By:
Jordan S. Tafflin
Robert M. Cavalier and Jordan S. Tafflin recently prevailed on a motion for
summary judgment, on behalf of TEB Associates, Inc., and two (2) of its
principals/employees. The court
dismissed plaintiffs’ claims against TEB sounding in negligent
inspection/contractual interference and fraud.
On or about January 24, 2009 plaintiffs entered into an
agreement of sale with a now defunct builder for the purchase and construction
of a modular home. Prior to the
setting/building of the modular home, there was an old house on a portion of
plaintiffs
property. Plaintiffs themselves
demolished and removed much of the old home, but left the existing foundation
underground, and entered into a contract obligating the builder to remove the
foundation. The builder never
removed this foundation.
During the process, plaintiffs entered into a
construction mortgage commitment with a bank (not TEB) for financing of the
construction. Contained within the
construction mortgage commitment was a provision stating, “[I]nspections will be
performed by TEB Associates and all advances will be made for work
completed...[i]nspections are performed to assure the Bank that the value of the
work is at least sufficient to cover our payments to you.”
In essence, TEB’s very limited role in the construction of plaintiffs’
home was to provide the bank with ongoing
ground level/visual construction
inspections (rather than underground inspections) to determine the
funds being requested for work completed on plaintiffs=
property was sufficient.
Accordingly, TEB was not retained to perform an underground investigation of
plaintiffs= property.
Consistent with their responsibilities, TEB conducted five (5) different
visual observations for the bank and prepared separate reports for each
inspection, which were only submitted to the bank.
Throughout the litigation, plaintiffs put forth various
arguments claiming TEB somehow owed a duty to them, including going so far as to
produce an expert report from Jonathan P.
Dixon an engineer and “construction manager”.
Dixon opined TEB did not satisfactorily perform the services provided to
the bank and thus breached a non-specified duty presumably owed to the bank.
Further, he contended TEB failed to inspect the quality of one aspect of
the work and specifically whether the remnants of the old foundation were fully
and completely removed from below the surface of the earth, pursuant to a
contractual obligation on the part of the builder.
In its motion for summary judgment, TEB argued, and the
court agreed, TEB did not owe a duty to the plaintiffs in their role in the
construction of plaintiffs’ modular home.
Specifically, as noted above, the construction mortgage commitment stated
TEB’s inspections were performed solely for the bank’s benefit and not for
plaintiffs. Further, discovery
confirmed the bank (and not the plaintiffs) retained TEB, and the plaintiffs
never received or reviewed the TEB residential inspection reports until after
litigation had begun. As such,
plaintiffs could not have relied on any TEB inspection report as they did not
know they even existed. The court
also rejected plaintiffs’ third party beneficiary argument.
Also in their motion for summary judgment, TEB argued, and
the court agreed, plaintiffs failed to show TEB committed fraud.
The court concurred with TEB in that they had no knowledge (and were not
expected to know) the pre-existing foundation and footings still remained
underneath plaintiffs’ home at the time of their inspections as TEB was not
retained to perform an underground investigation.
In fact, deposition testimony revealed the plaintiffs themselves were
aware of the pre-existing footing, and the existence of the preexisting
foundation and footings could not be seen without the use of some type of
excavating equipment.
