Court Opinion

ID: 2779011
Source: CourtListenerOpinion
Date Created: 2015-02-12 15:03:03.492393+00
Date Added: 2024-06-11T11:28:11.030812
License: Public Domain

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                DISTRICT OF COLUMBIA COURT OF APPEALS

                                    No. 14-CV-374

                     THORSTEN P. SUNDBERG, et al., APPELLANTS,

                                           v.

                         TTR REALTY, LLC, et al., APPELLEES.

                            Appeal from the Superior Court
                             of the District of Columbia
                                   (CAB-4366-13)

                        (Hon. Judith N. Macaluso, Trial Judge)

(Argued December 11, 2014                            Decided February 12, 2015)

      Timothy R. Clinton, with whom Matthew J. Peed was on the brief, for
appellants.

      Dale K. Cathell, pro hac vice, by special leave of court, with whom J. Hess
and Richard M. Kremen were on the brief, for appellee David Winer.

    Spencer K. Stephens for appellees TTR Realty, LLC, and Mansour Abu-
Rahmeh.

     Before WASHINGTON, Chief Judge, BLACKBURNE-RIGSBY, Associate Judge,
and OKUN, Associate Judge, Superior Court of the District of Columbia.

      
          Sitting by designation pursuant to D.C. Code § 11-707 (a) (2012 Repl.).
                                          2

      OKUN, Associate Judge, Superior Court of the District of Columbia:          We

live in an age of seemingly boundless information, and this information serves as

one of our most vital currencies. In this case, the purchasers of a residence allege,

in effect, that they were deprived of this currency because they were not provided

with accurate information concerning an impending construction project at a

neighboring building. With one exception, the trial court found that the purchasers

failed to sufficiently allege a cause of action in their complaint and granted the

seller‟s and realtor‟s motions to dismiss. In granting the motions to dismiss, the

trial court found that the purchasers could not establish that they detrimentally

relied on the seller‟s and realtor‟s alleged misrepresentations and omissions, and

could not establish a breach of the covenant of good faith and fair dealing, because

the alleged misrepresentations and omissions occurred after the purchasers signed

the contract to buy the property. Although we believe that there may be cases

where a cause of action can properly be based on the failure to provide accurate

information about a property, even if the misrepresentations or omissions occur

after the sales contract is signed, this case is not one of them. Accordingly, for the

reasons set forth below, we affirm.
                                         3

              PROCEDURAL AND FACTUAL BACKGROUND

      In the fall of 2012, appellants Thorsten P. Sundberg (“Sundberg”) and Debra

T. Huang (“Huang”) purchased a residence from appellee David Winer (“Winer”),

who sold the residence by using the services of a realty company and realtor,

appellees TTR Realty, LLC (“TTR Realty”), and Mansour Abu-Rahmeh (“Abu-

Rahmeh”). According to the complaint filed by appellants, after the parties signed

a contract for the sale of the property, but before the parties actually transferred

title to the property, appellees intentionally provided false information and

withheld material information from appellants about a construction project that

was scheduled to occur at the Old Pawn Shop, a building across the street from

their residence. The complaint further alleged that the construction project began

shortly after appellants moved into their residence, and that this construction

substantially and permanently diminished the value of their property. Finally,

appellants claimed that they would not have purchased the property, and instead

would have breached the contract and been subject to the contract‟s remedies for

breach of contract, had they been truthfully informed of the impending

construction project. The appellants alleged that appellees‟ actions violated the

Consumer Protection Procedures Act (“CPPA” or the “Act”) and the covenant of
                                              4

good    faith   and   fair   dealing,   and       involved   fraudulent   and   negligent

misrepresentations and omissions.

       Appellees TTR Realty and Abu-Rahmeh filed a motion to dismiss the

complaint, arguing that the complaint failed to state a cause of action for two

reasons. First, they argued that all the components of the sales contract were

subsumed into the deed that was signed by the parties more than two months after

the contract was signed, and that the deed did not contain any false statements

concerning the construction plans of the Old Pawn Shop. Second, they claimed

that their disclosure obligations were limited to disclosures concerning the physical

condition of the property purchased by appellants, and did not extend to the

condition of neighboring properties. The trial court rejected these arguments and

denied the motion to dismiss.

