Dinerman v. Santiago, No. 505-9-04 Wncv (Katz, J., Aug. 17, 2005)

[The text of this Vermont trial court opinion is un official. It has been reformatted from the original. The accuracy of the text and the accompanying data included in the Vermont trial court opinion database is not gua ranteed.]

STATE OF VERMONT SUPERIOR COURT Washington County, ss.: Docket No. 505-9-04 WnCiv

DINERMAN

v.

SANTIAGO and ELITE LIFESTYLE

FINDINGS OF FACT

CONCLUSIONS OF LAW

NOTICE OF DECISION

This matter was tried to the court on August 10, 2 005. On the basis of the evidence presented, the following decision i s announced.

FINDINGS OF FACT

1. The parties entered into a contract on March 1 4, 2004 for the

construction and installation of a sunroom. Defend ant is in the business of fabricating and installing sunrooms. The contract envisioned a total price of $18,600, and called for a “deposit with order” of $ 6,000.2. Santiago took very preliminary measurements of Plaintiffs’ home on that first, March, visit, and began to draw up plan s to meet Plaintiffs’ requirements. The contract calls for installation to “begin around May 10 and . . . be completed on or about May 30.”

3. As events unfolded, Santiago proved not very g ood at returning telephone calls. Nevertheless, the project continu ed on its course. Around April 10, a preliminary drawing was prepared by Def endants showing the proposed new room. Santiago had told Mr. Dinerman that the preliminary drawing would be delivered in two weeks, presumably from the mid-March date, although that is not part of the written cont ract. He also said that he would obtain the town building permit.

4. Although Defendants started to fill out the pe rmit application, Plaintiffs, as property owners, needed to sign it, so the application was forwarded to them. Mr. Dinerman then completed it, signed it, and brought it to the Fayston town office. The permit eventual ly was issued, though with a condition on its face stating that it would becom e effective fifteen days after issuance to allow interested persons time for appeal.

5. After the preliminary drawing was discussed be tween the parties, Defendants on May 16 prepared a “final” drawing. T his was based on a site visit on May 10 by Santiago and his assistant, Bria n, at which they took

measurements and had detailed discussions with Dine rman. There is no doubt that the parties expected the work to continu e at the time of the meeting. Dinerman also raised several substantial additions in his discussions of May 10, including outside fire stair s and french doors. Defendants apparently quoted the additional work at $4,288. The final drawing was sent to Dinerman for signature, and he did, indeed, sign it.

6. In addition to signing the May 10 final drawin g, Dinerman had his attorney-friend send a letter to Defendants. Altho ugh purporting to review the contract agreement, this letter proposed a subs tantial alteration of the

terms. The stairs would be included within the ori ginal contract price. There would be a penalty for failure to complete on schedule. The schedule of payments was changed to be significantly less “f ront loaded” than theschedule incorporated in the signed contract. Thes e changes were rejected

by Defendants, with Santiago saying his “clients do n’t tell him how to run

his business.”

7. By mid-May, Defendants had fabricated the comp onents of the sunroom in accordance with the May 10 drawing. It was ready to be

installed.

8. On May 19, Santiago called Dinerman to say tha t he had a crew ready to go to the job site from Maine. Dinerman r ejected this offer to commence installation, telling Santiago not to send the crew. Dinerman’s reason was that the period for appeal of the town p ermit still had two days to run, so construction could not commence for another two days. We find credible Santiago’s explanation that his crew would have had to set up and reconnoiter the job site. This project was somewha t complex, because the terrain is very steep and rocky. The crew would ha ve to make a final determination of exactly where to put piers and sup ports for the underside of the deck, upon which this sunroom was to be constru cted. We are persuaded that there was sufficient set-up work for the crew, before any changes were made to the site, that they could have profitably u sed the two days, yet not commenced construction until the permit actually to ok effect—May 22.

9. Although Dinerman altered the “final” drawing to indicate that doors were to open out, we find that change to be i nconsequential, as Defendants could readily alter their existing compo nents to have doors swing out, rather than in.

10. On May 26, Dinerman sent his attorney’s lette r with proposed new

contract terms.

11. The parties never got this arrangement back o n track. The room was never installed. The fabricated parts were either discarded or reused in other jobs.

CONCLUSIONS OF LAW1. Generally, where a contract is unambiguous, it s interpretation is a

matter of law for the court to declare. John A. Ru ssell Corp. v. Bohlig , 170 Vt. 12, 16 (1999). When ambiguities are present, t he contract terms become

a matter of fact to be determined on the evidence. Id . If contract language appears to be ambiguous, we attempt to resolve the ambiguity by examining “the whole instrument, attempting to determine the intent of the drafters from all of the language and using relevant constru ction aids.” Kipp v. Chips Estate , 169 Vt. 102, 107 (1999). We may assess extrinsic evidence in determining whether there is an ambiguity. Id .; see generally Isbrandtsen v. North Branch Corp. , 150 Vt. 575, 577-79 (1988) (discussing in detail the

role of extrinsic evidence in the determination of an ambiguity). Here, we perceive no ambiguity and neither party contends th at any ambiguity requiring the admission of parole evidence exists. The subjective beliefs, or other uncommunicated understandings, of either part y are irrelevant. Quenneville v. Buttolph , 2003 VT 82, ¶ 15.

