American Capital Corp. v. Blixseth
| Decision Date | 21 August 2008 |
| Docket Number | No. C.A. 06-90 S.,C.A. 06-90 S. |
| Parties | AMERICAN CAPITAL CORPORATION, Plaintiff, v. Timothy L. And Edra BLIXSETH, Defendants. |
| Court | U.S. District Court — District of Rhode Island |
Thomas C. Angelone, Hodosh, Spinella & Angelone PC, Providence, RI, for Plaintiff.
Brian P. Voke, Campbell Campbell Edwards & Conroy, PC, Boston, MA, for Defendants.
AMENDED MEMORANDUM AND DECISION
This matter comes before the Court on the motion of Timothy and Edra Blixseth (collectively, the "Blixseths") for summary judgment on the claims of American Capital Corporation ("ACC") as well as the Blixseths' counterclaim for the termination of a real estate sales agreement and the return of funds paid as a deposit thereon. After careful consideration, and for the following reasons, the Blixseths' motion is granted.1
On November 23, 2005, the Blixseths and ACC entered into an Agreement for Sale and Purchase ("Agreement") of three parcels of real estate in Newport, Rhode Island. The three parcels together totaled eight acres. One parcel was vacant; the second parcel had a mansion on it; the third, a carriage house. At the same time, the Blixseths provided ACC with a $1.25 million deposit.
Prior to execution of the Agreement, ACC provided the Blixseths with Real Estate Disclosure Forms2 as mandated by Rhode Island's Real Estate Sales Disclosure Act ("REDA" or "the Act"). R.I. Gen. Laws § 5-20.8-2.3 Section 5-20.8-2(b)(2)(xxiii) of the REDA provides, inter alia, that
If the subject property is located in a historic district, that fact must be disclosed to the buyer, together with the notification that
It is undisputed that ACC knew all three parcels were located within the Newport Historic District and subject to the rules and regulations of the Newport Historic District Commission. Nevertheless, neither Real Estate Disclosure Form made the disclosure required by Section 5-20.8-2(b)(2)(xxiii).
The closing was scheduled for January 17, 2006, but it was not attended by the Blixseths, nor did they wire money to complete the sale. ACC filed suit against the Blixseths on February 3, 2006, seeking, amongst other things, an order for specific performance to compel the Blixseths to purchase the property. Subsequently, on March 10, the Blixseths' counsel sent a letter to ACC demanding termination of the Agreement and the return of the Blixseths' deposit on the ground that ACC's failure to make the disclosure required under Section 5-20.8-2(b)(2)(xxiii) rendered the Agreement voidable at the Bixseths' election. The Blixseths also filed a counterclaim that reiterated the allegations in their letter demanding termination of the agreement and return of their deposit. The Blixseths now seek summary judgment on this claim.4
Summary judgment is appropriately granted where there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material if it has the "potential to affect the outcome of the suit." Velazquez-Garcia v. Horizon Lines of P. R., Inc., 473 F.3d 11, 15 (1st Cir.2007) (citations omitted).
Once the movant has made the requisite showing, the nonmoving party "may not rest upon the mere allegations or denials of [its] pleading, but ... must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The court views all facts and draws all reasonable inferences in the light most favorable to the nonmoving party. Torrech-Hernandez v. Gen. Elec. Co., 519 F.3d 41, 46 (1st Cir.2008).
The REDA provides that "the seller of ... real estate shall deliver a written disclosure to the buyer...." R.I. Gen. Laws § 5-20.8-2(a). The written disclosure "shall state all deficient conditions of which the seller has actual knowledge," and "shall comply with the requirements set forth in [Section 5-20.8-2(b) ]." Id. The Act defines "deficient conditions" to mean "any land restrictions, defect, malfunction, breakage, or unsound condition existing on, in, across or under the real estate of which the seller has knowledge." R.I. Gen. Laws § 5-20.8-1(5). The requirements set forth in Section 5-20.8-2(b) consist of more than 30 items that, if applicable, the seller of real estate must disclose to, the buyer. In short, the disclosure obligation imposed on sellers by the REDA extends to both "deficient conditions," as defined by Section 5-20.8-1(5), and the information specified in Section 5-20.8-2(b).
