Dinerman v. Santiago, No. 505-9-04 Wncv (Katz, J., Aug. 17, 2005)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted
from the original. The accuracy of the text and the accompanying data included in
the Vermont trial court opinion database is not guaranteed.]


STATE OF VERMONT                                            SUPERIOR COURT
Washington County, ss.:                              Docket No. 505-9-04 WnCiv



DINERMAN

v.

SANTIAGO and ELITE LIFESTYLE



                             FINDINGS OF FACT
                           CONCLUSIONS OF LAW
                            NOTICE OF DECISION



       This matter was tried to the court on August 10, 2005. On the basis
of the evidence presented, the following decision is announced.

                              FINDINGS OF FACT

1.       The parties entered into a contract on March 14, 2004 for the
construction and installation of a sunroom. Defendant is in the business of
fabricating and installing sunrooms. The contract envisioned a total price of
$18,600, and called for a “deposit with order” of $6,000.
2.        Santiago took very preliminary measurements of Plaintiffs’ home on
that first, March, visit, and began to draw up plans to meet Plaintiffs’
requirements. The contract calls for installation to “begin around May 10
and . . . be completed on or about May 30.”

3.       As events unfolded, Santiago proved not very good at returning
telephone calls. Nevertheless, the project continued on its course. Around
April 10, a preliminary drawing was prepared by Defendants showing the
proposed new room. Santiago had told Mr. Dinerman that the preliminary
drawing would be delivered in two weeks, presumably from the mid-March
date, although that is not part of the written contract. He also said that he
would obtain the town building permit.

4.        Although Defendants started to fill out the permit application,
Plaintiffs, as property owners, needed to sign it, so the application was
forwarded to them. Mr. Dinerman then completed it, signed it, and brought
it to the Fayston town office. The permit eventually was issued, though with
a condition on its face stating that it would become effective fifteen days
after issuance to allow interested persons time for appeal.

5.       After the preliminary drawing was discussed between the parties,
Defendants on May 16 prepared a “final” drawing. This was based on a site
visit on May 10 by Santiago and his assistant, Brian, at which they took
measurements and had detailed discussions with Dinerman. There is no
doubt that the parties expected the work to continue at the time of the
meeting. Dinerman also raised several substantial additions in his
discussions of May 10, including outside fire stairs and french doors.
Defendants apparently quoted the additional work at $4,288. The final
drawing was sent to Dinerman for signature, and he did, indeed, sign it.

6.      In addition to signing the May 10 final drawing, Dinerman had his
attorney-friend send a letter to Defendants. Although purporting to review
the contract agreement, this letter proposed a substantial alteration of the
terms. The stairs would be included within the original contract price.
There would be a penalty for failure to complete on schedule. The schedule
of payments was changed to be significantly less “front loaded” than the
schedule incorporated in the signed contract. These changes were rejected
by Defendants, with Santiago saying his “clients don’t tell him how to run
his business.”

7.       By mid-May, Defendants had fabricated the components of the
sunroom in accordance with the May 10 drawing. It was ready to be
installed.

8.       On May 19, Santiago called Dinerman to say that he had a crew
ready to go to the job site from Maine. Dinerman rejected this offer to
commence installation, telling Santiago not to send the crew. Dinerman’s
reason was that the period for appeal of the town permit still had two days to
run, so construction could not commence for another two days. We find
credible Santiago’s explanation that his crew would have had to set up and
reconnoiter the job site. This project was somewhat complex, because the
terrain is very steep and rocky. The crew would have to make a final
determination of exactly where to put piers and supports for the underside of
the deck, upon which this sunroom was to be constructed. We are persuaded
that there was sufficient set-up work for the crew, before any changes were
made to the site, that they could have profitably used the two days, yet not
commenced construction until the permit actually took effect—May 22.

9.     Although Dinerman altered the “final” drawing to indicate that
doors were to open out, we find that change to be inconsequential, as
Defendants could readily alter their existing components to have doors
swing out, rather than in.

10.     On May 26, Dinerman sent his attorney’s letter with proposed new
contract terms.

11.     The parties never got this arrangement back on track. The room was
never installed. The fabricated parts were either discarded or reused in other
jobs.


                         CONCLUSIONS OF LAW
1.       Generally, where a contract is unambiguous, its interpretation is a
matter of law for the court to declare. John A. Russell Corp. v. Bohlig, 170
Vt. 12, 16 (1999). When ambiguities are present, the contract terms become
a matter of fact to be determined on the evidence. Id. If contract language
appears to be ambiguous, we attempt to resolve the ambiguity by examining
“the whole instrument, attempting to determine the intent of the drafters
from all of the language and using relevant construction aids.” Kipp v.
Chips Estate, 169 Vt. 102, 107 (1999). We may assess extrinsic evidence in
determining whether there is an ambiguity. Id.; see generally Isbrandtsen v.
North Branch Corp., 150 Vt. 575, 577-79 (1988) (discussing in detail the
role of extrinsic evidence in the determination of an ambiguity). Here, we
perceive no ambiguity and neither party contends that any ambiguity
requiring the admission of parole evidence exists. The subjective beliefs, or
other uncommunicated understandings, of either party are irrelevant.
Quenneville v. Buttolph, 2003 VT 82, ¶ 15.

