Behrens v. S.P. Const. Co., Inc.
| Decision Date | 17 May 2006 |
| Docket Number | No. 2005-062.,2005-062. |
| Parties | Thomas BEHRENS and another. v. S.P. CONSTRUCTION COMPANY, INC. |
| Court | New Hampshire Supreme Court |
Gallagher, Callahan & Gartrell, P.A., of Concord (Jeanne P. Herrick on the brief and orally), for the petitioners.
Danis Lewis Law Office, of Natick, Massachusetts (Robert M. Daniszewski on the memorandum of law and orally), for the respondent.
The petitioners, Thomas and Kerry Behrens, appeal an order of the Superior Court (McGuire, J.) denying their request for specific performance of a sales agreement they entered into with the respondent, S.P. Construction Company, Inc., as well as their request for contract damages. We affirm.
The record supports the following facts. In late 2002, the petitioners sought to purchase property in Newport from the respondent, a real estate brokerage and sales company. The petitioners and the respondent signed a sales agreement on January 31, 2003, and February 2, 2003, respectively. The selling price, as recorded in the signed sales agreement, was $315,000, and the petitioners paid a $5,000 deposit on February 7, 2003. The sales agreement contained a financing provision stating that the agreement was "contingent upon the [petitioners] obtaining financing" in the amount of $200,000 "or less." An addendum to this provision contains the following term: "Sellers to provide up to $200,000 in first mortgage financing at the rate of 7% interest for the first 7 years of the purchase . . . ."
Prior to closing, a dispute arose regarding the financing provisions in the agreement, delaying the culmination of the sale. In August 2003, the petitioners filed a petition seeking specific performance of the sales agreement and damages. They claimed that the financing terms obligated the respondent to provide as much financing as they required, up to $200,000. The respondent, however, argued that the agreement obligated the petitioners to accept as much financing as the respondent could provide, up to $200,000.
After a bench trial, the trial court found the sales agreement to be ambiguous, and, therefore, considered parol evidence. Noting that both parties' positions were reasonable, the trial court concluded that there was no meeting of the minds on an essential term of the sales agreement, and, as such, the contract was unenforceable. Accordingly, the trial court denied the petitioners' request for specific performance and damages.
On appeal, the petitioners argue: (1) that the trial court erred in its application of contract law to the sales agreement; (2) that the trial court improperly applied a subjective standard in evaluating contract formation; (3) that the trial court erred by finding the sales agreement to be ambiguous and admitting parol evidence; and (4) that the trial court erred when it declined to order specific performance of the sales agreement.
Because the sales agreement is a contract, we apply the general rules of contract interpretation in our review. See Sherman v. Graciano, 152 N.H. 119, 121, 872 A.2d 1045 (2005). The interpretation of a contract, including whether a contract term is ambiguous, is ultimately a question of law for this court to decide. Id. Accordingly, we review a trial court's interpretation of a contract de novo. Id. Where, however, the terms of a contract are indeed ambiguous, and the fact finder has properly looked to extrinsic evidence to determine the intent of the parties, our standard of review is more deferential. Galloway v. Chicago-Soft, 142 N.H. 752, 756, 713 A.2d 982 (1998). We will sustain a trial court's findings and conclusions unless they are lacking in evidential support or tainted by error of law. Appeal of the State of N.H., 147 N.H. 426, 429, 790 A.2d 131 (2002).
The petitioners first contend that the trial court improperly conflated contract formation principles with contract interpretation principles. Specifically, they argue that courts must first determine that a contract was formed between the parties before construing the contract's language, and that the trial court erred by interpreting the language of the contract to find that no contract was formed. The petitioners offer no authority supporting the position that principles of contract formation and interpretation must remain exclusive of each other in a court's analysis of a contract.
