trial court‟s dismissal of the CPPA count
against appellee Winer.
3
Appellants argue that the CPPA authorizes both aider and abettor liability
and civil conspiracy liability for non-merchants because the CPPA was modeled
after a comparable California statute under which this type of liability has been
imposed, citing People v. Toomey, 203 Cal. Rptr. 642 (Cal. Ct. App. 1984), in
support of their argument. However, Toomey does not dictate a different result.
First, the defendant in Toomey clearly was a merchant because he was one of the
two co-owners of the business, along with his wife, and also was “the president
and operating officer” of the company who “orchestrated all aspects of the
business.” 203 Cal. Rptr. at 652. Second, although certain provisions of the CPPA
were modeled on the California statute, there is no indication that the CPPA was
meant to include aider and abettor liability or co-conspirator liability; to the
contrary, the provisions that were modeled on the California statute were contained
in the 2000 amendments to the CPPA, authorized the remedies of disgorgement
and restitution and representative actions on behalf of other consumers, and did not
address either aider and abettor or civil conspiracy liability. See Grayson, 15 A.3d
at 241-42 & nn. 63-64.
13
Fraudulent and Negligent Misrepresentations and Omissions
In order to sufficiently allege fraudulent misrepresentations or omissions, a
plaintiff must allege facts showing that a person or entity “(1) made a false
representation of or willfully omitted a material fact; (2) had knowledge of the
misrepresentation or willful omission; (3) intended to induce [another] to rely on
the misrepresentation or willful omission; (4) the other person acted in reliance on
that misrepresentation or willful omission; and (5) suffered damages as a result of
[that] reliance.” Schiff v. American Ass’n of Retired Persons, 697 A.2d 1193, 1198
(D.C. 1997) (citing Howard, 432 A.2d at 706); see also Saucier v. Countrywide
Home Loans, 64 A.3d 428, 438 (D.C. 2013) (to sufficiently allege common law
fraud, a plaintiff must allege facts demonstrating “(1) a false representation (2) in
reference to a material fact, (3) made with knowledge of its falsity, (4) with the
intent to deceive, and (5) action is taken in reliance upon the representation.”). A
false representation may be either “an affirmative misrepresentation or a failure to
disclose a material fact when a duty to disclose that fact has arisen.” Id. (quoting
Rothenberg v. Aero Mayflower Transit Co., 495 F. Supp. 399, 406 (D.D.C. 1980)).
A misrepresentation is “material” if it would be “likely to induce a reasonable
person to manifest his assent, or if the maker knows that it would be likely to
induce the recipient to do so.” Id. at 438-39 (quoting Sarete, Inc. v. 1344 U Street
14
Ltd. P’ship, 871 A.2d 480, 493 (D.C. 2005), citing RESTATEMENT (SECOND) OF
CONTRACTS, § 162 (1981). Although the non-disclosure of material information
may constitute fraud when there is a duty to disclose, “mere silence does not
constitute fraud unless there is a duty to speak.” Id. at 439 (quoting Kapiloff v.
Abington Plaza Corp., 59 A.2d 516, 517 (D.C. 1948)).
In contrast to a complaint that alleges fraudulent misrepresentations, a
complaint alleging negligent misrepresentations need not allege that the defendant
had knowledge of the falsity of the representation or the intent to deceive.
However, a plaintiff alleging negligent misrepresentations or omissions still must
allege facts indicating that he relied on the defendant‟s misrepresentation or
omission to his detriment. See, e.g., Kumar v. District of Columbia Water & Sewer
Auth., 25 A.3d 9, 15 (D.C. 2011). More specifically, a plaintiff alleging negligent
misrepresentations or omissions must show “(1) that [the defendant] made a false
statement or omitted a fact that he had a duty to disclose; (2) that it involved a
material issue; and (3) that [the plaintiff] reasonably relied upon the false statement
or omission to his detriment.” Id. at 15 n.9 (quoting Redmond v. State Farm Ins.
Co., 728 A.2d 1202, 1207 (D.C. 1999)).
15
In this case, appellants did not allege in their complaint that appellees made
any misrepresentations or omissions prior to the time that appellants signed the
sales contract for the property. Thus, as the trial court found, appellants failed to
allege that they detrimentally relied on any such misrepresentations or omissions
when they signed the sales contract. Appellants claim, however, that they
detrimentally relied on these misrepresentations and omissions after they signed
the contract, because they would not have purchased the property at closing had
they been provided with truthful information about the impending construction at
the Old Pawn Shop, and instead would have breached the contract and then been
subject to the breach of contract remedies set forth in the sales contract.
