PACIFIC GROVE HOLDING, LLC v. Hardy

• Decision Date: 27 March 2000
• Docket Number: No. A99A1928.,A99A1928.
• Citation: 243 Ga. App. 161,532 S.E.2d 710
• Parties: PACIFIC GROVE HOLDING, LLC v. HARDY.
• Court: Georgia Court of Appeals

532 S.E.2d 710

243 Ga. App. 161

PACIFIC GROVE HOLDING, LLC v. HARDY.

No. A99A1928.

Court of Appeals of Georgia.

March 27, 2000.

Shapiro, Fussell, Wedge, Smotherman, Martin & Price, Nicholas P. Papleacos, Atlanta, for appellant.

Talley & Darden, Jeffrey B. Talley, Charles L. Davis, Jr., Marietta, for appellee.

MILLER, Judge.

Charles Hardy granted Pacific Grove Holding a 90-day option to purchase land in Paulding County in exchange for $25,000, to be held in escrow by Park West Realty. The stated option period expired September 13, 1998, without Pacific Grove giving Hardy written notice of its intent to exercise the option, and Hardy demanded that Park West disburse the $25,000 to him. Contending that the contractually specified contingency regarding access to sewer lines had not been met, Pacific Grove purported to terminate the option agreement on September 29, 1998, and demanded that the escrow money be refunded to it. Park West initiated this action for interpleader and, after tendering the $25,000 into the registry of the court, was released by consent order. Hardy and Pacific Grove answered the interpleader, and each cross-claimed for the escrow money. On cross-motions for summary judgment, the following, largely undisputed, facts were adduced.

Pacific Grove's agent contacted Park West and asked it to contact Hardy and negotiate an option agreement for Pacific Grove to purchase real property for which Hardy himself held an option to purchase. Pacific Grove forwarded to Park West a proposed option agreement, and when this was presented to Hardy, he made several changes to it. Specifically, Hardy rejected the optionee's right to an automatic extension (upon payment of an additional $25,000). Also, Hardy rejected language whereby he would warrant that water, sewer, and power lines sufficient to support a 200-unit multifamily project would be available at the property lines. Rather, Hardy proposed that the availability of these utilities be classified as contingencies to be met by the purchaser or grantee of the option.

After further negotiation, Pacific Grove drafted the agreement executed on June 15, 1998. In Paragraph 5, Hardy warranted only that he had good title to the property. Paragraph 6 provided: "During the Option Period, the following contingencies shall be met: a. Determine that water, sewer and power lines will prior to Closing, be available at the property lines...."

Paragraph 7 provided:

If Grantee exercises the option ... the sale shall be closed within thirty (30) days from the date of Grantee's notifying Grantor of the exercise of its option.... In the event Grantee fails to exercise its option, or having exercised its option, fails to close the purchase for any reason other than the failure of title on the part of the Grantor, or one or more contingencies are not met or Grantor's breach of some obligation of Grantor hereunder, then Grantee shall not be entitled to a refund of any part of the Option Money paid hereunder, and the retention thereof shall be Grantor's sole right and remedy. However, should Grantor refuse to perform, title to the Optioned Property be other than as represented herein, one or more contingencies is not met as specified herein or Grantor otherwise defaults hereunder, Grantee shall ... be entitled to a refund of the Option Money ... or may proceed with any other remedy available....

And Paragraph 12 provided: "If Grantee elects to terminate this Option for any reason other than Grantor's default, failure of title as required herein or one or more contingencies are not met, Grantee shall forfeit the $25,000 Option Money."

One week after the parties executed this option agreement, the Paulding County Department of Public Works informed Pacific Grove that:

We have reviewed the proposed site location for "The Pines at Macland" along Hwy 120 and have determined there to be future sewer service available. A new outfall sewer has been designed with construction estimated to begin in the fall of 1998. The sewer is estimated to be completed and fully operational in the fall of 1999.... Sufficient sewer treatment capacity is currently available at the Paulding County Land Application System to support a 206-unit development in this area.

