Court Opinion

ID: 9690771
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:41:53.981219+00
Date Added: 2024-06-11T09:08:20.887101
License: Public Domain

Annabelle Clinton Imber, Justice, dissenting. One of the basic precepts of contract interpretation is that the different clauses of a contract must be read together so that all of its parts harmonize, and one provision should not be given effect to the exclusion of another, nor an interpretation be adopted which neutralizes a provision if the various provisions can be reconciled. Sturgis v. Skokos, 335 Ark. 41, 977 S.W.2d 217 (1998). Although the majority opinion initially recites the above-stated maxim, the majority nonetheless goes on to interpret the contract at issue here in a manner that is in complete contravention of that basic precept in contract law. By interpreting the contract as being fully performed at the alleged “closing” of the deal — when the Ivys completed and returned the required documents to RE/MAX, were paid their equity, and vacated the home — the majority renders paragraph 6(f) of the contract superfluous and ignores the obvious purpose of paragraph 7(d). Only when paragraphs 6(f) and 7(d) are interpreted together so that the condition in paragraph 6(f) survives the alleged “closing” of the real estate deal, can both provisions function harmoniously. Therefore, because the initial determination of the existence of ambiguity in a contract is a question of law for the circuit court, I conclude that the circuit court erred when it failed to grant RE/MAX’s directed-verdict motion and, instead, submitted the issue of the contract’s interpretation to the jury. See Fryer v. Boyett, 64 Ark. App. 7, 978 S.W.2d 304 (1998). Accordingly, I must respectfully dissent. First, if, as the majority proposes, the contract was fully performed as of the date of “closing,” paragraph 6(f) would never take effect in the instant case, and thus it would be meaningless. The function of paragraph 6(f) was to relieve RE/MAX of all of its obligations under the RE/MAX-Ivy contract if Huntco failed to perform its duties under the RE/MAX-Huntco contract. However, under the RE/MAX-Huntco contract, Huntco was not obligated to begin paying RE/MAX service fees on an employee’s house until RE/MAX took the house into its inventory. A house would become part of RE/MAX’s inventory when RE/MAX had acquired it under a “Contract of Sale,” but the house had not yet been conveyed to a third party. That is, in order for a home to be in RE/MAX’s inventory the following had to occur: (1) the employee had to accept RE/MAX’s offer by completing and returning all of the requisite legal documents, including the Contract of Sale and the Warranty Deed, (2) RE/MAX had to pay the employee his or her equity within four days of its receipt of the documents, and (3) RE/MAX had to take possession of the home. Then, at the end of the month in which a house was taken into inventory, Huntco’s obligations to RE/MAX would finally be triggered when RE/MAX sent Huntco an initial invoice on the house. In the instant case, the home was taken into RE/MAX’s inventory on October 9, 2001 — the date by which the Ivys had returned the requisite documents to RE/MAX, RE/MAX had paid the Ivys their equity, and the Ivys had vacated their home. Consequently, the earliest date that Huntco would have been obligated to pay RE/MAX service fees for the Ivys’ house was October 31, 2001, the end of the month in which the house was taken into RE/MAX’s inventory. According to the majority, paragraph 6(f) merged into the deed on October 9 and became unenforceable. Such an interpretation dictates an absurd result by nullifying other provisions in the contract. Under the majority’s interpretation, paragraph 6(f) was never enforceable because Huntco’s obligations never came to fruition before the “closing” date. A further result would be that RE/MAX would have no recourse if Huntco breached its obligations, and thus paragraph 6(f) would be utterly meaningless. The majority’s interpretation also ignores the clear purpose of paragraph 7(d). I agree with the majority that the parties probably included paragraph 7 (d) in an attempt to prevent their duties under the contract from merging into the deed when it was transferred to RE/MAX. However, by interpreting the contract as being fully performed at the “closing” when the Ivys had completed all of their duties to RE/MAX, the majority ignores the fact that RE/MAX, the other party to the contract, had not performed all of its duties to the Ivys at that time. The Contract for Sale lists the purchase price of the Ivys’ home as $612,500, but the Ivys only received $24,066.11 in equity from RE/MAX. Additionally, the contract states that if RE/MAX assumed the Ivys’ mortgage it would make all payments on the mortgage after the date of possession and could continue making payments until a third-party buyer was found. At the point when the majority views the contract as being fully performed, October 9, RE/MAX had completed virtually none of its duties under the contract. Although RE/MAX had paid the Ivys their equity in the house, it had not made a single mortgage payment nor had it located a third-party buyer. As stated above, paragraph 7(d) was included to protect the parties from a breach of the contract after the deed was transferred, but the majority’s interpretation of the contract eviscerates any protection the Ivys had from a breach by RE/MAX. If, as the majority contends, the contract merged into the deed on the date of “closing,” RE/MAX would have been relieved of any obligation to continue paying the Ivys’ mortgage and could have allowed the mortgage to go into default. Basically, RE/MAX could have acquired a home worth $612,500 for a bargain price of $24,066.11. Finally, I would point out that the Ivys’ assertion — that the contract was fully performed — completely contradicts their request for specific performance because specific performance is a remedy that is only appropriate when one party to a contract has not yet fully performed. If the contract here was fully performed at “closing” and if, as the majority asserts, RE/MAX was only obligated to make mortgage payments because it was the owner of the home, then how can the majority justify the jury’s decision to require RE/MAX to specifically perform by making mortgage payments for the Ivys’ benefit? For the above stated reasons, I respectfully dissent. Brown and Dickey, JJ., join this dissent.