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Sadler v. 30 Route 6, LLC

Superior Court of Rhode Island, Providence

August 28, 2019

BRIAN SADLER, Petitioner,
30 Route 6, LLC; and the property located at 30 Highland Avenue, East Providence, More Particularly identified on the City of East Providence Tax Assessor's Map as Map 607, Plat 20, Lot 1 an In-Rem Respondent, Respondents. AND KSM REALTY, LLC; and STEVEN MEDEIROS, Plaintiffs,
30 ROUTE 6, LLC; BRIAN SADLER, and Defendants, FRANCISCO CRUZ, Intervenor/Defendant. FRANCISCO CRUZ, Plaintiff,
30 ROUTE 6, LLC, Defendant.

          Eric S. Brainsky, Esq.; Michael L. Mineau, Esq.; Joseph R. Daigle, Esq.


          STERN, J.

         This matter comes before the Court for decision after a three-day bench trial based on the competing specific performance claims of Francisco Cruz (Mr. Cruz), one prospective buyer, and KSM Realty, LLC (KSM), the other prospective buyer, as against 30 Route 6, LLC (30R6) and Brian Sadler (Seller), sole member and manager of 30R6.[1] Both Mr. Cruz and KSM contend that they are entitled to real property located at 30 Highland Avenue in East Providence, Rhode Island (Property) based on separate purchase and sales agreements they had entered with Seller at different times. The parties have stipulated that if Mr. Cruz is not entitled to specific performance, an order should enter allowing KSM to purchase the Property.



         This dispute arises out of Mr. Cruz's attempts to purchase and develop the Property into a "Tommy Car Wash."[2] Trial Tr. 181:21-25, 183:23-184:8, Apr. 24, 2019. On May 11, 2018, Mr. Cruz and his real estate broker, Jeffrey Mateus (Mr. Mateus) of Mateus Realty, executed and submitted a written offer to purchase the Property through Seller's real estate brokers, Michael Volpe (Mr. Volpe) and/or Michael Giuttari, of MG Commercial. Stipulated Statement of Material Facts (SOF) ¶ 12. On June 4, 2018, Mr. Cruz and Seller executed a purchase and sale agreement for the Property (P&S1) with a purchase price of $1, 212, 500. Ex. 2, §§ 1, 2.

         The P&S1 contained various terms and conditions relevant to the instant analysis. Specifically, the P&S1 provided a 60-day inspection period, commencing from the agreement's effective date, within which time Mr. Cruz could inspect and assess the Property (Due Diligence Period) and terminate the P&S1 for any reason. Id. § 12; SOF ¶ 15. The P&S1 contained a condition providing that Mr. Cruz would "use best efforts" during the Due Diligence Period "to obtain approval from the City of East Providence to open an automatic Tommy Carwash." Ex. 2, § 12(c). Nevertheless, the P&S1 was not expressly contingent on Mr. Cruz's obtaining any such permits or other Federal, State, and/or local regulatory approvals. SOF ¶ 21. The P&S1 contained another provision providing in substance that Mr. Cruz had the option to cancel the sale on or before August 1, 2018 in the event he could not obtain a financing commitment (Mortgage Contingency).[3] Ex. 2, § 13.

         Assuming Mr. Cruz elected to proceed with the sale, with or without permits or financing, the P&S1 provided the following with respect to a closing: "[t]he Seller will deliver the said deed, duly executed and stamped . . . on August 20, 2018, at 10:00 unless otherwise mutually agreed upon by the parties" (Closing Date). Ex. 2, § 4. Complications arose. In mid-July-despite that the Property had previously been used as a car wash-representatives with the City of East Providence (City) began to suggest they might not approve a car wash on the Property until such time as a traffic study could be performed. Trial Tr. 42:19-23; 99:17-100:9, Apr. 23, 2019. Mr. Cruz was intending to finance the sale of the Property with a Small Business Administration (SBA) loan, which would have enabled him to simultaneously finance the purchase of the Property and equipment; however, these loans were contingent on the City's approvals. Id. at 98:14-99:16.

