July 2007
In Hartman v. Pulte Homes of New England, LLC, Morris Borea represented 45 Plaintiffs, most of whom were husband and wife, who purchased homes at the Beach Farms subdivision in Old Lyme, CT, from Pulte Homes of New England, LLC, between 2001 and 2003. The plaintiffs were the buyers of the 24 homes that Pulte built in the subdivision. The homes sold for between $500,000 and $1Million Dollars. Pulte Homes of New England is a wholly owned subsidiary of Pulte Homes, Inc., a national homebuilder that did $14 Billion in sales in 2006.
The Beach Farms subdivision is located right next to, and within walking distance of, the Mile Creek Beach Club, which operates a private beach club on one of the best strips of beach in Connecticut. The Beach club has been there since about 1945 and has a 6-year waiting list to join if a person is able to get two sponsors and get voted into the club. When Pulte purchased the property where it built the Beach Farms homes, it also negotiated the assignment of 24 immediate family memberships for the Mile Creek Beach club, which it offered as part of the sale of the Beach Farms Homes. Pulte included an Exhibit K, as part of the purchase and sale agreement for the new homes, which specifically provided in writing that the Beach club membership was transferable to a future buyer of the home. After the buyers closed on their homes, they discovered that while they could join the Beach Club, the memberships were not transferable and they could not transfer the membership when they sold their homes.
At first, the Beach Farms Homeowners Association tried to deal with Pulte directly about the problem but Pulte refused to agree that the memberships were not transferable even though the Beach Club wrote a letter in January of 2003 specifically stating that the memberships are not transferable. In fact, Pulte continued to close on homes without correcting Exhibit K to its sales agreement even after it received a copy of the beach club's letter and had met with the homeowner's association regarding the problem. Rome McGuigan was retained in March of 2004 and filed suit in June of 2004 on behalf of all the Beach Farms owners claiming that Pulte was liable for fraud, negligent misrepresentation, breach of contract and CUTPA as a result of its marketing and sale of the Beach Farms homes.
In June of 2005, after unsuccessfully trying to strike our claims in Court, Pulte forced us to go into arbitration under the rules of the American Arbitration Association because each sales agreement had an arbitration clause. After filing for arbitration, Pulte took the depositions of all 45 plaintiffs and we conducted approximately a numerous depositions of Pulte employees, third party witnesses, and experts. Between November 1, 2006 and January 12, 2007, we arbitrated the matter before a panel of three arbitrators. The hearing lasted 12 days, and consisted of the testimony of over 50 witnesses and the review of hundreds of exhibits. In May of 2007, the arbitrators ruled that Pulte was liable for fraud, negligent misrepresentation, breach of contract and CUTPA. The arbitrators found that there was no basis for Pulte to have represented in writing that the beach club memberships were transferable and that the claimants' homes would not be as valuable without the Beach Club membership as the homes would be if they could transfer the membership when they were sold. The arbitrators awarded $120,000 in compensatory damages, $725,000 in punitive damages, approximately $90,000 in costs and approximately $300,000 in attorney fees. The total award was $1,235,631.00.
In June of 2007, Pulte filed an Application to vacate the Award and we responded by filing an Application to confirm the Award and requested pre-judgment interest because there was not a reasonable basis for Pulte's application. The parties briefed the issue and appeared for argument before Judge Elaine Gordon on July 23, 2007, in the New London Superior Court. Judge Gordon denied Pulte's application, granted our application, and entered judgment in our favor on July 26, 2007. Judge Gordon also held that there was no reasonable basis for Pulte's application and awarded pre-judgment interest of approximately $20,000.00. Pulte then filed an appeal. The parties settled the claims at the appellate Pre-Argument Conference. Terms of the settlement are confidential.
