Title: RICHARD S. PIROSCHAK V. WILLIAM T. WHELAN

State: wyoming

Issuer: Wyoming Supreme Court

Document:

RICHARD S. PIROSCHAK V. WILLIAM T. WHELAN2005 WY 26106 P.3d 887Case Number: 04-51Decided: 03/01/2005
OCTOBER TERM, A.D. 2004

 
 
                                                                                                            

 
 
RICHARD 
S. PIROSCHAK,

 
 
Appellant

(Defendant),

 
 
v.

 
 
WILLIAM 
T. WHELAN,

 
 
Appellee

(Plaintiff).

 
 
 
 
Appeal from theDistrictCourtofTetonCounty

 
 
 
 

Representing 
Appellant:

David G. 
Lewis, Jackson, Wyoming

 
 

Representing 
Appellee:

James K. 
Lubing and Carter H. Wilkinson, Jackson, Wyoming.  
Argument by Mr. Wilkinson.

 
 
 
 
 
 
Before 
HILL, C.J., and GOLDEN, KITE, and VOIGT, JJ., and SULLINS, 
D.J.

 
 

GOLDEN, 
Justice.

 
 

[¶1]          
In this 
appeal, Appellant Richard S. Piroschak, the buyer of real estate from Appellee 
William T. Whelan, appeals from a judgment in favor of Whelan finding that 
Piroschak had breached the contract to purchase real estate and denying his 
claims of fraud and deceit.   
That judgment ordered Piroschak to pay over $170,000 in damages and 
attorney fees and, now on appeal, Piroschak contends that neither the breach nor 
damages were proved at trial by adequate evidence.

 
 

[¶2]          
We 
reverse and remand for new trial.

 
 
 
 

 
 

[¶3]          
Piroschak 
presents the following issues on appeal:

 
 

1.                  
Whether 
the language of the contract and the evidence presented at trial supported the 
trial court's legal conclusion that the appellant breached the Contract to Buy 
and Sell Real Estate?

 
 

2.                  
If there 
were a breach of contract by the appellant, did the appellee prove its damages 
with competent testimony and reasonable certainty, both with regard to the type 
and value of the damages?

 
 
Whelan 
responds with this statement of the issues:

 
 

A.                 
Whether 
Appellant's issues regarding waiver and excuse of performance should be 
dismissed because they were raised [for the] first time on 
appeal.

 
 

B.                 
Whether 
Appellant's issues regarding waiver and excuse of performance should be affirmed 
in Appellee's favor due to a lack of cited pertinent authority as required by 
W.R.A.P. 7.01.

 
 

C.                
Whether 
the District Court's finding that Appellant materially breached the contract for 
the purchase of real property was inconsistent with the evidence, clearly 
erroneous, or contrary to the great weight of the evidence, and contrary to the 
law of Wyoming.

 
 

D.                
Whether 
the District Court's determination of damages as a result of Appellant's breach 
of contract and injury to Appellee's property was inconsistent with the 
evidence, clearly erroneous, or contrary to the great weight of the evidence, 
and contrary to the law of Wyoming.

 
 
 
 

 
 

[¶4]          
The 
parties entered into the contract in April of 1997 for Piroschak to buy property 
from Whelan.  Whelan had previously 
operated the property as a bed and breakfast business in Alta, Wyoming, but had not done so in the previous 
fifteen months and was selling the property as a residence.  Some limited financial information was 
made available to Piroschak; however, the purchase contract specifically 
provided that Whelan neither warranted nor guaranteed any potential income.  The parties agreed to a sales price of 
$447,500, and Piroschak paid a nonrefundable deposit of $15,000. Under the 
contract, Piroschak had until May 18, 1999, to obtain financing.  In the interim, Piroschak was required 
to pay $3,000 monthly as rent, with 10% of the rent being credited toward the 
purchase price. 

 
 

[¶5]          
Piroschak 
operated the property as a bed and breakfast and struggled to make it 
financially successful.  The 
contract did not indicate when rent was due, and about half of his rent payments 
were not paid by the first of each month; however, Whelan never threatened 
Piroschak with default or eviction.  
In April of 1999, after a Jackson, Wyoming, bank indicated it was not interested 
in providing financing, Piroschak's accountant sent Whelan a letter indicating 
Piroschak was unable to obtain financing.  
Under the terms of the contract Piroschak was to apply for financing with 
a lender and, if financing was unavailable, could provide Whelan with a lender 
declination letter and void the sale.  
Around the same time, Piroschak personally informed Whelan that he 
(Piroschak) would be unable to complete the purchase and requested that Whelan 
lower the purchase price. Whelan instead told Piroschak to vacate the 
premises.  When Whelan reentered the 
property, the home was in disrepair.  
Whelan cleaned the place and made various repairs.  In December of 1999, Whelan sold the bed 
and breakfast to another buyer for $325,000. 

