Opinion
Civil Action CV-23-192
12-15-2023
ALRIG USA ACQUISITIONS, Plaintiff, v. MBD REALTY LLC, Defendant.
Plaintiff-Adam Shub, Esq. Defendant-James Monteleone, Esq.
Plaintiff-Adam Shub, Esq.
Defendant-James Monteleone, Esq.
ORDER ON MOTION TO DISMISS
Deborah P. Cashman Justice, Superior Court.
Before the Court is Defendant MBD Realty LLC's ("MBD") M. R. Civ. P. 12(b)(6) Motion to Dismiss Alrig USA Acquisitions's ("Alrig") two-count complaint. Alrig seeks return of its deposit in the amount of $170,000 following its termination of a purchase and sale contract for commercial real estate due to the City of Portland's planned redevelopment of the neighborhood where the property is located. For the reasons discussed below, MBD's motion is GRANTED.
I. Facts
The following facts are drawn from the complaint and are taken as true at this stage of the litigation.
Alrig is a commercial real estate developer from Michigan that sought to purchase commercial property located at 1091-1107 Congress Street ("the property") in Portland, Maine from MBD. (Compl. ¶¶ 1, 5-6, 9.) The property is located in Portland's "Libbytown" neighborhood and near northbound Interstate 295 (Exit 5) and is the site of a closed Denny's restaurant. (Compl. ¶¶ 7-8.)
In February of 2022, Alrig entered a purchase and sale agreement ("the contract") with MBD to buy the property for a purchase price of $2.35 million. (Compl. ¶ 9-10; Ex. A.) Alrig paid the $50,000 deposit called for in the contract. (Compl. ¶¶ 10-11.) On April 25, 2022, Alrig exercised its right to extend the inspection period as defined in the contract. (Compl. ¶ 12.) In connection with the extension of the inspection period, Alrig paid an additional $10,000 toward the deposit for a total of $60,000. (Comp. ¶ 13.)
On May 25, 2022, Alrig and MBD executed a first amendment to the contract ("May 25th Amendment"). (Compl. ¶ 14.) The May 25th Amendment enlarged the inspection period to June 25, 2022. (Compl. ¶ 15.) Alrig paid an additional $10,000 toward the deposit pursuant to the May 25th Amendment for a total of $70,000. (Compl. ¶ 16.)
On June 24, 2022, Alrig and MBD executed a second amendment to the contract ("June 24th Amendment"). (Compl. ¶ 17.) Pursuant to the June 24th Amendment, Alrig paid an additional $100,000 toward the deposit for a total deposit of $170,000. (Compl. ¶ 18.)
Prior to and leading up to the execution of the contract, MBD, including through its real estate broker, was aware that the City of Portland intended to redevelop the Libbytown neighborhood. (Compl. ¶ 19.) The intended redevelopment included construction of a roundabout at the property and adjacent to Interstate 295 North, which would amount to a taking of the property. (Compl. ¶¶ 20-21.) Neither MBD nor its agents disclosed information about the Libbytown redevelopment or the roundabout before the parties entered into the contract or the May 25th or June 24th Amendments, (Compl. ¶ 23-24.)
In August of 2022, Alrig had a pre-application meeting with the City of Portland, during which Alrig learned about the Libbytown redevelopment and the roundabout for the first time. (Compl. ¶¶ 25-26.) On September 9, 2022, Alrig issued a notice of termination of the contract and requested return of the deposit, citing section 16 of the contract related to casualty and condemnation. (Compl. ¶¶ 27-28.) MBD refused to return the deposit. (Compl. 29.)
II. Standard of Review
A motion to dismiss pursuant to M.R. Civ. P. 12(b)(6) tests the legal sufficiency of the complaint. See Berounsky v. Oceanside Rubbish, Inc., 2022 ME 3, ¶ 7, 266 A.3d 284. The Court assumes all facts alleged in the complaint are true and examines the complaint "'in the light most favorable to the plaintiff to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory."' Oakes v. Town of Richmond, 2023 ME 65, ¶ 15,A.3d_(quoting Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, ¶ 7, 843 A.2d 43). "'A dismissal should only occur when it appears beyond doubt that a plaintiff is entitled to no relief under any set of facts that [they] might prove in support of [their] claim.'" Id. (quoting Moody, 2004 ME 20, ¶ 7, 843 A.2d 43).
