In a blank Sigil epub file I pasted a text code file that included --
SOURCE
<p>"You’d go nuts," Blake commented. "It’d be nice, sitting around like that with nothing to do, but after two weeks, you’d go off your rocker. Thomas Wolfe, I think it was, said ‘You can’t go home again.’"</p>
And got this --
RESULT
<p>"You’d go nuts," Blake commented. "It’d be nice, sitting around like that with nothing to do, but after two weeks, you’d go off your rocker. Thomas Wolfe, I think it was, said ‘You can’t go home again.’</p>
<p>"</p>
This also happens when the quote within a quote is at the beginning of the paragraph.