       Appellee Winer, meanwhile, filed a motion to dismiss on very different

grounds. Winer argued that the trial court should dismiss the counts alleging

fraudulent and negligent misrepresentations and omissions because the alleged

misrepresentations and omissions occurred after the execution of the sales contract

and appellants, therefore, could not have relied on them at the time they signed the

contract. In addition, Winer asserted that the CPPA count should be dismissed
                                           5

because the statute only applies to merchants and he was not a merchant as defined

by the Act. Finally, Winer claimed that the count alleging a breach of the covenant

of good faith and fair dealing should be dismissed because he fully performed his

obligations under the contract when he conveyed good title to the purchasers and

vacated the premises in a timely manner.

      The trial court granted Winer‟s motion, dismissing the CPPA and breach of

good faith and fair dealing counts with prejudice, and dismissing the

misrepresentation and omission counts without prejudice. More specifically, the

trial court rejected appellants‟ argument that the CPPA applied to Winer, even

though he was not a merchant, because Winer conspired with TTR Realty and

Abu-Rahmeh, and aided and abetted their violations. The court held that a non-

merchant could not be vicariously liable under the CPPA, noting that a contrary

result would establish a cause of action against a non-merchant even though the

CPPA excluded non-merchants from its coverage.1 The trial court also dismissed

the breach of good faith and fair dealing count with prejudice, rejecting appellants‟

argument that the withholding of accurate information about the construction plans

      1
           Although appellants argued that Winer could be liable under both
conspiracy and aider and abettor theories, the trial court only addressed appellants‟
conspiracy theory in its order granting Winer‟s motion to dismiss. However, the
trial court explicitly rejected appellants‟ aider and abettor theory when it denied
appellants‟ subsequent motion for reconsideration.
                                              6

at the Old Pawn Shop deprived appellants of the fruits of the contract, and agreeing

with Winer that appellants received the fruits of the contract when they received

title to the property at settlement.

      Finally,   the   trial   court   held       that   the   fraudulent   and   negligent

misrepresentation and omission counts should be dismissed, finding that appellants

failed to show detrimental reliance because the alleged misrepresentations and

omissions occurred after the contract was signed. The court rejected appellants‟

argument that appellees‟ misrepresentations and omissions deprived them of the

opportunity to not purchase the property and instead face the remedies provided in

the contract for breach of contract. The trial court dismissed these counts without

prejudice, providing appellants the opportunity to allege with more particularity

any misrepresentations or omissions that occurred prior to the signing of the sales

contract.

      After the trial court granted Winer‟s motion to dismiss, TTR Realty and

Abu-Rahmeh filed a motion for judgment or, in the alternative, for reconsideration.

The trial court granted this motion in part, dismissing the fraudulent

misrepresentation and omission counts, without prejudice, and dismissing the

breach of good faith and fair dealing count with prejudice, for the reasons set forth
                                         7

in the order granting Winer‟s motion to dismiss. However, the trial court did not

dismiss the CPPA count against TTR Realty and Abu-Rahmeh, finding that they

were merchants under the CPPA and also noting that the complaint adequately

alleged a violation of the CPPA because the Act does not require detrimental

reliance as an element of a claim.

      Following the trial court‟s grant of Winer‟s motion to dismiss and its partial

grant of TTR Realty‟s and Abu-Rahmeh‟s motion for judgment, appellants filed a

motion to certify the case for appeal and to stay the trial proceedings, pursuant to

Super. Ct. Civ. R. 54 (b). The trial court granted appellants‟ motion, and this

appeal followed.2

      2
         Rule 54 (b) authorizes the trial court to enter a final appealable judgment
in cases involving multiple claims or multiple parties, even if some claims in the
case remain pending, upon a finding that there is no just reason to delay the appeal
and upon an express direction for entry of judgment. Because the trial court
entered such an order in this case, we have jurisdiction over this appeal. See, e.g.,
Dyhouse v. Baylor, 455 A.2d 900, 901 (D.C. 1983).
                                           8

                                      ANALYSIS

                            Motion to Dismiss Standard

      We review de novo the dismissal of a complaint under Super. Ct. Civ. R. 12

(b)(6) for failure to state a claim upon which relief can be granted. Potomac Dev.

