Opinion
Civil Action No. 1:20-cv-87
2022-03-11
John HARRELL and Dawn Harrell, Plaintiffs, v. Douglas DELUCA, Defendant.
Lee-Ann Christine Brown, Bradley Arant Boult Cummings LLP, Washington, DC, Thomas Ryan Lynch, Asmar, Schor & McKenna, PLLC, Washington, DC, for Plaintiff John E. Harrell. Thomas Ryan Lynch, Asmar, Schor & McKenna, PLLC, Washington, DC, for Plaintiff Dawn D. Harrell. Eugene A. Burcher, Michael John Coughlin, Walsh Colucci Lubeley & Walsh PC, Prince William, VA, Malcolm William Thomas, Bean Kinney & Korman PC, Arlington, VA, for Defendant.
Lee-Ann Christine Brown, Bradley Arant Boult Cummings LLP, Washington, DC, Thomas Ryan Lynch, Asmar, Schor & McKenna, PLLC, Washington, DC, for Plaintiff John E. Harrell.
Thomas Ryan Lynch, Asmar, Schor & McKenna, PLLC, Washington, DC, for Plaintiff Dawn D. Harrell.
Eugene A. Burcher, Michael John Coughlin, Walsh Colucci Lubeley & Walsh PC, Prince William, VA, Malcolm William Thomas, Bean Kinney & Korman PC, Arlington, VA, for Defendant.
ORDER
Liam O'Grady, United States District Judge
Introduction
This matter comes before the Court on the Parties’ Cross Motions for Summary Judgment. Dkt. 83; Dkt. 111. The matters have been fully briefed by the Parties and are now ripe for consideration.
Factual Background
The Plaintiffs in this civil action are two individuals and residents of the District of Columbia, John and Dawn Harrell. Dkt. 36-1 at 1. The Plaintiffs entered into a series of agreements to purchase a property at 6122 Lee Highway Arlington, Virginia ("the Property"). Dkt. 84 at 4. The Property was owned by the Defendant, Douglas Deluca, who is a resident of Virginia. Id. at 4. Deluca is a licensed contractor in the state of Virginia, and he owns a contracting company that is also licensed in Virginia. Id. at 3-4. In 2018, Deluca began work to refurbish a residence on the Property. Id. at 4.
In 2018, the Harrells began to make plans to relocate to the Washington D.C. area. Id. at 5. The Harrells learned about the Property through a real estate agent, Brendan Muha. Id. After some initial exchanges, the Parties entered into a sales contract on April 3, 2019 for the Harrells to purchase the home from Deluca while he completed renovations on the Property's unfinished residence. Dkt. 90 at 4; Dkt. 84 at 5-6; see Dkt. 84-7. Over the course of the next few months, the Harrells requested extensive modifications to the building plans that are reflected in addendums to the Sales Contracts. Dkt. 62 at 1-2. On July 3, 2019, the Harrells closed on the house, were conveyed title to the Property, and made payment of $4,557,490.28 to Deluca. Id. at 2. On the same day, the Parties entered into a Post-Closing Construction Agreement that reflected new construction work to be done and incomplete work to be finished by Deluca on the Property. Dkt. 84-20.
Sometime during the following months, the relationship between the Parties began to deteriorate. In the beginning of August 2019, John Harrell instructed Deluca to cease construction work on the Property. Dkt. 84 at 11-12. Deluca was then allowed to resume work on or around August 23, 2019. Id. at 12 Deluca asserts that he kept the Harrells apprised of the status of his work on a ‘punch-list’ that was created by the Harrells. Id. On December 2, 2019, the Harrells informed Deluca through counsel that they intended to rescind all the sales agreements between the Parties. Dkt. 62 at 2. The proposed rescission was rejected by Deluca. Id. The construction work was never completed and the Harrells never moved into the residence. Id.
The Harrells then filed the current civil action on June 27, 2020. Dkt. 1. The civil action states a cause of action for fraud in the inducement, constructive fraud, breach of contract, and violations of the Virginia Consumer Protection Act ("VCPA"). Dkt. 36-1 at 30-35. Deluca has moved for partial summary judgment on the claim for breach of contract and dismissal of the other three counts of the Amended Complaint. Dkt. 84 at 30. The Harrells have moved for partial summary judgment on their breach of contract claims and Deluca's affirmative defense of set-off. Dkt. 112 at 1.