The difficulty with appellants‟ argument is their premise that they had a
right to breach the contract, and that this right was unlawfully foreclosed by
appellees‟ alleged misrepresentations and omissions. To the contrary, a party has
no “right” to breach a contract, and appellants therefore cannot rely on such a
“right” in support of their detrimental reliance argument. Indeed, we have
carefully delineated the various circumstances under which a party may seek to
avoid his or her obligations under a contract, but have not included the “right” to
breach a contract as one of these circumstances. See, e.g., Hernandez v. Banks, 65
A.3d 59, 75 (D.C. 2013) (en banc) (party may avoid obligations under contract if
16
that party was mentally incapacitated at time contract was signed); Island Dev.
Corp. v. District of Columbia, 933 A.2d 340, 349-50 (D.C. 2007) (party may avoid
contract obligations if performance of contract has become impossible or
impracticable, or if events beyond parties‟ control have frustrated the contract‟s
purpose); Isaac v. First Nat’l Bank, 647 A.2d 1159, 1163 (D.C. 1994) (party may
avoid contract obligations based on mutual mistake, fraud in the inducement or
duress); Truitt v. Miller, 407 A.2d 1073, 1079 (D.C. 1979) (party may avoid
contract obligations if contract violates statute designed to protect public); see also
RESTATEMENT (SECOND) OF CONTRACTS, § 7 (providing similar examples of
voidable contracts).
Appellants argue that they had a “right” to breach the contract because “the
modern law of damages is based on the premise that a contractual obligation is not
necessarily an obligation to perform, but rather an obligation to choose between
performance and compensatory damages.” See Charles J. Goetz & Robert E.
Scott, Liquidated Damages, Penalties and the Just Compensation Principle: Some
Notes on an Enforcement Model and a Theory of Efficient Breach, 77 COLUM. L.
REV. 554, 558 (1977) (emphasis in appellants‟ brief); see also Northwest Airlines,
Inc. v. U.S. Dep’t of Transp., 15 F.3d 1112, 1121 n.5 (D.C. Cir. 1994) (citing
RESTATEMENT (SECOND) OF CONTRACTS, ch. 16, intro. note at 100) (“„Efficient
17
breach‟ refers to the principle that a breaching party has the option of paying
damages rather than performing its contractual obligations where damages are an
adequate substitute for specific performance.”). Although this argument has some
force, it also has a number of shortcomings. Indeed, as the drafters of the
RESTATEMENT (SECOND) OF CONTRACTS have noted, this approach “fails to take
account notions of the sanctity of contract and the resulting moral obligation to
honor one‟s promises.” Id. Moreover, this argument has no support in our case
law, and is contrary to relevant Supreme Court case law. See Rousey v. Jacoway,
544 U.S. 320, 328 (2005) (contracting parties do not have “an unrestricted right to
breach a contract simply because the price of doing so is the payment of
damages.”).
Furthermore, the contract itself did not provide appellants with the right to
breach the contract. Rather, the default clause in the contract stated as follows:
If purchaser fails to complete settlement for any reason
other than default by seller, at the option of seller, the
deposit may be liquidated damages (not as a penalty) in
which event purchaser shall be relieved from further
liability to seller. If seller does not elect to accept the
deposit as liquidated damages, the deposit may not be the
limit of purchaser‟s liability in the event of a default.
18
Sales Contract at ¶ 23 (emphasis added). Thus, contrary to appellants‟ argument,
the sales contract provided appellees with the option to seek liquidated damages
or other damages resulting from appellants‟ default, but did not give appellants
the option of breaching the contract had they received the information that
appellees allegedly failed to provide.4
In sum, appellants failed to sufficiently allege that they detrimentally relied
on appellees‟ alleged fraudulent and negligent misrepresentations and omissions.
Therefore, the trial court did not err in granting appellees‟ motions to dismiss
these counts.
4
Appellants argued in their appellate brief that the sales contract provided
them with the option of consummating the purchase on the agreed-upon terms or
“walking away” from the contract, citing Dodek v. CF 16 Corp., 537 A.2d 1086
(D.C. 1988), in support of their argument. However, at oral argument, appellants
clarified that they were not asserting that the sales contract was an option contract,
rather than a binding contract that required them to purchase the property under the
terms set forth in the contract. Moreover, even if appellants had not clarified their
position in this manner, it is clear that the sales contract in this case was not an
option contract. In fact, in Dodek, we found that the contract at issue was an
option contract because it gave the purchaser the “option and privilege to „choose
between consummating the purchase on the agreed upon terms or of walking away,
for any reason or no reason, with no obligation or liability whatever save the loss
of his deposit.” Id. at 1095 (quoting Green Manor Corp. v. Tomares, 295 A.2d
212, 214 (Md. 1972)). In this case, by contrast, the sales contract did not give the
purchaser the right to walk away from the contract and face only the loss of the
deposit; rather, the contract gave the sellers the right to seek the recovery of the
deposit or any other damages if the purchasers defaulted on their obligations under
the contract.
19
Breach of Covenant of Good Faith and Fair Dealing
Every contract contains an implied covenant of good faith and fair dealing.
