JOHN A. WOODCOCK, Jr., District Judge.
JOCA-ROCA REAL ESTATE, LLC (Joca-Roca) purchased property from Robert Brennan under an asset purchase agreement. Years after the closing, Joca-Roca learned that the state of Maine Fire Marshal required that the building on the property be equipped with sprinklers. Joca-Roca brought an action against Mr. Brennan alleging fraud and breach of contract, and seeking compensation for costs it incurred to install an automatic sprinkler system in the building. Mr. Brennan now moves the Court for summary judgment based on insufficient evidence and statute of limitations grounds. The Court concludes that Mr. Brennan is entitled to summary judgment on Joca-Roca's breach of contract claim based on the six-year statute of limitations, but it also concludes that Joca-Roca's fraud claim survives the motion.
On March 4, 2013, Joca-Roca filed a two-count complaint against Mr. Brennan, alleging both fraud and breach of contract. Compl. (ECF No. 1). Mr. Brennan moved for summary judgment on March 2, 2015.
Joca-Roca opposed Mr. Brennan's motion on April 1, 2015. Opp'n to Def.'s Mot. for Summ. J. (ECF No. 74) (Pl.'s Opp'n). Joca-Roca also filed a reply to Mr. Brennan's statement of material facts, Opposing Statement of Material Facts and Pl.'s Additional Facts, at 1-2 (ECF No. 75) (PRDSMF), and its own statement of additional material facts, id. at 2-7 (PSAMF). Mr. Brennan replied to Joca-Roca's opposition on April 15, 2015, Def.'s Reply to Pl.'s Opp'n to Def.'s Mot. for Summ. J. (ECF No. 79) (Def.'s Reply), and also replied to its statement of additional material facts. Def.'s Reply Statement of Material Facts (ECF No. 78) (DRPSAMF).
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because the amount in controversy exceeds $75,000 and the parties are citizens of different states. 28 U.S.C. § 1332(a)(1).
On September 18, 2005, Mr. Brennan entered into an agreement to convey to Joca-Roca his boat, car, and RV dealership facility (the Main Facility) in Lebanon, Maine, along with the underlying real estate and other improvements, including a separate boat storage building. SSMF ¶ 3. On December 8, 2005, the sale closed. SSMF ¶ 1; PSAMF ¶ 15; DRPSAMF ¶ 15. The Main Facility is a 32,000 square-foot building that is used in part as a showroom.
In 2003, Mr. Brennan signed an application for a construction permit with the state fire marshal's office for a boat storage building in Lebanon, Maine.
Town of Lebanon Fire Chief Blaine H. Wood was present during the construction of the Main Facility in 2003 and suggested to Mr. Brennan that a fire sprinkler system would be "nice" and he "ought to have them because of the size of the building." DSMF ¶ 1; PRDSMF ¶ 1; PSAMF ¶ 13; DRPSAMF ¶ 13.
On August 23, 2013, Chief Wood signed an affidavit stating that he "noted to Mr. Brennan that he may need to have the building equipped with a sprinkler system for fire safety, and should consult with the State Fire Marshal's office"; however, although Chief Wood could not remember exactly what he said to Mr. Brennan in 2003, he clarified at his deposition a month later that: (1) he did not prepare that affidavit, (2) he never told Mr. Brennan that he may need to install sprinklers, and (3) he never told Mr. Brennan to check with the state fire marshal's office.
On or about January 17, 2006 (about a month after the closing), Robert S. Hark, Esquire, counsel for Joca-Roca, issued a land use opinion (the Opinion Letter) of the property to T.D. Banknorth, N.A. (TD Bank) in which he noted that: (1) the land uses did not contravene any zoning provision of municipal ordinances, regulations or by-laws, as there was no general zoning ordinance in Lebanon; (2) there was no evidence of any code violations under the town's building code; (3) the Maine Department of Environmental Protection (DEP) considered the property to be in compliance with their permitting regime; and (4) an occupancy permit was missing for the Main Facility.
On February 13, 2006, Mr. Brennan obtained a Certificate of Occupancy (the Certificate) for the Main Facility, which limited the use to a "Metal Storage Building."
The Main Facility has never had an automatic sprinkler system despite its use as a showroom under Mr. Brennan's ownership. SSMF ¶ 4; PSAMF ¶ 20; DRPSAMF ¶ 20. In January 2013, the state fire marshal's office informed Joca-Roca that the only building listed in their database was a storage facility, that the occupation of the Main Facility required a sprinkler system, and that the building was nonconforming as used. PSAMF ¶¶ 18, 19; DRPSAMF ¶¶ 18, 19. The state fire marshal's office threatened to close down the operations in the Main Facility if a sprinkler system was not installed. PSAMF ¶ 21; DRPSAMF ¶ 21.