Legal Standard
A party may move for summary judgment by identifying either a claim or defense, or a part of a claim or defense, on which summary judgment is sought. Federal Rule of Civil Procedure 56. Summary judgment will be granted "if the movant shows that there is no genuine dispute as to any material fact." Id. A party opposing a motion for summary judgment must respond with specific facts, supported by proper documentary evidence, showing that a genuine dispute of material fact exists, and that summary judgment should not be granted in favor of the moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Fourth Circuit has held, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Bouchat v. Baltimore Ravens Football Club, Inc. , 346 F.3d 514, 519 (4th Cir. 2003) (quoting Anderson , 477 U.S. at 247-248, 106 S.Ct. 2505 ). "It is the responsibility of the party seeking summary judgment to inform the court of the basis for its motion, and to identify the parts of the record which it believes demonstrate the absence of a genuine issue of material fact." Hyatt v. Avco. Fin. Servs. Mgmt. Co. , 2000 WL 33912656, at *4, 2000 U.S. Dist. Lexis 13645, at 11 (E.D. Va. March 2, 2000) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ) aff'd, 22 F. App'x 81 (4th Cir. 2000).
Discussion
Deluca argues that summary judgment is appropriate based on Virginia's economic loss rule, the novation of the sales agreement, or the doctrine of caveat emptor. Id. at *1, 2000 U.S. Dist. Lexis 13645, at 1. Deluca also argues that the Plaintiffs have not established evidence that any of the alleged misrepresentations made by Deluca are sufficient to support a claim for fraud. Id. at *1, 2000 U.S. Dist. Lexis 13645, at 1-2. The Harrells have motioned for a summary judgment finding that Deluca undisputedly breached the contract and that Deluca's claim for set-off based on expenses incurred should be dismissed due to a lack of evidence. Dkt. 112 at 1.
1. The Virginia Economic Loss Rule
Deluca argues that he is not liable for tort claims because he does not have a common law duty to the Harrells as a hired contractor. Dkt. 84 at 22-23. Deluca's argument relies on the established principle of Virginia law that dissatisfaction with the benefits of an agreement does not create a basis for a civil action based in tort. See Filak v. George , 267 Va. 612, 618, 594 S.E.2d 610 (2004) ("Thus, when a plaintiff alleges and proves nothing more than disappointed economic expectations, the law of contracts, not the law of torts, provides the remedy for such economic losses.") Deluca asserts that the economic loss rule completely bars the Harrells from raising their claims for fraudulent inducement and constructive fraud.
Under Virginia law, "A false representation of a material fact" that induces the formation of a contract "is always ground for recission of the contract." Abi-Najm v. Concord Condominium, LLC , 280 Va. 350, 362, 699 S.E.2d 483 (2010) (The Virginia Supreme Court found the economic loss rule did not apply when the Defendant allegedly had knowledge of a false material fact before a contract was formed) (quoting George Robberecht Seafood, Inc. v. Maitland Bros. Co. , 220 Va. 109, 111-112, 255 S.E.2d 682 (1979) ). The Virginia Supreme Court has held that fraud can be asserted when the circumstance of the fraud indicates "the misrepresentation of present pre-existing facts, and cannot be predicated on unfulfilled promises or statements as to future events." Id. (quoting Lloyd v. Smith , 150 Va. 132, 145, 142 S.E. 363 (1928) ). The Virginia Supreme Court has also held that fraud claims can be sustained when the fraud induces the performance of a contract, such as the payment by one party to another. Devine v. Buki , 289 Va. 162, 175, 767 S.E.2d 459 (2015) ("Therefore, unlike fraudulent inducement to contract, where the concealment must necessarily precede the formation of the contract, the concealment at issue in a fraudulent inducement to perform claim may occur either before or after the contract has been entered into.")
As discussed below, there are genuine factual disputes regarding some of the representations that were allegedly made by Deluca to the Harrells. If Deluca had the intention not to perform the promises made or was concealing an existing material fact, this could allow a factfinder to hold Deluca liable for fraudulent inducement or fraudulent concealment. Abj-Najm , 280 Va. at 362, 699 S.E.2d 483 ("An action in tort for deceit and fraud may sometimes be predicated on promises which are made with a present intention not to perform them ... The gist of fraud in such a case is not the breach of the agreement to perform, but the fraudulent intent."); SuperValu, Inc. v. Johnson , 276 Va. 356, 666 S.E.2d 335 (2008) ("Nevertheless, if a defendant makes a promise that, when made, he has no intention of performing, that promise is considered a misrepresentation of present fact and may form the basis for a claim of actual fraud.") (citations omitted). The Harrells have presented sufficient evidence in the record before the Court to show that a genuine issue of fact presently exists regarding Deluca's intent to perform and Deluca's prior knowledge of existing facts, the concealment or misrepresentation of which may have induced the Harrells to enter the sales agreement or complete performance under the sales agreement. Therefore, summary judgment cannot be granted based on the application of the economic loss rule.
