Dysart v. Cummings

TYSON, Judge.

STROUD, Judge dissenting.

I conclude that there are genuine issues of material fact as to whether plaintiffs provided adequate notice of termination of the purchase contract and whether plaintiffs' termination of the contract was based upon a reasonable estimate of the cost of necessary repairs to the property. Accordingly, I would reverse the trial court order granting summary judgment in favor of plaintiffs and remand this case to Superior Court, Wake County for trial. For this reason, I respectfully dissent.

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. §1A-1, Rule 56(c) (2005). "When considering a motion for summary judgment, the trial judge must view the presented evidence in a light most favorable to the nonmoving party,"Dalton v.Camp,353 N.C. 647,651,548 S.E.2d 704,707(2001); thus, facts asserted by the nonmoving party are presumed to be true,see e.g., Norfolk W.Ry. Co. v. Werner Indus. Inc.,286 N.C. 89,97,209 S.E.2d 734,738(1974), and the moving party carries the burden of proof to show that there is no triable issue of fact,Boudreau v. Baughman,322 N.C. 331,342,368 S.E.2d 849,858(1988). On appeal, this Court conductsde novoreview of a trial court order granting summary judgment.See Summey v. Barker,357 N.C. 492,496,586 S.E.2d 247,249(2003).

Defendants present two questions for review by this Court: (1) whether plaintiffs breached the purchase contract by failing to provide defendants with a list of necessary repairs within fourteen days of entering the contract and (2) whether plaintiffs breached the purchase contract by terminating the contract based on an unreasonable repair estimate. The trial court's order awarding summary judgment to plaintiffs is appropriate only if the pleadings, affidavits, and other evidence show as a matter of law that plaintiffs' termination was permitted by the purchase contract. Two clauses contained in the purchase contract govern my analysis of these issues: (1) contract clause 12, titled "Property Disclosure and Inspections" and (2) addendum clause 9, titled "Cost of Repair Contingency." The purchase contract entered into by the parties was a standard form "Offer to Purchase and Contract" jointly approved by the North Carolina Bar Association and the North Carolina Association of Realtors.Page 651

Contract clause 12 defines plaintiffs' right to inspect the property and provides in pertinent part that

[a]ny inspections shall be completed and

written

notice

of necessary repairs shall be given to Seller [defendants]

on or before 14 days after acceptance.

. . . [I]f any repairs are necessary, Seller [defendants] shall have the option of completing them or refusing to complete them. If Seller [defendants] elects not to complete the repairs, then Buyer [plaintiffs] shall have the option of accepting the [p]roperty in its present condition or terminating this contract, in which case all earnest monies shall be refunded.

(Emphasis added.) Addendum clause 9 permits plaintiffs to choose to terminate the contract and reclaim their earnest money "[i]f a of the total cost of repairs" discovered pursuant to the inspections permitted by contract clause 12 "exceeds $10,000."

Because "contract provisions should not be construed as conflicting unless no other reasonable interpretation is possible,"InternationalPaper Co. v. Corporex Constructors, Inc.,96 N.C. App. 312,316,385 S.E.2d 553,556(1989), this Court must first consider whether addendum clause 9 and contract clause 12 can be reconciled. I conclude that these clauses may be read together without conflict.

The plain language of addendum clause 9, expressly incorporates contract clause 12; thus, addendum clause 9 also requires the "estimate of the total cost of repairs" be provided to defendants "in writing . . . on or before 14 days after acceptance" of plaintiffs' offer to purchase. If the clauses were read separately, then plaintiffs would be permitted to exercise an option to terminate at , even on the day of closing. This alternative interpretation, which is advanced by plaintiffs, is unsupported by the incorporation of contract clause 12 into addendum clause 9 and results in illogical and unintended consequences in the performance of the contract. The interpretation of these clauses is of particular concern because the "Offer to Purchase and Contract" at issue is a standard form contract which is used extensively in North Carolina real estate transactions.

Although plaintiffs notified defendants' real estate agent by fax that they had "decided to terminate contract per additional provisions addendum #9" within 14 days of acceptance, it is undisputed that the fax did not state why plaintiffs were terminating the contract, did not include a list of necessary repairs, and did not contain an estimate of the cost of repairs. Plaintiffs did not provide any further details ofPage 652their decision to terminate until after the 14 day period had passed. Considering this evidence in the light most favorable to defendants, I would hold that there is a question of material fact as to whether plaintiffs provided adequate notice of termination pursuant to contract clause 12 and addendum clause 9 of the "Offer to Purchase and Contract" entered into by the parties.

As stated above, addendum clause 9 is a "Cost of Repair Contingency" provision. The majority concludes that this clause gave plaintiffs "discretionary power to terminate the contract" subject only to a requirement that plaintiffs "act in a reasonable manner and in good faith," citingMezzanotte v. Freeland,20 N.C. App. 11,200 S.E.2d 410(1973),cert. denied,284 N.C. 616,201 S.E.2d 689(1974) andMidulla v.Howard A. Cain Co.,133 N.C. App. 306,515 S.E.2d 244(1999) in support of its decision. I find the contingency clauses at issue inMezzanotteandMidulladispositively different from addendum clause 9.

