The dispute centers on a 7,800-square-foot single-family home in Gloucester, Massachusetts that RMB Properties, LLC Series I purchased from 171 Atlantic Road LLC on September 18, 2020, for $4.7 million. The property, originally built in 1908 and previously used as a hotel, had been gutted to the studs and rebuilt by 171 Atlantic for commercial resale. Almost immediately after buyer Ronald Berman moved in, the home was beset by water cascading through windows, doors, and ceilings; radon levels well above the contractually required threshold of 3.9 picocuries per liter; and a range of building-code deficiencies. Berman testified that conditions deteriorated so severely in the winter of 2020 that the home was uninhabitable and his daughter's family would leave in the middle of the night.
U.S. District Judge Myong J. Joun held that 171 Atlantic breached the purchase and sale agreement by failing to complete punchlist items it was contractually obligated to fix, including water seepage at the bulkhead, chimney flashing repairs, grading deficiencies, and the installation of a functioning radon mitigation system. The PSA required radon levels below 3.9 picocuries per liter; testing in November 2020 showed a current reading of 8.2 pc/l and an average of 7.0 pc/l, and the subcontractor retained for mitigation ultimately told 171 Atlantic's project manager that it had done the best it could. The court also held that 171 Atlantic breached the PSA by delivering a property with multiple Massachusetts Building Code violations — including deficiencies in exterior wall weather barriers, flashing, insulation flame-spread ratings, and surface drainage — and rejected the seller's reliance on a certificate of occupancy as insufficient to create a genuine factual dispute.
On the express warranty claim, the court granted partial summary judgment for the buyer as to flooring and plumbing defects covered by the PSA's Seller's Limited Warranty, but denied it as to the roof. Observations of exposed nail heads and improper shingle installation were made in July 2023, after the one-year warranty period had expired, and the court held that a genuine factual dispute remained over whether those conditions existed during the warranty period.
The implied warranty of habitability ruling turned on two threshold questions: whether the property qualified as a new house and whether 171 Atlantic was a builder-vendor. Judge Joun held that both elements were satisfied. The seller had purchased the property for the sole purpose of renovating and reselling it to the public, and the renovation involved gutting the interior to bare studs and rebuilding everything from flooring and plumbing to the roof, siding, and windows. The court rejected the argument that 171 Atlantic's use of a related construction entity, Melanson Development Group, to perform the work stripped it of builder-vendor status, citing the interrelationship between the two entities and the fact that both shared the same principal. The court further held that the water infiltration defects were latent — concealed behind woodwork, stone, and structural components — and that the property's failure to keep out the elements, combined with the building-code violations already established, fell squarely within the circumstances the Supreme Judicial Court identified in Albrecht v. Clifford as breaching the implied warranty.
On 171 Atlantic's two summary judgment motions, the court denied relief across the board. Several damages categories the seller sought to exclude had already been withdrawn by the buyer, rendering those requests moot. Remaining disputes — including whether deck metal panel replacement, first-floor great room remediation, storm doors and windows, and consultant costs fall within the PSA's scope — presented genuine factual questions the court declined to resolve as a matter of law. The court also rejected the seller's attempt to exclude damages categories for lack of expert support at the summary judgment stage, noting that the seller cited no authority requiring such exclusion before trial.