Edlow v. RBW, LLC

• Decision Date: 08 August 2012
• Docket Number: No. 10–1746.,10–1746.
• Citation: 688 F.3d 26
• Parties: Kenneth EDLOW, Plaintiff, Appellant, v. RBW, LLC, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

688 F.3d 26

Kenneth EDLOW, Plaintiff, Appellant,

v.RBW, LLC, Defendant, Appellee.

No. 10–1746.

United States Court of Appeals,First Circuit.

Heard Feb. 8, 2011.

Decided Aug. 8, 2012.

Diane Rubin, with whom Jeffrey J. Pyle, Joshua A. Lewin and Prince, Lobel, Glovsky & Tye LLP were on brief, for appellant.

Richard D. Batchelder, Jr., with whom William J. Dunn and Ropes & Gray were on brief, for appellee.

Before LIPEZ, Circuit Judge, SOUTER,^* Associate Justice, and HOWARD, Circuit Judge.

HOWARD, Circuit Judge.

This action, removed from Massachusetts Superior Court, involves residential condominium units in a development along Boston's Battery Wharf. Plaintiff Kenneth Edlow appeals the 12(b)(6) dismissal of his suit against the developer RBW, LLC, in which he sought to rescind his purchase of a condominium unit, to recoup his deposits on a second unit, and to recover damages. Mr. Edlow also appeals the district court's denial of his motion to amend his complaint.

I.

As presented in the complaint and documents incorporated therein, the facts alleged are as follows.¹ In the fall of 2004, Edlow entered into three nearly identical purchase and sale (“p & s”) agreements with RBW for the purchase of three residential condominium units in RBW's Battery Wharf Development project. The Master Deed and Condominium Documents explained that the project was a luxury development consisting of a Residential Unit (which included Edlow's units at issue here), a Commercial Unit, and a Hotel Unit (the “Hotel”). At the time that the p & s agreements were executed, it was anticipated that the Regent Hotel group would operate the Hotel as the “Regent Boston,” and the residential unit occupantswould have privileged access to the Hotel's “first-rate” amenities and concierge services. According to the marketing materials that Edlow received from RBW, the Regent Boston was to offer an 18,000 square foot Guerlain spa, over 5,000 square feet of meeting space, and a signature restaurant by Michelin chef Guy Martin. The hotel services were to include 24–hour concierge service and an executive business center.

Edlow's closings were scheduled to take place by June 2007, with prices set at $1,800,000 for the first unit and $3,200,000 for each of the other two units. Over an eighteen-month period beginning when the p & s agreements were entered into in 2004, Edlow paid promised deposits of varying amounts in three installments, totaling twenty percent ($1,640,000) of the combined purchase price.

When construction on the project fell behind, RBW exercised its rights to extend the closing dates several times. Concerned by this anemic progress, Edlow visited the site in April 2008. It was clear to him during that visit that the Hotel was not yet ready and that no restaurant or spa yet existed. RBW representatives nevertheless assured him that the project was proceeding and that “all promised amenities would be available.”

During the next month, the parties negotiated a revised agreement. Under this new agreement, Edlow would affirm his commitment to purchase two of the units. He would be released from the obligation to buy one of the more expensive units, and it was agreed that his $640,000 deposit on that unit would be put toward the imminent purchase of the first of the two remaining units. The new agreement contemplated that the parties would close on the sale of the second remaining unit on August 15, 2008 and that they would otherwise perform under the terms of the prior agreements. The closing for the first unit took place on May 15, 2008.

In early June, RBW informed Edlow in writing that Regent was pulling out of the project and that the restaurant and spa were now scheduled to open in early 2009. In early July, RBW also informed him that the replacement hotel would not offer the property management and concierge services that were discussed in the original marketing materials. Despite having received these notices, Edlow executed the new agreement on July 27, 2008.

Days later, Edlow notified RBW that he would not attend the scheduled August 15 closing on the second unit, and he demanded the return of his deposits on that unit. He now justifies his withdrawal by arguing that at the time, the project was far from completion. He emphasizes that it had no hotel or hotel operator, no spa, no restaurant, no business center, “nor any of the other elements of the promised package of lifestyle amenities.”

