Eastern Motor Inns, Inc. v. Ricci

• Decision Date: 20 November 1989
• Docket Number: No. 88-509-A,88-509-A
• Citation: 565 A.2d 1265
• Parties: EASTERN MOTOR INNS, INC. v. Armand RICCI and Shirley Ricci. ppeal.
• Court: Rhode Island Supreme Court

Page 1265

565 A.2d 1265

EASTERN MOTOR INNS, INC. v. Armand RICCI and Shirley Ricci.

No. 88-509-Appeal.

Supreme Court of Rhode Island.

Nov. 20, 1989.

Lauren E. Jones, Jones & Aisenberg, Joseph A. Kelly, Marc DeSisto, Carroll, Kelly & Murphy, Providence, David F. Sweeney, Breslin, Sweeney & Earle, Warwick, for plaintiff.

Michael A. Kelly, Michael D. Mitchell, Adler, Pollock & Sheehan, Providence, for defendants.

OPINION

KELLEHER, Justice.

This is a Superior Court civil action in which Eastern Motor Inns, Inc. (Eastern), seeks a mandatory injunction directing Armand Ricci (Ricci) and his wife to convey to Eastern a two-acre parcel of real estate situated on Mink Street in nearby Seekonk, Massachusetts. The litigants are before us on cross-appeals. Eastern faults the trial justice for his rejection of its claim seeking specific performance. The Riccis challenge the trial justice's dismissal of their counterclaim, seeking damages for (1) breach of contract, (2) slander of title, and (3) a violation of the Massachusetts Unfair and Deceptive Practices Act. Mass.Gen.Laws Ann. ch. 93A, § 2 (West 1984).

When the Riccis purchased the Mink Street parcel sometime in the early 1970s, it was situated in an area zoned for industrial use. After lapse of several years, they decided to sell the parcel and use the proceeds to supplement their retirement income. They entered into a series of contracts to sell the parcel. Each agreement, however, was contingent upon the Riccis' obtaining a zoning change from the town of Seekonk, but the requisite permission was never obtained. On July 15, 1986, the Riccis entered into an agreement with Eastern, a Rhode Island corporation having its principal place of business in East Providence. The Riccis agreed to convey the Mink Street parcel to Eastern for $275,000, subject to terms and conditions that were incorporated into a purchase-and-sales agreement. Eastern intended to operate an eighty-unit motel at the Mink Street location. Such an enterprise required the grant of a zoning modification by the town of Seekonk. Consequently the Ricci-Eastern agreement was made subject to a condition that the requisite zoning change be effectuated. The agreement also provided that the sale was to be effectuated and the conveyance of the real estate to occur within thirty days after the municipality had given its approval.

As the end of 1986 approached, the litigants were still awaiting the approval of the proposed zoning change. The Riccis were concerned about an imminent change in the Internal Revenue Code that would nullify the favorable treatment formerly given a taxpayer's capital gains. The change was to take effect on January 1, 1987. Because of the change the Riccis contacted Eastern and offered to reduce the selling price by $10,000 if Eastern would agree to a "partial closing" with the cash and the deed to be held in escrow pending the final determination of the zoning application.

Eastern agreed to this proposal, and on December 30, 1986, the "escrow closing" took place at the office of Eastern's attorney. There the parties entered into a second agreement, the terms of which were incorporated by reference into the July 15, 1986 agreement. The pertinent terms of the December 1986 agreement read as follows:

"3. The escrow account, with accrued interest, shall be paid over to the Sellers at such time as the Buyer has received final approval by way of permits, variances or licenses as may be required from the town of Seekonk and no appeals or court actions opposing such permission are then pending.

"4. If such permissions, licenses, variances or permits have not been received by the Buyer by the 1st day of July, 1987, then the escrow agents * * * shall pay over the purchase monies, together with accrued interest thereon, to the Buyer in exchange for a deed for the subject property to the Sellers, Armand H. and Shirley M. Ricci."

In mid-January 1987 the Seekonk town meeting granted the zoning relief sought by the Riccis, and the zoning change became effective when, in early April 1987, the Massachusetts Attorney General approved the town meeting's grant. Prior to his approval a scheduled title closing had been canceled on March 23, 1987, because of the absence of the attorney general's consent. Then, another closing scheduled for May 1987 was canceled because of an alleged hazardous waste problem at the Mink Street site. However, at the end of June 1987, Eastern had learned there was no such danger. Eastern's president, Aldor Glaude (Glaude), testified that he was ready and willing to close at any time during the last week of June, except for the thirtieth when he was scheduled to move into a new apartment.