On June 7, 2013, Joca-Roca obtained a permit for the installation of a sprinkler system in the Main Facility. PSAMF ¶ 24; DRPSAMF ¶ 24.
Joseph Alosa is an owner of both Joca-Roca and Profile State Line Superstore (Profile Superstore). PSAMF ¶ 25; DRPSAMF ¶ 25. Profile Superstore had a written lease agreement to occupy the real estate owned by Joca-Roca, but that lease probably expired and Profile Superstore and Joca-Roca now operate under an informal rental agreement.
Profile Superstore has expended no less than $195,359 towards retrofitting the Main Facility with a sprinkler system. PSAMF ¶ 32; DRPSAMF ¶ 32. The expenses related to the sprinkler system were incurred beginning in 2013. PSAMF ¶ 33; DRPSAMF ¶ 33. To date, Joca-Roca has credited Profile Superstore in excess of $150,000 in rent to account for the installation of the sprinkler system. PSAMF ¶ 34; DRPSAMF ¶ 34. Joca-Roca demanded indemnification from Mr. Brennan for the cost of installing an automatic sprinkler system. PSAMF ¶ 22; DRPSAMF ¶ 22. Mr. Brennan refused to indemnify Joca-Roca. PSAMF ¶ 23; DRPSAMF ¶ 23.
Mr. Brennan's motion is premised on two arguments: (1) the summary judgment record does not establish fraud because there is insufficient evidence that he either was actually aware of a sprinkler requirement or that he recklessly disregarded whether the Main Facility should have had sprinklers when he made representations and warranties about the property as part of the sale to Joca-Roca; and, (2) Joca-Roca's claim for breach of contract is time-barred and is not revived by tolling the limitation period. Def.'s Mot. at 3-9.
Mr. Brennan first addresses Joca-Roca's fraud claim, arguing that Joca-Roca has failed to submit sufficient evidence to show that he knew the Main Facility should have had sprinklers. Id. at 3-4. In Mr. Brennan's view, that he specifically discussed sprinklers with the town of Lebanon's fire chief and the fire chief was unaware of any sprinkler requirement make it "hard to argue" that he either knew or was in reckless disregard as to whether the building should have had sprinklers. Id. at 4.
Next, Mr. Brennan contends that the Certificate issued in 2006 with the limiting "metal storage building" condition was not intended to limit the use of the Main Facility as there was no zoning provision in Lebanon that would have applied to limit the use, that the issuance of the Certificate had nothing to do with the Main Facility's compliance with state fire code regulations or sprinkler requirements, and that the fact that the building was used as a showroom and offices demonstrates that the Certificate was not limiting the building's use to storage only. Id. at 4-5.
Finally, Mr. Brennan submits that the land use opinion issued to TD Bank about a month after the closing demonstrates that Joca-Roca's own counsel did not consider the Main Facility to be in violation of any sprinkler requirement. Id. at 5.
Joca-Roca contends that it has generated a trialworthy issue regarding Mr. Brennan's knowledge because it has presented sufficient evidence from which a factfinder could conclude that Mr. Brennan knowingly or with reckless disregard for the truth made false representations that the Main Facility was properly permitted. Pl.'s Opp'n at 8. Joca-Roca says it is undisputed that sprinklers were required for the Main Facility when it was constructed in 2003,
Next, Joca-Roca argues that the Certificate is significant because the occupancy classification of a building dictates whether automatic sprinklers are required under state law. Id. Joca-Roca says that whether the CEO intended to limit the use of the facility or make a determination regarding compliance with fire codes does not impact the Certificate's weight in this case. Id. Joca-Roca submits that Mr. Brennan knew that the facility's use as a dealership showroom was inconsistent with its classification on the Certificate, which permits an inference that when he procured the Certificate — after the closing — he knew that his representations in the Agreement were either false or that he acted with reckless disregard as to their truth. Id. at 6-7.
Finally, Joca-Roca claims the land use opinion letter is immaterial to the fraud claim because Mr. Hark expressly limited his opinion to compliance with town ordinances, town building permit and variance records, and certain DEP records. Id. at 7. Joca-Roca maintains that Mr. Hark did not even consider fire code compliance. Id.
