IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
ANTHONY NIEVES and KRISTEN )
CUIFFO, )
)
Plaintiffs, )
)
v. ) C.A. No. N20C-11-103 FWW
)
INSIGHT BUILDING CO., LLC, )
d/b/a INSIGHT HOMES, )
36 BUILDERS, INC. d/b/a INSIGHT )
HOMES, INC., INSIGHT HOMES, )
INC., and INDIAN MISSION )
INVESTMENTS, LLC, )
)
Defendants. )
Submitted: February 19, 2021
Decided: May 19, 2021
Upon Defendant Insight Building Co., LLC, d/b/a Insight Homes, 36 Builders, Inc.,
d/b/a Insight Homes, Inc. and Insight Homes, Inc.’s Motion to Dismiss
DENIED.
ORDER
Nicholas G. Kondraschow, Esquire, & William J. Rhodunda, Jr., Esquire,
Rhodunda, Williams & Kondraschow, Brandywine Plaza West, 1521 Concord
Pike, Suite 205, Wilmington, DE 19803, Attorneys for Defendants Insight
Building Co., LLC, 36 Builders, Inc., and Insight Homes, Inc.
Julia Klein, Esquire, Klein LLC, 225 West 14th Street, Suite 100, Wilmington, DE
19801, Attorney for Plaintiffs Anthony Nieves and Kristen Cuiffo.
WHARTON, J.
This 19th day of May 2021, upon consideration of the Motion to Dismiss of
Insight Building Co., LLC, d/b/a/ Insight Homes, 36 Builders, Inc., d/b/a Insight
Homes, Inc. and Insight Homes, Inc. (collectively, “Insight Defendants”),1 the
Opposition of Plaintiffs Anthony Nieves and Kristen Cuiffo (collectively, the
“Plaintiffs”),2 and the record in this case, it appears to the Court that:
1. Before the Court is the Insight Defendants’ Motion to Dismiss
Plaintiffs’ First Amended Complaint (“FAC”) or, alternatively, to dismiss only
Count V, Fraudulent Concealment and Misrepresentation, and Count X, Civil
Conspiracy. This action arises from the Defendants’ alleged faulty construction of
Plaintiffs’ home and their failure to provide adequate stormwater management and
drainage at Stonewater Creek, a housing development in Sussex County.3 The FAC
lists four defendants: the three Insight Defendants and Indian Mission Investments,
LLC (“IMI”).4
2. Plaintiffs allege that Defendants’ contractual breaches and intentional
negligence resulted in structural problems, not only in Plaintiffs’ home, but also in
the surrounding area and neighborhood.5 Specifically, Plaintiffs allege that the
1
Insight Defs.’ Mot. to Dismiss, D.I. 12.
2
Pls.’ Resp. to Mot. to Dismiss, D.I. 20.
3
FAC, D.I. 2.
4
Id. The docket does not show a return of service of the FAC on IMI.
5
Id. at 2.
2
Insight Defendants’ negligence resulted in myriad structural problems, including a
chronically flooded crawlspace, crooked and structurally unsound walls, an impaired
heating and cooling system, peeling shingles, and warped siding.6 This alleged
negligence has resulted in water soaking into walls throughout the house, which has
caused mold and roaches to appear.7 The Insight Defendants’ alleged negligence
has also caused moisture problems, such as flooding and standing water throughout
Plaintiffs’ property. Additionally, the moisture problems have caused excess water
to build up and become a breeding ground for mosquitoes and frogs.8 Plaintiffs
assert that all Defendants allegedly conspired to sell lots and homes to individuals,
including Plaintiffs, despite Defendants’ knowledge of the existing problems with
stormwater management and concomitant damage to health and property.9
3. Before filing this action in the Superior Court, Plaintiffs and others not
plaintiffs here sought injunctive relief and damages for negligence, breach of
fiduciary duty, breach of contract and warranty, and fraud from the Defendants here
and others in the Court of Chancery.10 Vice Chancellor Glasscock granted a motion
to dismiss two equitable claims, which included dismissing certain defendants, and
6
Id.
7
Id.
8
Id. at 3.
9
Id. at 3-4.
10
Nieves, et al. v. Insight Building Co, LLC, et al. 2020 WL 4463425 (Del. Ch.
Aug. 4, 2020).
3
deferred decision as to the remaining counts and defendants.11 The Vice Chancellor
directed Plaintiffs to inform him whether they wished to proceed in equity and for
him to decide the remainder of the motions or to transfer the matter to the Superior
Court.12 Plaintiffs opted to transfer their claims, at least initially.13 The Vice
Chancellor ordered the claims transferred to the Superior Court, “provided that
Plaintiffs file an election to transfer and otherwise comply with the requirements set
out in 10 Del. C. § 1902.”14
4. Plaintiffs’ FAC brings ten counts against Defendants. The FAC
includes all the claims for damages brought in the Court of Chancery plus several
additional claims.15 Relevant to this motion are Counts V and X. Count V -
Fraudulent Concealment and Misrepresentation - alleges that Defendants
deliberately concealed and misrepresented material facts about the home and
surrounding property, including drainage and flooding problems, faulty crawlspace
construction, and the 30-foot buffer behind their home.16 Count X - Civil Conspiracy
11
Id. at 11. (“Judgment on the motions to dismiss Counts I-III against Indian
Mission and Insight, as well as judgment on the motion to dismiss alias Count X
against Insight is deferred.”).
