OPINION BY
This is an appeal from the order of the Court of Common Pleas of Cumberland County denying Appellants Mario and Tabatha Umbelina’s request for equitable rescission of the contract providing for the construction of their home. After careful review, we affirm the trial court’s denial of the Umbelinas’ request for rescission and are constrained to vacate the trial court’s award of restitution to the Umbelinas.
The Umbelinas met with Jack Adams of Jack Adams Builders, LLC (Appellee) who was the approved builder for Lot 17. Mrs. Umbelina did not inform Adams that the home would need any special accommodations for her knee problems. The Umbeli-nas selected a two-story home plan because it would be less expensive than building a one-floor ranch home. Adams subsequently submitted a construction proposal that the Umbelinas accepted after reviewing it with their attorney. The construction agreement was executed on October 15, 2005.
After closing on the property, the Um-belinas met with Adams to discuss the location of the house on the lot. Adams staked out the house’s approximate location in accordance with the lot’s setback restrictions and informed the Umbelinas that the trees at the back of Lot 17 could not be removed due to restrictions the township placed on the subdivision. In order to lessen the steepness of the driveway, Adams asked the Umbelinas to move the home back an additional twenty feet from the proposed location. The Umbeli-nas only gave Adams permission to move the house back twelve feet as they wanted space to install a swimming pool in the backyard.
Before beginning construction of the home, Adams showed Mrs. Umbelina the approximate locatiоn of the garage floor using a story pole and explained the house could not be relocated once the foundation was poured. Mrs. Umbelina approved this location. However, upon viewing the actual foundation once it was poured, Mrs. Umbelina expressed concern that the driveway would be too steep. Adams assured the Umbelinas that the lot would be graded and would meet township and county requirements.
Russell E. Yinger and Timothy Stout, the South Middleton Township residential building inspectors, were responsible for inspecting the construction before issuing the сertificate of occupancy. Neither Yinger nor Stout realized that the property was subject to the township’s steep slope ordinance, which required (1) a professional engineer to prepare a driveway profile and a statement addressing structural concerns created by the slope and (2) the township engineer to approve the submitted plans. Unaware that this ordinance existed, Yinger mistakenly issued a building permit for the house without requiring Adams to comply with any of the steep slope requirements. Upon completion of the homе, Yinger issued the home’s certifícate of occupancy, which was an affirmative statement a builder can rely upon that the property meets all the applicable township codes.
Prior to closing, the Umbelinas conducted a final walkthrough of the home and prepared a “punch list” of the following items that had not been completed: unfinished painting, missing downspouts, cox’rection of mud infiltration into the basement, exposed nails in the carpet, separation of the stairs leading to the second floor, unsecured countertops, dishwasher cаbinet not meeting the floor, and unsealed wires and pipes. Despite the
After Adams did not complete the items on the punch list and the Umbelinas found more problems in their home, the Umbeli-nas met with Yinger and Stout, who discovered the driveway violated township codes. When the Umbelinas confronted Adams about the code violations, he responded that the home was issued a certificate of occupancy, but apologized “for not building [the] house to what [the Umbeli-nas] needed, and [admitted] he did not have the experience to build the house [the Umbelinas] required.” N.T., 6/21/10, 114. The Umbelinas prohibited Adams from returning to their home to address the uncompleted work and hired other contractors to (1) install a retaining wall to prevent mud infiltration in the basement, (2) install gutters, (3) replace wet drywall, (4) replace insulation in the house and garage, and (5) construct yard terraces. On September 26, 2006, the Umbelinas filed a consumer protection complaint against Adams Builders with the state Attorney General’s office.
On June 21, 2007, the Umbelinas filed a lawsuit against Adams and Bream Builders, LLC, and Adams individually, seeking damages for breach of contract, requesting rescission of the agreement of sale, and alleging violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL). Adams and Bream Builders, LLC denied having any involvement with the construction of the Umbeli-nas’ home. The Umbelinas did not take any further action until July 22, 2008, when they filed a second lawsuit against Jack Adams Builders. The trial court consolidated the two actions for trial.
From June 21, 2010 to June 23, 2010, a trial court sat as factfinder in a bench trial and visited the site of the Umbelinas’ home to view the slope of the driveway. The Umbelinas presented the expert testimony of Gregory Rogalski, a registered professional engineer, who testified that the driveway violates South Middleton Township’s Zoning Ordinance Section 1807, which requires driveways not to exceed a seven percent slope within the first twelve feet from the street. The overall slope of the Umbelina’s driveway is eighteen percent, however, the slope in the first nine feet of the driveway is only 0.8% over the seven percent threshold. Rogalski opined that it would impractical to attempt to remediate the slope of the driveway by lowering the garage or moving the house back further onto the lot.
