Glenn v. Reese

• Decision Date: 11 December 2009
• Docket Number: No. 20080861.,20080861.
• Citation: 2009 UT 80,225 P.3d 185
• Parties: Endré GLENN and Margret Glenn, Plaintiffs and Appellants, v. Robin REESE and Judith Reese, Defendants and Appellees.
• Court: Utah Supreme Court

225 P.3d 185

2009 UT 80

Endré GLENN and Margret Glenn, Plaintiffs and Appellants, v. Robin REESE and Judith Reese, Defendants and Appellees.

No. 20080861.

Supreme Court of Utah.

December 11, 2009.

Rehearing Denied February 18, 2010.

Jason K. Nelsen, Salt Lake City, for plaintiffs.

Karra J. Porter, Salt Lake City, for defendants.

INTRODUCTION

DURHAM, Chief Justice:

¶ 1 This action stems from a Real Estate Purchase Contract (REPC) executed between Robin and Judith Reese (Buyers) and Endré and Margret Glenn (Sellers) in December 2007. We are asked to determine if the district court erred in refusing to grant summary judgment for the Sellers because the REPC is ambiguous and cannot be interpreted as a matter of law. Specifically, we must decide whether the REPC affords Buyers a means to cancel the REPC because of an appraisal below the purchase price listed in the REPC. Sellers argue that, though the REPC is unambiguous, it only permits cancellation based on an appraisal obtained by a lender. Buyers argue that the REPC allows them to request and obtain their own appraisal and cancel the REPC based on their dissatisfaction with that appraisal.

¶ 2 We hold that the REPC is unambiguous and is broad enough to allow cancellation based on an unsatisfactory appraisal obtained by Buyers. Because of this holding, we must also decide if Buyers complied with the REPC's cancellation procedure when they submitted to Sellers two addenda to the REPC. We conclude that Buyers did not breach the REPC and are entitled to summary judgment. We therefore remand to the district court for entry of summary judgment and an award of attorney fees in favor of Buyers.

BACKGROUND

¶ 3 On December 19, 2007, Buyers offered to purchase Sellers' home (the Property) for $540,000. After some negotiation, the parties executed a REPC. The REPC indicates that Buyers would finance the purchase with $410,000 in cash and $130,000 in a conventional loan from a lender. The REPC also includes two provisions regarding conditions based on an appraisal or evaluation of the Property. First, Section 2.4 of the REPC contains an "Appraisal Condition" that allows Buyers to cancel the REPC if the Property appraises for less than the purchase price. Section 2.4 reads:

2.4 Appraisal Condition. Buyer's obligation to purchase the Property is conditioned upon the Property appraising for not less than the Purchase Price. This condition is referred to as the "Appraisal Condition." If the Appraisal Condition applies and the Buyer receives written notice from the Lender that the Property has appraised for less than the Purchase Price (a "Notice of Appraised Value"), Buyer may cancel this contract by providing a copy of such written notice to Seller no later than three days after Buyer's receipt of such written notice.

Second, Section 8 conditions Buyers' obligation to purchase the Property upon approval of certain evaluations, including a physical condition inspection and the availability of homeowner's insurance. Specifically, Section 8(e) conditions purchase upon "[a]ny other [test or evaluation] deemed necessary by buyers." In the event that Buyers are dissatisfied with one of these evaluations, Section 8.2 provides that Buyers may submit to Sellers either a notice of intent to cancel or a written notice of objections. If Buyers submit a notice of objections, Section 8.4 grants the parties seven calendar days (the Response Period) to resolve these objections. If the parties fail to agree on a method to resolve these objections, Buyer may then cancel the REPC within three days after the Response Period expires.

¶ 4 On December 27, 2007, Buyers' agent engaged JMS Group Appraising to conduct an appraisal of the Property. The appraisal placed the value of the Property at $80,000 below the purchase price. Because Buyers estimated they could pay cash for the Property if priced at this lower value, they neither applied nor received a loan from a lender. After receiving the appraisal on December 28, 2007, Buyers, through their agent, sent Addendum No. 3 to Sellers on the same day. Addendum No. 3 stated:

1. Purchase price to be $460,000 per appraised value.

2. If seller does not agree to the new purchase price contract will be canceled.

[3]. Earnest Money to be returned to Buyers.

The Addendum gave Sellers until 6:00 p.m. on the following day to accept. Sellers did nothing. After the deadline passed without an answer from Sellers, Buyers submitted Addendum No. 4 on December 31, 2007, which stated:

1. Seller has failed to respond to addendum #3. Buyers are canceling this contract based upon the appraised value coming in at 460,000 and the seller not accepting the value as the purchase price.