Although the above two categories of information are disjunctively set forth in the Act, it is plain that in some cases there will be substantial overlap between them. For example, Section 5-20.8-2(b) requires that sellers disclose any basement defects. R.I. Gen. Laws § 5-20. 8-2(b)(2)(iii). This particular item, it is safe to say, would also fall within the definition accorded to "deficient conditions." See R.I. Gen. Laws § 5-20.8-1(5) (). On the other hand, some information listed in Section 5-20.8-2(b) does not appear to relate to anything that reasonably could be called a "deficient condition." See, e.g., R.I. Gen. Laws § 5-20.8-2(b)(2)(i)(length of seller occupancy); id. § 5-20.8-2(b)(2)(xxxiv) ("[m]iscellaneous").
Among the various items listed by Section 5-20.8-2(b) is "[z]oning." R.I. Gen. Laws § 5-20.8-2(b)(2)(xxiii). Specifically, the Act provides that
If the subject property is located in a historic district, that fact must be disclosed to the buyer, together with the notification that
Id. As noted earlier, ACC did not disclose to the Blixseths that the three parcels of land were located within Newport's Historic District. Under the Act, however, a seller's failure to disclose certain conditions does not automatically entitle a buyer to terminate a pending sale of real estate. Rather, a sale may be terminated only if the undisclosed condition is a "materially deficient condition." R.I. Gen. Laws § 5-20.8-4(b)(1). Here, the parties dispute whether historic district zoning is a "deficient condition" at all and, if it is, whether it is a "materially deficient condition" as a matter of law.
The Act defines "deficient conditions" to mean "any land restrictions, defect, malfunction, breakage, or unsound condition existing on, in, across or under the real estate of which the seller has knowledge." R.I. Gen. Laws § 5-20.8-1(5). It cannot reasonably be asserted that historic zoning represents a "defect, malfunction, breakage, or unsound condition." See State v. DiCicco, 707 A.2d 251, 253 (R.I.1998) () (quoting Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1226 (R.I.1996)). Therefore, what remains is to determine whether historic zoning constitutes a "land restriction" within the meaning of the REDA.
The starting point for interpreting a statute is, of course, the language of the statute itself; absent a clearly expressed legislative intention to the contrary, that language must ordinarily be given its plain meaning and regarded as conclusive. See Consumer Prod. Safety Com'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980). Here, the Act provides that "property located in a historic district may be subject to construction, expansion, or renovation limitations." R.I. Gen. Laws § 5-20.8-2(b)(2)(xxiii) (emphasis added). This by itself would appear to place historic district zoning within the meaning of "land restrictions," since a "restriction" is, most obviously, "a limitation imposed upon a person or thing." Oxford English Dictionary (2d ed.1989) (emphasis added).
Moreover, it is widely accepted that historic or landmark zoning "restricts the owner's control over [a] parcel." Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 113, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) (emphasis added). In Penn Cent., for example, the Supreme Court acknowledged that, under New York City's Landmarks Preservation Law, "designation as a landmark results in restrictions upon the property owner's options concerning the use of the landmark site," and that historic zoning laws "place special restrictions on landmark properties as a necessary feature to the attainment of ... larger objectives."5 Id. at 110, 111, 98 S.Ct. 2646; see also Cienega Gardens v. United States, 503 F.3d 1266, 1283 (Fed. Cir.2007) (); Van Horn v. Town of Castine, 167 F.Supp.2d 103, 104 (D.Me.2001) (); People Tags, Inc. v. Jackson County Legislature, 636 F.Supp. 1345, 1358 (W.D.Mo.1986) () (citing Lafayette Park Baptist Church v. Scott, 553 S.W.2d 856 (Mo.App.1977)). Based on all the foregoing authorities, it is inescapable that historic district zoning is a "land restriction" which, for the purposes of the Act, constitutes a "deficient condition[ ]." R.I. Gen. Laws § 5-20.8-1(5).
Although neither "m...
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