Merritt v. Craig

746 A.2d 923 (2000)

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Nature of the Case

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Facts

In the fall of 1995, P inspected D's property. After viewing the residence, P advised D that they were interested in purchasing the property; however, their offer was contingent upon a satisfactory home inspection. P and their inspector, and D's husband conducted an inspection of the basement area of the residence, during which there was an examination of cistern and water supply pipes. The cistern had been used to store a water supply reserve but was not currently utilized. The inspector advised P that the system he had observed was one which utilized a submersible pump in the well from which water flowed to a pressure tank in the basement. The pressure tank distributed water through the internal piping system of the house. There were also two water lines that entered the basement area. One of the lines came from an 800-foot well that was located on the property, and the other line came from a well located on the adjacent property. The well located on the adjacent property supplied water to both the residence and a guest house owned by D. The existence of the adjacent well was not disclosed to P. A contract of sale was executed along with a 'Disclosure Statement' signed by D on June 9, 1994, and acknowledged by P on November 2, 1995, affirming that there were no problems with the water supply to the dwelling. Between November 5, 1995, and June 1996, D caused the water line from the guest house to D's residence to be cut, and the cistern reactivated to store water from the existing well on P's lot. On May 18, 1996, D's husband advised Dennis Hannibal, one of the real estate agents involved in the deal, that he had spent $4,196.79 to upgrade the water system on P's property and to restore the cistern and remove P's house from the second well on D's guest house property. On June 14, 1996, P and D had settlement on the property. Later that afternoon, D's husband, without P's knowledge, excavated the inside wall of P's house and installed a cap to stop a leaking condition on the water line that he had previously cut. P noticed that the water supply in their well had depleted. On July 13, 1996, they met with D Craig to discuss a solution to the water failure problem. P agreed with D to conduct a flow test to the existing well and contribute money for the construction of a new well. It produced only one-half gallon of water per minute. P paid for the drilling of a second well on their property, but it failed to produce water. P contacted a plumber who confirmed that the line from the guest house well to D's residence had been cut flush with the inside surface of the basement wall and cemented closed. P sued D seeking rescission of the deed to the property and contract of sale, along with compensatory and punitive damages. The judge dismissed P's claim for rescission on the ground that they had effectively waived their right to rescission based on their election for a jury trial. The jury returned a verdict in favor of P and awarded compensatory damages in the amount of $42,264.76 and punitive damages in the amount of $150,000. P filed a motion to alter or amend the judgment requesting the court to grant rescission of the contract of sale and the deed, which the circuit court denied on June 17, 1998. D moved for judgment notwithstanding the verdict on May 8, 1998, which was also denied by the circuit court. This appeal resulted.