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Aldrich v. Add Inc.6/21/2002
Suffolk.
April 4, 2002
Condominiums, Master deed. Real Property, Condominium. Limitations, Statute of. Corporation, Corporate successor liability. Negligence, Design, Construction work, Economic loss. Actionable Tort. Repose, Statute of.
The plaintiffs, trustees of the Seal Harbor III Condominium Trust (trust), brought this action against ADD Inc., an architectural firm (architect), to recover damages for the negligent design of the Seal Harbor III Condominium (condominium). The architect moved for summary judgment on the ground that the plaintiffs' claim was barred by the economic loss rule. A judge in the Superior Court denied that motion. A second judge granted the architect's subsequent motion for summary judgment on the ground that the plaintiffs' claim was time barred by the three-year limitation set forth in G. L. c. 260, ยง 2B. A third judge denied the plaintiffs' motion for leave to amend their complaint to add a claim for breach of express warranty. We granted the parties' joint application for direct appellate review. The issues now before us are whether (1) the second judge erred in concluding that the plaintiffs were the successor in interest to the owner of the property on which the condominium was built and, therefore, were subject to an expired contractual time limitation governing a cause of action between such owner and the architect; (2) the first judge erred in concluding that the plaintiffs' tort claim against the architect was not barred by the economic loss rule; and (3) the third judge erred in denying the plaintiffs' motion for leave to amend their complaint. We vacate the allowance of summary judgment based on the theory of successorship, affirm the denial of summary judgment based on the economic loss rule, and remand the case for further proceedings consistent with this opinion.
1. Background. The condominium, located on a peninsula in Winthrop, is a ten-story building containing 117 residential condominium units and approximately 153 parking spaces in an underground garage. As of 1984, a developer, Dolphin Real Estate Corporation (Dolphin), owned the land on which the condominium was to be situated. Dolphin retained the architect to provide design services in connection with the construction of the condominium, which was to be built by Sanford Construction Company, Inc. (contractor).
In late 1984, Dolphin and the architect entered into a standard form of agreement between owner and architect (owner-architect agreement), as promulgated by the American Institute of Architects. Pursuant to this agreement, the basic services to be provided by the architect included: (1) review and evaluation of the project, including the preparation of schematic design documents illustrating the scale and relationship of project components; (2) refinement of the building and site design generated in the schematic design phase; (3) preparation of drawings and specifications for construction that fully complied with all applicable Federal, State, and local laws, ordinances, and codes; and (4) administration of the construction contract between Dolphin and the contractor, including site inspection visits. The architect's obligations under the owner-architect agreement terminated when final payment to the contractor was due, or sixty days after the date of substantial completion of the work, whichever came first. Dolphin was responsible for such activities as paying construction costs, compensating the architect, and furnishing all legal, accounting, and insurance services as may be necessary.
Construction of the condominium began in the spring of 1986. On July 28, 1987, Dolphin filed a master deed in the Suffolk County registry of dee
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