Opinion
No. 51661-2-I.
Filed: March 1, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Snohomish County. Docket No: 99-2-07180-6. Judgment or order under review. Date filed: 12/30/2002. Judge signing: Hon. Thomas J Wynne.
Counsel for Appellant(s), James R. Ihnot, Attorney at Law, 610 Market St. Ste 100, Kirkland, WA 98033-5451.
Counsel for Respondent(s), Gregory Earl Thulin, Attorney at Law, 119 N Commercial St. Ste 660, Bellingham, WA 98225-4452.
The DeQuilettes sued for specific performance of a real estate purchase and sale agreement that the seller repudiated after a dispute arose as to whether the `items' sold with the property included a vehicle parked on it. The trial court concluded that the dispute constituted a mutual mistake and that there was no valid agreement from the inception because the parties did not have a meeting of the minds. Based upon the undisputed facts, these conclusions are erroneous. There was no mutual mistake because the parties did not have identical intentions regarding the Blazer, which in any event was not an essential term. Furthermore, the seller's repudiation of the agreement constituted anticipatory breach. We reverse.
FACTS
A 1989 Chevy Blazer parked at the former residence of Walter A. Dunlava was offered for sale by his estate. The Estate was also selling the real property where the Blazer was parked. The asking prices were $40,000 for the real property and $5,000 for the Blazer. An old pickup, a camper, a mobile home, and a garage were also located on the Dunlava property. On August 28, 1999, Frits DeQuilettes test drove the Blazer at the property and consulted his son, Ron DeQuilettes, about buying the Blazer. They decided that they did not want to pay $5,000 for it, but that they were interested in making an offer on the property. While at the property, they approached Jim Gibb and offered $35,000 for the property and the Blazer. Gibb rejected this offer, stating that the property was listed for $40,000, and that this price did not include the vehicles. Gibb told them that any formal offers for the property should be submitted to Del Farley, the listing agent.
The DeQuilettes met with Farley at his office later that day and signed a purchase and sale agreement. Farley drafted addendum `A' to be attached to the agreement. The addendum contained the following provision: `Price shall be $40,000.00. This price includes all structures and items on the property. Sellers will keep any personal property now in the mobile home that they desire.' The Estate requested the last sentence, and the DeQuilettes requested the term `items.' Dorothy Moffatt, the personal representative for the Dunlava Estate, signed it on behalf of the Estate on September 1, 1999. Ron later testified that this language was viewed as a convenient means of avoiding itemization of all of the personal property located on the property, but allowing the Estate's representatives to remove any personal property they wanted from the mobile home. The DeQuilettes intended the term `items' to include all vehicles on the property, including the Blazer. Moffatt did not intend to include the Blazer in the sale of the property.
Jim Gibb is a relative of Dorothy Moffatt and acted on her behalf for the Estate.
On September 9, 1999, the Estate removed the Blazer from the Dunlava property. Ron noticed its absence and faxed a letter to Moffat asking for confirmation that the Blazer was included in the sale. On September 13, Gibb faxed a letter notifying Ron that the Estate considered the agreement to be null and void and was returning the earnest money deposit of $1,000. He explained, `This is due to the interpretations of the words and items and any new offer must spell this out clearly.'
Negotiations continued until September 22 regarding two issues: the Blazer and an `illegal' water line crossing the Dunlava property to a neighbor's property for which there was no easement, a situation Ron learned of on September 15 from a third party. Ron suggested in a September 15 letter that the parties modify the agreement by (1) adding certain provisions to accommodate the water line without granting an easement to the neighbor served by it, and (2) reducing the price by $2,500 to compensate for the exclusion of the Blazer. Gibb sent a fax to Ron on September 21 rejecting the offer to reduce the price and again stating that the earnest money was being returned and that the agreement was null and void. Ron wrote back the next day to question the Estate's basis for terminating the agreement. He also agreed to draft a new agreement at the full asking price of $40,000, without the Blazer, but including certain provisions related to the water line. Later that day, Gibb faxed Ron a letter stating that the Estate had accepted another offer on the property and considered the matter `concluded and closed.' After litigation commenced, the DeQuilettes learned that before they knew of the water line's existence, Farley had raised concerns about it to Gibb in a September 10 letter in which Farley concluded that the only way to avoid granting an easement would be to terminate the agreement with the DeQuilettes on the basis of the parties' differing interpretations of `items.'