2. The Post Closing Agreement
Deluca has argued that the claims for fraud should be dismissed because the Harrells entered into the Post-Closing Construction Agreement (Dkt. 84-21) when they currently had knowledge that the previous representations made by Deluca were false. Dkt. 84 at 23. Deluca cites to the Fifth Circuit for the proposition that a party with knowledge of a claim for fraud cannot raise that claim when they enter into a subsequent agreement. Id. at 23-24 (citing Mitsubishi Aircraft International, Inc. v. Brady , 780 F.2d 1199, 1201 (5th Cir. 1986) (applying Texas law). This principle has been echoed in the holdings of the Fourth Circuit. See Holder v. Maaco Enterprises , 644 F.2d 310, 313 (4th Cir. 1981) (There was no implied waiver of the right to sue for fraud by signing a new contract, the trier of fact is required to determine if the plaintiff knew they had the right to sue for fraud before the claim can be dismissed). The Harrells have pointed to evidence that demonstrates that they were not aware of the falsity of the alleged representations before entering into the Post-Construction Closing Agreement. See e.g. Dkt. 90 at 11 (Explaining evidence which demonstrates that the Harrells believed tile for the master bathroom was already ordered). A genuine dispute of fact exists regarding the knowledge the Harrells had at the time of entering into the Post-Closing Construction Agreement. Summary judgment cannot be granted for Deluca on the fraud claims based on the argument that the subsequent agreement was signed with knowledge of the alleged fraud.
Deluca also argues that the Post-Closing Construction agreement is a novation of the existing sales agreement. Dkt. 84 at 29-30. Deluca's memorandum states that "the plain meaning of the Post-Closing Construction Agreement ("PCCA") reveals that it is a novation of any remaining obligations under the Sales Agreement after the July 3, 2019, closing." Id. at 30. Deluca points to no term or clause in the contract in support of this proposition. The Court has already found as a matter of law that the Sales Agreement was collateral to the Post-Closing Construction Agreement and the two contracts did not merge. Dkt. 11 at 2 (citing Abj-Najm , 280 Va. at 361, 699 S.E.2d 483 ). The Court explicitly held that "the Construction Agreement did not extinguish, discharge, or contradict the preexisting Sales Contract terms ..." Id. Deluca has not produced any fact that shows the parties had a "clear and definite intention" to novate the prior sales agreement. Honeywell, Inc. v. Elliott , 213 Va. 86, 89-90, 189 S.E.2d 331 (1972). Summary judgment cannot be granted for Deluca on the breach of contract claims because there was no novation of the prior agreements as a matter of law.
3. Caveat emptor
Deluca argues that the doctrine of caveat emptor should bar the Harrell's claims for fraudulent inducement and constructive fraud. Dkt. 84 at 21. Generally, in Virginia "the burden is upon a purchaser of real property to discover defects." Van Deusen v. Snead , 247 Va. 324, 329, 441 S.E.2d 207 (1994) However, this doctrine of caveat emptor will not apply when a defendant's action diverts the examination of a plaintiff or otherwise induces the plaintiff to complete a purchase. Id. (quoting Armentrout v. French , 220 Va. 458, 466, 258 S.E.2d 519 (1979) ; Horner v. Ahern , 207 Va. 860, 864, 153 S.E.2d 216 (1967) ). The Harrells have produced--through exhibits and deposition testimony-evidence that supports a genuine factual dispute as to whether Deluca's actions diverted the investigation into, and discovery of, defects by the Harrells. See e.g. Dkt. 90 at 11 (discussing misrepresentations about the status of orders for construction materials). As such, summary judgment cannot be granted based on the application of the doctrine of caveat emptor.
