Banner v. Hockessin Chase, L.P. ( 2022 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
VAN J. BANNER )
)
Plaintiff, )
)
v. ) C.A. No. N21C-06-235 JRJ
)
)
HOCKESSIN CHASE, L.P.; TOLL )
BROTHERS, INC.; WENDY JO )
STURTZ; and WILLIAM I. WOLFF )
)
Defendants. )
Date Submitted: February 11, 2022
Date Decided: May 12, 2022
MEMORANDUM OPINION
Upon Defendants Hockessin Chase, L.P. and Toll Brothers, Inc., and Wendy Jo
Sturtz and William I. Wolff’s Motions to Dismiss:
GRANTED.
Douglas J. Cummings, Jr., Esquire, of Kollias Law, LLC, 3513 Concord Pike, Suite
3300, Wilmington, Delaware 19803, Attorney for Plaintiff Van J. Banner.
Anthony N. Delcollo, Esquire, of Offit Kurman, P.A., 222 Delaware Avenue, Suite
1105, Wilmington, Delaware 19801, Attorney for Defendants Hockessin Chase, L.P.
and Toll Brothers, Inc.
Donald L. Gouge, Jr., Esquire, of Donald L. Gouge, Jr., LLC, 800 North King Street,
Suite 303, Wilmington, Delaware 19801, Attorney for Defendants Wendy Jo Sturtz
and William I. Wolff.
Jurden, P.J.
I. INTRODUCTION
Before the Court are Motions to Dismiss submitted by Defendants Hockessin
Chase, L.P. and Toll Brothers, Inc. (“Developer Defendants”), Wendy Jo Sturtz
(“Sturtz”) and William I. Wolff (“Wolff”) (collectively the “Defendants”).
Defendants assert the Court should dismiss the Complaint because the statute of
limitations expired before Plaintiff filed his Complaint. Plaintiff argues the
Complaint was timely filed because the statute of limitations did not begin to run
until June 27, 2018 – when Plaintiff received correspondence from Toll Brothers
rejecting his warranty claim.
Applying Superior Court Civil Rule 12(b)(6), the Court finds that that the
statute of limitations began to run by no later than April 6, 2016, and that Plaintiff
was on inquiry notice of the claims on or before that date. Assuming arguendo that
the Plaintiff was not on inquiry notice in April 2016, the Court finds he was on
inquiry notice as of May 2, 2018, the date he submitted a warranty claim to Toll
Brothers. The Court finds Plaintiff’s Complaint filed on June 24, 2021 is time-
barred, and therefore, Defendants’ Motions to Dismiss are GRANTED.
2
II. BACKGROUND
On March 17, 2006, Sturtz purchased a home at 43 Waterton Drive, Bear,
Delaware (the “Property”) from the Developer Defendants.1 At that time, the
Developer Defendants provided the homeowner a ten-year Builder’s Limited
Warranty for construction defects. After living in the home for almost a decade,
Sturtz decided to put the property up for sale. In conjunction with the property
listing, on February 22, 2016, Sturtz prepared a Seller’s Disclosure of Real Property
Condition Report (“Seller’s Disclosure”).2 The Seller’s Disclosure informed
prospective buyers of the Sturtz’s understanding of the then-present condition of the
property.3
On or about February 24, 2016, Plaintiff and Sturtz executed an Agreement
of Sale for Delaware Residential Property (the “Agreement of Sale”).4 In the
Agreement of Sale, Plaintiff was obligated to complete, inter alia, a Residential
Home Inspection, which allowed Plaintiff, at his own expense and using a home
inspector of his choosing, to notify Sturtz of any identified defects. Sturtz could then
either agree to remedy the defects, or refuse to do so.5 Additionally, the Residential
Home Inspection contingency contemplated a stucco inspection. Plaintiff hired an
1
Compl. ¶ 11 (Trans. ID. 66715267).
2
Id. Ex. 1 (Trans. ID. 66715267).
3
Id.
4
Id. Ex. 2 (Trans. ID. 66715267).
5
Compl. ¶ 20.
3
inspector to perform the general home inspection, which was completed March 1,
2016.6 Plaintiff also hired Expert Home Group to perform a stucco inspection, and
on February 29, 2016, Expert Home Group completed the stucco inspection. Expert
Home Group then issued a detailed inspection report.
