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Gregory J. Star, et al. v. Lawrence J. Rosenthal

August 9, 2012


The opinion of the court was delivered by: Dalzell, J.


Plaintiffs Gregory J. and Luba Star (collectively, the "Stars") bring suit against defendants Lawrence J. and Phyllis B. Rosenthal*fn1 (collectively, the "Rosenthals"), asserting several Pennsylvania state-law claims arising out of the Stars' purchase of a house from the Rosenthals.

The Stars allege that this home proved subject to water infiltration. They further claim that though the Rosenthals knew the house had this defect, the Rosenthals nonetheless made false representations to the Stars in order to induce them to buy the house and later to refrain from bringing suit.

Specifically, the Stars allege six claims*fn2 against the Rosenthals: (1) violation of Pennsylvania's Real Estate Seller Disclosure Law ("RESDL"), 68 Pa. Cons. Stat. Ann. §§ 7301, et seq.; (2) fraudulent misrepresentation; (3) violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 Pa. Stat. §§ 201-1, et seq.; (4) negligent misrepresentation; (5) breach of contract; and (6) unjust enrichment. The Stars plead their fifth and sixth counts in the alternative to the other claims they present.

The Rosenthals have filed a motion to dismiss all claims in the complaint, to which the Stars have responded. For the reasons we discuss below, we will grant the Rosenthals' motion to dismiss in part, as to Count I of the complaint, and will direct them to file an answer to the remaining allegations of the complaint.

I. Factual Background

In ruling on a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), we must "'accept all factual allegations in the complaint as true and give the pleader the benefit of all reasonable inferences that can be fairly drawn therefrom.'" Ordonez v. Yost, 289 Fed. Appx. 553, 554 (3d Cir. 2008) (quoting Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993)). We may "'consider only allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim,'" Brown v. Daniels, 128 Fed. Appx. 910, 913 (3d Cir. 2005) (quoting Lum v. Bank of America, 361 F.3d 217, 222 n.3 (3d Cir. 2004)), where a document forms the basis of a claim if it is "integral to or explicitly relied upon in the complaint." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)) (emphasis and internal quotation marks omitted). As our Court of Appeals has explained, this means that we may "consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document." Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Since the Stars' complaint relies in part on certain documents, we will review both the allegations of the complaint and the features of those documents that are material to the Rosenthals' motion to dismiss.

According to the Stars, they are husband and wife living at 1708 Brittany Drive in Ambler, Pennsylvania, while the Rosenthals are husband and wife living in West Palm Beach, Florida. Pls.' Compl. ¶¶ 2-3. The Stars aver that on August 21, 2008 they entered into an Agreement of Sale (the "Agreement") with the Rosenthals to purchase the Rosenthals' residential property (the "house") located at 1708 Brittany Drive in Ambler. The Rosenthals had lived in the house continuously from its construction in 1987 until its sale to the Stars. Id. ¶¶ 4-6.

The Agreement provided that "[t]he following are part of this Agreement if checked: . . . Seller's Property Disclosure [checked]." Ex. A to Pls.' Compl. ("Agreement") § 34; see also Pls.' Compl. ¶ 7. The Seller's Property Disclosure Statement (the "Disclosure") that the Rosenthals provided to the Stars included the following questions: (1) "Are you aware of any water leakage, accumulation, or dampness within the basement or crawl space?," Ex. B to Pls.' Compl. ("Disclosure") § 4(b); (2) "Are you aware of any fire, storm, water, or ice damage to the property?," id. § 6(f); (3) "Do you know of any past or present drainage or flooding problems affecting the property?," id. § 16(b)(2); (4) "Are you aware of any insurance claims filed relating to the property?," id. § 19(g); and (5) "Are you aware of any material defects to the property, dwelling, or fixtures which are not disclosed elsewhere on this form?" Id. § 19(h). The Rosenthals checked "No" in response to each of these questions. Id. §§ 4(b), 6(f), 16(b)(2), 19(g)-(h); see also Pls.' Compl. ¶¶ 8, 10-13. The Disclosure also included the question, "Are you aware of any past or present water leakage in the house or other structures?", and in response the Rosenthals checked "Yes" and wrote "upstairs hall bathroom windows leaked, replaced in 1993." Disclosure § 6(a); see also Pls.' Compl. ¶ 9.

The Stars further allege that during a September 3, 2008 home inspection they attended with an (unnamed) inspector they had hired, Lawrence Rosenthal "specifically denied any water infiltration in the basement of the House." Pls.' Compl. ¶ 19. During the same inspection, when Lawrence heard the inspector say that "any signs of water penetration in the basement occurred while the House was being built and before it was fully enclosed," he did not correct this statement. Id. ¶ 20.