Mr. Brennan insists that Joca-Roca's fraud claim rests upon "nothing more than conjecture." Def.'s Reply at 2. He claims that the construction permit application upon which Joca-Roca relies was submitted for a boat storage facility that is not the Main Facility. Id. at 3. With respect to Joca-Roca's arguments regarding the application to the state fire marshal's office for the boat storage building, Mr. Brennan contends that his knowledge that the boat storage building did not require sprinklers has no bearing on whether he knew that the Main Facility needed sprinklers. Id. He instead relies on his conversations with Chief Wood, which he says show what he knew when he was constructing the Main Facility. Id. at 4. Chief Wood never told him he had to check with the state regarding sprinklers, Mr. Brennan asserts, so if the fire chief did not think the Main Facility needed sprinklers, it is unreasonable to think Mr. Brennan knew or recklessly disregarded whether the building needed sprinklers. Id. Mr. Brennan admits that he did not check with the state fire marshal's office after the building was constructed to make sure he was in compliance, but argues that Joca-Roca did not either. Id. If Joca-Roca's actions were reasonable, he contends, so were his. Id.
Next, Mr. Brennan responds to Joca-Roca's argument that his behavior toward the fire code requirements was consistent with his approach to other permits for the property. Id. at 5. Mr. Brennan, assuming that Joca-Roca's statement referred to a public water supply application pending at the time the Agreement was signed but was approved before the closing, asserts that rather than creating an inference of fraud, his behavior demonstrates that he was ensuring the Main Facility had no missing permits or approvals before he sold it to Joca-Roca. Id.
Mr. Brennan restates his contention that the occupancy of the Main Facility for the purposes of state fire code requirements has nothing to do with the issuance of the Certificate, and says that the land use opinion letter demonstrates that Joca-Roca's own counsel was aware that the Certificate was missing but was also unaware of the importance of checking with the state fire marshal's office. Id.
Mr. Brennan contends that Joca-Roca's breach of contract claim is time-barred and not subject to any tolling of the limitation period. Def.'s Mot. at 6. He first addresses Joca-Roca's claim based on breach of the warranties and representations in the Agreement, contending that Joca-Roca's cause of action accrued on the date of the closing. Id. at 6-7. Next, Mr. Brennan asserts that over six years have passed since the claim accrued, and it is therefore time-barred. Id. at 7. Mr. Brennan then turns to the alleged breach of the contractual indemnity provision in the Agreement, arguing that Joca-Roca's claim for indemnification is a claim for direct injury not related to any third-party liability, and is also time-barred. Id. at 8-9.
Mr. Brennan argues that because Joca-Roca has not alleged fraudulent concealment, no tolling provision applies to the breach of contract claim. Id. at 9. He contends that because Joca-Roca did not allege that he fraudulently concealed any breach of the representations or warranties, and as there is no evidence of any fraudulent concealment in connection with the damages Joca-Roca is pursuing, the tolling provision under the Maine statute does not apply. Id.
Joca-Roca maintains that its breach of contract claim is not time-barred because it is based upon Mr. Brennan's refusal to indemnify Joca-Roca under the Agreement after it was forced by the state fire marshal to update the Main Facility with a sprinkler system in 2013. Pl.'s Opp'n at 8-9. Next, Joca-Roca rejects the distinction Mr. Brennan draws between direct injury and third-party claims, arguing that Maine law does not limit indemnification claims to circumstances involving third party claims. Id. at 9. Further, Joca-Roca contends, the plain language of the Agreement provides that Mr. Brennan agreed to indemnify Profile Superstore and Joca-Roca for any breach of any representation or warranty, whether or not involving a third-party claim. Id. at 10. Finally, Joca-Roca asserts, third-party liability is present because Joca-Roca's tenant, Profile Superstore, is the party actually incurring the costs of the sprinkler installation. Id. at 11.
Mr. Brennan distills his argument, stating that Joca-Roca's claim for direct indemnification is time-barred because the underlying claim upon which it is based — breach of the Agreement's representations and warranties — is time-barred. Def.'s Reply at 5. He concedes that if this was a third-party claim then the statute of limitations would not have run but contends that because this case does not involve a third-party indemnification claim, the cause of action arose the day after the closing. Id. at 6-7.