The Expert Home Group Report (the “2016 Report”) identified defects in the
home’s construction, including defects in the stucco facade.7 The 2016 Report
provided a summary checklist, specifically identifying inadequate or defective
stucco and caulking.8 The 2016 Report warned that the stucco thickness on the home
was below construction industry standards in effect at the time the home was
constructed, and noted “stucco that is thinner than specified may be subject to
cracking, delamination, separation from the substrate, and may allow more water
penetration through the stucco.”9 Additionally, the 2016 Report informed Plaintiff
that caulking was inadequate and/or failing around the windows and doors, caulk
was absent around fixtures mounted to the stucco, and joints between stucco and
siding, stone, or trim elements were not caulked at all.10 The absence of properly
installed caulk created a risk of additional water damage.11 The 2016 Report also
noted cracks in the stucco, and recommended Plaintiff seal all cracks to prevent
6
Id. ¶ 34.
7
Id. Ex. 3, at 2. (Trans. ID. 66715267).
8
Id.
9
Id. ¶ 2.
10
Id. ¶¶ 6-9.
11
Id. ¶ 7.
4
water damage.12 Finally, Expert Home Group explicitly warned Plaintiff that
defective stucco issues may be latent and more extensive than those “present at the
specific time of inspection.”13
On March 3, 2016, Reaction Exteriors LLC (“Reaction Exteriors”) produced
an estimate to repair the issues identified in the 2016 Report. Reaction Exteriors
priced the repairs at $6,234.00, including $1,924.00 for stucco repair and $3,445.00
to correct caulk related defects.14
On March 12, 2016, just prior to the expiration of the Builder’s Limited
Warranty, and during Plaintiff’s pending purchase of the home, Sturtz submitted a
warranty claim to the Developer Defendants.15 The factual basis, i.e., the alleged
damages which Sturtz sought remediation) for Sturtz’s warranty claim was the 2016
Report and the Reaction Exteriors repair estimate. Toll Brothers accepted Sturtz’s
warranty claim.16 In the April 6, 2016 Settlement and Release, Sturtz and Toll
Brothers resolved the pending warranty claim, and Toll Brothers compensated Sturtz
for the defects identified in the stucco inspection report commissioned by Plaintiff -
12
Id. ¶ 10.
13
Id. ¶¶ 36, 39.
14
Id. Ex. 4 (Trans. ID. 66715267).
15
Id. Ex. 9, at 1 (Settlement Agreement) (Trans. ID. 66715267). Sturtz and Toll Brothers executed
a Settlement Agreement for water infiltration to the property. The Settlement Agreement indicates
Sturtz purchased the property from Toll Brothers on March 17, 2006. On March 12, 2016, Sturtz
submitted to Toll Brothers a Builder’s Limited Warranty Request, seeking to repair “alleged
deficiencies causing water infiltration in the Home.” Id. The Builder’s Limited Warranty expired
on March 17, 2016, ten years from the date Sturtz bought the property.
16
Id.
5
- the 2016 Report. Additionally, the Settlement Agreement required Sturtz to make
certain disclosures to any future prospective buyer of the home. Specifically,
Paragraph 5 of the Settlement Agreement provided:
Owners agree to disclose the fact of the settlement and release of Toll
entities, the expiration of the limited warranty, the Conditions, the
Inspection Report, and the Warranty request to any future prospective
buyer of the Home prior to the time when such buyer agrees to buy the
Home directly from the owners or closes on the sale of the Home.
Owners further agree to make all disclosures to any real estate brokers
or agent(s) representing Owners or potential buyers in connection with
Owner’s marketing and/or sale of the Home as is required by applicable
law.17
On April 6, 2016, Plaintiff purchased the home from Sturtz.18 At closing,
Sturtz issued a credit to Plaintiff in the amount of $6,234.00, payment for the cost of
repairs provided in the Reaction Exteriors estimate.19
In the spring of 2018, Plaintiff learned that other homes in his same residential
development were experiencing defective stucco issues.20 In fact, one of his
neighbors in the Red Lion Chase Development “noticed the visual evidence of
stucco failure on [Plaintiff’s] home and informed [Plaintiff] that many, many houses
in the neighborhood [were] experiencing the same problems.”21 Some neighbors
17
Settlement Agreement ¶ 5.
18
Compl. ¶ 41.
19
Id.
20
Id. ¶ 44.
21
Id. ¶ 43.
6
produced the Red Lion Chase Water Infiltration Flyer (“Flyer”), which suggested
that homeowners experiencing stucco issues should submit warranty claims to Toll
Brothers.22
On May 2, 2018, Plaintiff submitted a warranty claim to Toll Brothers.23 The
Warranty Claim form, completed and signed by Plaintiff, identifies the following
stucco and structural damages: (1) water damage around the windows; (2) water
damage to the chimney; (3) wood rot around the doors; and (4) water damage to the
concrete front of the residence.24 On June 27, 2018, Toll Brothers rejected Plaintiff’s
claim, informing him that (a) all builder warranties had expired, and (b) on April 6,
2016, Sturtz and Wolff executed Settlement Agreement releasing the Developer
Defendants from further liability under the Builder’s Limited Warranty.25 The
Settlement Agreement specifically addressed the stucco and construction defects
identified in the February 29, 2016 Expert Home Group Inspection Report and the
March 3, 2016 Reaction Exteriors repair estimate.26
22
Id. ¶ 45; see also id. Ex. 6 (Trans. ID. 66715267).