According to the Stars, in the summer of 2009 "the area experienced heavy directional rain and wind which pounded against the front of the House," causing "water to literally flow over the front wall of the basement of the House," Id. ¶ 15. During each subsequent storm involving heavy directional rain, water flowed in and through the living room windows, in and around the front door, and over and through the front wall of the basement of the house. Id. ¶¶ 16-17. Nonetheless, during an October, 2009 visit by the Rosenthals at which the Stars recounted their recent experience of basement water infiltration, the Rosenthals denied having had any prior water infiltration. Id. ¶ 18.

The Stars claim that in the summer of 2011 they discovered files in the house's basement -- titled "Lib. Mut. --Claim -- 90-91" and "LM/Cutler Lawsuit 91-92" -- that the Rosenthals had left behind. Id. ¶¶ 21-22. The Stars allege that these files demonstrate that the Rosenthals experienced significant and persistent water infiltration throughout the house and that they filed an insurance claim and lawsuit related to this infiltration. Id. ¶ 23. The Stars also aver that during that same summer they found photographs dated between 1990 and 1992 that the Rosenthals had taken of extensive water infiltration through the windows, front door, and basement of the house that mirrored the infiltration the Stars experienced. Id. ¶ 25.

The Stars allege that each of the Rosenthals' answers on the Disclosure was false, and that the Rosenthals knew them to be false at the time they made them.*fn3 Id. ¶¶ 14, 26-30. The Stars claim that had they "been told the truth about the extensive and persistent water infiltration to which the House had been subjected for more than 20 years, they would not have purchased the House." Id. ¶ 31. They thus suggest that they have suffered damages that include: (1) the purchase price of the house; (2) all improvements to the house made since its purchase; (3) all other costs associated with purchasing and maintaining the house; (4) all costs associated with remediation efforts aimed at stemming the flow of water into the house; (5) diminution in the value of the house; (6) "mental anguish, anxiety, and emotional distress"; and (7) "such other further injuries and damages as will be demonstrated through discovery of this matter." Id. ¶ 35.

Notably, the Agreement contains the following release language at § 27:

Buyer releases, quit claims and forever discharges SELLER, ALL BROKERS, their LICENSEES, EMPLOYEES and any OFFICER or PARTNER of any one of them and any other PERSON, FIRM or CORPORATION who may be liable by or through them, from any and all claims, losses or demands, including, but not limited to, personal injury and property damage and all of the consequences thereof, whether known or not, which may arise from the presence of termites or other wood-boring insects, radon, lead-based paint hazards, mold, fungi or indoor air quality, environmental hazards, any defects in the individual on-lot sewage disposal system or deficiencies in the on-site water service system, or any defects or conditions on the Property. Should Seller be in default under the terms of this Agreement, or in violation of any seller disclosure law or regulation, this release does not deprive Buyer of any right to pursue any remedies that may be available under law or equity. This release will survive settlement.

II. Analysis

The Supreme Court has explained that "only a complaint that states a plausible claim for relief survives a motion to dismiss" pursuant to Rule 12(b)(6), leading a reviewing court to engage in a "context-specific" inquiry that "requires [it] to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). To survive this inquiry, a pleading may not simply offer "labels and conclusions," Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S. Ct. at 1949.

Rather, a plaintiff must provide "enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]" of each cause of action. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (internal quotation marks omitted). Moreover, a defendant may raise an affirmative defense "on a Rule 12(b)(6) motion if the predicate establishing the defense is apparent from the face of the complaint." Bethel v. Jendoco Constr'n Corp., 570 F.2d 1168, 1174 n.10 (3d Cir. 1978). Thus, a complaint may fail to survive a motion to dismiss either because (1) the plaintiff has failed to supply well-pled allegations in support of one or more elements of a cause of action, or (2) the allegations of the complaint themselves establish that the plaintiff cannot prevail.

We will take up each of the Stars' claims in turn.

A. Count I: Violation Of Pennsylvania's RESDL

The Stars aver that "[p]ursuant to 68 Pa. Con. Stat. Ann. § 7301(11), Defendants are liable to Plaintiffs for any and all actual damages suffered as a result of Defendants' violation of the Real Estate Seller's Disclosure Law, and the damages alleged in this complaint were proximately caused by Defendants' intentional concealment of known defects." Pls.' Compl. ¶ 43. The Rosenthals respond that "the Plaintiffs failed to file their RESDL claim within the applicable two-year statute of limitations and, in fact, missed the statutory deadline by more than a ...

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