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Sundberg v. TTR Realty, LLC

Court of Appeals of Columbia District

February 12, 2015

THORSTEN P. SUNDBERG, et al., APPELLANTS,
v.
TTR REALTY, LLC, et al., APPELLEES

Argued: December 11, 2014.

Page 1124

[Copyrighted Material Omitted]

Page 1125

Appeal from the Superior Court of the District of Columbia. (CAB-4366-13). (Hon. Judith N. Macaluso, Trial Judge).

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.[*].

OPINION

Page 1126

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.

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" ).

Page 1127

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 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 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 ...


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