23
Compl. ¶ 47; see also id. Ex. 7. to Compl. (Trans. ID. 66715267).
24
Id.
25
Id. Ex. 8. (Trans. ID. 66715267). Per the Settlement Agreement, Sturtz and Wolff completed
settlement on the purchase of the residence on March 17, 2006, and that the Builder’s Limited
Warranty was for a term of ten years, expiring on March 17, 2016. Prior to settlement, Sturtz and
Wolff submitted a Builder’s Limited Warranty claim to Toll Brothers, which included the 2016
Report prepared by Expert Home Group, and the Reaction Exteriors March 3, 2016 repair estimate,
“seeking repairs to the Home due to alleged deficiencies causing water infiltration in the Home….”
Id. Ex. 9. On April 6, 2016, Sturtz and Wolff executed the Settlement Agreement with Toll
Brothers. Id.
26
Compl. ¶ 53; see also Settlement Agreement.
7
In March of 2019, after Toll Brothers rejected Plaintiff’s warranty claim,
Plaintiff commissioned a second stucco inspection, a Confidential Property
Inspection Report (the “2019 Report”).27 Plaintiff obtained the 2019 Report and
forwarded it to Reaction Exteriors for an estimated cost of repairs. This time, the
Reaction Exteriors estimate valued the cost of repairs at $165,890.00 for stucco and
brick veneer replacement, stucco and structural repairs to the chimney, and
comprehensive caulking repairs.28
On June 24, 2021, Plaintiff filed the Complaint against Defendants, asserting
claims for declaratory judgment, negligent construction, breach of contract, breach
of implied covenant of good faith and fair dealing, tortuous interference with
contract, and fraud.29
III. STANDARD OF REVIEW
When considering a motion to dismiss, the Court “will consider all well-
pleaded facts in the complaint and accept them as true.”30 The Court will grant a
Rule 12(b)(6) motion to dismiss only when “it appears ‘with reasonable certainty
that, under any set of facts that could be proven to support the claims asserted, the
27
Id. Ex. 12 (Trans. ID. 66715267).
28
Id. Ex. 13 (Trans. ID. 66715267).
29
See generally Compl.
30
Reid v. Thompson Homes at Centerville, Inc., 2007 WL 4248478, at *4 (Del. Super. Ct. Nov.
21, 2007) (quoting AT&T Corp. v. Clarendon America Ins., 2006 WL 2685081, at *3 (Del. Super.
Ct. Sept. 18, 2006)).
8
plaintiff would not be entitled to relief.’”31 The moving party bears the burden of
establishing the aforementioned condition and the Court “must view all inferences
drawn from the facts plead in the light most favorable to the plaintiff.”32 In deciding
the motion, the Court can also consider documents incorporated into the complaint
which are integral to the plaintiff’s claim.33
IV. PLAINTIFF’S CLAIMS
Plaintiff’s Complaint asserts seven claims. Count I of Plaintiff’s Complaint
is a claim for declaratory judgment. Plaintiff argues that the April 6, 2016 Settlement
Agreement between Sturtz, Wolff and Toll Brothers is invalid because it identifies
Wolff as an “Owner” of the residence.34 Plaintiff claims that because Wolff was not
an owner of the property, he lacked the authority to release Toll Brothers from future
warranty claims.35
In Count II, Plaintiff argues that the Settlement Agreement is a “contract
prohibited by law” and is unenforceable.36 Plaintiff argues the Settlement
Agreement “contractually prohibited” Sturtz from compliance with 6 Del. C. §
31
Super. Ct. Civ. R. 12(b)(6); Thomas v. Capano Homes Inc., 2015 WL 1593618, at *2 (Del.
Super. Ct. Apr. 2, 2015) (citing Clinton v. Enterprise Rent-A-Car Co., 977 A.2d 892, 895 (Del.
2009)).
32
Jeanbaptiste v. Clarios, LLC, 2020 WL 2375047, at *1 (Del. Super. Ct. May 11, 2020); Thomas,
2015 WL 1593618, at *2 (citing Savor, Inc. v. FMR Corp., 2001 WL 541484, at *2 (Del. Super.
Ct. Apr. 24, 2001)).
33
Reid, 2007 WL 4248478, at *4.