Next, Mr. Brennan responds to Joca-Roca's "late hour" argument that its damages are the result of rent abatement to its tenant Profile Superstore. Id. at 7. Mr. Brennan asserts that Joca-Roca has no liability to Profile Superstore because, at the time of the closing, Joca-Roca and Profile entered into a written lease in which Joca-Roca unequivocally exclaimed the express or implied warranties of habitability, merchantability, or fitness for any particular purpose or otherwise. Id. at 8. Joca-Roca's decision to provide rent credit to Profile Superstore, was, according to Mr. Brennan, entirely voluntary. He submits that any party who voluntarily makes a payment has no right to seek indemnification for a loss it was not obligated to pay in the first instance. Id.
Summary judgment is appropriate only "if the movant shows 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 existence or nonexistence has the potential to change the outcome of the suit." Tropigas de Puerto Rico, Inc. v. Certain Underwriters at Lloyd's of London, 637 F.3d 53, 56 (1st Cir. 2011) (quoting Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010)). A dispute is "genuine" if "a reasonable jury could resolve the point in favor of the nonmoving party." Id. (quoting McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995)).
"If the moving party has made a preliminary showing that there is no genuine issue of material fact, the nonmovant must `produce specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue.'" McCarthy v. City of Newburyport, 252 Fed. Appx. 328, 332 (1st Cir. 2007) (quoting Triangle Trading Co., Inc. v. Robroy Indus., Inc., 200 F.3d 1, 2 (1st Cir. 1999) (internal punctuation omitted)). In other words, the non-moving party must "present `enough competent evidence' to enable a factfinder to decide in its favor on the disputed claims." Carroll v. Xerox Corp., 294 F.3d 231, 237 (1st Cir. 2002) (quoting Goldman v. First Nat'l Bank of Boston, 985 F.2d 1113, 1116 (1st Cir. 1993)).
The Court then "views the facts and draws all reasonable inferences in favor of the nonmoving party." Ophthalmic Surgeons, Ltd. v. Paychex, Inc., 632 F.3d 31, 35 (1st Cir. 2011). However, the Court "afford[s] no evidentiary weight to `conclusory allegations, empty rhetoric, unsupported speculation, or evidence which, in the aggregate, is less than significantly probative.'" Tropigas, 637 F.3d at 56 (quoting Rogan v. City of Boston, 267 F.3d 24, 27 (1st Cir. 2001)); accord Sutliffe v. Epping Sch. Dist., 584 F.3d 314, 325 (1st Cir. 2009).
The Supreme Court has stated that "the plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case . . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In other words, a movant for summary judgment bears the burden to "demonstrate that there is `an absence of evidence to support the nonmoving party's case.'" Napier v. F/V Deesie, Inc., 454 F.3d 61, 66 (1st Cir. 2006) (quoting Celotex Corp., 477 U.S. at 325).
To sustain an intentional fraud claim under Maine law, a plaintiff must show by clear and convincing evidence: "(1) that the defendant made a false representation, (2) of a material fact, (3) with knowledge of its falsity or in reckless disregard of whether it is true or false, (4) for the purpose of inducing the plaintiff to act in reliance upon it, and, (5) the plaintiff justifiably relied upon the representation as true and acted upon it to the plaintiff's damage."
In the Agreement, Mr. Brennan expressly represented that the Main Facility had all necessary licenses, permits, and approvals for use as a dealership. In relevant part, the Agreement states:
Agreement at § 7(E), (G). In support of its contention that Mr. Brennan knew the representations contained in the Agreement were false or that Mr. Brennan acted in reckless disregard as to their truth or falsity, Joca-Roca has presented evidence that: (1) Chief Wood directed Mr. Brennan to consult with the state fire marshal regarding the necessity of sprinklers; (2) Mr. Brennan completed a state fire marshal's office application for a construction permit for a boat storage building, dated September 15, 2003; and (3) the Certificate, dated February 13, 2006, obtained approval for an occupancy for a "metal storage building" that would not require a sprinkler system under state fire code regulations. Mr. Brennan contends that this evidence is insufficient to survive summary judgment, and that he has presented evidence that Chief Wood never told him he had to check with the state fire marshal about sprinklers.
Viewing the evidence in the light most favorable to Joca-Roca, Mr. Brennan knew in or around 2003 that he should consult with the state fire marshal about whether the building needed a sprinkler system because he was told so by Chief Wood. Furthermore, Mr. Brennan completed (or directed an employee on how to complete) a permit application seeking approval from the state fire marshal for the construction of a boat storage building. His contention that knowledge that the boat storage building did not need sprinklers has no bearing on his knowledge that the Main Facility needed sprinklers is a fallacy.
