Plaintiff: Jeffrey H. Gladstone, Esq.
Defendant: Scott Partington, Esq. Jeffrey S. Brenner, Esq.
(Attorney for non-party witness)
matter came before this Court, sitting without a jury, on
Buyers Brian Goldner and Barbara Goldner's (Plaintiffs)
complaint against Sellers Robert Kreft and Mary Ann Kreft
(Defendants) for breach of contract, breach of good faith and
fair dealing, and for declaratory judgment. Plaintiffs'
claims arise out of an alleged breach of a Purchase and Sales
Agreement (the PSA) for real property and release of
Plaintiffs' deposit of $326, 250 (the Deposit). In
response, Defendants counterclaimed for breach of contract,
breach of good faith and fair dealing, and specific
performance of the PSA. At the conclusion of their case,
Defendants moved for judgment as a matter of law pursuant to
Super. R. Civ. P. 52(a). This Court reserved Decision and at
the conclusion of testimony instructed the parties to file
post-trial memoranda. Decision is herein rendered.
Jurisdiction is pursuant to G.L. 1956 §§ 8-2-13,
8-2-14, and 9-30-1 et seq., and Super. R. Civ. P.
about November 4, 2014, Plaintiffs and Defendants entered
into the PSA for the purchase of Defendants' residence
located at 306 Rumstick Road in Barrington, Rhode Island (the
Rumstick Property). See Trial Ex. 1; Trial Tr.
15:21-16:16. During their search for a property and the
closing, they worked with Midge Berkery (Berkery), a real
estate agent. Trial Tr. 12:20-13:13. Section 3 of the PSA
provided that the purchase price for the Rumstick Property
was $4, 350, 000 of which the Deposit was to be paid on or
before November 4, 2014. Id. Plaintiffs paid the
Deposit on or before November 4, 2014, and a notice of wire
transfer to the escrow account was sent to the realtors on
November 5, 2014. See Trial Ex. 6. The Deposit is
still in escrow due to Defendants' refusal to authorize
its release to Plaintiffs. See Trial Tr. 31:2-20.
Pursuant to the PSA, the closing on the Rumstick Property was
to be held on March 2, 2015. See Trial Ex. 1.
of the PSA, § 16 granted Plaintiffs a right to cancel
the PSA if issues related to the inspections of the Rumstick
Property had not been resolved by the Inspections Contingency
deadline set forth therein. See Trial Ex. 1. In
full, § 16 provides:
"Inspection Contingency: Time is of the essence as
it applies to Section 16.
"(a) Buyers shall have a ten (10) day period,
exclusive of Saturdays, Sundays and holidays
("Inspections Contingency Deadline"), from the date
of this Agreement to conduct and complete inspections, obtain
inspection reports, deliver to Seller or listing Licensee any
and all requests relating to inspections, obtain Seller's
response, and resolve all such requests with Seller in
writing or this contingency shall be deemed waived.
"(b) The inspections shall be conducted at Buyer's
expense by a recognized inspector(s) or inspection company of
Buyer's choice. Inspections may include, but are not
limited to, pest, cesspool/septic/sewer, radon, well water,
lead, physical/mechanical, hazardous substances, wetlands and
"(c) If Buyer wishes to terminate this Agreement because
of the following:
"(1) Buyer is not satisfied with the results of the
"(2) Buyer and Seller have not resolved any and all
issues relating to inspections to Buyer's satisfaction;
"(3) Seller has not responded to Buyer's requests on
or before the Inspections Contingency Deadline,
"then Buyer shall deliver a written notice of
termination to Seller or Listing Licensee on or before the
Inspections Contingency Deadline or any mutually agreed
extensions of such Deadline. If Buyer fails to deliver such
notice, this Contingency shall be deemed waived and Buyer
will forfeit Buyer's right to terminate this Agreement
based on the Inspections Contingency." Id.
Section 16 also included an "Additional Provisions"
subsection which provided that "[n]ot withstanding the
10 day inspection period terms set forth herein, the
inspection period shall be extended through and including
November, 22nd, 2014." Id.
accordance with § 16 of the PSA, Plaintiffs hired
Cornerstone Home Inspection (Cornerstone) to conduct an
inspection of the Rumstick Property. Trial Tr. 17:1-22.
