Schell v. Scallon

• Decision Date: 25 January 2019
• Docket Number: S-18-0094
• Citation: 433 P.3d 879
• Parties: Dustin D. SCHELL and Lonnie N. Schell, Appellants (Plaintiffs), v. Dustin SCALLON and Lance Scallon, Appellees (Defendants).
• Court: Wyoming Supreme Court

433 P.3d 879

Dustin D. SCHELL and Lonnie N. Schell, Appellants (Plaintiffs),

v.Dustin SCALLON and Lance Scallon, Appellees (Defendants).

S-18-0094

Supreme Court of Wyoming.

January 25, 2019

Representing Appellant: Randall T. Cox, Cox, Simper & Thrall, Gillette, Wyoming. Argument by Mr. Cox.

Representing Appellee: Tad T. Daly, Daly & Sorenson, LLC, Gillette, Wyoming. Argument by Mr. Daly.

Before DAVIS, C.J., and BURKE^* , FOX, KAUTZ, and BOOMGAARDEN, JJ.

BOOMGAARDEN, Justice.

[¶1] Appellants, Dustin and Lonnie Schell (collectively, "Buyers"), purchased a residential property from Appellees, Dustin and Lance Scallon (collectively, "Sellers"). The purchase contract for the property required, "Seller to complete a fully functional water well prior to closing." Buyers alleged Sellers failed to comply with that requirement and breached the contract. After a bench trial, the district court entered judgment in favor of Sellers. We affirm.

ISSUES

[¶2] We consolidate and rephrase the issues in this case as follows:

1. Did the district court err when it ruled that Sellers completed a fully functional well by closing and, thus, did not breach the purchase contract?

2. Did the district court commit reversible error by excluding particular testimony or exhibits offered by Buyers?

FACTS

[¶3] Prior to listing their residential property for sale, Sellers obtained water by hauling it to a cistern on the property, but they understood potential buyers may not be able to obtain financing to purchase a property that lacked its own water supply. Sellers consequently decided to drill a water well, and around the end of January 2015, Sellers contracted with Stan Davis to drill the well. Sellers obtained a groundwater permit from the State Engineer’s Office in February, and Mr. Davis began drilling in March.

[¶4] Sellers listed the property for sale about a month after contracting with Mr. Davis. On March 1, 2015, Buyers offered to purchase the property. Buyers used a standard Wyoming Association of Realtors form for their proposed purchase contract. Buyers supplemented the form’s boilerplate language with four "additional provisions," one of which required, "Seller to complete a fully functional water well prior to closing." Buyers did not request any other terms or conditions be included related to drilling the well, and the contract did not reference any standards or performance specifications for the well other than being "fully functional." Sellers responded with a counter-offer that included the well requirement, unamended, and Buyers accepted the counter-offer three days later.

[¶5] The parties initially scheduled the closing date for June 1, 2015, but at Buyers’ request, the parties moved up the date to May 11th, and then again to April 27th. Despite the expedited timeframe, Mr. Davis completed the well and installed a pump on April 10, 2015. Sellers used the well prior to closing and did not have any issues with the well or the taste, clarity, or quantity of water from the well. At the time of closing, Sellers believed the well was fully functioning.

[¶6] Buyers did not inspect the well prior to closing, other than obtaining a water sample that passed their lender’s required test. Buyers moved into the home on the day of closing. Around the time of closing, Sellers requested that Mr. Davis install a deeper, more powerful pump, at no charge to Buyers, to help the well function better during drought conditions. Buyers consented, and Mr. Davis returned to the property after the closing and installed the new pump.

[¶7] Buyers began experiencing problems with the well over the next several months, including discolored water, algae, and silt clogging water filters and appliances. At Buyers’ request, Mr. Scallon returned to the property on a few occasions to install landscaping and to help Buyers fix a problem with the booster pump, which was separate from the well and moved water from the cistern into the home. The district court judge heard conflicting testimony at trial on whether Buyers informed Mr. Scallon about their concerns with the well during that time.

[¶8] In March 2016, Buyers sought advice about killing the algae in their water system from Cliff Ruby, a licensed well driller. He recommended applying chlorine tablets in the well casing and cistern, but that did not end the problem. The well quit working on June 27, 2016, prompting Buyers to have their well inspected and to contact Mr. Ruby again. The well’s pump and tubing were pulled, and Josh Cowan with Windcreek Services lowered a camera down the well and made a video recording. Following the inspection, Buyers accepted Mr. Ruby’s recommendation and had Mr. Ruby plug the well and drill a new one.

