By David
Rogers
On January 28, the
Essex Superior Court (Feeley, J.) issued a decision providing that (1) the
statute of repose does not begin to run – with respect to a phased condominium
– until the final phase is recorded; and (2) a developer may waive its rights –
under the statute of repose – by executing a tolling agreement. There had
previously been no reported Appellate Court decisions – or even trial court
decisions – concerning these issues in the Commonwealth of Massachusetts.
The condominium
initiated the lawsuit seeking to recover damages related to certain alleged
widespread deficiencies in the design and construction of the common areas and
facilities of the condominium.
The case involves
the Regency at Methuen Condominium – an age-restricted (55+), gated community
located in Methuen, Massachusetts – which was developed and constructed by Toll
Brothers. The condominium initiated the lawsuit seeking to recover damages
related to certain alleged widespread deficiencies in the design and
construction of the common areas and facilities of the condominium.
The condominium’s
master deed was recorded in 2011. Thereafter, sixty-six phasing amendments were
recorded over the next four years as additional units were constructed and
added to the condominium. “Phasing of a condominium permits a developer to
expand the size and scope of a condominium project in response to market
conditions. In a phased condominium development, groups or stages of units are
completed over a period of several years and become part of the condominium by
successive amendments to the master deed. ‘Phasing’ is not a statutory term,
but is a usage that has grown out of the general enabling provisions of G.L. c.
183A.” Queler v. Skowron, 438 Mass. 304, 312 n.15 (2002) quoting Podell v.
Lahn, 38 Mass.App.Ct. 688, 689 n.3 (1995). After the final phasing amendment
for the Regency at Methuen Condominium was recorded, the condominium contained
240 units.
Toll Brothers
filed a motion to dismiss, contending that many of the association’s claims
were barred by the statute of repose. The statute of repose provides, in
pertinent part, that “in no event shall [an action arising out of any
deficiency in the construction of an improvement to real property] be commenced
more than six years after the earlier of the dates of: (1) the opening of the
improvement to use; or (2) substantial completion of the improvement and the
taking of possession for occupancy by the owner.” M.G.L. c. 260, § 2B. Simply
put, most of an association’s construction defect claims are absolutely time
barred six years from the date that construction of a condominium is completed.
Toll Brothers
contended that the Trust’s tort claims – as to the first fifteen (15) phases
and first sixty (60) units of the Condominium – were time barred by the statute
of repose. These particular phases/units were opened/substantially completed
before December 22, 2011 – more than six years before the association’s
complaint was filed on December 22, 2017.
To be clear,
although Toll Brothers had signed an agreement with the condominium association
– explicitly providing that it would not raise the statute of repose as a
defense to a lawsuit – Toll Brothers proceeded to advance a motion to dismiss,
arguing that “a tolling agreement cannot operate to revive a Plaintiff’s
claims.”
Toll Brothers –
relying almost entirely upon the U.S. Supreme Court’s Waldburger decision –
contended that “Statutes of Repose are absolute bars, which are not subject to
any form of tolling.” In actuality, however, the U.S. Supreme Court, in
Waldburger, merely recognized that equitable tolling does not apply to the
statute of repose. CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2183-2184 (2017).
Although there
were no reported decisions in the Commonwealth concerning the issue, the
association pointed a relatively recent decision by the United States Court of
Appeals for the Eleventh Circuit. In that case the court ruled that a statute
of repose is subject to express waiver. Secretary, U.S. Department of Labor v.
Preston, 873 F.3d 877, 884 (2017). The Court – in elucidating the not-so-subtle
distinction between the equitable tolling at issue in Waldburger and the express
waiver of a statutory right – provided, in pertinent part, as follows:
The Court in
Waldburger observed only that statutes of repose aren’t subject to equitable
tolling. Our case has nothing to do with equitable tolling; rather, the
defendants here executed a series of contracts in which they expressly – and
(as they have since acknowledged) knowingly, willingly, and voluntarily –
renounced their rights under [the subject statute of repose]. That express
waiver makes this case a whole different ballgame. The mere fact that a
defendant ordinarily won’t lose the protection of a statute of repose through
no fault (or even act) of his own – as in the equitable-tolling context – says
nothing about whether he can expressly disavow that protection. A statute of repose
confers on a defendant a personal privilege of sorts, in the form of an
immunity from further liability. While that privilege can’t just be snatched
out of the defendant’s hand – certainly not, as Waldburger confirms, by a
squishy doctrine like equitable tolling – there is nothing to prevent the
defendant from voluntarily giving it away.
Preston, 873 F.3d
at 884.
The association
acknowledged that the statute of repose is not subject to the principles of
equitable tolling. The association, however, was not relying upon the doctrine
of equitable tolling, but rather the fact that Toll Brothers intentionally and
voluntarily waived its rights under G.L. c. 260, § 2B. Accordingly, the
association maintained, its claims against Toll Brothers are not time barred.
The Court agreed
with the association, rebuking Toll Brothers as follows:
No case cited by
the Toll defendants supports that unfathomable contention that potential
defendants can lull potential plaintiffs into delaying the commencement of suit
by execution of a written tolling agreement, and then sandbag them by
disavowing the legal effect of the written agreement. (emphasis supplied).
The Court clearly
recognized that Toll Brothers’ conduct, in this regard, was particularly
unseemly. Indeed, after signing a contract providing that it would not raise a
statute of repose defense, Toll Brothers essentially argued that its promise
was worthless and that the association was out of luck with respect to its
claims of shoddy construction. Such actions should provide a cautionary tale as
to the depths that developers will stoop to shirk responsibility for defective
construction. Fortunately, in light of the Court’s ruling, associations can
continue to rely upon tolling agreements as an effective tool for prolonging
negotiations with a developer during the transition period.
In sum, the
Court’s decision reflects a commonsense, pragmatic approach to these two
issues. Indeed, it makes sense that a statute of repose – which is based upon
the completion of construction – should not begin to run until construction of
all phases of a condominium is complete. It also makes sense that a developer,
who signs a contract waiving a statutory defense, should not be permitted to
raise that waived defense in a lawsuit. Unfortunately, however, one can never
be certain that the Court will adopt a sensible approach to such issues.
The Court’s ruling
in the Regency at Methuen case should be viewed as a victory for the
condominium industry, as well as yet another decision reflecting a general
disdain for condominium developers’ efforts to avoid liability for defective
construction. See e.g., Trustees of the Cambridge Point Condominium Trust v.
Cambridge Point, LLC, 478 Mass. 697 (2018)(ruling that a condominium developer
could not invoke an anti-litigation provision in the condominium’s governing
documents to avoid liability – finding that the subject provision “is void
because it contravenes public policy”); Wyman v. Ayer Properties, LLC, 469
Mass. 64 (2014)(economic loss rule does not apply to damage caused by negligent
design and construction of the common areas of a condominium building).
Originally posted on
tlawmtm.com:
Associated with
the Boston and Braintree based firm of Moriarty, Troyer & Malloy LLC, Dave Rogers specializes in complex civil
litigation at both the trial and appellate levels. He has extensive experience
in the area of construction litigation. Dave’s practice is focused on
construction, real estate, and condominium matters. His clients include
condominium associations, real estate developers, general contractors,
subcontractors, and individuals. Dave
can be contacted at drogers@lawmtm.com
The
above-referenced lawsuit is captioned Board of Trustees of the Regency at
Methuen Condominium Trust v. Toll MA Land Limited Partnership, et al., Essex
County Superior Court, Civil Action No. 1777-CV-01924. The Court’s
decision may be found here at this link
