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El Hadidi v. Intracoastal Land Sales, Inc.

United States District Court, D. South Carolina, Florence Division

June 25, 2014

Tarek El Hadidi, Plaintiff,
v.
Intracoastal Land Sales, Inc.; ABC-XYZ (a series of fictitious corporations); and John Does 1-10, Defendants.

ORDER

R. BRYAN HARWELL, District Judge.

Plaintiff Tarek El Hadidi ("Hadidi" or "Plaintiff") filed this action in the Superior Court of New Jersey against the above captioned Defendants on February 4, 2011. See Compl., ECF No. 1-2. Defendant Intracoastal Land Sales, Inc. ("Defendant" or "Intracoastal") removed the action to the United States District Court for the District of New Jersey on June 24, 2011. See Notice of Removal, ECF No. 1. Defendant moved to dismiss or transfer the action, see Mot. to Dismiss, ECF No. 7, and on February 24, 2012, the District of New Jersey issued an Order transferring the matter to this Court, see Order, ECF No. 18.[1] Defendant again moved to dismiss the action on March 9, 2012. See Mot., ECF No. 21. The undersigned granted that motion in part and denied it in part on February 20, 2013. See Order, ECF No. 30. The Court granted the motion with respect to Plaintiff's claims for outrage and negligent infliction of emotional distress. See id. at 7. The Court denied the motion as to Plaintiff's remaining claims, determining that Plaintiff's statute of limitations arguments were premature at the motion to dismiss stage. See id. at 5.

On February 4, 2014, Defendant filed the motion for summary judgment that is presently before the Court, arguing that Plaintiff's remaining claims are barred by the applicable statute of limitations. See Mot., ECF No. 57. Plaintiff responded on March 10, 2014, see Pl.'s Response, ECF No. 62, and Defendant replied to the response on March 20, 2014, see Reply, ECF No. 63. The undersigned held a hearing on May 28, 2014, with attorney Walker H. Willcox appearing on behalf of Plaintiff and attorneys Jeffrey S. Tibbals and W. Chase McNair appearing on behalf of Defendant.

Having considered the filings of the parties and the arguments of counsel, the Court finds that, applying New Jersey's conflict of laws rules, South Carolina law should apply to this action. Therefore, South Carolina's statute of limitations will apply to Plaintiff's claims. The Court, however, finds that there is a genuine issue of material fact regarding whether Plaintiff's claims are timely. Accordingly, Defendant's motion for summary judgment is denied.

FACTUAL BACKGROUND

This dispute centers around two undeveloped lots in the Waterway Palms Plantation ("the development") in Myrtle Beach, South Carolina, which Plaintiff purchased from Defendant. Plaintiff alleges a series of misrepresentations, primarily concerning a "second property report" (discussed in more detail below), which asserted that the water and sewer infrastructure at the development would be completed in April 2005. Plaintiff asserts that Defendant's misrepresentations led him to purchase the property in April 2005, and that further misrepresentations regarding completion of the infrastructure continued even after the closing, and that he relied on all of this to his detriment.[2]

In February of 2005, Plaintiff, a New Jersey citizen and resident, received a solicitation in New Jersey from Defendant inviting him to a dinner and sales presentation. See Aff. of Tarek El Hadidi, ECF No. 62-8 at ¶ 2. In the middle of February 2005, Plaintiff went to a sales presentation conducted by representatives of Defendant at the Bridgewater Marriot Hotel in Bridgewater, New Jersey regarding the development. See Hadidi Dep., ECF No. 62-2 at 32:1-8. At the sales pitch, he received the first of two federal property reports. See ECF No. 62-8 at ¶ 16. This report estimated that the development's sewer infrastructure would be completed in October 2004. Id. Moreover, this report indicated that the water lines in Phase 1 of the development would be completed by April 2005. See ECF No. 64-4 at 2. At the sales pitch, Plaintiff paid a refundable deposit and signed a document "securing his interest" in visiting and purchasing property in the development. See ECF No. 62-8 at ¶ 11.

In March of 2005, Plaintiff flew down to Myrtle Beach to view the property and meet with Defendant's representatives. See ECF No. 62-8 at ¶ 11. At the first presentation by Defendant in Myrtle Beach, Plaintiff received a second property report which explained that the sewer and water infrastructure now both had a revised completion date of April 2005. See ECF No. 62-2 at 46:19-47:3. Plaintiff testified in his deposition that a representative of Defendant specifically pointed out that the sewer infrastructure date had been moved back from the first report. Id. Plaintiff, however, stated that Defendant's representatives indicated they were making progress and were ahead of the new schedule. Id. at 47:4-15. Plaintiff signed documents acknowledging receipt of both federal property reports while in Myrtle Beach. See Acknowledgments, ECF No. 57-6.