The DeQuilettes filed a lis pendens against the property and a complaint seeking specific performance. The trial court held a bench trial and concluded that there was no valid agreement due to mutual mistake and no meeting of the minds. It also concluded that even if the agreement had been valid, the agreement had automatically terminated due to the DeQuilettes' failure to waive the water line provisions contained in their letters of September 15 and 22. The court dismissed the DeQuilettes' complaint and awarded a $2,900 judgment to the Estate as compensation for $900 of utility charges it paid while the case was pending and $2,000 in lost interest. It also awarded $17,830 in attorney fees and $217.90 for costs under the attorney fee provision of the purchase and sale agreement.
DECISION
The DeQuilettes argue on appeal that the purchase and sale agreement is valid and binding and that the trial court erred in concluding that there was no valid agreement due to mutual mistake and no meeting of the minds. Appellate review is limited to determining whether the trial court's findings are supported by substantial evidence and, if so, whether the findings in turn support the conclusions of law. Willener v. Sweeting, 107 Wn.2d 388, 393, 730 P.2d 45 (1986). A mutual mistake occurs when parties to an agreement make a mistake as to a basic assumption of the contract. Scott v. Petett, 63 Wn. App. 50, 57, 816 P.2d 1229 (1991). `The rationale is that, but for the mutual mistake, the parties would have executed the reformed contract.' Halbert v. Forney, 88 Wn. App. 669, 674,945 P.2d 1137 (1997). For that reason, the mistake must be identical. In re Estate of Harford, 86 Wn. App. 259, 263, 936 P.2d 48 (1997).
The doctrine of mutual mistake does not apply here because the DeQuilettes and Estate did not share the same intent. The DeQuilettes believed that the Blazer was included in the purchase price. The Estate believed that the term `items' did not include the Blazer. These intentions are clearly not identical; thus, there was no mutual mistake.
Regarding the lack of a meeting of the minds, the DeQuilettes contend that under the `objective manifestation theory of contracts,' the court focuses upon the outward manifestation of assent and that the parties' subjective intentions are irrelevant. City of Everett v. Estate of Sumstad, 95 Wn.2d 853, 855, 631 P.2d 366 (1981). Under this theory, they argue, the agreement is valid and binding because it demonstrates the outward manifestation of assent to include all `items' on the property, including the vehicles, in the sale despite the parties' disagreement about the meaning of the term, `items.' The Estate responds that the court's primary purpose in interpreting a contract is to determine the parties' intent, relying on Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990), and that its intent was to sell the property without the Blazer. Thus, there was no meeting of the minds regarding the terms of the agreement.
While the parties extensively argue the meaning of the term `items,' ultimately the pivotal issue is not how that term should be interpreted, but instead whether it is an essential element of the transaction. Specific performance will only be granted when the party seeking it proves by clear and convincing evidence that parties have agreed upon the essential elements of a contract. Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993). The essential elements of a contract for real property are the subject matter, the consideration, and terms of payment. Hubbell v. Ward, 40 Wn.2d 779, 787, 246 P.2d 468 (1952). When these elements are set forth in the contract, a party not in breach is entitled to equitable relief in the form of specific performance. Hubbell, 40 Wn.2d at 787.
