Harlan v. Hardaway
| Decision Date | 11 May 1990 |
| Docket Number | No. 89-306-II,89-306-II |
| Parties | Jerry G. HARLAN, Wanda G. Harlan, Glenn F. Nabors, and Nancy A. Nabors, Plaintiffs/Appellees, v. Stanley Hall HARDAWAY, Defendant/Appellant. 796 S.W.2d 953 |
| Court | Tennessee Court of Appeals |
Charles W. Bone, Janet P. Medlin, Ben A. Burns, Baker, Worthington, Crossley, Stansberry & Woolf, Nashville, for defendant/appellant.
Aleta Arthur Trauger, J. Graham Matherne, Wyatt, Tarrant, Combs, Gilbert & Milom, Nashville, for plaintiffs/appellees.
This appeal involves a dispute arising from the construction and sale of a condominium unit. The developers brought suit against the purchaser in the Chancery Court for Davidson County after he repudiated the purchase agreement. The trial court heard the case without a jury and awarded the developers a $38,298 judgment. The purchaser has appealed, insisting that the developers are not entitled to recover because they materially breached the purchase agreement. We affirm the judgment.
Stanley Hall Hardaway graduated from college in 1985 and joined his family's construction business in Nashville. Sometime during 1986, he learned of a condominium development called Harbor Village being constructed on Coleman Lake in Madison and became interested in purchasing a unit there. The project was being developed by a partnership consisting of Jerry G. Harlan, Glenn F. Nabors, and their wives.
The development was in its early stages when Mr. Hardaway first visited the property. He was not interested in any of the units already under construction but told the sales agents that he was interested in another planned unit overlooking the lake. Even though the developers had not intended to build the unit at that time, they decided to change their construction schedule, thinking that it would be helpful to have a Hardaway living in their development.
Mr. Hardaway and his father agreed to purchase a unit for $139,500. On July 11, 1986, they signed a standard purchase agreement containing several handwritten changes insisted on by Mr. Hardaway's father. One of these changes was a liquidated damage clause providing for a $100 per day penalty for every day after January 31, 1987 that the use and occupancy certificate was not issued. The developers agreed to the liquidated damage clause but only in return for the Hardaways' agreement to extend the completion date to February 28, 1987.
The Hardaways also talked with the sales agents, and later with Mr. Nabors, about installing a "rubber roof" on Mr. Hardaway's unit instead of the asphalt roof being used on the other units. Mr. Nabors agreed to install a rubber roof on the unit at no additional charge even though it was more expensive and instructed the roofing subcontractor accordingly.
Constructing Mr. Hardaway's unit earlier than planned required the developers to obtain additional financing and to draw up additional plans requiring regulatory approval. These activities delayed the start of construction, and so work on Mr. Hardaway's unit did not begin until late October, 1986. Mr. Hardaway became concerned about the delay, and on November 12, 1986, he sent a letter to the development's sales agents stating that he would enforce the liquidated damage clause if his unit did not receive a use and occupancy permit by March 1, 1987.
Mr. Hardaway also became engaged during November. He and his fiancee scheduled their wedding for March 7, 1987 to enable them to move into the new condominium the week before the ceremony. The development's sales representatives and interior decorator assured them that they would do all they could to make sure that the unit was finished on time.
The young couple insisted on a number of changes in the design of their unit, including additional air conditioning, a larger deck, and a marble tub in the master bathroom. They also chose unique, fashionable interior colors and carpets that required different fixtures. The developers agreed to make these changes for an additional charge.
As the wedding approached, it became clear that the unit would not be completed on time. Mr. Hardaway expressed his disappointment in a February 24, 1987 letter and reiterated his intention to enforce the liquidated damage clause. The sales representatives assured Mr. Hardaway that every effort would be made to have the unit finished by the time he and his wife returned from their honeymoon; however, it was still not completed on March 16, 1987 when the couple returned to Nashville.
The parties signed a new purchase agreement at Mr. Hardaway's request on March 19, 1987. The terms of this agreement were the same as those in the first agreement, except for the price which had been increased to $146,368 to reflect the cost of the extra work and for the deletion of Mr. Hardaway's father's signature. Thus, the contract still provided for a February 28, 1987 completion date even though that date had already passed and still included the liquidated damage clause.
