Opinion ID: 6534112
Heading Depth: 2
Heading Rank: 1

Heading: Did the district court erroneously overturn the circuit court's application of the doctrine of mutual mistake?

Text: [¶11] The district court held that the circuit court erred as a matter of law when it applied the doctrine of mutual mistake. We review a court's conclusions of law de novo. Ohio Cas. Ins. Co. v. W.N. McMurry Constr. Co. , 2010 WY 57 , ¶ 14, 230 P.3d 312 , 320 (Wyo. 2010). A court may reform or cancel a written contract that, due to a mutual mistake of the parties, does not accurately reflect the parties' true intentions. 66 Am. Jur. 2d Reformation of Instruments § 20 (May 2018 update) ; Lawrence v. City of Rawlins , 2010 WY 7 , ¶ 14 n.4, 224 P.3d 862 , 868 n.4 (Wyo. 2010) ; Hansen v. Little Bear Inn Co. , 9 P.3d 960 , 964 (Wyo. 2000). To establish a claim of mutual mistake, the proponent must prove three elements by clear and convincing evidence: (1) there was a prior agreement that the written instrument undertook to evidence; (2) a mistake occurred in the drafting of the instrument; and (3) there was no fraud or inequitable conduct on the part of a party. Gumpel v. Copperleaf Homeowners Ass'n, Inc. , 2017 WY 46 , ¶ 75, 393 P.3d 1279 , 1299 (Wyo. 2017) (citing Mathis v. Wendling , 962 P.2d 160 , 164 (Wyo. 1998) ). The mistake must be reciprocal and common to both parties with each party being under the same misconception as to the terms of the written instrument. W.N. McMurry Constr. Co. , 2010 WY 57 , ¶ 16, 230 P.3d at 320 (citation omitted). [¶12] The circuit court found that the parties made a mutual mistake in drafting the Contract: Testimony was offered as to the antecedent agreement of the parties. The Buyer, his agent and Seller knew that the purchase agreement was for a new mobile home. When reading the contract in its entirety [it] is ... clear that the contract contemplates the transfer of a currently titled or pre-owned mobile home. [¶13] The district court determined that the circuit court improperly applied the doctrine of mutual mistake-a conclusion with which we agree. Our first task ... is to define precisely the mutual mistake that is purportedly at issue. Gumpel , 2017 WY 46 , ¶ 76, 393 P.3d at 1299 . The circuit court identified the parties' antecedent agreement to be that the mobile home was new. The purported mistake was that the Contract contemplated the sale of a used mobile home. Whether the mobile home was new is not at issue. The purported mistake at issue is the process of the purchase transaction-in particular, whether the Contract mistakenly required either Burton to deliver a Wyoming title at closing or Mr. Larson to pay sales tax. The record contains no suggestion, let alone clear and convincing evidence, that the parties had an antecedent agreement as to the details of how ownership would be transferred to Mr. Larson. Specifically, the record does not show that prior to the Contract the parties had agreed that Burton would deliver an MCO or that Mr. Larson would necessarily pay sales tax on the transaction. With no prior agreement, the first element of a mutual mistake is unproven and we go no further. The district court correctly found that the circuit court erred as a matter of law. II. Did the district court err when it found that Mr. Larson breached the contract before Burton Construction, Inc.'s performance was due by making a clearly erroneous finding of fact, and as a matter of law? [¶14] Mr. Larson argued that Burton breached the Contract by failing to deliver a  Wyoming title at closing. The district court disagreed, concluding that it is factually unknown whether Burton delivered a Wyoming title at closing because Mr. Larson abandoned the closing before Burton arrived. The district court instead held Mr. Larson in breach, finding that he refused to attend closing and tender sales tax as required by the Contract. [¶15] To prove a breach of contract, the proponent must show a lawfully enforceable contract, an unjustified failure to timely perform all or any part of what is promised therein, and entitlement of injured party to damages. Schlinger v. McGhee , 2012 WY 7 , ¶ 12, 268 P.3d 264 , 268 (Wyo. 2012), as amended on reh'g (Feb. 7, 2012) (quoting Reynolds v. Tice , 595 P.2d 1318 , 1323 (Wyo. 1979) ). Here, the Contract is lawfully enforceable. Mr. Larson delivered the Contract to Burton with his signature and $500 earnest money as an offer to purchase the mobile home. Burton countersigned and accepted the earnest money, thus perfecting the Contract. Next, the Contract entitles a nonbreaching party to damages. Thus, to find a breach, we must interpret the Contract to identify each party's obligations and determine whether either party unjustifiably failed to perform as promised. [¶16] Contract interpretation presents questions of law which we review de novo. Pope v. Rosenberg , 2015 WY 142 , ¶ 21, 361 P.3d 824 , 830 (Wyo. 2015). The fundamental goal of contract interpretation is to determine the intent of the parties. Whitney Holding Corp. v. Terry , 2012 WY 21 , ¶ 