After the passage of several months, Edlow reasserted his demand for the return of his deposits on the second unit. In November 2009 he sued in Massachusetts state court. He alleged that as of the date of his complaint, “RBW had still failed to deliver the complete package of promised amenities and lifestyle commitments for Battery Wharf.” The complaint did not specify which amenities and lifestyle commitments had yet to be delivered, but it did allege that RBW knew at the time of Edlow's April 2008 site visit that the hotel, restaurant, and spa would not be ready by the scheduled August closing because Regent was no longer involved in the project. The complaint asserted that RBW intentionally and negligently misrepresented the project's status to induce him into agreeing to purchase the remaining units under the new agreement. In addition, Edlow alleged that RBW violated the “noticeand delivery” requirements of § 9(e) of the p & s agreement by failing to timely inform him of “secret,” “substantive” modifications to the Master Deed of the Battery Wharf Condominium.²

Based on these allegations, Edlow's suit asserted various contract, tort and statutory claims, and it sought both damages and equitable relief, including rescission of his purchase of the first unit. RBW removed the case to federal court and sought dismissal. Shortly after a hearing on the motion to dismiss, Edlow sought leave to amend his complaint to “clarify and expand upon the factual bases of that claim.” The district court granted RBW's motion to dismiss and denied the motion to amend as moot. This appeal followed.

II.

Review is de novo, and our “sole inquiry ... is whether, construing the well-pleaded facts of the complaint in the light most favorable to the plaintiff[ ], the complaint states a claim for which relief can be granted.” Ocasio–Hernández v. Fortuño–Burset, 640 F.3d 1, 7 (1st Cir.2011); see alsoFed.R.Civ.P. 12(b)(6) (providing review for failure to state a claim). In making our inquiry, we are “not wedded to the lower court's rationale and may affirm the district court's order of dismissal on any ground made manifest by the record.” Decotiis v. Whittemore, 635 F.3d 22, 28 (1st Cir.2011) (internal quotation marks omitted). Although Edlow is not required to provide detailed factual allegations “to provide the grounds of his entitlement to relief,” he must articulate “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). Because jurisdiction is based on diversity, 28 U.S.C. § 1332, we look to Massachusetts law for the elements of Edlow's claims. See Andrew Robinson Int'l, Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 51 (1st Cir.2008).

A. Breach of Contract

The breach of contract claims were properly dismissed because the complaint does not plausibly plead a breach of any contractual duty. The plaintiff's position is that RBW “was unwilling or unable fully to perform” its contractual obligations; that it failed to provide certain amenities allegedly promised as part of the bargain; and that it “engag[ed] in a pattern of obfuscation and misrepresentation concerning the status of the project[ ] and its delays and setbacks.” Edlow also says that RBW “made substantive modifications to the Master Deed” of the overall condominium without the notice called for by § 9(e) of the p & s agreements.

1. The Allegedly Promised Amenities

Edlow's position is that RBW had a duty to provide certain promised amenities. In making this claim, the complaint refers to not only the p & s agreement,³ but also to the marketing materials, to oral statements made by RBW representatives, and to the Condominium Presentation's incorporated materials.⁴ Of the documents and communications referred to in the complaint, however, only the marketing materials and the alleged oral statements by RBW representatives discussed specific details of alleged promised amenities ( e.g., a “Guerlain” spa, in contrast to a hotel spa; a “three-star Michelin” restaurant, rather than a hotel restaurant; and a “Regent” hotel, instead of a generic four-star hotel). But neither the marketing materials nor the oral statements were incorporated into the p & s agreement, and that agreement contains an unambiguous merger clause preventing their consideration. See Sound Techniques, Inc. v. Hoffman, 50 Mass.App.Ct. 425, 737 N.E.2d 920, 924 (2000) (agreed upon and unambiguous merger clauses are effective unless fraud or deceit induced the contract, and thus they apply notwithstanding negligent oral misrepresentations). The primary merger clause reads as follows:

The terms of this Agreement, together with the Condominium Presentation, constitute the entire agreement between the parties hereto and no statements made whether orally or in writing, by anyone with regard to the transaction which is the subject of this Agreement shall be construed as a part hereof unless the same be incorporated herein by writing and signed by Seller and Buyer. Buyer has relied only upon the warranties and representations set forth in this Agreement, if any, and Buyer hereby waives, to the extent permitted by law any and all implied warranties. No oral warranties, representations or statements shall be considered a part hereof.

P & s agreement § 21 (emphasis added); see also id. § 9(b) (“Seller expressly disclaims any representations and warranties not expressly made in...