34
Compl. ¶ 78.
35
Id. ¶ 79.
36
Id. ¶ 82.
9
2572(a), which requires a seller in a real property transaction “disclose, in writing,
to the buyer… all material defects of that property that are known at the time the
property is offered for sale or that are known prior to the time of final settlement.”37
Plaintiff claims that the Settlement Agreement allowed Sturtz and Wolff “to conceal
the existence of the agreement and its terms, which included the misappropriation of
[Plaintiff’s] warranty claim, the severity of the underlying, systemic stucco issue
known by Defendants, as well as the release of then present and future water
infiltration warranty claims….”38
Count III is a claim for negligent construction. Plaintiff asserts than
Developer Defendants breached their duty of care in constructing the home.39
Specifically, Plaintiff claims that Developer Defendants owed a duty to the
homeowners to construct the home and install the stucco in a reasonable manner,
37
Id. Plaintiff’s claim that Sturtz was prohibited from disclosing the settlement is contrary to the
language in the Settlement Agreement. The Settlement Agreement required Sturtz and Wolff to
make specific disclosures regarding the settlement and release of Toll Entities and the Limited
Warranty, among other necessary disclosures. See supra n. 17., at 6. The Complaint and the
attached exhibits establish Plaintiff was aware of the content and conclusions in the 2016 Report,
as he commissioned it and provided it to Sturtz. All identified and potentially future defects were
identified in the 2016 Report. And, because Sturtz’s warranty claim was based on the 2016 Report
commissioned by Plaintiff, and submitted to Toll Brothers prior to settlement, the Complaint
inferentially concedes Plaintiff’s “knowledge of the severity of the underlying systemic stucco
issue(s)” and the factual basis alerting Plaintiff to “present and future water infiltration” issues.
Compl. ¶ 84.
38
Id. ¶ 84.
39
Id. ¶ 89.
10
and they failed to do so “by engaging in faulty stucco construction and improper
installation.”40
Count IV alleges a breach of contract claim against Sturtz. Plaintiff argues
that he and Sturtz entered into a valid enforceable contract, which included the
content of the seller’s disclosures. Plaintiff points to seller’s duties under 6 Del. C.
§ 2572(a), arguing that Sturtz was “obligated to disclose” any faulty issues
pertaining to the functionality of the stucco, and she failed to do so.
Count V is a claim for a breach of the implied covenant of good faith and fair
dealing. Plaintiff argues Sturtz failed to disclose the “faulty construction, improper
installation and systemic stucco issues at the property,”41 and it was unreasonable to
conceal them from Plaintiff. Plaintiff also claims Sturtz was “impliedly obligated”
to disclose the existence of a homeowner’s warranty.42
Count VI of Plaintiff’s Complaint is a claim for tortious interference with
contract against Developer Defendants and Wolff. Plaintiff claims that upon
entering into the Settlement Agreement, the Developer Defendants and Wolff agreed
to terms which “contractually obligated [ ] Sturtz to violate her obligations of
40
Id. ¶ 91.
41
Id. ¶ 102. The same reasoning in n.37 applies here. Plaintiff suggests Sturtz had, and failed to
disclose, the “faulty construction, improper installation and systemic stucco issues at the Property,”
but the sole source of the faulty construction, improper installation and systemic stucco issues
Sturtz is alleged to have “concealed” from Plaintiff are the specific defects identified in Plaintiff’s
2016 Report.
42
Id. ¶ 103.
11
disclosure” to Plaintiff.43 Plaintiff alleges the Settlement Agreement prohibited
Sturtz from disclosing the alleged issues with the stucco and the existence of the
homeowner’s warranty before, during and after the Settlement Agreement was
signed.44
Finally, Count VII is a fraud claim. Plaintiff argues all Defendants entered
into the Settlement Agreement after Plaintiff and Sturtz entered into the Agreement
of Sale, but before the time of the closing of the Property.45 Plaintiff claim relies
upon the Agreement of Sale, where Sturtz “represented that there was no
‘Homeowner’s Warranty’ in existence.”46 Without more, Plaintiff avers that “Sturtz
made that representation in coordination with, or at the direction of,” the remaining
Defendants.47 Plaintiff then claims that “all Defendants either knew that
representation was false or made that representation with reckless indifference to the
truth.”48 Furthermore, the Complaint notes when “Sturtz bought the property from
Developer Defendants (March 17, 2006), Developer Defendants issued a Builder’s
Limited Warranty to the homeowners.”49 Plaintiff claims all Defendants entered
43
Id. ¶ 109.
44
Id. ¶ 111.
45
Id. ¶ 116.
46
Id. ¶ 117.
47
Id.
48
Id. ¶ 118.
