Huber v. Calloway, No. M2005-00897-COA-R3-CV (Tenn. App. 7/12/2007), M2005-00897-COA-R3-CV.
| Decision Date | 12 July 2007 |
| Docket Number | No. M2005-00897-COA-R3-CV.,M2005-00897-COA-R3-CV. |
| Parties | RICHARD E. HUBER ET AL. v. ROBERT CALLOWAY ET AL. |
| Court | Court of Appeals of Tennessee |
Appeal from the Chancery Court for Wilson County; No. 04123; C.K. Smith, Chancellor.
Judgment of the Chancery Court Reversed.
Gary Vandever, Lebanon, Tennessee, for the appellants, Robert Calloway and Carol G. Calloway.
David B. Foutch, Lebanon, Tennessee, for the appellees, Richard E. Huber and Debra L. Mase.
OPINION
This appeal involves a dispute arising out of the attempted exercise of an option to purchase a tract of farmland in Wilson County. The option provided that the parties would agree upon a purchase price when the purchasers exercised the option. When the purchasers attempted to exercise the option, their neighbors refused to permit them to have the property appraised in order to establish a purchase price. Accordingly, the purchasers filed suit in the Chancery Court for Wilson County requesting that their neighbors be compelled to allow an appraisal of the property and to enjoin them from improving the property while the dispute was pending. The trial court required the neighbors to allow the appraisal, and the purchasers offered their neighbors the appraised value of the property. When the neighbors refused to sell the property, the purchasers amended their complaint to allege breach of contract and misrepresentation. The trial court heard the case without a jury, directed the clerk and master to obtain an independent appraisal of the property, and ordered the neighbors to sell the property to the purchasers at the newly appraised value of the property. We have determined that the parties' option agreement is not an enforceable contract and, therefore, we reverse the trial court.
In 2002, Richard E. Huber and Debra L. Mase became interested in purchasing a large amount of acreage in Wilson County. They focused their attention on a farm and house owned by Virginia H. Reeve ("Reeve property") which was listed for sale by Carol G. Calloway. As it turned out, Ms. Calloway and her husband, Robert Calloway, owned the property surrounding the Reeve property on three sides. During the discussions regarding the purchase of the Reeve property, Ms. Mase and Mr. Huber expressed an interest in purchasing the Calloways' property, and the Calloways indicated their willingness to sell.
Ms. Mase and Mr. Huber subsequently entered into a contract to purchase the Reeve property, but the agreement was expressly conditioned on the Calloways' willingness to sell them one of the adjacent tracts immediately and to give them the right of first refusal to purchase the remaining two adjacent tracts. The Calloways were not parties to the contract for the Reeve property, but Ms. Calloway signed it as the listing agent for the seller's real estate company.
The closing on the Reeve property took place on December 12, 2002. On that date, Mr. Huber and Ms. Mase and the Calloways signed a purchase agreement for two of the surrounding tracts. They also signed an option agreement drafted by Mr. Huber permitting Mr. Huber and Ms. Mase to purchase the third tract — which included the Calloways' house — at any time during the next five years, upon six months written notice to the Calloways. Rather than setting a purchase price for the third tract, the parties included the following provision in the option:
In lieu of attaching purchase agreement, Buyer and Seller agree to complete an agreement at time of notice to sell. Purchase price to be mutually agreed upon based on independant [sic] appraisal at time of notice to sell.
As consideration for the option, Mr. Huber and Ms. Mase agreed to pay the Calloways an annual fee of $500 to be credited to the purchase price or forfeited in the event that Mr. Huber and Ms. Mase failed to execute an agreement to purchase the property. The option agreement also gave the Calloways the right to force Mr. Huber and Ms. Mase to purchase the property on six months' written notice.
On December 2, 2003, Mr. Huber and Ms. Mase sent a letter informing the Calloways of their intent to exercise their option to purchase the final tract. The letter requested a closing date between June 1 and September 1, 2004 and suggested that both sides engage appraisers and that the purchase price be determined by averaging the appraisals. The Calloways, apparently without the knowledge of Mr. Huber and Ms. Mase, had an appraisal completed on December 19, 2003, which determined that the value of the property was $230,000.
