Summary
holding that under Delaware law "a response to an offer that is not on the terms set forth by the offeror constitutes a rejection of the original offer and a counter-offer. . . . Because it stated new terms not in the offer, response was a counter-offer and [] a rejection"
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Civil Action No. 921-S.
Submitted: June 28, 2006.
Decided: August 16, 2006.
Shawn P. Tucker Wolf, Block, Schorr and Solis-Cohen, LLP Wilmington, DE.
Douglas A. Shachtman Douglas A. Shachtman Associates Wilmington, DE.
Dear Counsel:
This letter addresses defendants' motion for partial summary judgment. Plaintiffs seek specific performance of a contract to sell a beach house located at 400 South Ocean Drive in Bethany Beach, Delaware (the "Beach House"). For the reasons stated below, I grant defendants' motion.
I. BACKGROUND
When Vincent and Judy Castagna (the "Castagnas" or "defendants") purchased the Beach House, they were represented by Douglas Appling and his realty company, Sandcastle Realty. Sandcastle Realty also acted as the rental agent for the property after the Castagnas purchased it. In August, 2004, defendants contacted Appling and expressed a desire to sell the Beach House. To that end, they signed an exclusive listing agreement with Sandcastle Realty authorizing the listing and sale of the house for $2.5 million.
Appling Dep. 24.
Id.
Id. at 27.
Pls.' Resp. in Opp'n to Defs.' Mot. for Partial Summ. J. Ex. 4.
Sandcastle Realty and Appling had on previous occasions represented Baffone in his real estate matters. Soon after entering the listing agreement with the Castagnas, Appling contacted Baffone about the Beach House. Baffone was interested in the property and decided to make an offer to purchase it.
Baffone Dep. 47-51.
Throughout the entire negotiations, Baffone and the Castagnas never communicated directly; they always communicated through Sandcastle Realty. On August 18, 2004, Sandcastle Realty told the Castagnas that Baffone was offering to purchase the house for $2.1 million. As a sign that he was serious about buying the property, Baffone provided a $50,000 deposit. The Castagnas rejected Baffone's offer and, on August 19, 2004, made a counter-offer, via Appling, to sell the property for $2.3 million.
Appling Dep. 39-40.
Baffone Dep. 21-22.
Appling Dep. 41-42.
Baffone told Appling that he would buy the house for $2.3 million, but only if certain contingencies relating to DNREC approvals were met. Appling contacted the Castagnas and told them about Baffone's counter-offer. On August 26, the Castagnas rejected Baffone's second offer and counter-offered to sell the Beach House for $2.3 million without any contingencies. Appling contacted Baffone about this latest counter-offer. Baffone told Appling that he would agree to buy the Beach House for $2.3 million, but only if the settlement date were December 31, 2004, and only if the Castagnas agreed to permit Baffone to settle at any time up to that date. Appling told the Castagnas about this latest counter-offer, but they never responded either affirmatively or negatively.
Pls.' Resp. in Opp'n to Defs.' Mot. for Partial Summ. J. Ex. 5.
Appling Dep. 44-47.
App. Defs.' Mot. for Partial Summ. J. at 50-55; Appling Dep. 46.
Appling Dep. 46-47.
Appling made repeated efforts to contact defendants about Baffone's August 26 counter-offer, but was unsuccessful. On August 30, Baffone made yet another offer to buy the house, this time offering $2.5 million with no contingencies. He never received a reply to this offer.
Appling Dep. 57.
Id. at 59.
Sandcastle Realty and Baffone filed their complaint on December 14, 2004, seeking specific performance of the purported contract. Baffone seeks specific performance of the contract so that the property will be conveyed to him by court order. Sandcastle Realty seeks specific performance so that it will be entitled to payment of commissions. Defendants filed their motion for partial summary judgment on April 24, 2006, seeking dismissal of Baffone's claim.
Defendants do not seek dismissal of Sandcastle Realty's claim.
II. ANALYSIS
Under Chancery Court Rule 56, this Court may grant summary judgment in favor of movants if "there is no genuine issue as to any material fact" and the moving party "is entitled to judgment as a matter of law." Because I find that there was never a "meeting of the minds," I conclude that there was no oral agreement and that the doctrine of part performance is inapplicable in this case. Accordingly, I grant defendants' motion for partial summary judgment.Baffone argues that he accepted the Castagnas' August 26 offer and that his $50,000 deposit constitutes part performance so that he is entitled to specific performance of the contract. The problem with this argument is that Baffone did not accept the Castagnas' August 26 offer. The Castagnas' August 26 counter-offer was to sell the property for $2.3 million without any contingencies. Baffone argues he "accepted" this offer when he agreed to buy the property with only a single contingency: the one regarding settling dates. Delaware law requires that an acceptance must be a response on "identical terms as the offer and must be unconditional." Baffone failed to accept the Castagnas' offer, which was an offer to sell without any contingencies. There was never a "meeting of the minds" and, thus, there was never a contract.
Plaintiffs have not claimed that Appling or Sandcastle purported to enter a contract on the Castagnas' behalf. The Castagnas never signed a power of attorney permitting Appling to do so.
Friel v. Jones, 206 A.2d 232, 233 (Del.Ch. 1964), aff'd, 212 A.2d 609 (Del. 1965); see also Restatement (Second) of Contracts § 58 (1981) ("An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered.").
Under our law, a response to an offer that is not on the terms set forth by the offeror constitutes a rejection of the original offer and a counter-offer. The Castagnas made an offer, which was rejected by Baffone by the act of making a counter-offer, seeking to purchase with contingencies and at a lower price. The Castagnas rejected this counter-offer, by making their final offer to sell, at a middle price without contingencies. Baffone rejected this offer by making a counter-offer that contemplated the same price but which insisted on certain terms regarding timing of the purchase. Because it stated new terms not in the Castagnas' offer, Baffone's response was a counter-offer and was a rejection, not an acceptance, of the Castagnas' final offer. Baffone immediately recognized this; he made yet another counter-offer on August 30, 2004. The Castagnas did not accept either counter-offer and, thus, no contract was formed. This is the blackest of black-letter contract law.
PAMI-LEMB I Inc. v. EMB-NHC, L.L.C., 857 A.2d 998, 1015 (Del.Ch. 2004); In re Estate of Messick, 1989 WL 101866, at *3 (Del.Ch. Sept. 5, 1989) ( citing Friel, at 233); Restatement (Second) of Contracts § 59 (1981) ("A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer."). See Restatement (Second) of Contracts § 39 (1981) (defining counter-offers).
Because no oral agreement was ever created, I cannot consider plaintiffs' arguments regarding part performance. Without an agreement in the first place, the doctrine of part performance does not apply.
III. CONCLUSION
Based on the agreed upon facts in the parties' depositions and briefs, I find that there is no dispute about facts material in this case. Delaware law governing contract formation squarely controls the outcome. For the reasons stated above, defendants' motion for partial summary judgment is granted and final judgment of dismissal is entered in favor of defendants and against plaintiff Baffone.
IT IS SO ORDERED.