Court Opinion

ID: 9623573
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:36:51.337526+00
Date Added: 2024-06-11T18:05:31.321624
License: Public Domain

WILKINS, Judge
(dissenting):
I respectfully dissent. I would reverse and remand the summary judgment on the basis that the option was exercised, and a dispute of material fact exists with regard to when payment of the purchase price was required.
BACKGROUND
In reviewing a grant of summary judgment, this court views the facts and inferences in the light most favorable to the losing party. Winegar v. Froerer Corp., 813 P.2d 104, 107 (Utah 1991). As such, we must recite the facts in the light most favorable to Brody. The facts critical to our review are as follows.
Brody’s agent telephoned Robert Mills on February 9, 1995. During the conversation, Brody orally exercised the option to purchase the condominium. Robert Mills, in acknowledging the exercise of the option, stated that immediate payment was unnecessary and agreed to close upon the Millses’ return to Salt Lake City. On February 13, 1995, Bro-dy sent the Millses a letter to acknowledge in writing the February 9 telephone conversation. The letter stated, “[W]e will be exercising our option to purchase the Condominium.” In the letter, Brody requested the name and number of the attorney the Millses had engaged to help close the sale. Brody also suggested she could close the purchase “anywhere from now to the time that you get back to town.... [SJince you’re returning March 23rd, if you would like the closing to coincide with that date, that is fine with me.” The parties agreed to close between March 20 and 24. Brody then contacted a title company and arranged to begin closing procedures.
Upon receiving the letter from Brody on February 14, 1995, the Millses had their attorney send a letter, dated February 15, 1995, informing Brody that the option had expired unexercised, because Brody had not tendered the full purchase price on or before February 14, 1995. The letter stated the Millses planned to return to their condominium on March 1,1995, when the lease expired. The Millses, however, later orally agreed to extend the lease through March 15, 1995.
On March 15, 1995, the oral extension of the lease agreement expired. Brody did not tender the purchase price, nor did she escrow the fund pending resolution of the dispute, because the Millses had stated they would not accept payment.
The Millses filed a complaint and a subsequent motion for summary judgment in district court claiming that Brody failed to timely exercise the option to purchase. Brody counterclaimed, seeking specific performance of the option contract. The district court granted the Millses’ Motion for Summary Judgment.
On appeal, Brody argues the trial court erroneously granted summary judgment because genuine issues of material fact exist regarding: (1) whether the option required payment to exercise; (2) whether the option was in fact exercised by phone and in writing; (3) whether the option was modified or extended; and (4) whether the Millses acknowledged the exercise of the option by waiving immediate payment of the purchase price.
STANDARD OF REVIEW
Whenever we consider an appeal from a summary judgment, we review the trial court’s legal conclusions, including its conclusion that the material facts are not disputed, for correctness. See Utah R.Civ.P. 56(c) (stating summary judgment is appropriate only if “there is no genuine issue as to any *366material fact and ... the moving party is entitled to a judgment as a matter of law”). This standard allows us to make our own conclusions and does not obligate us to defer to the trial court. See State v. Pena, 869 P.2d 932, 936 (Utah 1994).
ANALYSIS
I. Exercise of the Option
I believe the trial court erroneously concluded that under Utah law, Brody was required to tender the full purchase price before or on the last day of the option period to exercise the option. In reaching this conclusion, the trial court relied on the Utah Supreme Court’s reasoning in Hofmann v. Sullivan, 599 P.2d 505 (Utah 1979). Hofmann, however, is not a case about how to exercise an option contract; it is a case discussing the enforceability of such a contract. Contrary to the trial court’s interpretation, Hofmann does not require tender of the purchase price to exercise the option. Instead, Hofmann held that an option contract that does not prescribe how and when payments will be made is “not ambiguous” and can be enforced by requiring payment “at the time of the exercise of the option.” 599 P.2d at 508 (emphasis added). Because the instant case deals with whether or not the option was exercised, rather than the Hofmann situation of whether or not the option contract was enforceable, the trial court’s reliance on Hof-mann is misplaced.