Corp. v. District of Columbia, 28 A.3d 531, 543 (D.C. 2011); Grayson v. AT&T

Corp., 15 A.3d 219, 228 (D.C. 2011) (en banc).            In determining whether a

complaint sufficiently sets forth a claim, the court must construe the complaint in

the light most favorable to the plaintiff and must take the facts alleged in the

complaint as true.       Casco Marina Dev., L.L.C. v. District of Columbia

Redevelopment Land Agency, 834 A.2d 77, 81 (D.C. 2003). However, “the tenet

that a court must accept as true all of the allegations contained in a complaint is

inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice,” and “unadorned,

the-defendant-unlawfully-harmed-me accusation[s]” also are insufficient. Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (“a plaintiff‟s obligation to provide the „grounds‟ of his

„entitlement to relief‟ requires more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action will not do.”).
                                           9

      Rather, “[t]o survive a motion to dismiss [under Rule 12 (b)(6)], a complaint

must contain sufficient factual matter, accepted as true, to state a claim to relief

that is plausible on its face. A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged. The plausibility standard is not

akin to a „probability requirement,‟ but it asks for more than a sheer possibility that

a defendant has acted unlawfully.” Potomac Dev. Corp., 28 A.3d at 544 (quoting

Ashcroft, 556 U.S. at 678); see also Bell Atl. Corp., 550 U.S. at 555 (“Factual

allegations must be enough to raise a right to relief above the speculative level.”).

Likewise, “[w]here a complaint pleads facts that are „merely consistent with‟ a

defendant‟s liability, it „stops short of the line between possibility and plausibility

of entitlement to relief.‟” Id.

                                        CPPA

      The CPPA is a “comprehensive statute designed to provide procedures and

remedies for a broad range of practices which injure consumers.”               District

Cablevision Ltd. P’ship v. Bassin, 828 A.2d 714, 723 (D.C. 2003) (quoting Atwater

v. District of Columbia Dep’t of Consumer & Regulatory Affairs, 566 A.2d 462,

465 (D.C. 1989)). Indeed, we have long considered the CPPA to be a remedial
                                        10

statute that must be “construed and applied liberally to promote its purpose.”

Grayson, 15 A.3d at 244-45 (quoting D.C. Code § 28-3901 (c) (2012 Repl.)).

Nonetheless, the CPPA does not cover all consumer transactions, and instead only

covers “trade practices arising out of consumer-merchant relationships.” Snowder

v. District of Columbia, 949 A.2d 590, 599 (D.C. 2008) (quoting Howard v. Riggs

Nat’l Bank, 432 A.2d 701, 709 (D.C. 1981)). The CPPA defines a “merchant” in

relevant part as a person who, in the ordinary course of business, sells or supplies

consumer goods or services. See D.C. Code § 28-3901 (a)(3).

      In this case, appellants acknowledged that Winer was not a “merchant”

under the CPPA because he was not in the business of selling residential

properties. Nonetheless, they argued that Winer‟s actions were covered by the

CPPA because he conspired with and aided and abetted TTR Realty and Abu-

Rahmeh, who indisputably were merchants. See, e.g., Gomez v. Independence

Mgmt. of Delaware, Inc., 967 A.2d 1276, 1287 n.12 (D.C. 2009). The trial court

rejected this argument because it would extend liability beyond that authorized by

the CPPA. We agree with the trial court for the following reasons.

      First, we have not recognized the tort of aiding and abetting in the District,

see Flax v. Schertler, 935 A.2d 1091, 1107 (D.C. 2007), and we likewise have
                                         11

cited authority suggesting that “a claim of civil conspiracy does not lie for

violation of a statute” absent statutory language to the contrary. See Executive

Sandwich Shoppe, Inc. v. Carr Realty Corp., 749 A.2d 724, 739 (D.C. 2000)

(citing Monsanto v. Electronic Data Sys. Corp., 529 N.Y.S.2d 512 (N.Y. App. Div.

1988)); see also Findlay v. CitiMortgage, Inc., 813 F. Supp. 2d 108, 122 (D.D.C.