See, e.g., Wright v. Howard Univ., 60 A.3d 749, 754 (D.C. 2013). This covenant
precludes any party from doing “anything which will have the effect of destroying
or injuring the right of the other party to receive the fruits of the contract . . . .”
Abdelrhman v. Ackerman, 76 A.3d 883, 891 (D.C. 2013) (quoting Hais v. Smith,
547 A.2d 986, 987 (D.C. 1988)). To state a claim for breach of the implied
covenant of good faith and fair dealing, a plaintiff must allege either “bad faith or
conduct that is arbitrary and capricious.” Id. at 891-92; Wright, 60 A.3d at 754. If
a party “evades the spirit of the contract, willfully renders imperfect performance,
or interferes with performance by the other party, he or she may be liable for
breach of the implied covenant of good faith and fair dealing.” Paul v. Howard
Univ., 754 A.2d 297, 310 (D.C. 2000) (quoting Hais, 547 A.2d at 987-88); see also
RESTATEMENT (SECOND) OF CONTRACTS, § 205 (“Subterfuges and evasions violate
the obligation of good faith in performance . . . [b]ut the obligation goes further:
bad faith may be overt or consist of inaction, and fair dealing may require more
than honesty.”).
20
In this case, appellants allege that appellees violated the duty of good faith
and fair dealing through misrepresentations and omissions after the sales contract
was signed and before the parties closed the transaction. They further allege that
these misrepresentations and omissions deprived them of the fruits of the sales
contract – namely, a residence whose value would not be diminished by the
impending construction at the Old Pawn Shop. The trial court disagreed with
appellants, finding that they received the fruits of the sales contract because they
received good title to the property at issue under the terms and conditions set forth
in the contract.
We agree with the trial court. As an initial matter, we must review the terms
of the contract at issue in order to determine whether appellees violated the duty of
good faith and fair dealing by evading the spirit of the contract, purposefully
failing to perform their obligations under the contract, or interfering with
appellants‟ ability to perform under the contract. The contract required Winer to
provide good and marketable title to the property at an agreed-upon price and by a
specified date. There is no dispute that Winer fully and timely performed this
obligation. The contract also contained a contingency clause that allowed
appellants to void the contract if the residence did not pass a home inspection
within a specified time period. There is no dispute that appellants did not exercise
21
this contingency clause. Moreover, this provision only covered an inspection of
the property that appellants agreed to purchase, and did not include or authorize an
inspection of any neighboring property. Therefore, any misrepresentation or
omission concerning the Old Pawn Shop would not have affected the home
inspection contingency clause contained in the contract.
The sales contract also contained a property condition statement furnished
by the seller that addressed the property‟s structural conditions; the operating
condition of its heating, air conditioning, plumbing and electrical systems; any
known defects existing in numerous specified appliances; any problems relating to
the exterior of the property; any environmental hazards (such as asbestos, radon
gas, lead based paint, underground storage tanks, formaldehyde, contaminated soil,
or other contaminants); and any zoning violations, non-conforming uses, violation
of building restrictions or setback requirements, or any easements (other than
utilities) on or affecting the property. Notably, the property condition statement
did not require appellees to provide any information about conditions, including
impending construction, at any neighboring properties. 5 Accordingly, because the
5
Arguably, appellees would have been required to disclose information
about the impending construction at the Old Pawn Shop if this construction
constituted a non-conforming use, or violated relevant zoning or building
regulations, and affected the property to be purchased by appellants. However,
(continued….)
22
sales contract did not impose any duty on appellees to inform appellants about the
impending construction project at the Old Pawn Shop, any misrepresentations or
omissions concerning this project did not deprive appellants of the fruits of the
contract.
Our conclusion with respect to the covenant of good faith and fair dealing in
this case does not mean, as appellees have argued, that a seller or realtor can never
violate the covenant of good faith or fair dealing based on misrepresentations or
omissions that occur after the sales contract is signed but before the parties transfer
title to the property. To the contrary, had appellees made fraudulent or negligent
misrepresentations or omissions concerning the structural conditions of the
property to be purchased by appellants, or concerning some other condition
explicitly set forth in the sales contract, such misrepresentations or omissions may
have given rise to a cause of action for violating the covenant of good faith and fair
dealing, even if the misrepresentations or omissions occurred in the time period
between the signing of the contract and the transfer of title. However, we need not
(….continued)
appellants did not allege such a violation or non-conforming use in their complaint
and did not make any such argument in their appellate briefs. To the contrary, they
only briefly cited this provision in their opposition to TTR Realty‟s and Abu-
Rahmeh‟s motion to dismiss, and did not provide any factual information in
support of this argument. Thus, even if this argument had been properly preserved
for appeal, it would have lacked a sufficient factual foundation in any event.
23
decide that issue because there is no evidence in this case, and no allegation in the
complaint, that appellees made any such misrepresentations or omissions here.
Accordingly, we affirm the trial court‟s dismissal of the count alleging a breach of
the covenant of good faith and fair dealing.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
So ordered.