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Constance M. Sullivan V Five Acres Realty Trust
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Mr. Lewin.
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Thank you, good morning.
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May it please the court.
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I will begin with the 93A verdict under count four.
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And specifically the issue of whether
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under Lantner versus Carson.
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And under the applicable standard of review.
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The sale of the Gagliardi's home
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was an isolated sale of a private home
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not in the ordinary course of business.
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It is our contention that this was an isolated sale.
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The evidence at trial was that in
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the course of 39 years from 1974 to 2013
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the Gagliardi's sold only one property.
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A two-family home to their daughter, Maria in 2003.
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The Gagliardi's history of home ownership is that
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in beginning of 1974 they lived in two homes
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for 14 years each.
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Inverting them each to two-family homes
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and keeping them for rental income.
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In 2002 the Gagliardi's bought their home in Dover and-
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Mr. Lewin, I think it'd be helpful if you would just
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point out what the legal parameters of
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the thing you're challenging.
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You're saying the evidence is not sufficient for this, why?
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What is it that the plaintiff had to prove and didn't prove?
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The plaintiff had the burden of proving
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that this was under Lantner versus Carson.
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An isolated stale sale.
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That this was not an isolated sale of a private home.
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And that this was in the ordinary course of
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the business conducted by the Gagliardi's.
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In order to fall within the definition of trade or commerce
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under Mass. General Laws Chapter 93A.
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Okay, thank you.
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The home in Dover was sold after
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the Gagliardi's lived there for almost 11 years.
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The sale was at a loss of $300,000 compared to
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the original purchase price.
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Mr. Lewin, how many homes did
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they convert into rental properties?
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And how many times was your,
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One of your clients,
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the client who did the mortar business
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involved in sort of doing work on those homes?
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They converted a two two-family homes.
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They converted two two-family homes.
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They were single-family homes
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converted to two-family homes.
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They purchased a third three-family home.
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And there were renovations done to the two conversions.
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The building permits-
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I don't understand what you mean by
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the renovations to the two conversions?
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You mean the multiple family homes?
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They were single-family homes converted to two-family
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that was I meant by conversion.
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And did your client do the renovations himself?
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I believe he did the masonry work
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involved in the renovations
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on the two two-family homes.
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So I guess that's (inaudible).
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Assuming all of those facts are true.
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It's still a motion to dismiss should have been granted
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or summary judgment should have been granted.
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On those facts were they are sort of
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they're not just sort of normal homeowners.
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They they're sort of normal homeowners who were doing
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some personal renovations and then there's some conversions.
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I guess that isn't enough to get you
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into the business context.
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I take it you're saying.
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That's correct.
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That should not be the standard
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for whether or not the sale of a home-
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So then are we at
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the point where it's really not so much a question of
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whether the evidence was sufficient at the trial.
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But really that in any view of the light most favorable to
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the purchasers there's not enough?
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That is correct your Honor.
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That is our view.
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And if that were not true.
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I mean, I know that were not true.
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But if that were not...
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If the standard is not...
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If we conclude that
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the motion to dismiss was properly denied,
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or the summary judgment was properly denied.
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Then we're left somewhere with a quantum of evidence issue.
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Is that correct?
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That is correct.
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And then if we look at that quantum of evidence.
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What is it that persuaded the judge
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and what is it that persuaded the jury
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to hold against your client in terms of
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that quantum of evidence going over to business?
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I believe that the jury conflated
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the business of apartment rentals
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and the business of masonry construction.
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With what occurred at this property.
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I believe that the jury was angered by the failure
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to obtain a permit for renovations done
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some seven years, almost seven years prior to the sale.
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Renovations to the kitchen and to the porch.
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Which were done for the purpose of providing
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a place for hosting family and friends.
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Would they have had to believe that
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the purpose was resale or could they have accepted that
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the purpose was to host family and friends
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and have a more enjoyable kitchen?
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I do not believe that even if the purpose was for resale.
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That should be sufficient
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or that should be acceptable evidence.
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So then if I'm following that.
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Then what they wanted to do it for
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was irrelevant in your mind.
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But the jury was angry about the failure to get the permit.
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Correct.
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And then the structural deficiencies
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that the Gagliardi's admitted were present
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as a result of the repair effort.
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With respect to the improvements.
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I think there's millions of homes in Massachusetts.
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People make improvements when they go to sell it.
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When they're about to sell their home all the time.
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Paint the house, remodel a bathroom.
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I don't think that the fact that improvements are made
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here seven years prior.
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But even if they're made in connection with a home
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that doesn't necessarily converts
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the sale of a home into a business.
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Because it would create an untenable standard.
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Mr. Lewin,
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I know you want to focus on this one transaction.
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But does it not at all matter that the defendants here
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were in the masonry business, right?
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And several times have purchased, renovated, and rented out
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homes over the course over the last several years.
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Isn't that something to consider?
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I don't believe it matters
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in connection with the sale of a private home.
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If you conclude that this was
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an isolated sale of a private home.
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And they were not in the business of selling houses,
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renovating and selling houses.
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Then I think that you...
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If you create a standard that says,
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"Well let me look at what other businesses that they were in
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and see if there's a connection between those businesses
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that they're in and the isolated sale of their home."
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I'm going to say then, that every home that is sold
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is subject to General Laws Chapter 93A.
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Well then that would require the court to look at
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the experience, knowledge and sophistication
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of a broad range of people.
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I mean attorneys know that you're supposed to get
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building permits when you do renovations to your home.