We conclude that the agreement contained the essential elements of an agreement for the purchase and sale of real property. There is no contention that the price, terms of payment, or legal description was lacking. Furthermore, there is no merit to the Estate's contention that the Blazer issue `went to the very essence of the Agreement,' without which neither party would have entered the transaction. Brief of Respondents, at 18. First, the agreement focused almost entirely on the sale of the real property. When viewed in context, the personal property was secondary to the transaction, as seen by the open-ended provisions to include all `items' and permit removal of unspecified personal property from the mobile home. Second, the $40,000 price of the real property is substantially more than the $5,000 asking price of the Blazer. In a stand alone agreement just for the Blazer, agreement as to the price would be necessary, but in the context of an estate sale that included real estate and assorted personal property, the Blazer is a minor portion of the agreement. Third, although the Estate claims that the dispute regarding the Blazer was of sufficient magnitude to warrant repudiation of the agreement, the Estate did not reconsider its decision after the DeQuilettes abandoned their claim to the Blazer on September 22, over a week before the closing date. Indeed, Farley's September 10 letter to Gibb raising concerns about the water line and suggesting that this problem be solved by terminating the agreement due to the Blazer dispute belies the Estate's contention that the Blazer disagreement was the sole reason for rejecting the agreement. All of these factors indicate that the Blazer was not a term essential or material to the agreement. The DeQuilettes proved by clear and convincing evidence the essential and material terms of the purchase and sale agreement. Although there may not have been a meeting of the minds as to the sale of the Blazer, with respect to the sale of the real estate, the contract shows that the parties agreed upon the necessary provisions the consideration, the terms of payment, and the subject matter. Rather than find the agreement invalid because the parties ascribed different interpretations to the term `items,' the proper procedure for the court to follow should have been to resolve the parties' interpretation dispute in accordance with Berg and enforce the agreement accordingly.
The Estate argues that in any event the DeQuilettes are not entitled to specific performance because the DeQuilettes' failure to waive the conditions related to the water line caused the agreement to terminate automatically by its own terms. This argument is without merit. Although the DeQuilettes did not waive those conditions before closing, the Estate's anticipatory breach relieved them of the obligation to perform under the agreement.
`An anticipatory breach occurs when one of the parties to a bilateral contract either expressly or impliedly repudiates the contract prior to the time for performance.' CKP, Inc. v. GRS Constr. Co., 63 Wn. App. 601, 620, 821 P.2d 63 (1991). A vendor may not put the buyer in default until the vendor has offered to perform. Bendon v. Parfit, 74 Wn. 645, 648, 134 P. 185 (1913). Anticipatory breach relieves the other party of the duty to perform. Wallace Real Estate Inv., Inc. v. Groves, 124 Wn.2d 881, 897, 881 P.2d 1010 (1994).
The Estate asserts that its repudiation of the agreement on September 13 was `not unequivocal,' as it was `still trying to proceed, albeit with clarification.' But the Estate does not reconcile this argument with the trial court's conclusion stating that, `[a]s of September 13, 1999, there was no further Agreement between Plaintiffs and Dunlava Estate because it had been declared void by Dunlava Estate.' In any event, the Estate's letters declaring the agreement to be `null and void' cannot reasonably be read as equivocal. The Estate clearly and unambiguously expressed its intent to terminate the agreement. Although the first letter did not preclude future negotiations, it required future negotiations to be in the form of new offers, not modifications to the original agreement.
Furthermore, under paragraph 6 of the agreement, the DeQuilettes had 15 days after providing their objections to any title defects to waive their objections and proceed with closing. As of September 13 when the Estate first repudiated the agreement, the DeQuilettes had not yet raised their concerns about the water line. Assuming for the purposes of argument that the water line was a title defect, the DeQuilettes still had 15 days from September 15, when they raised their objections, to decide whether to waive them. But on September 22, the Estate notified the DeQuilettes that the Estate had agreed to sell the property to a third party. Thus, the DeQuilettes' time for waiving objections had not yet expired, but the Estate expressly stated that it would not proceed with the DeQuilettes under any circumstances because it was selling the property to a third party. We hold that the Estate's conduct constituted anticipatory breach and excused any performance required from the DeQuilettes.
The DeQuilettes request attorney fees under the attorney fee provision contained in the agreement. The DeQuilettes are the prevailing party and we grant their request.
We reverse and direct judgment in favor of the DeQuilettes.
ELLINGTON and AGID, JJ., concur.