Urman v. South Boston Savings Bank
424 Mass. 165 (1997)
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Rule of Law:
A seller of real estate is not liable for failing to disclose a past, remediated, off-site environmental condition when the seller's knowledge is limited, the condition does not affect the property being sold, and there is no demonstrable future danger.
Facts:
- The Massachusetts Department of Environmental Protection (DEP) declared the area near 9 Hasenfus Circle a 'priority' site due to trichloroethylene (TCE) vapors entering a nearby elementary school from contaminated groundwater.
- The school was closed for cleanup from February to September 1990 and reopened approximately four months before the plaintiffs purchased their unit.
- The previous owner of the condominium unit informed South Boston Savings Bank that he had difficulty selling the unit due to the nearby hazardous waste problem affecting marketability.
- The bank's internal records acknowledged a 'hazardous waste problem' in the neighborhood that was impacting the property's marketability.
- On December 27, 1990, Pete and Victoria Urman purchased the foreclosed condominium unit from the bank without being informed of the past contamination issue.
- In May 1991, air quality tests conducted in the Urmans' unit showed only minimal, non-dangerous levels of TCE, and no corrective measures were required or implemented.
Procedural Posture:
- Pete and Victoria Urman filed a complaint against South Boston Savings Bank in the Superior Court.
- The Urmans and the bank filed cross-motions for summary judgment.
- The Superior Court judge denied the Urmans' motion, granted the bank's motion, and entered a judgment dismissing the Urmans' claims.
- The Urmans, as appellants, appealed the judgment of the Superior Court.
- The Supreme Judicial Court of Massachusetts granted the Urmans' application for direct appellate review.
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Issue:
Does a bank's failure to disclose a past, remediated toxic waste contamination problem on a nearby property to the buyers of a foreclosed condominium unit constitute common law fraud, a violation of consumer protection statute G. L. c. 93A, or negligent infliction of emotional distress?
Opinions:
Majority - Greaney, J.
No. A seller's failure to disclose a past, remediated, off-site environmental contamination does not constitute fraud, a violation of G. L. c. 93A, or negligent infliction of emotional distress under these circumstances. For the common law fraud claim, the court held that a seller has no duty to disclose defects to a buyer in the absence of a fiduciary duty; mere silence is not fraud. Regarding the G. L. c. 93A claim, the court found no violation because the bank's knowledge was limited, the contamination was in the past, the problem was off-site, it had been remedied before the sale, and the unit itself was not affected. The court determined such a 'precarious grievance' was not actionable. Finally, the claim for negligent infliction of emotional distress failed because the bank owed no duty to the plaintiffs and was therefore not negligent, and the plaintiffs could not show they were ever exposed to harmful levels of TCE or suffered any related physical harm.
Analysis:
This case clarifies and limits a seller's duty to disclose under Massachusetts' consumer protection law, G. L. c. 93A, particularly concerning off-site conditions. It establishes that a seller is not necessarily liable for failing to disclose historical, remediated problems in a neighborhood that do not directly impact the property's physical condition or habitability. The decision distinguishes between active, material defects and past, neighborhood 'stigmas,' thereby protecting sellers from liability for vague or resolved issues. This precedent requires future plaintiffs to show that an undisclosed off-site condition is of sufficient, ongoing materiality to render a property substantially less valuable or desirable to a reasonable buyer.