49
Id. ¶ 119.
12
into the Settlement Agreement with the intention of misrepresenting the condition
of the property, and that he suffered injury in reliance of that misrepresentation.
V. PARTIES’ CONTENTIONS
On September 10, 2021, Sturtz and Wolff filed a Motion to Dismiss the
Complaint, arguing that the statute of limitations had expired. Defendants Sturtz
and Wolff assert that the 2016 Report, commissioned by Plaintiff, identified specific
defects in the stucco and expressly warned of the real possibility of more extensive
defects and damage not revealed by the stucco inspection.50 Thus, as of April 6,
2016 - the settlement date - Plaintiff was in possession of information sufficient “to
put a person of ordinary intelligence and prudence on inquiry which, if pursued,
would lead to the discovery of such facts.”51 Accordingly, Sturtz and Wolff first
assert the statute of limitations began, at the latest, on the settlement date, April 6,
2016, terminating more than three years before Plaintiff filed the Complaint.52
Second, Sturtz and Wolff direct the Court to the May 2, 2018 warranty claim
Plaintiff submitted to Toll Brothers, wherein he asserted warranty claims for
defective stucco, water infiltration and structural issues. The May 2, 2018 warranty
50
Id. ¶ 12.
51
Id. ¶ 13.
52
Id. ¶¶ 83-86; see also DEL. CODE ANN. tit. 6 § 2572(a) (2021).
13
claim demonstrates Plaintiff was on inquiry notice of the injuries he now raises, well
before the expiration of the statute of limitations.53
On September 22, 2021, Developer Defendants filed a Motion to Dismiss,
arguing that all counts of the Complaint are time-barred.54 The Developer
Defendants argue the statute of limitations would toll no later than May 2, 2018,
when Plaintiff submitted a warranty claim to Toll Brothers - more than three years
prior to filing the Complaint.55 As of that date, Plaintiff had inquiry notice of the
claims he did not raise until filing a Complaint on June 24, 2021. As such, Plaintiff’s
claims are time-barred.
Plaintiff asserts Defendants’ Motions to Dismiss are premature, claiming the
pending motions should be denied and the Court should allow the parties to proceed
with discovery.56 Plaintiff alleges each of the defendants knew about, but withheld
from Plaintiff, information regarding the stucco problems.57 Plaintiff claims inquiry
notice was not established until receipt of Toll Brothers’ June 27, 2018 warranty
rejection letter.58 Accordingly, the discovery toll attached at receipt of the rejection
53
Defendants Wendy Jo Sturtz and William F. Wolff’s Motion to Dismiss Complaint as to Moving
Defendants, ¶¶ 5-9 (Trans. ID 66921061).
54
Motion to Dismiss Complaint as to Defendants Hockessin Chase L.P. and Toll Brothers, Inc., ¶
11 (Trans. ID 66956324).
55
Id. ¶¶ 12-14.
56
Plaintiff’s Combined Response in Opposition to Both Pending Motions to Dismiss (“Plaintiff’s
Response”), ¶ 1 (Trans. ID 67085027).
57
Id. ¶ 2.
58
Id. ¶ 9.
14
letter, and the Complaint, filed just within the three-year statute of limitations, was
timely.
VI. DISCUSSION
The causes of action in Plaintiff’s Complaint are governed by 10 Del. C. §
8106,59 “which requires that a plaintiff bring an action to recover damages within
three years of the ‘accruing of the cause of action.’”60 The statute of limitations
applicable to all of Plaintiff’s claims is three years. However, there are exceptions
that toll the statute of limitations. “To determine if an exception tolls the statute of
limitations, the Court conducts a three part test: first, the Court decides when a cause
of action accrued; second, the Court must assess whether the statute of limitations
has been tolled, and third, the Court must determine when the plaintiff was on
59
10 Del. C. § 8106 provides:
[n]o action to recover damages for trespass, no action to regain possession of
personal chattels, no action to recover damages for the detention of personal
chattels, no action to recover a debt not evidenced by a record or by an instrument
under seal, no action based on a detailed statement of the mutual demands in the
nature of debit and credit between parties arising out of contractual or fiduciary
relations, no action based on a promise, no action based on a statute, and no action
to recover damages caused by an injury unaccompanied with force or resulting
indirectly from the act of the defendant shall be brought after the expiration of 3
years from the accruing of the cause of such action; subject, however, to the
provisions of §§ 8108–8110, 8119 and 8127 of this title.
60
Thomas, 2015 WL 1593618, at *2 (citing S & R Associated, L.P. v. Shell Oil Co., 725 A.2d 431,
439 (Del. Super. Ct. Sept. 30, 1998); 10 Del. C. § 8106); Silverstein v. Fischer, 2016 WL 3020858,
at *4 (Del. Super. Ct. May 18, 2016) (holding the statute of limitations for claims of breach of
contract, negligence and fraud is three years.).
