Opinion ID: 1830503
Heading Depth: 1
Heading Rank: 4

Heading: Demand for Repairs

Text: Melton argues that the lower courts erred in holding that a demand was a condition precedent [6] to the termination of the contract. In the alternative, Melton argues that the court of appeal erred in not articulating a standard for what constitutes a demand, but that in no instance, can a demand be decided by a subjective intent inquiry. Rather, courts should measure the performance of a contract by objective actions. In response, the Campbells argue that none of their communications amounted to a repair demand because they were still willing to pay the $400,000 purchase price after writing the letters to Melton. Thus, the Campbells urge that the lower courts correctly concluded the clause was never triggered. Both parties agreed that it was Melton's refusal to make repairs which activated the relevant portion of the  additional provisions  clause. The Second Circuit reasoned that inherent in the act of refusal is the existence of a demand, stating that common sense dictates that it would be illogical to conclude that one ever refuses to do something without first being asked to do it. We agree with the court of appeal's conclusion that implicit in that portion of the clause which gives Melton a choice to pay or refuse repairs over $2000 is the requisite that a demand be first made upon him by Campbell for responsibility of the costs. More importantly, we find that requirement explicitly provided in the contract's inspection clause that required the purchaser to give notice of any objection to the inspections in writing within five days. The parties had deleted a portion of the standard form contract language regarding inspections during negotiations of the purchase agreement, as evidenced by a cross marking out the provision, and a cross reference to the  additional provisions  clause. However, the parties retained the following paragraph in the inspections provision: Any additional inspection reports required by the purchaser, which are listed in the additional provisions of this agreement, at Purchaser's sole expense, shall be obtained within [45] days from Seller's acceptance of this agreement. A copy of such additional inspection reports must be afforded to Seller within five (5) days of completion of the inspections. Purchaser shall make known his/her objections to contents of such additional inspection reports in writing within five (5) days of completion of the inspections. Upon completion of such inspection, PURCHASER SHALL provide Seller or Seller's Agent/Broker with a copy of all inspection reports and if not satisfied with the present condition of the property as reflected in inspections reports shall indicate in writing his rejection of the property. FAILURE TO MAKE INSPECTIONS OR GIVE WRITTEN REJECTION TO SELLER OR SELLER'S AGENT/BROKER WITHIN FIVE (5) DAYS SHALL BE DEEMED AS ACCEPTANCE BY PURCHASER OF THE PROPERTY'S PRESENT CONDITION. (Italics added). Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. Civ. Code art. 2050. A doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties. La. Civ.Code art. 2053. A provision susceptible to different meanings must be interpreted with a meaning that renders the provision effective, and not with one that renders it ineffective. La. Civ.Code art. 2049. Reading the contract as a whole to give each provision effect, the clear and explicit intent of the parties was that the  additional provisions  clause providing for termination of the contract remained inoperative until repairs over $2,000 were requested in writing. However, we disagree with the lower courts' conclusion that a demand for repairs over $2,000 in writing was never made. The record shows that there were two letters from Campbell to Melton which precipitated Melton to exercise his claimed option to nullify the contract. In its findings of fact, the trial court concluded that neither correspondence, dated October 21 and 28, 1997, which informed Melton of the results of the structural reports, qualified as formal demands but were rather invitation[s] to discuss the matter.... Regarding the October 21, 1997 correspondence, the trial court relied on Campbell's testimony that his purpose in writing the letter was to inform Melton of the results of the inspections and of the numerous undisclosed defects or problems which were revealed. [7] In relation to the October 28 letter, Campbell testified that when he wrote the letter, he was still willing to go forward and close on the house and absorb all that liability. Campbell explained that he was not demanding repair but simply informing Melton of the undisclosed problems which had been discovered and giving him an opportunity to cure them. The Second Circuit concluded that the trial court resolved the discrepancy in the letters in favor of Campbell's explanation that the language was merely informative. However, the lower courts' erred in considering an explanation from Campbell regarding the letters' content. While we acknowledge that factual findings which are pertinent to the interpretation of a contract will not be disturbed absent manifest error, we can only conclude from review of the record that the trial court manifestly erred when it looked outside the writings of the parties to consider parol evidence regarding Campbell's intent in discussing the repair items. Even if we were to consider the October 21 letter an invitation, rather than a demand for repairs exceeding $2,000, we fail to see how Campbell's subsequent letter on October 28 could be construed as another invitation after Melton's response stating his intent to nullify the contract based on the  additional provisions  clause. The Second Circuit acknowledged the obvious point of difficulty in the letter's language that held Melton responsible for repair of the three mechanical systems or reduction in the purchase price to the tune of $15,000. The obvious language in Campbell's letter cannot be overcome because we can see no reason that Campbell would have written the letters if he did not expect some payment or rebate for repairs that he identified would cost over $2,000. Further, the resolutory condition for repairs over $2000 could only be invoked by a signed writing according to the contract's express terms. [8] Therefore, it was proper to look only into the parties' writings to determine whether Campbell had proved up the fulfillment of the condition terminating the contract. While the Campbell's communication of October 28, 1997 was couched in polite terms, there was little doubt that when the interpretation was confined to only the four corners of the document, that signed writing constituted a demand for repairs in excess of $2,000 that terminated the contract between the parties. The Campbells' subsequent actions in an attempt to close the sale could not prevent the clause's operation to void the contract once the demand for repairs was made.