InMezzanotte, the real estate contract provided "[t]his agreement is contingent upon parties of the second part [plaintiff] being able to secure a second mortgage from North Carolina National Bank in order to finance the closing and to secure additional working capital. . . ."20 N.C. App. at 13,200 S.E.2d at 412(alteration in original) (emphasis added). InMidulla, the real estate contract provided that the plaintiffs' offer to purchase was contingent upon "[r]eview of [residential] covenants and restrictions, the body of which are to Buyer [plaintiffs]."133 N.C. App. at 307,515 S.E.2d at 245(emphasis added). In bothMezzanotteandMidulla, this Court determined that the plaintiff buyers had discretionary power to terminate the respective real estate contracts because they were not "satisfied," and the Court emphasized that an "implied promise of good faith and reasonable effort" accompanies any discretionary option to terminate a real estate contract that is contingent on one party's "satisfaction."¹Mezzanotte,20 N.C. App. at 17,200 S.E.2d at 415;Midulla,133 N.C. App. at 309,515 S.E.2d at 246.Page 653

In the casesub judice, plaintiffs' option to terminate the real estate contract is contingent on "a of the total cost of repairs," not on an estimate that is to plaintiffs.²Although discretionary in the sense that plaintiffs may choose to honor the purchase contract despite the existence of necessary repairs in excess of $10,000, plaintiffs' right to terminate the contract pursuant to addendum clause 9 is expressly limited by the requirement that the estimated cost of repairs be reasonable. This means that to prevail on summary judgment, plaintiffs must show that they obtained a "reasonable estimate of the total cost of repairs" in excess of $10,000.

Reasonableness is a quintessential jury question.See Radford v.Norris,63 N.C. App. 501,503,305 S.E.2d 64,65(1983) ("Since the test is one of reasonableness, and depends upon the circumstances of the particular case, it is a jury question except in the clearest of cases."). North Carolina courts consistently hold that "reasonableness" is a factual issue for the jury in many different types of cases.SeeMarcus Bros. Textiles, Inc. v. Price Waterhouse, LLP,350 N.C. 214,224,513 S.E.2d 320,327(1999) (The question of justifiable reliance in an action for negligent misrepresentation is "analogous to that of reasonable reliance in fraud actions, where it is generally for the jury to decide whether plaintiff relied upon the representations made by defendant.") (internal quotation omitted);State Props. LLC v. Ray,155 N.C. App. 65,73,574 S.E.2d 180,186(2002) (In an action for fraud, "[t]he reasonableness of a party's reliance is a question for the jury, unless the facts are so clear that they support only one conclusion.");NationsBank of N.C., N.A. v. American Doubloon Corp.,125 N.C. App. 494,499,481 S.E.2d 387,390(1997) (The commercial reasonableness of a bank's retention of collateral after default on a loanPage 654"is a jury question and does not readily lend itself to summary judgment" because "reasonable minds may differ over what is commercially reasonable.");Smith v. Martin,124 N.C. App. 592,600,478 S.E.2d 228,233(1996) (The reasonableness of a plaintiff's mitigation efforts in an action for wrongful cancellation of a deed of trust "depends upon the facts and circumstances of the particular case and is a jury question except in the clearest of cases.");Snead v. Holloman,101 N.C. App. 462,467-68,400 S.E.2d 91,94(1991) (The reasonableness of a plaintiff's failure to follow medical advice in a negligence action is a jury question that is relevant to the amount of damages the plaintiff may recover.). However, by expressly determining that "[p]laintiffs acted in a reasonable manner and in good faith," the majority removes this question from jury consideration and resolves the issue as a matter of law. Considering the evidence presented in the light most favorable to defendants, I would hold that there is a genuine issue of material fact as to whether the repair estimate obtained by plaintiffs was reasonable.

My decision is supported by the following evidence forecast by defendants: (1) plaintiffs' initial estimate by McLean was based upon a cursory inspection during which McLean did not even look at the foundation under defendants' house; even so, McLean gave the opinion that the foundation was settling and major repairs were needed, (2) the crack McLean observed on the exterior of the home was not an indication of settling at all but was actually a superficial defect caused by water dripping into the stonework from leaky gutters, (3) plaintiffs' estimate of $58,910.23 was not credible when considering that defendants actually completed the necessary repairs for $6,986.11, and, (4) plaintiffs had given other reasons for wanting to terminate the contract that were unrelated to the condition of the house. From this evidence, a jury could find that plaintiffs' repair estimate was unreasonable.

For the reasons stated above, I would reverse the trial court's order awarding summary judgment to plaintiffs and remand this case to Superior Court, Wake County for trial. Accordingly, I respectfully dissent.Page 655