V.S.H. Realty, Inc. v. Texaco, Inc., 84-1531
Decision Date | 29 April 1985 |
Docket Number | No. 84-1531,84-1531 |
Citation | 757 F.2d 411 |
Parties | , 15 Envtl. L. Rep. 20,420 V.S.H. REALTY, INC., Plaintiff, Appellant, v. TEXACO, INC., Defendant, Appellee. |
Court | U.S. Court of Appeals — First Circuit |
Allan van Gestel, Boston, Mass., with whom Allan J. Sullivan and Goodwin, Procter & Hoar, Boston, Mass., were on brief for plaintiff, appellant.
Robert M. Gault, Boston, Mass., with whom Bruce F. Metge, Washington, D.C., and Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Boston, Mass., were on brief for defendant, appellee.
Before COFFIN and BREYER, Circuit Judges, and WYZANSKI, * Senior District Judge.
Appellant V.S.H. Realty, Inc. (V.S.H.) claims that appellee Texaco, Inc. (Texaco) must return a $280,000 down payment V.S.H. paid on a piece of real estate in Chelsea, Massachusetts. V.S.H. claims that Texaco breached the sales agreement, fraudulently induced it into agreeing to the purchase, and violated a Massachusetts statute prohibiting unfair and deceptive acts in business dealings. The district court dismissed the case under Fed.R.Civ.P. 12(b)(6) for failure to state a claim, and denied V.S.H.'s subsequent motion to vacate judgment and to permit an amendment of the complaint. We think the court was correct in dismissing the breach of contract claim but erring in dismissing the common law and statutory deception counts.
On August 11, 1983, V.S.H. offered to purchase from Texaco a used bulk storage petroleum facility for $2.8 million. Texaco accepted the offer on September 7, and V.S.H. made a deposit of $280,000 to be applied against the purchase price. The offer to purchase required Texaco to convey the property "free and clear of all liens, encumbrances, tenancies and restrictions", except for those set forth in the offer. Attached to the offer to purchase was an acknowledgement signed by Texaco stating that, to the best of the company's knowledge and belief, it had not received "any notice, demand, or communication from any local county, state or federal department or agency regarding modifications or improvements to the facility or any part thereof." The offer also included a disclosure by Texaco that fuel oils had "migrated under [Texaco's] garage building across Marginal Street from the terminal [and that] the fuel oil underground as a result of heavy rains or high tides, seeps into the boiler room of the garage building." V.S.H., for its part, expressly stated in the offer that it had inspected the property, and accepted it "as is" without any representation on the part of Texaco as to its condition.
Problems arose when V.S.H. representatives visited the property in mid-October 1983, approximately a month after Texaco accepted the offer to purchase, and observed oil seeping from the ground at the western end of the property. During a subsequent visit, V.S.H. representatives discovered another oil seepage at the eastern end of the property. V.S.H. then notified Texaco that it would not go through with the purchase unless Texaco corrected the oil problem, provided V.S.H. with full indemnification, or reduced the purchase price. When Texaco refused, V.S.H. demanded return of its down payment. Texaco again refused, and V.S.H. filed this lawsuit on January 10, 1984.
In its three-count complaint, V.S.H. alleges first that Texaco violated Mass.Gen.Laws Ann. ch. 93A, Sec. 2, which prohibits unfair and deceptive acts and practices, basing that assertion largely on Texaco's failure to disclose the seeping oil, and its failure to disclose an investigation of the property by the U.S. Coast Guard. V.S.H.'s second count claims relief for breach of contract, based on Texaco's alleged inability to convey the property at the specified time free of all liens, encumbrances and restrictions. V.S.H.'s contract theory is that the penalties associated with the oil seepage problem constitute an encumbrance on the property. Finally, V.S.H. charges Texaco with common law misrepresentation and deceit for failing to disclose the oil seepage problems and Coast Guard investigation "in the face of repeated inquiries by V.S.H. about the subject."
At the conclusion of a hearing on Texaco's motion to dismiss all three counts, the district court announced without explanation that the contract claims should be dismissed. It also dismissed the common law fraud count at that time, stating that V.S.H. had failed to allege the required affirmative misrepresentation or implicit misrepresentation by partial and ambiguous statements. It deferred decision on the chapter 93A count, and in a latter written decision dismissed that count on two grounds: an Attorney General's regulation Our approach to reviewing a dismissal of a complaint at such a preliminary stage of proceedings is necessarily informed by the teaching that we must consider "not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims", Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). With that view of our task in mind, we disagree with the action taken by the district court with respect to the counts based on chapter 93A and common law misrepresentation. V.S.H.'s original complaint may well have been vague in some allegations, but we believe that it presented "enough information to 'outline the elements of the pleaders' claim' ", Kadar Corp. v. Milbury, 549 F.2d 230, 233 (1st Cir.1977) (quoting Wright & Miller, Federal Practice and Procedure Sec. 1357). 1 V.S.H. is therefore "entitled to be heard more fully than is possible on a motion to dismiss a complaint." Scheuer, id. 416 U.S. at 250, 94 S.Ct. at 1693. We affirm the dismissal of the count based on breach of contract. We shall first discuss the counts based on common law misrepresentation and chapter 93A, ending with the count based on breach of contract.
upon which V.S.H. relied was not intended to apply in a transaction between two sophisticated business entities, when one party agrees to take the property "as is"; and Texaco had no duty to disclose the oil seepages to V.S.H., and so its failure to do so could not have violated chapter 93A.
