Katz v. Maffett

Superior Court of Delaware

Katz v. Maffett

DecidedJanuary 9, 2020

DocketN19C-06-114 ALR

StatusPublished

This text of Katz v. Maffett (Katz v. Maffett) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Katz v. Maffett, (Del. Ct. App. 2020).

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Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

BERNARD KATZ, ) ) Plaintiff, ) ) v. ) C.A. No. N19C-06-114 ALR ) SIDNEY MAFFETT, ) ) Defendant. )

Submitted: November 23, 2019 Decided: January 9, 2020

Upon Defendant’s Motion for Summary Judgment GRANTED

ORDER

Upon consideration of Defendant’s motion for summary judgment; the

opposition thereto filed by Plaintiff; the facts, arguments, and authorities set forth

by the parties; the Superior Court Rules of Civil Procedure; statutory and decisional

law; and the entire record in this case, the Court hereby finds as follows:

1. Plaintiff is an individual who controls a limited liability company

(“Buyer Entity”). Defendant is an individual who is the managing member of a

limited liability company (“Seller Entity”). A limited liability company is a legal

entity that is separate and distinct from its members.1

1 See, e.g., Harner v. Westfield Ins. Co., 2018 WL 6721765, at *3–4 (Del. Super. Dec. 12, 2018); Poore v. Fox Hollow Enters., 1994 WL 150872, at *2 (Del. Super. Mar. 29, 1994). 2. Buyer Entity purchased a parcel of real property (“Property”) from

Seller Entity pursuant to a written sale agreement on July 10, 2014 (“Sale”). Plaintiff

executed the sale agreement on behalf of Buyer Entity, and Defendant executed the

sale agreement on behalf of Seller Entity. To fund the purchase, Buyer and Plaintiff

co-signed a purchase money note for $500,000 in favor of Seller Entity.

3. On June 13, 2019, Plaintiff filed this action asserting one claim of

misrepresentation in connection with the Sale. The Complaint alleges that (1)

Defendant sold the Property to Plaintiff, (2) Defendant intentionally concealed rust

build-up on the roof of a warehouse located on the Property to induce Plaintiff to

purchase the Property “as is,” (3) Defendant knew or should have known that the

warehouse was in violation of two sections of the City of Wilmington Building

Code, and (4) Plaintiff would not have purchased the Property had Defendant

disclosed the rust build-up and building code violations to Plaintiff prior to

settlement.

4. Defendant initially filed the instant motion as a motion to dismiss but

because Defendant submitted various supplemental materials with the motion, the

Court converted Defendant’s motion to dismiss into a motion for summary

judgment2 and afforded the parties additional time to present all materials pertinent

to such a motion.

2 See Super. Ct. Civ. R. 12(b). 2 5. The Court may grant summary judgment only where the moving party

can “show that there is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.”3 A genuine issue of material fact

is one that “may reasonably be resolved in favor of either party.”4 The moving party

bears the initial burden of proof and, once that is met, the burden shifts to the non-

moving party to show that a material issue of fact exists.5 At the motion for summary

judgment phase, the Court must view the facts “in the light most favorable to the

non-moving party.”6 Summary judgment is only appropriate if Plaintiff’s claim

lacks evidentiary support such that no reasonable jury could find in Plaintiff’s favor.7

6. Defendant asserts four grounds for granting the motion: (1) Plaintiff

lacks standing to bring his claim because Plaintiff was not the buyer; (2) Plaintiff’s

claim is not properly brought against Defendant because Defendant was not the

seller; (3) the Complaint does not plead misrepresentation with sufficient

3 Super. Ct. Civ. R. 56(c). 4 Moore v. Sizemore, 405 A.2d 679, 680–81 (Del. 1979). 5 Id. 6 Brozka v. Olson, 668 A.2d 1355, 1364 (Del. 1995). 7 See Hecksher v. Fairwinds Baptist Church, Inc., 115 A.3d 1187, 1200–05 (Del. 2015); Edmisten v. Greyhound Lines, Inc., 2012 WL 3264925, at *2 (Del. Aug. 13, 2012). 3 particularity, as is required by Superior Court Rule of Civil Procedure 9(b);8 and (4)

Plaintiff’s claim is barred by the applicable three-year statute of limitations.

7. Plaintiff opposes Defendant’s motion.

8. The Complaint alleges that Plaintiff purchased the Property from

Defendant; however, the written sale agreement states that the transaction occurred

between Buyer Entity and Seller Entity, and Plaintiff has produced no evidence to

the contrary.

9. To succeed in an intentional misrepresentation claim,9 a plaintiff must

prove the following:

(1) the defendant falsely represented or omitted facts that the defendant had a duty to disclose, (2) the defendant knew or believed that the representation was false or made the representation with a reckless indifference to the truth, (3) the defendant intended to induce the plaintiff to act or refrain from acting, (4) the plaintiff acted in justifiable

8 See Super. Ct. Civ. R. 9(b) (“In all averments of fraud, negligence or mistake, the circumstances constituting fraud, negligence or mistake shall be stated with particularity.”). 9 The Court construes Plaintiff’s misrepresentation claim as one for intentional misrepresentation. While the Complaint does not explicitly state that the claim is for intentional misrepresentation, it describes Defendant’s conduct as “intentional.” In addition, “‘[i]t is well-settled Delaware law that the Chancery Court has exclusive jurisdiction over claims of negligence [sic] misrepresentation.’ ‘The one exception to the exclusive jurisdiction of the Chancery Court would be cases where the negligent misrepresentation claim is raised in the context of the Consumer Fraud Act.’” Optical Air Data Sys. v. L-3 Commc’ns Corp., 2019 WL 210543, at *1 (Del. Super. Jan. 14, 2019) (quoting Van Lake v. Sorin CRM USA, Inc., 2013 WL 1087583, at *11 (Del. Super. Feb. 15, 2013)) (alterations omitted). Plaintiff’s misrepresentation claim is not raised under the Consumer Fraud Act and therefore cannot be asserted as a negligent misrepresentation claim in the Superior Court. 4 reliance on the representation, and (5) the plaintiff was injured by its reliance.10

In other words, Plaintiff must prove not only that Defendant made a false

representation to induce Plaintiff to act but also that Plaintiff acted in reliance on

that representation.

10. Plaintiff claims to have purchased the Property in reliance on

Defendant’s alleged misrepresentations. While Plaintiff may have caused Buyer

Entity to purchase the Property, Buyer Entity, not Plaintiff, actually purchased the

Property. Therefore, even if Plaintiff can prove that Defendant falsely represented

the building’s condition and compliance with the Wilmington Building Code,

Plaintiff lacks standing to pursue a claim of intentional misrepresentation.

11. Notwithstanding Plaintiff’s lack of standing, Defendant is entitled to

judgment as a matter of law based on statute of limitations grounds. A three-year

statute of limitations applies to Plaintiff’s misrepresentation claim.11 Assuming

10 DCV Holdings, Inc. v. ConAgra, Inc., 889 A.2d 954, 958 (Del. 2005) (emphasis added). 11 See 10 Del. C. § 8106(a) (“[N]o action based on a promise . . .

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