### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE JULY 11, 2000 Ses sion TERRY C. INSCOE, ET AL 

### . v. KATHLEEN KEMPER, ET AL



### . Direct Appeal from the Chancery Court for Sumner County No. 98C-385; The Honorable Tom E. Gray, Chancellor

No. M1999-00741-COA-R3-CV - Filed November 6, 2000

This appeal arises from a suit filed by Inscoe se eking thereturn of earnest money held in escrow for the purchase of Kemper’s residence. When Inscoe decide d not to purchase the residence, Kemper refused to return the earnest money. The trial court found in favor of Inscoe and ordered the return of the earnest money. In mak ing its fin ding, the court stated that Inscoe’s promise to buy wa s illusory an d there was no meeting of the minds, thus the contract was void and unenforcea ble. Kemper appeals

. Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed Alan E. Highers, J., delivered the opinion of the court, in which, W. F RANK C RAWFORD , P.J., W.S., and D AVID R. F ARMER , J., joined. Arthur McClellan,

Gallatin, TN, for

Appellants John D. Kitch, Nashville, TN, for Appellees
OPINION
In November 1997, Inscoe offered to purchase Kemper’ s property in H enderso nville, Tennessee. The contract price was six hundred and fifty thousand dol lars ($ 650,000). The proposed contract containedseveral han dwritten co nditions including o ne that mad e the purchas e continge n t on Inscoe’s receipt of a job offer from Columb ia/HCA at an acceptable level of compensation and job title. At some point during negotiations, Inscoe deposited five t housand dollars ($5,000

) earnest money to be held in escrow pending the completed sale. Kemper rejected the contract based on the conditions. Inscoe was informed by her real estate agent, Mr. Forkum, that

the contingencies were unacceptable to Kemper. I nscoe made a second offer to Kemper at the same price. This offer contained only the following han d-writ

ten condition: the contract is contingent upon a cceptance by buyer of a satisfactor y home inspection report by December

15, 1997, at which time, buyer agrees to deposit

$20,000 with Re/Max Choice Properties-2-

as additional earne

st money. Ac

cording to I

nscoe, Forkum dis

cussed the new co

ndition with Ms. Mitchell, Kemper’s real e state agent. F

orkum and Mitchell

also discussed the job contingency from the first proposed contract, and Mitchell stated that it “would be totally unacceptable.” On Nove mber 17, 1997, Kemper a

ccepted Ins

coe’s second of

fer and signed

the contract.
The Kemper property was inspected in early December 1997. The inspector drafted a report on December 4. The report “graded” each topic, with grades rang ing from 0-100, with 100 being the best and anything rated 60 or lower needing correction, maintenance, or replacement. The gra des givento the Kemper property included the following: eart

hwork (40); wate

r damage (40) ; concrete masonry (60); wood surfaces/sub stitutes (60); exterior siding (40); roof overhang (40); woodmillwork/trim

(40); caulking (

40); vents (40); f

inish materials /

paint / finishes / co

atings / treatment (20). The report also li

sted several othe

r problems. Despit

e the nume

rous prob lems listed in the report, the inspector classified the house as somewhere between good and avera ge. After reviewing the inspector’s report, the Inscoes decided that the house w as n ot sat isf act ory. On December 15, 1997, Inscoe’s husband wrote to Forkum that because of items in the homeinspection repo rt, the Ins coes did not plan to go forward with the purchase. When Forkum contacted Mitchell with this inf

ormation, he was to

ld that it was unacceptable because the inspection report was satisfactory. Shortly there after, Kemper’s attorney contacted the I nscoes andinformed them that the contr

act was in full for

ce and effect.
In January 1998, Inscoe learned that she would not receive the position with Colombia/HCA. She wrote to

Kemper’s attorney seeking release of the ear nest money. The money was not returne d. Thereafter, Inscoe initiated suit in the Sumner County Chancery Court on December 23, 19 98. Insc oe sought return of the five thousa

nd dollar ($5,000)

earnest money

as provided for u

nder the contrac

t. Kemper filed a counter-complaint seeking specific performance of the contrac t. Before the case went to tr ial, Kemper sold the property to another buy er and amended her complaint to seek mone y damages.
A non-jury trial on the complaint and counter-complaint was held on Sept ember 7, 1 999. At trial, testimony by the

Inscoes indicated they believed the conting ency meant the home inspection re port must be “satisfactory” to them as buyer s. In addition, Mr. Inscoe testified that although he perceived the contingency as an escape clause, it was not used as such. Mrs. Inscoe testified that she and her husband

were genuinely dissatisfied with the finding in the report and did not wish to proceed with the sale on that basis. Forkum, the Inscoes’ a gent, testified that the language in the contingency

meant satisfacto

ry to the I nscoes. The Kempers’ real e

state agent, Mit

chell, testified that the home inspection report clause was confusing. According to

the agent, the clause meant a “satisfactory home inspection report” rather than “satisfactory to the buyers.” This contradicted her

deposition testimony during which she had stated that t he lan guage n ormal ly mean t “sat isfac tory to the bu yers.” In addition, she testified that it was not intended as an escape clause if Inscoe did not receive a job offer with C olo mbia/HCA.-3-