Even if he did not actually know that the building required sprinklers or that he needed to get approval from the fire marshal, Mr. Brennan himself highlighted the evidence demonstrating that he acted in reckless disregard as to the truth of the express representations he made in the Agreement. In his reply, Mr. Brennan conceded that he "didn't go checking with the State Fire Marshal's office after the building was already constructed to make sure he was in compliance" because an "owner does not normally go running around doing follow-up checks with government officials to look for problems." Def.'s Reply at 4. This argument is problematic for two reasons.
First, Mr. Brennan's position contradicts other evidence — viewed in the light most favorable to Joca-Roca — establishing that he was indeed "running around" to secure other missing permits for the building; Mr. Brennan finalized the public water supply application after entering into the Agreement.
Second, a jury could conclude based on the facts in the record — viewed in the light most favorable to Joca-Roca — that Mr. Brennan, in preparation for a sale in which he expressly warranted that the property was in compliance with applicable government regulations, would either check with government officials to make sure he could legally stand behind his statements, or in the alternative avoid making express representations and merely sell the building "as is." Moreover, a factfinder could conclude that he should have known — after completing a construction permit application for the state fire marshal around the same time — that he needed to apply to the state fire marshal for a construction permit for the Main Facility. Consequently, a jury could find that he should have known that his statements in the Agreement were misrepresentations. From this evidence, a factfinder could reasonably infer that the representations contained in the Agreement were at least made in reckless disregard of their truth or falsity.
The Court concludes that the summary judgment record presents a triable issue as to whether Mr. Brennan provided Joca-Roca with information — concerning whether the Main Facility had all necessary federal, state, and local licenses, permits and approvals — that he either knew was false or acted in reckless disregard as to its truth or falsity. The Court is unable to conclude, based on this record, as a matter of law that Mr. Brennan did not know the representations in the Agreement were false, or that he did not act in reckless disregard as to the truth of the statements. Whether Joca-Roca justifiably relied on the false statement — in light of its own attorney's review of the transaction and other factors, such as the obviousness of whether a building has a sprinkler system — is a matter Mr. Brennan has not argued in this motion. On the narrow issue of whether Joca-Roca has generated a genuine dispute of material fact on the third element of its fraud claim in Count I, the Court denies Mr. Brennan's motion for summary judgment.
Mr. Brennan moves the Court for summary judgment on Joca-Roca's breach of contract claim, asserting that it is time-barred by the applicable statute of limitations. See 14 M.R.S. § 752 ("All civil actions shall be commenced within 6 years after the cause of action accrues and not afterwards").
It is well-settled that, under Maine law, "[t]he accrual of a cause of action occurs at the time the plaintiff sustains a judicially cognizable injury," which in breach of contract claims is usually set "when the contract was breached." Chiapetta v. Clark Assocs., 521 A.2d 697, 699 (Me. 1987); see also Gile, 2008 ME 58, ¶ 8, 943 A.2d 599 ("In a breach of contract claim, that date occurs when the defendant breaches the contract"); Dugan v. Martel, 588 A.2d 744, 746 (Me. 1991) ("In general, the accrual of a cause of action occurs at the time a judicially cognizable injury is sustained"); Burke v. Hamilton Beach Div., Scovill Mfg. Co., 424 A.2d 145, 149 (Me. 1981) ("In contract actions a cause of action accrues at the time of breach"), vacated on other grounds by Adams v. Buffalo Forge Co., 443 A.2d 932 (Me. 1982). Joca-Roca's principal argument is that its cause of action did not accrue until 2013, when it was made aware by the state fire marshal that the Main Facility did not comply with state fire code. In contrast, Mr. Brennan argues that the claim accrued when the Agreement was signed because that was the moment when Joca-Roca suffered a judicially cognizable injury.
The law is clear. At the latest, Joca-Roca's breach of contract claim accrued and triggered the six-year statute of limitations at the closing in December 2005 or when Joca-Roca took possession of the Main Facility, presumably shortly after the closing. In other words, if Joca-Roca had discovered on or after the closing on December 8, 2005 that the Main Building did not have a sprinkler system and that the state fire marshal required such a system, Joca-Roca could have filed suit then based on a breach of contract. However, Joca-Roca did not file its Complaint until March 4, 2013, more than six years later. Thus, the action is time-barred unless an exception or more particularized statute applies.
Joca-Roca appears to concede that its claim is not timely insofar as it is based on a breach of the warranty provision but insists that Mr. Brennan breached the indemnification provision in 2013 and effectively restarted the limitation period. See Pl.'s Opp'n at 8 n.1 ("Joca-Roca asserts a breach of contract claim for Brennan's failure to indemnify Joca-Roca under the [Agreement], not, as Brennan suggests, merely a breach of the representations and warranties"). The parties make much of whether the indemnification provision in the Agreement may serve as a separate breach event for the purposes of Joca-Roca's breach of contract claim. In this case, it may not.
