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This action alleged building defects and
breaches of fiduciary duties in connection with the
construction of Millennium Place, a large-scale
condominium project in downtown Boston. The primary
condominium board included representatives from each
residential association; however, it was controlled by
representatives of the commercial association who were
appointed by the project’s developer. When members of
the residential associations identified defects in the
buildings and demanded that the primary association take
action against the developer to have these defects
corrected, the primary association refused. The
president of a residential association brought suit
against the developer-appointed board members, the
developer itself, the construction manager, and a number
of the project’s architects and engineers. Several
Defendants moved to dismiss.
The Court first considered the motion to
dismiss brought by the developer and its representatives
on the board. This motion asserted that Plaintiff lacked
standing to sue, on the grounds that the residential
association rather than its president was the real party
in interest. The Court agreed that it was the
residential association – not its president – that had
the statutory authority to sue and the standing to bring
a derivative claim on behalf of the primary association.
But it did not follow that dismissal was therefore in
order; rather, the proper course under Mass. R. Civ. P.
Rule 17(a) was to grant the Plaintiff a reasonable
amount of time to amend the complaint and substitute the
real party in interest as Plaintiff. Id. at *4.
The Court then considered the motion
brought by the construction manager and joined by the
architect of record. This motion first asserted that
Plaintiff failed to state a claim for breach of contract
insofar the complaint did not allege a contractual
relationship between the residential association and the
construction manager. Plaintiff attempted to salvage
this claim under a third-party beneficiary theory, which
requires a Plaintiff to “show that the parties to the
contract intended to give the Plaintiff the benefit of
the promised performance.” Id. at *5. But in this
case, “the express language of the contract establishes
the absence of any such intent …. The contract claim
therefore must be dismissed for failure to state a
claim.” Id.
The construction manager’s motion also
sought dismissal of Plaintiff’s negligence claim under
the economic lossdoctrine, which “bars recovery in the |
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absence of personal injury or physical
damage to property other than the property alleged to
have been negligently constructed.” Id. Nothing
in Plaintiff’s complaint or supporting materials
suggested personal injury. As for damage to property,
Plaintiff’s materials were ambiguous at best. But at the
motion to dismiss stage, the Court was required to “read
the complaint and its attachments broadly, drawing all
reasonable inferences in favor of the Plaintiffs.”
Id. Under that standard, the Court could not
conclude “that the complaint fails to allege any set of
facts on which relief could be granted.” Id.
Turning to the timeliness of Plaintiff’s
negligence claims, the Court observed that G.L. c. 260,
§ 2B provides both a statute of repose and a statute of
limitations applicable to claims of negligence in
connection with building construction. “The issuance of
a certificate of occupancy officially opens a building
to use, and therefore triggers the start of the six year
period under the statue of repose.” Id. at *6. In
this case, certificates were issued more than six years
prior to the commencement of suit; however, these
certificates were only temporary and only for certain
parts of the buildings. The Court found no Massachusetts
case addressing the effect of temporary certificates on
the statute of repose, but followed the federal district
Court in holding that such certificates do commence the
repose period in the absence of any limitations
expressed therein respecting the use to be made of the
building. Id. Nevertheless, the evidence before
the Court did not clearly establish whether the
certificates issued for the project covered the portions
of the building at issue. Id. at *7. The
three-year statute of limitations likewise did not bar
the claims, since it was unclear from the record when
Plaintiff reasonably should have discovered the alleged
defects. Id.
The construction manager’s motion also
asserted that Plaintiff failed to meet the requirements
for a derivative action under Mass. R. Civ. P. Rule
23.1. The Court held that “although the point could have
been made more expressly, the complaint does adequately
allege that it is brought on behalf of the primary
association.” Id. at *8. The Court further held
that a demand on the members of the primary association
would have been futile, given the fact that it was
controlled by the developer. The Court also held that
Plaintiff adequately represented the interests of the
primary association, notwithstanding the fact that some
members of the association did not consent to
Plaintiff’s suit. Id. at *9.
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