 
 

[¶6]          
This 
case began in federal district court, where Piroschak sued Whelan for fraud and 
deceit.  After the federal suit was 
dismissed, Whelan brought suit in TetonCounty district court and sought an order 
to compel arbitration.  Piroschak 
counterclaimed for fraud and deceit, basically claiming that Whelan had 
misrepresented the earning potential of the bed and breakfast.  The motion to compel arbitration was 
denied, and Whelan eventually filed an amended complaint alleging breach of 
contract.  After a bench trial, the 
district court denied Piroschak's fraud claim, a finding that is not challenged 
in this appeal.  The court also 
found that Piroschak had breached the contract by repeatedly paying the rent 
late and by failing to pay rent in April and May of 1999.  The court assessed damages against 
Piroschak at $143,500, consisting of (1) $122,500--the difference between the 
contract sale price and the amount for which Whelan later re-sold the property; 
(2) $6,000 for missed rent payments in April and May of 1999; (3) $10,000 for 
materials to make repairs; and (4) $5,000 for labor for repairs.  The court also later assessed attorney's 
fees against Piroschak, making for a total judgment of $170,291.67.  This appeal 
followed.

 
 
 
 

 
 
Standard 
of Review

 
 

[¶7]          
"When 
a trial court in a bench trial makes express findings of fact and conclusions of 
law, we review the factual determinations under a clearly erroneous standard and 
the legal conclusions de novo."  
Hansuld v. Lariat Diesel Corp., 2003 WY 165, ¶13, 81 P.3d 215, ¶13 
(Wyo. 2003) (citing Rennard v. Vollmar, 977 P.2d 1277, 1279 (Wyo. 
1999)).  When reviewing the factual 
findings of a district court following a bench trial, we apply the following 
standards:

 
 
The 
factual findings of a judge are not entitled to the limited review afforded a 
jury verdict.  While the findings 
are presumptively correct, the appellate court may examine all of the properly 
admissible evidence in the record.  
Due regard is given to the opportunity of the trial judge to assess the 
credibility of the witnesses, and our review does not entail re-weighing 
disputed evidence.  Findings of fact 
will not be set aside unless they are clearly erroneous.  A finding is clearly erroneous when, 
although there is evidence to support it, the reviewing court on the entire 
evidence is left with the definite and firm conviction that a mistake has been 
committed.

 
 

Harber 
v. Jensen, 
2004 WY 104, ¶7, 97 P.3d 57, ¶7 (Wyo. 2004) (quoting Life Care Centers of 
America, Inc. v. Dexter, 2003 WY 38, ¶7, 65 P.3d 385, ¶7 (Wyo. 2003)).  Findings may not be set aside because we 
would have reached a different result.  
Harber, ¶7 (citing Double Eagle Petroleum & Mining 
Corp. v. Questar Exploration & Production Co., 2003 WY 139, ¶6, 78 P.3d 679, ¶6 (Wyo. 2003)).  Also, in 
reviewing a trial court's findings of fact,

 
 
we 
assume that the evidence of the prevailing party below is true and give that 
party every reasonable inference that can fairly and reasonably be drawn from 
it.  We do not substitute ourselves 
for the trial court as a finder of facts; instead, we defer to those findings 
unless they are unsupported by the record or erroneous as a matter of 
law.

 
 

Harber, 
¶7 (quoting 
Life Care Centers, ¶7).  We 
affirm the trial court's findings if there is any evidence to support them.  Id.  

 
 
 
 
Breach 
of Contract

 
 

[¶8]          
In 
the first of two issues, Piroschak claims the district court erred in finding a 
breach of contract based on late payment of rent.  Piroschak notes the contract did not 
provide a day of the month by which the rent payments were due.  He asserts that, by accepting the late 
payments, Whelan waived any breach on that ground.  Piroschak also argues that his failure 
to pay rent in April and May was not a breach of the contract because, by that 
time, he had informed Whelan that financing was unavailable and Whelan had 
evicted him.  He also maintains 
that, under the circumstances, it would have been a useless gesture for him to 
provide a written proof of denial of financing.  In response, Whelan asserts that waiver 
and excuse of performance are affirmative defenses, that Piroschak did not raise 
the defenses below, and that Piroschak should be precluded from raising the 
issues on appeal.  Addressing the 
merits, Whelan asserts that, even though the contract did not include a due date 
for the rent, Piroschak admitted that the payments were due on the first of the 
month.  Whelan also notes that he 
complained when the rent was late, thus reserving (and not waiving) his 
rights.  As for Piroschak's 
contention that his performance under the contract was excused because he 
informed Whelan that financing was unavailable, Whelan notes that the contract 
required Piroschak to provide Whelan with a letter of declination from the 
lender.  Whelan asserts that 
Piroschak never provided such a letter, much less filled out a loan 
application.  

