Oates v. Larkin, 23 Mass. L. Rptr. 390 (2007).
            Superior Court of Massachusetts, at Suffolk.

            The Primary Association included four associations: three residential and one commercial. The residential units were under the control of the owners. The developer still had control of the commercial association. Seven managers ran the Primary Association: three were presidents of each of the residential associations, and the developer appointed four managers for the commercial association. The plaintiff, Keith Oates, is the president of one of the residential associations (“the Association”) suing on behalf of its members. Once in control of the condominiums, the Association members reported several construction defects such as drainage on balconies, problems with heat pumps and thermostats in units, inadequate roof fans, and other nonconformities. After several attempts to have the nonconformities cured, plaintiff filed suit against the developer, the commercial association managers, the contractor, and the architect.

            Plaintiff sought indemnification from the commercial association managers for the cost of bringing the suit, claiming breach of fiduciary duty. Plaintiff also claimed negligence and breach of contract by all other defendants.

            The developer and his appointed managers claimed that president Oates lacked standing (had no personal injury or real interest) to bring a derivative suit—a suit by an entity’s member on behalf of the entity. The court agreed: the Association, not Oates, was a member of the Primary Association and therefore the real party in interest. But the court did not find a dismissal necessary. It directed that the complaint be amended to change the plaintiff’s name to that of the Association. Although Oates could make the decision to sue and engage counsel, he was not authorized to sue on the Association’s behalf.

            The contractor claimed the complaint should be dismissed for the following reasons: there was no contract between the Association and the contractor; the claim of negligence was based on economic loss only; the time limit to file either claim had expired; and Oates failed to meet the requirements of a derivative suit. The court sided with the contractor on the lack contract argument. The contract was between the developer and the contractor and showed no intent that the Association be a third party beneficiary of the contractual performance. 

            As to the negligence claim, plaintiff had to show personal injury and property damage beyond the negligent construction. Because the court could not conclude that the complaint did not set any facts to support a negligence allegation, it addressed the timeliness of the claim. The court considered the statute of repose, which barred any claims brought after six years of the earlier of occupancy or substantial completion. Because there were many different certificates of completion, the court could not determine the applicable occupancy date and could not dismiss on that basis.

            Also, the statute of limitations barred any claims brought three years after the owner should have discovered the defects. The court could not find that there were not any facts supporting a timely claim and could not dismiss on that ground. Also, the court did not dismiss the complaint because it disagreed that the plaintiff did not meet the derivative action requirements that the contractor specified.

            Finally, the court allowed the architect to join the contractor’s motion to dismiss, which meant the architect was asking for the same relief as the contractor. Thus, the court denied the developer’s and managers’ motion to dismiss as long as the complaint was to be amended to change the plaintiff name to that of the association. The motion to dismiss for lack of contractual relationship was allowed, and the motion to dismiss on the other grounds was denied.

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