Ricci, on the other hand, testified that he made several attempts to arrange a closing between June 22 and July 1, 1987, but was thwarted in his attempts to contact Glaude because Glaude's phone remained disconnected while he was in the process of moving into a new apartment. On July 1, 1987, Ricci went to Glaude's new abode with a closing in mind. Glaude, however, informed Ricci that he could not close on that day because he was awaiting the arrival of two individuals--an interior decorator and a television technician. The decorator was to afford Glaude a bit of privacy by the installation of vertical blinds. Glaude's recreational needs were to be met with a modification to his television set so that he and his guests could enjoy "HBO." Eastern's attorney suggested a closing for July 2, 1987, but the suggestion was rejected by the Riccis.

On the next day Eastern recorded the December 30, 1986 agreement in the Seekonk land evidence records. The record indicates that during the period the Mink Street parcel was subject to the Ricci-Eastern agreement, the value of the property had increased substantially. In fact, the Riccis were offered $500,000 for the parcel.

In mid-October 1987 the Riccis filed a motion for summary judgment, claiming that the contract terminated on July 1, 1987, thus barring Eastern's specific-performance claim. Eastern responded by filing a motion for partial summary judgment, seeking specific performance on the part of the Riccis.

The motions came on for a hearing before a Superior Court justice who denied both motions because he could not determine, as a matter of law, ¹ whether the July 1, 1987 closing date was essential to Eastern's right to enforce the agreement. The motion justice specifically found that the December 1986 agreement was ambiguous as a matter of law. Consequently he noted that a determination of the litigants' intent involved a factual determination that could not be resolved by way of summary judgment.

After the motions were denied, the controversy came on before a Superior Court justice who presided over a bifurcated trial. He first considered evidence relative to Eastern's specific-performance claim. At the conclusion of the presentation of evidence for and against Eastern's claim, the trial justice recessed the trial until he could consider the evidence presented. Three days later he returned to the bench and rendered an oral decision in which he rejected Eastern's claim for specific performance. The jury, which had been impaneled prior to the hearing on Eastern's claim, took its place in the courtroom, and evidence relative to the Riccis' counterclaim began. At the conclusion of the presentation of evidence on their claim, the trial justice directed a verdict for Eastern on all three counts of the counterclaim. We shall first consider Eastern's appeal of the denial of its request for specific performance and then review the trial justice's rejection of the Riccis' counterclaim.

The grant of a request for specific performance is not a matter of right but rests within the sound discretion of the trial justice. Gaglione v. Cardi, 120 R.I. 534, 540, 388 A.2d 361, 364 (1978). On appeal this court will not disturb a trial justice's ruling on a specific performance claim unless the appellant demonstrates an abuse of discretion or error of law on the part of the trial justice. See Ludwig v. Kowal, 419 A.2d 297, 304 (R.I.1980). Furthermore, with respect to factual findings upon which that ruling rests, we have consistently held that in situations in which the parties have submitted a controversy to a trial justice sitting without a jury, the findings of fact made by the court will not be disturbed on appeal unless the appealing party shows that the findings are clearly wrong or that the trial justice misconceived or overlooked material evidence. Gaglione, 120 R.I. at 539-40, 388 A.2d at 364.

The critical factual finding to which Eastern objects is the trial justice's conclusion that time was of the essence when the parties entered into the December 1986 agreement, making July 1, 1987, the "final conclusive date for performance of the contract." Eastern had argued that the July 1 date was merely an outside time restraint included for the sole benefit of Eastern and therefore could be waived by Eastern on July 1, 1987.

Whether an agreement makes time of the essence is determined by the intent of the parties to the contract. See Safeway System, Inc. v. Manuel Bros., Inc., 102 R.I. 136, 145, 228 A.2d 851, 856 (1967) (citing Sal's Furniture Co. v. Peterson, 86 R.I. 203, 208, 133 A.2d 770, 773 (1957)). That intent may appear by express stipulation in the contract or it may be found in the nature or purpose of the contract or in the circumstances in which it was made. Id. Here the trial justice made a detailed review of the pertinent evidence and found that although the "dropdead" provision was inserted at Eastern's request, it was included for the protection of both parties. As noted earlier, he also found that time was of the essence in the performance of this contract. This factual determination finds more than adequate support in the record.

To begin with, Ricci testified that Eastern's attorney, ² on several occasions during the ...