Kawas v. Spies

• Decision Date: 30 September 2022
• Docket Number: 2:20-CV-138
• Parties: ANNE KAWAS and PAUL KAWAS, Plaintiffs, v. JAMES SPIES, DARLENE SPIES, and DUDLEY DO SSI, LLC, Defendants.
• Court: U.S. District Court — Southern District of Georgia

ANNE KAWAS and PAUL KAWAS, Plaintiffs,
v.
JAMES SPIES, DARLENE SPIES, and DUDLEY DO SSI, LLC, Defendants.

No. 2:20-CV-138

United States District Court, S.D. Georgia, Brunswick Division

September 30, 2022

ORDER

HON. LISA GODBEY WOOD, JUDGE UNITED STATES DISTRICT COURT

Before the Court are Plaintiffs' and Defendants' motions for summary judgment. Dkt. Nos. 29, 36. For the reasons stated below, Plaintiffs' motion, dkt. no. 29, is DENIED. Defendants' motion, dkt. no. 36, is GRANTED as to Plaintiffs' claims for (1) active concealment of water intrusion, (2) active concealment of foundation damage, (3) willful concealment of bulkhead and erosion issues and (4) active concealment of bulkhead and erosion issues and DENIED as to all other claims.

BACKGROUND

A. Factual Background

This case arises out of Plaintiffs Anne and Paul Kawas's purchase of a house on Saint Simons Island from Defendants James and Darlene Spies.

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James and Darlene Spies purchased a house on Saint Simons Island (the “Property”) from Nancy and Robert Butler in 2012. Dkt. No. 36-1 ¶ 1; Dkt. No. 46 ¶ 1. The Property bordered Dunbar Creek, a tidal creek. Dkt. No. 29-1 ¶ 11; Dkt. No. 39-1 ¶ 11. During the sale, the Butlers disclosed that the Property had experienced water intrusion problems in the past. Dkt. No. 29-1 ¶ 2; Dkt. No. 39-1 ¶ 2. The Spieses testified that they did not ask what specific water intrusion problems the Butlers experienced nor what efforts the Butlers undertook to control the water intrusion. Dkt. No 36-4 at 13:21-14:25; Dkt. No. 36-2 at 28:3-10, 31:4-25. Rather, the Spieses left the details of the due diligence investigation to the local realtor they used. Dkt. No. 36-4 at 14:7-25, 15:1-4, 16:3- 8.

Darlene Spies testified that the day the Spieses closed on the Property she “noticed a small puddle of water in the garage” and “some outlets on the patio that looked like they should have been inspected a little better.” Dkt. No. 36-4 at 16:24-17:2. She stated, however, that they “wiped up the water and never saw it again” so she “never thought of it to be an issue.” Dkt. No. 36-4 at 17:7-9; see also id. at 17:10-15 (similar); id. at 18:7-17 (explaining that Darlene Spies noticed a container of cat litter next to the garage door and assumed it was to clean up small puddles, for example, those coming from an automobile).

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After the Spieses moved in, however, they had “[a] problem with [] mold and [] water in the garage” and rot under the house due to water intrusion. Dkt. No. 36-5 at 52:3-6; Dkt. No. 36-2 at 31:8-32:24 (referring to water intrusion in the basement five to six months after purchasing the house); Dkt. No. 36-5 at 52:3-6, 53:1-9 (referring to mold, water, and rot issues that Darlene Spies reported finding around the house). In their depositions, the Spieses provided conflicting testimony about any subsequent steps they took to fix water intrusion issues. Dkt. No. 36-5 at 17:8- 20, 19:3-20 (Darlene Spies discussing her husband's prior deposition testimony, for which she was present, indicating that repairs were made to prevent water intrusion); Dkt. No. 36-5 at 20:6-21:2 (Darlene Spies testified that she chose to have green moss removed from the outer walls for landscaping reasons, not to prevent water intrusion); Dkt. No. 36-5 at 21:3-6 (“Q: [A contractor named] Koldewey attempted to fix the garage walls to prevent water intrusion in May and June of 2013, didn't he? [Darlene Spies]: Okay. Yes.”); Dkt. No. 36-5 at 21:7-18 (indicating that water problems discussed with a contractor were “outside . . . . Not in the inside of the building”); Dkt. No. 36-5 at 21:19-22:6 (questioning Darlene Spies about her disagreement with her husband's prior testimony, which suggested that even after the outer wall was fixed, the garage floor was still wet); Dkt. No.

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36-5 at 22:13-23:9 (claiming that the work done by their repairman “was not due to water intrusion” but rather “a find when we took the vine off the wall” which “did not intrude into the house at that time” and insisting that “there was never any water intrusion from the time [Darlene Spies] mopped up the small [puddle]”); Dkt. No. 36-2 at 37:2-14 (James Spies testified that he “believe[d]” his wife “did eradicate” the water intrusion issue he had referred to in his prior deposition); No. 36-2 at 37:15-23 (similar).

The Spies sued their broker in a previous lawsuit concerning the property. Dkt. No. 36-1 ¶ 7; Dkt. No. 46 ¶ 7. In the lawsuit against the broker, Darlene Spies testified that there was mold on a wall in the garage, dkt. no. 36-4 at 20:24-22:12, dkt. no. 36-5 at 51:22-52:6, and that the Spieses had to replace a door and doorframe in the basement because it was rotting, dkt. no. 36-4 at 77:25-79:21. She later disputed these claims. Id. at 19:24-24:23 (alleging that there was “crystallization,” not mold, in the house and that mold was a word their lawyers had used); 36-5 at 28:10- 29:7 (stating that the door did not close properly, not that it was rotted on the inside or water damaged). Darlene Spies's email exchanges with a contractor also indicate that there was standing water outside the house, the wall going from the garage to the third floor was “saturated” with water, and there was a threat of greater intrusion if the contractor did not address the drainage

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issues. Dkt. No. 36-2 at 172-73. Darlene Spies maintains that water never entered the house and that the wall was only saturated with water on the outside. Dkt. No. 36-4 at 100:18-101:7; Dkt. No. 36-5 at 21:7-22:24. The Spieses then completed multiple repairs to fix the possible water intrusion problems. Dkt. 36-4 at 102:7-13 (stating that the Spieses installed a French drain, gutters, and piping).

