Cristo Viene Pentecostal Church v. Paz

• Decision Date: 24 May 2007
• Docket Number: No. 32280.,32280.
• Citation: 144 Idaho 304,160 P.3d 743
• Parties: CRISTO VIENE PENTECOSTAL CHURCH, an unincorporated association, and Jose N. Pastor, Plaintiffs-Appellants, v. Jesus A. PAZ, Defendant-Respondent.
• Court: Idaho Supreme Court

160 P.3d 743

144 Idaho 304

CRISTO VIENE PENTECOSTAL CHURCH, an unincorporated association, and Jose N. Pastor, Plaintiffs-Appellants, v. Jesus A. PAZ, Defendant-Respondent.

No. 32280.

Supreme Court of Idaho, Boise, May 2007 Term.

May 24, 2007.

Gigray, Miller & Downen, Caldwell, Idaho, for appellant. William F. Gigray, Jr. argued.

Hamilton, Michaelson & Hilty, LLP, Nampa, Idaho, for respondent. Mark Hilty argued.

JONES, Justice.

Appellants, Cristo Viene Pentecostal Church and Jose Pastor (collectively, the plaintiffs), sued Respondent, Jesus Paz, for breach of contract, alleging that he wrongfully denied them their contractual right to purchase certain real property located in Caldwell, Idaho. Paz moved for summary judgment, arguing that the contract executed by the parties constituted a lease agreement with an option to purchase and that the plaintiffs had failed to exercise the option. The district court granted Paz' motion for summary judgment and quieted title to the property in his name. We affirm.

I.

Cristo Viene Pentecostal Church is a place of worship in Caldwell, ministered by Pastor. The Church holds its services in a building located at 220 North 6th Avenue ("subject property"), the right to ownership of which is at dispute in this case. The plaintiffs initially rented space in the building from Darigold, Inc., which previously owned the subject property. However, in the winter of 2000, Darigold offered to sell the subject property to the plaintiffs for $52,500. When the plaintiffs could not secure sufficient funding to finance the purchase, Paz, who was loosely affiliated with the church, approached Pastor with a solution.

At the time, Paz was in the process of selling certain commercial properties to the City of Caldwell. He proposed using the proceeds of the sales to purchase the subject property with the intent of reselling it to the Church at the same price. A conversation between the two ensued whereby Pastor orally agreed that the Church would put $5,000 down on the property, with the balance of the purchase price to bear 9.5 percent interest and be paid in monthly installments of $550. The Church paid $2,500 on April 27, 2000, and Paz proceeded to purchase the subject property on May 18, 2000.

The parties did not execute a written agreement regarding the subject property until June 22, 2000, when they signed a contract furnished by Paz. The written contract differed from the parties' prior oral agreement in that it did not provide for a down payment. Additionally, the contract stated it was a lease with an option to purchase; however, Pastor, who could not read or write English, signed with the belief that it was a simple sale contract in accordance with the terms of their oral agreement. The contract provided that should the Church wish to exercise its option to purchase the subject property, it must do so between May 18, 2001 and May 28, 2001 by: (1) paying an additional $550; (2) entering into a long term purchase agreement with Paz; and (3) utilizing Alliance Title of Caldwell as the closing agency. The plaintiffs began making what they believed to be monthly purchase payments of $550 on July 1, 2000. Paz contends the payments were rent payments under the terms of the lease. The plaintiffs subsequently presented Paz with a second payment of $2,500 on July 5, 2000. Then, in May or June of 2001, the plaintiffs allege Paz informed Pastor that state regulations prohibited him from selling the subject property until two years had lapsed from when he sold the commercial property to the City of Caldwell.

In the spring of 2003, the Church came up with sufficient funding to pay off the remaining balance of the purchase price and Pastor approached Paz to acquire title to the subject property. At that time, Paz informed him that the Church had not exercised its option to purchase the property pursuant to the terms of the contract. Paz did, however, indicate that he would be willing to sell the subject property to the Church for $70,000. He further stated that he would credit against the new asking price the $5,000 payment made by the plaintiffs, $1,294 the plaintiffs paid to keep the building insured, $1,837.49 they paid in property taxes, and $108.81 they paid for irrigation assessments, bringing the requested purchase price down to $61,759.70.¹

The plaintiffs sued for breach of contract, claiming they had a contractual right to purchase the subject property for $52,500. Paz denied the plaintiffs' claim, and filed a counterclaim seeking a quiet title judgment. Paz then filed a motion for summary judgment, arguing that the contract executed by the parties constituted a lease agreement with an option to purchase and that the plaintiffs had failed to exercise the option. Although the district court found that the contract unambiguously constituted a lease agreement with an option to purchase, it initially denied Paz' motion on the ground that a material factual dispute might exist concerning the statement allegedly made by Paz in May or June of 2001, regarding his ability to sell the property. On reconsideration, the district court found that Paz' alleged statement was immaterial and granted his motion for summary judgment, holding that the plaintiffs never exercised their contractual option to purchase. The district court subsequently quieted title to the property in Paz' name. The plaintiffs appeal.