36, 270 P.3d 662 , 673 (Wyo. 2012). The language of the parties expressed in their contract must be given effect in accordance with the meaning which that language would convey to reasonable persons at the time and place of its use. Ultra Res., Inc. v. Hartman , 2010 WY 36 , ¶ 22, 226 P.3d 889 , 905 (Wyo. 2010) (quoting Moncrief v. Louisiana Land Exploration Co. , 861 P.2d 516 , 524 (Wyo. 1993) ). This Court employs common sense in interpreting contracts and ascribe[s] the words with a rational and reasonable intent. Id. , ¶ 22, 226 P.3d at 905 . When the provisions in the contract are clear and unambiguous, the court looks only to the 'four corners' of the document in arriving at the intent of the parties. Claman v. Popp , 2012 WY 92 , ¶ 26, 279 P.3d 1003 , 1013 (Wyo. 2012) (citations omitted). In the absence of any ambiguity, the contract will be enforced according to its terms because no construction is appropriate. Id. (citation omitted). Id . at ¶ 20, 361 P.3d at 830 (quoting Wallop Canyon Ranch, LLC v. Goodwyn , 2015 WY 81 , ¶ 35, 351 P.3d 943 , 953 (Wyo. 2015) ). [¶17] There is no reason to venture beyond the four corners of the Contract to determine that Burton was required to deliver a Wyoming title at closing. The parties argued, and both lower courts found, that the Contract's language is unambiguous, and we agree. 4 The Contract states that closing must occur by January 15, 2016, at which time Burton must deliver a Wyoming title: At closing, Owner shall execute and deliver a Wyoming title and Bill of Sale free and clear of all liens and encumbrances. [¶18] On the other hand, the Contract also stated that Mr. Larson shall be responsible for sales tax, if any. The words if any indicate that Mr. Larson's responsibility to pay sales tax is conditioned on sales tax being generated by the transaction. Our rules of interpretation require that we interpret a contract as a whole, reading each provision in light of all the others to find their plain meaning. Pope , 2015 WY 142 , ¶ 20, 361 P.3d at 830 (citations omitted). Here, the Contract plainly requires Burton's delivery of a Wyoming title. In this light, the Contract requires Mr. Larson to pay the sales tax associated with Burton's delivery of a Wyoming title. Accordingly, we conclude that Mr. Larson was not obligated to pay sales tax on the transaction, as none would be generated. To obtain a Wyoming title before closing, Burton would become the first  owner of the mobile home and would have to pay sales tax on his initial purchase of the mobile home from the manufacturer. The State of Wyoming taxes only the first sale of a mobile home. Wyo. Stat. Ann. § 39-15-101 (a)(xiii)(B) (LexisNexis 2017); Wyo. Stat. Ann. § 39-15-103 (b)(iv) (LexisNexis 2017). As the second titleholder, Mr. Larson would not be subject to any sales tax. [¶19] Burton urges us to give the Contract's language its full effect together in the context of a normal closing of the parties' contract for the sale of a new mobile home (emphasis in original). Burton explains that the contextual fair meaning of the parties' contract, evident from the contract itself, always was that the parties agreed formally to effectuate a sale and transfer of title and possession of a new mobile home with a manufacturer's warranty. Larson agreed to pay the sales tax on that sale. Burton agreed to collect the sales tax at closing from Larson and to then promptly effectuate the issuance of one certificate of title by the County Clerk to Larson with Larson's Bank's lien shown on it as a first lien. [¶20] We have stated that we will construe contract language in the context in which it was written, looking to the surrounding circumstances, the subject matter, and the purpose of the agreement to ascertain the intent of the parties at the time the agreement was made. Stone v. Devon Energy Prod. Co., L.P., 2008 WY 49 , ¶ 18, 181 P.3d 936 , 942 (Wyo. 2008). However, we will not rewrite contracts under the guise of interpretation, and so long as there is no ambiguity, we are bound to apply contracts as they have been scrivened. Amoco Prod. Co. v. EM Nominee P'ship Co. , 2 P.3d 534 , 540 (Wyo. 2000). Comet Energy Services, LLC v. Powder River Oil & Gas Ventures, LLC , 2008 WY 69 , ¶ 11, 185 P.3d 1259 , 1263 (Wyo. 2008). Pope , 2015 WY 142 , ¶ 20, 361 P.3d at 830 (quoting Wallop , 2015 WY 81 , ¶ 35, 351 P.3d at 953 ). [¶21] [C]ourts apply an objective theory of intent whereby one party's intention is deemed to be that meaning a reasonable person in the position of the other contracting party would ascribe to the first party's manifestations of assent. 