Appeal by defendants from an order entered 31 March 2006 by
Judge William G. Hamby, Jr. in Cabarrus County District Court.
Heard in the Court of Appeals 7 March 2007.
Hartsell & Williams, P.A., by David C. Williams and Christy E.
Wilhelm, for plaintiff-appellees.
Conroy & Weinshenker, P.A., by Seth B. Weinshenker, for
defendant-appellants.
BRYANT, Judge.
Wilson Don Grassman, his wife Cynthia Grassmann, and the Law
Office of Carl S. Conroy, P.A. (collectively “defendants”) appeal
from an order entered 31 March 2006 granting summary judgment in
favor of Raymond Carson and his wife, Patricia Carson,
(collectively “plaintiffs”). For the reasons below, we affirm the
order of the trial court.
Facts and Procedural History
On 27 September 2005, the parties entered into a written
“Offer To Purchase And Contract,” whereby plaintiffs agreed topurchase defendant-Grassmans' property located at 1140 Westlake
Drive, Kannapolis, North Carolina. Under the contract, plaintiffs
paid a $15,000.00 earnest money deposit which was held by
co-defendant, The Law Office of Carl S. Conroy, P.A. The “Other
Provisions and Conditions” clause of the contract provides as
follows:
Buyer's offer is contingent on the sale of
their existing residence. Buyer has requested,
and Seller has agreed, that Seller will not
accept any third-party offers for the purchase
of the Property for a period of thirty days,
as measured from constructive receipt of the
Earnest Money Deposit, provided, however, that
in the event Buyer has not demonstrated the
satisfaction of the contingency on or before
the 30th day, Seller shall be free to accept
such offers thereafter, and any subsequent
breach or inability to close this transaction
by Buyer shall result in a forfeiture of the
Earnest Money Deposit above.
Pursuant to this provision, defendants did not accept any
third-party offers on the property for the thirty-day period.
However, plaintiffs failed to sell their existing residence, and
plaintiffs did not close on the transaction with defendants.
Defendants refused to return the Earnest Money deposited in escrow.
Plaintiffs subsequently commenced this action by filing a
Summons and a Complaint for a Declaratory Judgment on 20 February
2006. Defendants served their Answer on 1 March 2006, and
thereafter, filed a Motion for Summary Judgment on 6 March 2006.
Plaintiffs subsequently filed their own Motion for Summary Judgment
on 24 March 2006.
This matter was heard during the 27 March 2006 session of the
District Court for Cabarrus County, North Carolina, the HonorableWilliam G. Hamby, Jr., Judge presiding. On 31 March 2006 the trial
court entered an order granting summary judgment in favor of
plaintiffs and directing defendants to return the earnest money to
plaintiffs. Defendants appeal.
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Defendants raise the issues of whether the trial court erred
in: (I) denying defendants' Motion for Summary Judgment; (II)
allowing the plaintiffs to recover their deposit by finding the
plaintiffs did not act in bad faith; (III) failing to give meaning
to all of the provisions of the contract; and (IV) failing to find
that the plaintiffs induced the defendants to remove the property
from the market for thirty days. However, the dispositive issue in
this appeal is whether the trial court properly granted summary
judgment in favor of plaintiffs after finding that “Plaintiffs
obligation to purchase the Defendants' property was contingent on
the sale of their existing residence.” For the reasons below, we
hold plaintiffs' obligation to purchase defendants' property was
contingent on the sale of plaintiffs' existing residence and, as
this residence was not sold, we affirm the judgment of the trial
court.
Standard of Review
“The standard of review on appeal from summary judgment is
whether there is any genuine issue of material fact and whether the
moving party is entitled to a judgment as a matter of law.”
Gattis
v. Scotland County Bd. of Educ., 173 N.C. App. 638, 639, 622 S.E.2d
630, 631 (2005) (citation omitted). “On appeal, an order allowingsummary judgment is reviewed
de novo.”
Howerton v. Arai Helmet,
Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004) (citation
omitted).
Contingency Clause
Defendants argue that the
entirety of the “Other Provisions
and Conditions” clause of the contract, and not just the first
sentence, controls when and if plaintiffs forfeit their earnest
money deposit. Defendants' argument is misplaced.
Defendants correctly assert that an unambiguous contract must
be construed “as a whole, considering each clause and word with
reference to all other provisions and giving effect to each
whenever possible.”
Marcuson v. Clifton, 154 N.C. App. 202, 204,
571 S.E.2d 599, 601 (2002) (citation and quotations omitted).
However, “[i]n entering into a contract, the parties may agree to
any condition precedent, the performance of which is mandatory
before they become bound by the contract.”
Cox v. Funk, 42 N.C.
App. 32, 34-35, 255 S.E.2d 600, 601 (1979) (citation omitted).
A condition precedent is an event which must
occur before a contractual right arises, such
as the right to immediate performance. Breach
or non-occurrence of a condition prevents the
promisee from acquiring a right, or deprives
him of one, but subjects him to no liability.
. . . The provisions of a contract will not be
construed as conditions precedent in the
absence of language plainly requiring such
construction.
In re Foreclosure of Goforth Props., Inc., 334 N.C. 369, 375-76,
432 S.E.2d 855, 859 (1993) (internal citations and quotations
omitted);
see also Mosely v. WAM, Inc., 167 N.C. App. 594, 600, 606
S.E.2d 140, 144 (2004) (“A condition precedent is a fact or eventthat must exist or occur before there is a right to immediate
performance, before there is a breach of contract duty.”).
Further, “[i]n North Carolina, such a condition precedent includes
the implied promise that the purchaser will act in good faith . .
. .”
Smith v. Dickinson, 57 N.C. App. 155, 158, 290 S.E.2d 770,
772 (1982) (citation and internal quotations omitted).
Here, the contract specifically provides that plaintiffs'
“offer is contingent on the sale of their existing residence.” As
the sale of plaintiffs' existing residence did not occur, the
contract never came into effect and, if plaintiffs did not act in
bad faith, defendants, as promisees, acquired no rights under the
contract.
See Cox, 42 N.C. App. at 34-35, 255 S.E.2d at 601-02
(affirming summary judgment in favor of buyers where the contract
to purchase property contained a condition precedent stating the
contract was subject to the closing of the sale of the buyers'
current home.) The trial court found as fact that “[t]here is no
evidence that Plaintiffs acted in bad faith in not satisfying the
contingency.” While defendants assign error to this finding of
fact, they do not challenge the accuracy of the finding, but rather
argue that the trial court erred in making the finding at all
because “there was no requirement in the contract that the
Plaintiffs had to act in 'bad faith' before they forfeited their
deposit.” This finding of fact is thus binding on this Court on
appeal.
Static Control Components, Inc. v. Vogler, 152 N.C. App.
599, 603, 568 S.E.2d 305, 308 (2002) (holding “because defendant
does not argue in his brief that these findings of fact are notsupported by . . . evidence in the record, this Court is bound by
the trial court's findings of fact.”). Because plaintiffs have not
acted in bad faith in failing to meet the condition precedent,
defendants have no rights under the contract. We thus affirm the
judgment of the trial court and overrule all of defendants'
assignments of error.
Affirmed.
Judges McCULLOUGH and LEVINSON concur.
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