12
Id.
13
Insight Defs’ Mot. to Dismiss, Ex. C, D.I. 12.
14
Id., Ex. D.
15
See, Nieves, et al. v. Insight Building Co., LLC, et al., Del. Ch. C.A. 2019-0454-
SG, First Amended Complaint, D.I. 30.
16
FAC at 36-38, D.I. 2.
4
– alleges that Defendants acted in concert to sell lots at Stormwater Creek while
intentionally failing to disclose the issues with flooding and stormwater
management.17
5. On February 1, 2021, the Insight Defendants moved to dismiss
Plaintiffs’ claims.18 They assert that Plaintiffs’ claims fail because they filed their
initial complaint 65 days after Vice Chancellor Glasscock’s Order, which is five
days after the requirements of 10 Del. C. § 1902.19 Additionally, the Insight
Defendants allege that Plaintiffs filed a substantially amended complaint, with
praecipe and summons, 31 days after the initial complaint and 96 days after Vice
Chancellor Glasscock’s Order.20 The Insight Defendants argue that this failure to
comply with the Order and § 1902 with respect to both the Complaint and FAC
should result in Plaintiffs’ action being dismissed.21 Alternatively, barring dismissal
of the FAC in its entirety, the Insight Defendants move to dismiss Plaintiffs’ claims
of fraudulent concealment and misrepresentation (Count V) and civil conspiracy
(Count X).22 Specifically, they allege that the fraud and conspiracy claims should
17
Id. at 44.
18
Insight Defs.’ Mot. to Dismiss, D.I. 12.
19
Id.
20
Id.
21
Id.
22
Id. at 4.
5
be dismissed because Plaintiffs failed to allege specificity.23 The Insight Defendants
argue that Plaintiffs do not allege that Defendants knew any alleged statements were
false, or what Defendants knew or how they knew it.24 Further, the Insight
Defendants assert that any alleged statements by Defendants concerning future
flooding cannot form the basis for a fraud claim.25 Because Plaintiffs’ claim for
fraudulent concealment and misrepresentation should be dismissed, and since the
civil conspiracy claims are based on fraud and misrepresentation, they contend the
civil conspiracy count must be dismissed as well.26
6. Plaintiffs oppose the motion, arguing that the Insight Defendants failed
to set forth one of the seven legally recognized grounds of dismissal under Superior
Court Civil Rule 12(b).27 Plaintiffs assert that they did not fail to comply with Vice
Chancellor Glasscock’s Order, as they were not required to transfer the Court of
Chancery matter pursuant to § 1902 in order to bring their claims in this court.28
Plaintiffs assert that they had the ability to transfer their claims under § 1902, but
instead simply chose to file an entirely new complaint in the Superior Court.29 Next,
23
Id. at 4-5.
24
Id.
25
Id. at 6.
26
Id.
27
Pl.’s Resp. to Mot. to Dismiss, D.I. 20.
28
Id. at 3-5.
29
Id. at 4.
6
Plaintiffs argue that the FAC alleges specific statements of present facts sufficient
to allow the fraud claim to proceed.30 Specifically, Plaintiffs assert that Defendants’
statements and representations concerning “flooding problems at Stonewater Creek”
and the “30-foot buffer behind [Plaintiffs’] house” are material past and present
statements that are sufficient for plausible fraud and concealment claims, as well as
civil conspiracy.31
7. A motion to dismiss for failure to state a claim pursuant to Superior
Court Rule 12(b)(6) will not be granted if the “plaintiff may recover under any
reasonably conceivable set of circumstances susceptible of proof under the
complaint.”32 The Court’s review is limited to well-plead allegations in the
complaint.33 In ruling on a motion under Rule 12(b)(6), the Court “must draw all
reasonable factual inferences in favor of the party opposing the motion.”34 Dismissal
is appropriate “only if it appears with reasonable certainty that the plaintiff could not
prove any set of facts that would entitle him to relief.”35 The pleading standards
governing a motion to dismiss in Delaware are minimal.36 Delaware is a notice-
30
Id. at 5.
31
Id. 5-6.
32
Browne v. Robb, 583 A.2d 949, 950 (Del. 1990).
33
Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005).
34
Id.
35
Id.
36
See, Central Mort. Co. v. Morgan Stanley Mort. Capital Holdings, LLC, 27 A.3d
531, 536 (Del. 2011).
