Court Opinion

ID: 3205783
Source: CourtListenerOpinion
Date Created: 2016-05-23 15:06:42.715067+00
Date Added: 2024-06-11T14:29:13.600218
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                JEFF VANBUSKIRK, AN INDIVIDUAL;                       No. 67816
                AND DENISE VANBUSKIRK, AN
                INDIVIDUAL,
                Appellants,
                vs.
                STANLEY NAKAMURA, AN
                                                                            FILED
                INDIVIDUAL; AND STEPHANIE                                   MAY 2.0 2016
                NAKAMURA, AN INDIVIDUAL,                                   TRAM K. LINDEMAN
                Respondents.                                            CLERK OF SUPREME COURT
                                                                       BY   5   .)1

                                                                             DEPle    ic5;;LC2AE-14
                                 ORDER OF REVERSAL AND REMAND

                             This is an appeal from a district court order granting
                summary judgment in a real property contract action. Eighth Judicial
                District Court, Clark County; Rob Bare, Judge.
                             We review de novo a district court's order granting summary
                judgment, Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
                (2005), and must determine whether the district court erred in
                interpreting and applying a contract's negotiation and time-is-of-the-
                essence provisions. We reverse.
                             On August 5, 2014, respondent-buyers Stanley and Stephanie
                Nakamura entered into a purchase agreement ("Agreement") for
                appellant-sellers Jeff and Denise Vanbuskirk's real property. Close of
                Escrow was to be September 10, 2014. Section 2(C) of the Agreement
                stated:
                            [1]f the appraisal is less than the Purchase Price,
                            the transaction will go forward if (1) Buyer, at
                            Buyer's option, elects to pay the difference and
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                            purchase the property for the purchase price, or
                            (2) Seller, at Seller's option, elects to adjust the
                            purchase price accordingly, such that the
                            Purchase Price is equal to the appraisal. If
                            neither option (1) or (2) is elected, then parties
                            may renegotiate; if renegotiation is unsuccessful,
                            then either party may cancel this agreement upon
                            written notice in which event the EMD shall be
                            returned to buyer.
                Section 25 stated that "time is of the essence" and that "[n]o change,
                modification, or amendment of this Agreement shall be valid or binding
                unless such change, modification or amendment shall be in writing and
                signed by each party."
                            On August 21st, after the appraisal came back $3,000 less
                than the purchase price, the Nakamuras sent the Vanbuskirks a proposed
                addendum lowering the purchase price, which evidenced their intent to
                forego the first option under Section 2(C); this document had no facial
                expiration date. On August 23rd, as the Vanbuskirks had not replied, the
                Nakamuras sent another proposed contract addendum with a 2-hour
                acceptance window. The Vanbuskirks did not reply within the specified
                deadline. On August 25th, the Vanbuskirks exercised option 2, accepting
                the August 21st addendum, which lowered the purchase price to match
                the appraisal value. The Nakamuras, however, insisted the addendum
                had expired and canceled the purchase agreement, demanding a return of
                their earnest money deposit. The Vanbuskirks refused to return the
                earnest money deposit, arguing that the Nakamuras failed to attempt
                renegotiations as required by Section 2(C).
                            The Nakamuras filed a complaint alleging breach of contract,
                seeking return of their $25,000 earnest money deposit. The Nakamuras
                moved for summary judgment, and the Vanbuskirks opposed, counter-
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                 moving for a forfeit of the earnest money deposit. The district court
                 granted the Nakamura's motion for summary judgment, holding that
                 renegotiation efforts were unsuccessful because the Vanbuskirks
                 "rejected" the Nakamuras' offer by not accepting it within the 2-hour
                 timeframe. Further, the district court concluded that, because time was of
                 the essence, the deadline for the Vanbuskirks to respond did not need to
                 be reasonable. Thus, the district court held that the Nakamuras were
                 entitled to a return of their earnest money deposit.
                             "[A] fundamental principle of contract law is that the time for
                 performance under a contract is not considered of the essence unless the
                 contract expressly so provides or the circumstances of the contract so
                 imply." Mayfield v. Koroghli, 124 Nev. 343, 349, 184 P.3d 362, 366 (2008).
                 If time is of the essence, performance must occur at the "stated and
                 unquestionable time" and parties are not entitled to a reasonable time to
                 perform thereafter. Holmby, Inc. v. Dino, 98 Nev. 358, 361, 647 P.2d 392,
                 394 (1982). "If time is not of the essence, the parties generally must
                 perform under the contract within a reasonable time, which depends upon
                 the nature of the contract and the particular circumstances involved."
                 Mayfield, 124 Nev. at 349, 184 P.3d at 366. Whether the time in question
                 is reasonable is a question of fact. Id. at 346, 184 P.3d at 364.
                             A contract that includes a clause providing in general terms
                 that time is of the essence does not necessarily apply to pre-closing
                 conditions that do not affect the specified closing date.      See Fletcher v.
                 Jones, 333 S.E.2d 731, 734 n.1 (N.C. 1985) ("If the condition precedent
                 were of crucial import to either or both parties and needed to be fulfilled
                 by a certain date, other than that set for closing, a separate date should
                 have been explicitly included to govern the condition precedent, along with

