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Bloom v. Sussex Group Partners, LLC

Superior Court of Delaware

June 5, 2014

Martin L. Bloom and Phyllis R. Bloom
v.
Sussex Group Partners, LLC, and Schell Brothers, LLC

Submitted: March 10, 2014

Dean A. Campbell, Esquire Law Office of Dean A. Campbell, LLC

Craig A. Karsnitz, Esquire Young Conaway Stargatt & Taylor, LLP

E. SCOTT BRADLEY, JUDGE.

Dear Counsel:

This is my decision on the motion for summary judgment filed by defendants Sussex Group Partners, LLC, and Schell Brothers, LLC, in this case involving allegations of fraud and breach of contract made by plaintiffs Martin L. Bloom and Phyllis R. Bloom against the defendants regarding the Blooms' purchase of a house from the defendants in a partially-completed residential development.[1] The Blooms purchased this particular house, in part, because it had a nice view of the open space and trees behind it. Indeed, the defendants charged, and the Blooms paid, a premium for the house because of its location in the development. Unb ekn own st to th e Bloo ms and before they signed a contract to purchase the house, the defendants were seeking approval from the Sussex County Planning and Zoning Department to modify the approved subdivision plan for the development to place 15 building lots into what had previously been open space behind the Blooms' house. The defendants obtained approval to do this after the Blooms settled on the house. The defendants never told the Blooms about this. The defendants did tell the Blooms before they signed a contract to purchase the house that the development was subject to change. However, in the contract that the Blooms signed, the defendants warranted that they would not materially modify the development. The Blooms only became aware of this change after they saw the defendants constructing houses in the area that they thought was going to remain open space. The Blooms then filed a complaint against the defendants, alleging fraud and breach of contract claims. The defendants argue that the fraud claims fail because they disclaimed all representations they made to the Blooms, and that the breach of contract claim is barred by the merger by deed doctrine. I have denied the defendants' motion for summary judgment, concluding that when the evidence is viewed in the light most favorable to the Blooms it appears that the defendants ran afoul of several consumer protection statutes and their own contractual warranties.

STANDARD OF REVIEW

This Court will grant summary judgment only when no material issues of fact exist.[2] The moving party bears the burden of establishing the non-existence of material issues of fact.[3] Once the moving party meets its burden, the burden shifts to the non-moving party to establish the existence of material issues of fact.[4] The Court views the evidence in a light most favorable to the non-moving party.[5] Where the moving party produces an affidavit or other evidence sufficient under Superior Court Civil Rule 56 in support of its motion and the burden shifts, the non-moving party may not rest on its own pleadings, but must provide evidence showing a genuine issue of material fact for trial.[6] If, after discovery, the non-moving party cannot make a sufficient showing of the existence of an essential element of the case, then summary judgment must be granted.[7] If, however, material issues of fact exist or if the Court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, then summary judgment is not appropriate.[8]

DISCUSSION

Consumer Fraud

Delaware's applicable consumer fraud law is set forth in 6 Del. C. §2511, et seq. The purpose of this subchapter is to protect consumers from unfair or deceptive merchandising practices.[9] §2513(a) defines an unlawful practice as:

The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, or the concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale, lease or advertisement of any merchandise, whether or not any person has in fact been misled, deceived or damaged thereby, is an unlawful practice.

§2513(a) applies to the sale of real estate and may be enforced by a private citizen.[10] The Blooms argue that the defendants violated §2513(a) because while the defendants in their promotional materials and through their sale agents were extolling the virtues of certain lots with a view of the open space, the defendants were actually in the process of seeking approval from the local zoning authority to eliminate a portion of that open space. The defendants argue that they did not violate §2513(a) because they disclaimed all representations they made to the Blooms. The defendants reason that by telling the Blooms that the development was subject to change, they are not responsible for anything they said or did not say about the development. I disagree. Delaware law generally allows a party to "contract around fraud"[11] by contractually disclaiming any representations that the party made to entice the other party to enter into a contract. However, I see no application for such a rule in a matter like this where the legislature has enacted a statute to protect consumers from such a practice. ยง2513(a) specifically prohibits a seller from misrepresenting and/or concealing any material fact in connection with the sale of that real estate to a consumer. It is one thing to extol the virtues of a development while disclosing that the development is subject to change. However, it is quite a different thing to actively be working on those changes and concealing those efforts from a prospective buyer. If the Blooms had known what the defendants were trying to do with the open space behind their house before they signed a contract to buy the house, then they ...


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