JAGAT R. PARIKH,
Plaintiff-Appellee,
v
.
Wake County
No. 02 CVD 5893
ENTREPRENEUR, INC.,
Defendant-Appellant.
Smith Debnam Narron Wyche Saintsing & Myers, LLP, by W.
Thurston Debnam, Jr., for plaintiff-appellee.
Murchison, Taylor & Gibson, PLLC, by Andrew K. McVey, for
defendant-appellant.
McGEE, Judge.
Jagat R. Parikh (plaintiff) and Entrepreneur, Inc. (defendant)
entered into an Agreement for Purchase of Assets (Agreement) on or
about 28 June 2001. The Agreement, drafted by counsel for
defendant, concerned the sale by defendant and purchase by
plaintiff of certain real property and associated assets located in
Wake County, North Carolina. Pursuant to paragraph 2(a) of the
Agreement, plaintiff paid defendant an earnest money deposit of
$10,000 (deposit). Paragraph 14 of the Agreement stipulates that
if plaintiff were to default
in [his] obligations hereunder or otherwise
fail or refuse to take title to the Assets as
required by this Agreement except as permittedhereunder, Sellers shall be entitled to retain
as liquidated damages the Deposit and shall
also be entitled to pursue any other rights or
remedies available to Sellers for such breach.
However, paragraph 9(a) of the Agreement, titled "Condition to
Buyers' Performance," provides that the obligation of the buyer to
purchase is "expressly subject to the satisfaction" of the
condition that prior to or at closing
(a) [plaintiff] shall have obtained a binding
commitment for financing of the purchase of
the Assets in the amount of $380,000.00 on
terms and conditions reasonably acceptable to
[plaintiff](the "Financing Commitment").
[Plaintiff] agree[s] to use good faith,
diligent efforts to obtain the Financing
Commitment in a timely manner. Notwithstanding
anything herein to the contrary, in the event
[plaintiff] ha[s] not notified Sellers of
[plaintiff's] failure to satisfy the condition
described in this Paragraph 9(a) prior to July
20, 2001, then [plaintiff] shall be deemed to
have waived such condition and shall be
obligated to close on the purchase of the
Assets notwithstanding any failure to obtain
the Financing Commitment.
Plaintiff obtained two letters from Crescent State Bank
(Crescent), the first dated 29 June 2001, and the second, 10 July
2001, in which Crescent stated its intent to loan plaintiff the
funds necessary for the purpose of purchasing the property subject
to the Agreement. In each letter, Crescent expressly conditioned
its commitment on the plaintiff's ability to obtain a satisfactory
"comprehensive Phase I environmental survey assessing the presence
of hazardous or toxic wastes or substances, PCBs or storage tanks
on the Property, and other material environmental matters[.]" The
determination as to whether the survey was satisfactory was left to
the discretion of Crescent. Plaintiff notified defendant of thecommitment letters and furnished defendant with a copy of the
letter dated 29 June 2001. Plaintiff did not deliver a copy of the
letter dated 10 July 2001 to the defendant because it was more
detailed as to the terms of the loan agreement and plaintiff did
not wish to disclose that "his house was being taken and what rate
he was getting and things like that[.]"
Both plaintiff and defendant were aware of the potential
presence of environmental contamination on the property. Defendant
agreed to indemnify plaintiff to an extent stipulated in paragraph
thirteen of the Agreement and in a supplemental Indemnity
Agreement.
The Phase I environmental survey (survey) of the real
property, performed on 20 July 2001, stated that there were
"recognized environmental concerns" relating to petroleum products
stored on the property. The indication was that petroleum products
had impacted the soil and groundwater of the real property as well
as adjacent property and that at least one release of petroleum
products had occurred during defendant's ownership. As a result of
the survey, Crescent declined to loan plaintiff the necessary funds
to complete the transaction. After Crescent's refusal, plaintiff
pursued financing from Paragon National Bank (Paragon). Paragon
also refused to close the loan due to the results of the survey.
Plaintiff was unable to obtain financing for the purchase of
the real property and thereafter requested that defendant return
plaintiff's earnest money deposit. Defendant denied plaintiff's
request, maintaining that defendant was entitled to keep the fundsas liquidated damages due to plaintiff's failure to comply with
paragraph 9(a). In response, plaintiff filed suit in order to
recover the earnest money deposit. In a judgment filed on 22
October 2002, the trial court ordered defendant to pay plaintiff
$10,000 plus interest from 6 May 2002 at a rate of eight percent
per annum until paid in full. In addition, defendant was taxed
with costs in the action. Defendant appeals.
We note that defendant has failed to comply with the North
Carolina Rules of Appellate Procedure. "The Rules of Appellate
Procedure are mandatory and failure to follow the rules subjects an
appeal to dismissal." Wiseman v. Wiseman, 68 N.C. App. 252, 255,
314 S.E.2d 566, 567-68 (1984). Defendant failed to cite to any
assignment of error in the argument portion of its brief in
violation of N.C.R. App. P. 28(b)(6). In addition, defendant did
not include in its brief a statement of the grounds for appellate
review as required by N.C.R. App. P. 28(b)(4). Nonetheless,
pursuant to N.C.R. App. P. 2, this Court, in its discretion, will
review the merits of defendant's argument.
Defendant contends that the trial court's findings of fact
were not supported by sufficient evidence. The appellate standard
of review in a case where a trial court sits without a jury is
"whether competent evidence exists to support its findings of fact
and whether the conclusions reached were proper in light of the
findings." Walker v. First Federal Savings and Loan, 93 N.C. App.