7
pleading jurisdiction, and a complaint need only “give general notice as to the nature
of the claim asserted against defendant in order to avoid dismissal for failure to state
a claim.”37
8. Superior Court Civil Rule 9(b) requires that “[i]n all averments of fraud
or mistake, the circumstances constituting fraud or mistake shall be stated with
particularity.”38 The particularity pleading standard requires a party to plead “the
time, place and contents of the false representations.”39 However, “[m]alice, intent,
knowledge, and other condition of a person may be averred generally.”40 The
requirement that fraud be pleaded with particularity “serves to discourage the
initiation of suits brought solely for their nuisance, value, and safeguards potential
defendants from frivolous accusations of moral turpitude.”41 In order to survive a
motion to dismiss a fraud claim, the party asserting fraud must allege that: (1) the
accused party falsely represented a material fact or omitted facts that they had a duty
to disclose; (2) the accused party knew that the representation was false or made
with a reckless indifference to the truth; (3) the accused party intended to induce the
37
Nye v. Univ. of Del., No. 02C-12-065, 2003 WL 22176412, at *3 (Del. Super.
Ct. Sept. 17, 2003); see also Super. Ct. Civ. R. 8(a)(1).
38
Super. Ct. Civ. R. 9(b).
39
ITW Glob. Invs. Inc. v. Am. Indus. Partners Capital Fund IV, L.P., No. N14C-
10-236, 2015 WL 3970908, at *5 (Del. Super. Ct. June 24, 2015).
40
Super Ct. Civ. R. 9(b).
41
Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624
A.2d 1199, 1208 (Del. 1993).
8
party asserting the fraud action to act or refrain from action; (4) the party asserting
the fraud acted in justifiable reliance on the representation; and (5) the party asserting
the fraud was injured by its reliance on the accused party’s representation.42
9. The first issue is whether the FAC should be dismissed for failure to
comply with § 1902. It should not. Plaintiffs were not required to transfer the claims
under § 1902. That statute is intended as a remedial measure to prevent cases from
being precluded solely due to being brought in the wrong court. 43 Therefore, any
election to transfer is the choice of the affected party, not a distinct requirement for
the underlying action to proceed anew in another court.44 Further, as noted by
Plaintiffs, there are no statute of limitations or laches issues present. Thus, giving
preclusive effect to § 1902 here would have the unintended and unwarranted result
of shortening the otherwise applicable statute of limitations. Plaintiffs had the ability
to bring this action in the Superior Court any time before the statute of limitations
ran. Finally, to the extent there should be any ramifications from the Plaintiffs’
decision not to follow the § 1902 procedure, and by implication, the Vice
Chancellor’s Order, those ramifications should be felt in the Court of Chancery, and
42
ITW Glob. Invs. Inc., 2015 WL 3970908, at *5.
43
See, Gregorovich v. E.I. du Pont de Nemours, 602 F. Supp. 2d 511 (Del. 2009);
Carney v. Qualls, 514 A.2d 1126 (Del. 1986).
44
Id.
9
not here.45 Therefore, Insight Defendants’ motion to dismiss the amended complaint
is DENIED.
10. The second issue is whether Plaintiffs’ claim for fraudulent
concealment and misrepresentation (Count V) should be dismissed. Even
considering the heightened pleading requirements necessary to bring a fraud claim,
the Court declines to dismiss that count. Here, the FAC alleges that the Insight
Defendants represented there was a 30-foot buffer behind Plaintiffs’ home they
could purchase for an extra $15,000 premium.46 Plaintiffs purchased the buffer,
based on Insight Defendants’ representation, only to learn it was owned by a separate
entity, Baywood LLC.47 Further, Plaintiffs allege that Defendants’ present
statements about the home’s construction and surroundings, specifically pertaining
to the crawlspace and flooding, drainage, and grading issues, were fraudulently
concealed and intentionally misrepresented by Defendants.48 Allegedly, Defendants
assured Plaintiffs as to the quality and nature of their property, going so far as to
45
It appears that the Court of Chancery case remains open in the docket. It also
appears that there is another open matter in the Court of Chancery between the
parties. From the public redacted complaint, the Court infers that the Plaintiffs are
seeking a declaratory judgment that an agreement between them and the Insight
Defendants is void, or in the alternative, they are seeking recission of the agreement.
See, Nieves, et al. v. Insight Building Co, LLC, et al, Del. Ch. C. A. 2019-0368-SG,
D.I. 6.
46
FAC at 10, D.I. 2.
47
Id. at 38.
48
Id.
10
represent to Plaintiffs that the crawlspace would be moisture free, the property was
not currently in an area prone to flooding, and the property would be graded such
that no runoff or standing water occurred on the property. Each of Defendants
representations were allegedly false, and Plaintiffs have plead with sufficient
particularity and specificity to meet the heightened pleading standards of a fraud
claim. Further, since the basis for the civil conspiracy claim (count X) relies on the
underlying facts of the fraud claim (count V), which survived the motion to dismiss,
it follows that the civil conspiracy claim will not be dismissed. Accordingly,
Defendant Insights’ Motion to Dismiss Counts X and V is DENIED.
THEREFORE, Defendant Insights’ Motion to Dismiss is DENIED.
IT IS SO ORDERED.
/s/ Ferris W. Wharton, J.
Ferris W. Wharton, J.
11