2. “An enforceable contract must demonstrate a me eting of the minds of the parties: an offer by one of them and an acce ptance of such offer by the other. To be valid, an offer must be one which is intended of itself to create a legally binding relationship on acceptance.” Sta rr Farm Beach Campowners Assoc., Inc. v. Boylan , 174 Vt. 503, 505 (2002) (citations omitted). That is, once the parties have a contrac t, neither party thereto is permitted as of right to demand a change in terms. Despite their valid contract, however, such a unilateral demand to chan ge the terms is implicit in the lawyer letter of May 26.

3. We understand Plaintiffs’ characterization of the original $6,000 deposit as “earnest money” to be intended to imply that it was just a sign of good faith that could be refunded on request, and w as not intended to be a deposit towards the contract price. We do not beli eve that the expression “earnest money” is a term of art with an accepted m eaning so specific as to require a particular result merely upon its utteran ce, apart from the actual terms of the contract in which it appears. As one court has noted, the expression “is of ancient origin. . . . [and] has given rise to many

controversies . . . .” Nosacka v. McKenzie , 54 So. 351, 352 (La. 1911).Generally, courts analyze the meaning of “earnest m oney” deposits in the

same manner as other types of deposits, by ascertai ning the intent of the parties from the language actually used in the unam biguous contract, like other ordinary contract terms. See generally, e.g. , Balata Development Corp. v. Reed , 548 S.E.2d 668 (Ga. App. 2001) (analyzing earnest money deposit agreement with ordinary rules of contract i nterpretation).

Of course, here, the contract makes no mention of “earnest money”; it says “deposit with order.” It also states a “balan ce due” that represents the total contract price less the deposit amount. With out more, in these circumstances, we have no doubt but that the deposi t was intended to be a partial payment on the total contract price, made t o guarantee Plaintiffs’ performance, not refundable “earnest money.” The W ashington Supreme Court said of a similar deposit: “That it was to be a partial payment is apparent from the following language . . .: 'Balanc e due on inventory to be paid when said inventory book is extended and foote d by . . . .” Baker v.

Shaw , 122 P. 611, 613 (Wash. 1912). Nothing in the con tract implies a right to unilaterally withdraw from it and receive back t he deposit amount, which we conclude Plaintiffs forfeited by repudiating the agreement.

4. Even if Defendants’ delivery of drawings may s omehow have been

behind the schedule envisioned in the contract’s Ma y 30 completion, Plaintiffs accepted any such deviation. They accep ted the May 10 drawing as part of an ongoing process, and approved it on M ay 26. This constituted a waiver of any prior default. “There are few prin ciples of contract law better established, or more uniformly acknowledged, than that a party to an executory bilateral contract, who keeps the same in existence after a known breach by the other party and accepts further perfo rmance from the party who has committed the breach, waives the breach, in the absence of an assertion of his intention to retain the rights acc ruing to him as a result of said breach, assented to by the other party; and if the injured party thereafter does not make good his promises of performance, he is responsible for such

failure.” Lemnah v. American Breeders Serv. , 144 Vt. 568, 579 (1984). In fact, when Defendants offered to perform on May 19, that accorded with the original completion date, as there is no reason to believe substantial completion, at that point, could not have been achi eved by the end of May.5. The reasonable interpretation of the May 26 at torney letter is that it

constitutes an offer of a substituted contract. “A substituted contract is one that is itself accepted by the obligee in satisfact ion of the original duty and thereby discharges it. A common type of substitute d contract is one that

contains a term that is inconsistent with a term of an earlier contract between the parties.” Restatement (Second) of Contracts § 279 cmt. a. (A novation is a form of substituted contract that brings in a new party. Id .) Defendants were within their rights to reject Plaintiffs’ offe r and stand on their existing contract; Plaintiffs had no right to substitution a bsent Defendants’ assent. “To allow one party to terminate unilaterally the c ontract without penalty, while requiring the other party to absorb the entir e loss, is to disregard another axiom of contract construction: an obligati on of good faith and fair dealing is an implied term in every contract.” Sul livan v. Locheam, Inc.

, 143 Vt. 150, 153-54 (1983).

6. Santiago’s testimony at trial that some of the fabricated components

were discarded and some others were reused is entir ely too vague to support a counterclaim. Any award based upon such evidence would inevitably require the court to engage in speculation. See Br eding v. Champlain Marine & Realty Co. , 106 Vt. 288, 297 (1934). When a party seeks an award of damages, it bears the burden of proving th e relevant facts with an enough specificity that the finder of fact can “mak e an intelligent determination of the extent of [the] loss.” Trombe tta v. Champlain Fruit

Co. , 117 Vt. 491, 494 (1953).

NOTICE OF DECISION

For the foregoing reasons, both claim and counterc laim are

dismissed. No costs awarded.

Dated at Montpelier, Vermont, ____________________ ___, 20__.__________________________ Judge