Kaiser v. Market Square Discount Liquors, 97CA1820.
| Decision Date | 29 April 1999 |
| Docket Number | No. 97CA1820.,97CA1820. |
| Citation | 992 P.2d 636 |
| Parties | Jay A. KAISER, an individual, contempt respondent, and AMCAP/Denver Limited Partnership, a Delaware limited partnership, contempt respondent, Plaintiffs-Appellees and Cross-Appellants, and Silver & Deboskey, P.C., contempt respondent, Appellee, v. MARKET SQUARE DISCOUNT LIQUORS, INC., a Colorado corporation, contempt petitioner; Donna Levine, an individual, contempt petitioner; and Freid Zarie, an individual, contempt petitioner, Defendants-Appellants and Cross-Appellees. |
| Court | Colorado Court of Appeals |
Silver & Deboskey, P.C., Joe L. Silver, Steven W. Kelly, Denver, Colorado, for Plaintiff-Appellees and Cross-Appellants
Kelly/Haglund/Garnsey & Kahn LLC., Edwin S. Kahn, Lori J. Potter, Denver, Colorado, for Appellee
Burns, Figa & Will, P.C., Phillip S. Figa, Alexander R. Rothrock, Audrey A. Baker, Englewood, Colorado, for Defendants-Appellants and Cross-Appellees
Opinion by Judge PLANK.
Defendants, Market Square Discount Liquors, Inc., a Colorado corporation, and Donna Levine and Freid Zarie, individuals associated with that business, (sellers) appeal the amount of damages awarded by the trial court on their counterclaim in a contract dispute. Plaintiffs, Amcap/Denver Limited Partnership, a Delaware limited partnership, and Jay Kaiser, president of Amcap/Denver's general partner, (buyers) cross-appeal the amount of that judgment. Sellers also appeal the trial court's dismissal of a contempt citation against buyers and their attorneys. We reverse and remand with directions.
Buyers leased to sellers space in their Aurora, Colorado, shopping center for the operation of sellers' retail liquor business. Subsequently, buyers desired to relocate or purchase sellers' business to accommodate the expansion request of a supermarket located near the liquor store. Sellers initially declined to relocate or sell the business, but eventually agreed to do so for a price based upon its annual "net operating income." The sale was to include certain personal property and the transfer or assignment of various rights of sellers to buyers.
Before the deal could be closed, a dispute arose between the parties over various matters, which resulted in this lawsuit. In an attempt to settle the suit, buyers and sellers entered into a stipulation for the sale of the business which incorporated their prior agreement with modifications. The stipulation required a higher but fixed purchase price of $285,000, not based upon the business' income, set a closing date, and required sellers to confess judgment for possession of the premises on that date regardless of whether the closing actually occurred.
At the attempted closing on the date set, buyers did not have certified funds or cash to pay a portion of the purchase price to sellers as required by the stipulation, and sellers could not establish that certain conditions had been met. After sellers had signed a relinquishment of the business' liquor license and other documents, buyers objected to continuing the closing. Sellers offered to put funds in escrow to ensure that their obligations would be met, but buyers rejected that offer. Buyers instead proposed to modify the stipulation, most notably by reducing the purchase price, but sellers rejected that proposal. The closing then failed, and buyers refused to return the documents signed by sellers.
Buyers took possession of the premises pursuant to the judgment earlier confessed by sellers and, using sellers' relinquishment obtained at the failed closing, acquired a temporary liquor license through another entity, and eventually a permanent license, for a new retail liquor business located elsewhere in the shopping center.
Two days after the failed closing, sellers sought and were granted a temporary restraining order (TRO) to prevent buyers from demolishing the building on the premises in which the liquor store was located. However, within an hour after the TRO entered, buyers' agents destroyed the building to prepare for the supermarket's expansion. Before trial, the court dismissed a contempt citation against buyers and their attorneys because sellers had not posted the required bond in the amount of $1 prior to the demolition of the building.
Before trial, the court granted a preliminary injunction which, among other provisions, ordered buyers to pay the indebtedness of sellers to a bank, secured by their leasehold, as well as sellers' trade payables owing to liquor suppliers and others, totaling approximately $87,000.
