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Bari v. Farivar

United States District Court, E.D. Pennsylvania

March 27, 2018

JONATHAN H. BARI and LESLIE S. BARI, H/W, Plaintiffs,
v.
ROBERT SAEID FARIVAR and FIROOZEH MOSTASHARI, H/W, Defendants.

          MEMORANDUM OPINION

          TIMOTHY R. RICE U.S. MAGISTRATE JUDGE

         Plaintiffs Leslie and Jonathan H. Bari (“the Baris”) allege Defendants Robert Saeid Farivar and Firoozeh Mostashari (“the Farivars”) defrauded them and violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) by failing to disclose defects in a home (“the Home” or “the Property”) the Baris purchased from them in 2014. They seek compensatory damages totaling approximately $594, 000, along with treble and punitive damages and legal fees. As explained below, I conclude that the Baris have failed to prove their claims and I will enter judgment in favor of the Farivars.

         This is an unfortunate case of buyers who coveted an elegant and historic home, but ignored or failed to fully investigate warnings and disclosures of potential defects in the Property. After realizing the scope of the problems upon purchase, the buyers desperately sought to depict the sellers as frauds who lured them to purchase the Home through lies, half-truths, and trickery. Sadly, the evidence portrays two sophisticated, detail-oriented, and well-educated buyers, who now suffer from buyers' remorse, not fraud.

         The Home, which is located along the Main Line of suburban Philadelphia, was constructed in 1807, shortly after our nation was founded, with additions built in 1941 and 1985. After an unsuccessful attempt to purchase the Home from a previous owner in 2012, the Baris purchased the Home from the Farivars just two years later. Despite having benefited from two comprehensive inspections of the Home, the Baris now report problems with the heat, air conditioning, drainage and water infiltration, tennis court, pool, and Internet wiring.[1] The Baris contend the Farivars knew about those problems and unlawfully hid them. The Farivars assert they either disclosed, adequately remedied, or did not know about the problems.

         Based on my observations of the parties' demeanor and review of the evidence, I find Mr. and Mrs. Bari's testimony mostly sincere, but often exaggerated and embellished. I instead credit the testimony of Dr. Farivar and Mrs. Mostashari. Although the Baris blame the Farivars for multiple problems in the Home, I conclude that the Farivars disclosed what they knew to the Baris. To the extent they omitted information, or did not update their disclosure statement, the Baris have failed to show that such information needed to be disclosed or that they suffered damages as a result of the Farivars' actions.

         The Baris' main allegation, concerning the defective heating system, was disclosed by the Farivars before the Baris purchased the Home. The disclosure gave the Baris ample opportunity to explore potential causes of the heating problems. They did so, even enlisting a plumbing and heating contractor to supplement the standard home inspection. The Baris likewise had notice of the drainage and water infiltration issues based on disclosures made by the Farivars and the Home's previous owner, as well as candid warnings provided during their two inspections of the Home. Recognizing this, the Baris base their claim on the Farivars' failure to tell them of the need to keep the drains clear during rainstorms, which was not a defect and did not trigger disclosure.

         Although the Baris also charge the Farivars with failing to disclose issues related to the air conditioning, damage to the tennis court following a winter storm, and a water line leak, not all of this information constituted defects that required disclosure. Indeed, the Farivars timely remedied much of the damage - conduct that the Baris claim shows the Farivars' attempts to mislead them. Instead, I find the Farivars acted in good faith to maintain the Property and transfer it in good condition.

         Based on the evidence presented at trial, and pursuant to Federal Rule of Civil Procedure 52, I make the following findings of fact and conclusions of law by a preponderance of the evidence.

         FINDINGS OF FACT

         1. The Home sits at the bottom of a long downhill driveway and consists of three main parts. N.T. 8/3/2017-II at 118; N.T. 8/4/2017 at 89. The center section, which includes a kitchen, living room, dining room, and several upstairs bedrooms, dates back to 1807, although some parts have been recently modernized. N.T. 8/3/2017-II at 117-18; Plaintiff Exhibit (“P”) 1121. The right side, which includes a family room, bar room, and guest room, was built in 1941. N.T. 8/3/2017-II at 117-18; P1121. The left side, which includes a garage and upstairs master bedroom, was built in 1985. N.T. 8/3/2017-II at 117-18; P1121.

         2. The Property also features a pool, pool house, tennis court, and gym situated on five acres of land with several hundred trees. N.T. 8/4/2017 at 87-88.

