Haidar v. Margetta
| Decision Date | 22 November 2022 |
| Docket Number | 2021-CA-00683-COA |
| Parties | YAZMINE HAIDAR AND HAROLD M. KATZ III APPELLANTS v. CHAD A. MARGETTA AND LYNETTE MARGETTA APPELLEES |
| Court | Mississippi Court of Appeals |
DATE OF JUDGMENT: 06/03/2021
PEARL RIVER COUNTY CHANCERY COURT, HON. RHEA HUDSON SHELDON, TRIAL JUDGE
ATTORNEYS FOR APPELLANTS: TYLER HOWARD ALEXANDER, WILLIAM NEY CRUSE SR.
ATTORNEYS FOR APPELLEES: ROBERT THOMAS SCHWARTZ, CHRISTIAN J STRICKLAND, JORDAN REX MATHEWS
EN BANC.
¶1. Yazmine Haidar and Harold Katz entered into a contract to buy land in Pearl River County from Chad and Lynette Margetta. Due to delays by their lender, Haidar and Katz were unable to close on the contractual closing date. Haidar and Katz allege that the parties agreed on a new closing date, but one day before the new closing date, the Margettas refused to honor the contract. Haidar and Katz then filed suit in chancery court, seeking specific performance or, in the alternative damages. However, the chancery court dismissed the complaint for failure to state a claim upon which relief could be granted, holding that Haidar and Katz could not enforce the parties' contract because they were unable to close on the contractual closing date. Haidar and Katz appealed.
¶2. For the reasons discussed below, we conclude that the chancery court erred by granting the Margettas' motion to dismiss. The parties' contract did not specify that time was "of the essence," nor do any of the facts alleged in the complaint establish that time was "of the essence." Therefore, the chancery court erred by holding as a matter of law that Haidar and Katz's delay in performance precluded them from enforcing the parties' contract. Whether time was of the essence to the parties' contract and whether Haidar and Katz were prepared to close within a reasonable time appear to present questions of fact. In any event, they cannot be resolved as a matter of law on a motion to dismiss. Accordingly, we reverse and remand the case for further proceedings consistent with this opinion.
¶3. Because we review an order dismissing the complaint pursuant to Mississippi Rule of Civil Procedure 12(b)(6), we accept the factual allegations of the complaint as true. City of Meridian v. $104,960.00 U.S. Currency, 231 So.3d 972, 974 (¶8) (Miss. 2017).
¶4. On December 7, 2020, the Margettas entered into a contract to sell two lots in the Legacy Subdivision in Pearl River County to Haidar and Katz for $80,000. The contract stated that closing would occur "on or before January 7, 2021." Haidar and Katz's lender, BankPlus, subsequently delayed the closing to February 2, 2021. According to the complaint, the new closing date "was communicated [to] and understood . . . by all parties via text message." However, the day before the new closing date, the Margettas refused to honor the contract.
¶5. On February 11, 2021, Haidar and Katz sued the Margettas in the Pearl River County Chancery Court, seeking an injunction to prevent the Margettas from selling the property to any other party and specific performance or, in the alternative, damages. The parties' contract was attached to the complaint as Exhibit A. A series of text messages between Haidar and Lynette Margetta regarding the delay in closing was attached to the complaint as Exhibit B.
¶6. The Margettas filed a motion to dismiss, arguing that the complaint failed to state a claim because the parties' "contract expired on January 7, 2021." In addition, they argued that the closing date was never extended in a signed writing, as required by the statute of frauds, Miss. Code Ann. § 15-3-1(c) (Rev. 2019). The Margettas also showed that on February 11, 2021, they had entered into a written contract to sell the two lots at issue plus one additional lot to Glen and Lisa Norris for $117,000. The contract between the Margettas and the Norrises stated that closing would occur "[o]n or before 30 days from the execution of [the contract]." The Margetta-Norris contract also noted that it reflected a prior oral agreement reached on February 1, 2021. The Margettas alleged that Haidar and Katz had prevented them from selling the lots to the Norrises by filing a lis pendens.
