Boston Partner Tara Lynch and Associate Shaun Loughlin recently obtained a defense verdict on a third-party complaint filed against Gordon & Rees' clients, a real estate brokerage and its broker and agent, in Massachusetts Superior Court, Middlesex County.
The firm's clients served as the listing agents for a developer who converted a two-family home into a two-unit condominium in a Boston suburb. The developer created two exclusive parking spaces for each condominium unit with the option to purchase a third parking space for an additional cost. The condominium’s master deed also included a provision that reserved for the developer the right to hold the additional space with the option to convey it to a unit owner in the future.
Gordon & Rees’ clients listed both units for sale and offered the additional space to all prospective buyers. No one purchased the additional space. After the buyers closed on the units, the developer advised the owners he would be utilizing the additional space reserved for himself in the master deed. The unit owners responded by serving the developer a demand letter under Chapter 93A, the Massachusetts Consumer Protection Statute, alleging unfair and deceptive business practices in failing to disclose the reservation of rights over the additional parking space. The unit owners followed up with a "Notice of No Trespass" to the developer.
In response, the developer filed suit in superior court, seeking a declaratory judgment regarding the scope of its reservation in the master deed. The unit owners counterclaimed for misrepresentation, trespass, and violations of Chapter 93A. The unit owners then filed a third-party complaint against the firm's clients, also alleging violations of Chapter 93A for failing to disclose the developer’s reservation of the additional space in the marketing and sale of the properties.
Following a one-day bench trial, the superior court delivered a verdict in favor of the real estate brokerage and its agent and broker on the third-party complaint. In delivering the verdict, the court stated that the unit owners failed to establish that Gordon & Rees' clients failed to disclose the reservation of the additional space to prospective buyers. Stating further, the court found that even if the firm’s clients failed to disclose the reservation, such an omission did not rise to the level of a Chapter 93A claim based upon the facts of the case.
The defense verdict eliminated the risk of strict statutory damages associated with Chapter 93 claims, including exposure to double or treble damages and attorney’s fees.