Hawkins v. Foster

• Decision Date: 10 March 1995
• Docket Number: No. 19212,19212
• Parties: Stanley W. HAWKINS and Norma C. Hawkins, Plaintiffs-Respondents, v. Robert L. FOSTER, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 80

897 S.W.2d 80

Stanley W. HAWKINS and Norma C. Hawkins, Plaintiffs-Respondents, v. Robert L. FOSTER, Defendant-Appellant.

No. 19212.

Missouri Court of Appeals,

Southern District,

Division One.

March 10, 1995.

Motion for Rehearing or Transfer,

Denied April 3, 1995.

Application to Transfer Denied

May 30, 1995.

C. Ronald Baird, Springfield, for defendant-appellant.

John Sims, Sims, Bridges, Dolence & Higdon, Neosho, for plaintiffs-respondents.

FLANIGAN, Judge.

This action arises out of a real estate contract entered into on May 9, 1990, between plaintiffs-sellers Stanley Hawkins and Norma Hawkins, husband and wife, and defendant-buyer Robert Foster. The purchase price for the residence and lot in Neosho was $130,000, and the closing was scheduled for July 6, 1990. On that date, defendant refused to close. On June 17, 1991, plaintiffs sold the property to another purchaser for $100,000 and paid a real estate commission of $7,000 in connection with that sale. The trial court, sitting without a jury, awarded plaintiffs judgment against defendant in the sum of $37,000. Defendant appeals.

In general, defendant contends: (1) plaintiffs are not entitled to recover because they failed to provide defendant, prior to the closing, with a certificate that the residence was free of termites, and termite infestation was present; (2) even if defendant breached the contract, plaintiffs' recovery was limited to $1,000 under the liquidated damage clause of the contract; and (3) even if defendant breached the contract and the liquidated damage clause is not enforceable, plaintiffs sustained no damages because plaintiffs' evidence showed that the value of the residence on the date of closing was $149,500, which was more than the contract price.

On appellate review of a judgment in a nonjury action, this court must affirm the judgment unless there is no substantial evidence to support it, or it is against the weight of the evidence, or it erroneously declares or erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976); Rule 73.01(c). ¹

Defendant is a licensed real estate broker who, at the time of trial, had been in the real estate business for 23 years. On May 9, 1990, aware that defendant was interested in buying the residence, plaintiff Stanley Hawkins told defendant that the house was up for sale. Later that day, defendant went to the residence and the parties signed a standard form written contract for the price of $130,000. Defendant supplied the printed form, and the parties inked in specific terms in the blanks provided. Hawkins told defendant that the residence had been "spot treated" for termites by Bob Caldwell in 1989. Defendant asked plaintiffs for a "certificate" of that from Caldwell. Defendant inked in the following provision: "Seller to furnish termite certification."

The contract called for the $130,000 to be paid by an initial installment of $1,000, and the balance to be paid upon delivery of the deed to buyer. The contract provided that the sale would be closed at defendant's office on July 6, 1990, at 1:00 p.m.

Six days prior to the day the contract was signed, plaintiffs obtained a written appraisal of the residence from realtor Thomas Dawson, who estimated that its market value on May 3, 1990, was $149,500. On May 9, plaintiff Stanley Hawkins told defendant that Dawson had made an appraisal, but defendant did not ask to see it. On May 10, defendant asked for a copy of the Dawson appraisal, and plaintiffs gave him a copy. Much of defendant's evidence in the trial court sought to challenge the accuracy of the Dawson appraisal, but on this appeal defendant makes no claim that any inaccuracy constitutes a defense.

On June 19, prior to the scheduled closing, plaintiffs obtained from Caldwell a certificate entitled "Standard Wood Destroying Insect Report Form," received into evidence as Exhibit 5. Plaintiffs' evidence was that to obtain the certificate Caldwell "had to go through a full treatment," and they paid Caldwell $725 to do so.

On June 21, defendant called plaintiff Norma Hawkins and told her that he had a problem with the Dawson appraisal. On June 27, defendant told Mrs. Hawkins that he had a cash flow problem and would not be able to close.