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Mr. Lewin, let me ask you about this
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part of the case where the spouse did the books for
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the masonry business in the house, and some of that.
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Where would that lead us in today's world?
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Where most people have, well not most.
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But a lot of people have home offices, accountants, lawyers
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in the like doing zoom calls out of their homes right?
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Shouldn't we look at that.
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And would concern whether or not that converts
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a primary residence into a place of business.
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Yes, yes your Honor.
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It would create an untenable standard.
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Because every transaction a home sale would be scrutinized
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to see what degree did people work at home especially now.
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And what were they doing in their house?
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What were they using their house for?
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I agree with that point of view.
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Here, Mrs.Gagliardi worked in the home
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for two to four hours a week.
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Doing the books for the masonry business
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and for the apartment rental business.
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Mr. Lewin, can I ask you please about
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the implied warranty of habitability.
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And on the same issue you've been on
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about a single transaction.
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And the issue is whether Albrecht versus Clifford
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should be extended to this situation.
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And what I mean by this situation;
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if you've got a contractor
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who is aware of a latent defect
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that resulted from that contractor renovating the home.
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Is that a natural extension of all that
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we should consider as it relates to
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the implied warranty of habitability.
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First your Honor,
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I believe the evidence is that
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the defendants were aware that
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they failed to obtain a building permit.
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They had done these renovations for themselves.
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They were not aware that there were structural defects
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to the porch renovations and to the kitchen expansion.
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But putting that aside.
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I would suggest that the standard for extending the
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or for applying the (inaudible) warranty should be limited
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to those persons in the business of
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developing residential property for resale.
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The builder, in other words the builder-vendor.
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Once you extend it beyond the builder-vendor,
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then I think that you get into an area where
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the standards become very blurred.
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And then anyone with some knowledge and experience
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and knowledge of building permits
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such as a real estate attorney
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could then be subject to the implied warranty for
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the failure to obtain a building permit.
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Mr. Lewin, can I ask that-
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Justice Lowy, are you done?
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Yes, thank you.
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So Mr.Lewin, I know you're a construction Lawyer.
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There's something about this case that troubles me.
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Cause I can't...
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It seems like it's odd.
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I mean, in an ordinary...
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So we've got people building.
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Doing renovations in a home without getting a license.
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How do you normally sue and recover for that?
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I understand we've got this sort of oddity here.
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We've got this 93A claim based on they're in the business.
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We've also got this implied warranty of habitability.
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If this were...
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There's gotta be some way of recovering
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for doing construction in a home
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without going to the building inspector.
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And then you get stuck with this house.
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How would this normally have been dealt with?
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This seems an oddity.
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I'm just trying to understand in conventional parlance.
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There's gotta be a right.
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A remedy for a wrong.
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I'm just trying to understand conventionally
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how would it have been dealt with?
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Your Honor, I would say conventionally
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it would be dealt with
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a purchase and sale agreement that contains provisions
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relating to the discovery of latent defects.
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Instead of releases as we had in this case.
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A purchase and sale agreement that released
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the seller from all liability.
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There was the second-
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But I'm trying to understand.
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Some contractors, you're quite familiar with contractors.
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Some contractors and also your client
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built without a permit.
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You're client also knows he shouldn't build without permit.
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I'm just trying to understand as a conventional matter
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how do you recover if you end up with one of those homes.
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Is 93A the conventional way this is dealt with?
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or implied warranty of habitability?
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What is the sort of standard way we deal with
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these kinds of, you know, basically improper conduct.
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You can't build without a building permit, right?
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So I'm just trying to understand.
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You say "This is an inapplicable."
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I'm trying to understand how it should have been remedied
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cause there's a wrong here, right?
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That's correct, your Honor.
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And it should have been remedied through a purchasing,
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through the terms of a purchase and sale agreement.
268
00:14:27.940 --> 00:14:31.389
Breach of the purchase and sale agreement.
269
00:14:31.389 --> 00:14:34.280
If there are the terms of a purchase and sale agreement-
270
00:14:34.280 --> 00:14:38.410
But there's negligent construction, right?
271
00:14:38.410 --> 00:14:41.113
No one knows negligent construction better than you.
272
00:14:42.730 --> 00:14:44.450
This is negligent construction.
273
00:14:44.450 --> 00:14:47.600
But we don't have a negligence claim here.
274
00:14:47.600 --> 00:14:48.650
I'm just trying to...
275
00:14:48.650 --> 00:14:50.960
This just seems very odd this case.
276
00:14:50.960 --> 00:14:54.620
I cant get my arms around why it's odd but-
277
00:14:54.620 --> 00:14:56.130
Yeah.
278
00:14:56.130 --> 00:15:00.530
But there's gotta be a remedy for a wrong.
279
00:15:00.530 --> 00:15:03.990
There was construction done on a house
280
00:15:03.990 --> 00:15:06.040
without getting a permit.
281
00:15:06.040 --> 00:15:09.580
So is 93A not the way to do this?
282
00:15:09.580 --> 00:15:10.413
What is...
283
00:15:10.413 --> 00:15:11.810
Should the contractors...
284
00:15:11.810 --> 00:15:12.670
So I'm just trying to understand
285
00:15:12.670 --> 00:15:16.420
conventionally how do you recover for this wrong?
286
00:15:16.420 --> 00:15:20.010
Particularly when your client who's a builder,
287
00:15:20.010 --> 00:15:21.470
does it without a permit.
288
00:15:21.470 --> 00:15:24.370
So I'm just trying to get a sense of...
289
00:15:24.370 --> 00:15:26.300
I don't sense the equities on your side.
