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Martin v. Kenneth ORT

Superior Court of Maine

February 3, 2016

DARREN MARTIN and SHERI MARTIN, Plaintiffs and Counterclaim Defendants
v.
KENNETH ORT and DEBRA ORT, Defendants and Counterclaim Plaintiffs.

ORDER AND DECISION ON PLAINTIFF/COUNTERCLAIM DEFENDANTS' MOTION TO DISMISS

ANN M. MURRAY, JUSTICE.

Before the Court is Plaintiff/Counterclaim Defendants Darren Martin and Sheri Martin's ("the Martins") Motion to Dismiss all seven counts of Defendant/Counterclaim Plaintiffs Kenneth Ort and Debra Ort's ("the Orts") Counterclaim. The Court has reviewed the parties' filings and denies the Motion.

BACKGROUND[1]

In the early Fall of 2008, the Orts, a husband and wife, found a listing for the sale of a property located at 145 Cedar Breeze Center in Glenburn, Maine (the "property"). The property was owned by the Martins, also husband and wife. (Def.'s Countercl. ¶¶ 1-4.) The Orts wished to proceed with owner financing from the Martins for the purchase of the property. (Def.'s Countercl. ¶ 6.) The Martins and Orts entered into an agreement whereby the Orts would purchase the property for the price of $159, 000. (Def.'s Countercl. ¶¶ 7-8.) The Orts made a $17, 000 down payment and agreed to make monthly payments of $1, 800 for six months while they attempted to obtain bank financing for the remaining balance of the purchase price. (Def.'s Countercl. ¶ 8.) The Orts also obtained homeowners' insurance and paid the property taxes. (Def.'s Countered. ¶ 9.)

By March 2009, six months later, the Orts were still unable to obtain bank financing. (Def.'s Countercl. 10.) Mr. Martin indicated to the Orts that he would extend the owner-financing agreement. (Def.'s Countercl. ¶ 11.) The Martins and Orts then agreed that the Orts would continue making payments toward the purchase of the property, but at an increased rate of $2, 000 per month. (Def.'s Countercl. ¶ 12.) The Orts stated it was the understanding of both parties that the Martins would finance the purchase of the property by the Orts and that ownership would eventually pass to the Orts. (Def.'s Countercl. ¶ 13.)

In the Counterclaim, the Orts refer to a lease entered into in April 2009, and claim that this lease was subsequently orally modified in 2009.[2] (Def.'s Countercl. ¶ 70.) The lease describes the property as leased premises and states that the term of the lease is month to month beginning on April 1, 2009 for the rent of $2, 000 per month payable to the Martins. (PL's Second Substituted Ex. B ¶¶ 1-3.) It also includes provisions stating that all improvements to the property shall be the property of the Martins, and that the Orts shall pay all utilities, taxes, insurance, and costs of repairs and maintenance. (PL's Second Substituted Ex. B ¶¶ 4-7.) Finally, the lease includes an "Entire Agreement, Severability" clause (the parties both refer to this as the integration clause), which states, in pertinent part, "[t]his Lease expresses the entire agreement between the parties, and supersedes all previous discussions and understandings between them. There are no terms or conditions of this Lease that are not reduced to writing by both parties." (PL's Second Substituted Ex. B 18.)

Based on their understanding that they were buying the property, the Orts paid for a number of substantial improvements to the property: they replaced the existing trailer with a year-round home, installed a well on the property, and installed a septic system. (Def.'s Countercl. ¶¶ 14, 16, 18, 20, 22, 28.) For each one of these improvements, the Martins gave the Orts verbal permission, assisted them in performing the improvements, and never indicated at any time that the Orts were making improvements on land that they were only leasing and would not eventually own. (Def.'s Countercl. ¶¶ 15, 17, 29, 21, 23-27.)

In or about July 2013, Mr. Ort delivered a $5, 000 check to Mr. Martin and told him that the Orts would be making larger monthly payments in order to finish paying for the property sooner. (Def.'s Countercl. ¶ 29.) Although the Martins told the Orts not to make larger payments because of adverse tax consequences, the Martins did not tell the Orts that the payments were for anything other than the payment for the purchase of the property. (Def.'s Countercl. ¶ 30.)

Sometime thereafter, the Orts presented the Martins with an itemization of all the money they had paid towards the purchase of the property and indicated that the payment in September of 2014 would be the last because the purchase price would have been paid in full by then. (Def.'s Countercl. ¶ 31.) Approximately one week later, Mr. Martin contacted the Orts and for the first time denied that the payments were for the purchase of the property and claimed they were in fact only for a leasehold interest. (Def.'s Countercl. ¶ 32.) Although they disagreed with Mr. Martin's characterization, the Orts continued to make payments. (Def.'s Countercl. ¶ 33.)

In May of 2015, the Orts met with the Martins and explained how they had made all the improvements with the Martins knowledge, permission, and assistance, and the Martins never suggested that Orts' payments were merely towards a lease. (Def.'s Countercl. ¶ 34.) The Orts then offered to sell the house to the Martins or make additional payments to the Martins for the purpose of purchasing the property. (Def.'s Countercl. ¶ 35.)

On or about September 3, 2015, Mr. Martin asked the Orts to make a written offer to complete the sale of the Property. (Def.'s Countercl. ¶ 36.) Through counsel, the Orts made a written offer to the Martins on October 2, 2015. (Def.'s Countercl. ¶ 37.) The Martins responded to the offer by filing the Complaint in the present lawsuit. (Def.'s Countercl. ¶ 38.) On October 27, 2015, the Orts answered and asserted a counterclaim consisting of the following counts: I) fraud, II) fraudulent concealment, III) negligent misrepresentation, IV) breach of contract, V) unjust enrichment, VI) quantum meruit, and VII) declaratory judgment. On November 16, 2015, the Martins filed the Motion to Dismiss all counts of the Orts' Counterclaim.

STANDARD OF REVIEW

Dismissal of a counterclaim, like a complaint, is proper only when the counterclaim fails to state a claim for which relief may be granted. See M.R. Civ. P. 12(b)(6). A motion to dismiss tests the legal sufficiency of the counterclaim, In re Wage Payment Litig. v. Wal-Mart Stores, Inc., 2000 ME 162, ¶ 3, 759 A.2d 217, and is a pure question of law. Persson v. Dep't of Human Servs., 2001 ME 124, ¶ 8, 775 A.2d 363. To be sufficient, a counterclaim need only consist of a short and plain statement of the claim to provide fair notice of the cause of action. Johnston v. Me. Energy Recovery Co., Ltd. P'ship, 2010 ME 52, ¶ 16, 997 A.2d 741 (quotation marks omitted). The court accepts facts, but not legal conclusions, as true. Harvey, Maine Civil Practice § 12:11 at 415-16 (3d ed. 2011). The court views the pleadings in the "light most favorable to the [non-moving party] to determine whether it set forth elements of a cause of action or alleges facts that would entitle the [non-moving party] to relief pursuant to some legal theory." Me. Energy Recovery Co., Ltd. P'ship, 2010 ME 52, ΒΆ ...


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