17A Am. Jur. 2d Contracts § 29 (May 2018 update). A reasonable layperson, such as Mr. Larson, would not be privy to a dealer's process of transferring title. Further, although parties to a contract are presumed to know the law, we do not attribute to them a complete understanding of the statutes governing sales of mobile homes. According to our established standards for interpretation of contracts, the words used in the contract are afforded the plain meaning that a reasonable person would give to them. Caballo Coal Co. v. Fid. Expl. & Prod. Co., 2004 WY 6 , ¶ 11, 84 P.3d 311 , 314 (Wyo. 2004) (citation omitted). [¶22] While Mr. Larson testified that he knew he had contracted to purchase a new mobile home, we are unable to discern from the record that new meant anything more to Mr. Larson than that the mobile home had not been previously occupied. Although Burton testified that by obtaining a Wyoming title, the mobile home would no longer be new, thus voiding the warranty to Mr. Larson; he also testified that he never discussed this concept with Mr. Larson. In fact, there is no evidence of any agreement regarding a warranty at the time the Contract was made: the listing agent could not say for sure that the online listing advertised the mobile home as having a warranty, and the Contract did not refer to a warranty. The only evidence that the parties discussed a warranty was testimony of a conversation that occurred during a walk-through of the mobile home after the Contract was signed, just before closing. Our primary purpose is to determine the true intent and understanding of the parties at the time and place the agreement was made . Pennaco Energy, Inc. v. KD Co. LLC , 2015 WY 152 , ¶ 25, 363 P.3d 18 , 25 (Wyo. 2015) (citations omitted) (emphasis added). [¶23] Likewise, the record shows that Mr. Larson did not share Burton's unilateral intent to deliver an MCO, collect the  sales tax at closing, and promptly effectuate the issuance of a title. Although Burton apparently had it in his mind that he would follow his customary process of transferring ownership, he signed an enforceable contract that promised otherwise. Because we use an objective approach to interpret contracts, evidence of a party's subjective intent is not admissible, regardless of whether the court determines a contract is ambiguous or clear. Ultra Res., Inc. v. Hartman , 2010 WY 36 , ¶ 23, 226 P.3d 889 , 905 (Wyo. 2010). We decline to rewrite the Contract to conform to Burton's subjective intentions.
[¶24] We review a district court acting in its appellate capacity under the authority of Wyo. Stat. Ann. § 5-2-119 (LexisNexis 2017), which directs this Court to set the standards and extent of our review. Neither the rules of appellate procedure nor our caselaw addresses whether we should review factual findings of the district court under these circumstances and, if so, our level of deference. Ordinarily, the review in the higher appellate court of the actions of the intermediate appellate court is limited to errors of law only. 5 C.J.S. Appeal and Error § 985 (June 2018 update). Nonetheless, we recognize that some issues involve mixed questions of law and fact; and, following a bench trial, we generally do not accept factual findings from the lower court that are clearly erroneous. E.g. , Gould v. Ochsner , 2015 WY 101 , ¶ 16, 354 P.3d 965 , 971 (Wyo. 2015). In civil cases, the United States Supreme Court follows the two court rule, by which the Court will not review findings of fact concurred in by two courts below in the absence of a very obvious and exceptional showing of error. 20 Charles A. Wright and Mary Kay Kane, Federal Practice and Procedure Deskbook § 115 (April 2018 update); see also Graver Tank & Mfg. Co. , v. Linde Air Products Co. , 336 U.S. 271 , 275, 69 S.Ct. 535 , 538, 93 L.Ed. 672 (1949). Likewise, we will not accept, without scrutiny, the findings of a district court that contradict the trial court and, if clearly erroneous in light of the record, we will disregard the findings. [¶25] Here, the two courts below did not concur, and the record does not support the district court's conclusion that the circuit court erred. Specifically, the circuit court found that [Burton's] agent did not appear with a title at closing, and [Burton] could not provide a title at closing as required by the contract. Nevertheless, the district court found that whether or not Burton tendered a ... title, remains factually unknown. Burton's testimony refutes the district court's findings: Q. [Mr. Larson's counsel] Okay. So, at any of these closings that you testified under Direct, under questioning from your attorney, at any of these closings did you bring a Wyoming Title? A. [Mr. Larson] No. .... Q. So, essentially we can agree that in none of these proposed closings did you bring a Wyoming Title. A. On a new home, no. .... Q. Okay. And, I guess at the risk of repeating myself, you never offered Mr. Larson any written or verbal communication to provide him with a Wyoming Title. A. No. Although Burton rescheduled the closing for January 15, he remained unwilling to deliver a Wyoming title. In preparation for the rescheduled closing, he directed the escrow officer to create a new settlement sheet showing an additional $1,806 in sales tax due from Mr. Larson, based on his planned delivery of an MCO. The record establishes that Burton neither delivered nor intended to deliver a Wyoming title before January 15. Thus, we set aside the district court's incompatible finding.