After a bench trial, the court ruled that buyers had materially breached the stipulation by failing to have cash or certified funds at closing, while sellers had committed minor breaches. The court awarded sellers $75,000 as the balance of damages for buyers' breach of contract. Sellers thus received approximately $162,000 of the stipulated purchase price of $285,000.
The trial court initially stated that its reduction in the award of damages from the purchase price was justified by the doctrine of mitigation of damages, noting that sellers had failed to meet certain conditions prior to closing and had thus contributed to its failure. Upon reconsideration, noting that mitigation of damages is an affirmative defense that must be properly pled, the trial court modified the judgment to indicate that the reduction in damages was because sellers did not come before the court with "clean hands" and was based upon the "totality of the circumstances." This appeal and cross-appeal followed.
After judgment entered in favor of sellers, they filed a notice of appeal in this court with a contemporaneous motion to determine if the judgment was an appealable final order. A division of this court ruled that it was, and buyers then sought and were granted leave to file an out-of-time cross-appeal by another division of this court, over sellers' objection. Sellers contend that we should dismiss the cross-appeal, but we decline to revisit that determination, and conclude that buyers' cross-appeal was properly filed.
Sellers contend that the trial court erred by improperly reducing their award of damages. We agree.
In a breach of contract action, the objective is to place the injured party in the position it would have been in but for the breach. The prevailing party is therefore entitled to recover the amount of damages necessary to accomplish that result. McDonald's Corp. v. Brentwood Center, Ltd., 942 P.2d 1308 (Colo.App.1997).
The amount of damages awarded for a breach of contract cannot be based on speculation or conjecture; all that is required, however, is that the damages be determined with "reasonable certainty." Tull v. Gundersons, Inc., 709 P.2d 940, 943 (Colo.1985).
Whether a breach of a contract is material, and therefore excuses further performance by the other party, is a question of fact. In deciding whether a breach is material, the trier of fact should consider "[t]he extent to which an injured party will obtain substantial benefit from the contract, as well as the adequacy of compensation in damages." Converse v. Zinke, 635 P.2d 882, 887 (Colo.1981).
Whether a written contract is ambiguous and, if not, how the unambiguous contractual language should be construed, are questions of law that we review de novo. We are not bound by the trial court's construction of unambiguous contractual language, nor by its finding that a contract is unambiguous. Dorman v. Petrol Aspen, Inc., 914 P.2d 909 (Colo.1996). A contract is ambiguous only if it is fairly susceptible of more than one interpretation. Fibreglas Fabricators, Inc. v. Kylberg, 799 P.2d 371 (Colo.1990).
When construing an unambiguous contract, the court may not rewrite its terms but must instead enforce it as written. USI Properties East, Inc. v. Simpson, 938 P.2d 168 (Colo.1997).
Our review of the stipulation reveals no ambiguity, and we therefore agree with the trial court that the stipulation is an unambiguous contract. We must therefore enforce it as written.
Here, the trial court found, with support in the record, that buyers did not have cash or certified funds at closing as required by the stipulation, which states in pertinent part:
The purchase price payable by [buyers] shall be modified to $285,000, payable in the amount of $175,000 in cash at closing, and by the execution of a purchase money promissory note in the amount of $110,000....
We agree with the trial court's interpretation of the stipulation, and, thus, conclude that buyers were required to pay to sellers the sum of $175,000 in cash at closing.
The trial court found that buyers' inability to tender the purchase price in cash or certified funds at closing was a material breach of the stipulation. Because there is support in the record for this finding, we will not disturb it on appeal. The trial court also implicitly found that sellers' breaches were not material, and that finding also has support in the record and will not be disturbed. See Converse v. Zinke, supra; Page v. Clark, 197 Colo. 306, 592 P.2d 792 (1979).
Furthermore, sellers, by granting possession to buyers in advance, had already substantially performed under the stipulation prior to the closing.
Sellers were entitled to the benefit of their bargain and to be placed in the same position they would have been in absent buyers' material breach and their own nonmaterial breaches. Hence, the trial court erred by not awarding damages in accordance with the contract.
The trial court's finding of sellers' unclean hands is not sufficient to justify a reduction of damages to be awarded to sellers, nor can the trial court do so on the basis of the "totality of the circumstances." See USI Properties East, Inc. v. Simpson, supra.
The clean hands doctrine can be used only as a defense to a claim in equity, not to a claim at law such as that presented here. Golden Press, Inc. v. Rylands, 124...
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