¶7. In response to the motion to dismiss, Haidar and Katz argued that they did not breach the contract by delaying the closing because time was not "of the essence" to the contract. They also argued that the parties had agreed to modify the contractual closing date.[1] ¶8. The chancery court granted the Margettas' motion to dismiss, holding that Haidar and Katz were not entitled to specific performance or damages because they were not prepared to close on January 7, 2021, and because a contract for the sale of land could not be modified orally. Haidar and Katz filed a notice of appeal.
¶9. "A motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted raises an issue of law, which is reviewed de novo." City of Meridian, 231 So.3d at 974 (¶8). Our review is limited to the face of the complaint, and we accept its factual allegations as true. Id. "The motion tests the legal sufficiency of the complaint" and "should not be granted unless it appears beyond a reasonable doubt that the plaintiff will be unable to prove any set of facts in support of the claim." Id.
¶10. On appeal, Haidar and Katz argue that because time was not "of the essence" to the parties' contract their inability to close by the date specified in the contract was not a material breach. Therefore, they argue that they are entitled to enforce the contract, and the chancery court erred by dismissing their complaint. For the reasons discussed below, we hold that the allegations of the complaint are sufficient to state a claim upon which relief could be granted. Therefore, we reverse the order dismissing the complaint and remand the case for further proceedings.[2] ¶11. This case involves a simple, two-page contract for the sale of land in Pearl River County. As one treatise on this subject recognizes, "[i]n the majority of real estate transactions, the parties do not intend to jeopardize their rights to perform a contract by failure to meet the contract's specified time for closing." 14 Richard R. Powell, Powell on Real Property § 81.03[5], at 113 (Michael Allan Wolf ed., 2003). "They do not view the date as a deadline but rather as a goal to be reached unless some unavoidable delay forces its postponement for a reasonable time." Id.
¶12. To be sure, contracting parties may agree that time is "of the essence" to their contract. "[W]hen the parties agree that time is of the essence in their contract, a delay in performance beyond the specified time will constitute a material breach" and generally will excuse further performance by the other party. 14 Richard A. Lord, Williston on Contracts § 43:7 (4th ed. Oct. 2022 update). But if time is not of the essence, then a slight delay in performance will not be deemed a material breach, and "performance must occur within a reasonable time." Id.; accord Powell, supra, § 81.03[5], at 112-13 (); Alan M. Weinberger, Real Estate Contracts, in 12 Thompson on Real Property § 99.15(d), at 293 (David A. Thomas ed., 1994).
¶13. Our Supreme Court has explained that time will be deemed essential to a contract only in limited circumstances:
Ferrara v. Walters, 919 So.2d 876, 884-85 (¶¶24-25) (Miss. 2005) (citations omitted).
¶14. In this case, the parties' contract does not state that time is of the essence. It sets a closing date, but the mere fact that a contract sets a closing date does not establish that time is of the essence. Id.;[3] see also, e.g., Pollard v. Martin, 382 S.E.2d 720, 721 (Ga.Ct.App. 1989) (); Limpus v. Armstrong, 322 N.E.2d 187, 190 (Mass. App. Ct. 1975) (); Whitney v. Perry, 617 N.Y.S.2d 395, 396 (App. Div. 1994) ().
¶15. Thus, the Margettas cannot show that time was of the essence to the contract unless the record establishes some other "clear indication of intent by the parties" that time was essential to the contract. Ferrara, 919 So.2d at 885 (¶25). But as courts in other states have held, in the absence of an express time-is-of-the-essence clause, whether time is of the essence generally presents a question of fact for the fact-finder.[4] In addition, what constitutes a "reasonable time" for performance also generally raises a question of fact.[5] Such decisions are consistent with Mississippi precedents holding that "whether a breach [is] material is a question of fact." Favre Prop. Mgmt. LLC v. Cinque Bambini, 863 So.2d 1037, 1044 (¶20) (Miss. Ct....
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