290
00:15:26.300 --> 00:15:28.650
But I'm not sure if these theories are correct.
291
00:15:30.890 --> 00:15:35.500
Your Honor, the remedy is through the contract.
292
00:15:35.500 --> 00:15:37.480
Through a purchase and sale agreement
293
00:15:37.480 --> 00:15:38.980
that protects the buyer.
294
00:15:38.980 --> 00:15:42.993
With representations that appropriate permits were obtained.
295
00:15:44.310 --> 00:15:46.910
And in fact the Greater Boston Real Estate Board
296
00:15:46.910 --> 00:15:49.005
standard form of purchase and sale agreement
297
00:15:49.005 --> 00:15:53.020
has a checklist that includes a representation
298
00:15:53.020 --> 00:15:56.480
that permits were obtained for all constructions.
299
00:15:56.480 --> 00:15:57.830
But so you don't...
300
00:15:57.830 --> 00:16:02.420
When a builder builds without getting a...
301
00:16:02.420 --> 00:16:05.330
and going through the building inspector
302
00:16:05.330 --> 00:16:08.130
and the house ends up getting lived in and sold.
303
00:16:08.130 --> 00:16:10.802
You don't have a negligent construction claim?
304
00:16:10.802 --> 00:16:11.635
I am-
305
00:16:11.635 --> 00:16:12.470
I apologize.
306
00:16:12.470 --> 00:16:14.773
Your Honor, if your focus is on the builder.
307
00:16:16.400 --> 00:16:18.640
Well, but your client is also a builder.
308
00:16:18.640 --> 00:16:21.470
He did some of the masonry work, right?
309
00:16:21.470 --> 00:16:23.680
My client does masonry work. Yes.
310
00:16:23.680 --> 00:16:25.330
Foundations.
311
00:16:25.330 --> 00:16:29.010
But he knocked down the wall in the building, right?
312
00:16:29.010 --> 00:16:29.843
He knocked-
313
00:16:29.843 --> 00:16:33.923
The carpenter that he hired knocked down the wall. Yes.
314
00:16:34.980 --> 00:16:36.060
Okay. All right.
315
00:16:36.060 --> 00:16:38.410
I'm not getting anywhere but I-
316
00:16:38.410 --> 00:16:40.122
May I ask you a question counsel.
317
00:16:40.122 --> 00:16:43.590
I think one of the answers Justice Kafker may be looking for
318
00:16:43.590 --> 00:16:46.800
is that the regular route would be prevented by
319
00:16:46.800 --> 00:16:49.140
the statute of repose, is that right?
320
00:16:49.140 --> 00:16:50.430
That's what I was getting there.
321
00:16:50.430 --> 00:16:52.030
But yeah.
Okay.
322
00:16:52.030 --> 00:16:54.444
And so if that's not available.
323
00:16:54.444 --> 00:16:59.444
Then going to the claims that the judge did dismiss
324
00:17:00.140 --> 00:17:03.150
reach the the fraud and the misrepresentation.
325
00:17:03.150 --> 00:17:06.700
What was the theory under which of those were dismissed?
326
00:17:06.700 --> 00:17:11.473
The Law on fraud and misrepresentation with regard to,
327
00:17:12.390 --> 00:17:14.610
as applied to the purchase and sale agreement.
328
00:17:14.610 --> 00:17:18.480
Is that there is no duty to disclose the lack.
329
00:17:18.480 --> 00:17:19.770
There's no duty to disclose
330
00:17:19.770 --> 00:17:22.130
the absence of a building permit.
331
00:17:22.130 --> 00:17:25.290
Okay, and so really your theory is...
332
00:17:25.290 --> 00:17:26.760
Putting everything else aside.
333
00:17:26.760 --> 00:17:27.840
I agree with Justice Kafker.
334
00:17:27.840 --> 00:17:31.750
It doesn't look like the equities are good for your client.
335
00:17:31.750 --> 00:17:34.100
But the Law might not get the other side
336
00:17:34.100 --> 00:17:35.360
where they want to be.
337
00:17:35.360 --> 00:17:39.620
But here typical way to approach this normally
338
00:17:39.620 --> 00:17:42.240
would have been to sue on the basis of
339
00:17:42.240 --> 00:17:44.810
the contract violation on the purchase and sale.
340
00:17:44.810 --> 00:17:46.490
But you're saying in this case there's a set,
341
00:17:46.490 --> 00:17:50.520
there were separate releases instead of the typical language
342
00:17:50.520 --> 00:17:52.700
in the purchase and sale that released your home,
343
00:17:52.700 --> 00:17:54.593
your clients from all liability.
344
00:17:55.600 --> 00:17:57.040
That's correct.
345
00:17:57.040 --> 00:17:58.430
And then there was a clause.
346
00:17:58.430 --> 00:18:00.730
And there was an inspection done by the buyer.
347
00:18:01.684 --> 00:18:03.083
And the inspector told the buyer-
348
00:18:03.083 --> 00:18:03.916
The inspector hired by the buyer said,
349
00:18:03.916 --> 00:18:06.680
"Hey check out. We didn't look at the permitting history.
350
00:18:06.680 --> 00:18:08.550
You should do that basically."
351
00:18:08.550 --> 00:18:09.383
Yes.
352
00:18:11.250 --> 00:18:14.049
Any further questions for Mr. Lewin.
353
00:18:14.049 --> 00:18:15.337
Thank you Mr. Lewin.
354
00:18:15.337 --> 00:18:16.170
Mr. McGlynn.
