Vendor and Purchaser--sales contract_time is of the essence
provision_specific performance
The trial court erred by granting summary judgment for
defendant seller in an action for specific performance of a
contract to sell real estate where the contract required
plaintiff to obtain financing on or before a specified date,
plaintiff buyer did not secure financing by the loan commitment
date but had obtained financing on the closing date, and the
contract contained a “time is of the essence” provision. That
provision was ambiguous and cannot be found to apply to the loan
commitment date as a matter of law. Moreover, there was a
genuine issue of material fact as to plaintiff's ability to close
on the closing date.
Battle Winslow Scott & Wiley, P.A., by M. Greg Crumpler, for
plaintiff-appellant.
Vandeventer Black, L.L.P., by Norman W. Shearin, Jr. and
Robert L. O'Donnell, for defendant-appellee.
EAGLES, Chief Judge.
Plaintiff appeals the trial court's 12 May 2000 entry of
summary judgment in favor of defendant. After careful review of
the record and briefs, we reverse and remand.
On 13 July 1999, plaintiff-buyer entered into a contract with
defendant-seller for the purchase of Lots 1 and 2 in Barnette Woods
in Buxton, North Carolina. The contract was a pre-printed form on
which the following specifics were inserted by the parties: (1)the sale price for the property was $160,000; (2) plaintiff was to
obtain financing on or before 30 August 1999; and (3) closing date
was 10 September 1999. The pre-printed form included Paragraph 6,
titled “Other Provisions and Conditions.” It provided a blank
space that allowed for the inclusion of additional provisions.
There, defendant-seller added the following: “All closing costs to
be paid by buyer except for deed preparation to be paid by seller.
Time is of the essence!!”
On 2 or 3 September 1999, plaintiff informed Anderson Midgett
of defendant Jennette Enterprises, Inc. that financing had not been
secured. In response, Midgett told plaintiff that defendant
considered the contract void, that defendant would not go forward
with the sale of the property, and that defendant was going to sell
the property to another purchaser. Plaintiff reminded Midgett that
the closing date was 10 September 1999. Midgett reiterated that
defendant would not honor the contract because financing had not
been obtained by the 30 August 1999 loan commitment date as stated
in the contract.
Notwithstanding defendant's claim that it would not honor the
contract, plaintiff continued to pursue financing that would permit
him to close on 10 September 1999. On the morning of 10 September
1999, East Carolina Bank agreed to lend plaintiff sufficient funds
for the purchase of defendant's property. Plaintiff notified
Midgett that he had secured financing necessary to close, that the
closing attorney had been instructed to proceed with closing, that
the necessary documentation could be prepared by 3:00 p.m. on 10
September 1999, and that it was plaintiff's intention to close thetransaction on 10 September 1999, as stated in the contract.
Defendant took no action to pursue closing the transaction.
On 14 September 1999, plaintiff initiated this action seeking
specific performance of the contract or, in the alternative,
damages for breach of contract. Defendant and plaintiff each filed
motions for summary judgment on 24 March 2000 and 31 March 2000,
respectively. On 12 May 2000, after a hearing, the trial court
denied plaintiff's summary judgment motion and granted summary
judgment for defendant. Plaintiff filed timely notice of appeal on
6 July 2000.
The standard for determining if a movant is entitled to
summary judgment requires a two-part analysis of whether: (1) the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, show that there is no
genuine issue as to any material fact; and (2) the moving party is
entitled to judgment as a matter of law. Davis v. Town of Southern
Pines, 116 N.C. App. 663, 665, 449 S.E.2d 240, 242 (1994). On
appeal, this Court must view the record in the light most favorable
to the non-movant and draw all reasonable inferences in the non-
movant's favor. Aetna Casualty & Surety Co. v. Welch, 92 N.C. App.
211, 213, 373 S.E.2d 887, 888 (1988).
Plaintiff contends on appeal that: (1) a genuine issue of
fact exists as to whether time was of the essence; (2) the “time is
of the essence” provision applied only to the closing date, not the
loan commitment date; (3) the provisions in the contract regarding
financing were for the benefit of plaintiff and could only bewaived by him; and (4) plaintiff was able to close on 10 September
1999 and was not in breach of contract.
