# FILED Dec. 23, 1996 Cecil Crowson, Jr . Appellate Court Clerk IN THE COURT OF AP PEALS OF

TENNESSEE WESTERN SECTI ON AT JACK SON

PAT SIMPSON, ) ) Plaintiff/Appellee, ) Obion Chancery No. 17,041 ) vs. ) ) GOLDEN SERVICE REALTY & ) Appeal No. 02A01-9509-CH-00203 AUCTION, INC., ) ) Defendant, ) ) and ) ) PHH HOMEQUITY CORPORATION, ) ) Defend ant/Appe

llant. )

APPEAL FROM THE CHANCERY COURT OF OB ION COUNTY

AT UNION CI

TY, TENNESSEE
THE HONORABLE WI

LL IAM MICHAEL MALOAN, CHANCELL OR
For the Plaintiff/Appellee : For the Defendant/Appellant : William R. Neese Catherine B. Clay ton Dresden, Tennessee Jonathan O. Steen Jackson, Tennessee
AFFIRMED IN PA RT, REVERSED IN PART

HOL LY KI RBY LI LL ARD , J. CONCUR:
AL AN E . HI GHE RS, J
. HEWIT T P. TOM LI

N, JR ., SR . J.OPINION

This case involves the alleged breach of a contract

for the sale of real estate. The trial c ourt found that the seller breached the contract by selling the r

eal estate to a third party . Damages were assessed based on an expert’s appraisal rather than the sale pric e to the third party. We aff irm the finding of a bre ach and

revers e on the me asure of damage s. In 199 2, A ppellee Pat Simpson (“Simpson”) entered into a contract with Appellant PHH Homequity

Corpora tion (“PHH ”) to pur

chase r eal prop erty

in Union City . Sa

ra h McEwen (“McEwen”), real es tate ag ent for Golden Ser vice Re a lty & Auction, I nc. (“Golden Service”), origina lly listed the property on December 10, 1991, at $75,500. No offe rs were made to pu

rchase the property, a

nd the pric e grad

ually dropped . By

July 1 0, 1992, the listed pr ice for the prope rty had droppedto $54,500. Simpson was monitoring the price of the property , and after theprice dropped in July, Simpson made an offer of $53,000. PHH ac cepted Simpson’s offer, and Simpson paid $500 in earnest money
. The contract provide d that the sale would be close d “within 45 days or sooner .” It stated that closing was to occur

“on or before August 30, 1992.” I n a paragraph detailing

special condition s, the contract provide d that i t would be n ull and voi d and ea rnest money

would be r

efunded if Simpson were unable to obtain financing. Simpson signed the contract on July 14, and PHH signed on July 23. On Ju ly 15, McEwe n asked Simpson to sign a PHH Homequity Corpora tion Standard Addendum. This addendum included the following provision: In the event this transaction does not close by the scheduled closing date, through no fault of Se ll er , B uye r( s) ag re e t o p ay $ N/ per day towards S eller’scarry

ing cost s. The total of said sum shall be credited to Seller onthe a ctual closing date. I f the closing is delay ed beyond 30 days from the or

iginal scheduled

closing date, then at Seller’s option, this agreement may be considered null and void. The addendu

m also specified that it would “supersede and override a ny other conf

licting clauses or statements in the attached contract.” Once a gain, PHH signed the addendum on July 23. After signin g th e contract, Simpson applied for a loan with Save Trust Feder al (“Bank”). Whil e the loan application was pending, McEwen contac ted both Simpson and the loan officer a t1 Simpson had also sued Golden Service for allegedly inducing PHH to breach the contract. The trial court dismissed this claim at the end of Simpson’s proof. This dismissal was not appealed. 2 the Ba nk, communicating her concern that the loan be approved in time to meet the contract’s August 30 clo sing d ate. O n Augus t 20, McEwen wrote a lett er to S imps on, st ating: This is to remind you that y our contract . . . expire s on Augu st 30, 1992. If it has not closed by that date, there

will be nothing m

ore that we can d o for y ou, it will be out of our ha nds. We want yo u to ha ve th e hou se. We

have worked hard and are doing e verything possible to get it closed by Aug ust 30th, 1992. In order t o prev ent an y misund ersta ndin g, we want you to rea lize y our contr

act will be null and void. The loan was not approved by August 30. McEwen called Simpson on September 1 to tell her that the house had beensold to another buyer. Simpson, however, took no steps to stop the proc essing of her loan, and it was approved on September 24. Simpson subseq uently sue d for damages. After a be nch trial, the trial court ruled that the contract was ambiguous on its face, that it did not expressly state that time was of the essence, and that a reasonable person would understand from the addendum that the buyer had thirty additional da ys past the official closing date in which to close the deal beforethe contr

