Marefield Meadows, Inc. v. Lorenz

• Decision Date: 26 February 1993
• Docket Number: No. 920883,920883
• Citation: 245 Va. 255,427 S.E.2d 363
• Parties: MAREFIELD MEADOWS, INC. v. Regula LORENZ. Record
• Court: Virginia Supreme Court

Page 363

427 S.E.2d 363

245 Va. 255

MAREFIELD MEADOWS, INC. v. Regula LORENZ.

Record No. 920883.

Supreme Court of Virginia.

Feb. 26, 1993.

Thomas V. Monahan, Winchester (Hall, Monahan, Engle, Mahan & Mitchell, on briefs), for appellant.

William D. Cremins, Fairfax (John P. Flannery, II, Leesburg, Walsh & Cremins, Fairfax, on brief), for appellee.

Present: All the Justices.

LACY, Justice.

In this appeal we consider whether a contract existed for the purchase of a stallion and, if so, whether the evidence was sufficient to establish the amount of damages sustained by the sellers as a result of a breach of that contract.

In June 1987, Marefield Meadows, Inc. (MFM) and Regula Lorenz, operating as Chestnut Hollow Stable (Lorenz), entered into a partnership agreement for the joint acquisition and care of a Hanoverian stallion, Maronjo. Under the agreement MFM had a two-thirds ownership interest in the stallion and Lorenz had a one-third interest. The agreement also divided liability for the expenses of maintaining or caring for the stallion in the same proportion as the ownership interests. Either party could terminate the arrangement by requesting the sale of the stallion. In that event, the other party had the right to purchase the interest of the terminating party.

In late 1988, Lorenz resigned as Maronjo's trainer and, in her resignation letter, informed MFM that she would continue to ride Maronjo until MFM "made [its] decision as to whether [it] want[ed] to purchase [Lorenz's] one-third ownership or release him for sale." Both parties retained attorneys and, on February 23, 1989, Lorenz's attorney, Craig White, wrote a letter to MFM's attorney, Georgia Herbert, that stated, in part:

We consider Mr. Thompson to be a mutually agreed upon appraiser and in accordance with Paragraph 16 of the parties' agreement Ms. Lorenz grants [MFM] the option to purchase her interest for $26,666.66 (1/3 of $80,000). However, if [MFM] prefers, Ms. Lorenz is willing to purchase its interest in Maronjo for $53,333.33 (2/3 of $80,000).

Herbert testified that on March 9, 1989, she told White over the telephone that MFM accepted Lorenz's offer to buy MFM's interest in Maronjo based on the appraised value. Herbert then wrote to White on March 17:

On instructions from my clients I am writing to confirm my March 9, 1989 over-the-telephone acceptance of your client's offer to purchase Marefield Meadows, Inc.'s interest in Moronjo [sic] for $53,333.33 as indicated in your letters of February 23 and March 9.

....

To make things simpler for Ms. Lorenz my clients will agree to accept payment from her 60 days from now.

Lorenz did not tender the purchase price to MFM. Instead, on May 17, 1989, the day on which payment was due under the terms of the March 17 letter, Lorenz filed suit to dissolve the 1987 partnership. MFM filed a counterclaim for specific performance of Lorenz's agreement to purchase MFM's interest in Maronjo. MFM also sought to recover Lorenz's share of Maronjo's maintenance expenses which MFM had paid both before and after the agreement to purchase.

Lorenz nonsuited her dissolution action. The litigation progressed on MFM's counterclaim against Lorenz. ¹

During the pendency of the litigation, MFM asked the court to appoint a receiver to handle the sale of Maronjo. The trial court, ultimately at the request of both parties, appointed a receiver for this purpose. Maronjo was sold for $56,500 on April 29, 1990. The net proceeds from the sale amounted to $45,200. In accordance with the agreement of the parties embodied in the trial court's order of April 13, 1990, half of the net proceeds, $22,600, was paid to the clerk of the court "to be held ... and ultimately distributed in accordance with the final decision in the case." The remaining half of the net proceeds was disbursed to the parties in accordance with their respective ownership interests in Maronjo: Lorenz received $7,533.33 and MFM received $15,066.66.

After a two day hearing, the trial court, sitting without a jury, found that White's February 23 letter on Lorenz's behalf constituted an offer to buy MFM's interest in Maronjo, and that MFM accepted that offer in the March 17 letter from Herbert to White. Based upon that finding, the court held that a contract existed between Lorenz and MFM. However, the trial court found that the evidence was insufficient to show that MFM had sustained any "real damages" as a result of Lorenz's breach of that contract. The court then ordered that the remaining balance of the proceeds from Maronjo's sale be released to Lorenz.