4. The alleged misrepresentations
Deluca argues that the Harrells have not produced sufficient evidence to support claims that fraudulent misrepresentations were ever made. Dkt. 84 at 1-2. A claim for common law fraud in Virginia requires: "(1) a false representation, (2) of a material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, and (6) damages resulting from that reliance." Bank of Montreal v. Signet Bank , 193 F.3d 818, 826 (4th Cir. 1999) (applying Virginia law) (citing Van Deusen , 247 Va. at 327, 441 S.E.2d 207 ). Statements which are indefinite or merely state an opinion do not constitute fraud, these are statements that are "vague and indefinite" or "loose, conjectural or exaggerated." Tate v. Colony House Builders , 257 Va. 78, 82, 508 S.E.2d 597 (1999) (quoting Saxby v. Southern Land Co. , 109 Va. 196, 198, 63 S.E. 423 (1909) ). Typically, "commendatory statements, trade talk, or puffing" are the type of statements that are considered opinion under Virginia law. Lambert v. Downtown Garage , 262 Va. 707, 713, 553 S.E.2d 714 (2001) (citations omitted). The alleged fraudulent statements must additionally be related to "present or pre-existing fact, and cannot ordinarily be predicated on unfulfilled promises or statements as to future events." Mortarino v. Consultant Eng'g Servs. , 251 Va. 289, 467 S.E.2d 778 (1996) (quoting Patrick v. Summers , 235 Va. 452, 454, 369 S.E.2d 162 (1988) ). An exception to the requirement that a statement must regard a present existing fact is when the claim for fraud is predicated on the defendant's intention not to perform the promise made. Merenstein v. St. Paul Fire & Marine Ins. Co. , 142 Fed. Appx. 136, 139 (4th Cir. 2005) (unpublished) (quoting Lloyd v. Smith , 150 Va. 132, 145-146, 142 S.E. 363 (1928) ) ("It has been said that the state of the promisor's mind at the time he makes the promise is a fact, and one which is exclusively within the promisor's own knowledge; so that, if he represents his state of mind--that it, his intention--as being one thing when in fact his purpose is just the contrary, he misrepresents a then existing fact.") The Harrells argue that there are five instances of misrepresentations that support their claims. Dkt. 90 at 2. The Harrells argue that these misrepresentations were all made regarding material facts that existed at the time, or that these acts were representative of Deluca's intention not to perform the action promised. The five alleged misrepresentations are that: (1) the square footage of the residence was 6500 square feet; (2) the work was performed with licensed contractors; (3) the roof was original slate; (4) the custom marble tiling for the bathroom floor was ordered; and (5) the work was performed with the required construction permits. Id.
In Tate , the Virginia Supreme Court found that statements (about a completed house) such as: "the house was free from structural defects", "it was constructed in a workmanlike manner" and was "fit for habitation" were sufficient to support a claim for constructive fraud because they were made regarding the "present quality or character of the property." 257 Va. at 83-84, 508 S.E.2d 597. On the other hand, statements that the plaintiffs would enjoy owning the house and that the house wouldn't require significant work were unactionable statements of opinion conditioned on future events. Id. at 84, 508 S.E.2d 597.
a. The square footage of the residence
The Harrells assert that various misrepresentations were made regarding the proposed square footage of the house. Dkt. 90 at 8. The Harrells have given deposition testimony at various times that, based on their recollection, these representations ranged from 6,500 to 8,000 square feet. See e.g. Dkt. 84-2 at 25; Dkt. 84-3 at 15. The Harrells argue that these statements were false based on the appraisals they had conducted for the house on April 26, 2019 and June 10, 2019. Dkt. 84-9 and Dkt. 84-16.
The Parties dispute what statements were made by the Defendant. The testimony of the Plaintiffs indicates that the statements were made with qualifying remarks such as the estimated square footage was "approximate." Dkt. 84-2 at 25. In addition, the Parties dispute whether the statements were even false. The Defendant argues that the square footage in the appraisals does not include the measurements of the outside porch and garage, and that if these omitted areas are included in the measurement the house would measure close to or above 6,500 feet. Dkt. 99 at 4-5.
The conflicting record demonstrates a genuine dispute of material fact as to the statements made regarding the represented square footage of the house and the actual square footage of the house. Summary judgment cannot be granted on this issue.
b. The licensure status of the contractors
The Harrells argue that Deluca represented all the subcontractors performing work on the Property were "licensed to perform contracting work in Virginia." Dkt. 90 at 19. The Harrells assert that this misrepresentation was material to entering the contract but do not point to any evidence to support this claim. Id. at 20 (Referring to the statement of facts within the Plaintiffs’ own memorandum). Instead, the Harrells argue that Virginia law requires all subcontractors to be licensed. Id. (citing Va. Code. § 54.1-1115 ). The Harrells then argue that Deluca did not comply with this law because certain subcontractors who worked for Deluca do not have the proper licenses according to public databases of Virginia contracting licenses. Id. at 19.
Deluca disputes whether this statement was ever made to the Harrells and argues that even if was, the subcontractors were licensed as required. Dkt. 97 at 31.