355
00:18:17.660 --> 00:18:18.780
Thank you. Good morning your Honors.
356
00:18:18.780 --> 00:18:20.840
And may it please the court.
357
00:18:20.840 --> 00:18:25.840
Taking up the questions posed by Justices Kafker and Cypher.
358
00:18:27.260 --> 00:18:30.390
Under this contract there would have been no remedy.
359
00:18:30.390 --> 00:18:34.870
And the remedy here is based upon two things, your Honors.
360
00:18:34.870 --> 00:18:37.210
Latent defects number one.
361
00:18:37.210 --> 00:18:40.440
And number two defects that were concealed.
362
00:18:40.440 --> 00:18:42.680
Defects that were illegal.
363
00:18:42.680 --> 00:18:44.690
In this particular instance the remedy,
364
00:18:44.690 --> 00:18:46.710
putting aside Chapter 93A,
365
00:18:46.710 --> 00:18:49.940
is breach of the implied warranty of habitability.
366
00:18:49.940 --> 00:18:53.980
For the simple reason that an exculpatory clause
367
00:18:53.980 --> 00:18:58.120
or a release in a contract is not going to a bar
368
00:18:58.120 --> 00:19:00.186
that type of a remedy so long as-
369
00:19:00.186 --> 00:19:02.380
I find that really odd.
370
00:19:02.380 --> 00:19:04.850
I mean, I understand the 93A claim.
371
00:19:04.850 --> 00:19:07.290
But I mean the breach of
372
00:19:07.290 --> 00:19:08.770
the implied warranty of habitability.
373
00:19:08.770 --> 00:19:13.200
They lived in the house themselves for a long time, right?
374
00:19:13.200 --> 00:19:16.350
I mean, so I'm not handy.
375
00:19:16.350 --> 00:19:18.770
But say I we're like Justice Gaziano.
376
00:19:18.770 --> 00:19:21.410
I'm a very handy homeowner.
377
00:19:21.410 --> 00:19:24.103
And I make improvements to my house.
378
00:19:27.240 --> 00:19:30.510
And then down the road I sell the house.
379
00:19:30.510 --> 00:19:33.659
I'm you know, I live in it for years.
380
00:19:33.659 --> 00:19:36.070
Gaziano got all the permits he needed.
381
00:19:36.070 --> 00:19:38.150
Yeah, but I'm just trying to understand
382
00:19:39.005 --> 00:19:42.930
how we've got an implied warranty of habitability here.
383
00:19:42.930 --> 00:19:45.133
A lot of people work on their homes.
384
00:19:46.650 --> 00:19:48.883
It just seems like that's a real reach.
385
00:19:50.350 --> 00:19:52.000
Justice Kafker,
386
00:19:52.000 --> 00:19:53.910
that is not this case.
387
00:19:53.910 --> 00:19:56.640
Obviously somebody that goes down to Home Depot
388
00:19:56.640 --> 00:20:00.370
on the weekend and gets a new kitchen
389
00:20:00.370 --> 00:20:02.830
or a new bathroom and remodels it.
390
00:20:02.830 --> 00:20:06.320
That's what not, what's did not happen here.
391
00:20:06.320 --> 00:20:09.260
What we have here is evidence that was presented
392
00:20:09.260 --> 00:20:12.450
to the jury during this nine day trial.
393
00:20:12.450 --> 00:20:15.810
That not only were the Gagliardi's engaged
394
00:20:15.810 --> 00:20:17.770
in trade or commerce under 93A.
395
00:20:17.770 --> 00:20:20.480
But they were also builder-vendors.
396
00:20:20.480 --> 00:20:22.590
We have a gentleman Mr.Gagliardi,
397
00:20:22.590 --> 00:20:26.740
who had a construction license for I believe 50 years.
398
00:20:26.740 --> 00:20:29.830
He also owned his own masonry business.
399
00:20:29.830 --> 00:20:33.010
He would also qualified and was registered
400
00:20:33.010 --> 00:20:35.070
as a home renovator.
401
00:20:35.070 --> 00:20:38.510
So we have construction knowledge and experience.
402
00:20:38.510 --> 00:20:42.800
We also have Mrs. Gagliardi who was part of that business.
403
00:20:42.800 --> 00:20:45.770
Managing it from the Dover home.
404
00:20:45.770 --> 00:20:48.150
So we have one of the the elements
405
00:20:48.150 --> 00:20:49.750
we think of builder-vendor here.
406
00:20:49.750 --> 00:20:53.430
This experience, this expertise.
407
00:20:53.430 --> 00:20:54.520
They also would...
408
00:20:54.520 --> 00:20:56.510
The jury also heard your Honors
409
00:20:56.510 --> 00:20:59.700
that Mr.Gagliardi in particular
410
00:20:59.700 --> 00:21:03.610
performed a fair amount of the renovations
411
00:21:03.610 --> 00:21:06.485
to the kitchen and the so-called Tuscan room himself
412
00:21:06.485 --> 00:21:07.760
and with his son.
413
00:21:07.760 --> 00:21:10.450
He used equipment from his business
414
00:21:10.450 --> 00:21:14.651
J & F Contracting to perform some of that work he-
415
00:21:14.651 --> 00:21:17.820
Mr. McGlynn, and again I don't mean to be difficult.
416
00:21:17.820 --> 00:21:22.060
I'm just trying to make sure that we don't convert every
417
00:21:22.060 --> 00:21:24.120
homeowner who goes to Home Depot
418
00:21:24.120 --> 00:21:26.650
into an implied warranty person.