Plaintiff was offered special incentives by Defendant, but only if closing occurred by April 2005. ECF No. 62-8 at ¶ 17. Accordingly, while in Myrtle Beach, Plaintiff executed an "Offer to Purchase and Contract" on Lot 282 of the development on March 11, 2005, and paid the earnest money. See Cotner Aff., ECF No. 57-2 at ¶¶ 12-13; Contract, ECF No. 57-7 at 4-5. While still in Myrtle Beach, Plaintiff also executed an Offer to Purchase and Contract on Lot 89 of the development on March 12, 2005, and paid the earnest money. See ECF No. 57-2 at ¶¶ 12-13; Contract, ECF No. 57-7 at 2-3. Both of these lots were in Phase I of the development. The transactions both closed at the Stanley Law Firm in Myrtle Beach, South Carolina on April 20, 2005. See ECF No. 57-2 at ¶¶ 14; HUD Settlement Statements, ECF No. 57-8. The closing attorney, however, did a "closing by mail, " sending various documents to Plaintiff for execution in New Jersey. See ECF No. 10-9 at 85-86.

Plaintiff testified that he relied on the representations made in the Federal Property Reports and from Intracoastal that the infrastructure would be ready for construction in April 2005, and that it was important to him that he be able to immediately build upon the properties after closing. See Hadidi Dep., ECF No. 57-3 at 50:1-9; ECF No. 62-2 at 87:12-88:8. He noted that, prior to purchasing the lots, Defendant represented that construction on the water and sewer lines began in 2004, and that as of March 2005 the sewer lines were 70% complete. See ECF No. 68-8 at ¶ 39. Subsequently, Plaintiff received a letter, dated May 31, 2005, which indicated that the sewer construction was 90% complete and the water construction was 60% complete. See Letter, ECF No. 57-9.

Plaintiff asserts that when he visited the development again in September 2005, he observed that it "was not being developed in a manner consistent with what the developer had represented to him." See ECF No. 1-2 at ¶ 20. Plaintiff stated in his deposition, however, that he had no reason to believe that there would be any issues with the lots being ready for construction, as he "had gotten communications from Intracoastal saying that everything was on schedule, fine, great, perfect, on time, ahead of time, beautiful." ECF No. 57-3 at 75:1-22. Therefore, in November of 2005, Plaintiff retained a builder. See ECF No. 63-1 at 73:3-15. Plaintiff testified that he was aware he could not move in without a certificate of occupancy, and thus would not want to build without knowing he could obtain one. See ECF No. 62-2 at 88:9-17. However, he indicated that he was not aware at that juncture whether he had to wait until the water and sewer infrastructure was completely finished to begin building. See id.

Subsequent to retaining the builder, Plaintiff continued to inquire as to the status of the infrastructure development. Plaintiff asserts he was told that Defendant was doing everything it was supposed to do and that everything was fine on its end. See ECF No. 62-2 at 89:17-25. He testified in his deposition that he continued to receive communications between April 2005 and October 2008 from Intracoastal indicating that "they were very pleased with the progress" and "everything was ahead of schedule." Id. at 72:10-22. Plaintiff submitted several newsletters which Defendant sent to the lot owners in the development, including Plaintiff, which represented that the water and sewer infrastructure were near completion. See Newsletters, ECF No. 62-6 at 8-9. These Community Newsletters, dated November of 2006[3] and August of 2007, [4] indicated that the reason for the delay was that the developer had not secured final regulatory approval for the water and sewer infrastructure. See id. The water and sewer infrastructure was completed, approved by South Carolina Department of Health and Environmental Control, and placed into operation on November 29, 2007. See DHEC Approval, ECF No. 57-10.

Plaintiff states that he first began having doubts about the truthfulness of Defendant's representations in late 2008. See ECF No. 68-8 at ¶ 40. He testified that he heard rumors about another one of Defendant's developments having issues, which spurred him to make an inquiry to the Grand Strand Water and Sewer Authority. See ECF No. 57-3 at 86:15-25. On May 6, 2009, Plaintiff received email correspondence and attachments from an employee with the Grand Strand Water and Sewer Authority which contained various documents related to the water and sewer infrastructure at the development. See Email and Attachements, ECF No. 7. Plaintiff argues that these documents first informed him that, despite Defendant's representations and assertions to the contrary, Defendant had not received regulatory approval to install the sewers at the time he purchased the lots. See ECF No. 68-8 at ¶ 20. Plaintiff also asserts that these documents informed him for the first time that Defendant was seeking approval to begin construction more than a year after it should have been 70% complete per Defendant's assertions. See id. at ¶ 34. He claims that "[o]nly upon receipt of the email... did I know that Defendants knowingly misrepresented the development construction deadlines." See id. at ¶ 40. Finally, Plaintiff argues that this documentation informed him that Defendant was aware of significant problems with the sewer system in December 2006, which Defendant never disclosed to him despite his inquiries. See ECF No. 62-8 at ¶ 40.

