IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JIEFU MA, and
PAUL PINEAULT, and
Donald L. Gouge, Jr., Esquire
Donald L. Gouge, Jr., LLC
800 King Street, Ste. 303
P.O. Box 1674
Wilmington, Delaware 19899
Attorney for Plaintiffs
C.A. No. CPU4-10-002256
Robert D. Goldberg, Esquire
Biggs & Battaglia
921 North Orange Street
P.O. Box 1489
Wilmington, Delaware 19899
Attorney for Defendants
MEMORANDUM OPINION AND ORDER
ON COMPLAINT OF PLAINTIFFS JIEFU MA AND XIASONG WANG
Submitted: January 13, 2012
Decided: April 10, 2012
This is an action for breach of contract, fraud, fraudulent misrepresentation, negligent
misrepresentation, and breach of the implied covenant of good faith and fair dealing. This action
arises out of an alleged real property sales agreement between Plaintiffs Jiefu Ma (“Mr. Ma”)
and Xiasong Wang (“Ms. Wang”), and Defendants Paul Pineault (“Mr. Pineault”) and Alexis
Pineault (“Mrs. Pineault”). On October 20, 2011, and December 12, 2011, trial was held in this
matter. This is the Court’s Decision After Trial. For the following reasons set forth below, the
Court is entering judgment in favor of Plaintiffs Mr. Ma and Ms. Wang.
On March 30, 2010, Mr. Ma and Ms. Wang filed an action for breach of contract, fraud,
fraudulent misrepresentation, negligent misrepresentation, and breach of the implied covenant of
good faith and fair dealing against Mr. and Mrs. Pineault. On February 24, 2011, Mr. and Mrs.
Pineault filed an Answer to the Complaint.
On October 20, 2011, and December 12, 2011, the Court held a trial on the Complaint
filed by Mr. Ma and Ms. Wang. The Court heard testimony from nine witnesses – Mr. Pineault,
Bjorn Haglund, Richard Hartnett, Mrs. Pineault, Stephen Green, Juliet Wu, and Mr. Ma on
behalf of the plaintiffs, and Karen Kolek, Joseph Rizzo, Earl Smith, Mr. Pineault, and Mrs.
Pineault on behalf of the defendants. The Court admitted a multi-tabbed joint exhibit binder, two
documents, and one package of photographs into evidence at trial. At the conclusion of the
plaintiff’s case in chief, the defendant moved for a directed verdict.
The Court denied
defendant’s motion for directed verdict. At the conclusion of trial, the Court ordered the parties
to submit post trial memoranda to supplement closing arguments.
In 1999, a home was built on a lot located at 104 Clear Creek Drive, Bear, Delaware
19701 (“104 Clear Creek” or the “home”).
Mr. and Mrs. Pineault became interested in
purchasing the home in 2001. Mrs. Pineault testified that from the time the home was built in
1999 until the time the Pineaults became interested in buying the home, the home was used by
the builder as a model home.
Mr. and Mrs. Pineault testified that they purchased 104 Clear Creek in 2001. Mrs.
Pineault testified that when they purchased the home, the real estate agent told her that during the
time the home was used as a model home, the dining room windows leaked. However, Mrs.
Pineault testified that the realtor also told the Pineaults that the windows had been repaired and
the windows had not leaked since these repairs. She also testified that before the Pineaults
purchased the home, the realtor replaced the carpeting in the home. Mrs. Pineault was unable to
recall whether the carpet was replaced because of water damage caused by the leaking dining
room windows, or because of high foot traffic attributable to the home being used as a model.
Mrs. Pineault further testified that the Pineaults never replaced the carpet during the time they
lived at 104 Clear Creek. On cross examination, Mrs. Pineault admitted that when the Pineaults
purchased the home she knew that there had been water leaks in the basement and living room,
but she never personally observed these leaks.
Mr. Pineault testified that before the Pineaults purchased 104 Clear Creek, the realtor told
them that there had been an issue with water in the front of the dining room or living room “near
the windows.” He testified that the realtor told him that both the carpeting and padding beneath
the carpeting in the “front rooms” was replaced. He also stated that neither the seller nor realtor
provided documentation for these repairs.
On the second day of trial, Mr. Pineault testified that before the Pineaults purchased the
home, the realtor told Mrs. Pineault that there had been issues with water leaks in the home. He
testified that he was aware that there had been water leaks “down the basement wall.” He also
testified that he was not worried about these issues when they bought the home because the home
was inspected before the Pineaults purchased the home both by a qualified inspector and by a
New Castle County government inspector. Mr. Pineault testified that the Pineaults also
personally inspected the home twice before closing. He also stated that at this time there was no
evidence of water leaks on the basement wall, but the basement ceiling beams and rafters were
discolored. Mr. Pineault further testified that the stains he observed at the time the Pineaults
purchased the home were identical to the stains shown in photographs taken by Ma during the
repairs of 104 Clear Creek at issue in this case.1 In other words, the stains did not change in
color, size, or character during the time that the Pineaults lived in the home. Mr. Pineault also
stated that he never observed water stains or active leaking on the basement walls before the
Pineaults purchased the home or during the time they owned the home.
Mrs. Pineault testified at the second day of trial that the carpeting in the living room and
dining room of the home was replaced before the Pineaults purchased the home. She testified
that the builder replaced the carpet because the home had been a sample home. She testified that
she personally observed the old carpet before the Pineaults purchased the home. Mrs. Pineault
further testified that during this inspection she did not observe any water stains on the old carpet,
but did notice that the carpet was worn and dirty. She also stated that before the Pineaults
purchased the home, the dining room windows were repaired. Mrs. Pineault testified that before
the Pineaults purchased 104 Clear Creek, she did not observe water stains on the basement wall
of the home similar to the stains visible in photographs taken by Ma during the repairs of the
Joint Exhibit Tab #9, Ma 105-06.
home.2 Further, that there were dark spots visible on the sub floor of the basement before the
couple purchased the home.
The Pineaults’ Ownership of 104 Clear Creek Drive.
On October 20, 2011, Mr. Pineault testified that during the time the Pineaults owned 104
Clear Creek Drive, they only had one issue with water. He stated that the basement flooded
sometime in 2004 during a major storm. Further, that during this storm, the sump pump in the
basement failed and the French drain backed up. He also testified that the Pineaults filed a claim
with their insurance company for the damage caused during this storm, that this incident was the
only water problem the couple experienced during the time they lived in the home, and that the
basement flooded, as a result of the hurricane.
On cross examination, Mr. Pineault admitted that after the instant lawsuit was filed, he
contacted his insurance company. Mr. Pineault also admitted that a letter from his insurance
company, State Farm, indicated that Mr. Pineault told State Farm representatives that there was
prior water leakage when the Pineaults owned 104 Clear Creek Drive, causing the damage at
issue in this case. Mr. Pineault stated that he was referring to the flooding that occurred during
Mr. Pineault testified that during the time the Pineaults owned the home, they made
numerous improvements to the home, including: (1) replacing the front door; (2) installing
grating around the outside walls of the home; (3) replacing the gutters; (4) painting the stucco
front of the home; (5) repainting every room in the home at least once; (6) building a sunroom in
the back of the home; (7) installing new carpet in the family room; (8) re-caulking the front
windows; (9) installing a new back door; (10) installing an elaborate home theatre in the
basement and; (11) installing a portico over the front door. Both Mr. and Mrs. Pineault testified
Joint Exhibit Tab #9, Ma 105-06.
that these repairs were not motivated by water issues in the front stucco wall of the home,
basement ceiling, or basement wall. Rather, both Mr. and Mrs. Pineault testified these repairs
and improvements were motivated entirely by aesthetics.
Mrs. Pineault testified more specifically about each of these repairs. She explained that
the grating was installed around the home because when it rained, the Pineaults had problems
with water pooling around a transformer in the backyard. Further, that shortly before the
Pineaults sold 104 Clear Creek Drive, they installed rocks around home to draw water away from
the dining room window area.
Mrs. Pineault testified that the Pineaults replaced all of the gutters on the home. She
explained that this was necessary because a helicopter had made an emergency landing in a field
behind the backyard of 104 Clear Creek in response to an injured child. She stated that when the
helicopter landed on the field she was in the backyard of the home grilling and watching her two
dogs. She also stated that the wind from the helicopter was so strong that “the chicken blew off
the grill”, “it pinned her dogs to the ground”, and the gutters in the back of the home “fell down”.
She further stated that her neighbors’ home was also damaged by the helicopter. Specifically,
Mrs. Pineault testified that some of the gutters and siding on the back of the neighbors’ home
was “ripped off.”