In cases addressing whether or not an option was properly exercised, Utah courts have consistently held that an option to purchase must be strictly exercised according to its terms. See J.R. Stone Co. v. Keate, 576 P.2d 1285, 1288 (Utah 1978); Nance v. Schoonover, 521 P.2d 896, 897 (Utah 1974). If an option agreement is silent as to the method required to exercise the option, courts have generally held that any mode of acceptance will suffice so long as it manifests the optionee’s unconditional decision to exercise. See Karakehian v. Boyer, 900 P.2d 1273, 1276 (Colo.Ct.App.1994), aff'd, 915 P.2d 1295 (Colo.1996); see also Loose v. Brubacher, 219 Kan. 727, 549 P.2d 991, 996 (1976). (stating “‘[wjhere the contract is silent on the subject of the manner in which an option is to be exercised, no particular form, or notice is essential’ ” (citation omitted)).
Moreover, payment or tender is not required to exercise an option unless expressly required by the terms of the agreement. See Karakehian, 900 P.2d at 1277-78 (stating when option requires tender, optionee must accept and tender; but when option contains no such language, tender is not condition precedent to exercise); cf. J.R. Stone, 576 P.2d at 1288 (requiring strict compliance with option terms); Nance, 521 P.2d at 897 (same). Here, the option did not specify any required form of exercise. There is no basis to assiune that Brody was legally required to tender the purchase price to exercise the option. Rather, the uncontested facts establish Brody exercised the option to purchase before the expiration of the option period. Under the facts as we are required to review them, the telephone conversation of February 9, 1995, and the letter sent by Brody, dated February 10, 1995, stating “we will be exercising our option to purchase the condominium,” are sufficient to exercise the option under its terms.
In addition, “[a]n acceptance requires manifestation of unconditional agreement to all of the terms of the offer ... [along with] a ■definite intention to accept the offer ... without material reservations or conditions.” R.J. Damn Constr. Co. v. Child, 122 Utah 194, 200, 247 P.2d 817, 819 (1952) (emphasis added); see also Upland Indus. Corp. v. Pacific Gamble Robinson Co., 684 P.2d 638, 640-41 (Utah 1984) (recognizing conditional acceptance as some statement that offeree is willing to enter into agreement different in some respect to proposed original offer, amounting to counteroffer). In this case, there is no discussion of accepting the offer in any way contrary to the terms of the option. The letter of acceptance alone, sent and received within the option period, was sufficient to exercise the option. See Hofmann, 599 P.2d 505, 507 (Utah 1979) (finding letter sent by offeree stating, “I hereby give you notice of [offeree’s] intent to exercise this option and to purchase said real property at the price agreed upon,” was reasonable and effective exercise); Upland Indus. Corp., 684 P.2d at 641 (holding notice of intent to *367exercise option which added additional “request” to deal was effective to timely exercise option to extend lease).
Therefore, Brody timely exercised the option. The alleged telephone acceptance, combined with the letter of confirmation, created a binding and enforceable contract for the sale and purchase of the condominium. See Estate of Schmidt v. Downs, 775 P.2d 427, 431 (Utah App.1989) (“[A]n option is a unilateral obligation binding only on the optionor. The option becomes binding on both parties, if the optionee accepts the offer within the specified time period.” (citations omitted)).
II. Time of Payment
Because Brody timely exercised the option, thereby creating a binding contract, we must determine whether Brody complied with the terms of the contract. Where the contract is silent as to when tender of the purchase price is required, “[c'Jourts universally read into such contracts an obligation of payment within a time ‘reasonable’ in the context of the transaction and circumstances of the parties. What is reasonable is a question of fact.” Hofmann, 599 P.2d at 508 (emphasis added) (quoting Ferris v. Jennings, 595 P.2d 857, 860 (Utah 1979)).
In reviewing the evidence presented to the trial court, genuine issues of material fact exist. A dispute exists between the parties as to when payment was required, and whether or not that payment was excused for legally sufficient reasons. In addition, what constitutes a “reasonable time” for payment is a question of fact, which depends in significant measure on what facts are established regarding the telephone conversation of February 9, 1995- Brody claims the conversation included a discussion that payment would be made sometime following the Mills-es’ return to Salt Lake City on or about March 15, 1995. The Millses contest this factual allegation, claiming the option contract required payment before or on February 14,1995. The substance of the February 9 conversation is clearly material to what constitutes a reasonable time for tender, and whether Brody complied with the contract terms.
CONCLUSION
I would reverse the trial court’s order of summary judgment because the trial court erred in concluding that the option agreement, silent as to the method and time of tender, required payment of the purchase price to exercise the option. In addition, viewing the facts and inferences in the light most favorable to Brody, genuine issues of material fact regarding the February 9, 1995 telephone conversation, and regarding what constitutes a reasonable time for payment under the exercised option agreement, preclude an order of summary judgment.