2.       “An enforceable contract must demonstrate a meeting of the minds
of the parties: an offer by one of them and an acceptance of such offer by the
other. To be valid, an offer must be one which is intended of itself to create
a legally binding relationship on acceptance.” Starr Farm Beach
Campowners Assoc., Inc. v. Boylan, 174 Vt. 503, 505 (2002) (citations
omitted). That is, once the parties have a contract, neither party thereto is
permitted as of right to demand a change in terms. Despite their valid
contract, however, such a unilateral demand to change the terms is implicit
in the lawyer letter of May 26.

3.      We understand Plaintiffs’ characterization of the original $6,000
deposit as “earnest money” to be intended to imply that it was just a sign of
good faith that could be refunded on request, and was not intended to be a
deposit towards the contract price. We do not believe that the expression
“earnest money” is a term of art with an accepted meaning so specific as to
require a particular result merely upon its utterance, apart from the actual
terms of the contract in which it appears. As one court has noted, the
expression “is of ancient origin. . . . [and] has given rise to many
controversies . . . .” Nosacka v. McKenzie, 54 So. 351, 352 (La. 1911).
Generally, courts analyze the meaning of “earnest money” deposits in the
same manner as other types of deposits, by ascertaining the intent of the
parties from the language actually used in the unambiguous contract, like
other ordinary contract terms. See generally, e.g., Balata Development
Corp. v. Reed, 548 S.E.2d 668 (Ga. App. 2001) (analyzing earnest money
deposit agreement with ordinary rules of contract interpretation).

        Of course, here, the contract makes no mention of “earnest money”; it
says “deposit with order.” It also states a “balance due” that represents the
total contract price less the deposit amount. Without more, in these
circumstances, we have no doubt but that the deposit was intended to be a
partial payment on the total contract price, made to guarantee Plaintiffs’
performance, not refundable “earnest money.” The Washington Supreme
Court said of a similar deposit: “That it was to be a partial payment is
apparent from the following language . . .: 'Balance due on inventory to be
paid when said inventory book is extended and footed by . . . .” Baker v.
Shaw, 122 P. 611, 613 (Wash. 1912). Nothing in the contract implies a right
to unilaterally withdraw from it and receive back the deposit amount, which
we conclude Plaintiffs forfeited by repudiating the agreement.

4.       Even if Defendants’ delivery of drawings may somehow have been
behind the schedule envisioned in the contract’s May 30 completion,
Plaintiffs accepted any such deviation. They accepted the May 10 drawing
as part of an ongoing process, and approved it on May 26. This constituted
a waiver of any prior default. “There are few principles of contract law
better established, or more uniformly acknowledged, than that a party to an
executory bilateral contract, who keeps the same in existence after a known
breach by the other party and accepts further performance from the party
who has committed the breach, waives the breach, in the absence of an
assertion of his intention to retain the rights accruing to him as a result of
said breach, assented to by the other party; and if the injured party thereafter
does not make good his promises of performance, he is responsible for such
failure.” Lemnah v. American Breeders Serv., 144 Vt. 568, 579 (1984). In
fact, when Defendants offered to perform on May 19, that accorded with the
original completion date, as there is no reason to believe substantial
completion, at that point, could not have been achieved by the end of May.
5.        The reasonable interpretation of the May 26 attorney letter is that it
constitutes an offer of a substituted contract. “A substituted contract is one
that is itself accepted by the obligee in satisfaction of the original duty and
thereby discharges it. A common type of substituted contract is one that
contains a term that is inconsistent with a term of an earlier contract between
the parties.” Restatement (Second) of Contracts § 279 cmt. a. (A novation
is a form of substituted contract that brings in a new party. Id.) Defendants
were within their rights to reject Plaintiffs’ offer and stand on their existing
contract; Plaintiffs had no right to substitution absent Defendants’ assent.
“To allow one party to terminate unilaterally the contract without penalty,
while requiring the other party to absorb the entire loss, is to disregard
another axiom of contract construction: an obligation of good faith and fair
dealing is an implied term in every contract.” Sullivan v. Locheam, Inc.,
143 Vt. 150, 153-54 (1983).

6.       Santiago’s testimony at trial that some of the fabricated components
were discarded and some others were reused is entirely too vague to support
a counterclaim. Any award based upon such evidence would inevitably
require the court to engage in speculation. See Breding v. Champlain
Marine & Realty Co., 106 Vt. 288, 297 (1934). When a party seeks an
award of damages, it bears the burden of proving the relevant facts with an
enough specificity that the finder of fact can “make an intelligent
determination of the extent of [the] loss.” Trombetta v. Champlain Fruit
Co., 117 Vt. 491, 494 (1953).


                          NOTICE OF DECISION


      For the foregoing reasons, both claim and counterclaim are
dismissed. No costs awarded.


       Dated at Montpelier, Vermont, _______________________, 20__.
__________________________
                     Judge