However, on the second day of trial, Mr. Pineault testified that the gutters were not
physically knocked down off the house by the force of the helicopter’s wind gust. Rather, that
the helicopter caused the nails attaching the gutters to the home to become loose. He stated that
after the helicopter incident, he re-hammered these nails to correct the problem. However, over
time, the nails again became loose and then he decided that, rather than continue to re-hammer
the nails, the gutters should be replaced. On cross examination, Mr. Pineault explained he only
replaced the gutters on the back of the home.
Mr. Pineault testified that the front door was replaced in 2002, shortly after the Pineaults
purchased the home. Mr. and Mrs. Pineault both testified that the door was replaced for aesthetic
reasons. Mrs. Pineault testified that the old door was not water damaged when it was removed.
Mrs. Pineault also testified that she installed the front portico because she “likes porticos”.
Mr. Pineault testified that he and Earl Smith (“Smith”) built a room inside the basement,
and a large movie theatre within. He said that during the construction of this room, he and Smith
had to “fish” wires for the electronics through the walls and did not notice water or water stains
while performing this work. Mr. Pineault said that he would not have installed a movie theatre
in his basement if he knew there were water issues in the basement.
Mr. Pineault testified that during the time the Pineaults owned the home, they had one
issue with termites in either 2007 or 2008. He testified that when he discovered the problem he
hired a termite technician. The termite technician treated the affected area, the basement ceiling,
and removed insulation that was covering this area so that the Pineaults could easily monitor the
area for further termite issues. Mr. Pineault stated unequivocally that the insulation was not
removed to monitor water issues. Further, that when the insulation was removed, he physically
touched the insulation and it was dry. On cross examination, Mr. Pineault stated that it was
coincidental that the area where the insulation was removed was the same area later discovered
to be severely damaged by water. Mrs. Pineault said that she did not recall when the termite
inspection and treatment took place, or when the insulation was removed because “[Mr. Pineault]
took care of those issues.”
Mr. Pineault testified that during the time the Pineaults owned the home, he observed that
there were stains in the corners of the basement wall consistent with the photographs taken by
Mr. Ma during the repairs at issue in this case. Further, that he never observed water or water
stains on the basement wall.3 Mr. Pineault admitted that during the time the Pineaults lived in
the home, he noticed that a piece of wood in the door frame surrounding the front door of the
home was water damaged and discolored. Mrs. Pineault testified that she also noticed water
damage on this piece of wood in the foyer. Nonetheless, Mr. Pineault testified that he never
checked the discolored portion of the basement ceiling immediately below the front door to see if
it was wet. He further testified that he never observed any wetness or stains on the carpet or
walls below any of the windows or on any of the windowsills in the living room or dining room
Mr. Pineault testified that in 2008, the Pineaults had the windows on the front stucco wall
of the home re-sealed, the stucco wall repainted, and the shutters surrounding the windows on
the front wall of the home replaced. Mr. Pineault testified that this work was done at the
recommendation of Vincent Rizzo, a family friend. Mr. Pineault testified that the painting was
done for aesthetic reasons. He stated that the stucco was not repainted to conceal water stains.
Mr. Pineault further testified that the windows were re-sealed because he thought that it would be
convenient and prudent to do so when the wall was painted. Mrs. Pineault testified that when the
Pineaults moved into the home, the stucco was painted a “beachy gray color” with blue shutters.
Mrs. Pineault testified that she did not like this color scheme so she had the stucco painted
“almond” and installed black shutters. She said that these repairs were in no way motivated by
Joint Exhibit Tab #9, Ma 105-06.
water problems. Mr. Pineault testified that the Pineaults never noticed that there were any holes
in the stucco walls of the home.4
Mrs. Pineault testified that in 2009, the Pineaults decided to sell 104 Clear Creek Drive
because she suffered an injury to her neck and was not able to take care of the home. Mr.
Pineault agreed that they decided to sell the home because Mrs. Pineault had trouble maintaining
the home because of the neck injury. While Mr. Pineault admitted that the home they moved
into after selling 104 Clear Creek was only fifty square feet smaller, he felt that the new home
“feels much smaller.” He said that during the eight years the Pineaults lived in 104 Clear Creek
Drive, Mrs. Pineault handled the vast majority of the housekeeping and was a “meticulous
housekeeper.” Mrs. Pineault explained that the new home has fewer floors than 104 Clear
Creek, lower ceilings, was built on a much smaller plot of land, has smaller windows and a
laundry room on the second floor. She admitted that the new home is still very large and
difficult to maintain, but stated that it is more manageable than 104 Clear Creek. She said that
they did not move out of 104 Clear Creek for financial reasons.
Mr. Pineault testified that during the eight years the Pineaults lived in 104 Clear Creek
Drive, they were not aware of anyone else in their neighborhood having water issues in their
home. He specifically testified that he never discussed water issues in 104 Clear Creek with any
of his neighbors or friends, and that none of his neighbors discussed water issues in their homes
Mr. Pineault testified that their dogs often looked out of the living room and dining room
windows, because the dogs were small and the windows were low to the ground. Mr. Pineault
later testified that he never noticed staining on the dining room or living room windows or the
connected window sills during the time they lived in the home. However, if there were stains in
Plaintiff’s Exhibit # 2, Photograph # 8.
this area, they might be attributable to the dogs’ regular use of the area. Mrs. Pineault also
testified that the carpeting underneath the dining room and living room windows were heavily
worn because the dogs frequently sat in this area. One of her dogs had a kidney issue that caused
him to regularly have accidents. She testified that she had purchased three carpet steamers
during the time they owned the home to clean up messes caused by the dogs under these
Karen Kolek (“Ms. Kolek”) testified that during the entire time the Pineaults owned 104
Clear Creek Drive, she lived at 107 Clear Creek Drive, across the street. Ms. Kolek testified that
she is very good friends with the Pineaults. She testified that during the time the Pineaults
owned 104 Clear Creek Drive, she spent a significant amount of time in their home. Also, for
approximately two and one half years, Ms. Kolek watched the Pineaults dogs on Monday
through Friday while the Pineaults were at work.
Ms. Kolek stated that, on days when she watched the Pineault’s dogs, she was in the
home up to three times per day. She said that while she was in the home, she entered nearly
every room in the home, including both the finished and unfinished portions of the basement.
Ms. Kolek estimated that during these two and one half years, she entered the basement
approximately once or twice per month, and that she never noticed water leaking down the
basement walls or smelled mold in the basement.
Ms. Kolek further testified that in 2009, she helped the Pineault’s move out of 104 Clear
Creek, including moving things out of the basement. She said that she had never seen water,
smelled mold, or observed evidence water damage anywhere in the basement of the home,
including the discoloration and staining on the basement.5 Ms. Kolek admitted that she would
Joint Exhibit Tab #9, Ma 105-06.
not have looked for discoloration and staining in the basement ceiling. Also, she admitted that
she had never seen any areas in the basement ceiling that were missing insulation.
Ms. Kolek testified that there was a “haircutting station” in the basement. Also, that the
Pineaults stored a large amount of bedding and blankets in plastic bags next to the basement wall
immediately beneath the front door. She stated that when the Pineaults moved out of 104 Clear
Creek Drive, Mrs. Pineault allowed her to go through the bedding and blankets to see whether
she wanted to take any, and that all the bedding and blankets were dry and undamaged. Ms.
Kolek said that the bedding and blankets did not cover the entire wall beneath the front door.
She also testified that there was a “fitness station” against the basement wall.
Additionally, Ms. Kolek opined that Mrs. Pineault maintained the home in “pristine”
condition and that there was “never anything out of place in the home.” Further, that the
Pineaults painted all the walls on the inside of the home and re-wallpapered the walls on more
than one occasion.
On cross examination, Ms. Kolek stated that the Pineaults replaced the carpet in either the
dining room or the living room at some point during the time they lived in the home. She
explained that, while she was not sure in which of the two rooms the Pineaults replaced the
carpet, she was certain that they replaced the carpet in one of those two rooms.
Ms. Kolek testified that she remembered when the helicopter landed behind 104 Clear
Creek Drive. Ms. Kolek did not recall whether the helicopter damaged the home. Ms. Kolek
stated that the gutters and fascia on her home were once “ripped off” by the wind and that she
knows that other homes in the neighborhood have had similar issues with gutters and fascia
becoming loose or detached.
Ms. Kolek testified that water leaked through the front door of her home and caused some
wood rot in the doorway. She said that she had never discussed this water issue with either Mr.
or Mrs. Pineault. She said she knew that several other homes in the same neighborhood had
issues with water leaking in through the doorways. She stated that all of these homes were part
of a planned neighborhood built by the same builder. Ms. Kolek said that she was not aware of
any homes with water leaking issues related to the windows. She stated that the Pineaults never
told her that they had issues with water at 104 Clear Creek Drive.