The City issued a certificate of use and occupancy on March 27, 1987, and the parties scheduled the closing for April 3, 1987. Mr. Hardaway and his father inspected the unit on April 2, 1987. In a letter dated April 3, 1987, Mr. Hardaway notified the developers that "[t]oo much remains to be completed for us to close on April 3rd as we had hoped." He listed thirty-six items that remained to be completed and stated that he would "be forced to take some other type of action" if these items were not completed within seven days.
At his father's suggestion, Mr. Hardaway's letter raised for the first time the status of the development's other amenities. He proposed that the title company hold $3,000 in escrow to assure the completion of the swimming pool, the tennis courts, and the jogging trail. He also proposed that he should be excused from paying the monthly maintenance fee until the completion of the construction on the exterior of his unit and the other recreational amenities.
The parties met at the unit on April 8, 1987. They resolved the items on the punch list but could not agree on Mr. Hardaway's proposals concerning the maintenance fee and the escrow arrangement. The developers told Mr. Hardaway that they would not agree to these suggestions out of fairness to the other Harbor Village residents. When Mr. Hardaway and his lawyer refused to abandon these issues, Mr. Nabors told Mr. Hardaway in a raised voice, "Look son ... I am not going to listen to this anymore, and we are not going to talk about that." Mr. Hardaway abruptly left the meeting because he was offended by Mr. Nabors' comments and tone of voice.
Mr. Harlan telephoned Mr. Hardaway on April 9, 1987 to placate him and to convince him to proceed with the closing. He apologized for his partner's statements and assured Mr. Hardaway that the recreational amenities would be completed. Mr. Hardaway responded stating, "I think that definitely shows class in you but I don't think Mr. Nabors has any class, in my opinion." The sales agents also telephoned Mr. Hardaway and offered to escrow their sales commission to assure the completion of the recreational amenities.
Notwithstanding these assurances, Mr. Hardaway prepared a letter dated April 9, 1987 repudiating the contract because the unit had not been completed on February 28, 1987. He also based his action on the developers' failure to complete the swimming pool, the tennis courts, and the jogging trail and on the fact that the common areas had not yet been conveyed to the homeowners' association. Four days later, Mr. Hardaway and his wife bought a new home in Goodlettsville.
The developers sued Mr. Hardaway in November, 1987 seeking specific performance and damages. However, they were finally able to sell Mr. Hardaway's unit in December, 1987 for $140,000 and, thereafter, only sought the damages stemming from Mr. Hardaway's repudiation of the purchase agreement. The trial court heard the developers' complaint and Mr. Hardaway's counterclaim without a jury and awarded the developers $38,298.
Mr. Hardaway's first argument is that he had no obligation to perform under the purchase agreement because the developers had failed to perform a condition precedent to the agreement's enforceability. We disagree. Mr. Hardaway did not assert this defense at trial and would have been unsuccessful had he done so because the portion of the agreement on which he relies cannot reasonably be interpreted as a condition precedent.
The developers filed two documents in the register's office in August, 1985 when they first began to develop Harbor Village. The first was a "declaration of covenants, conditions and restrictions;" the second, the "by-laws of Harbor Village P.U.D. Assn. Inc." Even though the declaration referred to a "plat of record," the property description, attached as an exhibit to the declaration, stated that "the Plat ... has not yet been placed on record in said Register's Office." There is, likewise, no evidence of the recordation of a master deed.
Both the purchase agreements Mr. Hardaway signed contained the following language:
That for and in consideration of the mutual covenants set forth, Seller does hereby agree to sell unto Purchaser and Purchaser hereby agrees to purchase from Seller the following described property upon the price, terms and conditions hereinafter set forth:
Building: 4
in Harbor Village, A De Minimis PUD according to a De Mimimis [sic] PUD Plat of Harbor Village, A De Minimis PUD, a Declaration and Master Deed Establishing Harbor Village as a De Minimis PUD Association and by-laws of Harbor Village Owner's [sic] Association all of which will be filed of record in the office of the Registrar of Deeds for Davidson County, Tennessee, prior to the closing of sale.
No mention of the recordation of the master deed was made until Mr. Hardaway's April 3, 1987...
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