Date: 10-18-2024

Case Style:

Francesco Scotti v. Matthew Mimiaga

Case Number: PC 21-4667

Judge: Brian P. Stern

Court: Superior Court, Providence County, Rhode Island

Plaintiff's Attorney:

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Defendant's Attorney:

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Description:

Providence, Rhode Island real property lawyers represented Plaintiff and Defendant in a breach of contract case.

This action involves a contract to sell real property located at 300 Benefit Street in Providence, Rhode Island (the property). We have primarily derived the facts of this case from the complaint filed by Mr. Scotti seeking specific performance of an option agreement between him as optionee and Mr. Mimiaga as optionor, which agreement was part of a somewhat complicated real estate transaction that was initially consummated in 2015 and then underwent some adjustments in the ensuing years. Additional facts have been derived from (1) the exhibits attached to Mr. Mimiaga's memorandum in support of his motion for summary judgment (including inter alia Mr. Mimiaga's deposition) and (2) the affidavit of Mr. Scotti and the exhibits attached thereto, which were filed in the Superior Court on October 11, 2022. We relate below the salient facts set forth in those several documents.

It is undisputed (1) that, at the time when the parties first began negotiations for the sale of the property, Mr. Scotti was the owner of the property; and (2) that in August of 2015 he sold the property to Mr. Mimiaga. In addition, Mr. Scotti has averred that he "financed the purchase" of the property and that Mr. Mimiaga executed a promissory note to him in the amount of $870,000 on August 13, 2015, on which date the property was conveyed to Mr. Mimiaga. Pursuant to the terms of the promissory note, Mr. Mimiaga agreed to make Mr. Scotti monthly, interest-only payments of $3,625 from September 1, 2015 until August 1, 2020, on which date the balance of the principal would be due.

Mr. Scotti alleged in his complaint that, as "part of the same transaction," Mr. Mimiaga granted him an option to repurchase the property in five years for $900,000 (the option agreement)-said option to be exercised before July 1, 2020. It was further Mr. Scotti's allegation that he notified Mr. Mimiaga in writing-by mailing a handwritten letter to him on June 1, 2020-that he was exercising his option to repurchase the property. Mr. Scotti further asserted that, due to issues largely relating to COVID-19, Mr. Mimiaga several times requested an extension of the length of time during which he could occupy the property.

During his deposition, Mr. Mimiaga testified that he was personally and actively involved in negotiations with Mr. Scotti for the purchase of the property, which negotiations took place at various times between May and August of 2015. In that deposition, Mr. Mimiaga testified that the transaction was initially structured as a purchase with Mr. Scotti providing the financing; he also stated that Mr. Scotti "asked to add an option." Mr. Mimiaga conceded in his deposition testimony that Mr. Scotti's request for an option was made "months before" the actual closing on the property. He added that he was unsure whether a purchase and sales agreement was signed before the closing, but he indicated that he had never seen a signed copy of such an agreement. It was further Mr. Mimiaga's testimony that the parties agreed on $900,000 as the purchase price for the property.[1]

Mr. Mimiaga testified that he never received the June 1, 2020 handwritten letter from Mr. Scotti. In any event, the record reflects that there was communication between the parties on or about June 4, 2020. At that time, Mr. Scotti forwarded to Mr. Mimiaga an e-mail that he had received from the owner of a piece of property near the Benefit Street property seeking permission to trim some overhanging trees. In addition to forwarding the e-mail from the neighboring property owner, Mr. Scotti inquired of Mr. Mimiaga as to what his "plans" were. Mr. Mimiaga replied that same day, stating that he had been offered a faculty position at UCLA, which he had accepted; he further indicated that he did not plan to move to Los Angeles until the end of September of 2020. In the exchange of communications which occurred on or about June 4, 2020, Mr. Mimiaga also indicated that he wished to remain on the property until the end of September of that year, while continuing to make the mortgage payment of $3,625 per month. Mr. Mimiaga further stated that he wanted
Mr. Scotti to "purchase back" the property from him, and he offered to do "several walkthroughs" of the property "to ensure that the house is up to [Mr. Scotti's] standards." On June 17, 2020, Mr. Scotti e-mailed Mr. Mimiaga that he was "game for having [Mr. Mimiaga] stay on" at the property and that he "would like to get together to inspect the condition of the property, at a time that is convenient for [Mr. Mimiaga]."