Offer, acceptance, and consideration are essential to contract formation. Tsiatsios v. Tsiatsios, 140 N.H. 173, 178, 663 A.2d 1335 (1995). There must be a meeting of the minds on all essential terms in order to form a valid contract. See Simonds v. City of Manchester, 141 N.H. 742, 746, 693 A.2d 69 (1997); see also 17A Am.Jur.2d. Contracts § 30 (2004). A meeting of the minds is present when the parties assent to the same terms. Chisholm v. Ultima Nashua Indus. Corp., 150 N.H. 141, 145, 834 A.2d 221 (2003). Moreover, the terms of a contract must be definite in order to be enforceable. See id; see also Restatement (Second) of Contracts § 33(1), comment b at 92 (1979) ().
The trial court found the disputed financing terms to be ambiguous. A trial court may use parol evidence to aid in interpreting an ambiguous term of a contract. Richey v. Leighton, 137 N.H. 661, 663, 632 A.2d 1215 (1993); see also Ouellette v. Butler, 125 N.H. 184, 187-88, 480 A.2d 76 (1984) (). After considering testimonial evidence from both parties, as well as documentary evidence from the respondent, the trial court concluded that the sales agreement was unenforceable because there was no "meeting of the minds" as to one of its essential terms.
Having reviewed the record before us, we conclude that the trial court properly inquired into the formation of the sales agreement prior to finding it unenforceable. As such, the trial court did not err in this respect.
The petitioners next argue that the trial court erred by failing to apply an objective standard when assessing whether a meeting of the minds existed between the parties. We disagree.
It is true that existence of a meeting of the minds sufficient to form a valid contract is analyzed under an objective standard. See Chisholm, 150 N.H. at 145, 834 A.2d 221. When there is a dispute regarding the terms of a contract, it is to be determined by the trier of fact. Id. "In determining the actual understanding and intent of the parties, the trier of fact should consider the objective meaning of the expressed contract terms." Tsiatsios, 140 N.H. at 178, 663 A.2d 1335.
An objective standard places a reasonable person in the position of the parties, and interprets a disputed term according to what a reasonable person would expect it to mean under the circumstances. N.A.P.P. Realty Trust v. CC Enterprises, 147 N.H. 137, 140, 784 A.2d 1166 (2001). In determining the parties' intentions under an objective standard, a court "must determine what the parties, as reasonable people, mutually understood the ambiguous term to mean." Id. at 140-41, 784 A.2d 1166. Having reviewed the record, we conclude that the trial court, in seeking to determine whether a meeting of the minds existed as to the disputed financing terms, first examined the language of the terms under an objective standard.
In its order of November 17, 2004, the trial court stated:
The sales agreement, in regard to financing, notes that the amount will be "$200,000 or less" and that the seller is "to provide up to $200,000 in first mortgage financing." However, it does not state which party would decide the amount to be financed, or how the financed money would be used, i.e. as purchase mortgage money, for improvements, or for some other purpose that might affect the amount of the actual mortgage on the property.
Though the trial court did not explicitly announce that it was applying an objective standard, it plainly sought to understand, from an objective perspective, "what a reasonable person would expect [the terms] to mean under the circumstances." N.A.P.P. Realty Trust, 147 N.H. at 140, 784 A.2d 1166. It was only after examining the disputed terms in this objective light that the trial court determined the language to be ambiguous.
The petitioners contend that, "because reasonable persons could not disagree as to its meaning," the trial court further erred by finding the sales agreement to be ambiguous. As we note above, the interpretation of a contract, including whether a contract term is ambiguous, is ultimately a question of law for this court to decide, and we review a trial court's interpretation of a contract de novo. Sherman, 152 N.H. at 121, 872 A.2d 1045. Having reviewed the sales agreement, we agree with the trial court that the disputed financing terms are ambiguous.
When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole. Ryan James Realty v. Villages at Chester Condo. Assoc., 153 N.H. 194, 197, 893 A.2d 661, 664 (2006). It is axiomatic that we give an agreement the meaning intended by the parties when they wrote it. Gen. Linen Servs. v. Franconia Inv. Assocs., 150 N.H. 595, 597, 842 A.2d 105 (2004). Absent ambiguity, the parties' intent will be determined from the plain meaning of the language used in the agreement. Ryan James Realty, 153 N.H. at 197, 893 A.2d at 664.
A clause of an agreement is ambiguous when the contracting parties reasonably differ as to its meaning. Appeal...
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