On March 25, 2004, Mr. Huber and Ms. Mase filed suit in the Chancery Court for Wilson County, alleging that the Calloways had cancelled four different appointments with their appraiser and that the Calloways were making improvements to the property in an attempt to increase its value prior to the sale. Mr. Huber and Ms. Mase asserted that this conduct amounted to an anticipatory breach and repudiation of the option agreement, and they requested a temporary restraining order prohibiting further improvements. They also filed a separate motion requesting the trial court to order an immediate appraisal of the property. On April 6, 2004, the trial court entered an order requiring the Calloways to allow Mr. Huber's and Ms. Mase's appraiser to visit the property and restraining the Calloways from making further improvements to the property pending further orders by the court.
On May 13, 2004, Mr. Huber's and Ms. Mase's appraiser valued the Calloways' house and land at $156,000. Two weeks later, the Calloways offered to sell the property for $267,000. On June 25, 2004, Mr. Huber and Ms. Mase filed an amended complaint, alleging breach of contract and misrepresentation. They requested the court to direct the Calloways to sell the property to them at a price established by an independent appraisal or the court's own determination. In the alternative, they requested rescission of their original purchase agreement for the Reeve property, the purchase agreement with the Calloways for the first two tracts of their land, and the option agreement for the purchase of the third tract.
The parties proceeded to a bench trial on November 10, 2004. The primary issue at trial concerned whether the option agreement had clearly established the procedure by which the purchase price would be established. During the trial, both Mr. Calloway and Mr. Huber testified as to their interpretations of the language "to be mutually agreed upon" and "based on independant [sic] appraisal." On January 4, 2005, the trial court entered an order directing the clerk and master to obtain an independent appraisal of the property and requiring the Calloways to sell the property to Mr. Huber and Ms. Mase for the amount of that appraisal. The appraiser chosen by the clerk and master valued the property at only $97,000. On February 2, 2005, the Calloways filed a motion for a new trial or to alter or amend the January 4, 2005 order. The trial court entered an order denying the motion on March 1, 2005. The Calloways have appealed.
The standards this court uses to review the results of bench trials are well-settled. With regard to a trial court's findings of fact, we will review the record de novo and will presume that the findings of fact are correct "unless the preponderance of the evidence is otherwise." Tenn. R. App. P. 13(d). We will also give great weight to a trial court's factual findings that rest on determinations of credibility. In re Estate of Walton, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). If, however, the trial court has not made a specific finding of fact on a particular matter, we will review the record to determine where the preponderance of the evidence lies without employing a presumption of correctness. Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997).
The presumption of correctness in Tenn. R. App. P. 13(d) applies only to findings of fact, not conclusions of law. Accordingly, appellate courts review a trial court's resolution of legal issues without a presumption of correctness and reach their own independent conclusions regarding these issues. Johnson v. Johnson, 37 S.W.3d 892, 894 (Tenn. 2001); Nutt v. Champion Int'l Corp., 980 S.W.2d 365, 367 (Tenn. 1998); Knox County Educ. Ass'n v. Knox County Bd. of Educ., 60 S.W.3d 65, 71 (Tenn. Ct. App. 2001); Placencia v. Placencia, 48 S.W.3d 732, 734 (Tenn. Ct. App. 2000), and questions regarding the interpretation or construction of a written contract are questions of law. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999); Hamblen County v. City of Morristown, 656 S.W.2d 331, 335-36 (Tenn. 1983); Atkins v. Atkins, 105 S.W.3d 591, 594 (Tenn. Ct. App. 2002).
The Calloways contend that the language in the option agreement requiring the parties to establish a mutually agreed upon price is merely an "agreement to agree" and, therefore, unenforceable as a contract. Mr. Huber and Ms. Mase, on the other hand, assert that the determinative language in the contract is the phrase "based on independant [sic] appraisal" and that this language reflects that the parties had conclusively agreed on the mechanism by which the purchase price would be set. We find that the Calloways have the better argument.
The difference between a valid contract and an unenforceable agreement requires consideration of two related concepts: an expression of the parties' intent to be bound, and the definitiveness with which they state their terms. See Higgins v. Oil, Chem. & Atomic Workers Intern. Union, Local No. 3-677, 811 S.W.2d 875, 881 (Tenn. 1991); Wolvos v. Meyer, 668 N.E.2d 671, 675 (Ind. 1996); Restatement (Second) Contracts 33, at 92 (1981); 1Joseph M. Perillo, ...
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