         3. In July 2012, the Baris entered into an Agreement of Sale for the Property with Todd and Barbara Albert, who had owned the Home since 2000. N.T. 8/3/2017-II at 84; P1083; Defendant Exhibit (“D”) 7 at Bari3158.

         4. During that transaction, the Alberts provided the Baris with a Seller's Property Disclosure Statement (“Albert SPD”), in which they stated that they did not know of any problems related to the nine-year-old heating system. N.T. 8/3/2017-II at 84; D7 at Bari3160.

         5. The Alberts also stated there were no problems with the air conditioning system, which was upgraded with a new unit in 2006 and completely rezoned in 2010. D7 at Bari3053; D8 at Bari45.

         6. The Alberts reported that the Property had two sump pumps, and noted “water leakage, accumulation, or dampness within the basement or crawl space.” D7 at Bari3158. In an addendum, the Alberts explained that water had damaged the basement in the summer of 2004 after a substantial rainfall. Id. at Bari3164. The damage was repaired and remediated. Id. Three drains were installed on the driveway and a “rubber membrane” was placed along the front portion of the Home to prevent water from entering the basement. Id.

         7. The Alberts additionally stated they knew of “past or present drainage or flooding problems affecting the property.” Id. at Bari3161. They explained that “[i]n the summer of 2011, the finished center section of the basement received approximately ¼ to ½ inch of water during a hurricane in which an estimated 8 inches of rainfall was recorded in a 24-hour period in the southeastern portion of Pennsylvania. Water was cleaned up and mold prevention measures were taken.” Id. at Bari3165.

         8. In mid-July 2012, the Baris had various inspections performed at the Home, including a general inspection of all the Home's major systems and components, and inspections of the tennis court, pool, and trees. N.T. 8/7/2017-II at 17-18; D10; D13; D14 at Farivar4368-70.

         9. Inspector Michael Baltrush of ValueGuard Home Inspections completed the general inspection and reported that the heating system, which consisted of two boilers, “functioned properly when tested and appear[ed] in generally good condition.” D10 at Farivar3016. Baltrush used an infrared thermometer to determine that the radiators and baseboards were getting hot, and found no lack of heat at any of the radiators or baseboards in his report. N.T. 8/7/2017-I at 43. Baltrush cautioned that “[t]he adequacy of heat distribution is difficult to determine during a one-time visit to the home.” D10 at Farivar3016.

         10. Baltrush noted that the two air conditioning compressors responded properly to operating controls. Id. at Farivar3017. Observing condensation on ductwork and water stains on the floor, Baltrush recommended further evaluation by a qualified HVAC technician. Id.

         11. Baltrush warned the Baris that basement leakage during rainy periods or spring “is a way of life” for owners of older homes. Id. at Farivar3008. He explained that such leakage rarely influences the structural integrity of the home, but precautions must be taken to avoid damage to storage and personal belongings. Id. Baltrush noted that a waterproofing system had been installed in the front wall of the basement, and recommended the Baris consult the Alberts to obtain additional information. Id.

         12. Baltrush also warned that the “front porch and grading were lower/sloped toward the house, ” and the driveway “slopes toward the house/garage, ” which could allow water to enter the Home. Id. at Farivar3012. He explained that surface drains had been installed to control the drainage, and again urged that the Baris consult the Alberts for more information. Id.

         13. The tennis court inspector reported that although 90 percent of courts older than 15 years contain some structural cracks, the Alberts' court had none. D13 at Bari3248. He also recommended that the court be resurfaced because it showed signs of wear. Id.

         14. The tree inspection report noted approximately eight trees surrounding the tennis court that needed to be removed, as well as “hanging broken limbs” that were “damaging light fixtures.” D14 at Farivar4370; N.T. 8/7/2017-II at 39-40.

         15. After the inspections were completed, the Baris sent the Alberts a 10-page spreadsheet outlining the problems found during the inspections and asked the Alberts to remedy some of the problems, including removing the trees around the tennis court that had “damaged lighting fixtures and could continue to damage lighting fixtures, [the] court, and fencing.” D14 at Farivar4364-80; N.T. 8/7/2017-II at 32-37.

         16. When the Alberts and Baris failed to agree on those issues, the Baris terminated the agreement of sale. N.T. 8/3/2017-I at 91-92.

         17. On August 3, 2012, the Farivars agreed to purchase the Property from the Alberts. P653.

         18. The Farivars arranged for an inspection of the Home on August 9, 2012. N.T. 8/7/2017-II at 176-80; P24; P25. A few days later, the inspector emailed the Farivars a report outlining several defects, including uninsulated air conditioning ducts. P25, P24 at Farivar4047-4049; N.T. 8/7/2017-II at 183-84. The inspector recommended cleaning and insulating the ducts. P24 at Farivar4046-4049. The inspector testified that the uninsulated ducts did not impact the effectiveness of the air conditioning system; rather, the lack of insulation could cause condensation, dripping water, and possible mold. N.T. 8/7/2017-II at 183-85.

