Zalewski v. Simpson

• Decision Date: 19 May 1982
• Docket Number: No. 3-1281A315,3-1281A315
• Parties: Zane H. ZALEWSKI and Mary V. Zalewski, Appellants (Defendants Below), v. Timothy J. SIMPSON, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 74

435 N.E.2d 74

Zane H. ZALEWSKI and Mary V. Zalewski, Appellants (Defendants Below), v. Timothy J. SIMPSON, Appellee (Plaintiff Below).

No. 3-1281A315.

Court of Appeals of Indiana, Third District.

May 19, 1982.

David Paul Allen, Hammond, for appellants.

Steven P. Kennedy, Munster, for appellee.

HOFFMAN, Presiding Judge.

This appeal arises from an award of summary judgment in an action for breach of a contract to purchase real estate.

On February 12, 1980, Timothy Simpson accepted the offer of Zane and Mary Zalewski to purchase his real estate pursuant to a written contract. The contract was contingent upon the Zalewskis obtaining a VA first mortgage loan in the amount of $54,000. Closing was to be within five days after the mortgage proceeds were ready to be paid out, and no later than March 28, 1980. The contract also provided that the purchaser would receive evidence of title, specifically a survey and a title insurance policy.

The Zalewskis applied for a VA loan from Calumet Securities Corporation. Calumet Securities received a preliminary title insurance report and a survey on February 27, 1980. These materials remained available pending closing. On March 7, 1980, Calumet Securities approved a VA loan to the Zalewskis in the amount of $54,000 and issued a commitment letter to them.

On March 25, 1980, Simpson, by his attorney, served a formal demand on the Zalewskis, alleging that all preconditions to close had been met and demanding that the Zalewskis close on March 28. On March 27, Simpson's attorney was advised by the Zalewskis' attorney that the Zalewskis would not close. Thereafter, on April 11, 1980 Simpson filed an action against the Zalewskis for breach of contract, requesting the liquidated damages provided for in the contract and for the damages of the real estate broker which had been assigned to him. The trial court granted Simpson's motion for summary judgment and awarded damages in the amount of $10,420 plus $2,500 in attorney fees.

It is this decision which the Zalewskis are appealing. The following issues, which have been condensed, are presented for review:

(1) whether the trial court erred in concluding that the seller had in all material respects performed in accordance with the terms of the contract;

(2) whether the trial court erred in concluding that all preconditions to closing had been met;

(3) whether the trial court erred in denying the Zalewskis' motion to strike portions of Simpson's affidavit; and

(4) whether the trial court erred in awarding the liquidated damages provided for in the contract plus attorney fees.

When reviewing the granting of a summary judgment, the Court of Appeals must determine whether there is any genuine issue of material fact and whether the law was correctly applied. Wallace v. Indiana Ins. Co. (1981), Ind.App., 428 N.E.2d 1361.

The Zalewskis have alleged that Simpson failed to provide a survey and title materials which constituted a violation of the contract. They use case authority to support their position that Simpson had a duty to present clear and marketable title, yet not once do they claim the title was defective in any way. Rather, their complaint was that the title materials were presented to their mortgage lender instead of to them personally.

The contractual obligations regarding title evidence were substantially complied with and the Zalewskis have suggested no prejudice which resulted from the manner in which the title evidence was handled. For approximately thirty days prior to the closing date, the documents were in the hands of the mortgage lender whom the Zalewskis chose to work through in obtaining their loan. The title evidence was available to the Zalewskis during that time. Although the practice of the lender receiving the title evidence is common, the Zalewskis had the additional opportunity to object to the situation by way of the demand letter sent to them by Simpson's attorney on March 25 which stated:

"The title report has been delivered to you, is clear of defects in title, and no reasonable extension of time is necessary with respect to this closing date."

Record at 46.

Yet the Zalewskis made no complaint at that point. Subsequently they simply refused to close. We must agree with the trial court that in all material respects, Simpson performed in accordance with the terms of the contract.

Next, the Zalewskis allege that the trial court erred in concluding that all preconditions to closing had been met. They contend that despite their efforts, they had not obtained a VA loan. The Zalewskis argue that the VA guaranty was not complete and also find fault with the proposed interest rate.

First of all, in connection with their loan application, the Zalewskis signed an agreement to accept the loan at the maximum prevailing interest rate permissible under FHA/VA regulations at the time of closing. Now they assert that the commitment they received from Calumet Securities which established the interest rate at 13% was invalid because of a federal regulation which provided for an interest rate ceiling of 10% on such loans. ¹ However, this regulation was asserted for the first time by the Zalewskis in their brief on appeal. No evidence of any such regulation was ever before the trial court for its consideration. In fact the evidence before the trial court was that the Zalewskis had originally applied for a loan at the rate of 12% interest. Also, in their memorandum of facts and law which was submitted to the trial court in support of their opposition to the motion for summary judgment, they specifically stated, "Defendants do not rely upon or claim the applicability of any federal law or law of other states." Record at p. 70. Being a court of review, we will not consider evidence which was never presented to the trial court. Mitchell et al. v. Falter et al., etc. (1955), 126 Ind.App. 34, 126 N.E.2d 769.

Likewise the argument of the Zalewskis that the VA guaranty was not complete is without merit. On March 7, 1980, the Zalewskis received a commitment letter from Calumet Securities for a VA loan in the amount of $54,000, after which time, the funds were available. Evidence contained in the affidavit and deposition of Mr. Rurode, an officer of Calumet Securities, established that the further processing of the VA guaranty had no effect on the Zalewskis' commitment. Calumet Securities was committed to the Zalewskis' loan when they issued their commitment letter and the VA guaranty was for the protection of Calumet Securities. Therefore, the trial court was correct in determining that the precondition of obtaining the loan had been met.

Next, the Zalewskis allege that the trial court erred in denying their motion to strike portions of Simpson's affidavit in support of his motion for summary judgment. They argue that the following paragraphs of Simpson's affidavit are not sufficiently within his personal knowledge so as to comply with Ind.Rules of Procedure, Trial Rule 56(E): ²

"3. A preliminary title insurance binder was furnished to Defendants ZANE and MARY ZALEWSKI, or their agent, in late February or early March, 1980, the exact date of receipt being unknown to the undersigned, a copy...