According to Mr. Mimiaga, he delivered a handwritten letter, dated September 1, 2020, to Mr. Scotti's office, indicating that he would not be moving to Los Angeles until October or November of that year. It was Mr. Mimiaga's testimony that he wanted an extension of the mortgage and of the due date for payment pursuant to the promissory note. Mr. Mimiaga also testified that, on September 13, 2020, he delivered a typewritten letter to Mr. Scotti's office. In that letter, Mr. Mimiaga stated that there was a possibility that he would be remaining in Providence "for the foreseeable future." He added that, if he did remain in Providence, he wanted to stay on the property, refinance his mortgage with another lender, and pay off the principal balance on the promissory note. However, Mr. Mimiaga also requested that, "for the time being," he be allowed to continue in his existing relationship with Mr. Scotti concerning the mortgage; and he also requested that he might continue to pay Mr. Scotti "the same amount of interest" on the loan. In his e-mail response on September 15, 2020, Mr. Scotti thanked Mr. Mimiaga for the update and stated: "Not
surprising that your plans need to be flexible. I hope everything works out well for you." Mr. Scotti concluded the e-mail by asking Mr. Mimiaga to continue to update him, so that he could "make arrangements in a timely manner." Mr. Mimiaga went on to testify that he believed Mr. Scotti was referring to the mortgage payoff when he made reference to "mak[ing] arrangements."

On December 3, 2020, Mr. Mimiaga e-mailed Mr. Scotti apologizing for the fact that his plans kept "getting pushed back due to [COVID-19]." He further indicated that his move to Los Angeles would likely occur around the end of January or February of the next year, and he added that his plan was to continue to pay Mr. Scotti "the same amount" if Mr. Scotti was amenable to that. Months later, in June of 2021, Mr. Mimiaga e-mailed Mr. Scotti to alert him about a "potential investment opportunity" regarding a property in Los Angeles. Mr. Scotti responded by e-mail the next day and stated that his financial situation was not nearly as strong as he "wish[ed] it were." Mr. Scotti concluded his e-mail to Mr. Mimiaga by asking him: "Is it time to resolve the 300 Benefit situation?"

On June 21, 2021, Mr. Scotti e-mailed Mr. Mimiaga the following message: "It sounds like you are moving on to California. I would like to take over 300 Benefit and am ready to return your deposit to you and finalize our agreement." Mr. Mimiaga replied by e-mail the next day, noting that he had been unable to locate housing in Los Angeles and that, because he was able to work remotely, he wished to remain in Providence "for the time being." He further stated that he needed to review the parties' contract to see what they "wrote down as far as [their] options" for him to either pay off the mortgage or "sell the property back to" Mr. Scotti. Mr. Mimiaga indicated that his preference "would be to refinance the mortgage" and pay off Mr. Scotti.

On June 23, 2021, Mr. Scotti responded to Mr. Mimiaga in an e-mail, noting that Mr. Mimiaga had contacted him a year earlier (June of 2020) and informed him that COVID-19 had made it difficult "to plan [his] departure from" the property. Mr. Scotti added that he was sympathetic to Mr. Mimiaga's needs and that he trusted that "the terms of our initial agreement would be extended and honored going forward." On July 3, 2021, Mr. Mimiaga responded that, upon his review of their contract, he wanted to "exercise [their] agreement for [him] to pay off the note."

On July 14, 2021, Mr. Scotti filed a complaint in Providence County Superior Court, seeking specific performance of the option agreement. Mr. Scotti sought an order compelling Mr. Mimiaga "to specifically perform his obligations under the Option Agreement and sell the Property to [Mr. Scotti] forthwith for the sum of $900,000, and awarding [Mr. Scotti] his costs and attorneys' fees." Mr. Scotti also caused to be recorded a "Notice of Lis Pendens" in the Providence Land Evidence Records.

Thereafter, Mr. Mimiaga filed an answer as well as a counterclaim, which contained the following counts: (1) slander of title; (2) punitive damages for the "malicious act" of recording a lis pendens; and (3) injunctive relief. In the counterclaim, Mr. Mimiaga contended that Mr. Scotti had refused to comply with his request for a payoff statement that would allow him to refinance the mortgage. He contended that the subsequent recording of a lis pendens by Mr. Scotti was malicious in that it prevented him from either refinancing the mortgage at a lower interest rate or from selling the property. He further contended that, when the lis pendens was recorded, the option agreement had already expired. He requested an injunction ordering Mr. Scotti to (1) release the lis pendens that he had recorded with respect to the property; (2) provide Mr. Mimiaga with a payoff statement; (3) discharge the mortgage upon receiving funds sufficient to pay off the total amount due under the promissory note; and (4) reimburse Mr. Mimiaga for the costs associated with the litigation.

