Nieves v. Insight Building Co., LLC

• Court: Superior Court of Delaware
• Decided: May 19, 2021
• Docket: N20C-11-103 FWW
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

ANTHONY NIEVES and KRISTEN ) CUIFFO, ) ) Plaintiffs, ) ) v. ) C.A. No. N20C-11-103 FWW ) INSIGHT BUILDING CO., LLC, ) d/b/a INSIGHT HOMES, ) 36 BUILDERS, INC. d/b/a INSIGHT ) HOMES, INC., INSIGHT HOMES, ) INC., and INDIAN MISSION ) INVESTMENTS, LLC, ) ) Defendants. )

Submitted: February 19, 2021 Decided: May 19, 2021

Upon Defendant Insight Building Co., LLC, d/b/a Insight Homes, 36 Builders, Inc., d/b/a Insight Homes, Inc. and Insight Homes, Inc.’s Motion to Dismiss DENIED.

ORDER

Nicholas G. Kondraschow, Esquire, & William J. Rhodunda, Jr., Esquire, Rhodunda, Williams & Kondraschow, Brandywine Plaza West, 1521 Concord Pike, Suite 205, Wilmington, DE 19803, Attorneys for Defendants Insight Building Co., LLC, 36 Builders, Inc., and Insight Homes, Inc.

Julia Klein, Esquire, Klein LLC, 225 West 14th Street, Suite 100, Wilmington, DE 19801, Attorney for Plaintiffs Anthony Nieves and Kristen Cuiffo.

WHARTON, J. This 19th day of May 2021, upon consideration of the Motion to Dismiss of

Insight Building Co., LLC, d/b/a/ Insight Homes, 36 Builders, Inc., d/b/a Insight

Homes, Inc. and Insight Homes, Inc. (collectively, “Insight Defendants”),1 the

Opposition of Plaintiffs Anthony Nieves and Kristen Cuiffo (collectively, the

“Plaintiffs”),2 and the record in this case, it appears to the Court that:

1. Before the Court is the Insight Defendants’ Motion to Dismiss

Plaintiffs’ First Amended Complaint (“FAC”) or, alternatively, to dismiss only

Count V, Fraudulent Concealment and Misrepresentation, and Count X, Civil

Conspiracy. This action arises from the Defendants’ alleged faulty construction of

Plaintiffs’ home and their failure to provide adequate stormwater management and

drainage at Stonewater Creek, a housing development in Sussex County.3 The FAC

lists four defendants: the three Insight Defendants and Indian Mission Investments,

LLC (“IMI”).4

2. Plaintiffs allege that Defendants’ contractual breaches and intentional

negligence resulted in structural problems, not only in Plaintiffs’ home, but also in

the surrounding area and neighborhood.5 Specifically, Plaintiffs allege that the

1 Insight Defs.’ Mot. to Dismiss, D.I. 12. 2 Pls.’ Resp. to Mot. to Dismiss, D.I. 20. 3 FAC, D.I. 2. 4 Id. The docket does not show a return of service of the FAC on IMI. 5 Id. at 2. 2 Insight Defendants’ negligence resulted in myriad structural problems, including a

chronically flooded crawlspace, crooked and structurally unsound walls, an impaired

heating and cooling system, peeling shingles, and warped siding.6 This alleged

negligence has resulted in water soaking into walls throughout the house, which has

caused mold and roaches to appear.7 The Insight Defendants’ alleged negligence

has also caused moisture problems, such as flooding and standing water throughout

Plaintiffs’ property. Additionally, the moisture problems have caused excess water

to build up and become a breeding ground for mosquitoes and frogs.8 Plaintiffs

assert that all Defendants allegedly conspired to sell lots and homes to individuals,

including Plaintiffs, despite Defendants’ knowledge of the existing problems with

stormwater management and concomitant damage to health and property.9

3. Before filing this action in the Superior Court, Plaintiffs and others not

plaintiffs here sought injunctive relief and damages for negligence, breach of

fiduciary duty, breach of contract and warranty, and fraud from the Defendants here

and others in the Court of Chancery.10 Vice Chancellor Glasscock granted a motion

to dismiss two equitable claims, which included dismissing certain defendants, and

6 Id. 7 Id. 8 Id. at 3. 9 Id. at 3-4. 10 Nieves, et al. v. Insight Building Co, LLC, et al. 2020 WL 4463425 (Del. Ch. Aug. 4, 2020). 3 deferred decision as to the remaining counts and defendants.11 The Vice Chancellor

directed Plaintiffs to inform him whether they wished to proceed in equity and for

him to decide the remainder of the motions or to transfer the matter to the Superior

Court.12 Plaintiffs opted to transfer their claims, at least initially.13 The Vice

Chancellor ordered the claims transferred to the Superior Court, “provided that

Plaintiffs file an election to transfer and otherwise comply with the requirements set

out in 10 Del. C. § 1902.”14

4. Plaintiffs’ FAC brings ten counts against Defendants. The FAC

includes all the claims for damages brought in the Court of Chancery plus several

additional claims.15 Relevant to this motion are Counts V and X. Count V -

Fraudulent Concealment and Misrepresentation - alleges that Defendants

deliberately concealed and misrepresented material facts about the home and

surrounding property, including drainage and flooding problems, faulty crawlspace

construction, and the 30-foot buffer behind their home.16 Count X - Civil Conspiracy

