Riley v. Germain

• Decision Date: 14 January 1999
• Docket Number: No. 98-34-Appeal.,98-34-Appeal.
• Citation: 723 A.2d 1120
• Parties: Michael E. RILEY et al. v. Fernand J. ST. GERMAIN et al.
• Court: Rhode Island Supreme Court

723 A.2d 1120

Michael E. RILEY et al. v. Fernand J. ST. GERMAIN et al.

No. 98-34-Appeal.

Supreme Court of Rhode Island.

January 14, 1999.

Lisa Kornher Cooper; James Vincent Paolino, Warwick, for plaintiffs.

Charles S. Kirwan, Pawtucket, for defendants.

Present LEDERBERG, BOURCIER, and FLANDERS, JJ.

OPINION

PER CURIAM.

This case involves the propriety of a damage award for the breach of a purchase and sale agreement for a residential property. The plaintiffs, Michael E. Riley and Beryl Riley, sued to recover their $15,500 deposit after they decided not to proceed with the purchase of the defendants' Woonsocket home. The Superior Court, however, ruled not only that the plaintiffs must forfeit their deposit, but also that they were liable to the defendants for damages arising out of their breach of the contract to purchase the defendants' home. The plaintiffs now appeal from a total judgment that entered in favor of the defendants on their breach-of-contract counterclaim for $245,247.63 ($122,013.62 in damages plus interest). We ordered the parties to show cause why we should not resolve this appeal summarily. After hearing the oral arguments and reviewing their memoranda, a panel of this Court concludes that no cause has been shown and that the appeal can be decided at this time.

The plaintiffs' complaint alleged that defendants, Fernand J. St. Germain and Rachel M. St. Germain, had breached the terms of a purchase and sale agreement signed by the parties on February 16, 1989, by "not living up to representations and promises made *** including but not limited to, closing dates, furnishings included in said sale, second mortgage availability, and current sale of adjacent lot, and a 72-hour response time." The plaintiffs demanded the return of their $15,500 deposit. The defendants' answer and counterclaim alleged that they had been ready, willing, and able to perform, but that plaintiffs refused to complete the purchase of their house. They demanded damages arising from plaintiffs' alleged breach or, in the alternative, specific performance.

The case proceeded to court-annexed arbitration and in December 1990, judgment entered for defendants on both plaintiffs' claim and defendants' counterclaim. The arbitrators awarded $22,000 plus interest and costs to defendants. The plaintiffs, however, rejected that award, and the case headed to Superior Court. Ultimately, defendants filed a motion for partial summary judgment as to liability. After a hearing, a motion justice entered an order granting the motion on defendants' counterclaim for breach of contract, and dismissing plaintiffs' complaint and defendants' alternative counterclaim for specific performance.

Two years later, another Superior Court justice presided at an evidentiary hearing on damages. At this hearing, defendants established that plaintiffs had agreed to purchase the house for $320,000 in February 1989. Several weeks after signing the purchase and sale agreement, plaintiffs decided not to proceed with the purchase. The defendants' real-estate agent, Roger L. Plante (Plante), outlined his efforts to sell the house after plaintiffs backed away from the agreed-upon purchase. He noted that the real-estate market in Rhode Island had declined drastically in late 1989 and the early 1990s. Although there were several other potential purchasers, Plante stated, defendants were unable to close with another buyer until January 1992, when they finally sold the house for $225,000. The defendants claimed that the $95,000 difference between this sale price and the $320,000 contract price was a loss proximately caused by plaintiffs' breach of contract.

Mr. St. Germain also testified about his carrying costs during the interim between plaintiffs' repudiation of the purchase and sale agreement in 1989, and the property's eventual sale in 1992. He stated that those costs included utilities, maintenance, insurance, taxes, pest control, and security. In addition, Mr. St. Germain testified that he and his wife had to install new kitchen cabinets and countertops in an effort to make the house more marketable. The defendants asserted that all of these costs (which totaled $47,876.17) were reasonable and necessary out-of-pocket expenses.

Final judgment entered for defendants on September 23, 1997 in the amount of $122,013.62,¹ plus interest for a total award of $245,247.63. On appeal, plaintiffs argue that both the liability and damages portions of the judgment were improper. They suggest that defendants misrepresented to them that they could move into the house almost immediately. This was important to them, they claim, because they wanted to enroll their son in a new school system immediately. Although there was no written agreement regarding early occupancy, plaintiffs contend that they relied to their detriment on defendants' oral statements that they would be able to move in before March 1989. They assert that defendants' early move-in assurances became part of the agreement and induced them to sign the purchase and sale agreement. Moreover, they maintain that these representations were tantamount to fraud. The plaintiffs assert that because defendants breached their agreement concerning immediate occupancy, the court should have excused them from performing their part of the bargain and allowed them to reclaim their original deposit. Additionally, plaintiffs argue that even if this Court upholds the liability judgment, the forfeiture of their deposit should have sufficed for the damages award. They also insist that the Superior Court erred in finding that defendants had mitigated their damages, and in holding plaintiffs liable for a loss in value caused by a declining real-estate market. They aver that during the years 1989 through 1992, "Rhode Island experienced the largest depreciation of real estate values in its history." Accordingly, they argue, the trial justice should have taken judicial notice of this decline, instead of holding them responsible for defendants' losses. Moreover, plaintiffs claim that defendants unreasonably held out for higher bids in this declining market. By not accepting a lower bid sooner, plaintiffs contend, defendants contributed to the large difference between plaintiffs' original offer and their home's much-reduced sales price three years later.

The defendants respond that the statute of frauds and the parol evidence rule barred all evidence of alleged prior oral representations. They note that plaintiffs attempted, unsuccessfully, to amend their Superior Court complaint to include a count...