First, under the plain language of the Agreement, Mr. Brennan is obligated to indemnify Joca-Roca for damages stemming from a breach of the Agreement in only three scenarios:
Agreement § 14(B).
For Mr. Brennan to be obligated to indemnify Joca-Roca under the explicit terms of the Agreement, he must first have breached a representation or warranty contained in the Agreement.
Otherwise, a contracting party could bide its time, wait until memories have faded, documents have been lost or destroyed, and witnesses have become unavailable, and then demand indemnification, restarting the six year statute of limitations, a result that undercuts the salutary purposes of the statute of limitations. See Nuccio v. Nuccio, 673 A.2d 1331, 1334 (Me. 1996) (quoting Duddy v. McDonald, 148 Me. 535, 538, 97 A.2d 445 (1953) ("Statutes of limitations are statutes of repose and . . . should be construed strictly in favor of the bar which it was intended to create and not liberally in favor of a promise, acknowledgement or waiver").
Additionally, the only date referenced in the indemnification section of the Agreement is the closing date; the Agreement states that Mr. Brennan will indemnify Joca-Roca for any breach of any representation or warranty "as if such representation or warranty were made on and as of the Closing Date." Agreement § 14(B). The parties' contract language supports the conclusion that the closing, not a later demand for payment based on representations made at the closing, served as a triggering event for claim accrual purposes.
Moreover, to give effect to Joca-Roca's theory would frustrate the Maine Legislature's purpose in enacting the six-year limitation period generally applicable to breach of contract claims. "Statutes of limitation are strictly construed. Their purpose is to provide eventual repose for potential defendants and to avoid the necessity of defending stale claims." Dowling v. Salewski, 2007 ME 78, ¶ 11, 926 A.2d 193 (internal citations and punctuation omitted). If the Court accepted Joca-Roca's proposition, a cause of action for breach would accrue anew each time Joca-Roca demanded payment from Mr. Brennan for costs stemming from alleged breaches of the parties' contract. Again, this would undercut the salutary purposes of the statute of limitations. See Nuccio, 673 A.2d at 1334. The seller in a transaction with an indemnification provision would remain uncertain whether time had extinguished potential liability.
The Court concludes that Joca-Roca has failed to generate a genuine issue of material fact concerning the date the contract was breached. Joca-Roca's breach of contract claim accrued in 2005, not in 2013 when Mr. Brennan refused its indemnification request. Accordingly, the Court concludes that the claim is time-barred and grants Mr. Brennan's motion for summary judgment on Count II.
"Maine common law has long recognized that fraud can toll a statute of limitation." Rared Manchester NH LLC v. Rite Aid of New Hampshire, Inc., 2011 WL 4005304, at *12 (D. Me. Sept. 6, 2011) (citing Choroszy v. Tso, 647 A.2d 803, 807 (Me. 1994)). Having concluded that the six-year limitation period set out in section 752 governs Joca-Roca's breach of contract claim, the Court explores whether another, more particularized, statutory tolling provision applies. See U.S. Bank Nat. Ass'n. v. Adams, 2014 ME 113, ¶ 4, 102 A.3d 774. Joca-Roca has cited no such statute in either its Complaint or its opposition to the current motion.
14 M.R.S § 859.
The Law Court articulated the following standard for demonstrating fraudulent concealment:
Bangor Water Dist., 534 A.2d at 1329 (quoting Alexander v. Gerald E. Morrissey, Inc., 399 A.2d 503, 506 (Vt. 1979)). Here, Joca-Roca has not demonstrated that Mr. Brennan had actual knowledge that his representation in the Agreement was false. If Joca-Roca could show as much, then the Court assumes it would have done so in its arguments regarding the knowledge element of its fraud claim. Instead, it merely argued that Mr. Brennen's knowledge of the falsity "can be inferred from the context." Pl.'s Opp'n at 5. Joca-Roca has failed to put forth sufficient evidence of actual knowledge to satisfy the requirements of section 859 and, even if it could so demonstrate, the summary judgment record is devoid of any mention of concealment or an intent or design to prevent discovery of facts giving rise to Joca-Roca's cause of action. Finally, Joca-Roca has failed to demonstrate that it could not have discovered the existence of its cause of action through due diligence or ordinary prudence before the expiration of the limitation period.