11 Id. at 11. (“Judgment on the motions to dismiss Counts I-III against Indian Mission and Insight, as well as judgment on the motion to dismiss alias Count X against Insight is deferred.”). 12 Id. 13 Insight Defs’ Mot. to Dismiss, Ex. C, D.I. 12. 14 Id., Ex. D. 15 See, Nieves, et al. v. Insight Building Co., LLC, et al., Del. Ch. C.A. 2019-0454- SG, First Amended Complaint, D.I. 30. 16 FAC at 36-38, D.I. 2. 4 – alleges that Defendants acted in concert to sell lots at Stormwater Creek while

intentionally failing to disclose the issues with flooding and stormwater

management.17

5. On February 1, 2021, the Insight Defendants moved to dismiss

Plaintiffs’ claims.18 They assert that Plaintiffs’ claims fail because they filed their

initial complaint 65 days after Vice Chancellor Glasscock’s Order, which is five

days after the requirements of 10 Del. C. § 1902.19 Additionally, the Insight

Defendants allege that Plaintiffs filed a substantially amended complaint, with

praecipe and summons, 31 days after the initial complaint and 96 days after Vice

Chancellor Glasscock’s Order.20 The Insight Defendants argue that this failure to

comply with the Order and § 1902 with respect to both the Complaint and FAC

should result in Plaintiffs’ action being dismissed.21 Alternatively, barring dismissal

of the FAC in its entirety, the Insight Defendants move to dismiss Plaintiffs’ claims

of fraudulent concealment and misrepresentation (Count V) and civil conspiracy

(Count X).22 Specifically, they allege that the fraud and conspiracy claims should

17 Id. at 44. 18 Insight Defs.’ Mot. to Dismiss, D.I. 12. 19 Id. 20 Id. 21 Id. 22 Id. at 4. 5 be dismissed because Plaintiffs failed to allege specificity.23 The Insight Defendants

argue that Plaintiffs do not allege that Defendants knew any alleged statements were

false, or what Defendants knew or how they knew it.24 Further, the Insight

Defendants assert that any alleged statements by Defendants concerning future

flooding cannot form the basis for a fraud claim.25 Because Plaintiffs’ claim for

fraudulent concealment and misrepresentation should be dismissed, and since the

civil conspiracy claims are based on fraud and misrepresentation, they contend the

civil conspiracy count must be dismissed as well.26

6. Plaintiffs oppose the motion, arguing that the Insight Defendants failed

to set forth one of the seven legally recognized grounds of dismissal under Superior

Court Civil Rule 12(b).27 Plaintiffs assert that they did not fail to comply with Vice

Chancellor Glasscock’s Order, as they were not required to transfer the Court of

Chancery matter pursuant to § 1902 in order to bring their claims in this court.28

Plaintiffs assert that they had the ability to transfer their claims under § 1902, but

instead simply chose to file an entirely new complaint in the Superior Court.29 Next,

23 Id. at 4-5. 24 Id. 25 Id. at 6. 26 Id. 27 Pl.’s Resp. to Mot. to Dismiss, D.I. 20. 28 Id. at 3-5. 29 Id. at 4. 6 Plaintiffs argue that the FAC alleges specific statements of present facts sufficient

to allow the fraud claim to proceed.30 Specifically, Plaintiffs assert that Defendants’

statements and representations concerning “flooding problems at Stonewater Creek”

and the “30-foot buffer behind [Plaintiffs’] house” are material past and present

statements that are sufficient for plausible fraud and concealment claims, as well as

civil conspiracy.31

7. A motion to dismiss for failure to state a claim pursuant to Superior

Court Rule 12(b)(6) will not be granted if the “plaintiff may recover under any

reasonably conceivable set of circumstances susceptible of proof under the

complaint.”32 The Court’s review is limited to well-plead allegations in the

complaint.33 In ruling on a motion under Rule 12(b)(6), the Court “must draw all

reasonable factual inferences in favor of the party opposing the motion.”34 Dismissal

is appropriate “only if it appears with reasonable certainty that the plaintiff could not

prove any set of facts that would entitle him to relief.”35 The pleading standards

governing a motion to dismiss in Delaware are minimal.36 Delaware is a notice-

30 Id. at 5. 31 Id. 5-6. 32 Browne v. Robb, 583 A.2d 949, 950 (Del. 1990). 33 Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005). 34 Id. 35 Id. 36 See, Central Mort. Co. v. Morgan Stanley Mort. Capital Holdings, LLC, 27 A.3d 531, 536 (Del. 2011). 7 pleading jurisdiction, and a complaint need only “give general notice as to the nature

of the claim asserted against defendant in order to avoid dismissal for failure to state

