SHERYL OKIN AND IRWIN OKIN v. ELSIE E. CONTE ( 2015 )

IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
SHERYL OKIN and IRWIN OKIN, )
)
Plaintiffs-below, )
Appellants, )
)
V._. ) CA. No. CPU4-14-002476
)
ELSIE E. CONTE, )
)
Defendant-below, )
Appellee. )
Sheryl and Irwin Okin Thomas B. Ferry, Esquire
15 Bridle Brook Lane 299 East Main Street
Newark, DE 19711 Newark, DE 19711
Appellants, Pro se Attorney for Appellee
RENNIE, J.
INTRODUCTION
This is an appeal from a July 24, 2014 decision, where the Justice of the Peace Court No.
13 found in favor of Defendant-below, Appellee Elsie E. Conte (“Conte”). The case is a breach
of contract action that arises from Conte’s alleged failure to disclose a material defect in
connection with the sale of residential property to Plaintiffs-below, Appellants Sheryl and Irwin
Okin (“S. Okin”, “I. Okin”, collectively “Appellants”). In addition to the alleged failure to
disclose, Appellants allege that Conte fraudulently concealed defects in the property’s basement.
On September 2, 2014, Appellants filed the Complaint on Appeal alleging that the
seller’s disclosure form required by Delaware’s Buyer Property Protection Act1 did not disclose
problems which existed prior to the purchase of the property and subsequently required repair
and replacement.2 Appellants seek damages totaling $19,388.00. On September 17, 2014, Conte
filed an Answer denying the substantive allegations of the Complaint on Appeal and asserted
affirmative defenses. Conte seeks an order affirming the Justice of the Peace decision-below.
Trial was held on July 8, 2014. At the close of evidence, the Court reserved decision. This is the
Court’s Opinion on the relief sought by the parties.
FACTUAL BACKGROUND
The testimony in this matter is at times conflicting and disconnected. After parsing
through the testimony, the Court finds the following facts to be credible. Appellants, who
previously lived in Long Island, New York, sought to purchase a home in Delaware. In April
2012, Appellants saw Conte’s property listing at 15 Bridlebrook Lane in Newark, DE (“the
property”). Conte’s listing through her realtor, Patterson Schwartz, described the property as
— _3.-'
I 6 Del. C. § 2570 et seq.
2 Appellants allege that the Property required waterproofing, addition of a new French drain, mold removal, cedar
wood closet replacement, and replacement of the drain lines in the basement.
2
Conte presented Appellants with information that the basement leaked in the past and the
waterproofing certification as evidence that it was resolved. The evidence presented does not
persuade the Court that Conte’s representations were knowingly false or that she fraudulently
concealed a known defect.
Accordingly, the Court finds in favor of Conte.
“CONCLUSION:
For the foregoing reasons, the Court finds in favor of Defendant-below, Appellee Elsie E.
Conte and against Plaintiffs-below, Appellants Sheryl and Irwin Okin. Each is ordered to
bear their own costs.
IT IS SO ORDERED this 14th day of July, 20
Shad.
Judge 3;"
ll
having serene creek views, a cedar storage closet and move-in ready.3 Appellants contacted
Patterson Schwartz and scheduled a viewing of the property.
Appellants initial impression was that the property met their needs. On April 19, 2012,
the parties executed an agreement of sale (“the agreement”) for the property.4 The agreement
called for all pre-settlement inspections, written reports of material defects and requests for
repair to be completed and presented to Conte by May 1, 2012.5 Conte’s response was due by
May 3, 2012, with all negotiations to be completed by May 5, 2012.6 Settlement on the property
was scheduled for May 31, 2012.
On April 19, 2015, Conte also presented the Seller’s Disclosure form to Appellants.7 The
seller’s disclosure report filled out by Conte indicated there was no damage to the drainage
8
system, basement, or crawlspace. Moreover, the form reported no damage to the sewage
system.9 S. Okin testified that Appellants relied exclusively on the seller’s disclosure report in
making their decision to purchase the property.