15
inquiry notice of the cause of action.”61 The party asserting the application of a
tolling doctrine “bears the burden of pleading specific facts to demonstrate that the
statute of limitations is, in fact, tolled.”62
A. The Causes of Action Accrued on or Before June 4, 2016
The statute of limitations runs when a plaintiff’s claim accrues.63 This occurs
“‘at the moment of the wrongful act and not when the effects of the act are felt,’ even
if the plaintiff is ignorant of the cause of action.”64 A “wrongful act” is a general
concept which varies depending upon the nature of the claims at issue.65 A cause of
action for negligence accrues at the time of the alleged injury.66 A cause of action
for fraud accrues when the fraud is successfully penetrated.67 A cause of action for
breach of contract accrues when the breach occurs.68
Viewing the evidence in the light most favorable to the Plaintiff, the Court
concludes the latest date that the alleged wrongful act could have accrued for each
of Plaintiff’s claims is April 6, 2016 – the date of settlement on the purchase of
61
Silverstein, 2016 WL 3020858, at *4 (citing Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860
A.2d 312, 319 (Del. 2004)).
62
Reid, 2007 WL 4248478, at *8.
63
Id.64
Id. (internal citations omitted).
65
Id. (citing Nardo v. Guido DeAscanis & Sons, Inc., 254 A.2d 254, 256 (Del. Super. Ct. May 26,
1969)).
66
Id. (citing Nardo, 254 A.2d at 256).
67
Id. (citing Van Lake v. Sorin CRM USA, Inc., 2013 WL 1087583, at *6 (Del. Super. Ct. Feb. 15,
2013)); Puig v. Seminole Night Club LLC, 2011 WL 3275948, at *4 (Del. Ch. Jul. 29, 2011).
68
Id. (citing Nardo, 254 A.2d at 256).
16
Plaintiff’s home. Therefore, to be timely, Plaintiff would have had to file a
Complaint on or before April 6, 2019, three years from the date of the alleged
wrongful act. Because Plaintiff filed the Complaint on June 24, 2021, more than
five years after the wrongful act, Plaintiff’s claims are time-barred unless he pleads
specific facts to demonstrate a tolling doctrine applies and he was not on inquiry
notice of the claims.
B. The Application of Tolling Doctrines
Plaintiff alleges two tolling doctrines may apply – the Discovery Rule and the
Fraudulent Concealment doctrine. In considering these doctrines, the Court is
considering the evidence in the light most favorable to the movant, taking all well-
pled facts in the Complaint as true.
1. The Discovery Rule
Under the Discovery Rule, the statute of limitations is tolled where “there
must have been no observable or objective factors to put a party on notice of an
injury, and plaintiff’s must show that they were blamelessly ignorant of the act or
omission and the injury.”69 Tolling of the statute of limitations is also recognized
where the injury is inherently unknowable and the claimant is blamelessly ignorant
of the wrongful act and the injury complained of.”70 A Plaintiff is considered to
69
Crest Condo. Ass’n v. Royal Plus, Inc., 2017 WL 6205779, at *3 (Del. Super. Ct. Dec. 7, 2017)
(citing In Re Dean Witter, 1998 WL 442456, at *5 (Del. Ch. Jul. 17, 1998)).
70
Silverstein, 2016 WL 3020858, at *5, (citing Wal-Mart Stores, Inc., 860, A.2d at 319).
17
possess inquiry notice “when they have discovered facts that would form the basis
of the action or are aware of facts that would put an ordinary person on inquiry and
if those facts were pursued, it would lead the plaintiff to discover the cause of
action.71 Inquiry notice does not require a plaintiff to have actual knowledge of an
injury, but rather requires plaintiff have “an objective awareness of the facts giving
rise to the injury.”72 To evaluate a plaintiff’s “objective awareness” of the facts
giving rise to the injury, the Court examines whether there are “red flags” that
“clearly and unmistakably would have led a prudent person of ordinary intelligence
to inquire further and by determining if plaintiff gained ‘possession of facts
sufficient to make him suspicious, or that ought to make him suspicious.’”73
Construing the evidence in the light most favorable to Plaintiff, the Court finds
Plaintiff has failed to plead sufficient facts to demonstrate the Discovery Rule tolled
the statute of limitations. In 2016, when Plaintiff purchased the Property, he paid
for and received both a home inspection report and the 2016 Report. The home
inspection report warned Plaintiff, “[s]tucco exterior walls have had a history of
leakage and hidden damage. This should be further investigated. A qualified,
71
Id. at *6.
