Phillips v. Gibson, 91-CV-0258-ST
| Decision Date | 19 April 1995 |
| Docket Number | No. 91-CV-0258-ST,91-CV-0258-ST |
| Citation | 133 Or.App. 760,893 P.2d 574 |
| Parties | Larry R. PHILLIPS, dba Phillips Construction, Appellant, v. John R. GIBSON and Gail Gibson, husband and wife, Respondents. ; CA A83710. |
| Court | Oregon Court of Appeals |
Gerald A. Martin, Bend, argued the cause, for appellant. With him on the brief was Francis & Martin.
Gregory P. Lynch, Bend, argued the cause, for respondents. With him on the brief were Stanley D. Austin and Holmes, Hurley, Bryant, Lovlien & Lynch.
Before RIGGS, P.J., and LANDAU and LEESON, JJ.
Plaintiff brought this action for lost profits on a construction contract allegedly breached by defendants. The trial court, sitting without a jury, concluded that the contract had been rescinded and dismissed all claims. 1 Plaintiff appeals. We review for errors of law, and reverse.
Plaintiff, a licensed building contractor, entered into a contract with defendants on August 15, 1990, to construct a residence for them. Plaintiff also orally agreed to assist defendants in obtaining financing by cooperating with defendants' lender. Under the terms of the contract, defendants made a $10,000 deposit and plaintiff began site preparation work. On September 12, 1990, the lender required plaintiff to sign a "Guaranty of Completion and Performance" as a condition of releasing loan funds to defendants. The guaranty would have obligated plaintiff to cure any loan default by defendants and to complete the project at plaintiff's sole expense. Plaintiff had never before been asked to sign such a document and, after consulting with an attorney, refused to sign. Defendants subsequently ordered plaintiff to cease work, because plaintiff's refusal to sign the guaranty prevented defendants from receiving the loan.
On September 26, 1990, plaintiff sent defendants a written accounting of the $10,000 deposit and a mutual release. Plaintiff calculated that defendants were entitled to a refund of $4,221.63, after subtracting expenses and the 15 percent commission specified in the contract. Defendants refused to sign the release and threatened to sue plaintiff for breach of contract because he would not sign the guaranty required by the lender. Defendants then brought before the Construction Contractors Board a claim for damages against plaintiff. 2 See ORS 701.140. On October 16, plaintiff hand delivered to defendants a letter prepared by plaintiff's attorney, accompanied by a check and defendants' blueprints and building permits. The letter recalculated the refund defendants were entitled to receive, increasing the amount to $5,115.33 by waiving plaintiff's commission under the contract, and offered defendants two options:
Defendants cashed the check, but did not withdraw their claim against plaintiff before the Construction Contractors Board. Plaintiff subsequently filed this breach of contract action in Deschutes County Circuit Court. 3
The trial court found that plaintiff's refusal to sign the lender's guaranty was reasonable, because the uncontroverted testimony that the guaranty was not standard in the industry meant that plaintiff could not have anticipated that his promise to cooperate with defendants' lender would involve such a request. Although it concluded that defendants' repudiation of the contract by ordering plaintiff to cease work was a material breach, the trial court nonetheless held that plaintiff had rescinded the contract and was precluded from seeking damages under it. The sole issue on appeal is whether the contract was rescinded.
Defendants assert that the trial court made a factual finding that both parties intended to rescind the contract and, therefore, it must be upheld if there is any evidence to support it. Saga Enterprises, Inc. v. Coldwell, Banker and Co., 287 Or. 169, 180, 598 P.2d 285 (1979). However, the "any evidence" standard does not apply where, as here, the historical facts are undisputed and the trial court's ruling involved the application of the law to the communications between the parties. Bollenback v. Continental Casualty Co., 243 Or. 498, 510, 414 P.2d 802 (1966). Intent to rescind is not the issue; the real question is whether plaintiff's actions met the legal standard for rescission. Stovall v. Publishers Paper Co., 284 Or. 53, 63, 584 P.2d 1375 (1978).
When one party to a contract has repudiated it, the other party may choose between the alternative remedies of accepting rescission and seeking restitution or bringing an action for damages. Bollenback, 243 Or. at 506, 414 P.2d 802; Durflinger v. Statesman Life Ins. Co., 100 Or.App. 581, 584, 787 P.2d 892 (1990). Defendants argue that plaintiff accepted rescission by offering a check for the unspent balance of their deposit. Plaintiff contends that his letter of October 16 was merely an offer to rescind that was not accepted by defendants because they chose to continue their claim before the Construction Contractors Board. According to plaintiff, rescission of a contract is the creation of a new contract, which is accomplished only by mutual agreement of both parties, McGrath v. Electrical Const. Co., 230 Or. 295, 305, 364 P.2d 604, 370 P.2d 231 (1961), and, because there was no mutual agreement in this case, there was no rescission.
A party who wishes to exercise the right to rescind must give the other party notice that unequivocally and unconditionally conveys the intent to...
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Soliz v. Jimenez
...arguments is entirely correct. We agree with plaintiffs that the May 27 letter acted as an offer to rescind. See Phillips v. Gibson, 133 Or.App. 760, 764, 893 P.2d 574 (1995). However, that letter also demanded that Jimenez respond to their new offer or agree to perform under the contract b......