Ferrara v. Walters
| Docket Number: | 2002-CA-02052-SCT Linked Case(s): 2002-CA-02052-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 09-22-2005 Opinion Author: Graves, James E. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Contract - Defects in title - Breach of the covenant of good faith and fair dealings - Time of the essence - Material breach Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Easley, Carlson and Randolph, JJ., Non Participating Judge(s): Diaz and Dickinson, JJ., Procedural History: Bench Trial Nature of the Case: Contract |
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| Trial Court: |
Date of Trial Judgment: 09-12-2003 Appealed from: Harrison County Chancery Court Judge: Carter Bise Disposition: Following a bench trial, the chancellor entered judgment denying any relief to Ferrara, but granting the Sellers compensatory damages in the amount of $15,358.97 and 2 punitive damages in the amount of $30,000.00. Case Number: C2402-01-171 |
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| Party Name: | Attorney Name: | |||
| Appellant: | CHRISTOPHER A. FERRARA |
THOMAS E. VAUGHN |
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| Appellee: | NANCY S. WALTERS AND DENNIS R. STRONG | DAVID A. WHEELER, CANDACE C. WHEELER |
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| Topic: | Contract - Defects in title - Breach of the covenant of good faith and fair dealings - Time of the essence - Material breach |
| Summary of the Facts: | Nancy Walters and Dennis Strong entered into a contract with Christopher Ferrara to sell certain real property located in Harrison County. Prior to closing, Ferrara discovered a defect in the chain of title which was not properly cured by the sellers. Ferrara filed suit seeking declaratory judgment and specific performance. The sellers counterclaimed alleging slander of title, an intentional interference with a contract, and abuse of process. The chancellor entered judgment denying any relief to Ferrara, but granting the sellers compensatory damages in the amount of $15,358.97 and punitive damages in the amount of $30,000. Ferrara appeals. |
| Summary of Opinion Analysis: | Issue 1: Defects in title Ferrara argues that the chancellor was manifestly wrong in failing to require the sellers to correct the defect in the title to the property and convey the property pursuant to the terms of their contract which obligated the sellers to provide good and merchantable title. The sellers did not dispute that their father died some years prior to the contract date, and in regard to his death, neither an estate was opened nor was there an adjudication to establish heirship. However, they contend that the quitclaim deed was executed to the sellers and was signed by all the heirs of Mr. Strong as well as his wife, Mrs. Strong, which is sufficient proof of title. Pursuant to the contract, it is abundantly clear that the sellers were duty bound to render unto Ferrara a warranty deed. Anything less than that effectively resulted in Ferrara receiving less than what he bargained for under the terms of their agreement. Where the terms of a contract are without ambiguity, as in the instant case, the plain meaning of the terms speaks to the intent of the parties. In 1950 Cole Budd conveyed the subject property to Mr. and Mrs. Strong. Since the deed was without any reference to rights of survivorship or otherwise, the conveyance effectively created a tenancy in common with both husband and wife maintaining a one-half undivided interest in the realty. As tenants in common, when Mr. Strong died intestate, his one-half undivided interest vested in his heirs at law, and Mrs. Strong maintained a one-half undivided interest plus whatever fractional interest she may have received as an heir of Mr. Strong. At the time the contract between Ferrara and the sellers was executed, Mrs. Strong was alive. Though she has subsequently died, Mrs. Strong’s interest in the property at the time of her death was effectively vested in the sellers via a quitclaim deed. Therefore, the title of the subject property is currently vested in the sellers, subject to possible claims brought by any heirs at law of Mr. Strong who might have failed to convey their interests to the sellers. Where a contract expressly provides that a seller render unto the buyer a warranty deed, nothing less can be given in satisfaction of the seller’s contractual obligation. Because the contract here action obligated the sellers to render a warranty deed, they possessed an affirmative duty to render to Ferrara a fee simple title which was clear and marketable. Further, where a contract expressly provides a reasonable opportunity for the seller to cure discovered defects in title, the seller’s failure to cure constitutes a material breach of the contract. Inasmuch as the sellers in this case failed to seek an adjudication of the heirship of Mr. Strong and failed to reasonably cure the defect in title, the sellers breached their contract with Ferrara. The sellers’ failure to cure the defect in title within a reasonable time period amounts to a breach of the covenant of good faith and fair dealings. The sellers completely ignored their obligations under the contract with Ferrara and then pursued a more lucrative deal with a third party. The sellers’ conduct violated standards of fairness and reasonableness. Issue 2: Time of the essence Ferrara argues that the chancellor erred in finding that under the sales contract, the time for performance was of the essence. In order for equity to regard contracts as of the essence, one of two conditions must be satisfied. First, the contract must expressly state that time is of the essence. Here, the contract on its face does not declare time to be of the essence as far as the scheduled closing date. The second way for equity to regard timely contract performance as of the essence is there must be a clear indication of intent by the parties to the same. Here, there is no clear indication (regarding time of performance) between the parties supported by the record. It is undisputed that at no time was the point made to Ferrara or his agent that time was of the essence under this contract. The trial court ruled that because Ferrara failed to close, the sellers were excused from performance under the contract. Termination of the contract is not proper absent a material breach. A breach is material where there is a failure to perform a substantial part of the contract or one or more of its essential terms or conditions, or if there is such a breach as substantially defeats the purpose of the contract. Ferrara’s refusal to close occurred only because of the defect in title which was not properly cured by the sellers. Therefore, the court erred in ruling that Ferrara’s refusal to close constituted a material breach, relieving the sellers of further performance. |
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