72
Id.
73
Id. (citing Coleman v. Pricewaterhousecoopers LLC, 854 A.2d 838, 842 (Del. 2004) (quoting
Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 363845, at *7 (Del. Super. Ct.
Jan. 27, 2010).
18
licensed stucco inspector/contractor should be consulted for a full evaluation of the
exterior walls and estimates prior to the end of the inspection contingency period.”74
The 2016 Report identified the following stucco and related construction
defects: the stucco was installed at an insufficient thickness; the home evidenced
improper caulking around windows, doors and related exterior items; and the stucco
was not installed with expansion joints. The stucco was also cracked, leading to a
recommendation to seal all of the stucco to prevent further water infiltration and
potential structural damage. The 2016 Report also specifically identified areas in
the stucco that exhibited higher than acceptable moisture levels,75 missing deck
ledger flashing,76 damage to the substrate on the right rear corner of the family
room,77 and numerous caulking issues that impacted the integrity of the stucco.78
The report also identified water damage to exterior doorframes.79 Additionally, the
report was qualified, informing Plaintiff:
IMPORTANT: It is important to note that all observations and moisture
readings represent the conditions present at the specific time of
inspection, and may or may not, be indicative of all conditions that may
be present at any given time, or even typical conditions that may not be
74
Compl. ¶ 35.
75
Id. Ex. 3 ¶¶12-14 (noting borderline elevated moisture readings (10) and elevated moisture
readings (5)).
76
Id. ¶ 4; see also id. Ex. 3, at 20.
77
Id. ¶ 13.
78
Id. ¶¶ 6-9.
79
Id. at 13; See also id. Ex. 3, at 18 (photo 17.3, photo 18.4) (showing rot at kitchen deck door left
side trim), photo 18.6 (showing rotted jamb at laundry room deck door).
19
present at the time of inspection. They should be used as clues to assess
what MAY be happening within the structure.80
The 2016 Report reasonably informed Plaintiff that its conclusions were
qualified and did not identify all potential defects.
The contents of the 2016 Report raise numerous red flags that clearly and
unmistakably would have led a reasonable person of ordinary intelligence to inquire
further. Plaintiff was in possession of facts that informed him the stucco on the
residence was improperly installed and posed a risk of deterioration, failure and
further structural damage to the home. Upon receipt of the 2016 Report prior to
settlement on April 6, 2016, Plaintiff was on inquiry notice, if not actual notice, of
the defects and injury.
Plaintiff’s suggestion that “the significance of the stucco issues was inherently
unknowable,” because he had an “invasive” home inspection performed, which
“triggered a de minimis invoice . . . for stucco repairs,”81 disregards the content of
the 2016 Report. At best, Plaintiff tacitly acknowledges the existence of injury at
the time of the 2016 Report, but suggests he just was not aware of the severity of the
damage. But the 2016 Report warned him of just that – that the inspection was not
perfect and may not disclose present but undetected stucco defects. The injury at
80
Id. at 4.
81
Plaintiff’s Response ¶ 6.
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issue was not “inherently unknowable,” and Plaintiff cannot claim to be
“blamelessly ignorant of the wrongful act and the injury complained of.”
Defendants also argue, alternatively, that Plaintiff had inquiry notice of the
injury as of May 2, 2018, the date he submitted a warranty claim to Toll Brothers.
Inquiry notice as of May 2, 2018 still puts Plaintiff beyond the expiration of the
statute of limitations. Taking all of the previously identified evidence from the 2016
Report, Plaintiff was also aware, prior to May 2, 2018, that other homes in the same
residential development were experiencing defective stucco issues, and one of his
neighbors told Plaintiff his home was exhibiting stucco failure. Plaintiff received
and reviewed a flyer suggesting that owners experiencing stucco issues submit
warranty claims to Toll Brothers, and on May 2, 2018, Plaintiff submitted a warranty
claim that identified specific stucco, water infiltration, and structural damage. As of
that date, Plaintiff knew both the wrongful act and the injury to his residence. This
information as of May 2, 2018 did, in fact, lead Plaintiff to “inquire further” by
actually submitting a warranty claim – inquiring further about the stucco damage to
the home and asking Toll Brothers to fix it.82
2. Fraudulent Concealment
82
Plaintiff’s claim that he was subject to inquiry notice upon receipt of as June 27, 2018, the date
Toll Brothers sent Plaintiff a letter, rejecting the warranty claim. The June 27, 2018 letter neither
suggested nor informed Plaintiff that Toll Brothers admitted the Property suffered from any
construction defect at the time Plaintiff submitted the warranty claim.