Appellants contracted with Reliable Home Inspection Service (“RHI”) to perform a pre-
closing inspection on the property. 10 On April 24, 2012, Robert Matthews11 inspected the
property and provided a written report of his findings.12 Matthews described his inspection as
“generalist in nature.” When Matthews inspected the property’s basement, it appeared to have
3 See Joint Ex. 1.
4 See Joint EX. 2.
5 Idaho
6 Id.
7 Idaho
8 See Joint Ex. 2, 11 73. The addendum to the disclosure states that a French drain was installed in 1965 and replaced
in the late 1970s. An addition was later added in 2010.
9 Id. at 11 94
m Matthews testified that in most instances, the inspector goes through the property with the customer. Then, the
inspector provides a report outlining defects and the corresponding recommended repairs.
” Matthews is employed as a property inspector for RHI.
'2 See Joint Ex. 4.
been recently painted. He could not see any water stains or any major challenges. Matthews
stated that the existence of fresh paint rendered the possibility of finding any defect unlikely, but
without more, he could not conclude that Conte was attempting to conceal a defect. After
Matthews’ inspection, Appellants sought two repairs, entered into negotiations with Conte, and
reached an agreement for repairs, which were satisfactorily made prior to the settlement date.
According to S. Okin, the basement was empty prior to the closing. The property had
basic furnishings, and she observed that the majority of the house was spot-painted. However, S.
Okin described the basement as in pristine condition. On May 31, 2012, the day of settlement,
Appellants performed a final walkthrough of the property. Other than a minor water blockage
issue in the master bathroom, the walkthrough did not show any issues.
According to I. Okin, Appellants first realized there was an issue in November 2012, six
months after the closing. The property came with a handmade cedar closet, which was placed in
the basement for the purpose of storing “off-season” clothing.13 Within a few months after they
moved in, Appellants placed various winter clothing in the cedar closet. In November 2012,
when Appellants went to retrieve the clothes, they found them full of mold. Appellants took the
clothes to a drycleaner to remove the mold; however, only certain items survived.l4
After the discovery of the mold, Appellants solicited Robert Shaw Contractors (“Shaw”)
to provide an estimate to repair the cedar closet. However, the inspection was not performed
until December 30, 2013, more than a year after the discovery of the problem.15 According to the
estimate, Shaw removed the cedar closet and observed water “running down the walls and onto
13 See Joint Exhibit 1. The cedar closet is listed in the property description as furniture which will pass to the new
owners.
14 See Pl.’s Ex.1. Appellants offered receipts purporting to document the occurrence; however, the receipts do not
indicate why the items were cleaned.
‘5 See Pl.’s Ex. 2.
the wood base [of the cedar closet], then onto the concrete floor.”16 Additionally, the estimate
states that when the closet was removed, mold was growing behind the closet walls and
blockwalls.17 Finally, the Shaw estimate states that the cedar closet needed to be demolished and
rebuilt with materials that would not harbor mold. Shaw priced the job at $2,200.00.18
Ultimately, Appellants decided against replacing the cedar closet and the entire cedar closet was
lost due to the mold infestation. I. Okin testified that when Shaw reported that the source of the
issue was water running down the walls — likely the product of a pipe leaking behind a basement
wall — they were surprised because Conte represented that the basement had waterproofing
services performed in 2010 by B-Dry Waterproofing, LLC.19
In September 2013, more than a year after the May 31, 2012 settlement, Appellants
began to notice water accumulation in the basement. Appellants contracted with Thompson’s
Waterproofing, LLC to have a new French drain and second sump pump installed in the
basement, totaling $8,300.00.20
According to Conte, the basement was painted in the 1970s and again in the 19805.
Additionally, when Conte had B-Dry waterproof the basement in 2010 after the sump pump was
installed, the wall was repainted.21 Conte testified that the Seller’s disclosure form (specifically
the paragraphs relating to the basement’s condition as well as the disclosure’s addendum) was
accurate at the time the disclosure was made.22 Additionally, the Appellants had an inspection
performed by an inspector of their choosing and negotiated certain repairs, which Conte
‘6 Pl.’s Ex. 2.
17 Id
'8 1d. Also, See Pl.’s Ex. 3 — 4. Exhibit 4 shows the cedar closet and basement with no issues as of June 26, 2013.
Although the pictures in Exhibit 3 show the closet after the discovery of mold, no testimony as to the date of the
Exhibit 3 pictures was presented to the Court.
19 See Joint Ex. 8.
20 See Pl.’s Ex. 5.
2‘ See Joint Ex. 8.