         Recognizing the need for a traffic study might affect Mr. Cruz's ability to close with SBA financing by the Closing Date, Mr. Cruz, by and through Mr. Mateus, and his attorney, Todd McNamara (Attorney McNamara), began communicating with 30R6's representatives for several weeks concerning terms for a proposed extension of the Closing Date, Mortgage Contingency deadline, and Due Diligence Period. SOF ¶ 23. As of August 20, 2018, Mr. Cruz and Seller had not come to terms on an extension. Id. § 24. No closing occurred on the Closing Date. Id. § 25.

         Just four days after the Closing Date, Seller decided he had waited long enough. On August 24, 2018, Seller's attorney, Matthew Slepkow (Attorney Slepkow), emailed Attorney McNamara informing him that Seller was terminating the P&S1 and retaining Mr. Cruz's $50, 000 deposit. Id. § 26. On August 29, 2018, Seller and KSM (by and through Steven Medeiros) executed an agreement for the purchase and sale of the Property (P&S2). Id. §§ 28, 29. On September 14, 2018, despite having executed the P&S2, Seller agreed to extend the Closing Date (in the P&S1) to October 1, 2018 (Extension). Ex. 23. Seller admitted he only executed the Extension because he was afraid of losing the KSM deal due to Mr. Cruz's filing of a lis pendens action on September 5, 2018.[4] Trial Tr. 368:10-17, Apr. 25, 2019. Apparently, Seller was hoping Mr. Cruz would not be able to perform, at which time Seller would have petitioned the Court to remove the lis pendens.

         Seller never told Mr. Cruz the purported Extension was a sham. After receiving the Extension, Mr. Cruz coordinated with Richard Storti (Mr. Storti), a "hard money" lender associated with Northeast Equity Partners, LLC, to procure a financial commitment. On September 28, 2018, Mr. Storti indicated he was ready to lend and had a commitment letter prepared for Mr. Cruz. Ex. 24. However, before Mr. Cruz physically obtained the commitment letter from Mr. Storti, one of Seller's attorneys sent an email to Mr. Cruz explaining that the Extension was on hold because KSM had filed a lawsuit seeking, inter alia, an injunction preventing the sale of the Property. Ex. 97. This Court held a hearing on October 3, 2018, and subsequently entered an order restraining the Property's sale.


         Standard of Review

         The standard of review in a non-jury trial is governed by Superior Court Rules of Civil Procedure 52(a), which provides, "[i]n all actions tried upon the facts without a jury . . . the court shall find the facts specially and state separately its conclusions of law thereon . . . ." "The trial justice sits as a trier of fact as well as of law." Hood v. Hawkins, 478 A.2d 181, 184 (R.I. 1984). "[A] trial justice's analysis of the evidence and findings in the bench trial context need not be exhaustive." McBurney v. Roszkowski, 875 A.2d 428, 436 (R.I. 2005). "Even brief findings will suffice as long as they address and resolve the controlling factual and legal issues." White v. LeClerc, 468 A.2d 289, 290 (R.I. 1983).



         With respect to the matter tried before this Court, Mr. Cruz seeks the remedy of specific performance. "The grant of a request for specific performance is not a matter of right but rests within the sound discretion of the trial justice." Eastern Motor Inns, Inc. v. Ricci,565 A.2d 1265, 1269 (R.I. 1989). Specific performance is particularly appropriate where, as here, the underlying transaction concerns the sale of land. See, e.g., Griffin v. Zapata, 570 A.2d 659, 661-62 (R.I. 1990); Yates v. Hill,761 A.2d 677, 679 (R.I. 2000). "[W]hen a buyer has at all times been ready, willing, and able to perform his or her part of an agreement to transfer real estate, the buyer is entitled to specific performance of that ...

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