Michael and Linda, LLC v. Smith, R. ( 2019 )

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2019 Pa. Super. 226
MICHAEL AND LINDA, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
ROBERT S. SMITH AND RENEE M. :
SMITH, :
:
Appellants :
: No. 2654 EDA 2018
Appeal from the Judgment Entered August 2, 2018
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): 2016-10803
BEFORE: BOWES, J., DUBOW, J., and FORD ELLIOTT, P.J.E.
OPINION BY DUBOW, J.: FILED JULY 25, 2019
Robert S. Smith and Renee M. Smith (hereafter, Sellers) appeal from
the Judgment entered against them on August 2, 2018, in this real estate
transaction dispute. We discern no trial court error of law or abuse of
discretion and, therefore, affirm.
We derive the following statement of facts from the trial court’s
Decision, which is supported by the record. See Trial Ct. Decision, 7/3/18, at
1-4.1
Sellers owned vacant real estate in Towamencin Township, Montgomery
County. Buyer, Michael and Linda, LLC, is a homebuilder.
The parties executed an Agreement of Sale in December 2015 for three
adjacent parcels of real estate (collectively, the Property). The three parcels
were identified as Lots 25, 26, and 27, which corresponded to parcel
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1Sellers do not challenge the trial court’s factual findings on appeal. See
generally Sellers’ Br.; Sellers’ Pa.R.A.P. 1925(b) Statement, 9/27/2018.
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identification numbers: 533-00-00943-003, 53-00-00942-004, and 53-00-
08142-004, respectively. The total, negotiated purchase price for these lots
was $370,000.2
The Agreement of Sale included a “time is of the essence” provision. It
obligated Sellers to provide good and marketable title, free and clear of all
liens and encumbrances. The Agreement of Sale set settlement for January
29, 2016, but also provided for the extension of the settlement date by written
agreement of the parties.
Prior to settlement, a title search revealed a mortgage on Lot 27. The
parties agreed to settle on the other lots for two-thirds of the negotiated price
and, further, to extend settlement on Lot 27 to February 29, 2016. As the
new settlement date approached, because the title issue remained unresolved,
the parties agreed to extend settlement further until March 14, 2016. At some
point thereafter, when it became clear that the title issue was yet unresolved,
Buyer proposed a third extension to the settlement date, but Sellers refused.
In April 2016, Buyer learned that the title issue was resolved and,
therefore, advised Sellers that settlement could proceed. However, Sellers
refused to settle on Lot 27.
In May 2016, Buyer commenced this litigation by Summons, thereafter
filing a Complaint asserting breach of contract. Complaint, 8/22/16. Following
a bench trial in May 2018, the court found in favor of Buyer, granting its
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2The trial court also noted that Lot 27 was considerably larger than the other
two lots. See Trial Ct. Decision at 1.
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request for specific performance and thus directing Sellers to convey Lot 27
to Buyer.
Sellers timely filed a Post-Trial Motion seeking judgment
notwithstanding the court’s verdict. Sellers’ Post-Trial Motion, 7/12/18. The
trial court denied the Motion and entered Judgment in favor of Buyer. Trial
Ct. Order, 7/31/18; Trial Ct. Judgment, 8/2/18.
Sellers timely appealed and filed a court-ordered Pa.R.A.P. 1925(b)
Statement. The trial court issued a responsive Opinion, citing its prior
Decision. See Trial Ct. Op., 10/24/18.
Sellers raise the following issues on appeal:
[1.] [Whether] the [t]rial [c]ourt err[ed] as a matter of law in
holding that [Sellers] were in breach of the Agreement of Sale
because they were unable to provide [Buyer] with clear title to Lot
27[;]
[2.] [Whether] the [t]rial [c]ourt err[ed] as a matter of law in
holding that [Sellers] were in breach of the Agreement of Sale by
failing to close on the sale of Lot 27 to [Buyer] by the March 14,
2016 [c]losing date[;]
[3.] [Whether] the [t]rial [c]ourt err[ed] as a matter of law in
holding that [Sellers’] refusal to agree to continue to extend the
March 14, 2016 [c]losing date did not terminate the Agreement of
Sale[; and]
[4.] [Whether] the [t]rial [c]ourt err[ed] as a matter of law in
granting the extraordinary remedy of specific performance to
[Buyer] where [Buyer] had no clear right to relief and justice did
not require the relief.
Sellers’ Br. at 7-8.
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Sellers contend that we should reverse the court’s Order denying their
Motion for judgment notwithstanding the verdict (JNOV). Our standard of
review is well settled.