Joseph Rizzo (“Mr. Rizzo”) testified that he has been employed by JVR Construction
Company for thirty years. He said that he has been a friend of the Pineaults for over twenty five
years. Mr. Rizzo stated that, based on his experience in performing masonry and stucco work in
the construction industry, he is familiar with the signs of water damage in a home. Further, that
he has visited 104 Clear Creek approximately four or five times for social visits.
Mr. Rizzo testified that on at least one occasion, he inspected 104 Clear Creek and did
not observe any signs of water damage, including stains or mold. He admitted that, despite
characterizing this visit as an “inspection,” he did not closely inspect the windows, the walls
immediately surrounding them, or the window sills. He said that the purpose of this inspection
was to look at “the structure of the house,” “the construction of it,” and later said that his
inspection had “no purpose…just to make sure everything was done properly.” Mr. Rizzo later
explained that Mrs. Pineault asked him to inspect the foundation of the home and specifically, to
inspect the basement and the stucco front wall of the home.
On cross examination Mr. Rizzo testified that he had never specifically visited the home
to inspect the walls or foundation. Mr. Rizzo testified that no insulation was missing from the
basement during any of the times he visited the home. Also, he could not recall the dates of his
visits. He testified that he had never performed any construction work on 104 Clear Creek.
Earl Smith (“Mr. Smith”) testified that he works as a carpenter for DiSabatino
Construction. Mr. Smith testified that he has been a friend of the Pineaults for over thirty years.
Mr. Smith testified that he had performed a substantial amount of construction and carpentry
work on 104 Clear Creek during the time the Pineaults lived in the home. He stated that he built
an archway in an entrance between two rooms, removed a railing, installed the new back door,
and built custom cabinets for the basement home theatre.
Mr. Smith said that when he visited the home socially that he was frequently in the
basement watching movies and working out. He testified that he had never observed water in the
basement, and that he would not have built wooden cabinets for the entertainment system if he
knew that there were water issues in the basement. He also testified that he had never observed
any insulation missing from the basement ceiling, stains or discoloration in the basement
ceiling.6 Further, he testified that he had never observed water or water stains near any of the
windows or window sills.
On cross examination, Mr. Smith denied meeting Pineaults’ counsel Robert Goldberg
(“Mr. Goldberg”) prior to the time of trial. Mr. Smith even denied meeting Mr. Goldberg on redirect examination conducted by Mr. Goldberg. Mr. Smith also emphatically testified that he
had never discussed the facts of the case or potential questions with the Pineaults prior to trial.
On re-direct examination Mr. Smith specifically denied meeting with Mr. Goldberg prior to trial
in the Pineault’s home. Mr. Pineault later testified that Mr. Smith, in fact, did meet with Mr.
Pineault and Mr. Goldberg prior to trial. Mr. Pineault explained that Mr. Smith was confused by
this line of questioning.
Joint Exhibit Tab #4, Ma 28.
The Seller’s Disclosure Form and the Agreement.
On September 7, 2009, the Pineaults completed and signed the “Seller’s Disclosure of
Real Property Condition Report” (Seller’s Disclosure Form”).7 The Pineaults answered the
following relevant questions as stated:
44. Are there any drainage or flood problems affecting the property? [No]
53. Is there any movement, shifting, or other problems with walls or foundations?
54. Has the property or improvements thereon ever been damaged by fire, smoke,
wind, or flood? [No]
57. Is there any past or present water leakage in the house? [Yes]
59. Are there any repairs or other attempts to control the cause or effect of any
problem described above? [No]
66. Is there any water leakage, accumulation, or dampness within the basement or
67. Have there been any repairs or other attempts to control any water or
dampness problem in the basement or crawlspace? [No]8
Further, page five of the Seller’s Disclosure Form provides: “[i]f you have indicated there
is a problem with any of the items on pages 1 through 5, please provide a detailed explanation
below or on additional sheets.”9 With respect to question 57 and 10310, the Pineaults answered:
“[d]ue to hurricane [and] power loss to sump pump added…generator.”11
Joint Exhibit, Tab # 2.
Joint Exhibit, Tab # 2.
Joint Exhibit, Tab # 2.
Question 103 asks whether there have been any additions to the electrical system in the home. The Pineaults
responded “Yes” to this question.
Joint Exhibit, Tab # 2.
Mr. Pineault testified that he prepared the Seller’s disclosure form together with his real
estate agent. He stated that, at the time he prepared the Seller’s disclosure form, he believed that
all the disclosures in the form were accurate. Mrs. Pineault admitted that, even though she
signed the Seller’s Disclosure Form, she never reviewed it before signing.
explained that “[t]here were things [Mr. Pineault] handled and there were things that I
handled…if I signed it I must have looked at it, but I doubt I looked at it.”
Juliet Wu (“Ms. Wu”) testified during Mr. Ma and Ms. Wang’s case in chief. Ms. Wu
was Mr. Ma and Ms. Wang’s real estate agent. Ms. Wu testified that it is her understanding that
the Pineault’s did not disclose any water issues when they completed the Seller’s Disclosure
Form on September 7, 2009. Ms. Wu testified that when she received the Seller’s Disclosure she
delivered the document to Mr. Ma and Ms. Wang, telling them that she could answer any
questions they might have concerning this document.
On September 21, 2009, Mr. Ma and Ms. Wu signed the Seller’s Disclosure Form,
acknowledging the following:
I am relying upon the above Report and statements within the Agreement of Sale
as a representation of the condition of property, and not relying upon any other
information about the property. I have carefully inspected the property. I
acknowledge that Agents are not experts at detecting or repairing physical defects
in property. I understand there may be areas of the property of which Seller has
no knowledge and this Report does not encompass those areas…I may negotiate
in my Agreement of Sale for other professional advice and/or inspections of the
property…This is a legally binding document. If not understood, consult an
On September 27, 2009, the parties signed the Agreement of Sale for 104 Clear Creek
Drive (the “Agreement”).13 The Agreement provided that the purchase price for 104 Clear Creek
Joint Exhibit, Tab # 2, Ma 21.
Joint Exhibit, Tab # 1.
was $390,000.00.14 The Agreement contained a home inspection contingency clause.15 This
clause reads as follows, in pertinent part:
If “Yes” is indicated above, this Agreement is contingent upon Buyer obtaining a
home inspection of the property and written report…, by a home inspection
company and/or licensed contractor/professional of Buyer’s choice at Buyer’s
expense. If Buyer does not choose to obtain an inspection, or if major defects are
not reported to the Seller by date specified, then Buyer has waived the Home
If the home inspection or any subsequent inspection discovers major defects,
Buyer shall provide Seller with a written request for repairs and a copy of the
relevant portions of the Inspection report. Any subsequent inspections
necessitated by the initial inspection shall be at the direction and expense of
Buyer,…performed by a licensed contractor/professional, and completed within
the time frames provided herein…Buyer and Seller agree that Broker(s) does not
guarantee, and will not be held responsible for, any person or company
performing the inspection or correction of any condition pursuant to the terms of
this Agreement and shall not be responsible for the selection of any person or
company chosen to perform an inspection or correct any condition.16
Additionally, Section 31 of the Agreement specifically incorporates the Seller’s
Disclosure Form into the contract.17
The First Home Inspection and Amendments to the Seller’s Disclosure Form.
On October 3, 2009, Reliable Home Inspection Service (“Reliable”) inspected 104 Clear
Creek Drive.18 Paul Duhamel (“Mr. Duhamel”) was the Reliable inspector. Mr. Duhamel took
photographs and prepared a report based on his findings during the inspection.
The Reliable Home Inspection Report was delivered to Mr. Ma and Ms. Wang. The
written Reliable Home Inspection report revealed the following problems related to water in the
Joint Exhibit, Tab # 1, Ma 7.
Joint Exhibit, Tab # 1.
Joint Exhibit, Tab # 1, Ma 11.
Joint Exhibit, Tab # 1, Ma 13.
Joint Exhibit, Tab # 4.
Page 1 of 8.
Major Defect19; Exterior; Masonry Walls: Signs of leaking and water retention at
front wall. Entire condition of stucco wall should be evaluated by a qualified
stucco inspector/contractor or engineer and all needed repairs made including any
needed repairs to correct grading at this area. (Infrared evaluation may be
necessary). To note it could not be determined if this condition exists at the
finished basement portion – ceiling in place.
Major Defect; Exterior; Basement; Basement Foundation Walls: Some cracks and
water penetration. Active water penetration should be repaired.20
Page 2 of 8.
Major Defect; Basement Ceiling Joist: Active water penetration and wood rot
noted, entire structural condition should be evaluated by a structural contractor or
engineer and any needed repairs made.
Page 3 of 8.