2. Earnest money of $5000.00 to be released to Buyers.

Though Sellers did not sign Addendum No. 4, Sellers' broker placed the Property back on the market on January 2, 2008 and sent an Earnest Money Release Form to Buyers' agent on January 4, 2008.

¶ 5 In March 2008, Sellers filed a complaint against Buyers, which was later amended. In the amended complaint, Sellers asserted causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, and sought specific performance of the REPC as their sole remedy. Both parties filed motions for summary judgment. The district court, at oral argument, denied both motions on the ground that the REPC was ambiguous. Sellers filed a petition for permission to appeal from an interlocutory order, pursuant to Rule 5 of the Utah Rules of Appellate Procedure, contesting the district court's denial of their motion for summary judgment. We granted the petition and have jurisdiction over this interlocutory appeal pursuant to Utah Code section 78A-3-102(3)(j) (2008).

STANDARD OF REVIEW

¶ 6 The propriety of a grant or denial of summary judgment is a question of law, which we review for correctness. R & R Indus. Park, L.L.C. v. Utah Prop. & Cas. Ins. Guar. Ass'n, 2008 UT 80, ¶ 18, 199 P.3d 917. In doing so, we view "the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Id. (quoting Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600).

ANALYSIS

¶ 7 The issue presented in this case is whether the district court erred in denying summary judgment on the basis that the REPC is ambiguous. If we conclude the REPC is unambiguous, we may interpret it as a matter of law and then must determine if Section 2.4 of the REPC contains Buyers' only means of cancellation for an appraisal below the purchase price or if Section 8's "other evaluations" is broad enough to allow such a cancellation. Furthermore, we must determine how or if Addendum No. 3 and Addendum No. 4 effected either of these sections. Sellers concede that if the REPC can be interpreted as a matter of law it may be interpreted in favor of Buyers.

¶ 8 We hold that the REPC is unambiguous and can be interpreted as a matter of law because "other evaluations" under Section 8 includes an appraisal procured by a buyer. We also hold that Addendum No. 3 to the REPC is an offer to modify the REPC, which became a nullity upon Sellers' refusal to accept. Thus, Buyers' Addendum No. 4 successfully cancelled the REPC.

I. THE REPC IS UNAMBIGUOUS AND CAN BE INTERPRETED AS A MATTER OF LAW

¶ 9 Both Sellers and Buyers argue that the REPC is unambiguous. Specifically, Sellers contend that Section 2.4 contains Buyers' only avenue for cancellation upon receipt of the appraisal below the purchase price and that Section 8 cannot be read to allow cancellation for the unfavorable appraisal. In contrast, Buyers assert that Section 2.4 and Section 8 are mutually exclusive. They argue that Section 2.4 applies only to cancellations based on an appraisal obtained by a lender and Section 8 applies to cancellations based on appraisal obtained by a self-financed buyer.

¶ 10 Well-accepted rules of contract interpretation require that we examine the language of a contract to determine meaning and intent. Café Rio, Inc. v. Larkin-Gifford-Overton, LLC, 2009 UT 27, ¶ 25, 207 P.3d 1235. Where the language is unambiguous, "the parties' intentions are determined from the plain meaning of the contractual language, and the contract may be interpreted as a matter of law." Id. (internal quotation marks omitted). We will also "consider each contract provision ... in relation to all of the others, with a view toward giving effect to all and ignoring none." Id. (ellipses in original) (internal quotation marks omitted). The court considers extrinsic evidence of the parties' intent only if the language of the contract is ambiguous. Id. A contractual term or provision is ambiguous "if it is capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terms, or other facial deficiencies." Id. (internal quotation marks omitted). When determining whether the plain language is ambiguous, "we attempt to harmonize all of the contract's provisions and all of its terms." Cent. Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3, ¶ 12, 40 P.3d 599.

¶ 11 Though Sellers argue that Section 2.4 provides Buyers' only means of cancellation due to an appraisal less than the purchase price, a plain reading of the language in Section 2.4 and Section 8 indicates otherwise. Section 2.4 clearly delineates the method for cancellation based on an unsatisfactory appraisal obtained by a lender. First, a lender must request an appraisal and provide a written notice to the buyer indicating that the property appraised for less than the purchase price. Then, if the buyer wishes to cancel, she must provide a copy of the written appraisal notice to the seller within three days. Thus, it is clear that a party without a lender cannot comply with this provision because it cannot obtain the requisite appraisal notice.

¶ 12 In this case, Buyers did not comply with Section 2.4 because they did not have a lender. After the home appraised at $80,000 below the...