In addition to the driveway violation, Rogаlski found several other violations
Upon conclusion of the trial, the trial court found that the Umbelinas were mot entitled to rescind the contract as Adams Builders had made no fraudulent misrepresentations concerning the slope of the finished driveway, his experience in constructing homes, or his honest belief that the home contained no code violations. For the same reasons, the trial court refused to find that Adams Builders had violated the state unfair practice statute.
However, the trial court found Adams Builders failed to construct a home of reasonable workmanship and value. Although the Umbelinas never raised a claim of breach of the implied warranty of habitability in their complaint and had abandoned their claims of breach of express and implied warranties with respect to the slope оf the driveway, the trial court nonetheless found Adams Builders had breached the implied warranty of habitability as the home was not “functional and habitable in accordance with contemporary community standards.” Trial Court Opinion (T.C.O.), 12/2/10, at 30. The trial court awarded the Umbelinas $26,036.68 in restitution for improvements the Umbelinas made to remedy Adams’s faulty construction. Both parties filed timely motions for post-trial relief. After reviewing the motions, the trial court reduced the Umbeli-nas’ restitution to $24,036.68, but denied both parties’ posi-trial motions in all other respects. The Umbelinas appealed and Adаms Builders filed a cross appeal.
The Umbelinas raise the following issues for our review on appeal:
1. Did the trial court err in refusing the purchasers’ request for rescission despite its finding that the builder did not provide a house that is functional and habitable in accordance with contemporary community standards?
2. Did the trial court err in granting restitution damages for the house builder’s material breaches rather than rescission where restitution damages fail to make the purchasers whole?
3. Are the trial court’s factual findings regarding the purchasers’ selection of the lot not supported by the evidence of record?
Umbelinas’ Brief, at 4.
Adams Builders raises the following claims in its cross appeal:
1. Did the trial court err when it awarded restitution since the Umbe-linas failed to establish fraud and/or material misrepresentation upon which they relied?
2. Did the trial court err when it awarded restitution since the Umbe-linas’ claim for rescission is barred by the Doctrines of Waiver and Laches?
3. Did the trial court err when it awarded restitution since the award constitutes legal damages?
4. Did the trial court err when it awarded the installation costs for the terraces, retaining wall, and railing since the award is not supported by the trial court’s analysis and by the weight of the evidence?
5. Did the trial court err when it awarded restitution since there was no evidence that the house was uninhabitable, not a functional living unit and/or unfit for its intended purpose?
Adams Builders’ Brief, at 4.
We begin by noting that the Um-belinas elected to pursue the equitable remedy of rescission of the agreement of sale and abandoned their legal claims against Adams Builders for breach of contract and breach of warranty. The doctrine of election of remedies prohibits a party from seeking inconsistent relief; а party alleging he has been defrauded in a contract must choose whether to seek rescission of the contract or to seek damages under the contract. Schwartz v. Rockey,
Rescission, an equitable remedy, involves a disaffirmance of the contract and a restoration of the status quo; whereas, the recovery of damages, which is a legal remedy, involves an affirmance of the contract. A party who has been defrauded can either rescind the contract or he can affirm the contract and recover damages. To allow him to do both wоuld be to allow a double remedy for the same wrong.
Wedgewood, Diner, Inc. v. Good,
Accordingly, the party’s election to seek one of the remedies effectively precludes further claims on the other inconsistent remedy:
appellants may not maintain at the same time in separate counts of one action, or in two different suits claims for rescission of a contract and restitution on the one hand and for damages for breach of the same contract together with expectation interest, on the other hand. These remedies are essentially inconsistent. Pittsburgh Union Stockyards [Stock Yards ] v. Pittsburgh Joint Stock Company,309 Pa. 314 ,163 A. 668 (1932); Emery v. Third National Bank of Pittsburgh,308 Pa. 504 ,162 A. 281 (1932); Clement Martin Inc. v. Gussey,191 Pa.Super. 464 ,157 A.2d 412 (1959). One may not terminate contractual obligations and seek the return of his consideration based upon the other party’s promise through an action for rescission and restitution and at the same time seek the full benefits of that promise through an action for breach.