III. Discussion
MBD moves to dismiss both counts of Alrig's two-count complaint for Breach of Contract (Count I) and Fraud (Count II), The Court considers each in turn.
A. Breach of Contract
MBD argues that Count I for Breach of Contract must be dismissed because the June 24th Amendment provided that the deposit and any extension payments would be nonrefundable except in the event of a default by the seller under section 12(b) of the contract. Because Alrig alleges that it terminated the contract pursuant to section 16, MBD argues that it cannot have breached the contract, as a matter of law, by refusing to return the deposit.
As an initial matter, Alrig attached only the original contract as an exhibit to its complaint, but it did not attach the May 25th or June 24th Amendments, despite referencing them in the complaint. MBD attached the June 24th Amendment to its motion to dismiss as an exhibit. Because the June 24th Amendment is referenced in the complaint, central to Alrig's claim, and its authenticity has not been challenged, the amendment has merged into the pleadings and considering the amendment does not convert the motion to dismiss into a motion for summary judgment. Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, ¶ 10, 843 A.2d 43.
The Court construes contracts "in accordance with the intention of the parties, which is to be ascertained from an examination of the whole instrument. All parts and clauses must be considered together that it may be seen if and how one clause is explained, modified, limited or controlled by the others." Am. Prot. Ins. Co. v. Acadia Ins. Co., 2003 ME 6, ¶ 11, 814 A.2d 989 (quoting Peerless Ins. Co. v. Brennon, 564 A.2d 383, 384-85 (Me. 1989)). "Ultimately, we seek to give effect to the plain meaning of the words used in the contract and avoid rendering any part meaningless." Dow v. Billing, 2020 ME 10, ¶ 14, 224 A.3d 244, Contract language is ambiguous if it is "reasonably susceptible to different interpretations." Acadia Ins. Co. v. Buck Const. Co., 2000 ME 154, ¶ 8, 756 A.2d 515. If the language of the contract is ambiguous, "the interpretation of the ambiguous language becomes a question for the factfinder to resolve by taking extrinsic evidence." Id.
The portions of the contract relevant to this dispute are section 16 of the original purchase and sale agreement and the June 24th Amendment. The parties do not dispute that section 16 allows Alrig, as the purchaser, to terminate the contract if the property "shall be subject to a taking by eminent domain." Section 16 further provides that Alrig would be entitled to an immediate refund of the deposit and extension payment if it terminated under section 16. The only dispute is whether the June 24th Amendment rendered the deposit nonrefundable in the event of Alrig's termination under section 16. The June 24th Amendment provides, in relevant part:
Purchaser and Seller desire to amend the Agreement pursuant to the terms of this Amendment to: (i) waive Purchaser's due diligence and title review contingencies; (ii) provide for two additional earnest money deposits; (iii) deem the Deposit nonrefundable; (iv)
extend the Closing Date; and (v) such other changes as set forth herein., . . Purchaser and Seller hereby agree as follows:
1. Purchaser's Due Diligence and Title Review. Purchaser hereby waives its title contingency contained in Section 5(b) of the Agreement and its due diligence contingency contained in Section 6 of the Agreement.
2. Payment of Additional Deposit; Deposits Nonrefundable. . . .
the Deposit, including any Extension Payments, the First Additional Deposit and the Second Additional Deposit, shall be deemed nonrefundable (but applicable against the Purchase Price at Closing), except in the event of a default by Seller pursuant to Section 12(b) of the Agreement.(Mot. Dismiss Pl.'s Compl., Ex. 1.)