A JNOV can be entered upon two bases: (1) where the movant is
entitled to judgment as a matter of law; and/or, (2) the evidence
was such that no two reasonable minds could disagree that the
verdict should have been rendered for the movant. When
reviewing a trial court’s denial of a motion for JNOV, we must
consider all of the evidence admitted to decide if there was
sufficient competent evidence to sustain the verdict. In so doing,
we must also view this evidence in the light most favorable to the
verdict winner, giving the victorious party the benefit of every
reasonable inference arising from the evidence and rejecting all
unfavorable testimony and inference. Concerning any questions
of law, our scope of review is plenary. Concerning questions of
credibility and weight accorded the evidence at trial, we will not
substitute our judgment for that of the finder of fact. If any basis
exists upon which the [court] could have properly made its award,
then we must affirm the trial court’s denial of the motion for JNOV.
A JNOV should be entered only in a clear case.
Haan v. Wells, 103 A.3d 60, 69-70 (Pa. Super. 2014) (citation omitted).
Sellers’ first three issues, which we address concurrently, concern the
proper interpretation of the parties’ Agreement of Sale, a real estate contract.
As such, the scope of our review is plenary, and our standard of review is de
novo. Maisano v. Avery, 204 A.3d 515, 520 (Pa. Super. 2019).
Sellers assert that (1) they did not breach the Agreement of Sale; (2)
they never refused to convey the title they were able to convey; and (3) Buyer
allowed the Agreement of Sale to expire when it failed to close on the
transaction. Sellers’ Br. at 29. In support of these bold assertions, Sellers
principally rely on what is commonly known as a “time is of the essence”
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provision in their contract. Id. at 36. According to Sellers, because the parties
had agreed that time was of the essence, upon learning that Sellers were
unable to convey clean title to the Property, Buyer was required to terminate
the Agreement or “take such title as [Sellers were] able to convey.” Id. at
25. For the following reasons, we reject these assertions as devoid of merit.
“The fundamental rule in interpreting the meaning of a contract is to
ascertain and give effect to the intent of the contracting parties.” Maisano,
204 A.3d at 520 (citation omitted). We determine that intent from the written
agreement, provided the language employed is clear and unequivocal. Id.
(citation omitted). “In the absence of an ambiguity, the plain meaning of the
agreement will be enforced.” Id. (citation omitted).
“When parties have deliberately by their agreement or covenants fixed
a time for the performance of an act, a court of equity will be very cautious
how it interferes in disregard of it, and thus in effect change the contract which
the parties have made.” Doughty v. Cooney, 109 A. 619, 619 (Pa. 1920)
(citation omitted).
However, “the law will not require the doing of a futile act.” Messina
v. Siberstein, 528 A.2d 959, 961 (Pa. Super. 1987) (citing Williams v.
Barbaretta, 59 A.2d 161 (Pa. 1948)). Thus, for example, a buyer’s obligation
to tender by a fixed date is excused where it is established that the seller is
not ready to settle. Id. at 62 (declining to enforce a “time is of the essence”
provision in a real estate contract where sellers conceded they were unable to
convey good title on the settlement date); but see McKuen v. Serody, 112
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A. 460, 461 (Pa. 1921) (holding that mere allegation that seller was unable to
convey title at designated time was insufficient to excuse buyer’s non-tender);
Phaff v. Gerner, 303 A.2d 826, 830-31 (Pa. Super. 1973) (foreclosing
specific performance as remedy to buyer where (1) buyer failed to timely
tender and (2) seller denied that timely tender would have been futile).
The contract at issue here is not ambiguous. Pursuant to their
Agreement of Sale, in exchange for Sellers’ conveyance of the Property, Buyer
agreed to tender the purchase price of $370,000. Complaint, Exh. A
(Agreement of Sale, 12/10/15, at 2 ¶¶ 1, 2(A)).
The parties further agreed that the Property “will be conveyed with good
and marketable title . . . free and clear of all liens, encumbrances, and
easements.” Agreement of Sale at 8 ¶ 18(A) (recognizing certain exceptions
regarding easements not relevant to this dispute). In the event a title issue
arose, the Agreement provides a remedy:
If [Sellers] [are] unable to give good and marketable title . . .
[Buyer] may terminate this Agreement by written notice to
[Sellers], with all deposit monies returned . . . Upon termination,
[Sellers] will reimburse [Buyer] for any costs incurred[.]
Id. at 8 ¶ 18(D) (emphasis added). Thus, in its discretion, Buyer was free to
terminate the Agreement, without penalty, if Sellers were unable to meet their
obligation to provide clean title to the Property. Id.3
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3 Absent equitable claims, “[g]enerally, a vendee’s [i.e., a purchaser’s] action
for breach of contract to sell land is limited to recovery of the consideration
paid plus reasonable expenses incurred.” Baldassari v. Baldassari, 420
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The Agreement of Sale set the date for settlement, January 29, 2016,
but also provided for the extension of that date “by mutual written agreement
of the parties.” Id. at 2 ¶¶ 4(A), 5(D). Finally, as highlighted by Sellers, the
parties agreed that “[t]he [s]ettlement [d]ate and all other dates and times
identified for the performance of any obligations of this Agreement are of the
essence and binding.” Id. at 2 ¶ 5(B).