The parties do not dispute that the Spieses found structural and foundational problems at the Property. Dkt. No. 29-1 ¶ 8; Dkt. No. 39-1 ¶ 8. The Spieses hired a contractor to address these foundational issues. Dkt. No. 36-4 at 94:14-17, 96:18-97:22. The Spieses also renovated the Property by landscaping, painting, replacing countertops and bathroom vanities, and installing a new shower and toilets. Dkt. No. 36-1 ¶ 2; Dkt. No. 46 ¶ 2;^[1] Dkt. No. 29-1 ¶ 32; Dkt. No. 39-1 ¶ 32 (disputing only the implication that

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the Spieses put in shrubs and performed landscaping to cover defects).

The Property suffered land erosion along the creek. Dkt. No. 36-1 ¶ 3; Dkt. No. 46 ¶ 3. To address the erosion, the Spieses built a bulkhead, which was completed around April 2013. Dkt. No. 36-1 ¶ 3; Dkt. No. 46 ¶ 3; Dkt. No. 29-1 ¶¶ 12-13; Dkt. No. 39-1 ¶¶ 12-13. Around April 2014, the Spieses's neighbor's bulkhead failed. Dkt. No. 36-1 ¶ 4; Dkt. No. 46 ¶ 4. Since the neighbor's bulkhead was attached to the Spieses's bulkhead, the Spieses decided to rebuild their bulkhead.^[2] Dkt. No. 36-2 at 75:11-17, 77:4-6. The Spieses hired a contractor to examine the bulkhead, and he advised them to install a helical anchoring system to remedy the issue. Dkt. No. 36-3 at 52:6-12, 70:9-13, 140 (showing the contractor's recommendations, including “new helical anchors”). The contractor told the Spieses that a “catastrophic failure” of the bulkhead could occur if the work was not done immediately. Dkt. No. 36-3 at 52:6-12, 53:22-161:1, 140. The repairs began in the fall of 2014, dkt. no. 36-1 ¶ 6; dkt. no. 46 ¶ 6 (disputing the term “bulkhead” instead of “seawall” and “repair” instead of

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“rebuild,” but not disputing that the work occurred in fall 2014), but the Spieses decided to use tie-backs instead of the helical anchoring system, dkt. no. 29-1 ¶ 17; dkt. no. 39-1 ¶ 17 (disputing only wording, not the fact that the Spieses did not use the helical anchoring system); Dkt. No. 36-3 at 71:23-72:3. Once the repairs were completed, the Spieses put sod against the bulkhead and the surrounding area. Dkt. No. 36-3 at 41:2-16 (stating that, at some unknown date, a picture was taken showing that there was no sod against the seawall); Dkt. No. 36-3 at 42:12-18 (stating that, in April 2014, a picture was taken showing sod all the way to the seawall).

The Spieses then filed a lawsuit against their realtor's brokerage company due to erosion-related issues. Dkt. No. 36-1 ¶ 7; Dkt. No. 46 ¶ 7. The Spieses lost at summary judgment because the court found, among other things, that they failed to exercise due diligence. Dkt. No. 36-1 ¶¶ 8-9; Dkt. No. 46 ¶¶ 8-9; see also Spies v. Deloach Brokerage, Inc., 169 F.Supp.3d 1365, 1377-79 (S.D. Ga. 2016). After the lawsuit concluded, the Spieses began to lease the Property.^[3] Dkt. No. 36-1 ¶ 10; Dkt. No. 46 ¶ 10. About a year later, the Kawases approached the Spieses and made an offer

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on the Property. Dkt. No. 36-1 ¶¶ 10, 28; Dkt. No. 46 ¶¶ 10, 28. The Property was not listed for sale at the time of the offer. Dkt. No. 36-1 ¶ 12; Dkt. No. 46 ¶ 12. The Kawases learned of the Property from a realtor who recommended it to them. Dkt. No. 36-1 ¶ 14; Dkt. No. 46 ¶ 14.

Paul and Anne Kawas are experienced property owners, owning approximately five properties. Dkt. No. 36-1 ¶ 20; Dkt. No. 46 ¶ 20. Paul Kawas is a civil litigator, and Anne Kawas is a certified public accountant. Dkt. No. 36-1 ¶¶ 17-19; Dkt. No. 46 ¶¶ 17-19. The Kawases are from New York, but they have owned a property on Saint Simons Island and spent time in the area since 2006. Dkt. No. 36-1 ¶¶ 16, 21; Dkt. No. 46 ¶¶ 16, 21.

Prior to closing, the Kawases conducted multiple visual inspections of the Property. Dkt. No. 29-1 ¶ 35; Dkt. No. 39-1 ¶ 35. The Kawases had an architect visit the Property to ensure that they could build an addition to the house, and the architect brought an engineer. Dkt. No. 45 at 20; Dkt. No. 36-7 at 15:5-9, 32:5-33:1; Dkt. No. 36-6 at 44:2-4, 66:3-24. The Kawases also hired a home inspector, and Paul Kawas accompanied the home inspector during his inspection. Dkt. No. 29-1 ¶¶ 36-37; Dkt. No. 39-1 ¶¶ 36-37. The inspector compiled a report and did not...