Subsequent letters (still within the option period) from the County to Pacific Grove recount Pacific Grove's offer to construct 1,617 feet of outfall sewer along the western boundary of the property in exchange for the County's providing sewer to the proposed development. As the end of the 90-day option period approached, Pacific Grove repeatedly assured Park West that Pacific Grove would purchase the property. After the express option period expired on September 13, 1998, without Pacific Grove exercising its option, Pacific Grove requested an extension. But Hardy was unwilling to grant an extension except for additional consideration and only after payment of the original $25,000. When informed that Park West intended to disburse the money to Hardy, Pacific Grove objected on the ground that Hardy had failed to provide sewer service to the property.

Pacific Grove maintained that the option agreement put the onus on Hardy to obtain appropriate sewer services to the property. Hardy purportedly agreed orally to extend the option period but never obtained a binding commitment from the County to install the sewer. According to Pacific Grove, its intended lender would not commit to finance the project. Part of the problem in obtaining sewer service is that Hardy had not given permission to cross the site of his personal residence in order to tap into an existing line.

The trial court concluded that the option period expired without Pacific Grove exercising the option or terminating the agreement; that the option was not exercised by Pacific Grove because the contingency of the sewer line had not been met; that the indefinite oral extension was ineffective due to the lack of certainty; and that the agreement did not put any performance obligation on Hardy to make the sewer line available but imposed the duty on Pacific Grove to determine the availability of sewer service so it could timely exercise its right to terminate due to the unmet contingency. Since Pacific Grove neither exercised its option nor terminated the agreement during the 90-day option period, the trial court ruled that Pacific Grove was not entitled to a refund of the $25,000 option money and awarded it to Hardy. Pacific Grove appeals from the order denying its motion for summary judgment and granting that of Hardy.

1. The first enumeration contends the trial court erred in holding that the alleged oral agreement with Hardy to extend the option period was unenforceable and so did not estop Hardy from claiming the option period expired without Pacific Grove either exercising its option or timely terminating the agreement. While there is no evidence to support an estoppel, we nevertheless conclude a factual question exists regarding a waiver.

(a) Waiver and estoppel are often similar but not identical.¹ In the case of a waiver the original contract remains; the [promised performance or, as here, the optionee's election] is due; the [grantor] merely waives strict performance as to time, so as to prevent him from declaring a forfeiture on account of a past failure. Generally he may still demand and require compliance with the contract, upon reasonable notice. In the case of an estoppel in pais, by reason of his conduct or acts, he will not be allowed to claim that there has been a failure in compliance by the other party, so as to relieve him.²

In this case, the evidence of a waiver is that Pacific Grove informed Hardy that obtaining the sewer service was Hardy's responsibility and that Hardy orally agreed to an extension, as requested by Pacific Grove. This is contradicted by proof that Hardy would agree to an extension only upon release of the original $25,000 to him and payment of additional consideration. Viewed in the light most favorable to Pacific Grove, there is no conduct by Hardy that made a timely election impossible. Certainly there is no proof that Hardy, in response to any specific proposal, refused the consent needed to make sewer service available to the option property.³ The root cause of the delay is the uncertainty of the availability of sewer service. Pacific Grove was, in our view, under the erroneous impression that the option agreement made Hardy responsible for delivering sewer service to the property line, at his own expense. But that erroneous impression is not any conduct by Hardy on which Pacific Grove reasonably relied to its detriment so as to amount to an estoppel. Pacific Grove's inaction was premised on its own mistaken assumptions.

( b) An option to purchase land falls within that portion of the Statute of Frauds⁴ pertaining to "[a]ny contract for [the] sale of lands, or any interest in, or concerning lands."⁵ Exercise of the option must be in writing⁶ and is effective only upon receipt.⁷ But even though the original option agreement here recites it is the "entire...