Hunter v. Wilshire Credit Corp.

• Decision Date: 21 October 2005
• Docket Number: 1040434.
• Parties: James A. HUNTER and Sylvia Hunter v. WILSHIRE CREDIT CORPORATION. et al.
• Court: Alabama Supreme Court

927 So.2d 810

James A. HUNTER and Sylvia Hunter v. WILSHIRE CREDIT CORPORATION. et al.

1040434.

Supreme Court of Alabama.

October 21, 2005.

John W. Parker, Mobile, for appellants.

John T. Bender of McFadden, Lyon & Rouse, L.L.C., Mobile, for appellee Wilshire Credit Corporation.

T. Kelly May and H. Cannon Lawley of Huie, Fernambucq & Stewart, LLP, Birmingham, for appellee Re/Max Advantage, Inc.

Mark A. Newell and Kevin L. Boucher of Masterson & Newell, L.L.C., Mobile, for appellee Re/Max Realty Professionals, Inc.

SEE, Justice.

The Mobile Circuit Court entered summary judgments in favor of ReMax Advantage, Inc., ReMax Realty Professionals, Inc., and Wilshire Credit Corporation, the defendants in an action filed by James Hunter and Sylvia Hunter. The Hunters appeal from the judgments. We affirm.

Facts and Procedural History

James Hunter and Sylvia Hunter wanted to purchase a house. The Hunters signed a buyer agency agreement with David Rice, an agent of ReMax Realty. On October 7, 2002, the Hunters entered an agreement ("the purchase agreement") to purchase from Wilshire a house located at 5425 Washington Boulevard in Theodore.¹ Wilshire had listed the house for sale with ReMax Advantage. The purchase agreement indicated, among other things, that the purchase price was $118,900, that the Hunters would pay a deposit of $500, and that the Hunters' offer would expire on October 9, 2002.

On October 11, 2002, two days after the Hunters' purchase offer had expired, Wilshire presented the Hunters an "Addendum to Purchase Agreement." The addendum referred to the house and the purchase agreement. It provided, in part:

"This addendum is to be part of and incorporated in the above Purchase Agreement. Price to be $119,500. Earnest money deposit to be increased to $6000.00. Buyer to furnish pre-qual [sic] letter, in 5 days, with full loan approval by 10/31/02. Seller will credit buyer $400 for purchase of home warranty."

James Hunter signed the addendum. Neither the purchase agreement nor the addendum had been signed by Wilshire at that time.

On November 4, 2002, Rice provided James Hunter with a form from Wilshire entitled "Real Estate Purchase Contract Counter Offer [sic] & Addendum." Wilshire had not signed the form. According to the Hunters, Rice advised James Hunter that the counteroffer was necessary "in order to set the closing up." James Hunter signed the counteroffer. The counteroffer stated that it "is to be made part of, and incorporated into Contract dated: 10/31/02, between Wilshire ... and the [Hunters]."² The counteroffer provided that if Wilshire defaulted under the terms of the "Contract or this Addendum, [the Hunters] shall be entitled to the return of the Earnest Money Deposit as [their] sole and exclusive remedy." In addition, the counteroffer included the following clauses:

"Closing Date/Time of Essence: Closing to occur on or before: 11/20/02 . . . . Seller shall have the right, in Seller's sole discretion, to extend the closing date or to void the Contract if; [sic] Seller determines that it is unable to convey good and insurable title to the Property by a reputable title insurance company at the regular rates.

"....

"Acceptance: This counter offer [sic] is made subject to Sellers [sic] Senior Management approval and shall not become a binding Contract until signed by Seller. Seller reserves the right to continue to offer the herein described property for sale and accept any other offer acceptable to Seller prior to full Senior Management approval."

On November 13, 2002, at 3:00 p.m., Wilshire acknowledged receipt of the purchase agreement. At 3:05 p.m., Wilshire signed the addendum and, at 3:30 p.m., Wilshire signed the counteroffer.

Closing was originally scheduled for November 18, 2002. The parties agreed that the Hunters would not take possession of the house until closing, but the Hunters made improvements to the property before the scheduled closing date. The closing did not occur on the scheduled date because a survey to determine the property lines had not been completed. The Hunters later learned that Wilshire was not going to close on the property because there were numerous judgments and liens against the property and, furthermore, because the survey indicated that the house encroached on an adjoining property line.