2011) (rejecting civil conspiracy claim under CPPA and noting that “the District of

Columbia Court of Appeals has expressed skepticism about statutory violations

serving as underlying torts for civil conspiracy claims where the statutory right at

issue has no common law tort analogue”); Armstrong v. Accrediting Council for

Continuing Educ. & Training, Inc., 832 F. Supp. 419, 425 (D.D.C. 1993) (“[T]he

court holds that the CPPA creates only those causes of action specifically

enumerated within its provisions; a cause of action creating liability for aiders and

abettors of those who allegedly violate the CPPA is not included.”), vacated on

other grounds, 84 F.3d 1452 (D.C. Cir. 1996).

      Second, as the trial court noted, if we were to allow a non-merchant to be

held liable under the CPPA either as an aider and abettor or a co-conspirator, we

would be extending the liability specifically authorized by the CPPA to cover the

actions of a wide variety of people or entities, such as appellee Winer, who are not

within the category of people or entities covered by the Act. Although the CPPA
                                            12

“was intended to be a far-reaching consumer protection law,” Howard, 432 A.2d at

710, there is no provision in the Act that either explicitly or implicitly authorizes

aider and abettor liability or civil conspiracy liability to be imposed upon a non-

merchant. See Armstrong, 832 F. Supp. at 425 (“[N]o provision of the CPPA

creates a cause of action for aider-and-abettor liability[;] . . . it is not clear from the

language of the statute why a „person‟ not subject to primary liability should be

subject to secondary liability.”). 3 Thus, we conclude that the CPPA does not

authorize liability to be imposed on non-merchants for either aiding and abetting or

civil conspiracy, and we uphold the trial court‟s dismissal of the CPPA count

against appellee Winer.

       3
          Appellants argue that the CPPA authorizes both aider and abettor liability
and civil conspiracy liability for non-merchants because the CPPA was modeled
after a comparable California statute under which this type of liability has been
imposed, citing People v. Toomey, 203 Cal. Rptr. 642 (Cal. Ct. App. 1984), in
support of their argument. However, Toomey does not dictate a different result.
First, the defendant in Toomey clearly was a merchant because he was one of the
two co-owners of the business, along with his wife, and also was “the president
and operating officer” of the company who “orchestrated all aspects of the
business.” 203 Cal. Rptr. at 652. Second, although certain provisions of the CPPA
were modeled on the California statute, there is no indication that the CPPA was
meant to include aider and abettor liability or co-conspirator liability; to the
contrary, the provisions that were modeled on the California statute were contained
in the 2000 amendments to the CPPA, authorized the remedies of disgorgement
and restitution and representative actions on behalf of other consumers, and did not
address either aider and abettor or civil conspiracy liability. See Grayson, 15 A.3d
at 241-42 & nn. 63-64.
                                         13

         Fraudulent and Negligent Misrepresentations and Omissions

      In order to sufficiently allege fraudulent misrepresentations or omissions, a

plaintiff must allege facts showing that a person or entity “(1) made a false

representation of or willfully omitted a material fact; (2) had knowledge of the

misrepresentation or willful omission; (3) intended to induce [another] to rely on

the misrepresentation or willful omission; (4) the other person acted in reliance on

that misrepresentation or willful omission; and (5) suffered damages as a result of

[that] reliance.” Schiff v. American Ass’n of Retired Persons, 697 A.2d 1193, 1198

(D.C. 1997) (citing Howard, 432 A.2d at 706); see also Saucier v. Countrywide

Home Loans, 64 A.3d 428, 438 (D.C. 2013) (to sufficiently allege common law

fraud, a plaintiff must allege facts demonstrating “(1) a false representation (2) in

reference to a material fact, (3) made with knowledge of its falsity, (4) with the

intent to deceive, and (5) action is taken in reliance upon the representation.”). A

false representation may be either “an affirmative misrepresentation or a failure to

disclose a material fact when a duty to disclose that fact has arisen.” Id. (quoting

Rothenberg v. Aero Mayflower Transit Co., 495 F. Supp. 399, 406 (D.D.C. 1980)).

