CLAIMS AGAINST DEVELOPERS UNDER THE D.C. CONSUMER PROTECTION PROCEDURES ACT (CPPA)
In the recent case of Wetzel v. Capital City Real Estate, LLC, the District of Columbia Court of Appeals held that the District of Columbia Consumer Protection Procedures Act (CPPA) provides an avenue for an aggrieved party to pursue recovery from a real estate developer, even when there has not been any direct contractual relationship between the parties (i.e., privity of contract). The aggrieved party must simply allege that a misrepresentation of a material fact misled the consumer.
In Wetzel, the plaintiffs purchased a condominium unit from Capital City Real Estate, LLC, a condominium developer. Subsequently, flooding, due to heavy rain that leaked through the walls and a window, seriously damaged the plaintiffs’ unit. The trial court dismissed all of the unit owners’ claims. On appeal, the Court of Appeals reversed in part, holding that the purchasers’ claims of fraud, strict liability, and violations of the CPPA had been improperly dismissed. The defendant developer did not sell the units, nor was it a party to the purchase agreement with the plaintiffs; but, as alleged in the plaintiffs’ complaint; the developer did misrepresent the condition of the unit, failed to disclose various defects, and actively participated in the preparation of and the marketing of the subject property. The Court of Appeals read the following language of the CPPA broadly to allow the plaintiffs to proceed directly against the developer: “Any person, whether acting for the interests of itself or the general public, may bring an action under the CPPA in the Superior Court of the District of Columbia seeking relief from the use by any person of a trade practice in violation of a law of the District of Columbia.” On that basis, the case was remanded to the Superior Court for further proceedings on the relevant counts.
The Court of Appeals’ decision in Wetzel, as it currently stands, provides purchasers with a potentially powerful weapon in situations where they discover defects in their newly purchased condominium units, particularly when the absence of privity would otherwise have precluded legal action. Previously, if owners had not purchased the unit directly from the developer, they could not proceed against the developer, leading to reduced likelihood of recovering damages. With the ruling in Wetzel, the Court of Appeals has opened the door to recovery from developers when the evidence demonstrates some involvement on their part in the marketing or sale of the unit, even if the unit is not conveyed to the purchaser by the developer.