act would become n

ull and void. Consequently , the tria l court fo und that PHH breac

hed the c ontract

by s elling th

e proper ty to a third party on September 1. 1 In assessin g damag es, the trial court noted that the appropriate award would be the difference betweenthe contract price and the fair marke t value of the house. The September 1 sale price to the third party was $53,900. H owever, the appraisal obtained by the B ank in connection with Simpson’s loan va lued the house at $61,000. The trial court awarded Simpson $8,000 in damag es, th e difference

between the contract price of $53,000 and the appraised value of $61,000. PHH’s motion to alter o r amend t he judg ment was d

enied. PHH then fil ed this ap peal. On appeal, PHH raises two issues. First, PHH contends that time was of the essence in the contract and that the parties u

nderstoo d that the

salewas to close on or before August 30. Second, if a breac h is found, PHH conte

nds that da

mages s hould

have been based on the

difference between the contract priceand the pr ice for which the

house ac tually

sold, rather than the difference between the contract price and the appraised va lue.3

The issue of

whether PHH brea

ched the contract require s interpr etation o f the par

ties’ agree ment. Contract

interpre tation is a question of law. Rainey v. Stansell , 836 S.W.2d 117, 118 (Tenn. App. 1992). Ou

r scope o f revie w, there

fore, is de novo on the re cord with no presumption of correctness of the trial court’s conc lusions of law. Id. The principles for contract interpretation are set forth in Rainey v. Stansell , 836 S.W.2d 117 (Tenn. App. 1992):

The cardina

l rule for in terpretat ion of contracts is to ascertain the intention of the part ies and to give effect to that

intention consistent with legal principles. A primary objective in the construction of a contract is to discover the intention of the parties from a consideration of the whole contract. In construing contracts, the words expressing the parties’ intentions sho uld be given their usual, natural and ordinary meaning, and neither party is to be favored in the construction. The court, a

t arrivin g at the inte ntion of the parties to a contract, does not attempt to ascertain the parties’ state of mind at the time the contract was executed, butrather their inten tions as a ctually embodied and e

xpressed in the contract as written. All provis i ons of a contract should be construed as in harmony with each ot her, if suc h cons truct ion ca n be rea sonab ly made, s o as to avoid repugn anc y betwee n the seve ral provisions of a

single c ontract . Id. at 118-19 (citations omitted). In this case, the parties’ agree ment states th at th e s al e i s t o b e c lo se d w it hi n f or ty- fi ve da ys
or sooner. S impson sig ned the c ontract on July 14 and the adde

ndum on July

15. PHH sig

ned both
on July 23. Forty -five da ys from July 14 fell on August 28, forty -five day s from July 15 fell on August 29, and forty-f

ive days from

July 23 fell on September 6. The contrac talso states that the closing date is August 30 or before. As the tr ial court found, thereis patent ambiguity on the fa

ce of the co ntract. The cont ract is st amped wit

h the follo wing sta

tement: “SEE MODI

FICA TION ON ATTAC HED ADDE NDUM F ORM ING PART OF THE CON TR ACT . C ONT RAC T VO ID UNLESS ATTACHED ADDENDUM IS FULL Y EXECUTED.” As noted above, th e a dd en du m p ro vi de s t ha t a n a dd it io na l t hi rt y da ys are allowed for closing if the scheduledclosing

date is no t met. The par

agrap h states th at the co ntract w ill become n ull and voi d after this additi onal thirt

y days has lapsed. PHH ma intains that the placement of “N/” in the blank in that paragraph indicates that the paragraph does not apply , while Simpson contends that the “N/” means only that she wa s to pay no money towards PHH’s carry

ing costs.4

The adde ndum conta

ins the fo llowing s tatement : THIS ADDENDUM SHALL SUPERSEDE AND OVERRIDE ANY OTHER CONFLI CTING CLAUSES OR STATEMENTS IN THE ATTACHED CONTRACT. Thus, if the provision in the addendum for an additional thirty day s is applicable, this would override a closing date specified in the body of the contract. Viewing the contract

as a whole, including the addendum, the most reasonable interpretation of the lang uage in the adde ndum is that the purchaser was given thirty days bey ond the scheduled closing date in which to complete the sale. The contract would bec ome null and vo id only after th is additional thirty day s had lapsed. This provision would override a closing date spec ified in the body of the contr act. Therefore, the languag e in the contract and the addendum, taken togethe r, indica te that Simpson had thirty day s after the August 3 0 closing date in which to complete the transaction. PHH argue s that time

was o f the essen ce in the contract and that McEwen stressed the importance of the August 30 closing date in her Aug ust 20 letter to Simpson an d in their
convers ations. The general rule is that

time is not of the essence in real estate contracts. Thompson
v. Menefee , 6 Tenn. App. 118, 128 (192 7). T ime can be of the essence, however , if the contract expressly stipulates so, if the contract or