Safety Concern21; Basement; Basement: As found in most homes in America,
possible mold/mildew noted, and should be evaluated/cleaned by qualified
personnel. As mold and mildew are not part of the home inspection the client
may decide to do further evaluation to determine the extent of the problem and the
cost to cleanup/repair.
Page 4 of 8.
Service/Repair22; Exterior; Grading: Soil should be sloped away from house to
improve drainage. The addition of window well covers is recommended – (keep
window wells covered). Trim Work: Some loose paint and wood rot noted.
Page 6 of 8.
Service/Repair; Crawl Space; Crawl Space Foundation Walls: Some cracks and
water penetration noted.
The report at page 8 defines the term “Major Defect” as “[a]n item that will require immediate maintenance and
should be carefully monitored to avoid larger problems.” Joint Exhibit # 4.
Note that this particular portion of the Reliable Report relating to water damage is related to a pipe that protruded
from the basement wall that is unrelated to the cause of the damage at issue in this case.
The report at page 8 defines the term “Safety Concern” as “[a]n item that affects the safety of the occupants of the
home, and is in need of immediate repair.”
The report defines “Service/Repair” as “[a]n item in need of repair or maintenance, the expected cost of which
should be at a level less than that of a major defect, at the time of inspection. Also noted, may be some inaccessible
items or items not working.”
Monitor/Maintain; Gutters…; Runoff Drains: Downspouts and runoff drains
should be extended in such a way as to move water away from the foundation
Roof…; Flashing; Other = Cracked neoprene flashing noted at plumbing vent
pipe should be sealed or otherwise repaired.
Page 7 of 8.
Inspection Definition/Limitation…; Basement; Basement Insulation: Insulation
limits inspection. Basement Wall Finish: Inspection limited by finished areas and
Moreover, the Reliable Home Inspection Report contained a lengthy disclaimer, which
provides in pertinent part:
Home inspectors are generalist and are not experts in any specific field, and
further evaluations are often needed. Qualified experts should be chosen carefully,
and should be allowed to thoroughly inspect the entire suspect system and not be
limited to specific areas sighted in the home inspection…It is not possible to be
exact, but an effort is made to be as accurate as possible based on visible evidence
where accessible…Please read the information printed on each page and call us
for an explanation of any aspect of the report that you do not fully
understand…The “Whole House Inspection” is conducted according to the
standards set by The American Society of Home Inspectors (ASHI) for the
purpose of identifying major deficiencies that might effect your decision whether
to purchase. Unfortunately we cannot take away all the risks of home ownership.
Although Service/Repair items may be mentioned, this report does not attempt to
list them all…Your home inspector is not a licensed structural engineer or other
contractor whose license authorizes the rendering of a technical analysis of the
structural integrity of a building or its other component parts. You may be
advised to seek a licensed engineer or contractor’s opinion as to any defects or
concerns mentioned in this report…Home buyers, after occupying the home,
sometimes overlook important information and warnings contained in their
reports. This can result in failure of equipment or other damage, which could have
been prevented if the inspector’s advice, and recommendations had been
Attached to the Reliable Home Inspection Report is an additional fourteen page
document titled “Inspection Report Details.” In this document, Duhamel again noted the
Joint Exhibit Tab # 4.
Joint Exhibit, Tab # 4 (emphasis added).
following issues, complete with accompanying explanations identical to the explanations
provided in pages one through eight of the report: (1) listing the front stucco/masonry wall as
containing a “major defect” with “signs of leaking and water retention;” (2) listing wood rot on
the “trim work;” (3) recommending that the downspouts and runoff drains be extended to remove
water away from the foundation wall; (4) noting that near the plumbing vent pipe on the roof the
neoprene flashing was cracked and should be repaired and re-caulked; (5) noting mold and
mildew issues in the basement; (6) noting cracks and “active water penetration” as a “major
defect” in the basement foundation walls; (7) noting “active water penetration and wood rot” in
the basement ceiling joist and recommending that the “entire structural condition should be
evaluated by a structural contractor or engineer and any needed repairs made;” (8) noting that
insulation and stored belongings limited the scope of the inspection performed in the basement;
(9) noting mold/mildew, cracks, and water penetration in the crawl space foundation walls; and
(10) again restating the definitions and disclaimer portion in its entirety.25
Moreover, the Reliable Home Inspection Report included numerous photographs of the
portions of the home referenced in the Report. In the section listing the “Basement Ceiling Joist”
as a “Major Defect” there are three photographs of the portion of the basement ceiling
immediately below the front door and front facing exterior wall of the home.26 Portions of the
concrete basement ceiling are visible beneath the ceiling and wooded basement ceiling joist.27
There are numerous plainly visible dark water stains on the concrete walls, and plainly visible
dark patches of mold on the wooden ceiling joist.28 In the portion of the report listing the mold
in the basement as a safety concern, there is another picture of a different portion of the basement
Joint Exhibit, Tab # 4, Inspection Report Details, Pages 1-14.
Joint Exhibit, Tab # 4, Page 2.
Joint Exhibit, Tab # 4, Page 2.
Joint Exhibit, Tab # 4, Page 2.
ceiling joist.29 In this picture there are numerous water stains on the concrete walls immediately
below the wooden ceiling joist and dark patches of mold on the ceiling joist itself.30 On cross
examination, Mr. Ma admitted that he observed these stains during Mr. Duhammels inspection.
Mr. Ma further testified that he asked Mr. Pineault about these stains, and Mr. Pineault told Mr.
Ma that the stains had been on the wall for years. In other words, Mr. Pineault represented that
the stains were not evidence of current water leakage issues.
Ms. Wu testified that she knew that the Reliable Home Inspection Report had identified
water issues in the home. Ms. Wu testified further that she was present during Mr. Duhamel’s
inspection and “saw moisture in the basement” at that time. Ms. Wu testified, however, that she
was not concerned when she saw active moisture in the basement because Mr. Pineault was also
present and told Ms. Wu that the basement was dry.
Mr. Pineault testified that after receiving the home inspection report, the Pineaults
updated the Seller’s Disclosure Form based on the recommendation of their real estate agent.
Specifically, the Pineaults updated the questions 51 and 66 as follows31:
51. Have you made any additions or structural changes? Noticed after we
purchased the home ten years ago that the right side dining room windows were
leaking onto the basement wall from the sill plat area. Called the builder, who
sent repairmen to correct the problem. The area has remained dry to current date.
* In the summer of 2008 we had all the windows caulked, sealed and painted the
stucco and replaced all of the shutters.
* On 4/24/09 we had all of gutters replaced by the gutter guys.
Joint Exhibit, Tab # 4, Page 3.
Joint Exhibit, Tab # 4, Page 3.
The Joint Exhibit binder contains the original Seller’s Disclosure Form at Tab # 2, and the Amended Seller’s
Disclosure Form at Tab # 3. However, Tab # 3 contains only updated explanations for questions 51 and 66, not a full
copy of the Amended Seller’s Disclosure Form.
66. Is there any water leakage, accumulation, or dampness within the basement or
crawlspace? 2005 addition to family was added. Portico was added to front of
house by Prestige Home Improvement. New front door was installed by Lowes.
On cross examination, Mr. Pineault admitted that he did not disclose that the carpeting
and padding had been replaced by the builder. He explained that he did not disclose this
information because the Pineaults did not replace the carpet themselves. Mr. Pineault also
admitted that at the time he completed the original and amended seller’s disclosure forms, he
knew that there was water damaged wood in the foyer near the front door, and that he did not
disclose this information.
Mrs. Pineault testified similarly that at the time Mr. Pineault
completed the Seller’s Disclosure Form and Amendment, she knew that there was water
damaged wood in the foyer. Finally, Mr. Pineault testified that, before amending the Seller’s
Disclosure form, he and his realtor, Jill Kovak (Ms. Kovak”), had climbed a ladder, felt the
basement ceiling joist, and that it was not wet.
Mr. Pineault testified that his explanation to question 51, that the Pineaults noticed that
the right side dining room windows were leaking down into the basement and further, that the
builder had repaired this issue, was not accurate. Mr. Pineault testified that he never saw water
leaking in these windows. Mr. Pineault further testified that the builder told him that there might
be an issue, and that the builder then sent a repairman to make this repair.
Mrs. Pineault also testified that the explanation to question 51 was not accurate, because
she never observed the dining room windows leaking during the time the Pineaults owned the
home. Mrs. Pineault did, however, admit that the basement walls had some water stains and that
the basement ceiling joist was water stained and moldy during the time the Pineaults lived in the
home.32 She further testified that she never noticed active water leaking in the basement, or
Joint Exhibit, Tab # 9, Ma 105-06.
water stains under any of the window sills in the home. Mrs. Pineault testified adamantly, that
had she noticed any water issues in the home, she would have had them repaired.