         19. The Farivars' inspection report cited no other defects related to the air conditioning, heating, water infiltration and drainage, tennis court, pool, or Internet wiring. P24; N.T. 8/7/2017-II at 187-88.

         20. The Farivars never read the report. N.T. 8/8/2017-II at 62-62; N.T. 8/9/2017 at 67. Instead, Dr. Farivar talked briefly with the inspector about whether the House had any major defects.[2] N.T. 8/9/2017 at 67; see also P25.

         21. In September 2012, the Farivars purchased the Home from the Alberts for $1, 700, 000. P653 at Farivar6182.

         22. One of the first improvements made by the Farivars, based on Mrs. Albert's recommendation, was to enlarge the drain in the front of the Home to make it more effective. N.T. 8/8/2017-II at 38; P9A at Bari3002.

         23. Because Mrs. Albert advised the Farivars to make sure the driveway drains were clear during storms, Mrs. Mostashari was vigilant about clearing the drains pursuant to a bi-yearly maintenance schedule, and before and during storms.[3] N.T. 8/8/2017-II at 37-39; N.T. 8/9/2017 at 62; P35 at 222.

         24. The Farivars noticed the basement was moist after one storm and installed a second dehumidifier to help remedy this situation. N.T. 8/9/2017 at 61-62, 65; P34 at 201-11; P9A at Bari3001.

         25. The Farivars testified that they did not otherwise experience water in the basement or any other area of the Home. N.T. 8/8/2017-II at 39; N.T. 8/9/2017 at 61-62, 64. I credit their testimony because it is corroborated by the Alberts, who reported experiencing water infiltration only twice, after substantial storms. Moreover, the Farivars were in the Home for just 22 months and there was no evidence of a rainfall during that time sufficient to cause water infiltration.[4] To the extent there was such a rainfall, the Farivars took precautionary measures to avoid water infiltration.

         26. On December 28, 2012, the Farivars called Oliver Heating and Cooling, pursuant to their maintenance contract, about the heat. See N.T. 8/3/2017-I at 15; D109. The technician reported the issue on the service ticket as “insufficient heat [in] one wing.” See N.T. 8/3/2017-I at 16; D109. The technician determined that a thermostat was miswired, corrected the problem, and reported the heat as working when he left. D109. This service call does not show that the Farivars knew about a material defect with the heat because Oliver remedied the problem.

         27. Approximately one week later, the Farivars called Oliver again. See N.T. 8/3/2017-I at 16; D110. The technician reported the issue as a “call back” for “insufficient heat.” D110; see also 8/3/3017 I at 16-17. The technician determined further investigation was needed because “3 zone valves under the crawl space are opened, and yet the baseboards on that zone are not getting hot.” D110. Those valves went to the bar area in the right wing of the Home. N.T. 8/3/2017-I at 17. The technician noted the Farivars had an upcoming appointment with a different Oliver technician, Roger Mauger. D110. This service call alerted the Farivars to an unresolved problem with the heat in the right wing.

         28. A few weeks later, on January 26, 2013, Dr. Farivar emailed the Baris, asking if they were still interested in the Home because he may be putting it back on the market. P632, Bari0006; N.T. 8/3/2017-II at 94-95.

         29. Later that day, Mr. Bari spoke with Dr. Farivar, who explained that he was considering selling the Home because he still owned a home in Iowa, he wanted to live closer to his job in Philadelphia, and he wanted a more open and modern home. N.T. 8/3/2017-II at 95. Mr. Bari followed up with an email to Dr. Farivar, seeking an opportunity to meet the Farivars to discuss a possible private sale of the Property. P632, Bari0007.

         30. Two days later, on January 28, 2013, the Farivars called Oliver again about the heat. D113. Mauger went to the Home and noted the reason for the call as “insufficient heat.” Id.; see also N.T. 8/3/2017-I at 20. Mauger determined a pressure temperature valve and a relief valve for the boiler were leaking and ordered new parts. D113; see also N.T. 8/3/2017-I at 20.

