Houston v. Willis
| Docket Number: | 2008-CA-01155-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 12-15-2009 Opinion Author: Barnes, J. Holding: Affirmed in part, reversed and remanded in part. |
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| Additional Case Information: |
Topic: Contract - Specific performance - Liquidated damages Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., GRIFFIS, ISHEE, ROBERTS, CARLTON AND MAXWELL, JJ. Concur in Part, Dissent in Part 1: IRVING, J. with separate written opinion. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 04-07-2008 Appealed from: Grenada County Chancery Court Judge: Percy L. Lynchard, Jr. Disposition: WILLIS GRANTED $365,000 IN SPECIFIC PERFORMANCE UNDER THE CONTRACT, $62,761.41 IN DAMAGES, AND $7,320.34 IN ATTORNEY’S FEES AND COSTS Case Number: 07-02-026ML |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | GARY HOUSTON |
SHELBY K. MILAM |
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| Appellee: | ROBERT WILLIS | JAMES P. VANCE | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Specific performance - Liquidated damages |
| Summary of the Facts: | Robert Willis and Gary Houston entered into a contract for the sale of a house owned by Willis. Willis contends the parties entered into a contract for the sale and purchase of the property, whereby Houston would temporarily rent the house for a period of time and then purchase it. Houston contends that he entered into a contract for the rental of the house with an option to purchase. When Houston failed to go through with the purchase of the house, Willis sued for specific performance. The chancery court granted Willis specific performance of the contract, ordering Houston to close on the sale of the property and to pay Willis $365,000. Additionally, the chancery court awarded Willis $62,761.41 in damages, which represented back rent from the date of the breach of the contract until the date of the hearing, and $7,320.34 in attorney’s fees and costs. Houston appeals. |
| Summary of Opinion Analysis: | Houston argues that the trial court erred in awarding Willis specific performance and liquidated damages when the contractual language allowed for a choice of one of these options. The original contract and Second Addendum, which are identical, state that if Houston breached the contract, Willis is given the option of accepting the earnest money as liquidated damages and the contract will be null and void; suing for the earnest money; or suing for specific performance. Houston argues that the Second Addendum was an extension of the original contract, and Willis did not adhere to its plain language. He also argues that the plain reading of the documents shows there was an understanding between the parties that should Houston elect not to purchase the home, his damages would be the loss of earnest money and rent. The “Second Addendum” was an extension of the original contract, but it did alter the original contract. However,there is no merit to Houston’s contention that Willis did not abide by the plain language of the contract. Generally, specific performance has been regarded as a remedy for breach of contract that is not a matter of right but of sound judicial discretion, but judicial discretion notwithstanding, where a contracting party can feasibly be given what he bargained for, specific performance is the preferred remedy. While most cases involve the buyer requesting specific performance from the seller, the law recognizes that the seller has a remedy in specific performance as well. Willis was at all times ready, willing, and able to convey the house to Houston. Because of Houston’s breach, Willis was forced to maintain insurances, taxes, upkeep, and mortgage payments on two houses instead of one. Further, these agreements were for the sale of the property; thus, specific performance is an appropriate remedy. Nowhere within the four corners of the contract is it stated that Houston is entering into a contract to lease the property with an option to purchase. The chancellor properly exercised his discretion and did not err in ordering specific performance of the sale of Willis’s home to Houston. Houston claims Willis made a valid election of remedies by retaining the earnest money as liquidated damages; accordingly, Houston argues Willis is not entitled to any further awards such as specific performance or other damages. It is well established that earnest money is considered liquidated damages. Pursuant to the Second Addendum, Willis had the right to elect his remedy under the three options of the breach of contract provision. Willis did not accept the $20,000 as liquidated damages, but as a down payment. The document clearly states that the sum of zero dollars was deposited with the broker as earnest money, and the $20,000, which had originally served as earnest money was released to Willis as a down payment toward the purchase of the property. When the earnest money deposit was released as a down payment, in effect, there was no earnest money remaining to serve as liquidated damages; thus, Willis had no other remedy available but to sue for specific performance. Houston argues that Willis did not act in good faith when he accepted the $20,000 and then sued for specific performance. However, Willis did not elect to retain the money as his “remedy.” The funds were credited to Houston to be used toward the purchase price of the house. Houston argues that the damages awarded by the chancellor were improper. The chancellor awarded Willis $62,761.41 in damages, which represents Houston’s rent, pursuant to the Second Addendum’s rate of $2,615.06 per month, from the time of the breach of the contract in March 2006 until the trial in March 2008. Houston notes that, from March 2004 until March 2006, Willis has taken in $58,315.80 in rent from him. While Houston received full use and occupancy of Willis’s property, Houston complains that to compensate Willis with this award results in a windfall for Willis. The appropriate standard for establishing a measure of damages for breach of contract is to put the injured party in the position where he would have been but for the breach. However, it is never contemplated that the injured party be placed in a better position than he otherwise would have been in if the contract had been performed. Here, the award of specific performance does not put Willis in as good a position as he would have been in had the contract been performed at the time specified in the contract. During the two-year interim, Willis has continued to pay mortgage payments, insurance, and taxes. However, this case is remanded to the chancery court for a recalculation of the amount of damages. In the Second Addendum, Willis specifically agreed to credit Houston with any principal paid on Willis’s mortgage from the rental funds paid by Houston. As the chancellor ordered Houston to pay the remaining contract price of $365,000, and damages based upon the rental rate of $2,615.06 from the time of the breach until the judgment, Houston is not being credited with the amount of principal contained in these payments, and Willis is receiving a double recovery to that extent. On remand, the chancellor may also consider whether the award should be further calculated to compensate Willis for his payment of insurance and taxes since the date of Houston’s breach of contract. |
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