[¶26] Throughout the proceedings and on appeal, Burton argued that his obligation to deliver a Wyoming title at closing could be performed by delivering an MCO and a bill of sale, which could be presented to the County Treasurer for a title after closing. Burton rests his argument on the doctrine of substantial performance, which allows a party that has substantially  complied with a contract to recover for its performance despite the fact that it has breached the contract by failing to comply fully with its terms. Bear Peak Res., LLC v. Peak Powder River Res., LLC , 2017 WY 124 , ¶ 40, 403 P.3d 1033 , 1047 (Wyo. 2017), reh'g denied (Nov. 7, 2017) (quoting 15 Williston on Contracts § 44:58 (4th ed. 2017) ). The doctrine is rooted in fairness and 'is intended to protect a party's right to be compensated when it has performed in all material and substantive respects and to avoid the possibility of a forfeiture due to technical, minor, inadvertent, or unimportant deficiencies.'  Id. (quoting Williston , supra , § 44:52). [¶27] We could find that Burton did not substantially perform his obligation to deliver a Wyoming title, as the added tax burden rendered the delivery of an MCO to be more than a technical, minor, inadvertent, or unimportant performance defect. Bear Peak Res., LLC , 2017 WY 124 , ¶ 40, 403 P.3d at 1047 . However, the doctrine of substantial performance is inapplicable here. Even though neither party argued for its application-and, even though it leads to the same result-we cannot ignore that Article 2 of the Uniform Commercial Code (UCC) 5 and the perfect tender rule govern the Contract. In Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. v. Y-Tex Corp. , 590 P.2d 1306 , 1309 (Wyo. 1979), the Court considered applicable provisions of the UCC in a breach of contract case where the parties had not called them to the attention of the district court. We determined that the UCC became a part of the contract as though written into its terms. Id. (citing Tri-Cty. Elec. Ass'n, Inc. v. City of Gillette , 584 P.2d 995 , 1007 (Wyo. 1978).) There is no reason to keep secret the proper law applicable to a case just because overlooked. Id. Likewise, we decline to ignore the UCC where we are bound by statute to apply it. 6 [¶28] The mobile home that Mr. Larson contracted to purchase is personal property and a good governed by the UCC. Wyo. Stat. Ann. § 34.1-2-105 (LexisNexis 2017) ( 'Goods' means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale ....); Milnes v. Milnes , 2008 WY 11 , ¶ 9, 175 P.3d 1164 , 1168 (Wyo. 2008) (mobile homes are ordinarily taxed as personal property unless converted to real property, i.e. installed on a permanent foundation, under Wyo. Stat. Ann. § 31-2-502 (b) ); Reposa v. Buhler , 770 P.2d 235 , 238 (Wyo. 1989) (applying personal property measure of damages to a mobile home); see also Singletary, III v. P & A Invs. , Inc. , 212 N.C.App. 469 , 712 S.E.2d 681 , 685-86 (2011) ; Hensley v. Ray's Motor Co. of Forest City, Inc. , 158 N.C.App. 261 , 580 S.E.2d 721 , 723 (2003) ; Cooper v. Bluff City Mobile Home Sales, Inc. , 78 S.W.3d 157 , 163 (Mo. Ct. App. 2002) ; Waggoner v. Town & Country Mobile Homes, Inc. , 808 P.2d 649 , 653 (Okla. 1990). The UCC does not rely on concepts of substantial performance, but instead requires that the seller make a perfect tender, meaning that the seller must tender goods that conform in all respects to those specified in the parties' agreement. 