Mr. Ma testified that he was present during Mr. Duhamel’s inspection, and that he had
read the Reliable Home Inspection Report. Mr. Ma stated that Mr. Duhamel noted that there was
insulation missing in the basement ceiling, and that the area around the basement ceiling joist of
the front wall to the house was wet to the touch. On cross examination Mr. Ma stated that during
Mr. Duhamel’s inspection he did not personally touch the basement ceiling joist, but rather, Mr.
Duhamel told Mr. Ma that it was wet. Mr. Pineault stated that during Mr. Duhamel’s inspection
Mr. Pineault told Mr. Ma that he had removed the insulation covering this area to monitor the
area for termites. Mr. Ma also admitted that during Mr. Duhamel’s inspection, Mr. Ma had seen
a water damaged piece of wood in the foyer.33
The Second Home Inspection, Subsequent Pre-Sale Repairs, and Closing.
Mr. Ma testified that he hired Silverside Structurals, Inc. to perform a follow up
inspection based on the water issues in the stucco front wall of the home, the basement wall, and
the basement ceiling joist that were discovered by Mr. Duhamel and discussed at length in the
Reliable Home Inspection Report. Mr. Ma testified that he hired Silverside Structurals, Inc.
upon the recommendation of Ms. Wu. Mr. Ma paid Silverside Structurals, Inc. $85.00 for this
Mr. Ma testified that Richard Hartnett (“Mr. Hartnett”) was the Silverside
Structurals, Inc. employee that had actually performed the inspection and prepared a written
Mr. Hartnett testified during plaintiff’s case in chief that he was the President of
Silverside Structurals, Inc for approximately two or three years.
Joint Exhibit, Tab # 9, Ma 102.
Joint Exhibit, Tab # 5.
Joint Exhibit, Tab # 5.
He testified that he has
approximately thirty years experience conducting “structural evaluations.” He said that on
October 12, 2009, he inspected 104 Clear Creek Drive at Ms. Wu’s request. She asked Mr.
Hartnett to evaluate water stains on the front wall of the home. Mr. Hartnett testified that he
inspected the walls and recommended that the shutters be removed, re-caulked, and that any
cracks be sealed.
Mr. Hartnett stated that he did not recall whether any insulation was missing in the
basement, or whether missing insulation was discussed with Mr. Pineault. He also could not
recall whether Mr. Pineault said anything about termites during the inspection.
Mr. Hartnett testified that he reviewed the Reliable Home Inspection Report before
performing his inspection. He admitted that he is not an engineer, but testified that he is
qualified to perform structural analyses. He stated that he could not recall whether the basement
walls were stained when he performed his inspection, and admitted that he did not include
anything about stains on the basement walls in the written report. Mr. Hartnett admitted on cross
examination that neither Mr. Ma nor Ms. Wu had asked him to perform a “structural analysis” of
the stucco front wall of the home.
Mr. Ma testified that he was present for Mr. Hartnett’s inspection and that Ms. Wu and
Mr. Pineault were also present. Mr. Ma stated that on the day of Mr. Hartnett’s inspection, it
was not raining or snowing outside. He said that they all went into the basement of the home,
where Mr. Hartnett examined the ceiling, basement ceiling joist, and basement walls that Mr.
Duhamel had referenced in his report. He said that Mr. Hartnett also examined the stucco front
wall of the home from the outside of the home.
Mr. Ma testified that Mr. Pineault told everyone present that there was a water leak in the
home after the Pineaults moved in. However, he said that Mr. Pineault assured everyone present
that when the Pineaults discovered these issues, they contacted the builder, who repaired the
water issues, and that the home had been dry ever since. Mr. Ma testified that he noticed that an
area of insulation was missing in the basement ceiling. Mr. Ma said that Mr. Pineault offered no
explanation for why the insulation was missing and that Mr. Pineault never mentioned termites.
Ms. Wu testified that Mr. Hartnett, Ms. Wu, and Mr. Ma all asked Mr. Pineault about
past leakage and water problems while the group was in the basement. Ms. Wu testified that Mr.
Pineault said that there was a water problem in the dining room ten years earlier, but the realtor
had repaired the problem and that the Pinaults had not experienced any issues with water since
then. Ms. Wu said that Mr. Pineault specifically told them that he exercised in the basement
everyday and had never seen any water on the basement walls. Ms. Wu also said that during the
time the group was in the basement, Mr. Pineault had never mentioned termites. She thought
that nothing was said about termites because “we were there for water.” Ms. Wu later testified
on cross examination that Mr. Pineault told them that he had removed the insulation in the
ceiling because he knew that there had previously been water problems in that area, and he
wanted to monitor the area for water issues.
After inspecting the home for water damage and continuing water issues in the stucco
front wall, basement ceiling joist, and basement wall, Mr. Hartnett prepared a one page report
listing his findings. The one page report provides as follows:
Water stains – front wall of basement
It is my opinion that at some time, water has penetrated the front wall above
The present owners have reported that the water problem was corrected at the
Some of sealant around the windows may have deteriorated over a period of
I suggest removing the shutters and resealing around the window.36
Note some water may have penetrated the wall at other locations.
I cannot guarantee that the above suggestions will stop all water penetration.
A “good faith” estimate to remove the shutters and caulk is…$300.00.
Total inspection service call to be paid by the responsible party is..[.]$85.00.37
Mr. Ma testified that Mr. Hartnett told him after the inspection, that if the problems were
corrected as recommended, that he should buy the home. Mr. Hartnett performed these repairs
prior to closing.
Mr. Ma testified that during Mr. Hartnett’s inspection, Mrs. Pineault told him that the
Pineaults were selling the home was because they were having financial difficulties. Mrs.
Pineault denied making this statement. Mrs. Pineault instead testified that Mr. Harnett was
scheduled to arrive for the inspection at 8:00 AM, and she was told that the inspection would last
between two and three hours. She stated that she left the property from 8:00 AM until 12:00 PM
to allow for the inspection.
On cross examination, Mr. Ma admitted that Mr. Duhamel recommended both orally and
in the Reliable Home Inspection Report that Mr. Ma have a “qualified stucco
inspector/contractor or engineer” inspect the structural integrity of the front wall of the home.
Mr. Ma stated that he did not think that this inspector was required to be an engineer, and that he
relied on Ms. Wu to select a suitable expert to perform the recommended inspection. He said
that Ms. Wu represented to him that Mr. Hartnett was an expert in stucco. Mr. Ma admitted that
Mr. Hartnett was not an engineer, and that he never instructed Mr. Hartnett to look inside the
front wall of the home to determine the extent of the water damage inside the wall. Mr. Ma also
admitted that the Pineaults never limited the scope of either inspection and never specifically
Mr. Ma testified that it is his understanding that Mr. Hartnett was referring to the dining room windows in this line
of the report.
Joint Exhibit, Tab # 5.
said that Mr. Hartnett could not look inside the walls. Moreover, Mr. Ma conceded that he
should have hired someone more qualified to properly examine the structural integrity of the
stucco front wall, basement wall, and basement ceiling joist.
Mr. Pineault testified that he, Mr. Ma, Ms. Wu, and Ms. Kovak were all present during
the second inspection. Further, during the time the group was in the basement, neither Mr. Ma
nor Mr. Hartnett directly asked Mr. Pineault about water, and he never said anything about water
leaks in the front windows. Notwithstanding the issues with water discovered both by Mr.
Duhamel and Mr. Hartnett, Ms. Wu testified that, after Mr. Hartnett’s inspection she, Mr. Ma,
and Ms. Wang felt comfortable going forward with the sale because they “trusted the seller’s
words.” Closing was held on November 16, 2009.
Water Problems in the Home after the Sale.
Mr. Ma testified that after he purchased the home, he wanted to repair and renovate the
home before he and Ms. Wang moved in. Starting on December 7, 2009, Mr. Ma took several
weeks off from work to perform the desired renovations. He stated that the carpet in the living
and dining rooms was “old and not clean,” so he wanted to tear the carpet up and install
hardwood floors in the living room, dining room, and foyer. Mr. Ma had decided to do this work
Mr. Ma did not begin to work on the floors until around December 22, 2009, because he
was performing other renovations. He testified that, when he began removing the old hardwood
floor in the foyer he discovered that the sub flooring beneath the hardwood was heavily stained,
moldy, and rotted.38 When he removed the carpeting from the dining and living rooms, the sub
flooring beneath the windows in these rooms was heavily stained, moldy, and rotted. Mr. Ma
testified further that the underside of the carpeting and the padding was heavily stained and
Joint Exhibit, Tab 9, Ma 103.
moldy. Mr. Ma testified that it was not raining on December 22, 2009 when he performed this
work. However, on cross examination, Mr. Ma admitted that there was a snowstorm at some
time prior to that date. On cross-examination, Mr. Ma admitted that there were no visible stains
on the top side of the carpet.