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                     a separate time-is-of-the-essence provision if necessary. It would then
                     have been clear that this particular condition, separate from the act of
                     closing, must be strictly performed by a different date.");        Harris v.
                     Stewart, 666 S.E.2d 804, 807 (N.C. Ct. App. 2008) (holding that "the
                     reasonable time to perform rule applies to pre-closing conditions, even
                     where an express deadline for the pre-closing condition is provided" unless
                     a time is of the essence provision expressly applies to that condition); see
                     also Jackson v. Holmes, 307 So. 2d 470, 472 (Fla. Dist. Ct. App. 1975)
                     (concluding that the time-is-of-the-essence provision applied to the closing
                     of the purchase and not a pre-closing condition requiring a bank loan
                     certification, holding: "[A] 'time is of the essence' provision will be given
                     effect in an equitable proceeding provided it is shown to be clearly
                     applicable to the contract requirement which it is sought to be applied").
                                 Thus, courts must determine the scope of a time-is-of-the-
                     essence provision.    See 17A Am. Jur. 2d Contracts § 471 (2004) ("[A]
                     question of construction arises where the language of the contract taken in
                     connection with the subject matter indicates some uncertainty as to the
                     intended scope of the provisions that time is of the essence."); 8 Catherine
                     M.A. McCauliff, Corbin on Contracts § 37.3 (Joseph M. Perillo ed., rev. ed.
                     1999) ("Merely putting into the contract the words 'time is of the essence
                     of this contract' may be effective for the purpose, because the context may
                     make clear what the intention is and what the expression means. What
                     the court must know, however, in order to give effect to such a cryptic
                     provision, is: What performance at what time is a condition of what party's
                     duty to do what?").
                                 Here, the purchase agreement included a general time-is-of-
                     the-essence provision under Section 25, titled "Other Essential Terms,"

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                  which simply stated: "Time is of the essence." Section 2(C), which
                  governed the options for appraisal, did not include a specific date or time-
                  is-of-the-essence provision. After receiving the appraisal for $3,000 less
                  than the purchase price, it took the Vanbuskirks 4 days to invoke option 2
                  under Section 2(C)—providing the seller will lower the purchase price to
                  match the appraised value. Had the Vanbuskirks expressly declined to
                  lower the purchase price, then the parties should have attempted to
                  renegotiate under option 3 of Section 2(C). For example, the parties could
                  have renegotiated to split the cost of the difference between the purchase
                  price and the appraised value. If those renegotiations were unsuccessful,
                  either party had the right to cancel the agreement as per Section 2(C).
                              In this case, however, the Vanbuskirks did not expressly
                  decline to exercise option 2; rather, they invoked it. The district court, on
                  the other hand, concluded that the Vanbuskirks "rejected" the addendum
                  by not responding within the 2-hour deadline. Yet, the district court failed
                  to analyze whether the time-is-of-the-essence provision applies to Section
                  2(C), and, if not, whether the 4-day delay in accepting the addendum was
                  reasonable. With 16 days remaining before the close of escrow after the
                  Vanbuskirks accepted the addendum lowering the purchase price, it is not
                  clear, based on the record before us, how this 4-day delay was
                  unreasonable such that it would affect the closing date.
                              Thus, we disagree that there are no genuine issues of material
                  fact regarding the scope of the time-is-of-the-essence provision and the
                  reasonableness of the delay in lowering the purchase price. Therefore,
                  summary judgment should not have been granted in favor of the
                  Nakamuras. Accordingly, we

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                                ORDER the judgment of the district court REVERSED AND
                  REMAND this matter to the district court for proceedings consistent with
                  this order.

                                                                                  J.
                                                   Saitta

                  cc: Hon. Rob Bare, District Judge
                       Nathaniel J. Reed, Settlement Judge
                       Black & LoBello
                       Pintar Albiston LLP
                       Eighth District Court Clerk

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