Mrs. Kemper’s testimony indicated that she interpreted theclause as requir ing a “satisfac

tory home inspection report.” By order entered September 17, 1999, the court dismissed boththe complaint and countercomplaint, holding therewas no enforceable contract because Inscoe ’s promise to buy was ill uso ry. In addition, the court found there was no meeting of the minds between the part ie s based on the disputed meaning of

the contingenc

y in the contr

act. Kemper was orde

red to return I

nscoe’s earne

st money and th

e parties were o

rdered to equall

y divide the c

ourt costs. Kempe

r appeals. Analysis
The standard of review for a non-jury ca se is de novo u pon the record. Wright v. City of Knoxville , 898 S.W.2d 177, 181 (Tenn. 1995). There is a presumption of correctness as to the trial court’s factual finding

s, unless the “pre

ponderance of t

he evidence is oth

erwise.” TENN.

R. APP. P. Rule 13(d). F or issues of law, the standard of review is de novo, with no presumption of correctness. Ridings v. Ralph M. Parsons Co. , 914 S.W.2d 79, 80 (Te nn. 1996). In t

he case at bar, the only issue s i nvolve the enfor ceability o

f the contract a

s well as the inter

pretation of cer

tain provisions in the contract entered into by the parties. The interpr eta tion of a written a

greement is a matter of law and not of fact, therefore, our review is de novo on the recor

d with no presumption of the correctness of the trial court's conclusions of law. Union Planters Nat'l Bank v. American Home Assurance Co. , 865 S.W.2d 907, 912 (Tenn. App.1993). Upon consideration of the record and the parties’ argument, we have determined the case may be r eso lved on one issue: the absence of a meeting of the minds of the parties based on the ambiguous language of the contingency. Accordingly , our discussion will be limited to this issue.

Satisfactory Home Inspection Report
On appeal, Inscoe argues that the obligation to purchase Kemp

er’s home was conditioned on the receipt of a satisfactory home inspection report. I nscoe asserts that since she fo und th e report uns ati sfa cto ry, the condition precedent was not met and her obligat ion to buy was not triggered. Kemper argues that the

report was satisf

actory and

therefore I

nsc oe’s obl igation to buy was triggered. Both of these arguments center on the meaning of a “satisfacto

ry home inspection report.” Based upon the following, we find that the contract term was ambiguous andprevented a meeting of the minds betwee

n the parties.
The primary ru

le in interpreting

contracts is to ascertain the intention of the parties from the contract as a whole and to give effect to that intention consistent with legal principles. Winfree v. Educators Credit Union , 900 S.W.2d 285, 289 (T enn. Ct. App.1995); Rainey v. Sta nsell , 836 S.W.2d 117, 118 (Tenn. Ct. App.1992). In construing contracts,the words expressin g the parties' intentions should be given th eir usual, natural, and ordinary meaning. Taylor v. White Stores, Inc. , 707 S.W.2d 514, 516 (Tenn. Ct. App.1985). In the absence of fraud or mistake, a contract must be-4-

interpreted

and enforced as written, even though it contains terms which may seem harsh or unjust. Heyer-Jordan & Assocs. v. Jordan , 801 S.W.2d 814, 821 (Tenn.App.1990).
An ambiguity in a contract is characterized as doubt or uncert ainty arising from the possibility of

the same langua

ge being fair

ly und ers too d in mor e ways than one. Hillis v. Powers , 875 S.W.2d 273, 276 (Tenn. App.1993). When a contract term is ambiguous there was no “meeting of the minds.” A contract is unenforceable when there is no meeting of the minds or mutual assent by the parties. Jamestowne On Signal, Inc. v . First Feder al Sav. & Loan As s'n 807 S.W.2d 559, at 564 (Tenn. Ct. App. 1990) citing Johnson v. Central National Ins. Co. of Omaha, Neb. , 356 S.W.2d 277, 281 (Tenn.1961) With the foregoing in mind, we now turn to the contract term at issue in this case. The contingency placed in the real estate co ntra ct conditioned the sale on the buyer’s acceptance

of a “satisfactory home inspection report.” At trial, both the parties and th

e parties’ agentsoffered conflicting interpretations of the langua ge. The Ins coes and their ag

ent believed it meant a report that was

subjectively

satisfactory to themselves as the buye

rs. The Kempers a

nd their agent believed it meant anobjectively satisfactory

report. It is apparent from these inconsistencies that the parties did not

share the same

understanding about the meaning of the contingency . Upon review, we hold that the language could be interpreted either way . Ac cor dingly, there was no meeting of theminds between the parties and the contract cannot be enforced. Therefore, the trial court did not err on this issue.
Conclusion For the foregoing reasons, the decision of the trial court is hereby affirmed. Costs of app eal are t axe d to App ell ant , Ka thl een K emp er, f or w hic h ex ecut ion may i ssu e, i f nec ess ary.

___________________________________ ALAN E. HIGHERS, JUDGE