As soon as Mr. Ma discovered these issues in the foyer, living room, and dining room, he
called Ms. Wu. Mr. Ma testified that on December 23, 2009, Ms. Wu, Mr. Duhamel, and Gary
Willow (“Mr. Willow”), a roofer Ms. Wu knew, inspected the home at 12:00 PM. It was not
raining at this time. They looked at the sub flooring, and Mr. Willow suggested that Mr. Ma call
Mr. Ma testified that Ms. Wu put her ear against the sub floor and told Mr. Ma that she
could hear water “gurgling.” Ms. Wu testified that the floors were moldy and wet, and that she
“could feel water dripping in the foyer.” Mr. Ma called Stephen C. Green (“Mr. Green”) at Mr.
On December 24, 2009, Mr. Green and Mr. Willow returned to the home and conducted
an inspection. Mr. Green said he needed to explore inside the walls to determine the scope of the
water problem. Mr. Green gave Mr. Ma a quote for the estimated cost of the work, which Mr.
On December 26, 2009, Mr. Green came back to the home and removed most of the
drywall from the living room, dining room, and foyer. It was raining moderately at the time. Mr.
Ma testified that while it was raining, he went into the basement and observed water dripping
down from the basement ceiling joist to the basement wall.39 Mr. Ma testified that once Mr.
Green removed the drywall and remainder of the sub flooring, he realized that he did not have
the expertise to properly complete the work and recommended that Mr. Ma contact a structural
Joint Exhibit, Tab # 9, Ma 105-06.
engineer. Mr. Green recommended, and ultimately contacted an engineer, Bjorn Haglund (“Mr.
Haglund”), to inspect the home.
Mr. Green testified that he is a licensed general contractor specializing in remodeling and
rehabilitation. When he arrived at the home, Mr. Ma had removed all the carpeting from the
living room and dining room, and all the hardwood from the foyer. He said that he observed
substantial water damage on each of these surfaces. Mr. Green testified that there were water
stains on the drywall below the window sills in the dining room.
Mr. Green removed most of the drywall from the walls in these rooms. Mr. Green
testified he found that there was particle board underneath the drywall. He testified that this
particle board was so badly water damaged that it crumbled when touched. He said specifically
that when he reached inside the wall, he easily pulled out handfuls crumbled particle board
similar in texture to sawdust.
Mr. Green said when he removed the drywall it was not raining. Further, that before he
removed the drywall, he instructed one of his employees to spray the living room and dining
room windows with a hose to determine whether the windows were the cause of the leak. He
testified that when this employee sprayed the point where the window and stucco wall meet, the
drywall inside the home became visibly wet and that the foyer smelled musty. Mr. Green also
indicated that when he went into the basement he could see dark water stains on the ceiling joist,
and that it also smelled musty.
On cross examination, Mr. Green was asked to identify the photographs in the Joint
Exhibit Binder that reflected water leaking or water damage that would have been visible before
Mr. Ma removed the hardwood in the foyer and the carpeting in the dining and living rooms, and
before Mr. Green removed the drywall in these rooms. Mr. Green responded that there were four
photographs in this binder displaying this damage. Specifically, he indicated that the water
damaged wood near the front door would have been visible40, the water stains on the basement
walls would also have been visible41, and that there was a hole in the stucco wall on the side of
the house where the gutter and roof met42.
Mr. Green testified that, had Mr. Ma and Ms. Wang hired him to inspect the structural
integrity of the stucco front wall, the basement ceiling joist, and the foundation before closing,
the only way he could have performed this inspection would have required removing portions of
drywall. Mr. Green explained, however, that it would not have been difficult to perform this
type of inspection.
Finally, Mr. Green discussed the visible hole in the side of the stucco wall near where the
gutter and roof met.43 Mr. Green testified that he observed water “pouring in” through this hole.
Mr. Green testified that the worst deterioration inside the front stucco wall of the home was near
this hole. Mr. Green said that this defect was attributable to a “bad stucco job”, and opined that
the home inspector should have found this hole during the course of the home inspection.
Further, Mr. Green testified that, in his opinion, many of the Pineault’s home
improvement projects were done to conceal and repair known water issues. Also, that front
doors on homes do not need to be replaced until they are at least ten years old. He further opined
that the portico and caulking under the shutters was done to prevent water leaks. Finally, that the
stucco front of the home was re-painted to conceal water stains. On cross examination, Mr.
Green admitted that the new door was a “real upgrade” over the door originally installed in the
home, and that homeowners often install porticos for aesthetic reasons.
Joint Exhibit, Tab # 9, Ma 102.
Joint Exhibit, Tab # 9, Ma 105b, Ma 106a.
Joint Exhibit, Tab # 9, Ma 113.
Joint Exhibit, Tab # 9, Ma 113.
Mr. Haglund testified that he is a registered professional structural engineer in Delaware
and that he has been working in this capacity since 1996.44 On January 8, 2009 he performed a
structural evaluation of 104 Clear Creek at Mr. Green at Mr. Ma’s request. Upon arrival, Mr. Ma
had already removed the flooring and carpeting in the foyer, dining room, and living room, and
that Mr. Green had already removed most of the drywall in these rooms. Mr. Haglund testified
that the wood that was exposed was in a “later decay stage,” meaning that water damage had
been occurring in the home for an extended period of time.45 He said that more than fifty percent
of the wood was damaged, expanding, and falling apart.46 Further, that the damaged wood was
wet to the touch, although it was not raining that day. Mr. Haglund indicated that the stains were
primarily located under and around the eight windows in the living room and dining room, and
under and around the front door. Also, that when he began his investigation, there were some
windows in the front two rooms of the home still covered with drywall. There were water stains
and cracking visible on the drywall covering these windows and that when he removed the
drywall from these previously unopened windows, he discovered more decomposed particle
Mr. Haglund also testified that there were also water stains running down the face of the
basement wall immediately below the front door. And, that this staining reflected both new and
old staining, because the stains were varied in color.47
Mr. Haglund opined that the cause of the window leaks was that the builder had not
installed proper “flashing” in between the stucco front wall and the eight front windows, front
door, and the picture window.
The parties stipulated that Mr. Haglund is an expert in engineering.
Plaintiff’s Exhibit # 2.
Plaintiff’s Exhibit # 2.
Plaintiff’s Exhibit # 2.
Mr. Haglund testified that, based on his investigation, he recommended that several
repairs be performed. He recommended that all the rotten wood be replaced, all the drywall
behind the front wall of the home be replaced, and a new stucco front wall be installed, complete
with proper flashing around the windows.
Mr. Haglund stated his awareness of the various upgrades and repairs to the home
performed by the Pineaults and that, in his opinion, these projects were undertaken to repair a
known water problem in the home. Mr. Haglund said that replacing gutters, installing porticos,
re-caulking windows, and replacing front doors are all things that are typically done when
homeowners know that there is a water problem and wish to correct it. On cross examination,
Mr. Haglund admitted that porticos are often installed for aesthetic reasons. Mr. Haglund also
admitted that the Pineaults had the windows re-caulked for the first time when the home was ten
years old, and that exterior window caulk generally needs to be reapplied every ten years.
Mr. Haglund testified that he is a former United States Marine, where he had served on a
helicopter squadron for three years. Mr. Haglund testified that he is very familiar with “rotor
wash,” a technical term used to describe the wind blown by helicopter propellers. Based on his
training and experience as an engineer and a Marine, he feels the Pineault’s story that the
helicopter blew the gutters off of the house is not plausible. On cross examination, however, Mr.
Haglund admitted that gutters frequently become loose, and that if the gutters were loose when
the helicopter landed, the rotor wash caused by the helicopter could have been strong enough to
dislodge the gutters from the home.
Also on cross examination, Mr. Haglund testified that the only damage he personally
observed that would have been visible to the Pineaults was the water staining and mold on the
basement ceiling joist, the water stains on the basement wall, and the water stains below the
windows that were unopened when he performed his investigation.
Repairs and Restoration.
Mr. Ma testified that he hired Mr. Green to perform the repairs recommended by Mr.
Haglund. Mr. Ma signed a contract48 to formally hire Mr. Green on April 6, 2010, but that Mr.
Green actually started working on April 17, 2010. He stated that Mr. Green completed the work
on June 22, 2010. Mr. Ma testified that he has incurred the following expenses in connection
with these repairs:
$ 2,440.00 paid to Mr. Green for demolition and exploratory work, based
on an invoice dated December 28, 2009.49
$ 23,612.81 paid to Mr. Green for different stages of the repair work.50
$6,205.00 paid to Home Depot for the purchase and installation of new
windows in the dining room, living room, and the second floor above
$720.00 paid to Mr. Haglund for his investigation and recommendations.52
The total amount sought based on these documents is $32,977.81.
