Court Opinion

ID: 9908150
Source: CourtListenerOpinion
Date Created: 2023-12-07 21:00:42.452691+00
Date Added: 2024-06-11T12:48:57.078840
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                            _______________________

                                     No. 23-1322
                               _______________________

                                PATRICK LAVECCHIA;
                                   ABIGAIL CASE,
                                          Appellants

                                             v.

                   CHRISTIAN C. FLEMING; ASHLEY FLEMING
                           _______________________

                    On Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                             District Court No. 2-22-cv-00390
                    District Judge: The Honorable Harvey Bartle, III
                             __________________________

                      Submitted under Third Circuit L.A.R. 34.1(a)
                                  November 9, 2023

              Before: RESTREPO, SCIRICA, and SMITH, Circuit Judges

                               (Filed: December 7, 2023)
                             __________________________

                                      OPINION *
                             __________________________

SMITH, Circuit Judge.

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
       Patrick Lavecchia and Abigail Case purchased Christian and Ashley Fleming’s

house in July 2021. It was not until after settlement on the property that Lavecchia and

Case had a home inspection conducted. They quickly learned that there were problems

with water intrusion in several areas of the house and mold in another part of it. They

eventually filed suit against the Flemings, seeking rescission of the contract of sale,

together with restitution of the purchase price of the home and certain other losses. At

the conclusion of a bench trial, the District Court entered judgment in favor of the

Flemings, concluding that rescission was not an available remedy. Lavecchia and Case

unsuccessfully moved for reconsideration under Federal Rule of Civil Procedure 59(e).

This timely appeal followed. 1 We will affirm the judgment of the District Court.

                                              I.

       According to Lavecchia and Case, the District Court erred in concluding that

rescission was not available to remedy what they claim was their reasonable reliance on

material misrepresentations made by the Flemings concerning water leakage. The

equitable remedy of rescission, which Lavecchia and Case sought, “involves a

disaffirmance of the contract and a restoration of the status quo.” Wedgewood Diner, Inc.

v. Good, 534 A.2d 537, 538 (Pa. Super. 1987) (emphasis added). In Fichera v. Gording,

the Pennsylvania Supreme Court said that “[t]he rule governing rescission is clear.” 227

A.2d 642, 643 (Pa. 1967).

1
  The District Court exercised diversity jurisdiction under 28 U.S.C. § 1332(a). We have
jurisdiction under 28 U.S.C. § 1291. We review a District Court’s findings of fact
following a bench trial for clear error and apply plenary review to its conclusions of law.
In re Frescati Shipping Co., 886 F.3d 291, 300 (3d Cir. 2018).
                                              2
       When a party discovers facts which warrant rescission of his contract, it is
       his duty to act promptly, and, in case he elects to rescind, to notify the other
       party without delay, or within a reasonable time. If possible, the rescission
       should be made while the parties can still be restored to their original
       position. Failure to rescind within a reasonable time is evidence, and may be
       conclusive evidence, of an election to affirm the contract.

Id. at 643–44 (emphasis added) (internal quotation marks and citation omitted) (cited

with approval in Schwartz v. Rockey, 932 A.2d 885, 894 (Pa. 2007)).

                                             II.

       The District Court did not err in concluding that rescission was not an appropriate

remedy. Judge Bartle found by “clear and convincing evidence” that the Flemings did

make material misrepresentations about whether the house had been damaged by water.

JA22. He also determined that the Flemings “knowingly and falsely denied” that there

had been, inter alia, any repair to, or leaking of, the roof. Id. And the Court found that

Lavecchia and Case reasonably relied on those misrepresentations. But rescission

requires more than material misrepresentations on which a buyer reasonably relies.

Pennsylvania law requires “prompt action [as] a prerequisite to the remedy of rescission.”

Schwartz, 932 A.2d at 894 (citing Fichera, 227 A.2d at 644). A court’s focus, therefore,

must be on whether the buyers’ conduct timely affirms or disaffirms the contract. See

Wedgewood Diner, 534 A.2d at 538; see also Fichera, 227 A.2d at 644.

       In concluding that rescission did not fit the circumstances of this case, the District

Court noted that Lavecchia and Case learned shortly after the July 2021 settlement on the

house that multiple indicators existed showing previous water damage and probable

mold. Yet the family arranged for mold remediation to be completed in September of

                                              3
2021, and they replaced the roof in December of 2021, eliminating two skylights. The

District Court found that, having made these improvements, Lavecchia and Case chose to

move back in, intending “to make it their home.” 2 JA14. Such a course of conduct is at

odds with the prompt disaffirmance of a contract that is a requisite for rescission.

Accordingly, we will not disturb the District Court’s determination that it could not

“restore the parties to their original positions or close to their original positions that

existed at the time of settlement.” JA25.

2
 Notably, in denying the motion for reconsideration, the District Court emphasized that
Lavecchia and Case made these improvements after learning of the Flemings’ fraud. The
Court also found that despite “having full knowledge of the fraud,” they “did not
promptly seek rescission.” JA6.
                                               4