## Facts

- Texaco agreed to sell a bulk petroleum storage facility in Chelsea, Massachusetts, to V.S.H. Realty for $2.8 million; V.S.H. paid a $280,000 deposit.
- The agreement required Texaco to convey title “free and clear of all liens, encumbrances, tenancies and restrictions,” except listed exceptions.
- Texaco signed an acknowledgment stating that, to its knowledge, it had not received any “notice, demand, or communication” from government agencies regarding “modifications or improvements” to the facility.
- Texaco disclosed a known condition: fuel oil had migrated under a nearby garage and, during heavy rains or high tides, seeped into the garage boiler room.
- V.S.H. stated it inspected the property and accepted it “as is,” without representations about condition.
- After acceptance, V.S.H. personnel observed additional oil seeping from the ground at the western end of the property and learned the U.S. Coast Guard was investigating seepage.
- V.S.H. alleged Texaco knew or should have known of the additional seepage and the Coast Guard investigation, and failed to disclose them despite V.S.H.’s inquiries.
- V.S.H. demanded remediation, indemnification, or a price reduction; Texaco refused, and V.S.H. sought return of its deposit and damages.

## Issues

1. Whether oil seepage and a Coast Guard investigation constituted “encumbrances” breaching the promise to convey title “free and clear” of encumbrances.
2. Whether Texaco’s disclosures and “no governmental communications” statement, coupled with alleged nondisclosure of additional seepage and a Coast Guard investigation, plausibly alleged common-law misrepresentation or fraudulent concealment.
3. Whether the same conduct plausibly alleged an “unfair or deceptive act or practice” under Mass. Gen. Laws ch. 93A, notwithstanding arm’s-length negotiations and no general duty to disclose.
4. Whether dismissal under Rule 12(b)(6) and denial of leave to amend were improper as to the misrepresentation and ch. 93A claims.

## Decision

- Affirmed dismissal of the breach of contract claim.
- Reversed dismissal of the common-law misrepresentation and Mass. Gen. Laws ch. 93A claims.
- Remanded for further proceedings on the surviving claims.
- Concluded that, at the pleading stage, the “as is” clause did not bar claims based on alleged fraud or deception.

## Legal Principles

- Contractual promises to convey title “free and clear of liens and encumbrances” target legal burdens on title (e.g., interests or restrictions), not merely adverse physical conditions or possible regulatory exposure, absent allegations of a present title burden.
- Under Massachusetts law, a party who chooses to speak in negotiations may incur a duty to avoid misleading “half-truths” by making additional disclosure necessary to prevent deception.
- An “as is” provision may allocate risk of unknown defects but does not categorically immunize a seller from liability for intentional or deceptive misrepresentation or concealment.
- Mass. Gen. Laws ch. 93A can reach misleading partial disclosures and omissions that are likely to mislead, particularly where the defendant has made affirmative statements that create a deceptive impression.
- On a Rule 12(b)(6) motion, the question is whether the complaint alleges sufficient facts to outline viable claims; dismissal is improper where allegations, taken as true, could support relief.

## Conclusion

The First Circuit held that alleged contamination and a Coast Guard investigation were not pleaded as title “encumbrances” supporting a contract claim, but that Texaco’s alleged half-truths and omissions about seepage and governmental investigation plausibly stated common-law misrepresentation and chapter 93A deceptive-practices claims, so those counts could proceed.


V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411 (1st Cir. 1985)