22 See Joint Ex. 2, 11 72—74
completed.23 Appellants did not request repairs to the French drain system or the cedar closet. In
fact, Conte testified that she was not aware of the basement’s issues until Appellants filed the
instant suit. Regarding the cedar closet, Conte testified that it was built in the 19805. During her
ownership of the property, Conte stored her off-season clothes in it. When she moved out in May
2012, approximately one week before closing, Conte emptied the closet and did not find mold.
Finally, Timothy Conte24 testified that he painted the basement when he was in high
school in 1975. His late step—father painted the basement again in the late 1980s, and as far as he
knew, that was the last time the basement was painted. However, Appellants asked him whether
he testified in the proceeding-below that he painted the basement with Dry-Lok paint within one
year of the sale to Appellants. He replied that he did not. In light of the inconsistent testimony of
Mr. Conte, the Court posed a direct question to Mr. Conte asking him whether he painted the
basement at anytime within two years prior to the sale of the property. Mr. Conte definitively
answered that he did not.
DISCUSSION
To prevail on a claim for breach of contract, the plaintiff must establish by a
preponderance of the evidence that: (1) a contract existed between the parties; (2) the defendant
breached an obligation imposed by the contract; and (3) the plaintiff suffered damages as a result
of that breach.25
The parties agree that a contract existed between Appellants and Conte. Section 31 of the
agreement specifically incorporates the Disclosure into the agreement. The parties dispute,
23 See Joint Ex. 7. Appellants negotiated for the reinstallation of a well-water conditioning system, electrical work,
and repairs to the property’s siding.
24 Mr. Conte is the son of Conte, and has knowledge of the events surrounding the closing as well as general
information concerning the condition of the basement.
25 Gregory v. Frazer, 2010 WL 4262030, *1 (Del. Com. Pl. Oct. 8, 2010); VLIW Technology, LLC v. Hewlett-
Packara’, C0., 840 A.2d 606, 612 (Del. 2003).
however, whether Conte breached the contract by failing to make the required disclosures. In
other words, the dispositive issue is whether Conte knew there were material defects in the
property’s basement and failed to adequately disclose these defects as required by the Buyer
Property Protection Act.
A. Buyer Property Protection Act
Conte contends that she truthfully and completely disclosed all information relating to the
basement’s water infiltration issues known to her at the time the disclosure was made in
accordance with the Delaware Buyer’s Property Protection Act.26 Additionally, Conte noted that
Appellants inspected the property at least four times prior to closing and negotiated certain
repairs, which she made.
In response, Appellants counter that Conte knew of the basement’s issues and did not
disclose its defects. Appellants further allege that they could not discover the defect because it
would not have been discovered but for their removal of the cedar closet — affixed to a basement
wall — for inspection.
Delaware’s Buyer Property Protection Act requires a seller transferring residential real
property to “disclose, in writing, to the buyer, agent and subagent...all material defects of that
property that are known at the time the property is offered for sale or that are known prior to the
time of final settlement.”27 “The disclosure is neither a warranty nor a substitute for any
inspections or warranties that either party may wish to obtain.”28 The disclosure merely “serves
as a good faith effort by the seller to comply with the requirements of the Buyer Property
Protection Act, and upon its completion, it becomes part of the purchase agreement.”29 Thus, “a
26 6 Del. C. §§2750 et seq.
27 6 Del. C. § 2572.
28 6 Del. C. § 2574 (as quoted in Dunn v. Vaudry, 2011 WL 4638266, at *6 (Sept. 30, 2011)).
29 6 Del. C. § 2573 -74.
seller's failure to disclose known material defects qualifies as a breach of the real estate sale
contract by the seller.”30
The Court finds by a preponderance of the evidence that Conte disclosed all material
defects relating to water filtration in the basement. The seller’s disclosure form adequately
informs Appellants of all occurrences of water infiltration and Conte’s subsequent repair efforts
to eliminate the issues.31 If the repairs were not performed correctly, Appellants have the burden
to show that Conte had knowledge of the defective repair and did not disclose it. Here,
Appellants presented no such testimony or evidence that meets this burden.