Subsequently, on August 24, 2022, Mr. Mimiaga filed a motion for summary judgment. In his memorandum in support of the motion, he contended that the option agreement: (1) lacked consideration; (2) failed to comply with the statute of frauds; (3) was not properly exercised; (4) had expired because time was of the essence; and (5) was not modified by either an express or an implied waiver that would extend the deadline to exercise the option. He further contended that "the undisputed evidence establishes that [he] never received the Handwritten Letter[2] or any other indication-formal or otherwise-that [Mr. Scotti] desired to exercise the option, until one (1) year after the option had expired." (Emphasis omitted.)

On October 11, 2022, Mr. Scotti filed an objection to the motion for summary judgment, in which he contended that the arguments contained in the motion were "either predicated on 'facts' that are demonstrably untrue" or raised "issues of fact that preclude resolution by summary judgment." In Mr. Scotti's affidavit, which was filed along with his objection, he asserted that the "considerable discount" in the purchase price of the property constituted the consideration for the option. In addition, he pointed out that, although an earlier version of the option agreement contained a clause indicating that time was of the essence, that clause had been specifically omitted from the final version of the agreement. He further asserted that his delay in repurchasing the property was the result of multiple requests made by Mr. Mimiaga, who sought "to extend his tenure" at the property due to "job changes, Covid-related issues," and the difficulty which Mr. Mimiaga had experienced relative to relocating to California.

In his reply to Mr. Scotti's objection to the motion for summary judgment, Mr. Mimiaga contended that, "without any further exchange, promise, concession, or consideration," his acceptance of the option agreement had been required "as a condition to proceed with the sale after the Parties had already agreed to the material terms of the transaction." (Emphasis in original.) He further asserted that Mr. Scotti could not present any evidence that Mr. Mimiaga had received the letter constituting notice that Mr. Scotti intended to exercise the option.

A hearing on the motion for summary judgment was held on October 25, 2022. On January 23, 2023, the hearing justice issued a written decision granting Mr. Mimiaga's motion for summary judgment. In his decision, the hearing justice held that, because "consideration for an option must be separate and distinct from consideration for the sale" and because the purchase price for the property "had already been established before the option was even considered," the option agreement was unsupported by separate consideration. In addition, the hearing justice turned to the question of whether Mr. Scotti had properly exercised the option. He explicitly stated that acceptance under an option contract is not operative until such acceptance is delivered; in this case, he ruled that there was no evidence that Mr. Scotti's June 1, 2020 handwritten letter had been delivered. The hearing justice specifically found that the attempt of Mr. Scotti to exercise the option "was improper because [he] did not ensure that his letter was delivered, nor did he even attempt to inform [Mr. Mimiaga] in some other fashion." The hearing justice further found that Mr. Scotti "did not act timely" and that "[i]f [Mr. Scotti] wanted to repurchase the Property, he could have tendered funds for that purpose on or before September 1, 2020 and leased the Property to [Mr. Mimiaga] as he did previously." The hearing justice concluded that, because "Rhode Island law requires the timely taking of a benefit of an option, the [c]ourt agrees with [Mr. Mimiaga]." The hearing justice also concluded that, "[w]ithout an express agreement waiving the provisions" of the option agreement, there could be "no express waiver as a matter of law." He further found that, because Mr. Mimiaga's e-mails did not appear to grant Mr. Scotti more time to repurchase the property and the communications did not show a refusal by Mr. Mimiaga to tender the property to Mr. Scotti, Mr. Mimiaga "did not impliedly waive any term contained in the Option."

On February 22, 2023, an order granting the motion for summary judgment and ordering Mr. Scotti to release the lis pendens within forty-eight hours was entered. On February 24, 2023, Mr. Scotti filed a motion to stay the order to release the lis pendens during the pendency of his appeal to this Court. That motion was denied on March 13, 2023; and on that same day, the February 22, 2023 order was amended to state that March 15, 2023 would be the deadline for the release of the lis pendens. Mr. Scotti timely appealed the March 13, 2023 amended order.[3]...

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Scotti v. Mimiaga, 2023-91-Appeal. (R.I. Oct 18, 2024)

Outcome: Affirmed

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