Title: Simpson Development Corp. v. Hermann

State: vermont

Issuer: Vermont Supreme Court

Document:

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 89-310


Simpson Development Corp.                    Supreme Court

                                             On Appeal From
     v.                                      Windsor Superior Court

Cheryl L. Herrmann                           March Term, 1990


Alden T. Bryan, J.

William H. Meub and Geoffrey Commons of Kelley, Meub, Powers & English,
Ltd., Middlebury, for plaintiff-appellee

Teachout, Brooks, Moore & McNally, Norwich, for defendant-appellant


PRESENT:  Allen, C.J., Peck, Gibson, Dooley and Morse, JJ.


     MORSE, J.   Cheryl Herrmann, purchaser of a parcel of real estate
owned by Simpson Development Corp., appeals a trial court's jury
instruction, construing a limitation-of-remedies clause in a way that
allowed the jury to award Herrmann the return of her deposit as her sole
remedy for Simpson's breach.  We affirm.
     The material facts are not in dispute.  On March 26, 1987, the parties
entered into a "design-build" contract involving land located in Hartford,
Vermont.  Herrmann agreed to pay $325,000 for a lot and a building that
Simpson would construct according to mutually acceptable specifications.
Herrmann placed $32,500 in escrow as a deposit that was nonrefundable except
in limited circumstances.
     At issue in this appeal is the provision affecting the return of
Herrmann's deposit.  That provision stated: "Upon material default by SELLER
under the terms and provisions hereof prior to closing, PURCHASER may
declare a default hereunder and SELLER shall promptly refund to PURCHASER,
as PURCHASER'S sole remedy, the ten percent (10%) deposit paid by PURCHASER
to SELLER together with accrued interest."
     From April through August of 1987, the parties negotiated the
specifications of the design of the building.  In May 1988, Simpson filed
suit seeking a declaratory judgment that Herrmann had breached the contract
and that it was entitled to keep her deposit.  Herrmann counterclaimed,
alleging that Simpson had breached the contract and requesting specific
performance and consequential damages.  Trial was by jury, which awarded
Herrmann the return of her $32,500 deposit as her sole remedy.
     Herrmann asserts a number of claims on appeal.  First, she contends
the limitation-of-remedies provision means that, unless and until she
declares a default, her available remedies cannot be limited.  Second, she
claims that the contract as a whole must be construed to provide her with a
fair and reasonable remedy.
     With regard to the first contention, we fail to see the logic behind
Herrmann's construction of the limitation clause.  Relying on the use of
the word "may" (i.e., "PURCHASER may declare a default"), she argues that
the provision is permissive and binds her only if she elects to declare
Simpson in default.
     We agree that the provision entitles Herrmann to an election if Simpson
breaches the contract:  she may declare a default and seek a return of her
deposit or she may proceed to perform despite the breach.  However, under
the plain meaning of this provision, she cannot declare Simpson in default
and pursue common-law contract remedies in addition to the return of her
deposit.
     Herrmann's argument poses a paradox and is self-defeating when its
logic is carried out.  Under the limitation-of-remedies provision, if
Herrmann declares Simpson to be in default of the contract, she cannot
invoke common-law remedies.  Yet, in order to prevail at all she must
accuse Simpson of breach of the contract.  Default is synonymous with
breach of contract.  Black's Law Dictionary at 171 and 376 (5th ed. 1979).
In short, a declaration of default is a sine qua non of any remedy.
     Herrmann claims this Court should interpret the clause to preserve her
remedies because ambiguous language in a contract must be construed against
its drafter.  Her argument fails because the language is not ambiguous.  See
Isbrandtsen v. North Branch Corp., 150 Vt. 575, 577-79,