The Harrells misrepresent Virginia law when they argue that it is a crime to use unlicensed subcontractors. Id. at 20. In Virginia, "Individuals shall not be subject to licensure as a tradesman when working under the supervision of a tradesman who is licensed in the specialty for which work is being performed." Va. Code Ann. § 54.1-1129(A). It is undisputed that Deluca and his contracting company have a proper contracting license in the state of Virginia. See Dkt. 84-1 at 7, 9. There is no evidence in the record that supports the argument that Deluca engaged in a criminal activity through his use of subcontractors.
Even looking at the evidence in the light most favorable to the Harrells, the statement that the subcontractors were ‘licensed’ is vague and indefinite. The evidence does not show that Deluca made a representation that certain subcontractors had a specific license (i.e. ‘this subcontractor has an electrician's license’). The evidence does not show that the companies hired as subcontractors lacked any required licenses. In addition, the Harrells have not made any argument or pointed to any evidence on how damages resulted from reliance on the alleged misrepresentation. The Harrells claim that the fact that the subcontractors were unlicensed is "dispositive," but the Harrells have not put any facts into the record or pointed to a legal explanation that supports what their argument is dispositive of. Dkt. 90 at 20.
There are no facts before the Court upon which a reasonable factfinder could find that the alleged statements regarding the licensing status of contractors was material to the Plaintiffs or specific enough to sustain a claim of fraud. Therefore, Summary Judgment is granted on this partial issue and the Court finds that this statement regarding licensing of subcontractors cannot sustain a claim for fraud.
c. The slate roof
In the Amended Complaint, the Harrells assert that "Several times prior to April 3, 2019, Deluca represented that the Main house roof was the original slate roof and committed to ensuring that the original slate roof was properly refurbished." Dkt. 36-1 at 23 ¶ 81. This allegation was admitted in Deluca's Answer. Dkt. 39 at 11 ¶ 81. The Harrells argue that the roof on the house is a "cheap knockoff" and not the original slate that had been promised by Deluca. Dkt. 90 at 21. The Parties have posited conflicting interpretations of a series of text messages between the Parties concerning this roof and this conflict demonstrates a genuine dispute of a material fact exists as to this issue. See Dkt. 99 at 9. The record supports conflicting interpretations of what statement was made and what ‘original’ slate is, or should, be. Based on the factual conflict within the record, summary judgment cannot be granted as to whether the statements regarding the slate roof could sustain a claim for fraud.
The Harrells support this proposition regarding the material used for the roof with the declaration of a person who they refer to as an expert witness. See Dkt. 90-8; Dkt. 112 at 13 (Declaration of Matthew Furlong). At this time, Deluca has not pointed to evidence in the record regarding the actual composition of the residence's roof or disputed Furlong's conclusions.
d. The marble tiling
The Harrells argue that Deluca informed them he had ordered customized bathroom tile, while at the time Deluca never intended to complete construction on the house. Dkt. 90 at 25. The Harrells argue that the record reflects that tile could not have been ordered at the time the statement was made based on the timing of Deluca's payment for the tile and the time when tile was selected by Dawn Harrell. Id. Deluca argues that credit card statements and text messages reflect that the bathroom tile had been ordered and that he intended to complete construction on the bathroom. Dkt. 99 at 12. The claims regarding the master bathroom tile could demonstrate a material fact that may support a claim for constructive fraud. The conflicting interpretations of the evidence indicate that a genuine factual dispute exists and therefore it would not be appropriate to grant summary judgment regarding the master bathroom tile.
e. The status of building permits for the property
The Harrells argue that Deluca represented that construction on the Property was performed with all required building permits. Dkt. 90 at 17. The Harrells argue (based on their own declarations) that this representation induced them to enter into the Post-Closing Construction Agreement. Id. at 17-18. The Harrells argue that these statements are material because, without the permits, the Property could not pass a final inspection and be occupied by residents. Id. at 4. Deluca represents that the record does not show any evidence that he knew statements regarding the permits were false. A review of the depositions and permit applications however indicates that the record contains sufficient circumstantial evidence from which a reasonable factfinder could conclude that the misrepresentation about permits was knowingly made. A reasonable factfinder could review the record (in the light most favorable to the Harrells) and conclude that the statement was made to fraudulently induce the Harrells to sign the Post-Closing Construction Agreement. At this time, a genuine dispute of material fact exists regarding whether the statement about the status of construction permits could support a claim for fraud. Accordingly, summary judgment cannot be decided regarding this statement.