A misrepresentation is “material” if it would be “likely to induce a reasonable

person to manifest his assent, or if the maker knows that it would be likely to

induce the recipient to do so.” Id. at 438-39 (quoting Sarete, Inc. v. 1344 U Street
                                          14

Ltd. P’ship, 871 A.2d 480, 493 (D.C. 2005), citing RESTATEMENT (SECOND)             OF

CONTRACTS, § 162 (1981). Although the non-disclosure of material information

may constitute fraud when there is a duty to disclose, “mere silence does not

constitute fraud unless there is a duty to speak.” Id. at 439 (quoting Kapiloff v.

Abington Plaza Corp., 59 A.2d 516, 517 (D.C. 1948)).

      In contrast to a complaint that alleges fraudulent misrepresentations, a

complaint alleging negligent misrepresentations need not allege that the defendant

had knowledge of the falsity of the representation or the intent to deceive.

However, a plaintiff alleging negligent misrepresentations or omissions still must

allege facts indicating that he relied on the defendant‟s misrepresentation or

omission to his detriment. See, e.g., Kumar v. District of Columbia Water & Sewer

Auth., 25 A.3d 9, 15 (D.C. 2011). More specifically, a plaintiff alleging negligent

misrepresentations or omissions must show “(1) that [the defendant] made a false

statement or omitted a fact that he had a duty to disclose; (2) that it involved a

material issue; and (3) that [the plaintiff] reasonably relied upon the false statement

or omission to his detriment.” Id. at 15 n.9 (quoting Redmond v. State Farm Ins.

Co., 728 A.2d 1202, 1207 (D.C. 1999)).
                                          15

      In this case, appellants did not allege in their complaint that appellees made

any misrepresentations or omissions prior to the time that appellants signed the

sales contract for the property. Thus, as the trial court found, appellants failed to

allege that they detrimentally relied on any such misrepresentations or omissions

when they signed the sales contract.           Appellants claim, however, that they

detrimentally relied on these misrepresentations and omissions after they signed

the contract, because they would not have purchased the property at closing had

they been provided with truthful information about the impending construction at

the Old Pawn Shop, and instead would have breached the contract and then been

subject to the breach of contract remedies set forth in the sales contract.

      The difficulty with appellants‟ argument is their premise that they had a

right to breach the contract, and that this right was unlawfully foreclosed by

appellees‟ alleged misrepresentations and omissions. To the contrary, a party has

no “right” to breach a contract, and appellants therefore cannot rely on such a

“right” in support of their detrimental reliance argument.          Indeed, we have

carefully delineated the various circumstances under which a party may seek to

avoid his or her obligations under a contract, but have not included the “right” to

breach a contract as one of these circumstances. See, e.g., Hernandez v. Banks, 65
A.3d 59, 75 (D.C. 2013) (en banc) (party may avoid obligations under contract if
                                          16

that party was mentally incapacitated at time contract was signed); Island Dev.

Corp. v. District of Columbia, 933 A.2d 340, 349-50 (D.C. 2007) (party may avoid

contract obligations if performance of contract has become impossible or

impracticable, or if events beyond parties‟ control have frustrated the contract‟s

purpose); Isaac v. First Nat’l Bank, 647 A.2d 1159, 1163 (D.C. 1994) (party may

avoid contract obligations based on mutual mistake, fraud in the inducement or

duress); Truitt v. Miller, 407 A.2d 1073, 1079 (D.C. 1979) (party may avoid

contract obligations if contract violates statute designed to protect public); see also

RESTATEMENT (SECOND)       OF    CONTRACTS, § 7 (providing similar examples of

voidable contracts).

      Appellants argue that they had a “right” to breach the contract because “the

modern law of damages is based on the premise that a contractual obligation is not

necessarily an obligation to perform, but rather an obligation to choose between

performance and compensatory damages.” See Charles J. Goetz & Robert E.

Scott, Liquidated Damages, Penalties and the Just Compensation Principle: Some

Notes on an Enforcement Model and a Theory of Efficient Breach, 77 COLUM. L.