Alrig argues that the scope of the June 24th Amendment is limited to waiving the due diligence and title review contingencies in the original contract and the language about making the deposit nonrefundable is related only to the waiver of the due diligence and title review contingencies, or alternatively the contract as amended is at least ambiguous on this point and therefore becomes a question of fact. Alrig's argued interpreted of the June 24th Amendment is belied by the plain language and structure of the amendment. Both the recitals and the actual terms of the amendment treat the waiver of due diligence and title review as a separate term from the deposit's nonrefundable character. The language of the amendment is not reasonably susceptible to Alrig's tortured reading limiting the scope of the amendment to waiver of due diligence and title review contingencies. The June 24th Amendment plainly and unambiguously establishes that the deposit(s) paid by Alrig are nonrefundable except in the event of a default by MBD pursuant so section 12(b) of the original contract. Because Alrig does not allege that MBD defaulted under section 12(b), the allegation that MBD has not returned the deposit cannot, as a matter of law, constitute a breach of the contract. Accordingly, Count I of the complaint for Breach of Contract is DISMISSED.
B. Fraud
MBD argues that Count II of the complaint alleging Fraud must be dismissed because MBD had no legal or contractual duty to disclose its prior knowledge of the neighborhood redevelopment project that affected the property. In the alternative, MBD argues that Alrig's count of Fraud should be dismissed because Alrig failed to plead fraud with sufficient particularity under M.R. Civ. P. 9(b). Alrig argues that its complaint states a claim for fraudulent concealment because MBD had a legal duty to disclose its knowledge of the City's eminent domain plans.
"(T]he elements of fraudulent concealment are '(1) a failure to disclose; (2) a material fact; (3) where a legal or equitable duty to disclose exists; (4) with the intention of inducing another to act or to refrain from acting in reliance on the non-disclosure; and (5) which is in fact relied upon to the aggrieved party's detriment.'" In re Boardman, 2017 ME 131, ¶ 9, 166 A.3d 106 (quoting Picker v. Roman Catholic Bishop of Portland, 2009 ME 67, ¶ 30, 974 A.2d 286). "Where there is no affirmative misrepresentation by the defendant, in order to prove fraud a plaintiff must demonstrate an active concealment of the truth or a special relationship that imposes a duty to disclose on the defendant." Kezer v. Mark. Stimson Assocs., 1999 ME 184, ¶ 23, 742 A.2d 898.
Here, Alrig's claim of fraudulent concealment fails because Alrig has not alleged active concealment of the City's neighborhood redevelopment plans and although alleged, there was no legal or equitable duty for MBD to disclose its knowledge. See Pacheo v. Libby O'Brien Kingsley & Champion, LLC, 2022 ME 63, ¶ 6, 288 A,3d 398 (courts are not bound to accept the complaint's legal conclusions on a motion to dismiss). ¶I]t is not fraud for one party to say nothing respecting any particular aspect of the subject property for sale where no confidential or fiduciary relation exists and where no false statement or acts to mislead the other are made." Eaton v. Sontag, 387 A.2d 33, 38 (Me. 1978). The hallmarks of a confidential relationship "'are the actual placing of trust or confidence in fact by one party in another and a great disparity of position and influence between the parties to the relation.'" Brae Asset Fund, LLP v. Adam, 661 A,2d 1137, 1140 (Me. 1995) (quoting Diversified Foods, Inc. v. First Nat'l Bank of Boston, 605 A.2d 609, 614 (Me. 1992)). Such hallmarks are not alleged by Alrig, nor has Alrig alleged that a fiduciary relationship existed between the parties. Accordingly, Count II of Alrig's complaint for fraud must be DISMISSED. The Court does not reach whether Alrig plead fraud with sufficient particularity under M.R. Civ. P. 9(b).
IV. Order
The entry is: Alrig's two-count complaint for Breach of Contract and Fraud against MBD is DISMISSED. The clerk may enter this Order on the docket by reference pursuant to M.R. Civ. P. 79(a). SO ORDERED. Deborah P. Cashman Justice, Superior Court