21
Plaintiff next contends that the Fraudulent Concealment exception may toll
the statute of limitations. “If a defendant fraudulently conceals information which
would have put the plaintiff on notice of the truth or intentionally throws the plaintiff
“off the trail of inquiry,” the statute of limitations is tolled.83 However, “[m]ere
ignorance of the facts without the concealment or misrepresentation does not toll the
statute of limitations.”84 When it is clear from the face of the Complaint that a cause
of action accrued more than three years before the complaint was filed, a plaintiff
must plead facts sufficient to toll the statute of limitations. A plaintiff asserting
fraudulent concealment as a tolling doctrine must plead the fraudulent concealment
with particularity.85
The Fraudulent Concealment exception tolls the statute of limitations when
there “was an affirmative act of concealment or some misrepresentation that was
intended to put a plaintiff off the trail of inquiry.”86 First, as a general matter, the
injury at issue in this litigation was identified only after Plaintiff commissioned,
received and shared the 2016 Report with Sturtz prior to settlement. On March 12,
2016, Sturtz provided a copy of the 2016 Report to the Developer Defendants when
83
Crest Condo. Ass’n v. Royal Plus, Inc., 2017 WL 6205779, at *3 (Del. Super. Ct. Dec. 7, 2017).
84
Continental Finance Co., LLC v. ICS Corp., 2020 WL 836608, at *4 (Del. Super. Ct. Feb. 20,
2020).
85
Id. (citing Super. Ct. Civ. R. 9(b); Krishna v. Asura Dev.Grp. Inc., 2017WL 1103013, at *6
(Del. Super. Ct. Mar. 24, 2017)).
86
Id. (citing Winner Acceptance Corp. v, Return on Capital Corp., 2008 WL 5352063, at *15 (Del.
Ch. Dec. 23. 2008) (citing In Re Dean Witter P’Ship Litig., 1998 WL 442456, at *5 (Del. Ch. Jul.
17, 1998)).
22
she submitted the Builder’s Limited Warranty claim. Plaintiff’s fraudulent
concealment claim makes no sense. Defendants collectively received the 2016
Report from Plaintiff. It was the 2016 Report that notified the Plaintiff and all
Defendants of potentially defective stucco issues, and there are no facts in the
Complaint which suggest Defendants possessed knowledge of any defective stucco
or water infiltration issues prior to the receiving the 2016 Report.
Second, Plaintiff claims Defendants committed common law fraud by
denying the existence of a Homeowner’s Warranty in the Agreement of Sale. 87 By
doing so, “all Defendants either knew that representation was false or made that
representation with reckless indifference to the truth.”88 Plaintiff asserts the
Defendants engaged in fraudulent conduct, because when “Sturtz brought the
property from Developer Defendants (March 17, 2006), Developer Defendants
issued a Builder’s Limited Warranty to [Sturtz].” As a result of this “fraud,” Plaintiff
was “induced to proceed with closing without his knowing of the existence of the
warranty on the property. . ..”
Plaintiff’s burden is to identify particularized facts sufficient to establish the
applicability of a tolling bar – in this case, fraudulent concealment.89 Plaintiff has
failed to do so. Failure of Sturtz to acknowledge the existence of a “Homeowner’s
87
Compl. ¶ 117.
88
Id. ¶ 118.
89
See Super. Ct. Civ. R. 9(b).
23
Warranty” on the Agreement of Sale because of the existence of a “Builder’s Limited
Warranty” does not constitute fraudulent concealment. And, the Agreement and
Release, which Plaintiff attached as Exhibit 9 to the Complaint (and incorporated by
reference in the Complaint), expressly provides that the Builder’s Limited Warranty
expired weeks prior to settlement (March 17, 2016). Plaintiff, who was not owner
of the property at any time the Builder’s Limited Warranty was in effect, would not
have had a right to file a warranty claim. Settlement occurred on April 6, 2016,
weeks after the Builder’s Limited Warranty expired. Furthermore, Sturtz gave
Plaintiff a credit for the known cost of repairs, per Plaintiff’s stucco inspection
report and repair estimate, at settlement. Plaintiff has not alleged an affirmative act
of concealment or some misrepresentation that was intended to put him off the trail
of inquiry sufficient to trigger a bar to the running of the statute of limitations. The
trail of inquiry started with Plaintiff’s 2016 Report.
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VII. CONCLUSION
Viewing the record in the light most favorable to Plaintiff, the Court finds that
all of Plaintiffs’ claims are time-barred. Accordingly, Defendants’ Motions to
Dismiss are GRANTED.
IT IS SO ORDERED.
/s/ Jan R. Jurden
Jan R. Jurden, President Judge
cc: Prothonotary
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