77A C.J.S. Sales § 273 (March 2018 update) (citing Pomerantz Paper Corp. v. New Cmty. Corp. , 207 N.J. 344 , 25 A.3d 221 , 231-32 (2011) ). In Wyoming, the perfect tender rule is found at Wyo. Stat. Ann. § 34.1-2-601 (LexisNexis 2017), stating in pertinent part: if the goods or the tender of delivery fail in any respect to conform to the contract , the buyer may: (i) Reject the whole .... (Emphasis added.) Generally, under the rule, the buyer may reject a seller's tender for any trivial defect, whether it be in the quality of the goods, the timing of performance, or the manner of delivery. Midwest Mobile Diagnostic Imaging, L.L.C. v. Dynamics Corp. of Am. , 965 F.Supp. 1003 , 1011 (W.D. Mich. 1997), aff'd , 165 F.3d 27 (6th Cir. 1998) (unpublished opinion). [¶29] Here, the Contract plainly states: At closing, Owner shall execute and deliver a Wyoming title and Bill of Sale free and clear of all liens and encumbrances. Delivering an  MCO that can be submitted to the County Treasurer for a Wyoming title after closing is not a perfect tender. The Contract unambiguously stated that the title was due at closing-not promptly effectuated afterward. Burton failed to perfectly perform his obligation to deliver a Wyoming title at closing under the plain terms of the Contract. 7 [¶30] We note that the obligation of good faith limits a buyer's seemingly unhindered right to reject under the perfect tender rule. William H. Lawrence, Appropriate Standards for a Buyer's Refusal to Keep Goods Tendered by a Seller , 35 Wm. & Mary L. Rev. 1635 , 1651 (1994) (The perfect tender rule does not give buyers the power to seize upon the slightest contract deviation, even though it is not important to the buyer, as a pretext for discontinuing the contract .... The good faith requirement of the Code effectively prevents such improper strategic behavior, and thus assures that application of the perfect tender rule will occur only in those instances when it is invoked honestly. (citations omitted) ); see also generally Printing Ctr. of Texas, Inc. v. Supermind Pub. Co. , 669 S.W.2d 779 , 784 (Tex. App. 1984) ; Y & N Furniture, Inc. v. Nwabuoku , 190 Misc.2d 402 , 734 N.Y.S.2d 382 , 385 (N.Y. Civ. Ct. 2001) ; Hubbard v. UTZ Quality Foods, Inc. , 903 F.Supp. 444 , 451 (W.D.N.Y. 1995) ; Clark v. Zaid, Inc. , 263 Md. 127 , 282 A.2d 483 , 484 n.1 (1971). Under the UCC, [e]very contract or duty within this act imposes an obligation of good faith in its performance and enforcement. Wyo. Stat. Ann. § 34.1-1-304 (LexisNexis 2017). Good faith includes both the subjective element of honesty in fact and the objective element of the observance of reasonable commercial standards of fair dealing. 67 Am. Jur. 2d Sales § 433 (May 2018 update) ; Wyo. Stat. Ann. § 34.1-1-201 (LexisNexis 2017). Here, the law did not oblige Mr. Larson to pay sales tax upon Burton's delivery of a Wyoming title. See supra ¶18. As Mr. Larson testified, by accepting an MCO, I was required to pay $1,800 more for sales tax that was never agreed upon anywhere. It was neither pretextual nor commercially unreasonable for Mr. Larson to reject the MCO as an imperfect tender, as Burton's delivery of an MCO added $1,806 to Mr. Larson's contractual obligation. [¶31] Finally, we disagree with the district court that Mr. Larson's failure to attempt to close the sale constituted an unjustified failure to perform under the Contract. The parties' agents were present at closing, and Mr. Larson was outside. Mr. Larson's funds had been issued. Mr. Larson's agent left the closing, and Mr. Larson declined to enter, only because Burton and his agent failed to deliver or undertake delivery of a Wyoming title. Burton's further attempts to close the sale before January 15 consisted of insisting that Mr. Larson accept an MCO in the place of a Wyoming title. [¶32] Mr. Larson argues that Burton breached the contract, which breach excuses Mr. Larson's performance. We agree. The UCC, however, compels us to frame his refusal to close the sale in terms of anticipatory repudiation, which allows a party to suspend his own performance [w]hen either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other. Wyo. Stat. Ann. § 34.1-2-610 (a) (LexisNexis 2017). [A]nticipatory repudiation centers upon an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance. Id. , cmt. 1. Mr. Larson was justified to treat Burton's clear determination to deliver an MCO as a repudiation of Burton's contractual obligation to deliver a Wyoming title. In the face of Burton's ongoing repudiation, Mr. Larson justifiably abandoned the initial closing and refused to join Burton's subsequent attempts to close the sale before January 15.