On July 6, at the appointed time, plaintiffs, accompanied by their attorney, went to defendant's office for the closing. They took various documents with them, including title insurance commitments, a warranty deed, and Exhibit 5. Defendant was not there. After waiting 30 minutes, plaintiffs and their attorney left defendant's office and encountered defendant on the parking lot. Plaintiffs told defendant they were there to close, and defendant said he was not going to close. Plaintiffs' evidence was that defendant did not give any reason for not closing at that time.

Plaintiffs immediately listed the residence with Sy Werner, a realtor. The original listing price was $139,000. Werner testified that he made concentrated efforts to market the residence, including holding an open house for realtors only, newspaper advertising, and "everything we had available." On June 17, 1991, plaintiffs sold the residence to another purchaser for $100,000 and paid Werner a commission of $7,000.

Defendant's first point is that the trial court erred in awarding judgment to plaintiffs because "plaintiffs failed to provide a termite certification [to defendant] that the residence was free of termites at or prior to the scheduled closing ...; termites were present [in 1989] and had been spot treated ...; active and inactive termite infestation was present in May and June of 1990; although treatment was provided, the certification did not state that the property was free from termites, hidden defects and structural damage, and the house was warranted against termites for a period of time and thus plaintiffs failed to perform a material condition of the contract."

A sufficient answer to defendant's first point is that it is factually unsound. The contract provided: "Seller to furnish termite certification."

Stanley Hawkins testified: Caldwell would not certify any home unless he did a full treatment, so I asked him to do a full treatment. Exhibit 5 is the certificate I received from Caldwell. Defendant did not ask for Exhibit 5 at the closing or earlier. We paid Caldwell $725 for him to go through a "full treatment," and that was on June 19 and for Exhibit 5 in anticipation of the closing. When we learned that Caldwell was going to have to do treatment on the house, including drilling some holes in the parquet floor, my wife called defendant and told him that Caldwell was going to do the treatment and was going to have to drill those holes. Defendant raised no objection. I took Exhibit 5 to the closing on July 6. Exhibit 5 satisfies the requirement that we were to provide termite certification. Exhibit 5 said it was termite free. The house was free of termites at the time we were going to turn the house over to defendant.

Plaintiffs offered the following admissions from defendant's deposition: I decided not to close because of the [Dawson] appraisal and I was never presented with anything on the termite certification. Plaintiffs told me, prior to the time I signed the contract, that there had been some termites out there and they had spot treated the year before. In my real estate business I have run into places where termites have been found. You generally go ahead and close, as long as the termites are treated and you have a certification and there is no structural damage. I don't know whether there was any structural damage at the Hawkins home. Out there at the closing I did not ask the Hawkinses for a deed or for a termite certification because I was not going to close because of the [Dawson] appraisal. [Exhibit 5] might be interpreted to be a termite certificate; a lot of lending institutions won't accept it as such; some cases it's accepted, some cases it's not.

Norma Hawkins testified: Defendant said he wanted a certification on the property for termites, and we were willing to get certification on it. We got [Caldwell] to come out and give us a certificate, Exhibit 5, and we had that document when we went to the closing. Exhibit 5 is the standard report form which we got from Caldwell. Caldwell treated it and gave me the certification. On July 6, 1990, there were no termites in the house.

Sy Werner, realtor, testified: If we had a contract calling for a termite certification, Exhibit 5 is the form I would have filled out by a termite inspector.

Exhibit 5, signed by Bob Caldwell of Caldwell Extermination Service, dated June 19, 1990, stated: "Findings: Based on careful visible inspection of the readily accessible areas of the property: (C) Visible evidence of infestation was noted; proper control measures were performed; (E) Visible evidence of previously treated infestation, which now appears inactive, was observed."

Plaintiffs' Exhibit 20, received into evidence, was a termite report on the residence dated May 21, 1991, stating: "Property treated in 1990; no active termites observed at this time."

The findings of the trial court included the following: "The Hawkins residence was free of termites on the date of closing called for in the real estate contract.... In making this finding, the court relies upon the testimony of [plaintiffs] that the termites found had been treated, as well as Exhibit 5; defendant admitted that he made no inquiry as to whether the property was treated for termites, that he was not aware of any structural damage to the property caused by the termites, that he did not send anybody to the property to determine whether there was structural damage or not, and that he made no inquiry to determine whether or not the termite infestation had been treated; defendant admitted that Hawkins told him the property had been treated; defendant made no inquiry about the termite certificate; any failure of plaintiff...