Kessler v. Tortoise Development, Inc.
| Decision Date | 01 May 1997 |
| Docket Number | No. 22635,22635 |
| Citation | 937 P.2d 417,130 Idaho 105 |
| Parties | Richard L. KESSLER and Cheryl L. Kessler, husband and wife, Plaintiffs-Appellants, v. TORTOISE DEVELOPMENT, INC., an Idaho corporation, Defendant-Respondent. Twin Falls, March 1997 Term |
| Court | Idaho Supreme Court |
Lloyd J. Webb (argued) and Curtis R. Webb, Lawyers, Twin Falls, for plaintiffs-appellants.
Roark, Rivers, Baxter & Phillips, Hailey, for defendant-respondent. Ray Keith Roark argued.
This is a real estate contract case. The primary issue presented is whether provisions in the contract preclude the buyer from obtaining specific performance when the seller fails to consummate the sale. We conclude the contract is ambiguous concerning the availability of specific performance. Because of this disposition of the primary issue, we also vacate the judgment granting the seller restitution and return of the premises and a writ of possession.
In 1991, Richard and Cheryl Kessler (Kessler) and Gerald Kingen (Kingen) purchased real property (the property) in Ketchum, Idaho, on which they planned to develop a In April 1994, Tortoise contracted with Avery Construction, Inc. (Avery) for Avery to construct the complex.
theater and restaurant complex (the complex). In 1993, Geoffrey Bushell (Bushell), a real estate broker, formed Tortoise Development, Inc. (Tortoise) to construct the complex.
In July 1994, Kessler and Tortoise signed a preprinted form real estate purchase and sale agreement (the purchase agreement) in which Kessler agreed to purchase the theater unit (the theater) in the complex. The purchase agreement states that Kessler deposited and Tortoise acknowledged the deposit of earnest money, which was also to serve as a down payment. The purchase agreement sets December 15, 1994 as the closing date of the purchase and provides that Kessler is entitled to possession "upon completion of the shell."
The portion of the purchase agreement entitled "DEFAULT" (the default provision) addresses only the seller's remedies upon buyer's default and does not address the buyer's remedies upon default by the seller. The portion of the purchase agreement entitled "EARNEST MONEY" (the earnest money provision) provides, in part:
If all conditions have been met by Buyer, Buyer and Seller agree that the earnest money (less credit report fees, and any other Buyer's costs) shall be refunded to Buyer in the event Buyer or Seller cannot consummate the sale due to circumstances beyond their control.
The portion of the purchase agreement entitled "TITLE INSURANCE" (the title insurance provision) provides, in part:
It is agreed that if the title of said premises is not marketable, or cannot be made so within thirty (30) days after notice containing a written statement of defects is delivered to the Seller, or if the Seller, having approved said sale fails to consummate the same as herein agreed, the earnest money shall be returned to the Buyer and Seller shall pay for the cost of title insurance, escrow and legal fees, if any.
Avery started construction of the complex, but in late July 1994 stopped working on the job and filed a lien against the property because Tortoise had not paid Avery.
On August 16, 1994, Bushell transferred the ownership of Tortoise to Kingen. Tortoise then negotiated the resumption of construction by Avery and obtained financing for the construction of the complex.
On August 23, 1994, Tortoise and Kessler signed an addendum to the purchase agreement (the addendum), stating that the earnest money to which the purchase agreement referred had not been received by Tortoise, and that the earnest money is a credit given to Kessler based on Kessler's original interest in the property. In the addendum, the closing date is changed to February 15, 1995, and Kessler reserves an option to continue the closing to no later than May 15, 1995.
Construction was not complete on February 15, 1995, and Kessler exercised the option to continue the closing to April 14, 1995. Tortoise was capable of delivering marketable title to the theater on February 15, 1995.
By January 1995, Tortoise had made nearly all the payments due to Avery, but construction was not complete. In February 1995, Tortoise paid Avery an additional amount to obtain lien releases from sub-contractors. The liens were not released. In March 1995, sub-contractors began to place liens against the property. Avery also filed a lien against the property.
Tortoise attempted to obtain a release of the liens pursuant to I.C. § 45-518 by posting a bond in the amount of 150% of the outstanding liens. After Tortoise filed the appropriate documents, Avery amended its lien causing the bond posted to fall below the amount required by statute, and Tortoise's petition to release the liens was not approved. Subsequently, additional liens were filed against the property.
On March 3, 1995, Kessler took possession of the completed shell. Kessler made improvements to the shell and began operating the theater. Kessler and Tortoise also signed a lease (the lease) for the theater, with the term of the lease to be from March 3, 1995 through the intended April 14, 1995 closing date. On or about April 15, 1995, Kingen presented two documents (the documents) for Kessler to sign: (1) a second addendum to the purchase agreement, and (2) an addendum to the lease. The documents On May 15, 1995, Kingen's attorney sent Kessler's attorney another proposed addendum to the lease by which Kessler would be required to contribute half of all legal fees, construction management fees and other costs and expenses which Tortoise would incur to complete the complex and to clear title to the property. Kessler did not accept the proposed addendum to the lease.
extended both the closing of the purchase and the term of the lease to September 15, 1995. Kessler made some modifications to the documents, signed them, and returned them to Kingen. Kingen apparently did not sign the documents.
Tortoise was unable to deliver marketable title to Kessler on the April 14, 1995 closing date because of the liens against the property. Tortoise continued to fight the liens, and title to the property remained unmarketable.
Kessler sued Tortoise seeking specific performance of the purchase agreement and a permanent injunction against Tortoise enjoining Tortoise from...
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...the parties' intent, the contract must be viewed as a whole and considered in its entirety. Kessler v. Tortoise Development, Inc., 130 Idaho 105, 107, 937 P.2d 417, 419 (1997). "If a contract's terms are clear and unambiguous, the contract's meaning and legal effect are questions of law, an......
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