REV. 554, 558 (1977) (emphasis in appellants‟ brief); see also Northwest Airlines,

Inc. v. U.S. Dep’t of Transp., 15 F.3d 1112, 1121 n.5 (D.C. Cir. 1994) (citing

RESTATEMENT (SECOND)       OF   CONTRACTS, ch. 16, intro. note at 100) (“„Efficient
                                          17

breach‟ refers to the principle that a breaching party has the option of paying

damages rather than performing its contractual obligations where damages are an

adequate substitute for specific performance.”). Although this argument has some

force, it also has a number of shortcomings.         Indeed, as the drafters of the

RESTATEMENT (SECOND)       OF   CONTRACTS have noted, this approach “fails to take

account notions of the sanctity of contract and the resulting moral obligation to

honor one‟s promises.” Id. Moreover, this argument has no support in our case

law, and is contrary to relevant Supreme Court case law. See Rousey v. Jacoway,

544 U.S. 320, 328 (2005) (contracting parties do not have “an unrestricted right to

breach a contract simply because the price of doing so is the payment of

damages.”).

      Furthermore, the contract itself did not provide appellants with the right to

breach the contract. Rather, the default clause in the contract stated as follows:

              If purchaser fails to complete settlement for any reason
              other than default by seller, at the option of seller, the
              deposit may be liquidated damages (not as a penalty) in
              which event purchaser shall be relieved from further
              liability to seller. If seller does not elect to accept the
              deposit as liquidated damages, the deposit may not be the
              limit of purchaser‟s liability in the event of a default.
                                          18

Sales Contract at ¶ 23 (emphasis added). Thus, contrary to appellants‟ argument,

the sales contract provided appellees with the option to seek liquidated damages

or other damages resulting from appellants‟ default, but did not give appellants

the option of breaching the contract had they received the information that

appellees allegedly failed to provide.4

      In sum, appellants failed to sufficiently allege that they detrimentally relied

on appellees‟ alleged fraudulent and negligent misrepresentations and omissions.

Therefore, the trial court did not err in granting appellees‟ motions to dismiss

these counts.

      4
         Appellants argued in their appellate brief that the sales contract provided
them with the option of consummating the purchase on the agreed-upon terms or
“walking away” from the contract, citing Dodek v. CF 16 Corp., 537 A.2d 1086
(D.C. 1988), in support of their argument. However, at oral argument, appellants
clarified that they were not asserting that the sales contract was an option contract,
rather than a binding contract that required them to purchase the property under the
terms set forth in the contract. Moreover, even if appellants had not clarified their
position in this manner, it is clear that the sales contract in this case was not an
option contract. In fact, in Dodek, we found that the contract at issue was an
option contract because it gave the purchaser the “option and privilege to „choose
between consummating the purchase on the agreed upon terms or of walking away,
for any reason or no reason, with no obligation or liability whatever save the loss
of his deposit.” Id. at 1095 (quoting Green Manor Corp. v. Tomares, 295 A.2d
212, 214 (Md. 1972)). In this case, by contrast, the sales contract did not give the
purchaser the right to walk away from the contract and face only the loss of the
deposit; rather, the contract gave the sellers the right to seek the recovery of the
deposit or any other damages if the purchasers defaulted on their obligations under
the contract.
                                          19

              Breach of Covenant of Good Faith and Fair Dealing

      Every contract contains an implied covenant of good faith and fair dealing.

See, e.g., Wright v. Howard Univ., 60 A.3d 749, 754 (D.C. 2013). This covenant

precludes any party from doing “anything which will have the effect of destroying

or injuring the right of the other party to receive the fruits of the contract . . . .”

Abdelrhman v. Ackerman, 76 A.3d 883, 891 (D.C. 2013) (quoting Hais v. Smith,

547 A.2d 986, 987 (D.C. 1988)). To state a claim for breach of the implied

covenant of good faith and fair dealing, a plaintiff must allege either “bad faith or

conduct that is arbitrary and capricious.” Id. at 891-92; Wright, 60 A.3d at 754. If

a party “evades the spirit of the contract, willfully renders imperfect performance,

or interferes with performance by the other party, he or she may be liable for

breach of the implied covenant of good faith and fair dealing.” Paul v. Howard

Univ., 754 A.2d 297, 310 (D.C. 2000) (quoting Hais, 547 A.2d at 987-88); see also