         31. Mauger also explained on the service ticket that he “educated [Mrs. Mostashari] on the heating and A/C troubles of [the] home that are preexisting to the purchase of the home.” D113; see also N.T. 8/3/2017-I at 20, 58-59. Mauger testified that he discussed the heat in the right wing because that was the “only area” he knew had an issue.[5] N.T. 8/3/2017-I at 21. Mrs. Mostashari also said that Mauger spoke to her only about the heat in the right wing. N.T. 8/8/2017-II at 20 (“he said that this wing of the house has always had issues with unreliable heat”). Based on their credible testimony, I find that Mrs. Mostashari knew about an unresolved heat problem in the right wing as a result of this service call.

         32. Mauger characterized the right wing heat as “intermittent” because it worked unless it was freezing cold outside.[6] N.T. 8/3/2017-I at 5, 6, 63.

         33. Mauger could not recall what he told Mrs. Mostashari about the air conditioning other than recommending that the right wing air conditioning unit be replaced with a heat pump. N.T. 8/3/2017-I at 22; N.T. 8/8/2017-II at 16.

         34. The Farivars did not call Oliver for heating issues during the remainder of the 2013 winter. See P1; Plaintiffs' Proposed Findings of Fact and Conclusions of Law (doc. 149) (“Pl. Findings”) ¶ 95.[7]

         35. The Farivars, however, used portable space heaters in the right wing to help warm that area. N.T. 8/8/2017 at 33; N.T. 8/9/2017 at 59-60; P34 at 169.

         36. In early February, the Farivars informed the Baris that they had decided not to sell the Home. N.T. 8/3/2017-II at 96. The Baris emailed the Farivars several times after that to see if they had changed their minds. Id. at 96-97.

         37. In late April 2013, Oliver returned to the Home to check the three air conditioning units. D116; N.T. 8/3/2017-I at 23. After replacing the air filters, flushing the drains and traps, and performing other checks, the technician reported that all three systems were “operational.” D116. The technician also recommended upgrading the air filters and obtaining a new unit in the right wing because it was 28 years old and in poor condition. Id.; N.T. 8/3/2017-I at 23-24.

         38. The Farivars did not call Oliver about air conditioning issues during the summer of 2013.[8] See P1; Pl. Findings ¶ 95.

         39. In October 2013, Oliver performed an annual service check on the Home's heating system and determined that it was operating properly. D118; N.T. 8/3/2017-I at 24-25.

         40. In the fall of 2013, the Farivars informed the Baris that they were moving because Dr. Farivar had obtained a new job in Minnesota. N.T. 8/3/2017-II at 97. They inquired whether the Baris were interested in purchasing the Home. See id.

         41. On December 9, 2013, the Farivars called Oliver about the heat. D119; N.T. 8/3/2017-I at 25. Mauger went to the Home and noted “no heat right wing” as the reason for the call on the service ticket. D119; see also N.T. 8/3/2017-I at 25. He stated a “purge” did not work, three zones in the crawlspace were open, and the main pipe and radiator on the second floor were hot. D119; see also N.T. 8/3/2017-I at 25. Mauger said there was either an “airbound or flow issue” that required an investigation by the plumbing department and noted that “this has been an issue dating back before Oliver and prior owners.” D119; see also N.T. 8/3/2017-I at 25-26. The service ticket was signed by Dr. Farivar. N.T. 8/8/2017-II at 21. Based on this service call, I find that Dr. Farivar knew that either an airbound or flow issue related to the heat in the right wing still needed to be investigated.

         42. At approximately 4:00 p.m. on December 11, 2013, the Baris met the Farivars at the Home. P1; N.T. 8/7/2017-II at 42. Although it was approximately 32-34 degrees Fahrenheit outside, Mr. Bari did not notice any issues with the heat in the Home. N.T. 8/7/2017-II at 41-44; D80; D81.

         43. The following day, the Farivars provided the Baris with a list of additions and improvements. N.T. 8/7/2017-I at 44-45; D21. The list did not note any improvements to the tennis court lights or the air conditioning ductwork. Id.; N.T. 8/7/2017-I at 46.

         44. On December 13, 2013, the Farivars again called Oliver. D120. Mauger noted on the service ticket that “one boiler [was] not coming on” because a wire on the relays attached to the boiler was not connected. D120; N.T. 8/3/2017-I at 28. After he reconnected the wire, both boilers came on during a cycle. D120. Because Oliver resolved the heat issue, I find that this service call did not further alert the Farivars to a defect with the heat.

         45. On December 18, 2013, the Farivars provided the Baris a Sellers' Property Disclosure Statement (“Farivar SPD”). N.T. 8/3/2017-II at 97; P9A.