5. The Virginia Consumer Protection Act claims
Deluca has also moved for summary judgment on the claims brought under the Virginia Consumer Protection Act. The Virginia Consumer Protection Act prohibits "misrepresenting that goods or services are of a particular standard, quality, grade, style or model." Va. Code. Ann. § 59.1-200. As discussed above, a genuine factual dispute exists as to whether Deluca misrepresented the quality and style of the roof on the main house. See Abj-Najm , 280 Va. at 355, 699 S.E.2d 483 (misrepresentations about the quality of flooring in a condominium was sufficient to survive the defendant's demurrer on claims brought under the Virginia Consumer Protection Act). Because a genuine factual dispute exists regarding a good that is clearly covered under the statute, summary judgment cannot be granted for Deluca on the Virginia Consumer Protection Act claims.
6. The Harrells’ claims for breach of contract
The Harrells have moved for partial summary judgment asserting that there is no genuine dispute that Deluca breached his contractual duties. Dkt. 112 at 1. The Harrells argue summary judgment is appropriate because it is undisputed that Deluca did not perform as required under the multiple agreements between the Parties. Id. at 10. The Harrells also argue that it is undisputed that a certain amount of work on the Property is defective. Id. at 13.
The Harrells argue that the Post-Closing Construction Agreement and Sales Agreements created enforceable obligations for Deluca to complete items listed in exhibits attached to those agreements. Id. at 9-10. The Harrells believe that the required construction was not completed on time and work that was completed was defective; therefore, the obligations in the agreements have not been met. Id. at 12. In contrast, Deluca challenges whether there were ever exhibits attached to the Post-Closing Construction Agreement and also challenges that the work was defective. Dkt. 130 at 8. The Harrells frame their argument based on the testimony of Deluca's expert witness. The Harrells assert that it is undisputed that there are at least 62 "building code violations at the Property." This is a mischaracterization of the testimony of Deluca's expert witness. That witness, Angus Macdonald, wrote in his report that he created an "action list" of 64 items that purportedly required remedial work. Dkt. 84-8 at 2. This list was based on items identified by other witnesses. Id. In his report, Macdonald described his own characterization of those items and if those items would require any additional work. Id. Mr. Macdonald's report does not state that all the items are building code violations and some of the items on the list are characterized as not requiring repair work. Id. at 3-6.
This disagreement between the Parties and their experts shows that a genuine dispute of material fact exists regarding the performance of the contract. There is evidence, viewed in the light most favorable to Deluca, from which a reasonable factfinder could find that Deluca did not breach the contract. Evidence regarding the performance of the agreements is also relevant to several of the affirmative defenses that have been raised by Deluca. For these reasons, the Harrells’ Motion for Summary Judgment is denied as to the breach of contract.
7. Delcua's claims for setoff
The Harrells have also moved for summary judgment on the affirmative defense of set-off that is plead in Deluca's Answer to the Amended Complaint. Dkt. 112 at 14. As discussed in the Court's previous rulings, Deluca will not be able to argue this affirmative defense with evidence that cannot be properly authenticated and entered into the record. However, in the record before the Court there is at least one invoice--that reflects the cost of a water boiler--that Deluca argues supports his affirmative defense. Dkt. 112-7. The Harrells contend that this invoice reflects the cost associated with work that was detailed in the Sales Agreement. Dkt. 112 at 15. Deluca on the other hand believes that the water heating system identified in the Sales Agreement had already been completed. Dkt. 130 at 18-19. Deluca argues that the Harrells later requested a new boiler after the final agreement was completed and that now this invoice reflects a new cost not contemplated in the original agreements. Id. This conflict in interpretation of the record shows a genuine dispute of material fact exists regarding the affirmative defense.
Evidence that cannot be authenticated as reflecting costs incurred at a relevant time and showing that the costs are linked to the Property will not be admitted into evidence.
When looking at the facts in the light most favorable to Deluca, it is apparent that there is at least a small amount of evidence supporting the affirmative defense of set-off. Summary judgment cannot be granted for the Harrells on the affirmative defense.
Conclusion
The Defendant's Motion for Summary Judgment (Dkt. 83) is GRANTED IN PART as to the factual issue that the alleged statements regarding the licensing status of contractors cannot support a finding of fraud. As to the remaining issues and claims identified in the Defendant's Motion for Summary Judgment, the Motion (Dkt. 83) is DENIED. The Plaintiffs’ Motion for Summary Judgment is DENIED. Dkt. 111.
It is so ORDERED.