II.

The following issues will be addressed in this opinion: (1) whether the district court erred in finding that the parties' written contract was a lease with an option to purchase and subsequently granting Paz' motion for summary judgment, and (2) whether either party is entitled to attorney fees or costs on appeal.

A.

When reviewing a summary judgment order, this Court applies the same standard as the district court. Foster v. Traul, 141 Idaho 890, 892, 120 P.3d 278, 280 (2005). Summary judgment is proper when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c). "If there is no genuine issue of material fact, only a question of law remains, over which this Court exercises free review." Infanger v. City of Salmon, 137 Idaho 45, 47, 44 P.3d 1100, 1102 (2002). This Court will construe all disputed facts liberally in favor of the non-moving party, and all reasonable inferences will be drawn in favor of the non-moving party. Hayward v. Jack's Pharmacy Inc., 141 Idaho 622, 625, 115 P.3d 713, 716 (2005). If the facts are such that reasonable persons could reach differing results, summary judgment is improper. Id.

B.

At dispute in this case is whether the plaintiffs have an ownership right in the subject property pursuant to the parties' written contract. Paz argues, and the district court found, that the parties' contract constituted a lease agreement with an option to purchase and that the plaintiffs failed to exercise the option. The plaintiffs maintain that the contract constituted a contract for sale of the subject property, which Paz breached by failing to transfer title when presented with the purchase price. In the alternative, they argue that even if the Court finds the contract to be a lease agreement with an option to purchase, they exercised the option by paying Paz $2,500 on July 5, 2000. Finally, the plaintiffs argue that the doctrine of quasi-estoppel precludes summary judgment in this case.

i.

As an initial matter, this Court must determine the legal effect of the parties' written contract. "The interpretation of a contract begins with the language of the contract itself." Independence Lead Mines Co. v. Hecla Mining Co., 143 Idaho 22, 26, 137 P.3d 409, 413 (2006). If the language of the contract is unambiguous, then its meaning and legal effect must be determined from its words. Shawver v. Huckleberry Estates, LLC, 140 Idaho 354, 361, 93 P.3d 685, 692 (2004). "A contract is ambiguous if it is reasonably subject to conflicting interpretations." Lamprecht v. Jordan, LLC, 139 Idaho 182, 185, 75 P.3d 743, 746 (2003). Determining whether a contract is ambiguous is a question of law over which this Court exercises free review. Id.

The express terms of the parties' contract unambiguously provided that it was a lease agreement with an option to purchase. Paragraph five of the contract, which delineated the pricing terms, stated that the total purchase price of the subject property was to be $52,500 with nothing down, and that the "[b]alance of the purchase price to be paid as follows: LEASE WITH AN OPTION TO PURCHASE AT $52,500." Paragraph eight provided additional terms and conditions, it stated in relevant part:

THE TENANTS ARE TO HAVE POSSESSION OF THE PROPERTY AND LEASE AT $550.00 A MONTH. LEASE PAYMENTS ARE TO BE PAID AT THE BEGINNING OF EACH MONTH.

THE TENANT IS TO EXERCISE THE PURCHASE OPTION BETWEEN MAY 18TH 2001 AND MAY 28TH 2001 BY PAYING $550.00 AND ENTERING INTO THE LONG TERM PURCHASE AGREEMENTS.

THE CLOSING AGENCY IS TO BE ALLIANCE TITLE OF CALDWELL, ID.

THE TENANTS ARE TO PAY FOR ALL MAINTENANCE, UPKEEP, UTILITIES AND PROVIDE THEIR OWN INSURANCE.

The language of the contract indicates it is not an absolute agreement to sell, as suggested by the plaintiffs. Rather, the language grants the plaintiffs an option to purchase the property at a specified time for the specified price of $52,500. A reading of the contract's plain language establishes that the parties executed a lease agreement with an option to purchase.

The plaintiffs contend that Pastor believed he was signing a simple sale contract in accordance with the parties' prior oral agreement and intended to purchase, not lease, the subject property. Pastor's subjective belief is inconsistent with the plain language of the contract. The parties do not dispute that Pastor did not review the terms of the contract at the time...