Though the sales contract stated that “time is of the
essence,” plaintiff first argues that the evidence raised a
question of fact as to whether the parties considered time to be of
the essence. In Crawford v. Allen, 189 N.C. 434, 127 S.E. 521
(1925), our Supreme Court held that facts of the case established
that time was not of the essence even though the contract contained
a recital to that effect. Similarly, this Court has held that even
though the contract stated that time is of the essence, the Court
could not determine as a matter of law under the facts of the case
that a failure to meet the deadline constituted a material breach
of the contract. Opsahl v. Pinehurst, Inc., 81 N.C. App. 56, 344
S.E.2d 68 (1986).
Here, the “time is of the essence” provision was written into
the contract as an additional provision and was acknowledged by
both parties. A court must construe a contract as it is written
and give effect to every part and provision whenever possible.
Marcoin, Inc. v. McDaniel, 70 N.C. App. 498, 504, 320 S.E.2d 892,
897 (1984). Even when viewed in the light most favorable to
plaintiff, the record here shows that defendant inserted the “time
is of the essence” provision into the contract, that plaintiff
signed the contract after the provision was inserted, that
defendant did not waive or attempt to change the provision, and
that plaintiff thought it important to be prepared to close by 10
September 1999. The record shows that the “time is of the essence”provision was part of the contract.
Because the inserted language is an enforceable provision in
the contract, we must consider the scope of the clause, i.e.
whether the “time is of the essence” provision applied only to the
closing date or to both the closing date and the loan commitment
date. The language inserted by defendant into Paragraph 6, titled
“Other Provisions and Conditions,” stated in its entirety: “All
closing costs to be paid by buyer except for deed preparation to be
paid by seller. Time is of the essence!!”
“[A]n ambiguity exists in a contract if the 'language of the
[contract] is fairly and reasonably susceptible to either of the
constructions asserted by the parties.'” Carolina Place Joint
Venture v. Flamers Charburgers, Inc., 145 N.C. App. 696, 699, 551
S.E.2d 569, 571 (2001) (quoting Taha v. Thompson, 120 N.C. App.
697, 701, 463 S.E.2d 553, 556 (1995) (citations omitted)). Where
the intended meaning of a contract term cannot be ascertained with
certainty, ambiguous terms should be construed against the party
who prepared the contract. Federal Realty Investment Trust v.
Belk-Tyler of Elizabeth City, Inc., 56 N.C. App. 363, 367, 289
S.E.2d 145, 148 (1982).
While neither this Court nor our Supreme Court has directly
considered the effect of a “time is of the essence” provision on a
loan commitment date as seen here, the following footnote from
Fletcher v. Jones is instructive:
If the condition precedent were of crucial
import to either or both parties and needed to
be fulfilled by a certain date, other thanthat set for closing, a separate date should
have been explicitly included to govern the
condition precedent, along with a separate
time-is-of-the-essence provision if necessary.
It would then have been clear that this
particular condition, separate from the act of
closing, must be strictly performed by a
different date.
Fletcher v. Jones, 314 N.C. 389, 393 n.1, 333 S.E.2d 731, 734 n.1
(1985).
In Mezzanotte v. Freeland, 20 N.C. App. 11, 200 S.E.2d 410
(1973), the purchasers of real property brought suit for specific
performance of the sales contract. The contract stated that the
purchasers were required to secure a loan from NCNB. The sellers,
in Mezzanotte, contended that the purchasers breached the contract
by failing to secure a loan from NCNB. This Court rejected the
seller's argument noting that the purchasers obtained other
financing and that the failure to acquire financing from NCNB was
not detrimental to the interests of the sellers.
Considering our Supreme Court's footnote in Fletcher, this
Court's holding in Mezzanotte, and the prevailing principles of
contract construction, we hold that the trial court erred in
holding, as a matter of law, that the time is of the essence
provision in this contract applied to the loan commitment date.
Based on careful analysis of the facts in the record on appeal, the
time is of the essence provision, inserted by defendant, was
ambiguous and cannot be found to apply to the loan commitment date
as a matter of law.
Finally, the parties disagree over whether it was possible for
plaintiff to close on 10 September 1999 as required by the contractand the time is of the essence provision. A careful review of the
facts in the record regarding plaintiff's ability to close on 10
September 1999, indicates that a genuine issue of material fact
exists. Genuine issues of material fact should be reserved for
determination by a fact-finder. For the foregoing reasons, we
conclude that genuine questions of material fact exist and that the
trial court erred in granting summary judgment in favor of
defendant. Accordingly, we reverse and remand this case for
further consideration not inconsistent with this opinion.
Reversed and remanded.
Judges HUNTER and HUDSON concur.
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