Even viewing the evidence in the light most favorable to Joca-Roca, there is no triable issue on the statute of limitations question because there is not enough evidence for a jury to return a verdict for the nonmoving party. The record contains no evidence showing there is a triable issue as to fraudulent concealment, and Joca-Roca has made no argument that the non-compliant conditions at the Main Facility were inherently unknowable or undiscoverable, which given the presumed discoverability of the existence or absence of a sprinkler system seems wise. The Court concludes that this case presents no exception to the general rule that "mere ignorance of a cause of action does not prevent the statute of limitations from running," Dugan v. Martel, 588 A.2d. 744, 746 (Me. 1991), and grants Mr. Brennan's motion for summary judgment as to Count II of the Complaint.
The Court DENIES Mr. Brennan's motion for summary judgment on Count I, and GRANTS his motion for summary judgment on Count II (ECF No. 71).
SO ORDERED.
To support paragraph 14, Joca-Roca cited portions of the Brennan deposition. PSMF ¶ 14 (citing Brennan Dep. 20-21-21:3 (Attach. 1)). The cited portion of the Brennan deposition relates to whether Mr. Brennan told Joca-Roca about the application for the public water supply as of the date of the Agreement, not the date of the closing. Furthermore, the portion of the Brennan deposition cited by Mr. Brennan confirms that he obtained approval for the public water supply application on November 2, 2005, more than a month before the December 8, 2005 closing. Accordingly, Joca-Roca has failed to support paragraph 14 with a citation to probative record evidence and the Court has struck Joca-Roca's paragraph 14.
The Court reviewed the Opinion Letter, see DSMF Attach. 2 Jan. 17, 2006 Letter to T.D. Banknorth, N.A., at PageID #: 232-34 (ECF No. 69-2), and concludes that it supports Joca-Roca's qualification. Joca-Roca's paragraph 35, which Mr. Brennan admitted, reflects the limitation to the Opinion Letter set forth in Joca-Roca's qualified response to Mr. Brennan's paragraph three. The Court modified that statement of fact accordingly. See PSAMF ¶ 35.
DSMF Attach. 3 Decl. of Kathryn A. Newell, ¶ 4 (ECF No. 69-3) (Newell Decl.). Joca-Roca interposed a qualified response to Mr. Brennan's paragraph 4 because Ms. Newell further declared that she did not determine whether the building complied with state fire code regulations in issuing the Certificate. PRDSMF ¶ 4. Joca-Roca's qualification to Mr. Brennan's paragraph 4 is similar to Mr. Brennan's statement of fact in his own paragraph 6. Compare DSMF ¶ 6 with PRDSMF ¶ 4.
The Court reviewed Ms. Newell's declaration and concludes that it supports Joca-Roca's paragraph 17, Mr. Brennan's qualification of Joca-Roca's paragraph 17, and Mr. Brennan's own paragraph 4. The Court overrules Mr. Brennan's denial of Joca-Roca's paragraph 17 and admits it without modification. However, the Court concludes that the declaration also supports Mr. Brennan's paragraph 4 and Joca-Roca's qualification thereof. Accordingly, the Court modified Mr. Brennan's paragraph 4 to reflect Joca-Roca's qualification. Additionally, because Joca-Roca's qualification of Mr. Brennan's paragraph 4 is included in Mr. Brennan's paragraph 6, the Court admits Mr. Brennan's paragraph 4 without modification.
Finally, Mr. Brennan interposed a qualified response to Joca-Roca's paragraph 17 because the record does not establish who obtained the Certificate after the closing and Joca-Roca's contention that Mr. Brennan obtained the Certificate is conjecture. PSAMF ¶ 17. The Court reviewed the Certificate and determined that it was issued to Stateline Auto. See DSMF Attach. 3 Department of Building Inspection Certificate of Occupancy, Lebanon, Maine, at PageID #: 237 (ECF No. 69-3) (Cert. of Occupancy). As Mr. Brennan testified, Stateline Auto was the entity that received approval for the public water supply. See Brennan Dep. at 19:21-20:20. Mr. Brennan admitted that he submitted that application, see id.; the Court concludes there is evidence in this record that permits characterizing Stateline Auto as Mr. Brennan for the purposes of this Order. Viewing the evidence in the light most favorable to Joca-Roca, the Court concludes that the record supports its statement of fact and overrules Mr. Brennan's qualification of Joca-Roca's paragraph 17 on this issue.