 
 

[¶9]          
Our review indicates that 
our well settled laws of contract interpretation settle all of the parties' 
contentions.  We, therefore, begin 
by addressing the trial court's legal conclusion that "[t]he repeated late 
payments by Mr. Piroschak, as well as the failure to pay the April and May 
payments, amounts to a breach of the Contract to Buy and [Sell] Real Estate 
between the parties."   In 
reviewing the trial court's findings, we apply the contract principles set forth 
in Examination Management Services, Inc. v. Kirschbaum, 927 P.2d 686, 689 (Wyo. 
1996):

 
 
The 
initial question of whether the contract is capable of being understood in only 
one way is a question of law for the court. Prudential Preferred Properties 
v. J and J Ventures, Inc., 859 P.2d 1267, 1271 (Wyo.1993); State v. 
Pennzoil Co., 752 P.2d 975, 979 (Wyo.1988).  If the court determines that the 
contract is capable of being understood in only one way, then the language used 
in the contract expresses and controls the intent of the parties.  Pennzoil, 752 P.2d  at 978.   In such case, the next question, 
what is that understanding or meaning, is also a question of law.  Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo.1994); Amoco Production Co. v. Stauffer Chemical Co. of 
Wyoming, 
612 P.2d 463, 465 (Wyo.1980). . . .  
As we have said, "[w]e are . . . at liberty to make a determination as to 
the existence of ambiguity whether or not the parties here agree thereto one way 
or the other, and whether or not the trial court has reached a conclusion 
thereon one way or the other."  
Amoco Production, 612 P.2d  at 465.

 
 

[¶10]      
The 
record shows that the parties used a contract form provided by the Wyoming 
Association of Realtors and, under Section IX, Paragraph C, the contract stated 
that possession was subject to a lease.  
Paragraph C stated:  

 
 
Seller 
agrees to a lease for up to two (2) years from date of occupancy with $15,000.00 
non-refundable deposit to be paid on date of possession and $3,000.00 per month 
lease payment (10% to be applied to purchase price principle) until date of 
closing.  Said lease is for up to 24 
months from date of occupancy. 

 
 
No other 
lease contract was prepared and executed between the parties, and it is from 
these brief four lines that, in his amended complaint for breach of contract, 
Whelan alleged that the contract was breached by a default on the lease 
payments.  His complaint also 
alleged that Piroschak had abandoned the property, failed to obtain a loan as 
called for by the contract, and damaged the property.  No other specific facts were alleged in 
the complaint.

 
 

[¶11]      
From 
these allegations, testimony at trial was given regarding the parties' differing 
interpretations of the four line written lease agreement.  Whelan believed that Piroschak had 
consistently paid rent late, and Piroschak agreed that the lease payments were 
due on the first but did not consider any payments made to be late because each 
payment was made within the first two weeks of the month and were paid each and 
every month.  Additionally, because 
Piroschak did not pay in April or May, Whelan believed that Piroschak still owed 
those months; however, Piroschak disagrees because, in April, Whelan had 
terminated the contract and evicted him.  
Because there is no written agreement concerning the lease other than 
Paragraph C, it appears that the parties' varying understandings arose from some 
other source not specified in the record.  
Additionally, Whelan's course of conduct in frequently accepting payments 
after the first of the month supports Piroschak's evidence that monthly payments 
made during the first half of each month complied with the agreement.  Given this evidence, we shall enforce 
Section XV, Paragraph A of the purchase agreement which states that the parties 
have made no oral modifications, agreements, or representations that were 
intended to modify the written terms of the lease.  Based on this written provision and the 
evidence that Piroschak made monthly payments in the proper amount, we conclude 
that the trial court erroneously found that Piroschak had breached the contract 
by making late payments. 