subject ma

tter involved manif

ests such an intent ion, or if the intention is implied by the nature of the contract or the circumstanc es of the case. Commerce St. Co. v. Goodyear Tire & Rubber Co. , 31 Tenn. App. 314, 330, 215 S.W.2d 4, 11 (1948). In the instantcase, the contract does not expressly sta te that time is of the essence. Neither the contract nor th e subject ma

tter mani fest suc h an inten t. Finall y, a n intent to make time o f the ess ence is no t implied by the nature of

the contract or the circumstances. McEwe n’s actions after executionof the contract demonstrate that she considered time to be of the essence . However , the pa rties’ actions at the time the contra

ct was e xecuted do not demonstrate such an intent. Moreover, Simpson testified that she read the a ddendu m when she signed it and believed that it gave he r extra time. Indeed, after

McEwen told Simpson on September 1 that the house had been sold, Simpson asked McEwen about the addendum. The circumstances of the ca se do not support the contention that the parties had a meeting of the minds that time was of the essenc e. PHH contends that Simpson’s acceptance of the return of her earnest money

evidenced her understanding that August 30 was the final deadline. The rec ord indicates that the subject

of earnest money was not broached by

PHH until its motion to alter or amen d the judgment. In its motion,5

PHH asked the trial court to allow evidence of Simpson’s acceptance of the earnest money , citing mistake or

inadver tence of counsel. The trial court denied the motion to amend, and we find no abuse of discretion in that decision. See Campbell v. Archer , 555 S.W.2d 110, 112-13 (Tenn. 1977); Serv-U- Mart, Inc. v. Sulli

van County , 527 S.W.2d 121, 123-24 (Tenn. 19 75); Col lins v. Gre ene County Bank , 916 S.W.2d 941, 945 (Tenn. App. 1995); Braswell v. Carothers , 863 S.W.2d 722, 730 (T en n. Ap p. 19 93 ). Co ns eq ue nt ly, we do not consider the issue of Simpson’s acceptance of the return of her earnest money
. Therefore, since there was no agreement that time was of the essence in the contract and since th e langua

ge in the contract and the a

ddendum g ave Simpso n thirty day s beyond the Au gust 3 0 closing date in which to complete the sale, PHH breached the contract by se

lling the property

to a third party on September 1. T he trial court is affirmed on this issue. Next, we consider

the issue of

damage s. Our re

view of th is issue is de novo upon the record witha presumption of correctness of the findings of f act unless the evidence preponderate s
o t herwise. Tenn. R. A

pp. P. 13(d

); Armstrong v. Hickman Cou nty Highway Dep’t , 743 S.W.2d 189, 195 (Tenn. App. 1987). The measure of damages for br each of contract for the sale of real estate is the difference betweenthe contract price of the property a

nd its fair market value at the time of the breach. Turner
v. Benson , 672 S.W.2d 7 52, 754 (T enn. 1984 ). The fa ir marke t value of realty is the pr ice a
reasona ble bu yer wo ul d p ay i f h e w er e w il li ng to bu y b ut did not have to and that a willing seller would ac cept if

he were willing to sell but did not have to. Nashville Hous. Auth. v. Cohen , 541 S.W.2d 947, 95 0 (Tenn. 1976). In this case, the trial cour t found that the fair market value of the propert y was $61,000, the amount at which it was appraised for Simpson’s loan from the B ank. Under some circ

umstance s, an app

raisal ma y pr ovide a mo

re accurate me asure of the fair market value than the a

ctual sellingpric e, as, fo

r example, where th

e seller is under a

compulsio n to sell qu ic kl y. However, in this case, the house had been on the mar ket for seven months before Simpson made her offer

of $53,000, starting at an asking price of $75,500 a nd gradually

dropping to an asking price of $54,500. There is no evidenc e in the record that any one offered the appraised price of $61,000 during the seven months the property was being offered

for sale. In addition, the evidenc e does not establish that PHH was under a compulsion to sell. Given the length of time the house had been on the market, we find that the eventual selling price of $53,900 represented the fair market6

value of the prop erty . Wetherefore reverse the trial c ourt’s award of $8,000 in damages and instea d order an award of $900 in damages to Simpson, the difference between Simpson’s contract pr ice and the actual selling price. T he trial cour t’s finding that PHH breached its contract with Simpson is affirmed. The damage award of $8,000 is reversed and damages orde red in the amount

of $900. Costs on appeal

are assessed against both Appellant and Appe lle e equall y, f or which execution

may issue if necessary .

HOLLY KIRBY LILLARD, J. CONCUR: ALAN E. HIGHERS, J.

HEWITT P. TOMLIN, JR., SR. J.