MFM, agreeing that the trial court correctly found that a contract for purchase of Maronjo existed, appealed the court's ruling with respect to damages. Additionally, MFM objected to the court's order directing that Lorenz receive the remaining proceeds of the sale. Lorenz assigned cross-error to the trial court's ruling on the existence of a contract. We awarded an appeal on all assignments of error and cross-error. Since a finding that the contract exists is pivotal to imposing liability for damages, we will consider Lorenz's assignment of cross-error first.

I. EXISTENCE OF A CONTRACT

Lorenz asserts that the trial court erred in holding that the letters between the parties created a contract. Lorenz argues that there was no intent to contract, that there was no agreement on the necessary terms, and that the offer was conditional upon Lorenz's ability to procure financing. Lorenz contends that the parties to a contract must intend to be bound by that contract and, as an indicia of that intent, the court must find that there was a meeting of the minds to determine that there is a valid contract. Harris v. Citizens Bank & Trust Co., 172 Va. 111, 143, 200 S.E. 652, 665 (1939). She claims that her testimony and her attorney's testimony show that neither she nor the attorney intended the February 23 letter to be an offer.

A meeting of the minds is essential to the formation of a contract, but "the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts." Lucy v. Zehmer, 196 Va. 493, 503, 84 S.E.2d 516, 522 (1954). MFM was entitled to believe that Lorenz meant what she said, and to rely on the clear language of White's February 23 letter: "Ms. Lorenz is willing to purchase [MFM's] interest in Maronjo for $53,333.33." The trial court correctly found that this language constituted an offer by Lorenz to purchase MFM's interest. Neither Lorenz's nor White's unexpressed reservations or intentions can override the written terms of that letter. Wells v. Weston, 229 Va. 72, 79, 326 S.E.2d 672, 676 (1985).

Lorenz next argues that, even if the February 23 correspondence constituted an offer, the March 17 letter did not create a valid contract because it did not contain an agreement on all the necessary terms and it did not "mirror the offer" as required when creating a contract through the exchange of letters. Gibney & Co. v. Arlington Brewing Co., 112 Va. 117, 121, 70 S.E. 485, 487 (1911). We disagree.

The March 17 letter accepted Lorenz's offer to purchase MFM's interest in the stallion "as indicated in [White's] letters of February 23 and March 9." This acceptance was unqualified and introduced no new terms. Thus, it meets the legal requirements for the creation of a contract through letters. Id. Issues such as liability for the ongoing expense of caring for the horse, breeding rights, and breeding contracts related to Maronjo set out in subsequent paragraphs of the March 17 letter, while possibly relevant to the dissolution of the partnership, were not necessary to the closing of the purchase agreement and were not identified by either party as contingencies or conditions of the agreement.

Finally, Lorenz's offer was not conditioned on her ability to obtain financing for the purchase. White testified that the February 23 letter contained no qualifications of the offer of sale. While White's March 9 letter informed Herbert that Ms. Lorenz was attempting to secure financing "to enable her to purchase [MFM's] interest in Maronjo," the letter did not state that Lorenz's success in doing so was a condition of, or prerequisite to, the creation of the contract.

In summary, White's February 23 letter constituted an offer by Lorenz to purchase MFM's interest in the stallion for $53,333.33. MFM accepted this offer through Herbert's March 17, 1989 letter. Accordingly, the trial court did not err in determining that a valid contract existed.

II. PROOF OF DAMAGES

MFM sought damages for breach of contract and sought recovery of one-third of the maintenance expenses it incurred for Maronjo from before the date of the contract until the court appointed a receiver to sell the stallion. The trial court denied MFM's claims in their entirety, stating that the evidence was "tangled and conflicting," making it "impossible for the court to fix any sp[e]cific amount of damages," and that MFM failed to prove that it had suffered "any real damages."

Under well-settled principles of appellate review, factual findings of a trial court are not reversed unless they are plainly wrong or without evidence to support them. Meredith v. Goodwyn, 219 Va. 1025, 1028, 254 S.E.2d 74, 76 (1979). Nevertheless, after reviewing this record, we conclude that MFM did incur "real damages" and that it provided sufficient evidence to support the recovery it seeks.

A. Breach of Contract Damages

The remedy for breach of contract is intended to put the injured party in the same position in which it would have been had the contract been performed. Appalachian Power Co. v. Walker, 214 Va. 524, 535, 201 S.E.2d 758, 767 (1974). In this case, the offer and acceptance letters establish the agreed purchase price of MFM's interest at $53,333.33. MFM received $15,066.66 from the sale of Maronjo, and credited this amount against its claim for the purchase price. Consequently, MFM reduced the amount of...