HOECHER v. Runyan, 00-156.

• Citation: 2001 WY 39,21 P.3d 339
• Decision Date: 17 April 2001
• Docket Number: No. 00-156.,00-156.
• Parties: Charles C. HOECHER and Joy L. Hoecher, Appellants (Plaintiffs), v. Robert E. RUNYAN, Appellee (Defendant).
• Court: Wyoming Supreme Court

21 P.3d 339

2001 WY 39

Charles C. HOECHER and Joy L. Hoecher, Appellants (Plaintiffs), v. Robert E. RUNYAN, Appellee (Defendant).

No. 00-156.

Supreme Court of Wyoming.

April 17, 2001.

Representing Appellant: Loyd E. Smith of Murane & Bostwick, LLC, Cheyenne, WY.

Representing Appellee: Mark A. Bishop of Bishop Law Office, Cheyenne, WY.

Before LEHMAN, C.J., and GOLDEN, HILL, and KITE, JJ.

HILL, Justice.

We review a Judgment and Order of the district court that dismissed with prejudice a complaint filed by the Appellants, Charles and Joy Hoecher (Hoechers). The Hoechers sought to recover damages, as well as attorney's fees, from Appellee, Robert E. Runyan (Runyan), for breach of a real estate sales contract.

We will reverse and remand with directions.

ISSUES

The Hoechers pose these issues for our resolution:

1. Whether the trial court erred in its interpretation of the contract to buy and sell real estate as a matter of law?

A) Whether, under the guise of interpretation, the trial court rewrote the contract and imported into the agreement terms specifically considered and rejected by the parties?

B) Whether the trial court erred in its interpretation of the financing provisions of the contract as a matter of law?

2. Whether the trial court's legal conclusion that Appellee Robert Runyan failed to qualify for financing is correct as a matter of law?

3. Whether the trial court's factual conclusion that Appellee Robert Runyan failed to qualify for financing is clearly erroneous?

4. Whether the trial court erred as a matter of law in its conclusion that the Appellants waived their right to written notice of Appellee's intention to exercise an option to void the contract and their right to a written letter of declination from Appellee's lender?

5. Whether the trial court erred as a matter of law in ruling that enforcing the written notice requirement would be unconscionable?

6. Whether the trial court's non-sequitur conclusion that Appellee Robert Runyan validly exercised an option to void the contract is error as a matter of law?

7. Whether Appellants, as the non-breaching parties, are entitled to their attorney fees incurred in this appeal and, upon remand, in the trial court proceedings?

Runyan provides this summary of the issues:

I. The trial court was correct in holding that Mr. Runyan's ability to obtain financing was a condition precedent to the contract.

II. The trial court was correct in finding that Mr. Runyan failed to qualify for financing.

III. The trial court was correct in finding that Mr. Runyan exercised his option to void the contract under Paragraph V.E. and that the Appellants' [sic] waived their right to written notice of the seller's denial of financing and intent to void the contract.

The Hoechers identify several rebuttal issues in their reply brief:

1. Appellee misstates, mischaracterizes, and embellishes the record.

2. Appellant did not waive the issue of whether the contract is unambiguous.

3. A condition precedent cannot arise from ambiguity.

4. Impracticability is not a defense to a failure to give notice of an event that never occurred.

FACTS

The facts are not so much complicated as they are lengthy. The Hoechers set out to sell their home in Cheyenne at an advertised price of $214,500.00 without the assistance of a real estate agent. Runyan agreed to buy it. As we proceed through the mire of facts, it is helpful to begin with a recitation of the facts which the district court determined were dispositive of this matter, hence, justifying dismissal of the complaint with prejudice. The district court took note of the basic fact that the Hoechers and Runyan had entered into a contract on July 29, 1997. On June 10, 1997, Security First Bank (SFB) sent a letter to Runyan that summarized a conversation Runyan had with SFB on June 10, 1997. The letter stated that SFB would lend Runyan up to $200,000.00 under these terms:

A 5 year loan, priced at 1 year Treasury plus 300 basis points, with annual interest adjustments. Interest would be payable monthly.

A loan fee of 2% of amount financed paid by [Runyan].

The bank would lend up to 70% of appraised value of the residence purchased. Publicly traded stock, owned by [Runyan], will be pledged to the Bank in the amount equal to 30% of the loan amount financed as additional collateral.

[Runyan] will deposit an amount into the bank equal to Principal, Interest, Taxes and Insurance for one year to be held by the bank to be pledged as additional collateral.

Additional details of the proposal were eventually spelled out in a Truth-In-Lending disclosure statement. Those details included that, based on a loan amount of $217,104.10, Runyan would make one monthly payment in advance and then make 59 monthly payments of $1,565.94 beginning October 1, 1997, and then a balloon payment of $223,160.94 on September 1, 2002.

This sort of loan is characterized as a portfolio loan. Once Runyan received the June 10, 1997, commitment letter, he proceeded to look for a home in Cheyenne. Runyan was aided in his search by Dawn Chymych (Agent), and the Agent was to be paid for her services by a 3% commission on the selling price of the house. Runyan made an initial offer of $207,000.00, but the Hoechers rejected that. At Runyan's suggestion, it was agreed that the Agent's commission would be paid by the Hoechers and, as consideration for that agreement, Runyan increased his offer on the home to $216,500.00 — $210,000.00 for the house, plus $6,500.00 for the Agent's commission.

The district court viewed the following provisions of the contract as important. The contract provided that Runyan made an earnest money deposit of $1,000.00, and it provided that the approximate balance of $215,500.00 was to be paid in cash, cashier's check, electronically transferred, or certified funds at closing. The district court found that the Agent had placed the balance to be paid at closing on the wrong line, and that no one noticed the mistake (the Hoechers contended that was not an "unnoticed" mistake, but exactly what the parties intended and, of course, that is precisely how the contract read). The district court also found that the Hoechers knew that Runyan was seeking unconventional financing for this real estate deal, and that they acquiesced in that method of "financing." The district court went on to rely heavily on Article V of the contract, which set out Runyan's responsibilities with respect to obtaining a loan. The closing on the property did not go as originally scheduled on August 25, 1997, and because SFB and Runyan failed to get an appraisal until August 28, 1997, the closing was rescheduled for September 2, 1997, the day after Labor Day. The appraisal valued the property at $209,000.00, i.e., the real value of the home, less the Agent's commission.

Because of these circumstances, SFB informed Runyan that he would have to make up for the difference by an additional pledge of stock. Runyan refused to pledge additional stock and, hence, SFB notified Runyan that the loan would be denied, though that did not occur until about a week after the scheduled September 2, 1997 closing. That letter was issued simply because Runyan refused to live up to his original agreement with SFB. The district court characterized SFB's action as changing the terms of the loan agreement and, therefore, Runyan had failed to qualify for such financing as initially was contemplated between him and SFB. By the terms of the contract, as construed by the district court, Runyan was obligated to give written notice to the Hoechers of the denial of financing, but he did not do so. The district court opted to excuse this failure on Runyan's part because the Hoechers did receive oral notice, and by their actions, waived written notice, as well as because holding Runyan to the written notice requirement would be "unconscionable."

The district court's final conclusions were that Runyan validly exercised his option to void the contract, he was entitled to the return of his earnest money deposit, and because neither party had breached the contract, attorney's fees could not be assessed as provided for in the contract. The court then dismissed the Hoechers' complaint with prejudice.

We agree with the rendition of the facts set out by the Hoechers because they are clearly demonstrated in the record. Runyan decided to relocate to Cheyenne because of the favorable tax climate and low cost of...