Lee v. Koehler
| Decision Date | 01 June 2005 |
| Citation | 112 P.3d 477,200 Or. App. 85 |
| Parties | William LEE and Pamela Lee, Respondents, v. Dieter KOEHLER, Appellant. |
| Court | Oregon Court of Appeals |
Greg Hendrix, Bend, argued the cause for appellant. With him on the brief was Hendrix, Brinich & Bertalan, LLP.
James A. Wallan, Medford, argued the cause for respondents. With him on the brief was Hornecker, Cowling, Hassen & Heysell, L.L.P.
Before LANDAU, Presiding Judge, and ARMSTRONG, Judge, and DEITS, Judge pro tempore.
Defendant appeals a judgment for plaintiffs in a dispute arising out of a contract to sell real property. Plaintiffs brought a claim for specific performance of the contract, and, in the alternative, a claim for damages for breach of the contract. The trial court entered judgment for defendant on the specific performance claim but entered judgment for and awarded damages to plaintiffs on the breach of contract claim. We affirm.
The property at the heart of this dispute is approximately 40 acres of undeveloped land near Powell Butte in Crook County. Plaintiffs, with the assistance of their real estate agent, offered to purchase the property from defendant. The parties negotiated and entered into a detailed purchase agreement on September 27, 2001. The purchase agreement consisted of a preprinted "Real Estate Sale Agreement" and two addenda, Addendum B and Addendum C.1 Four provisions of the contract are relevant to this dispute.
First, the agreement provided that defendant would pay for plaintiffs' legal expenses with regard to the purchase of the property. During the negotiations, plaintiffs' real estate agent resigned. To avoid paying a commission to a new agent, defendant asked plaintiffs not to retain another real estate agent. Instead, he suggested that plaintiffs retain an attorney to complete the transaction, whose fees defendant agreed to pay. Plaintiffs accepted defendant's offer, and the parties incorporated their agreement on that point in Addendum C to the purchase agreement, which, in relevant part, provided:
Second, the contract tied the closing date of the sale of the subject property to the closing date of the sale of plaintiffs' home in Bend, then scheduled for January 1, 2002. The preprinted "Real Estate Sale Agreement" provided that "TIME IS OF THE ESSENCE" with regard to closing and that the closing date could be extended, in certain circumstances, a maximum of five business days.
Third, among a list of "contingencies," the contract provided:
"Along the south boundary of the property, there is a 50-foot road easement which the existing road may or may not be contained within, however access to this road easement is guaranteed to the owner(s) of subject property being purchased herein."
Plaintiffs insisted on that provision because they wanted to ensure that they would have access along the south boundary of their property despite the existence of other access to the property. Defendant agreed to the provision because, at the time, he mistakenly believed that he possessed the right to use the road. He believed that the road was located either on the subject property or within an easement that he had created on the adjoining property to the south when he owned that property. He had granted the easement to Lamm, who needed the easement for access to his property located to the southeast of the subject property. However, Lamm later purchased the property that was burdened by the easement. Thus, the easement was extinguished by the merger of the servient and dominant estates. The road was, in fact, located in part on the subject property and in part on the neighboring property. Therefore, defendant would have had to reacquire easement rights from Lamm in order to comply with the guarantee in the sales agreement.
The final relevant detail of the purchase agreement is an attorney fee provision in the preprinted form. That provision states that "[t]he prevailing party in any suit, action or arbitration (excluding those filed in Small Claims Court) shall be entitled to recovery of all reasonable attorney fees and costs (including all filing and mediator fees paid in mediation) pursuant to ORCP 68."
This litigation arose after defendant refused to extend the closing date of the agreement beyond January 2002. The buyers of plaintiffs' Bend property requested that plaintiffs extend the closing date on that property to May 1, 2002, and plaintiffs agreed in early November 2001 to do that. Plaintiffs believed that such an extension automatically extended their contract with defendant because the language of the purchase agreement linked the two closings. Plaintiffs informed their attorney that they intended to provide defendant with a "Notice of Change in Close of Escrow Date," in which plaintiffs purported unilaterally to modify the closing date to May 1, 2002. Plaintiffs' attorney advised plaintiffs that it would be more diplomatic to present the modification as a request. On that advice, plaintiffs presented defendant with a document styled Addendum D and dated December 22, 2001, that would have modified the closing date to May 1, 2002. Defendant refused to sign Addendum D.
On January 4, 2002, defendant notified plaintiffs that he was terminating the purchase agreement and returning their earnest money. Plaintiffs then brought this action for specific performance and breach of contract and filed a lis pendens on the property.2
Having found another buyer for the subject property, defendant wanted the lis pendens removed, so he filed a motion for a mandatory injunction to remove it. After a three-day hearing, in which both parties testified in great detail about the facts and circumstances surrounding their contract, the trial court denied defendant's motion. The parties then filed cross-motions for summary judgment and stipulated that the transcripts from the injunction hearing constituted the facts on which the court should make its decision. The court granted summary judgment for defendant on plaintiffs' claim for specific performance and granted summary judgment for plaintiffs on their breach of contract claim. The court concluded that defendant had breached the purchase agreement because he was unable to guarantee access to the road on the south boundary of the property. The court postponed ruling on the question of damages and the question of the legal fees that plaintiffs claimed under Addendum C.
Those two questions were tried to the court on August 21, 2003. At trial, plaintiff William Lee testified that the damages resulting from defendant's breach consisted of the expense of a well draw-down test to determine whether the well on the property was sufficient for their needs. Lee also testified that they had presented a statement of their legal expenses under Addendum C but that defendant had breached the contract by refusing to pay it. Plaintiffs offered into evidence an invoice from their attorney. Defendant did not object, and the court admitted the invoice into evidence. The invoice consisted of a list of dates, services performed on those dates, and a total of charges. The services were provided between December 21, 2001 and January 21, 2002, and the total bill was for $1,522.50. Although he argued to the court as factfinder that the invoice was problematic because it did not segregate the services into those performed in furtherance of the purchase agreement and those in anticipation of litigation, defendant did not move for judgment as a matter of law or otherwise challenge the legal sufficiency of the evidence. The court declined to award plaintiffs the cost of the well drawdown test, but it did award them the $1,522.50 in attorney fees as the sole item of damages. The court entered a final judgment in the case on November 7, 2003, from which defendant appealed.
Defendant makes three assignments of error. First, he assigns error to the trial court's conclusion that he had breached the purchase agreement with regard to access to the south boundary road....
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