RESTATEMENT (SECOND) OF CONTRACTS, § 205 (“Subterfuges and evasions violate

the obligation of good faith in performance . . . [b]ut the obligation goes further:

bad faith may be overt or consist of inaction, and fair dealing may require more

than honesty.”).
                                         20

      In this case, appellants allege that appellees violated the duty of good faith

and fair dealing through misrepresentations and omissions after the sales contract

was signed and before the parties closed the transaction. They further allege that

these misrepresentations and omissions deprived them of the fruits of the sales

contract – namely, a residence whose value would not be diminished by the

impending construction at the Old Pawn Shop. The trial court disagreed with

appellants, finding that they received the fruits of the sales contract because they

received good title to the property at issue under the terms and conditions set forth

in the contract.

      We agree with the trial court. As an initial matter, we must review the terms

of the contract at issue in order to determine whether appellees violated the duty of

good faith and fair dealing by evading the spirit of the contract, purposefully

failing to perform their obligations under the contract, or interfering with

appellants‟ ability to perform under the contract. The contract required Winer to

provide good and marketable title to the property at an agreed-upon price and by a

specified date. There is no dispute that Winer fully and timely performed this

obligation.   The contract also contained a contingency clause that allowed

appellants to void the contract if the residence did not pass a home inspection

within a specified time period. There is no dispute that appellants did not exercise
                                        21

this contingency clause. Moreover, this provision only covered an inspection of

the property that appellants agreed to purchase, and did not include or authorize an

inspection of any neighboring property.      Therefore, any misrepresentation or

omission concerning the Old Pawn Shop would not have affected the home

inspection contingency clause contained in the contract.

      The sales contract also contained a property condition statement furnished

by the seller that addressed the property‟s structural conditions; the operating

condition of its heating, air conditioning, plumbing and electrical systems; any

known defects existing in numerous specified appliances; any problems relating to

the exterior of the property; any environmental hazards (such as asbestos, radon

gas, lead based paint, underground storage tanks, formaldehyde, contaminated soil,

or other contaminants); and any zoning violations, non-conforming uses, violation

of building restrictions or setback requirements, or any easements (other than

utilities) on or affecting the property. Notably, the property condition statement

did not require appellees to provide any information about conditions, including

impending construction, at any neighboring properties. 5 Accordingly, because the

      5
        Arguably, appellees would have been required to disclose information
about the impending construction at the Old Pawn Shop if this construction
constituted a non-conforming use, or violated relevant zoning or building
regulations, and affected the property to be purchased by appellants. However,
                                                       (continued….)
                                          22

sales contract did not impose any duty on appellees to inform appellants about the

impending construction project at the Old Pawn Shop, any misrepresentations or

omissions concerning this project did not deprive appellants of the fruits of the

contract.

      Our conclusion with respect to the covenant of good faith and fair dealing in

this case does not mean, as appellees have argued, that a seller or realtor can never

violate the covenant of good faith or fair dealing based on misrepresentations or

omissions that occur after the sales contract is signed but before the parties transfer

title to the property. To the contrary, had appellees made fraudulent or negligent

misrepresentations or omissions concerning the structural conditions of the

property to be purchased by appellants, or concerning some other condition

explicitly set forth in the sales contract, such misrepresentations or omissions may

have given rise to a cause of action for violating the covenant of good faith and fair

dealing, even if the misrepresentations or omissions occurred in the time period

between the signing of the contract and the transfer of title. However, we need not

(….continued)
appellants did not allege such a violation or non-conforming use in their complaint
and did not make any such argument in their appellate briefs. To the contrary, they
only briefly cited this provision in their opposition to TTR Realty‟s and Abu-
Rahmeh‟s motion to dismiss, and did not provide any factual information in
support of this argument. Thus, even if this argument had been properly preserved
for appeal, it would have lacked a sufficient factual foundation in any event.
                                         23

decide that issue because there is no evidence in this case, and no allegation in the

complaint, that appellees made any such misrepresentations or omissions here.

Accordingly, we affirm the trial court‟s dismissal of the count alleging a breach of

the covenant of good faith and fair dealing.

                                   CONCLUSION

         For the foregoing reasons, the judgment of the trial court is affirmed.

                                                    So ordered.