         46. The Farivar SPD noted the Farivars were required by the Pennsylvania Real Estate Seller Disclosure Law, 68 Pa. C.S. § 7301 et seq. (“RESDL”), to “disclose to a buyer all known material defects about the property that are being sold that are not readily observable.” P9A at Bari3000. It defined material defects as problems “with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property.” Id.; see also 68 Pa. C.S. § 7102. However, “[t]he fact that a structural element, system or subsystem is beyond the end of [its] normal useful life . . . is not by itself a material defect.” P9A at Bari3000; 68 Pa. C.S. § 7102.

         47. The Farivar SPD further stated it included “disclosures beyond the basic requirements of the law in an effort to assist buyers in evaluating the property” and did not relieve the Farivars of their “obligation to disclose a material defect . . . not addressed on [the] form.” P9A at Bari3000. The SPD, however, “was not a substitute for any inspection or warranties that [the Baris] may wish to obtain.” Id.

         48. The Farivars stated on the SPD that the Property had one sump pump, which was in good working order. Id. at Bari3001. They also were aware of “water leakage, accumulation, or dampness within the basement or crawl space” and knew about “repairs or other attempts to control any water or dampness problem in the basement or crawl space.” Id. The Farivars explained that the “basement [was] moist during rain storm [and they] installed [a] dehumidifier to [the] sump pump.” Id.

         49. The Farivars stated they were not aware of any “fire, storm, water or ice damage to the property.” Id. They did know about floor damage, and noted the living room had a 2x3 foot area of warped floorboard. Id.

         50. The Farivars said that the heating system was serviced “under contract” and “fireplaces” were “an additional and/or backup heating system.” Id. at Bari3004. The Farivars did not mention their use of space heaters as an additional and/or backup heating system. Id.

         51. The Farivars stated that they were aware of “problems or repairs needed” for the heating system, explaining the “family room heat is intermittent, predates our purchase, bar room heat is intermittent, guest room above family room heat [is] cool if very cold.” Id.

         52. The Farivars stated that they were not aware of any problems with the air conditioning. Id. at Bari3005.

         53. The Farivars also said they did not know of “any past or present drainage or flooding problems affecting the property, ” or “any past or present drainage or flooding mitigation on the property.” Id. at Bari3006.

         54. The Farivars stated they were not aware of any other material defects to the Property. Id. at Bari3008. They agreed to update the SPD if they learned of “additional information about the property, including through inspection reports from a buyer.” Id.

         55. In early January 2014, the Farivars spoke with Oliver about replacing the air conditioning unit with a heat pump, as Mauger had recommended. N.T. 8/8/2017-II at 16. Oliver informed the Farivars that it did not carry the appropriate size heat pump and they should contact another company, such as Sila Heat and Air Conditioning. Id.

         56. On January 16, 2014, Matthew Migliore at Sila provided the Farivars a work order for a heat pump/air handler (“heat pump”) for $7, 396. N.T. 8/7/2017- I at 6-7; N.T. 8/8/2017-II at 24-25; P464 at Farivar3404; P472.

         57. A few weeks later, on February 4, 2014, the Farivars and Baris, with the assistance of counsel, entered into an agreement of sale (“Sale Agreement”) for the Property for $1, 835, 000. N.T. 8/7/2017-II at 67-68, 89-90; D24. Settlement was scheduled for June 23, 2014. D24 at Bari372.

         58. In the Sale Agreement, the Baris elected to undertake several types of inspections of the Property between March 4 and March 13, 2017. D24 at Bari376. Within this same period, the Baris could: (a) accept the Property with the information stated in the inspection reports and agree to the release in the Sale Agreement; (b) terminate the Sale Agreement and obtain a refund of their deposit; or (c) present the inspection reports to the Farivars with a proposal for corrections and/or credits. Id.

         59. The Farivars agreed to “maintain the Property, grounds, fixtures and personal property specifically listed in [the] Agreement in its present condition, normal wear and tear excepted.” Id. at Bari378. “If any system or appliance included in the sale of Property [were to] fail before settlement, ” the Farivars agreed to: (a) repair or replace the failed system or appliance before settlement; or (b) provide prompt written notice to the Baris of their decision to: (i) credit the Baris at settlement for the fair market value of the failed system or appliance; or (ii) not repair or replace the failed system or appliance, and not credit the Baris at settlement. Id. at Bari378-379.

         60. The Sale Agreement stated that it contained “the whole agreement between [the parties], and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale.” Id. at Bari379. It explained that any representations and claims made by the Farivars were not part of the Agreement “unless expressly incorporated or stated in [the] Agreement.” ...


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