Wedgewood Diner,
The Umbelinas chose to seek rescission, an equitable remedy essentially annulling the contract, which should be “granted only where the parties to a contract can be placed in their former positions with regard to the subject matter of the contract.” Baker v. Cambridge Chase, Inc.,
The trial court rejected the Umbelinas’ assertion that Adams had made fraudulent statements that they relied on their detriment as the steeрness of finished driveway would have been obvious even before construction began. The trial court, noting that anyone other than Lance Armstrong would have difficulty in climbing the driveway, made the following findings:
The primary focus of [the Umbelinas’ fraud] claim lies with the assurances that Adams gave regarding the steepness of the driveway. The court acknowledges that the driveway is steep-as Adams noted, “we all knew it was steep.” In fact, as the court approached the development for its view, the Umbe-lina residence was clearly visible from a considerable distance, рerched at the apex of the development. Consequently, the court was not surprised, after traveling up the steady incline of Woodlawn Drive, to find a home with an unmatchable view. The driveway is steeper than what the court would desire, and we sympathize with the [Umbelinas’] concerns, but that is the price one pays for a picturesque view of the valley.
If the court was not startled by the steepness, nor, should it have been a post-construction revelation to anyone involved in this transaction. Once the site of the home was determined, and Mrs. Umbelina was unquestionаbly involved in that process, the steepness of the grade of the yard and driveway would be inevitable. Moving the house back another 10 or 20 feet would, perforce, have lessened the slope, but under no scenario does the court find that this driveway would have been an easy climb for anyone other than Lance Armstrong.
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The fact remains that the Umbelinas chose this lot primarily for its cost, size, and view. With that choice, they were not only locked into a contractor, but they were also locked into a house on a hill. Perhaps, they were so enamored with the view of the valley that their perspective of the slope of the property was distorted. Regardless, we do not find that Adams’ opinions, statements about codes or even his own wishful thinking regarding the driveway constitute fraudulent misrepresentations that expose him to any personal liability.
T.C.O. at 25-27. The trial court refused to find Adams Builders responsible for violating the steep slope ordinance and code requirements when he sought the approval of township officials who issued the home a certificate of occupancy without knowledge of the apрlicable codes and ordinance.
On appeal, the Umbelinas concede the trial court was correct in finding that Adams did not make any fraudulent misrepresentations to induce them into entering the construction agreement, but argue Adams Builders’ failure to construct a house of reasonable workmanship and value constituted a material breach which justified rescission of the contract. We disagree. Our courts have established that the “only grounds upon which equity will permit rescission of an executed contract are fraud, mistake, failure of consideration, and quia timet.” New-Com Corp. v. Estate of Gaffney,
The Umbelinas rely on the decision of the United States District Court for the Eastern District of Pennsylvania in Castle v. Cohen,
After both appraisals were submitted and the plaintiffs refused to buy the stock at the defendants’ appraised value, the defendants sold the stock to a third-party purchaser without giving the plaintiffs a chance to exercise their right of first refusal. On appeal, the dеfendants claimed that the plaintiffs improperly submitted their initial appraisal at such a low value that it constituted a material anticipatory breach entitling the defendants to rescind the contract and sell to a third party without restriction. Id. at 626. The District Court held that the defendants’ attempt to rescind the purchase agreement was improper because the plaintiffs’ breach did not go to the heart of the contract as the parties agreed the stock would be sold at its fair market value, which could be determined by the fact-finder. Id. at 627.
The rule in Castle is not applicable to this case as the facts in Castle involved the anticiрatory breach of an executory contract, where an aspect of the parties’ obligations had not yet been performed. Pennsylvania courts have long recognized the general principle of contract law providing that a material breach of a contract, which is vital to the existence of the contract, relieves the non-breaching party from any continuing duty of-performance under the contract. LJL Transp., Inc. v. Pilot Air Freight Corp.,
In LJL Transp., Inc., our Supreme Court found that Pilot was justified in terminating its contract with a franchisee who improperly diverted business to a direct competitor of Pilot that the franchisee ownеd. Even though the franchise agreement expressly gave the franchisee a right to cure a breach of the agreement, the Supreme Court found the franchisee’s self-dealing and disloyalty was an incurable breach that frustrated the principal purpose of the franchise agreement. Accordingly, the Supreme Court emphasized that Pilot should not be expected to continue to perform under the agreement where the parties’ basic trust had been violated:
when there is a breach of contract going directly to the essence of the cоntract, which is so exceedingly grave as to irreparably damage the trust between the contracting parties, the non-breachingparty may terminate the contract without notice, absent explicit contractual provisions to the contrary.