V.S.H. bases its count for common law misrepresentation on Texaco's partial disclosure of oil seepages, the deliberate concealment of other leaks and the failure to acknowledge the U.S. Coast Guard investigation of the spills. The failure to disclose is actionable, V.S.H. argues, because it repeatedly asked Texaco about oil leaks on the premises, yet Texaco knowingly made only partial disclosure of them. V.S.H. alleges that Texaco's fragmentary disclosures induced it to enter into the contract, and caused it damage in the form of the $280,000 down payment which it otherwise would not have made.
What we face here, however, are allegations of partial or incomplete statements that may by their incompleteness be actionable. Restatement of Torts (Second), Secs. 529, 551(2)(b). There is much case law in Massachusetts supporting the proposition that a party who discloses partial information that may be misleading has a duty to reveal all the material facts he knows to avoid deceiving the other party.
This duty to avoid misrepresentations is so strong that the deceived party is not charged with failing to discover the truth. Snyder v. Sperry & Hutchinson Co., 368 Mass. 433, 446, 333 N.E.2d 421 (1975) ().
We believe the allegations in V.S.H.'s complaint regarding partial and ambiguous statements satisfy the requirements for stating a claim of misrepresentation. V.S.H. has alleged that it made "repeated inquiries" about oil leaks on the property, to which Texaco failed to fully respond. In addition, Texaco stated in an acknowledgement attached to the contract that it had "not received any notice, demand, or communication from any local county,...
To continue reading
Request your trial-
Farmers Ins. Exch. v. Morris
...Alabama law). Accord, AgriStor Leasing v. Farrow, 826 F.2d 732, 736 n. 6 (8th Cir.1987) (applying Iowa law) ; V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 418 (1st Cir.1985) (applying Massachusetts law) ; King v. Horizon Corp., 701 F.2d 1313, 1318 (10th Cir.1983) (applying Colorado la......
-
Logan Equipment Corp. v. Simon Aerials, Inc.
...that may be misleading has a duty to reveal all the material facts he knows to avoid deceiving the other party." V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411 (1st Cir.1985). Finally, as noted above, statements of opinion or judgment relating to future events are generally not actionabl......
-
Richey v. Patrick
...tanks); Sheehy v. Lipton Indus., Inc., 24 Mass.App. 188, 507 N.E.2d 781 (1987) (hazardous waste problems); V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411 (1st Cir.1985) (applying Massachusetts law to the problem of seeping oil at the east and west ends of the property); Gopher Oil Co., I......
-
VMark Software, Inc. v. EMC Corp.
...n. 5, 563 N.E.2d 188; Sheehy v. Lipton Indus., Inc., 24 Mass.App.Ct. 188, 193-194, 507 N.E.2d 781 (1987); V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 417-418 (1st Cir.1985). In any event, it is the law of Massachusetts that even sophisticated businessmen must deal with each other hon......
-
CHAPTER 8 ENVIRONMENTAL ISSUES INVOLVED IN OIL & GAS ACQUISITIONS AND DIVESTITURES
...[210] 955 F.2d 519 (8th Cir. 1992). [211] See also: Sheehy v. Lipton, 507 N.E.2d 781 (Mass. App. 1987); V.S.H. Realty v. Texaco, Inc., 757 F.2d 411 (1st Cir. 1985). [212] See: American Cyanamid Co. v. Sparto, 267 F.2d 425 (5th Cir. 1959); Borel v. Fiberboard Paper Products Corp., 493 F.2d 1......
-
CHAPTER 6 APPORTIONING ENVIRONMENTAL LIABILITIES IN REAL ESTATE TRANSACTIONS1
...right of recovery against person liable for release of hazardous material); and misrepresentation, V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 415 (1st Cir. 1985) (seller's disclosure of one oil leak but not another states claim for misrepresentation in spite of buyer's accepting the......
-
Half-truths: protecting mistaken inferences by investors and others.
...of nondisclosure appears to be dwindling, caused in part by the half-truth doctrine). (3.) Compare V.S.H. Realty Inc. v. Texaco Inc., 757 F.2d 411,415 (1st Cir. 1985) (rejecting a motion to dismiss a half-truth claim under Massachusetts law when seller disclosed some leaks in a storage faci......