419
00:21:26.650 --> 00:21:27.483
How is...
420
00:21:28.450 --> 00:21:31.640
I understand they did some work
421
00:21:31.640 --> 00:21:35.310
and converting some homes into rental units.
422
00:21:35.310 --> 00:21:39.030
But how long do they live in this Dover before,
423
00:21:39.030 --> 00:21:41.920
after the renovations, before they sell it?
424
00:21:41.920 --> 00:21:43.633
They live for how long?
425
00:21:44.650 --> 00:21:48.540
They acquired the property in 2002 I believe.
426
00:21:48.540 --> 00:21:53.540
They began renovations Justice Kafker at approximately 2006.
427
00:21:54.640 --> 00:21:58.290
Those renovations were completed in 2010.
428
00:21:58.290 --> 00:22:01.600
We don't know the exact date because Mrs.Gagliardi
429
00:22:01.600 --> 00:22:05.395
spoliated crucial evidence relating to the renovations.
430
00:22:05.395 --> 00:22:06.860
They live in...
431
00:22:06.860 --> 00:22:08.680
While those renovations are going
432
00:22:08.680 --> 00:22:11.810
I take it they're living in the home during...
433
00:22:11.810 --> 00:22:13.360
They're like Thomas Jefferson.
434
00:22:13.360 --> 00:22:14.480
They're living in their house
435
00:22:14.480 --> 00:22:16.710
while they're constructing, right?
436
00:22:16.710 --> 00:22:19.450
That is my understanding, your Honor.
437
00:22:19.450 --> 00:22:24.450
And once those renovations were completed in 2010.
438
00:22:24.580 --> 00:22:28.110
In May 2011, less than a year later.
439
00:22:28.110 --> 00:22:29.850
They put the house on the market
440
00:22:31.428 --> 00:22:34.840
with an asking price of about $3.3 million
441
00:22:34.840 --> 00:22:38.040
a roughly 1.12 million
442
00:22:38.040 --> 00:22:42.300
over what they purchased it for in 2002.
443
00:22:42.300 --> 00:22:45.210
The point is that that's only one of the factors
444
00:22:45.210 --> 00:22:47.520
that would determine what we would submit
445
00:22:47.520 --> 00:22:51.020
as a pervasive element of commerciality
446
00:22:51.020 --> 00:22:53.140
in terms of what they did here.
447
00:22:53.140 --> 00:22:56.970
This was Justice Kafker and your Honors,
448
00:22:56.970 --> 00:23:01.330
I believe the fifth property where what we discussed
449
00:23:01.330 --> 00:23:04.720
and presented to the jury during the trial.
450
00:23:04.720 --> 00:23:07.350
Was the Gagliardi business model.
451
00:23:07.350 --> 00:23:09.580
Putting aside the fact that they were
452
00:23:09.580 --> 00:23:11.450
operating their two businesses;
453
00:23:11.450 --> 00:23:14.240
the construction business and the real estate business
454
00:23:14.240 --> 00:23:15.800
out of the Dover property.
455
00:23:15.800 --> 00:23:17.712
And they stored equipment.
456
00:23:17.712 --> 00:23:18.614
There is a clear record-
457
00:23:18.614 --> 00:23:20.097
Can you go back to
458
00:23:20.097 --> 00:23:22.010
that storage of equipment issue for a moment.
459
00:23:22.010 --> 00:23:26.060
Reading the record it seems to me that there's some conflict
460
00:23:27.883 --> 00:23:29.690
Your argument is that they're storing
461
00:23:29.690 --> 00:23:30.660
all this equipment there.
462
00:23:30.660 --> 00:23:33.130
The other side saying, "Look, it just happened once or twice
463
00:23:33.130 --> 00:23:36.440
a year when he was going. When his jobs were close to home
464
00:23:36.440 --> 00:23:37.760
he kept his truck there."
465
00:23:37.760 --> 00:23:39.743
What the resolution of that?
466
00:23:41.740 --> 00:23:43.660
Considering the standards of review
467
00:23:43.660 --> 00:23:45.640
of this case Justice Cypher.
468
00:23:45.640 --> 00:23:47.960
If there was conflicting evidence on that
469
00:23:47.960 --> 00:23:51.627
the jury was certainly free to choose, to reject that
470
00:23:51.627 --> 00:23:53.170
"it was only here a couple of weeks".
471
00:23:53.170 --> 00:23:56.040
And under the standards of review Justice Cypher
472
00:23:56.880 --> 00:24:01.880
the contrary evidence should be rejected and not considered.
473
00:24:01.890 --> 00:24:04.500
So the jury certainly took that into consideration.
474
00:24:04.500 --> 00:24:06.280
Not only the trucks that were stored there,
475
00:24:06.280 --> 00:24:09.200
but also the scaffolding that they use to install
476
00:24:09.200 --> 00:24:11.220
the chimney and some of the foundation work
477
00:24:11.220 --> 00:24:13.930
on the so-called Tuscan home.
478
00:24:13.930 --> 00:24:16.140
So this business model
479
00:24:17.570 --> 00:24:20.680
extended for approximately four decades
480
00:24:20.680 --> 00:24:24.890
and they had a cycle where they would acquire a property.
481
00:24:24.890 --> 00:24:27.520
They would renovate it as my brother indicated.
482
00:24:27.520 --> 00:24:31.300
I believe in two properties they expanded from one apartment
483
00:24:31.300 --> 00:24:34.580
to two apartments to double the rent rental income.
484
00:24:34.580 --> 00:24:36.260
They did that repeatedly.