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Such a breach is so fundamentally destructive, it understandably and inevitably causes the trust which is the bedrock foundation and veritable lifeblood of the parties’ contractual relationship to essentially evaporate. We find our law does not require a non-breaching party to prolong a contractuаl relationship under such circumstances.
LJL Transp., Inc.,
In this case, the Umbelinas attempted to rescind a fully executed contract; the Umbelinas closed on the home after accepting Adams Builders’ construction of the home in exchange for the money they agreed to pay for the home under the contract. Our Supreme Court has explicitly limited a party’s ability to rescind an executed contract:
the general rule is that the acceptance of a deed in pursuance of an agreement of sale is a satisfaction of all previous negotiations and covenants, and in the absence of fraud or imposition a purchaser will not be entitled to a recission of the contract and a cancellation of the deed.
Namy v. Black,
In their second claim, the Umbelinas argue that the trial court’s award of restitution is inadequate as this remedy fails to make them whole. The Umbelinas essentially reiterate the same arguments they offered for their request for rescission and claim they should be returned to their original positions prior to the contract. As the Umbelinas did not prоve they are entitled to rescind the agreement, we find this argument meritless.
Lastly, the Umbelinas claim that the trial court’s finding that they selected the lot with the steepest terrain is against the weight of the evidence and
On cross-appeal, Adams Builders claims the trial court’s award of restitution was improper as the Umbelinas failed to establish that they were entitled to rescind the contract. Adams Builders relies on Boyle v. Odell,
The purchaser [of real estate] is given the election of remedies; he may seek to rescind the deed, or in the alternative, may sue for damages. A plaintiff in these circumstances seeking rescission mаy not also seek damages, as such remedies would be inconsistent. However, in addition to granting equitable relief, in the nature of rescission, the trial court is also empowered to grant the plaintiffs restitution of appropriate losses incurred. Restitution, unlike damages, is a remedy not inconsistent with rescission.
Boyle,
In Silverman v. Bell Sav. & Loan Ass’n,
Although the trial court found it was not proper to rescind the contract, the trial court provided that “equity requires an order of restitution for [Adams Builders’] faulty work.” T.C.O. at 30. As the Umbelinas provided no other basis for equitable relief, it appears the trial court essentially raised a claim of unjust enrichment sua sponte on the Umbelinas’ behalf to justify its award of restitution. We recognize that courts may grant restitu-tionary damages to prevent unjust enrichment by requiring a party to “disgorge the benefit he has received by returning it to the party who conferred it.” Ferrer v. Trustees of University of Pennsylvania,
The trial court reasoned that restitution was proper to reimburse the Umbelinas for the repairs they undertook to correct Adams Builders’ defective construction. Even though the trial court dismissed the Umbelinas’ action at law for breach of contract and breach of express and implied warranties, the trial court found Adams Builders “breached its contractual obligations” in building the Umbelinas’ home with “faulty workmanship.” T.C.O. at 29. Relying on Elderkin v. Gaster,
Although the trial court purported to award the Umbelinas restitution for the cost of their repairs, it is clear that the trial court gave the Umbelinas damages under a theory of breach of the implied warranty of habitability. Awarding the Umbelinas damages is inconsistent with their request for a rescission of the construction agreement. See Boyle,
Order affirmed in part. Award of restitution vacated.
Notes
. The trial court eventually entered a verdict in favor of Adams and Bream Builders, LLC and Adams individually, as they were not parties to the contract at issue. Although Adams was a member of Adams and Bream Builders LLC, the trial court found that the only connection Adams and Bream had to this case was Adams’s inadvertent use of Adams and Bream letterhead for the specification sheet. All other documents clearly stated that the Umbelinas contracted with Jack Adams Builders for the construction of thеir home. The trial court also refused to pierce the corporate veil to find Adams individually liable. See Trial Court Opinion, 10/2/10 at 24-25. These findings do not affect our resolution of any of the claims in this appeal.
. “While we recognize that federal district court cases are not binding on this court, Pennsylvania appellate courts may utilize the analysis in those cases to the extent we find them persuasive.” Braun v. Wal-Mart Stores, Inc.,
. Although not cited by either party, we observe that other states have held that a substantial breach of the implied warranty of habitability entitles a buyer to rescind an exeсuted agreement for the sale of a new home. See Eliker v. Chief Industries, Inc.,
. In order to recover for unjust enrichment, a party must show both “(1) an enrichment, and (2) an injustice resulting if recovery for the enrichment is denied.” Braun v. Wal-Mart Stores, Inc.,