In McCoy v. Cox, the court held that a leak in a shower pan that was known to the sellers
to have occurred in the past was not a material defect subject to mandatory disclosure because
the seller corrected the problem at least a year prior to settlement and had not experienced any
leaks since the repair.32 The court also found that there was not enough evidence in the record to
establish that the sellers knew of a subsequent leak after they performed the repair one year
before settlement.33
Here, the record demonstrates that Conte disclosed (1) her knowledge of prior leakage
problems in the basement, (2) the fact that she repaired them nearly two years before settlement,
and (3) that she had not experienced any other known leaks since the repair. Moreover,
Appellants testified that they inspected the home in its entirety at least three times. Appellants
had an independent inspection performed, and no defects relating to water accumulation in the
23—:——:——-=—=
3° McCoy v. Cox, 2007 WL 1677536, at *1 (Del. Super. Jun. 11, 2007);..-
3‘ See Joint Ex. 2,111147-50; 72-74.
32 McCoy, at *7.
33 Id
basement were reported.34 Additionally, Conte testified that she was not aware of the basement
issues until Appellants brought the instant action. Thus, based on this record, Appellants have
not met their burden to show that the leak existed prior to the settlement, or that Conte failed to
disclose its existence.
The Court finds by a preponderance of the evidence that Conte disclosed all pertinent
information relating to the French drain. In the seller’s disclosure and addendum, paragraph
seventy-three states that the French drain was installed in 1965, replaced in the late 19705, and
Conte had an addition to the existing system installed in 2010.35
Appellants have not presented any evidence which persuades the Court that Conte failed
to disclose a defect relating to condition of the sump pump, other than presenting testimony that
an additional sump pump was required to be installed. Appellants have failed to show that Conte
did not disclose a defect in either system. Therefore, the Court finds that Conte’s seller
disclosure form satisfies the requirements of the Buyer Property Protection Act.
B. Fraudulent Misrepresentation
Appellants argue that Conte used Dry-Lok paint in the basement to reduce moisture
because she was aware of the water problems existing at the time of sale. They further argue that
the existence of fresh paint in the area where the leak occurred suggests that Conte knew of the
leak’s existence, and rather than disclose it, she painted over it, preventing its discovery during
reasonable inspections performed.
Conte counters that in completing the statutorily-mandated Disclosure, Appellants were
presented with truthful information regarding the history of water leakage due to the property’s
34 See Joint Ex. 4.
35 See Joint Ex. 2, 111] 73—74.
close proximity to a creek and subsequent efforts to repair damage. Conte maintains that she was
not aware of any leak or potentially defective repair within the basement at the time of
settlement. Further, Conte argues that Appellants had notice of the water filtration issues because
she provided them with the B-Dry warranty showing that the basement was waterproofed and
guaranteed to be leak-free for the life of the structure.
To establish a prima facie case of common law fraud, a plaintiff must show: (1) a false
representation, usually one of fact; (2) made by the defendant with knowledge or belief that the
representation was false, or was made with reckless indifference to the truth; (3) an intent to
induce the plaintiff to act or to refrain from acting; (4) action or inaction taken by the plaintiff in
justifiable reliance upon the representation; and (5) damage as a result of such reliance.36
In determining whether a false representation was made, the Court may review evidence
of overt misrepresentations, including evidence of “oral promises or representations made
prior to the written agreement.”37 A false representation also may be established by evidence that
a defendant deliberately concealed material facts, or was silent in the face of a duty to speak.38
The Court finds that Conte did not fraudulently misrepresent the basement’s condition.
As stated previously, Conte disclosed all known defects and repair efforts concerning the
basement. Although the instant defects were latent, Appellants have not shown that Conte knew
or should have known of their existence. Further, the evidence submitted by Appellants of
estimates for repair of the- various issues within the basement are dated at the earliest nine
months after the May 31, 2012 settlement date. Appellants’ photographical evidence, while
clearly displaying mold, does not definitively establish that the defect existed at settlement.
36 Stephenson v. Capano Dev., 1110., 462 A.2d 1069, 1074 (Del. 1983).
37 Anglin v. Bergold, 1989 WL 88625, at *2 (Del. Super. Jun. 26, 1989) (citing Scott—Douglas Corp. v. Greyhound
Corp, 304 A.2d 309, 317 (Del. Super 1973)).
33 Stephenson, 462 A.2d at 1074.
10