485
00:24:36.260 --> 00:24:38.810
They use the equity in these properties
486
00:24:38.810 --> 00:24:40.800
to acquire additional properties.
487
00:24:40.800 --> 00:24:44.270
They use the equity of those properties to acquire Dover.
488
00:24:44.270 --> 00:24:45.180
And then-
489
00:24:45.180 --> 00:24:48.360
Did they ever live in those homes?
490
00:24:48.360 --> 00:24:50.801
I understand-
[McGlynn Yes They.
491
00:24:50.801 --> 00:24:52.230
Sorry.
492
00:24:52.230 --> 00:24:53.820
Yes they did.
493
00:24:53.820 --> 00:24:55.481
I'm sorry, I didn't mean to talk over you.
494
00:24:55.481 --> 00:24:58.003
It's a little bit of the electronic transmission.
495
00:24:58.003 --> 00:25:01.100
As we stated in our briefing papers.
496
00:25:01.100 --> 00:25:05.270
The evidence was that they would stay in a home.
497
00:25:05.270 --> 00:25:07.140
Not every home that they acquired,
498
00:25:07.140 --> 00:25:08.880
but for approximately 10 years.
499
00:25:08.880 --> 00:25:12.480
During that time they'd renovate them.
500
00:25:12.480 --> 00:25:14.370
They'd then live in them for a while
501
00:25:14.370 --> 00:25:15.250
and then they would put them in the-
502
00:25:15.250 --> 00:25:18.000
Can I be more specific
Certainly.
503
00:25:18.000 --> 00:25:21.420
So let's just focus on where you're...
504
00:25:22.500 --> 00:25:25.640
I don't mean to mispronounce them, the Gagliardi's
505
00:25:25.640 --> 00:25:26.930
lived their whole life.
506
00:25:26.930 --> 00:25:28.720
Forget about their children and other things.
507
00:25:28.720 --> 00:25:30.950
So they lived in how many...
508
00:25:30.950 --> 00:25:33.300
cause I'm sure Mr. McGlynn
509
00:25:33.300 --> 00:25:35.543
you've probably lived in five houses.
510
00:25:36.870 --> 00:25:39.550
A lot of us had moved in, you know
511
00:25:39.550 --> 00:25:42.170
benefited from the going-up in the market.
512
00:25:42.170 --> 00:25:45.270
I just want to make sure we're not writing decisions
513
00:25:45.270 --> 00:25:47.590
that apply to everybody here.
514
00:25:47.590 --> 00:25:51.400
But something specific because a lot of people
515
00:25:51.400 --> 00:25:54.810
improve their homes, move to a better home,
516
00:25:54.810 --> 00:25:57.070
improve that home, and they moved to another one.
517
00:25:57.070 --> 00:25:59.570
I just want to make sure we're not sweeping in
518
00:25:59.570 --> 00:26:03.200
those people into a 93A claim.
519
00:26:03.200 --> 00:26:07.010
So just tell me how many times did the Gagliardi
520
00:26:08.440 --> 00:26:11.963
change homes, go ahead, over their lifetime here.
521
00:26:12.950 --> 00:26:14.160
I believe your Honor,
522
00:26:14.160 --> 00:26:19.080
that they changed homes approximately four or five times.
523
00:26:19.080 --> 00:26:22.280
They lived in two of the rental properties
524
00:26:23.190 --> 00:26:24.730
which they renovated.
525
00:26:24.730 --> 00:26:28.130
Then they use the equity in those rental properties to
526
00:26:28.130 --> 00:26:29.810
acquire a commercial property,
527
00:26:29.810 --> 00:26:31.900
which obviously they did not live in.
528
00:26:31.900 --> 00:26:34.710
They use the equity to acquire the Dover property
529
00:26:34.710 --> 00:26:36.710
which they did live in and-
530
00:26:36.710 --> 00:26:40.410
Is that different from a normal people
531
00:26:40.410 --> 00:26:42.580
who are successful in the world.
532
00:26:42.580 --> 00:26:44.480
They're making little money and they're buying
533
00:26:44.480 --> 00:26:45.930
a little bigger house.
534
00:26:45.930 --> 00:26:48.860
Are they really different from just what
535
00:26:48.860 --> 00:26:50.070
a lot of people want to do.
536
00:26:50.070 --> 00:26:51.600
The American dream you know,
537
00:26:51.600 --> 00:26:54.270
go from one house to another that's a little better
538
00:26:54.270 --> 00:26:56.020
than the house they were in before.
539
00:26:57.750 --> 00:27:01.080
This is not a case of the American dream
540
00:27:01.080 --> 00:27:04.690
where they've had some good luck in
541
00:27:04.690 --> 00:27:08.520
maybe capitalizing on a hot market.
542
00:27:08.520 --> 00:27:11.210
This is something that they have done over 40 years.
543
00:27:11.210 --> 00:27:12.510
Where they would renovate.
544
00:27:13.370 --> 00:27:14.950
They obviously they would improve
545
00:27:14.950 --> 00:27:16.510
the value of those properties.
546
00:27:16.510 --> 00:27:18.950
They would pull out the equity from those properties
547
00:27:18.950 --> 00:27:20.850
to acquire other properties.
548
00:27:20.850 --> 00:27:24.710
They would take that equity and use it to renovate.
549
00:27:24.710 --> 00:27:26.490
Dover was within that chain.
550
00:27:26.490 --> 00:27:30.190
I believe it was the fifth of the six properties
551
00:27:30.190 --> 00:27:31.480
that they acquired.
