Submitted: May 30, 2014
Donald L. Gouge, Esquire, Donald L. Gouge, Jr., LLC, Attorneys for Plaintiffs.
Bayard J. Snyder, Esquire, Snyder & Associates, P.A. Attorneys at Law, Attorney for Defendants.
DECISION AFTER TRIAL
M Jane BRADY, Superior Court Judge.
This case arises from a sale of real estate. On or about November 11, 2009, Kenneth and Clasina Dreisbach ("Plaintiffs") bought 202 W. Longspur, Wilmington, Delaware ("the Property") from Robert and Martina Walton ("Defendants"). After the sale, Plaintiffs discovered that several answers on the Seller's Disclosure ("Disclosure") were incorrect, and the home required reconstruction, specifically in the basement. Plaintiffs filed suit alleging breach of contract, fraud and misrepresentation, negligent fraud, and violation of the covenant of good faith and fair dealing. A bench trial was held, beginning on April 14, 2014. Post-trial submissions were filed on May 30, 2014. This is the Court's dccision.
Defendants purchased the Property in 1999 from the original builder, who had rented the home previously. In 2003, Defendants decided to finish their basement to add a fourth bedroom and a full bathroom. They hired Matthew Hedden ("Hedden"), who had been referred to them by a family friend. Hedden provided Defendants with a business card stating he was an electrician and a general contractor.  Hedden was, in fact, a licensed master electrician in Delaware and owned Matthew Hedden & Sons, Inc., which had been incorporated since April 1, 1999. However, Hedden was not a licensed contractor in New Castle County ("NCC"), and Hedden did not acquire the necessary permits for Defendants' home improvements. Before completing the finishing touches in the basement, Defendants and Hedden had a disagreement with regard to the stairwell. Hedden "took exception to what [Mrs. Walton] wanted[, ] and he walked . . . and never came back."
In 2005, Defendants' son-in-law discovered some possible mold near the soffit, when he came over to put insulation in the attic. Defendants hired Lane Roofing, Inc. ("Lane Roofing") to inspect their roof. Because other neighbors were replacing their roofs, Defendants wanted to determine whether they should as well. During the inspection, signs of water leakage were discovered around the attic and chimney. Lane Roofing removed, replaced, and repaired the area.
In 2009, Plaintiffs began house hunting. Plaintiffs hired Lauri Brockson ("Brockson") as their real estate agent and Bryan Murray, Esquire ("Murray") as their real estate attorney.Plaintiffs found a home for sale in Newark, Delaware. After their offer on the Newark home was accepted, the Plaintiffs went to New Castle County offices to investigate the house.  They found that a portion of the land lay in a flood zone and the deck was not up to code.Dissatisfied with those circumstances, Plaintiffs asked to be, and were, released from the contract. They renewed their search and found the subject Property. Plaintiffs hired an inspector and learned that the roof needed repairs. Neither the home inspector nor Murray notified Plaintiffs of any permit issues with the house. Mr. Dreisbach did not ask Murray whether he had checked permits, because he "thought everything was fine" and he "trusted the realtor, the inspectors, and Mr. Murray." Plaintiffs did not go to the County offices as they had with the home in Newark, because they "really wanted the property" and acknowledged they knew the home needed some work.
Mrs. Walton's real estate agent gave her the Seller's Disclosure form to fill out. She answered several questions incorrectly. She represented there were no violations of NCC code on the property,  and that permits for structural changes to the home had been appropriately taken out. As to whether there were any past leaks, Mrs. Walton answered "no." The question about roof repairs was left blank. Mrs. Walton answered "no" to the question of whether there were any plumbing additions and "na" for whether a licensed contractor was used for any such plumbing additions. Those answers were also incorrect. Further, Mrs. Walton incorrectly reported that the electrical work was performed by a licensed contractor,  and that all permits associated with any work done were appropriately acquired.
On November 11, 2009, both parties reached an agreement for the sale of the property. Defendants reduced the price by $8, 500, because of issues with the roof. A standard Delaware Agreement of Sale for Delaware Residential Property form was executed, which included the aforementioned Disclosure, and the sale was consummated.
In 2010, Plaintiffs received their first tax statement for the Property, which listed the structure as having 3 bedrooms and 2.1 bathrooms. Because that description did not comport with the structure, Plaintiffs went to the NCC offices and discovered that the permits required for the basement had never been issued, and that the basement was not in compliance with the NCC code. Plaintiffs hired Tricon Construction ("Tricon") to remedy the situation. In three phases, Tricon removed the work that Hedden had performed and reconstructed the finished basement to meet NCC code. The cost of phase 1 was $4, 202.50, phase 2 was $4, 790.50, and phase 3 was $15, 538.50. Plaintiffs filed suit for breach of contract, fraud and misrepresentation, negligent fraud, and breach of the implied covenant of good faith and fair dealing.
In addition to claims related to the lack of permits and the use of a licensed contractor for the basement, Plaintiffs alleged that Defendants failed to disclose that: (1) they rented the property, (2) they filed an insurance claim from that address in March of 2008, and (3) there was damage to the roof. Plaintiffs alleged the Property was rented after receiving mail for multiple people and neighbors had said the home was previously rented. Defendants testified that it was the original builder and previous owner who had rented the property. Plaintiffs alleged an insurance claim on the Property was not reported after having heard from an insurance company that there was a claim for an unknown reason in March of 2008. Mrs. Walton testified during trial that the claim was for an étagère that broke and was unrelated to the Property itself. At the end of trial, ...