As found by the trial court, the evidence established that Sellers were
unable to convey the Property as agreed. Specifically, Sellers were unable to
convey Lot 27 with clean title on the negotiated settlement date. Trial Ct.
Decision at 3.4 Nevertheless, Buyer tendered two-thirds of the negotiated
purchase price for the Property, and the parties twice agreed to extend the
settlement date, eventually setting settlement for March 14, 2016. Id.; see
also Answer and New Matter, Exh. D1 at 3 (Signed Addendum). These
extensions afforded Sellers an opportunity to meet their contractual obligation
to convey clean title. Thus, we discern no breach of the Agreement of Sale at
this point.
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A.2d 556, 561 (Pa. Super. 1980) (footnote omitted). In this case, Paragraph
18(D) of the Agreement of Sale embodies this remedy. Alternatively, there
exists a narrow claim for “loss of bargain” damages premised upon a vendor’s
bad faith. Id. at 561-62 (quoting Seidlek v. Bradley, 142 A. 914, 915 (Pa.
1928)). Buyer has not pursued such a claim in this litigation.
4 As noted, Sellers do not challenge the findings of the trial court. Supra at
n.1. Nevertheless, we note further that Sellers conceded this specific fact
prior to trial. Answer and New Matter, 12/29/2016, at 2 ¶ 7 (admitting their
inability to convey clear and marketable title).
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On the extended settlement date, Sellers were not yet able to convey
clean title. Trial Ct. Decision at 3. Therefore, as of March 14, 2016, Sellers
were in breach of Paragraph 18(A) of the Agreement of Sale. Pursuant to
Paragraph 18(D), Buyer was empowered to terminate the Agreement of Sale.
Further, Buyer was entitled to the return of deposit monies paid and costs
incurred. However, there is no evidence that Buyer terminated the Agreement
by written notice to Sellers, nor is there evidence that Sellers returned deposit
monies or reimbursed Buyer for its costs. Absent such evidence, and mindful
that Paragraph 18(D) affords Buyer sole discretion to terminate, we conclude
that the Agreement of Sale remained in force.
Moreover, in light of these facts—in particular, (1) Buyer’s partial
performance in tendering two-thirds of the negotiated price, (2) Sellers’
inability to meet their contractual obligation to convey the Property with clean
title, and (3) the parties’ multiple agreements to extend settlement for the
express purpose of affording Sellers an opportunity to remedy the title issue
on Lot 27—we conclude that there is no legal basis to enforce Paragraph 5(B)
to Sellers’ benefit. The evidence is indisputable that Sellers were not ready
to settle on the last negotiated settlement date, March 14, 2016. Therefore,
any tender by Buyer on that date would have been futile, and its obligation to
tender the balance of the negotiated sale price is excused. Messina, 528
A.2d at 961.
Thereafter, in April 2016, Sellers successfully cleared the encumbrance
upon Lot 27, thus potentially curing their prior breach of the Agreement of
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Sale. This afforded Sellers yet another opportunity to meet their contractual
obligation to convey the Property to Buyer. However, in May 2016, upon
refusing to complete settlement, Sellers eschewed this opportunity.
Accordingly, we conclude that Sellers remained in breach of their contractual
obligation. Maisano, 204 A.3d at 520.
In their fourth issue, Sellers assert that the trial court erred in granting
specific performance to Buyer. Sellers’ Br. at 39-41.
Specific performance is an equitable remedy in which the court compels
performance of a contract. Lackner v. Glosser, 892 A.2d 21, 31 (Pa. Super.
2006). A claim for specific performance “should only be granted where the
facts clearly establish the plaintiff’s right thereto; where no adequate remedy
at law exists; and, where the [court] believes that justice requires it.” Payne
v. Clark, 187 A.2d 769, 771 (Pa. 1963).
Due to the unique qualities of real estate, “[c]ourts in this
Commonwealth consistently have determined that specific performance is an
appropriate remedy to compel the conveyance of real estate where a seller
violates a realty contract and specific enforcement of the contract would not
be contrary to justice.” Oliver v. Ball, 136 A.3d 162, 167 (Pa. Super. 2016)
(citing Borie v. Satterthwaite, 37 A. 102 (Pa. 1897)).
In light of the foregoing analysis, the trial court properly granted specific
performance. Sellers clearly violated the terms of the Agreement of Sale when
they refused to convey the entire Property, including Lot 27. Their refusal left
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Buyer without an adequate remedy at law, and it would be inequitable to deny
Buyer relief under the circumstances of this case. Id.
Accordingly, we affirm the trial court’s denial of Sellers’ Motion for JNOV.
Haan, 103 A.3d at 70.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/25/19
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