552
00:27:31.480 --> 00:27:35.730
They then use the equity in Dover to acquire Weston.
553
00:27:35.730 --> 00:27:39.080
They moved out of Dover to Weston at the time that
554
00:27:39.080 --> 00:27:43.610
they sold the house to the Sullivans in 2013.
555
00:27:43.610 --> 00:27:45.640
There is evidence Justice Kafker
556
00:27:45.640 --> 00:27:49.090
that they considered renting out Dover.
557
00:27:49.090 --> 00:27:52.410
But the client decided not to do that because of its
558
00:27:52.410 --> 00:27:56.020
remoteness and its size it was going to be a difficult rent.
559
00:27:56.020 --> 00:27:59.070
But what they did do is while they were finishing
560
00:27:59.070 --> 00:28:02.010
the renovations in Dover they use the equity from Dover.
561
00:28:02.010 --> 00:28:06.470
They acquired Weston, they renovated Weston in 2009.
562
00:28:07.510 --> 00:28:11.510
And they use that and generated approximately $36,000
563
00:28:11.510 --> 00:28:13.690
worth of income annually
564
00:28:13.690 --> 00:28:16.150
just from that one property alone.
565
00:28:16.150 --> 00:28:19.000
Again this rental income
566
00:28:19.000 --> 00:28:21.520
from the evidence presented to the jury.
567
00:28:21.520 --> 00:28:24.920
Was well over 50% of the total income
568
00:28:24.920 --> 00:28:27.490
that these individuals received annually.
569
00:28:27.490 --> 00:28:30.030
It was disproportionately
570
00:28:30.030 --> 00:28:32.700
rental income as opposed to salaries.
571
00:28:32.700 --> 00:28:35.860
They also obviously achieved a significant wealth by
572
00:28:35.860 --> 00:28:40.860
virtue of the increase in value of these properties
573
00:28:41.520 --> 00:28:43.549
as they were renovated.
574
00:28:43.549 --> 00:28:48.549
You recognize from Dover, that they lost about $300,000.
575
00:28:50.100 --> 00:28:51.493
But let me ask you this,
576
00:28:51.493 --> 00:28:56.343
because I wanna come at this from a different perspective.
577
00:28:57.220 --> 00:29:00.140
Because you've been asked a lot of questions about,
578
00:29:00.140 --> 00:29:02.157
and so is Mr. Lewin about
579
00:29:02.157 --> 00:29:04.440
"Is this the right course of action here?"
580
00:29:04.440 --> 00:29:07.460
And we've got a statute of repose that's complicating it.
581
00:29:07.460 --> 00:29:12.160
But one could argue that what's going on here is trying to
582
00:29:12.160 --> 00:29:16.210
shizzle in this circumstance into
583
00:29:16.210 --> 00:29:18.590
a course of trade and commerce.
584
00:29:18.590 --> 00:29:23.590
And I know that the fraud case was dismissed.
585
00:29:26.064 --> 00:29:28.870
But why isn't this fraud?
586
00:29:28.870 --> 00:29:32.767
You've got fragmentary information, at least.
587
00:29:34.830 --> 00:29:36.457
The United States Supreme court once said,
588
00:29:36.457 --> 00:29:40.457
"The best way to lie is, to surround truth around the lie."
589
00:29:41.340 --> 00:29:46.340
So I don't understand why
590
00:29:46.810 --> 00:29:47.720
instead of...
591
00:29:47.720 --> 00:29:49.540
Well I do understand because you got
592
00:29:49.540 --> 00:29:52.050
attorney fees and multiple damages.
593
00:29:52.050 --> 00:29:54.420
But it seems to me that the real problem
594
00:29:54.420 --> 00:29:58.050
in what's going on here is fraud.
595
00:29:58.050 --> 00:30:01.857
They decided to talk and not say the real big thing which is
596
00:30:01.857 --> 00:30:03.220
"Not only do we not have a permit.
597
00:30:03.220 --> 00:30:05.170
But we got structural problems here.
598
00:30:05.170 --> 00:30:07.397
And by the way we're contractors."
599
00:30:10.458 --> 00:30:15.130
To address your question in two fold banner Justice Lowy.
600
00:30:15.130 --> 00:30:17.500
Number one, the fraud count was dismissed.
601
00:30:17.500 --> 00:30:18.640
We do think-
I know.
602
00:30:18.640 --> 00:30:20.770
We do think that there was actionable fraud
603
00:30:20.770 --> 00:30:24.820
and that was the basis of one of our cross appeals.
604
00:30:24.820 --> 00:30:29.180
There was actionable fraud under Kannavos verses Annino here
605
00:30:29.180 --> 00:30:32.220
Based upon the representations in the marketing materials
606
00:30:32.220 --> 00:30:34.220
touting these rather these renovations.
607
00:30:34.220 --> 00:30:35.473
Obviously without disclosing
608
00:30:35.473 --> 00:30:38.360
no permits and defective construction.
609
00:30:38.360 --> 00:30:42.600
And also when Mr. and Mrs.Gagliardi separately escorted
610
00:30:42.600 --> 00:30:46.110
the Sullivans around during the pre-closing inspection.
611
00:30:46.110 --> 00:30:51.110
And Mr.Gagliardi is promoting the renovations he made in
612
00:30:51.580 --> 00:30:52.930
the so called Tuscan room.
613
00:30:52.930 --> 00:30:55.790
Mrs.Gagliardi is promoting the renovation she made.
614
00:30:55.790 --> 00:30:57.240
No, but they're proud of...