The Pineaults Liability for Breach of Contract
“[A] seller transferring residential real property shall disclose, in writing, to the
buyer…all material defects of that property that are known at the time the property is offered for
sale or that are known prior to the time of final settlement”53 Oral disclosures, while helpful, do
Joint Exhibit, Tab # 7.
Joint Exhibit, Tab # 7, Ma 60.
Joint Exhibit, Tab # 7, Ma 61.
Joint Exhibit, Tab # 7, Ma 67. Mr. Haglund testified that there was water damage in the wood surrounding the
second floor windows similar to the damage surrounding the windows in the dining room and living room, and
necessitating similar repairs.
Joint Exhibit, Tab # 7, Ma 68.
6 Del. C. § 2572(a).
not relieve the seller of residential real estate from their statutory duty to disclose all known
material defects in writing.54 Sellers have a continuing duty to update their disclosure forms to
reflect any and all material changes up to the date of final settlement.55 This required seller’s
disclosure is intended to be a good faith effort by the seller to disclose known defects, and is not
a substitute for warranties or inspection.56 This requirement was further intended to eliminate
the doctrine of “caveat emptor,” or “let the buyer beware” from residential real estate sales in
Once the Seller’s Disclosure Form is signed by both the buyer and seller, the form
becomes a part of the contract.58
Accordingly, failure to disclose known material defects
qualifies as a breach of the real estate sale contract by the seller.59 In a civil action for breach of
contract, the burden of proof is on the plaintiff to prove the claim by a preponderance of the
evidence.60 To prove a claim for breach of contract by a preponderance of the evidence, the
plaintiff must establish the following: (1) the existence of a contract; (2) the defendant breached
an obligation imposed by the contract; and (3) resulting damages to the plaintiff.61
The implied covenant of good faith and fair dealing is not an independent cause of
action.62 Rather, the implied covenant of good faith and fair dealing is subsumed within every
contract and operates to preclude a party from avoiding a contractual undertaking by invoking a
condition in the contract, if the condition occurred as a result of the party’s own actions.63
“[P]arties are liable for breaching the covenant when their conduct frustrates the “overarching
McCoy v. Cox, 2007 WL 1677536, *1 (Del. Super. June 4, 2007).
6 Del. C. § 2572(b).
6 Del. C. § 2574.
Iacono v. Barici, 2006 WL 3844298, *4 (Del. Super. Dec 29, 2006) (citations omitted).
McCoy, 2007 WL 1677536 at *1.
Interim Healthcare, Inc. v. Spherion Corp., 844 A.2d 513, 545 (Del. Super. 2005).
VLIW Technology, LLC v. Hewlett-Packard Co. STMicroelectronics, Inc., 840 A.2d 606, 612 (Del. 2003).
McCoy, 2007 WL 1677536 at *9.
Gilbert v. El Paso Co., 490 A.2d 1050, 1055 (Del. Ch. 1984).
purpose” of the contract by taking advantage of their position to control implementation of the
agreement's terms.”64 “Only when it is clear from the writing that the contracting parties ‘would
have agreed to proscribe the act later complained of ... had they thought to negotiate with respect
to that matter’ may a party invoke the covenant's protections.”65
In this case, the parties agree that a contract existed. The Agreement of Sale specifically
incorporates the Seller’s Disclosure Form into the contract.66 The parties only dispute whether
the Pineaults breached the contract by failing to make the required disclosures. Further, the
plaintiffs argue that the Pineaults breached the spirit of the contract for sale by making numerous
allegedly misleading written and oral representations before closing.
In D’Aguiar v. Heisler, the Court held that a seller of residential real estate breached its
contract with the buyer by failing to adequately disclose water and foundation issues in the
basement of a residential home.67 The seller in that case made the following written disclosures:
(1) there were small cracks in the basement walls (2) there was past or present leakage,
dampness, or accumulation in the basement that the seller corrected by re-routing a down spout,;
and (3) at of the time of the sale there was no water leakage, dampness, or accumulation in the
basement.68 At trial, the defendants initially testified consistent with this disclosure, that there
were water issues in the basement shortly after they purchased the home that were corrected by
re-routing a down spout, and some flooding during a hurricane. However, the sellers then
admitted during their testimony at trial that they knew: (1) that water “seeped” through the
basement walls shortly before settlement; and (2) there was a large inward “bulge” in one of the
Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del. 2005)
Id. (citations omitted).
Joint Exhibit Tab # 1, Ma 13.
D’Aguiar v. Heisler, 2011 WL 6951847 (Del. Com. Pl. Dec. 15, 2011).
Id. at *10-11.
concrete basement walls.69 Further, the Court noted that characterizing large cracks that cut
through nearly all of the basement walls as “small cracks” did not adequately describe the
gravity of what were, in fact, severe, large, and discolored cracks.70 In other words, the plaintiffs
established that the sellers did not disclose all known material defects related to flooding in the
basement because they testified at trial that at the time they completed the seller’s disclosure
form, they were aware of other severe defects, but failed to disclose these defects in writing.
In the instant case, the Pineaults similarly failed to disclose the full extent of their
knowledge of the condition of the stucco front wall of the home, the basement ceiling joist, and
the basement wall. The initial disclosure form provided that there was: (44) no drainage or flood
problems in the property; (53) no problems with the foundation; (54) that the property had never
been damaged by flooding; (57) that there was “past or present water leakage in the house,” (59)
that there had never been any repairs or attempts to control any of the above problems, and (66)
that there had never been any water leakage in the basement, or (67) attempts to control water
issues in the basement.
The initial disclosures in this case were misleading and inaccurate because the Pineaults
only disclosed that there had been leakage in the home, not flooding, and never any leakage in
the basement. Despite the fact that page five of the Seller’s Disclosure Form requires that the
seller explain problems disclosed in the form, the Pineaults made no mention of leaking dining
room windows at this time. At trial, the Pineaults testified that when they filled out the Seller’s
Disclosure Form, they knew that the basement had flooded during a hurricane in 2004, that there
were stains on the basement walls from water leaking down these walls, and that the dining room
windows leaked at some time. Whether the Court finds that the Pineaults knew about the leaks
in the dining room windows (based on the fact that they disclosed this information in the second
disclosure form), or because they later testified at trial that they knew that leaks had occurred and
been repaired before they moved in, is immaterial. In either event, the Pineaults knew that there
had been a water leak in the dining room windows at some time and did not include that
information on the initial disclosure form.
After Mr. Duhamel’s inspection revealed numerous water related defects in the home, the
Pineaults updated their disclosure form to add: (51) during the time they owned the home, the
right side dining room windows leaked down onto the basement wall, but that the Pineaults
contacted the builder who corrected the problem. Further, the Pineaults disclosed that in 2008
the stucco was painted, shutters were replaced and windows resealed; disclosed that the gutters
were replaced in 2009; and (66) disclosed that they installed a portico and new front door. In
other words, after Mr. Duhamel discovered that there might be a severe water issue in the stucco
front wall, basement ceiling joist, and basement wall, only then did the Pineaults disclose that
they once had a water issue with the dining room windows that was corrected, and that they
replaced the front door, gutters, and installed a portico.
The Court finds it very significant that the Pineaults made these disclosures only after
numerous defects were revealed in Mr. Duhamel’s report. The Pineaults initially completed the
Seller’s Disclosure Form on September 9, 2009. Given their temporal proximity, there is no
reasonable explanation for failing to include that the gutters had been replaced in 2009 and that
the stucco front wall had been repaired in 2008. Moreover, the Pineault’s updated disclosure
failed to include numerous other known water related problems in the home, including the water
damaged wood in the foyer, the stains on the basement wall, the water damaged basement ceiling
joist, etc. Only after Mr. Duhamel’s report did the Pineaults make a comprehensive update of
the Seller’s Disclosure Form, disclosing that the dining room windows once leaked, but had been
repaired, and listing the stucco and gutter repairs, and the front door/portico additions. Given the
Pineaults often vivid descriptions of past events at trial, including the helicopter incident, as well
as both Mr. and Mrs. Pineaults’ several statements regarding her fixation on being a fastidious
housekeeper, the Court finds that the Pineaults were sufficiently knowledgeable to make more
detailed, helpful, and accurate disclosures.