528, 532, 378 S.E.2d 583, 585, disc. review denied, 325 N.C. 230,
381 S.E.2d 791 (1989). Defendant generally argues that the trial court's judgment was
inconsistent with the intentions of defendant and plaintiff as
expressed in the Agreement. Defendant contends the Agreement did
not require plaintiff to provide defendant with notice that
plaintiff had obtained a commitment letter regarding financing, but
rather that plaintiff was obliged to notify defendant by 20 July
2001 of his inability to obtain such a commitment letter and should
plaintiff fail to do so, he would be deemed to have waived the
condition and would be bound to close on the purchase of the real
property. Defendant also maintains that obtaining financing was
not a condition of the Agreement.
In an action involving a contract, this Court has held that
the intention of the parties to the contract
must be determined from the language of the
contract, the purpose and subject matter of
the contract and the situation of the parties.
When the language of the contract is clear and
unambiguous, construction of the agreement is
a matter of law for the court.
Piedmont Bank & Trust Co. v. Stevenson, 79 N.C. App. 236, 240, 339
S.E.2d 49, 52, aff'd, 317 N.C. 330, 344 S.E.2d 788 (1986). General
rules of construction direct that words be given their usual and
ordinary meaning and a contract is "to be construed against the
party drafting the agreement." Id. at 242, 339 S.E.2d at 52.
Furthermore, "[i]t is the province of the courts to construe and
not to make contracts for the parties." Taylor v. Gibbs, 268 N.C.
363, 365, 150 S.E.2d 506, 507 (1966).
The dispute in this case deals with the meaning of paragraph
9(a) and whether plaintiff failed to comply with his obligationunder that provision, entitling defendant to retain the earnest
money for plaintiff's default, as provided in paragraph 14.
Paragraph 9(a) is titled "Condition to Buyers' Performance" and
states that plaintiff is required to obtain a "binding commitment"
for financing . . . on terms and conditions reasonably acceptable"
to plaintiff. Paragraph 9(a) also indicates that should plaintiff
fail to notify defendant by 20 July 2001 of plaintiff's inability
to obtain a "binding commitment," plaintiff will be "obligated to
close on the purchase of the Assets notwithstanding any failure to
obtain the Financing Commitment."
Plaintiff submitted Crescent's commitment letter dated 29 June
2001 to defendant before 20 July 2001 in order to show defendant
that plaintiff had established a commitment for financing.
Furthermore, plaintiff obtained the more detailed second commitment
letter, dated 10 July 2001, prior to 20 July 2001. The second
commitment letter set forth the material terms of the loan,
including the amount to be loaned, interest rate and repayment
terms. Crescent ultimately refused to proceed with financing due
to the results of the survey, which were not known until after 20
July 2001. If the survey had been satisfactory to Crescent, it
would have been obligated to proceed with the financing if all
other conditions set forth in the commitment letters had been met.
This Court focuses particularly on the phrasing of paragraph
9(a) and after a careful reading of the provision, we conclude that
plaintiff did not default and therefore is entitled to the return
of his earnest money. Defendant asserts that plaintiff's abilityto obtain financing was simply not a condition provided for by the
Agreement. That statement is contradicted by the inclusion of
paragraph 9(a) in the Agreement, which was drafted by defendant.
If defendant was correct in its assertion, then paragraph 9(a)
would be rendered meaningless.
According to our reading of paragraph 9(a), plaintiff would
have been in default under the Agreement if he failed to notify
defendant by 20 July 2001 of his inability to obtain a binding
commitment letter. Contrary to defendant's interpretation of the
provision, the letters from Crescent were sufficient to meet
plaintiff's obligation under paragraph 9(a) despite the inclusion
of the condition regarding the environmental survey and thus,
plaintiff met the condition explicit in paragraph 9(a) by obtaining
the letters from Crescent by the specified date. In Crescent's 10
July 2001 letter to plaintiff, Crescent explicitly denotes that it
is "pleased to make available . . . this commitment for a loan in
the amount of Four Hundred Thirty Thousand Dollars ($430,000.00)
. . . for [the] purpose of [the] purchase of [the property located
at 421 East Chatham Street]." (emphasis added). By all
indications, Crescent would have been required to make the loan to
plaintiff had the outcome of the environmental survey not presented
an insurmountable hurdle.
Defendant also argues that the parties bargained for paragraph
13 in which defendant agreed to indemnify plaintiff regarding
certain environmental matters relating to the property and
therefore it was not reasonable for plaintiff to accept financingconditioned on a satisfactory survey. However, paragraph 13 is not
relevant to our review of whether plaintiff defaulted pursuant to
paragraph 9(a). As drafted by defendant, paragraph 9(a) provides
that the commitment letter obtained by plaintiff may be subject to
terms and conditions reasonably acceptable to plaintiff. The
environmental survey required by Crescent was reasonably acceptable
to plaintiff since plaintiff could not acquire financing without
accepting such a provision.
The trial court found that plaintiff notified defendant of the
first commitment letter from Crescent on or about 29 June 2001 and
that ultimately Crescent refused to fund the loan due to the
results of the survey. The trial court concluded that plaintiff
had complied with his obligation under paragraph 9(a) and he was
entitled to the return of his deposit. We affirm the judgment of
the trial court.
Affirmed.
Judges HUNTER and GEER concur.
Report per Rule 30(e).
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