615
00:30:58.159 --> 00:30:59.250
A couple of things,
616
00:30:59.250 --> 00:31:03.310
One they liked them, they're proud of this room.
617
00:31:03.310 --> 00:31:07.890
They've lived in it. It's there...
618
00:31:07.890 --> 00:31:09.750
Whether they know its,
619
00:31:09.750 --> 00:31:11.730
if they knew it was structurally deficient
620
00:31:11.730 --> 00:31:15.347
they were risking their own lives living in there.
621
00:31:15.347 --> 00:31:19.670
I guess Mr. McGlynn, none of us trust
622
00:31:19.670 --> 00:31:22.220
the person who sells us our house.
623
00:31:22.220 --> 00:31:25.303
That's why we hire a building inspectors.
624
00:31:27.443 --> 00:31:32.443
And you know have the termites person come.
625
00:31:33.370 --> 00:31:36.683
I'm not sure this is fraud as opposed to,
626
00:31:38.410 --> 00:31:39.671
They're not...
627
00:31:39.671 --> 00:31:42.830
I don't see this necessarily as fraud as is,
628
00:31:42.830 --> 00:31:45.830
isn't this what the building inspectors supposed to pick up?
629
00:31:46.790 --> 00:31:50.490
Your client is also a sophisticated business person
630
00:31:50.490 --> 00:31:52.733
who can afford a building inspector.
631
00:31:54.920 --> 00:31:55.947
They must look at it and say,
632
00:31:55.947 --> 00:31:57.840
"Wow, this wiring isn't right."
633
00:31:57.840 --> 00:31:59.170
You know, I don't know.
634
00:31:59.170 --> 00:32:01.470
It just seems like this is tricky, this thing.
635
00:32:03.890 --> 00:32:06.690
Yes, there was a building inspector here.
636
00:32:06.690 --> 00:32:09.100
But the jury heard the testimony from
637
00:32:09.100 --> 00:32:10.070
the building inspector.
638
00:32:10.070 --> 00:32:12.063
The jury heard the testimony from
639
00:32:12.063 --> 00:32:15.550
the Sullivan's as well as the expert witnesses.
640
00:32:15.550 --> 00:32:16.500
And whether or not
641
00:32:16.500 --> 00:32:19.690
the building inspectors testimony may have been
642
00:32:19.690 --> 00:32:23.870
consistent with what you're suggesting Justice Kafker.
643
00:32:23.870 --> 00:32:27.190
The jury had every right to reject that testimony.
644
00:32:27.190 --> 00:32:28.580
And it should not be considered
645
00:32:28.580 --> 00:32:31.650
for purposes of the standards of review.
646
00:32:31.650 --> 00:32:34.940
which cabins all of the evidence that we have in this case.
647
00:32:34.940 --> 00:32:36.010
The evidence-
648
00:32:36.010 --> 00:32:37.850
Mr. McGlynn, can I ask on that point?
649
00:32:37.850 --> 00:32:40.950
And again this is in your, so let me finish the question.
650
00:32:40.950 --> 00:32:45.950
So did they move to dismiss the 93A
651
00:32:47.797 --> 00:32:51.610
and the implied warranty of habitability claims
652
00:32:51.610 --> 00:32:54.833
when they were originally brought?
653
00:32:55.960 --> 00:32:58.090
If I understand your question your Honor.
654
00:32:58.090 --> 00:33:01.640
Via for example a motion to dismiss or summary judgment.
655
00:33:01.640 --> 00:33:05.410
Yeah. Was it-
Twice, twice.
656
00:33:05.410 --> 00:33:06.243
They tried-
Twice
657
00:33:07.706 --> 00:33:08.796
Okay.
658
00:33:08.796 --> 00:33:11.250
Twice they tried and they failed.
659
00:33:11.250 --> 00:33:15.410
We are up as, as you are well aware on two motions;
660
00:33:15.410 --> 00:33:18.938
motion to alter or amend or a motion to new trial.
661
00:33:18.938 --> 00:33:22.970
The Justices are certainly much better aware of what
662
00:33:22.970 --> 00:33:24.480
the standards are there.
663
00:33:24.480 --> 00:33:28.090
The evidence here is we think substantial of
664
00:33:28.090 --> 00:33:32.130
not only trade or commerce but the builder-vendor.
665
00:33:32.130 --> 00:33:34.760
I just want to get back to one thing.
666
00:33:34.760 --> 00:33:36.139
And that is we do-
667
00:33:36.139 --> 00:33:37.780
Your time is running out.
668
00:33:37.780 --> 00:33:39.000
So be quick, please.
669
00:33:39.000 --> 00:33:40.700
All right, we don't believe that there's any
670
00:33:40.700 --> 00:33:42.370
legal flood gates that are,
671
00:33:42.370 --> 00:33:44.630
litigation flood gates that are going to be open here
672
00:33:44.630 --> 00:33:47.660
because a plaintiff is going to have to demonstrate
673
00:33:47.660 --> 00:33:49.730
each and every factor for a breach.
674
00:33:49.730 --> 00:33:51.610
For example of 93A or violation of 93A
675
00:33:51.610 --> 00:33:54.900
or the breach of implied warranty,
676
00:33:54.900 --> 00:33:57.360
builder-vendor causation damages,
677
00:33:57.360 --> 00:33:58.540
statute of limitations,
678
00:33:58.540 --> 00:33:59.910
statute of oppose.
679
00:33:59.910 --> 00:34:00.920
Thank you.
680
00:34:00.920 --> 00:34:02.120
Thank you, Mr.McGlynn.