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Wuestenberg v. Rancourt

Superior Court of Maine, Penobscot

January 15, 2019

Michael Wuestenberg and Rosemarie Wuestenberg, Plaintiffs,
v.
Harry J, Rancourt, III and Stephanie J. Rancourt, Defendants.

          FINDINGS, ORDER, AND JUDGMENT

          Hon. Bruce C. Mallonee, Justice

          Introduction

         This case arises out of the sale by the Rancourts to the Wuestenbergs of a house located at 363 Sawyer Road in Hampden, Maine. The Rancourts, millwrights by trade, developed over the years a side business of building and then selling houses. The house they sold to the Wuestenbergs was built for themselves rather than for their business. They lived in it for more than a decade before the sale.

         Certain defects in the house were observed by the Wuestenbergs and others before the sale but the full magnitude of these shortcomings was not appreciated until after the transaction was complete. Other defects became known only after thorough post-sale examinations by professionals, Both to remedy the defects and to realize their desire to alter the residence, the Wuestenbergs undertook substantial remediation and reconstruction before they moved into the house. This post-sale construction cost hundreds of thousands of dollars. In part because of financial difficulties, the Wuestenbergs were unable to occupy the house for more than two and a half years after the purchase.

         The Wuestenbergs sued the Rancourts by complaint dated July 25, 2014, for damages they claim arise out of the defects in the house. An amended complaint was filed on February 9, 2016, followed by a second amended complaint, which was allowed by order dated June 28, 2016. Of the 11 counts in the second amended complaint, 8 survived the court's order on summary judgment dated March 17, 2017. The remaining counts were presented in a bench trial conducted on March 12, 13, 15, 16, 19, 20, 22, and 23; and on July 9, 10, 11, 12, 13, 18, and 20, 2018. Thereafter, counsel submitted written summations and the court heard oral argument on November 1, 2018. The case is now in order for decision.

         At trial, Plaintiffs were represented by Attorneys Timothy Woodcock and David Pierson and Defendants by Attorney David Herzer. The court renews in writing its thanks to counsel for their courtesy to the witnesses, their cooperation in managing an ever more complex marking system for hundreds of exhibits, and their concentration of presentational effort on issues rather than ephemera. Before, during, and after trial, they have served their clients and the court well.

         Spoliation

         A threshold issue for the court's analysis is the Rancourts' claim that certain evidence or claims should be precluded because the evidence of their alleged inadequate construction was lost in the Wuestenbergs' rebuilding. The parties analyzed this issue with accompanying citations to a number of cases, none of them precisely apposite to the situation presented but all of them informative. For this court's analysis, the summary of elements presented in Driggin v. American Security Alarm Co., 141 F.Supp.2d 113, 120 (D. Me. 2000) is particularly useful:

(1) Whether the defendant was prejudiced as a result of the destruction of the evidence; (2) whether the prejudice can be cured; (3) the practical importance of the evidence; (4) whether the plaintiff was in good faith or bad faith; and (5) the potential for abuse if the evidence is not excluded,

         The prejudice resulting from Plaintiffs' construction efforts, if any, cannot be cured. All of the other factors cited militate against a sanction based on spoliation. The court specifically finds the Wuestenbergs acted in good faith in rebuilding the house they had bought so that they could live in it. There seems no realistic hazard that any person would view this court's decision on the issue as a license for spoliation in the future. And, mostly, Plaintiffs' reconstruction seems not to have had any effect on the case: through weeks of trial and hundreds of pages of argument, the Rancourts appeared unhampered in their defense of the Wuestenbergs' claims. For the foregoing reasons, Defendants' request for sanctions based on spoliation must be DENIED.

         Claims and Elements

         The Wuestenbergs seek damages for claims presented in Counts I, II, and III (all sounding in fraud); IV (negligent misrepresentation); VII (negligence); IX (violation of the Unfair Trade Practices Act); and XI (breach of contract requiring mediation). They also seek punitive damages in Count X. The court first lists the elements of each cause of action:

         Counts I, II, and III: These claims are interrelated though not entirely overlapping. Plaintiffs seek damages arising out of certain claimed communications and silences they assert are actionable as common law fraud or as violations of the statute requiring certain disclosures from sellers to buyers of residential real estate.

         To recover for common law fraud, Plaintiffs must prove that Defendants made a material misrepresentation that was false, was known to be false or was made recklessly as an assertion of fact without knowledge of its truth or falsity, and was made with the intention that it be acted upon. Further, Plaintiffs must show they acted on the material misrepresentation with resultant damages. Letellier v. Small, 400 A.2d 371, 373 (Me. 1979); see also Fitzgerald v. Gamester, 658 A.2d 1065, 1069 (Me. 1995). Actionable conduct includes not only false affirmative statements but either active concealment of the truth or silence when there is an affirmative duty to disclose. Fitzgerald, 658 A.2d at 1069.

         Maine's Property Disclosure Act, 33 M.R.S §§ 171-179 (2017), affirmatively requires certain disclosures from sellers to buyers. Pertinent to the Wuestenbergs' claims, this requires disclosure of "known defects/' defined as "a condition, known by the seller, that has a significant adverse effect on the value of the property, significantly impairs the health or safety of future occupants of the property or, if not repaired, removed or replaced, significantly shortens the expected normal life of the premises." 33 M.R.S. § 171(1).

         Count IV: This claim sounds in negligent misrepresentation, an alternative theory of recovery based on the communications underlying Counts I, II, and III. The elements of negligent misrepresentation are as follows:

One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information, for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information if he fails to exercise reasonable care or competence in obtaining or comunicating the information.

Binette v. Dyer Library Association, 688 A.2d 898, 903 (Me. 1996) (quoting Restatement (Second) of Torts § 552(1) (1977)).

         Count VII: This claim sounds in negligence and seeks recovery for the Rancourts' flawed design, construction, and alteration or modification of the house. The basic elements are the same as in any negligence case: duty, breach, causation, and resulting damages. See Searles v. Trustees of St. Joseph's College, 1997 ME 128, ¶ 5, 695 A.2d 1206.

         Count IX: This claim asserts violation of Maine's Unfair Trade Practices Act, found at 5 M.R.S. §§ 205-A - 214 (2017). To prevail on this claim, the Wuestenbergs must at the outset establish that their purchase of the house took place in a business context. Binette, 688 A, 2d at 907. Thereafter, they must establish that the Rancourts' actions constituted unfair or deceptive practices, as defined by law, that caused the Wuestenbergs a financial loss. Unlike the foregoing claims, a claimant under the UTPA need not show the offending party had a culpable state of mind. State v. Weinschenk, 2005 ME 28, ¶ 17, 868 A.2d 200 (citing Binette, 688 A.2d at 906).

         Count X: Plaintiffs seek an award of punitive damages. To recover them, they must first show that Defendants committed a tort; thereafter, they must prove by clear and convincing evidence that Defendants acted with express or implied malice. This well known standard was articulated in the seminal case of Tuttle v. Raymond, 494 A.2d 1353 (Me, 1985).

         Count XI: In this count, Plaintiffs seek damages for Defendants' failure to participate in mediation, thereby violating a clause in the parties' contract that required mediation before filing of a civil action. To prevail on this claim, Plaintiffs must prove that ...


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