a claim.”37

8. Superior Court Civil Rule 9(b) requires that “[i]n all averments of fraud

or mistake, the circumstances constituting fraud or mistake shall be stated with

particularity.”38 The particularity pleading standard requires a party to plead “the

time, place and contents of the false representations.”39 However, “[m]alice, intent,

knowledge, and other condition of a person may be averred generally.”40 The

requirement that fraud be pleaded with particularity “serves to discourage the

initiation of suits brought solely for their nuisance, value, and safeguards potential

defendants from frivolous accusations of moral turpitude.”41 In order to survive a

motion to dismiss a fraud claim, the party asserting fraud must allege that: (1) the

accused party falsely represented a material fact or omitted facts that they had a duty

to disclose; (2) the accused party knew that the representation was false or made

with a reckless indifference to the truth; (3) the accused party intended to induce the

37 Nye v. Univ. of Del., No. 02C-12-065, 2003 WL 22176412, at *3 (Del. Super. Ct. Sept. 17, 2003); see also Super. Ct. Civ. R. 8(a)(1). 38 Super. Ct. Civ. R. 9(b). 39 ITW Glob. Invs. Inc. v. Am. Indus. Partners Capital Fund IV, L.P., No. N14C- 10-236, 2015 WL 3970908, at *5 (Del. Super. Ct. June 24, 2015). 40 Super Ct. Civ. R. 9(b). 41 Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1208 (Del. 1993). 8 party asserting the fraud action to act or refrain from action; (4) the party asserting

the fraud acted in justifiable reliance on the representation; and (5) the party asserting

the fraud was injured by its reliance on the accused party’s representation.42

9. The first issue is whether the FAC should be dismissed for failure to

comply with § 1902. It should not. Plaintiffs were not required to transfer the claims

under § 1902. That statute is intended as a remedial measure to prevent cases from

being precluded solely due to being brought in the wrong court. 43 Therefore, any

election to transfer is the choice of the affected party, not a distinct requirement for

the underlying action to proceed anew in another court.44 Further, as noted by

Plaintiffs, there are no statute of limitations or laches issues present. Thus, giving

preclusive effect to § 1902 here would have the unintended and unwarranted result

of shortening the otherwise applicable statute of limitations. Plaintiffs had the ability

to bring this action in the Superior Court any time before the statute of limitations

ran. Finally, to the extent there should be any ramifications from the Plaintiffs’

decision not to follow the § 1902 procedure, and by implication, the Vice

Chancellor’s Order, those ramifications should be felt in the Court of Chancery, and

42 ITW Glob. Invs. Inc., 2015 WL 3970908, at *5. 43 See, Gregorovich v. E.I. du Pont de Nemours, 602 F. Supp. 2d 511 (Del. 2009); Carney v. Qualls, 514 A.2d 1126 (Del. 1986). 44 Id. 9 not here.45 Therefore, Insight Defendants’ motion to dismiss the amended complaint

is DENIED.

10. The second issue is whether Plaintiffs’ claim for fraudulent

concealment and misrepresentation (Count V) should be dismissed. Even

considering the heightened pleading requirements necessary to bring a fraud claim,

the Court declines to dismiss that count. Here, the FAC alleges that the Insight

Defendants represented there was a 30-foot buffer behind Plaintiffs’ home they

could purchase for an extra $15,000 premium.46 Plaintiffs purchased the buffer,

based on Insight Defendants’ representation, only to learn it was owned by a separate

entity, Baywood LLC.47 Further, Plaintiffs allege that Defendants’ present

statements about the home’s construction and surroundings, specifically pertaining

to the crawlspace and flooding, drainage, and grading issues, were fraudulently

concealed and intentionally misrepresented by Defendants.48 Allegedly, Defendants

assured Plaintiffs as to the quality and nature of their property, going so far as to

45 It appears that the Court of Chancery case remains open in the docket. It also appears that there is another open matter in the Court of Chancery between the parties. From the public redacted complaint, the Court infers that the Plaintiffs are seeking a declaratory judgment that an agreement between them and the Insight Defendants is void, or in the alternative, they are seeking recission of the agreement. See, Nieves, et al. v. Insight Building Co, LLC, et al, Del. Ch. C. A. 2019-0368-SG, D.I. 6. 46 FAC at 10, D.I. 2. 47 Id. at 38. 48 Id. 10 represent to Plaintiffs that the crawlspace would be moisture free, the property was

not currently in an area prone to flooding, and the property would be graded such

that no runoff or standing water occurred on the property. Each of Defendants

representations were allegedly false, and Plaintiffs have plead with sufficient

particularity and specificity to meet the heightened pleading standards of a fraud

claim. Further, since the basis for the civil conspiracy claim (count X) relies on the

underlying facts of the fraud claim (count V), which survived the motion to dismiss,

it follows that the civil conspiracy claim will not be dismissed. Accordingly,

Defendant Insights’ Motion to Dismiss Counts X and V is DENIED.

THEREFORE, Defendant Insights’ Motion to Dismiss is DENIED.

IT IS SO ORDERED.

/s/ Ferris W. Wharton, J. Ferris W. Wharton, J.