In accordance with the terms of the counteroffer, Wilshire attempted to return the $6,000 earnest-money deposit to the Hunters. The Hunters refused to accept the money. The Hunters sued Wilshire, seeking specific performance and consequential damages. The Hunters also sued ReMax Advantage and ReMax Realty seeking compensatory damages and punitive damages. ReMax Advantage, ReMax Realty, and Wilshire all moved for summary judgments. The trial court entered summary judgments in their favor. The Hunters appeal.

Standard of Review

"A party is entitled to a summary judgment when `there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.'" University of South Alabama v. Progressive Ins. Co., 904 So.2d 1242, 1246 (Ala.2004) (quoting Rule 56(c)(3), Ala. R. Civ. P.). "`[W]hen a trial court sits in judgment on facts that are undisputed, an appellate court will determine whether the trial court misapplied the law to those undisputed facts.'" Moss v. Williams, 822 So.2d 392, 394 (Ala.2001) (quoting Craig Constr. Co. v. Hendrix, 568 So.2d 752, 756 (Ala.1990)).

Analysis

I. Wilshire

In entering a summary judgment in favor of Wilshire, the trial court determined that the counteroffer was legally enforceable and, therefore, that the Hunters' sole remedy was the return of the earnest-money deposit. The Hunters argue, however, that the counteroffer is "not operable as a matter of law." They argue that the purchase agreement and the addendum to that agreement constitute the only enforceable contract between the Hunters and Wilshire, and that that contract defines the rights of the parties.³ The Hunters assert that Wilshire breached the terms of the purchase agreement and the addendum, and that, therefore, they are entitled to specific performance and the reimbursement of the expenses they incurred as a result of Wilshire's breach.

We first consider whether the counteroffer is an enforceable contract. "`"The requisite elements of [a valid contract] include: an offer and an acceptance, consideration, and mutual assent to terms essential to the formation of a contract."'" Avis Rent A Car Sys., Inc. v. Heilman, 876 So.2d 1111, 1118 (Ala.2003) (quoting Ex parte Grant, 711 So.2d 464, 465 (Ala. 1997), quoting in turn Strength v. Alabama Dep't of Finance, 622 So.2d 1283, 1289 (Ala.1993)). Here, on October 7, 2002, the Hunters offered Wilshire $118,900 to purchase a house. The Hunters' offer expired on October 9, 2002. On October 11, 2002, Wilshire presented the unsigned addendum to James Hunter, and he signed it.⁴ On November 4, 2002, James Hunter received and signed the counteroffer, which, most notably, limited the Hunters' remedies.⁵ On November 13, 2002, Wilshire first acknowledged receipt of the purchase agreement (which had by that time expired), signed the addendum, and signed the counteroffer, in that order.

On November 4, 2002, by signing the counteroffer, the Hunters offered to purchase the house pursuant to the terms of the counteroffer for $119,500. The terms of the counteroffer were inconsistent with the terms of the purchase agreement and the addendum. Specifically, the counteroffer states that if Wilshire is unable to convey "good and insurable" title to the property, Wilshire can either extend the closing date or void the contract. The purchase agreement provides that "A FURTHER PERIOD OF THIRTY (30) DAYS shall be allowed for closing if: (A) the closing is delayed by reason of title defects which can be readily corrected ...." (Capitalization in original.) Although the purchase agreement states that "[i]f ... the title is not marketable ... [the earnest-money] deposit [is] to be refunded," that statement does not purport to limit the Hunters' remedy. However, the counteroffer limits the Hunters' remedy, in the event of a default by Wilshire, to the return of the earnest-money deposit. In this case, Wilshire was unable to convey marketable title because of numerous judgments and liens against the property and because the house encroached on an adjoining property line. In accordance with the terms of the counteroffer, Wilshire attempted to return the earnest money to the Hunters. The Hunters refused the earnest money and sued for specific performance and damages.

Wilshire originated, but did not sign, the counteroffer. The counteroffer specified the manner in which it was to be accepted, stating that it "shall not become a binding Contract until signed by [Wilshire]." See Paterson & Edey Lumber Co. v. Carolina-Portland, 215 Ala. 621, 626, 112 So. 245, 249 (1927); Hardwood Package Co. v. Courtney, 253 F. 929, 931 (4th Cir.1918) ("an unsigned contract cannot be enforced by either of the parties, however completely it may express their mutual agreement, if it was also agreed that the contract should not be binding until signed by both of them"). See also 1 Arthur L. Corbin, Corbin on Contracts § 3.34 at 487 (Joseph M. Perillo ed., 1993) ("When one party solicits and receives an . . . expression of agreement from another, clearly specifying that there is to be no contract until ... assent by some officer or representative of the...