Thomas v. Tom Scarborough and Marsha Scarborough
| Docket Number: | 2005-CA-02137-COA Linked Case(s): 2005-CT-02137-SCT ; 2005-CA-02137-COA |
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| Court of Appeals: |
Opinion Link Opinion Date: 11-27-2007 Opinion Author: GRIFFIS, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Real property - Adoption of proposed findings and conclusions - Applicability of section 75-2-718(1) - Forfeiture of equity payment Judge(s) Concurring: KING, C.J., MYERS, P.J., IRVING, CHANDLER, BARNES ISHEE AND ROBERTS, JJ. Non Participating Judge(s): CARLTON, J. Dissenting Author : LEE, P.J. Procedural History: Bench Trial Nature of the Case: CIVIL - REAL PROPERTY |
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| Trial Court: |
Date of Trial Judgment: 10-13-2005 Appealed from: RANKIN COUNTY CHANCERY COURT Judge: Thomas L. Zebert Disposition: CIRCUIT COURT AWARDED INTERPLEADER FUND TO APPELLEES FINDING FORFEITURE PROVISION OF LEASE AGREEMENT UNCONSCIONABLE AS UNREASONABLY LARGE LIQUIDATED DAMAGES |
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| Note: | REVERSED AND RENDERED - 11/14/2006; MOTION FOR REHEARING FILED: 11/27/2006: GRANTED; MOTION FOR REHEARING GRANTED; AFFIRMED - 11/27/2007 | |
| Party Name: | Attorney Name: | |||
| Appellant: | CYNTHIA SCARBOROUGH THOMAS |
PATRICK M. RAND |
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| Appellee: | TOM SCARBOROUGH AND MARSHA SCARBOROUGH | DAVID L. MORROW, JR., JOHN R. ELLIOT, JR. |
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| Topic: | Real property - Adoption of proposed findings and conclusions - Applicability of section 75-2-718(1) - Forfeiture of equity payment |
| Summary of the Facts: | The motion for rehearing is granted, and this opinion is substituted for the original opinion. In an interpleader action filed by M-Tec Title and Escrow Services, Inc., and joined by Cynthia Thomas, the chancellor awarded the $22,141.57 balance of the interpleader fund to Tom and Marsha Scarborough. Although the Scarboroughs breached a Lease Purchase Agreement for real property owned by Thomas, the court determined that an award of the funds to Thomas would constitute unreasonably large liquidated damages. Thomas appeals. |
| Summary of Opinion Analysis: | Issue 1: Adoption of proposed findings & conclusions Thomas argues that the chancery court erred in adopting verbatim the proposed findings of fact and conclusions of law submitted by the Scarboroughs. While a trial court may, within its sound discretion, adopt verbatim or almost verbatim the findings of fact and conclusions of law submitted by a party, less deference is afforded to the chancellor's findings. Upon review of the record, it is apparent that the chancery court adopted the proposed findings of fact and conclusions of law submitted by the Scarboroughs, subject to a few additions. The chancellor was asked only to determine whether the Agreement was clear on its face concerning the equity payment and security deposit, and whether the forfeiture of these payments constituted unconscionable and unreasonably large liquidated damages. Under the circumstances of this case, the chancery court committed no procedural error in adopting almost verbatim the Scarboroughs’ proposed findings of fact and conclusions of law. Issue 2: Applicability of section 75-2-718(1) Thomas argues that the chancellor erred in applying section 75-2-718(1) to a contract for the lease purchase of real property, and also in finding a forfeiture of the $30,000 equity payment unconscionable. The Agreement between the parties provided the terms of the lease, an option to purchase, and a specific provision for the forfeiture of all payments in the event of default. Both Thomas and the Scarboroughs performed dutifully under the terms of the Agreement for approximately two and a half years before the Scarboroughs breached the Agreement by failing to timely pay rent. The Scarboroughs argue that an alleged contradiction between paragraphs two and ten of the Agreement created an ambiguity concerning whether the current equity payment would be refunded in the event of breach by the lessee. However, there is no ambiguity in the Agreement, as there is no conflict between paragraph two and paragraph ten. Paragraph two speaks only to the payments of rent, additional rent, and taxes as being nonrefundable. Paragraph ten, entitled “Default and Remedies,” clearly provides that in the event of default the lessee “shall forfeit all payments made hereunder [the Agreement].” Alternatively, the Scarboroughs argue that, even if the Agreement is unambiguous, the forfeiture of the current equity payment is an unreasonably large liquidated damages provision under section 75-2-718(1). The contract makes clear that the only thing that Thomas gets as a result of the lease and nonexercise of the purchase option is rent ($1,550 per month), additional rent ($5,848.12 per year) and property taxes. By the contract’s own express, unambiguous terms, she is not entitled to keep the $30,000 “current equity” payment unless the Scarboroughs buy the house, or as reasonable liquidated damages for breach of the rental agreement. Under the agreement, the Scarboroughs were obligated to rent the home for four years (from November 2001 through October 2005). They failed to timely pay rent in May 2004. They vacated the premises in July of 2004, with 16 months remaining on the lease. Thomas was paid through July of 2004. Thomas sold the house for $215,000 on November 9, 2004 and paid off the house’s mortgage. Thomas is $32,873.67 better off because of the Scarboroughs’ breach. She therefore has no damages. In light of this, the forfeiture of $31,750 is an unreasonable penalty. |
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