 

[¶12]      
In its 
next finding to support breach, the trial court stated that Piroschak had never 
made the April or May payments.  The 
record shows that in April of 1999 Whelan demanded that Piroschak vacate the 
premises. According to Paragraph C, the lease payment requirement was subject to 
possession, and Piroschak was entitled to possession until closing so long as he 
made monthly lease payments and tendered a loan application within 720 banking 
days after Whelan accepted the offer.  
Given that the record shows that Whelan terminated the contract and 
Piroschak vacated the premises in April, we cannot see the basis for finding 
that Piroschak missed paying April and May's payments, and we conclude that the 
trial court's findings in this regard are erroneous.  

 
 

[¶13]      
The 
trial court made no other findings or conclusions regarding breach such as 
whether Piroschak breached the contract in other ways, i.e., by failing 
to secure financing or failing to make reasonable efforts to secure 
financing.  We cannot make that 
determination ourselves as a matter of law because of the state of the 
evidence.  The record does not 
indicate that the trial court decided that Piroschak truthfully stated that he 
conducted efforts to secure a loan which were rejected by a Jackson bank; that 
this application was made within 720 banking days after Whelan accepted the 
offer, and that the trial court determined whether this evidence satisfied the 
provision in Section V, Paragraph A, which required Piroschak to complete and 
tender a loan application to a lender.  
These findings and conclusions must be made at the trial court level, and 
we reverse the decision that the contract had been breached by late and missed 
payments and remand for new trial on the issue of breach of 
contract.

 
 
 
 
Damages

 
 

[¶14]      
In 
his second issue, Piroschak challenges the damage award, and we review that 
issue despite the reversal and remand for new trial on the issue of contract 
breach because we conclude that the trial court has applied the wrong measure of 
damages for loss of bargain.  We do 
not consider issues related to lack of evidence.  Piroschak contends that the district 
court applied the wrong legal standard when it used the before-and-after fair 
market value ($122,500) of the property to calculate damages.  Citing City of Kemmerer v. 
Wagner, 866 P.2d 1283, 1287 (Wyo. 1993), Piroschak asserts that, because 
the damage was not extensive, the measure of damages should be the reasonable 
amount of future repairs.  He also 
claims the proof of damages was insufficient in three respects:  first, Whelan did not prove the market 
value of the property at the time of resale; second, Piroschak claims Whelan 
sold the property at $325,000 because he did not want to hassle with it; and, 
finally, Piroschak argues that there was insufficient evidence to support the 
$10,000 for repairs and the $5,000 for labor.  In response, Whelan asserts that 
Piroschak has cited an incorrect tort standard for damages.  Whelan asserts that the before and after 
fair market value is the proper measure of damages and correctly compensates 
Whelan for his loss of the bargain.  
Whelan believes the damages are supported by the evidence in all 
respects.

 

[¶15]   "Damages for a breach of contract 
for sale of real property are not difficult of accurate estimation.  They are measured by the difference 
between the contract price and the value of the property at the time of the 
breach of contract.  Such damages 
represent the loss of the bargain."  
Walker v. Graham, 706 P.2d 278, 281 (Wyo. 1985) (citing Reed v. Wadsworth, 553 P.2d 1024, 1035 (Wyo. 1976)).  Although a subsequent sale of the same 
property may be evidence of market value, it is not conclusive, but rather the 
price received is only evidence of value and not the measure of damage.  Reed, at 1035.  In this case, the trial court 
determined that the loss of bargain damages was the difference between the 
contract price and the subsequent sale price.  That method is not the correct measure 
of damages.  The resale price of the 
land is not necessarily the market value of that land.  Id. at 1036.  Instead, "the trial court should 
consider all relevant evidence of market value, including other sales of 
the same or similar property, which were transacted reasonably close in time and 
distance and under comparable market conditions."  Id. (emphasis added).  For example, in Reed, the 
district court relied on an expert appraisal, which was based on the sales of 
comparable land, and we found this reliance to be proper.  After a new trial, should the issue of 
damages again arise concerning the loss of bargain, the trial court should 
require evidence to support all damage claims in accordance with this 
standard.

 

 
 
 
CONCLUSION

 
 
[¶16]   Piroschak did not appeal the trial 
court's judgment regarding his counterclaims.  The trial court's judgment that 
Piroschak breached the contract because of late and missing payments is 
reversed, and the issue of breach of contract is remanded for new trial.  The award of damages is also 
reversed.  We note that the trial 
court applied an incorrect rule of law when computing damages for loss of 
bargain and should the issue again arise, damages should be measured in 
accordance with our decisions in Walker and Reed.