Plaintiffs were very specific with Berkery that they wanted
an inspection both of the main house as well as of a barn on
the Rumstick Property because the barn appeared to be very
old and was a very large structure. Trial Tr. 17:17-22;
Rumstick Property was inspected by Chip Grassie (Grassie),
the owner of Cornerstone, on November 12, 2014. Trial Tr.
69:12-21. Grassie is a professional home inspector with over
twenty-five years of experience, during which time he has
completed over 15, 000 home inspections. Trial Tr. 68:10-11;
69:5-7. He produced the Cornerstone Inspection Report (the
Inspection Report). See Trial Ex. 3; Trial Tr.
70:12-71:5. In all of his inspection reports, Grassie
identifies items as fitting within one of five categories:
acceptable, not present, not inspected, marginal, or
defective. See Trial Ex. 3; Trial Tr. 70:12-71:5.
The Inspection Report revealed several items that needed to
be repaired, including the foundation of the barn situated on
the Rumstick Property. Trial Ex. 3. Subsequently, at trial,
Plaintiff Brian Goldner (Mr. Goldner) testified that he was
concerned with the defects listed in the Inspection Report
and had discussions with Grassie after the Inspection Report
was made to discuss the barn and its foundation. Trial Tr.
24:21-25:2. Specifically, it was Mr. Goldner's
understanding that the barn's foundation "had very
loose stone, that it was dilapidating and that [Grassie]
could pull stones out from the foundation of the barn and
felt that it needed to be addressed and that it was a
defective item." Trial Tr. 22:6-14.
six of the Inspection Report and listed as item (7) in the
summary report attached to the Inspection Report, the
barn's foundation was checked as "defective."
Trial Ex. 3. Grassie also provided an explanation in addition
to the grade, which stated the following: "Foundation:
Stone Loose stone noted. A qualified masonry contractor is
recommended to evaluate and estimate the cost of parging the
foundation walls." Id. In the definitions
section of the Inspection Report, "defective" is
defined as "[i]tem needs immediate repair or
replacement. It is unable to perform its intended
function." Id. In addition to the barn, there
were also other items on the Rumstick Property that were
labeled "defective." See id.
response to the findings of the Inspection Report, Plaintiffs
and Defendants executed a "Repair Addendum" on
November 21 and 22, 2014 (the Repair Addendum). See
Trial Ex. 4; Trial Tr. 25:3-26:12. The Repair Addendum, under
a section titled "Other, " stated the following:
"Items 2, 3 . . . 6, 7, 8, 10, 11, 12, 13, 14, 15, 16
found on the attached inspection summary report from
Cornerstone Inspection to be completed by seller by December
1st, 2014." Id. Item (7) listed in the
"Other" section to the Repair Addendum refers to
the barn's foundation. See id.; Trial Ex. 3;
Trial Tr. 25:3-26:12. The Repair Addendum further provided:
"The Buyer has the right to have the work inspected
within 5 calendar days after Seller notifies Buyer in writing
that the work has been completed, or prior to closing,
whichever comes first. If Buyer fails to reinspect, Buyer
accepts the work in its repaired condition 'as is'
and waives his right to reinspect." Id.
trial, Defendant Robert Kreft (Mr. Kreft) testified that
prior to the signing of the Repair Addendum, he advised his
real estate agent Marybeth Frye (Frye) in an email that the
"barn items are not getting fixed. It's a barn from
1860." Trial Ex. 7; see also Trial Tr.
112:6-13. However, according to Defendants, his refusal to
repair was based on the fact that in 2013, Mr. Kreft had an
engineer assess the stability of the barn since it was his
intention to store motor vehicles on the first floor and
furniture on the second floor. Trial Tr. 226:11-23. Steven A.
Bogle, P.E. produced an engineering report for that
assessment (the Bogle Report). See Trial Ex. 12.
Meridian Custom Homes (Meridian)-the contractor charged with
renovating the barn at that time-received the Bogle Report
and created a change order (the Change Order) to include the
barn as part of the work to ensure its stability.
See Trial Tr. 226:19-23; 229:1-3; Trial Ex. 17. The
Change Order reported approximately $60, 000 in renovations
that Defendants performed on the barn's foundation in
2013. See Trial Ex. 17. According to Defendants, Mr.
Kreft forwarded both ...