In summary, the Pineaults disclosed in writing that there was either past or present water
leakage in the home, and that the dining room windows leaked down onto the basement wall, but
that this problem was repaired by the builder at an unspecified time. Stated differently, the
Pineaults disclosed that there once was a water issue in the home, where the dining room
windows leaked down onto the basement wall, but that this issue had been repaired. Further,
their disclosure provided that since the time of this repair, there had never been another problem
with water in the home. The testimony of others that areas were wet to the touch during
inspections and further, that the extent of the damage indicated decay over an extended period,
The testimony taken at trial establishes by a preponderance of the evidence that the
Pineaults knew that there was a water problem in the stucco front wall, dining room and living
room windows, and basement ceiling joist and failed to adequately disclose the extent of their
knowledge. At trial, Mr. and Mrs. Pineault made the following admissions that were not reflected
in the Seller’s Disclosure Form: (1) Mr. Pineault testified that the basement walls were water
stained; (2) Mrs. Pineault testified that the basement ceiling joist had large spots of dark mold on
it; (3) there was a water damaged piece of wood in the foyer near the front door; and (4) the
carpet was replaced in the living room and dining room before the Pineaults purchased the home.
Further, both Mr. Green and Mr. Haglund testified that the drywall underneath the
windows in the living room and dining room was water stained. When Mr. Ma pulled up the
carpet while attempting to install hardwood floors, the underside of the carpet beneath the
windows in the living room and dining room was heavily water stained and moldy. Carpet does
not become stained and moldy without being exposed to significant moisture.
testimony of several defense witnesses regarding Mrs. Pineaults’ cleaning habits, the Court finds
it extremely unlikely that Mrs. Pineault never noticed the stained drywall and never observed
that the carpet was wet. Nonetheless, the Pineaults never disclosed that the drywall near the
windows was stained and cracked, and never disclosed that the carpet near these windows had
gotten wet during the time they owned the home. While it is clear that the problems were caused
by poor workmanship by the builder and not the actions of the Pineaults, their disclosure was
Mr. Green and Mr. Ma testified that on December 26, 2009, about one month after
closing, they observed active water leaks on the basement wall. Mr. Pineault testified that he
observed this same area was stained before the Pineaults purchased the home. Further, Mr.
Green testified that when one of his workers sprayed the living room and dining room windows
from the outside of the home with a hose, the drywall inside the home became visibly wet. Ms.
Wu testified that she saw “moisture” in the basement during Mr. Duhamel’s inspection. Mr. Ma
testified that Mr. Duhamel touched the basement ceiling joist during the inspection and said that
it was wet to the touch. The Pineaults admitted that they knew there was a water problem in the
home before they moved in, and the seller’s disclosure form indicates that this problem was
corrected after they moved in. It would not be logical for the Court to conclude that the
Pineaults knew there was a water problem, had it repaired, never noticed another leak, wet area,
or stain in the home, and then, within one month of plaintiffs moving into the home, Mr. Ma and
Mr. Green observed water running down the basement wall, and the drywall in the front
windows became visibly wet when the living and dining room windows were sprayed with a
Moreover, the factual record after trial is permeated with evidence that there has been a
longstanding, persistent and visible problem with water in 104 Clear Creek since the home was
built in 1999. The basement walls were water stained immediately below the basement ceiling
joist. The ceiling joist was wet and moldy before settlement. The underside of the carpet under
the dining room windows was severely water stained and moldy even though new carpet was
installed in these rooms before the Pineaults moved into the home. Mr. Green and Mr. Ma
testified that they observed active water leakage down the basement wall one month after
settlement. There was a water damaged piece of wood in the foyer. In D’Aguair, the Court
found failures to disclose based on the seller’s admissions during direct and cross examination
that he knew there were water problems in the home. In this case, the Pineaults admitted they
knew about the moldy ceiling joist, water stained basement walls, and leaking dining room
windows, but that they did not disclose this information. The Pineaults contention that they did
not notice water issues is further undermined by the visible and substantial symptoms of water
damage documented by both Mr. Ma and Mr. Green only one month after settlement.
The Pineaults argued in closing that these issues were visible to Mr. Ma and Ms. Wang
prior to settlement, and therefore the plaintiffs should not be permitted to now claim that failure
to disclose these issues was breach of contract. For example, Mr. Duhamel indicated that there
was an active water leak in the basement ceiling joist and water retention in the front stucco wall
in his report. However, Delaware case law is clear that oral disclosures are not sufficient to
absolve sellers of residential real estate from their statutory duty to disclose prior to settlement
all known material defects in writing.71 Similarly, whether the buyer independently discovers a
defect prior to settlement does not abrogate the seller’s statutory duty to disclose all known
material defects in writing.72 The rationale for requiring written disclosures is to remove the
doctrine of buyer beware or caveat emptor from residential real estate sales in Delaware.73 Thus,
any water issues or red flags the plaintiffs noticed before settlement are immaterial to the
outcome of their breach of contract claim -- because this did not absolve the Pineaults of their
statutory duty to disclose all known material defects in writing.
The Court finds the testimony of the Pineaults’ other witnesses, Ms. Kolek, Mr. Rizzo
and Mr. Smith, not helpful to the Court, for various reasons.
For example, Mr. Smith
categorically denied meeting Mr. Goldberg or discussing the facts of the case with the Pineaults,
even when asked these very questions by Mr. Goldberg, the Pineaults counsel.
confused or otherwise on this point, it renders his testimony less than persuasive.
The Pineaults argue that even assuming that they failed to make the required disclosures,
they are not liable for breach of contract because Mr. Duhamel’s report raised numerous red
flags related to water damage in the home, and recommended that the plaintiffs hire a structural
engineer or qualified stucco contractor to evaluate the structural integrity of the stucco front wall.
The Pineaults argue further that the plaintiffs should have hired someone more qualified than Mr.
Hartnett, who charged them $85.00 and performed, what Mr. Ma now concedes, was not an
adequate or thorough inspection. In other words, the Pineaults argue that they are not liable for
breach of contract because the plaintiffs did not justifiably rely on the information contained in
the Seller’s Disclosure Form.
McCoy, 2007 WL 1677536 at *1.
Id. at *6.
Iacono, 2006 WL 3844298 at *4.
While this argument is somewhat compelling, it does not dispense with the Pineaults
liability for breach of contract in this case. Rather, this argument strikes squarely at the plaintiff’s
misrepresentation and fraud claims. The elements of the claim of negligent misrepresentation
are: “(1) a pecuniary duty to provide accurate information, (2) the supplying of false information,
(3) failure to exercise reasonable care in obtaining or communicating information, and (4) a
pecuniary loss caused by justifiable reliance upon the false information.”74 The Pineaults cited
and the Court has considered, a plethora of case law on negligent misrepresentation,
misrepresentation, and fraud. However, breach of contract and negligent misrepresentation are
two wholly distinct and separate claims.
While negligent misrepresentation contains the
requirement that the plaintiff justifiably rely on the defendant’s false information in entering the
transaction at issue, breach of contract contains no such element. In post trial briefing, the
Pineaults did not cite any case law, nor did the Court discover during its independent research,
any legal precedent where a court inserted an element of detrimental reliance into a breach of
contract claim. As such, the fact that the home inspection reports contained red flags does not
absolve the Pineaults of liability for their knowing material omissions from their Seller’s
Accordingly, the Court finds that the Pineaults knew and failed to disclose a known
material defect in the Seller’s Disclosure Form, i.e., the extent of the water retention and leaking
issue in the stucco front wall of the home, the basement ceiling joist, and the basement wall.
Consequently, the Plaintiffs Mr. Ma and Ms. Wang, have proven their case by a preponderance
of the evidence, and the Pineaults are liable for breach of contract. The Court’s analysis thus
shifts to damages for breach of contract.
Darnell v. Myers, 1998 WL 294012, *5 (Del. Ch. May 27, 1998) (emphasis added).
Mr. Ma’s testimony on damages was largely undisputed. Aside from minor suggestion
that Mr. Ma did not solicit a competitive bids before he hired Mr. Green to perform the
restorative work, the Pineaults made little argument in closing or briefing to rebut the allegations
and testimony on damages. The plaintiffs introduced numerous documents indicating that their
damages incurred in this case total $32,977.81. These documents established that plaintiffs paid
the following sums: (1) $2,440.00 to Mr. Green for demolition and exploratory work75; (2)
$23,612.81 paid to Mr. Green for the repair work76; (3) $6,205.00 paid to the Home Depot for
the purchase and installation of the damaged windows77; and (4) $720.00 paid to Mr. Haglund
for his investigation and recommendations.78 Therefore, the Court finds that the plaintiffs are
entitled to compensatory damages in the amount of $32,977.81.
For the reasons stated in this opinion, the Court finds in favor of the plaintiff on the
Complaint against the Pineaults and awards plaintiff damages in the amount of $32,977.81 plus
court costs and pre judgment and post judgment interest at the legal rate until fully paid.
IT IS SO ORDERED this 10th day of April, 2012.
/S/ Joseph F. Flickinger III
Joseph F. Flickinger III
Joint Exhibit, Tab # 7.
Joint Exhibit, Tab # 7, Ma 60.
Joint Exhibit, Tab # 7, Ma 61.
Joint Exhibit, Tab # 7, Ma 67.