[¶9] Buyers initiated this action against Sellers in December 2016, raising claims of fraud, negligence, and breach of contract. The fraud and negligence claims were dismissed on summary judgment and are not part of this appeal. The district court conducted a bench trial on the breach of contract claim. Witnesses at the trial included Dustin Schell, Dustin Scallon and his wife, Danielle, and representatives of the companies that helped with Buyers’ post-closing well inspection. Buyers also called Mr. Ruby as an expert witness. He testified that he found problems with the well’s construction when he viewed the downhole video and later plugged the well in June 2016. He testified that he thought the video showed a hole in the casing but admitted he did not know when that hole was created. Mr. Ruby also opined that the well did not comply with the State Engineer’s minimum construction standards for water wells or with common industry practices. Mr. Ruby opined that the well was not functional when he observed it, but later admitted that he believed a well could still be functional even if it did not comply with the minimum construction standards.

[¶10] After trial, the district court ruled that Buyers did not satisfy their burden of proof and concluded that Sellers had completed a fully functioning water well prior to closing. The district court entered judgment in favor of Sellers, stating:

In this case, the Plaintiffs’ real estate agent added the language requiring the water well. That language did not require a well that produced a certain amount of water. It did not require a well that produced water of a certain quality (although the evidence established that the one test of the water that the Plaintiffs’ real estate agent performed showed the water to be satisfactory). The contract did not require that the well meet certain minimum engineering standards. The contract did not require that the well produce water for a certain period of time.

Based upon the totality of the evidence, the Court concludes that the well was fully functional as of the date of closing. It produced sufficient water for a single family residential dwelling, which was the purpose of the contract. Although the Court considered the expert testimony, that testimony established that the well, as constructed, could function. While it may have been a "marginal" well, the well was a fully functional water well for at least a couple of weeks after closing. Any warranties beyond the well functioning at the time of closing would have been subsumed by the contract’s right to inspect and the "as is" clause. See Rogers v. Wright , 2016 WY 10, ¶ 38, 366 P.3d 1264, 1277 (Wyo. 2016).

Buyers appealed the district court’s judgment.

STANDARD OF REVIEW

[¶11] After a bench trial, we review the trial court’s findings of fact for clear error and its conclusions of law de novo. Moore v. Wolititch , 2015 WY 11, ¶ 9, 341 P.3d 421, 423 (Wyo. 2015) (citing Clark v. Ryan Park Prop. & Homeowners Ass’n , 2014 WY 169, ¶ 6, 340 P.3d 288, 289 (Wyo. 2014) ). A trial court’s rulings on the admissibility of evidence are within its sound discretion and we will not disturb those rulings absent a clear abuse of discretion. Black Diamond Energy, Inc. v. Encana Oil & Gas (USA) Inc. , 2014 WY 64, ¶ 34, 326 P.3d 904, 913 (Wyo. 2014) (citing City of Gillette v. Hladky Constr., Inc. , 2008 WY 134, ¶ 84, 196 P.3d 184, 211 (Wyo. 2008) ).

DISCUSSION

[¶12] This case involves the water well Sellers paid to have drilled on their property. It does not include causes of action against the well driller or involve the agreement between Sellers and the well driller. Buyers allege Sellers breached the contract to purchase the property by failing to complete a fully functional water well prior to closing. The parties disagree about the meaning of that contract requirement and whether Sellers satisfied it.

I. Interpretation of the Purchase Contract

[¶13] According to Buyers, a "fully functional water well" means a well that produces a suitable quantity and quality of water for domestic use for the reasonable life of the well, a period which Buyers also assert must be longer than just the time between the well’s completion and the date of Buyers’ closing. Buyers also argue the well could not be considered "fully functional" under the purchase contract because it did not meet the State Engineer’s Office’s Water Well Minimum Construction Standards or the industry standards that Mr. Ruby testified about at trial.

[¶14] Sellers counter that we must interpret the contract as a whole, reading the well requirement in the context of other provisions, such as the contract’s disclaimer, inspection, and "as is" clauses. Sellers also argue the district court properly analyzed the contract and they endorse the court’s conclusions. The district court determined in its written judgment that the contract did not require the well to produce a certain amount of water, produce water of a certain quality, produce water for a certain period, or to meet certain minimum engineering standards. The court also determined that the contract’s right to inspect and "as is" clause subsumed any warranties beyond the well functioning at the time of closing.

[¶15] The interpretation of the purchase contract is a...