The Court overrules Joca-Roca's objection and admits the statement for two reasons. First, motions to strike statements of fact are generally not allowed, but they may be used to remove a fact from the Court's consideration. See D. ME. LOC. R. 56(e). Second, the Court reviewed Ms. Newell's declaration and concludes that Mr. Brennan's entire statement of fact is supported by the record.
In support of its statement of fact, Joca-Roca cited Mr. Alosa's declaration:
PSAMF Attach. 3 Decl. of Joseph Alosa, ¶ 5 (ECF No. 75-3) (Alosa Decl.). In support of his qualification, Mr. Brennan cited a copy of the lease, which shows an expiration date of December 31, 2011, see DRPSAMF Attach. 4 Real Estate Lease (ECF No. 78-4), and Mr. Alosa's deposition in which he testified:
DRPSAMF Attach. 5 Dep. of Joseph Alosa, at 71:8-71:24 (ECF No. 78-5) (Alosa Dep.).
The Court concludes that the record supports both Joca-Roca's statement and Mr. Brennan's qualification, and that the parties' statements do not conflict. The Court modified Joca-Roca's paragraph 26 slightly to reflect that the written lease probably expired and that Profile Superstore and Joca-Roca now have an informal rental agreement.
Alosa Decl. ¶ 7. In support of his denial, Mr. Brennan cited Mr. Alosa's declaration that he is the owner of both Joca-Roca and Profile Superstore, see id. ¶¶ 1, 4, and David Roy's declaration that he "at the direction of Joseph Alosa, on behalf of Profile, executed an agreement with D.M. Burns Security, Inc. in June 2013 for the installation of a sprinkler system in the Main Facility . . . ." DRPSAMF Attach. 4 Decl. of David Roy, ¶ 4 (ECF No. 75-4) (Roy Decl.).
First, Mr. Brennan is quibbling and his denial is frivolous. Second, the record supports Joca-Roca's statement, and does not support a denial of that statement. The Court overrules Mr. Brennan's objection and admits Joca-Roca's paragraph 27 as written.
The Court interprets "unambiguous contract language according to its plain and commonly accepted meaning." Seashore Performing Arts Ctr., Inc. v. Town of Old Orchard Beach, 676 A.2d 482, 486 (Me. 1996).
Furthermore, to the extent that Joca-Roca cites other cases in support of its argument regarding accrual of its breach of contract claim, each is distinguishable. Peerless did not involve a breach of contract claim, did not discuss timing of accrual of a cause of action, or the tolling of a statute of limitations. See Peerless Div., Lear Siegler, Inc. v. U.S. Special Hydraulic Cylinders, Corp., 1999 ME 189, 742 A.2d 906. Cyr v. Michaud likewise did not involve a claim of indemnification pursuant to a breach of contract. See Cyr v. Michaud, 454 A.2d 1376, 1385 (Me. 1983).
Joca-Roca is correct when it says that Maine law does not limit indemnification claims to circumstances involving third parties, but it fails to show how an indemnification request based on a contractual indemnification provision serves as the date for which a breach of contract claim accrues.
Finally, in its reply, Joca-Roca states that because Joca-Roca's tenant Profile Superstore paid for the sprinkler system in the Main Facility, third-party liability is present in this case because Joca-Roca is "having to pay for those expenses in the form of a rent credit to its tenant." See Pl.'s Opp'n at 11. Other than its own say-so, Joca-Roca offers no authority for its contention. The Court considers this undeveloped proposition waived.
Neither party cited Maine caselaw that discusses the distinction between direct and third-party indemnification claims for the purposes of analyzing the accrual of a breach of contract cause of action, nor could the Court find any. The Court finds the reasoning in the Delaware Chancery Court's opinion helpful, and it supports the Court's conclusion in this case that Joca-Roca's claim accrued at the date of closing and was not tolled. However, the opinion is not controlling here, was issued at the motion to dismiss stage, and relied on an interpretation of the doctrine of inherently unknowable injury, a feature of Delaware state law neither party addressed in their briefs.
Joca-Roca attacks the usefulness of CertainTeed on the basis that a subsequent district court case in Delaware rejected CertainTeed. See Pl.'s Opp'n at 10. That case, JFE Steel Corp. v. ICI Americas, Inc., 797 F. Supp. 2d. 452 (D. Del. 2011), does not deal the fatal blow that Joca-Roca contends it does. Significantly, JFE Steel involved a third-party indemnification claim, and the court determined that the defendant breached the contract when it refused to compensate the plaintiff for payments to a third party. See JFE Steel Corp. at 456-457, 470.