Plaintiff filed this suit on February 24, 2011 in the Superior Court of New Jersey asserting that Defendant misrepresented various facts in connection with the purchase of these lots, and continued to misrepresent the status of the infrastructure development and the reasons behind the delay. As a result of these alleged misrepresentations, Plaintiff claims that his property values decreased and that he could not realize the benefits of his investments. In particular, the following claims are still pending: New Jersey Consumer Fraud Act (Count I);[5] Negligent Misrepresentation (Count II); Fraud and Intentional Misrepresentation (Count III); Unjust Enrichment (Count IV). Defendant's motion for summary judgment solely challenges whether these claims are timely. The parties first dispute which state's law should apply-New Jersey or South Carolina-under the applicable choice of law rules. The parties then dispute whether the claims are timely under the appropriate statutes.

SUMMARY JUDGMENT STANDARD

Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes the showing, however, the opposing party must respond to the motion with "specific facts showing there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

When no genuine issue of any material fact exists, summary judgment is appropriate. Shealy v. Winston, 929 F.2d 1009, 1011 (4th Cir. 1991). The facts and inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Id. However, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).

In this case, the moving party "bears the initial burden of pointing to the absence of a genuine issue of material fact." Temkin v. Frederick Cnty. Comm'rs, 845 F.2d 716, 718 (4th Cir. 1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). If the moving party carries this burden, "the burden then shifts to the non-moving party to come forward with fact sufficient to create a triable issue of fact." Id. at 718-19 (citing Anderson, 477 U.S. at 247-48).

Moreover, "once the moving party has met its burden, the nonmoving party must come forward with some evidence beyond the mere allegations contained in the pleadings to show there is a genuine issue for trial." Baber v. Hosp. Corp. of Am., 977 F.2d 872, 874-75 (4th Cir. 1992). The nonmoving party may not rely on beliefs, conjecture, speculation, of conclusory allegations to defeat a motion for summary judgment. See id.; Doyle v. Sentry, Inc., 877 F.Supp. 1002, 1005 (E.D. Va. 1995). Rather, the nonmoving party is required to submit evidence of specific facts by way of affidavits, depositions, interrogatories, or admissions to demonstrate the existence of a genuine and material factual issue for trial. See Fed.R.Civ.P. 56(c), (e); Baber, 977 F.2d at 875 (citing Celotex, 477 U.S. at 324)). Moreover, the nonmovant's proof must meet "the substantive evidentiary standard of proof that would apply at a trial on the merits." Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993); DeLeon v. St. Joseph Hosp., Inc., 871 F.2d 1229, 1223 n.7 (4th Cir. 1989).

DISCUSSION

I. New Jersey Choice of Law Rules Require the Application of the South Carolina Law.

Following a transfer under 28 U.S.C. § 1404(a) initiated by a defendant, the transferee court must follow the choice-of-law rules that prevailed in the transferor court. Van Dusen v. Barrack, 376 U.S. 612 (1964). New Jersey has adopted the two-pronged "most significant relationship test" set forth in the Restatement (Second) Conflict of Laws (the "Restatement"). P.V. v. Camp Jaycee, 962 A.2d 453, 455 (N.J. 2008). "The first prong of the analysis requires a court to examine the substance of the potentially applicable laws in order to determine if an actual conflict exists.... The second prong of the most significant relationship test requires the Court to weigh the factors enumerated in the Restatement section corresponding to plaintiffs' cause of action." Ghaffari v. Hern, No. 06-931, 2009 WL 2147092, at *5 (D.N.J. July 15, 2009) (citations omitted).

Under the first prong, a conflict arises when potentially applicable laws differ in substance. Camp Jaycee, 962 A.2d at 460. Here, the two jurisdictions whose laws might apply are South Carolina and New Jersey. South Carolina has a three-year statute of limitations for private actions under SCUTPA, as well as for claims of negligent misrepresentation, fraud, and unjust enrichment. See Brooks v. GAF Materials Corp., 284 F.R.D. 352 (D.S.C. 2012) ("South Carolina law provides for a three-year statute of limitations on actions for negligence, negligent misrepresentation, fraud, and unfair trade practices."); S.C. Code Ann. § 15-3-530(1) (2010) (three year statute of limitations for "an action upon a contract, obligation, or liability, express or implied"). New Jersey has a six-year statute of limitations for claims under the New Jersey Consumer Fraud Act ("NJCFA"), negligent misrepresentation, fraud, and unjust enrichment. See Tammera v. Grossman, No. 10-569, 2010 WL 1372406, at *5 (D.N.J. Mar. 29, 2010) (six year statute of limitations for common law fraud); R.C. Beeson, Inc. v. Coca Cola Co., 337 ...


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