Davis v. Harmony Dev., LLC

460 P.3d 230

Jerry K. DAVIS, Appellant (Defendant),

v.HARMONY DEVELOPMENT, LLC, Appellee (Plaintiff).

S-19-0119

Supreme Court of Wyoming.

March 20, 2020

Representing Appellant: Weston W. Reeves and Anna Reeves Olson, Park Street Law Office, Casper, Wyoming. Argument by Ms. Olson.

Representing Appellee: Billie LM Addleman and Kara L. Ellsbury, Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Addleman.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

GRAY, Justice.

[¶1] Harmony Development, LLC (Harmony), the seller, and Jerry K. Davis, the buyer, entered into a contract for the sale of a lot in the Harmony Hills subdivision, Casper, Wyoming. Mr. Davis later decided he no longer wanted to purchase the lot. Harmony sued him, asserting breach of contract, among other claims, and seeking specific performance. After a bench trial, the district court found that Mr. Davis had breached the contract and ordered him to specifically perform. Mr. Davis appeals. We affirm.

ISSUES

[¶2] The issues are:

1. Did the contract satisfy the statute of frauds and if not, does the doctrine of partial performance apply?

2. Did the district court abuse its discretion when it awarded specific performance of the contract?

FACTS

[¶3] Harmony owned a large multi-lot subdivision in Casper, Wyoming, known as Harmony Hills Addition No. 2 (Harmony Addition). Lisa Burridge, Harmony’s manager and agent, approached Mr. Davis, a real estate developer and owner of a health and fitness club, about buying a lot and developing a new health and fitness club in the Harmony Addition. Harmony and Mr. Davis negotiated terms from November 2014 through February 2015. On February 9, 2015, they executed a contract for the purchase and sale of close to seven acres of land in Harmony Addition described as "Lots 1, Block 2, Harmony Hills Addition #2," for a price of $1,500,000. Mr. Davis paid a $25,000 deposit.

[¶4] The contract contained the following terms:

X. CONDITION OF PROPERTY.

...

B. Buyer acknowledges and agrees that, upon execution of this Contract:

1. Buyer is not relying upon any representations of Seller or Seller’s Agents or representatives as to any condition which Buyer deems to be material to Buyer’s decision to purchase this property; ...

...

XV. DEFAULT, REMEDIES AND ATTORNEY’S FEES.

A. TIME IS OF THE ESSENCE hereof, and any party who fails to tender any payment, or perform any other condition hereof as herein provided, shall be in default of this Contract. In the event of default, the non-defaulting party may elect to treat this Contract as breached and recover such damages as may be proper, or may treat this Contract as being in full force and effect and require specific performance of the terms hereof . In lieu of the remedy provided above to Seller if Buyer is the defaulting party, Seller may elect to terminate the Contract and recover such damages as may be proper, or Seller may elect to retain all payments made hereunder as liquidated damages, such amount, if elected by Seller, being agreed by the parties hereto to constitute compensation for the loss of opportunity suffered by Seller due to such breach.

B. In the event that any party shall become in default or breach of any of the terms of this Contract, such defaulting or breaching party shall pay all reasonable attorney’s fees, costs and other expenses which the non-breaching or non-defaulting party may incur in enforcing this Contract with or without formal proceedings. This provision shall not limit any other remedies to which the parties may otherwise be entitled.

...

XVI. ADDITIONAL PROVISIONS.

...

4. Sellers[’] obligations hereunder and closing shall be subject to the Seller receiving all necessary approvals from the City of Casper, utility companies, etc., in order to complete the infrastructure for the subject property. Closing shall occur within seven calendar days following Sellers’ receipt of "substantial completion" as provided by City of Casper.

Continued on attached addendum.

(Emphasis added.) The attached addendum provided:

5. Seller intends to develop subject property such that Yesness Street is completed along the subject property on the South side and Tranquility Way is completed along the subject property on the East side of the subject property (see attached preliminary plat). Seller will provide [electric, gas, and internet service to the lot line and] will pay for the installation of City water and City sewer lines along Tranquility Way and Yesness Street.

...

8. See preliminary plat of subject property attached. Buyer is purchasing a lot that is approximately 6.76 acres in size.

9. Buyer understands that the proposed Cordial Drive may be constructed at a later date, or may be eliminated from final plat .

10. Seller will remove existing City water line that runs North to South on property and backfill and compact area where removed.

(Emphasis added.)

[¶5] On March 23, 2015, the parties executed an addendum to the contract (March 2015 addendum). The March 2015 addendum amended the contract as follows:

1. Lot size to be increased by 15,387 square feet

2. Price to be increased by $5.09 per square foot x 15,387 square feet = $78,319.83

3. New purchase price to be $1,578,319.83

4. Legal description of property shall be Lot 1, Block 1, Harmony Hills Addition No. 2, Phase 1.

Harmony recorded the final plat (which included the new legal description of Mr. Davis’s lot) on July 22, 2015.

[¶6] Approximately one year after signing the March 2015 addendum and seven months after the plat was recorded, Mr. Davis informed Harmony that he would not complete the purchase. In a March 11, 2016 e-mail to Ms. Burridge he explained:

The vision of Harmony Hills that was represented to us in the beginning has changed over the last year .... The new projected projects do not fit in harmony with our planned facility. We understand that things change and you’ve done everything you can to continue your development through the sluggish economy. At this time we are not ready to purchase property and build our facility in Harmony Hills.

[¶7] Harmony sued Mr. Davis, claiming breach of contract and breach of the covenant of good faith and fair dealing. Mr. Davis argued that the contract was unenforceable for failure to comply with the statute of frauds and asserted counterclaims for breach of contract, breach of the covenant of good faith and fair dealing, and negligent misrepresentation. The district court granted summary judgment to Harmony on Mr. Davis’s claim of negligent misrepresentation. It held a bench trial on the remaining claims and defenses, and on January 3, 2019, entered judgment in favor of Harmony. The district court ordered Mr. Davis to specifically perform the contract, as amended. Mr. Davis appeals.

DISCUSSION

[¶8] Mr. Davis argues that the district court erred when it granted specific performance of the contract for several reasons, including that the contract violated the statute of frauds. We first address the question of whether the contract complies with the statute of frauds or whether it fits within an exception to the statute of frauds and then turn to the issue of whether the district court abused its discretion when it awarded specific performance.

I. Did the contract satisfy the statute of frauds and if not, does the doctrine of partial performance apply?

A. Standard of Review

[¶9] The determination of whether an agreement falls within the statute of frauds is a question of law which is reviewed de novo. In re Estate of Maycock , 2001 WY 103, ¶ 12, 33 P.3d 1114, 1117 (Wyo. 2001). "[A]pplication of the statute of frauds is not automatic." Parkhurst v. Boykin , 2004 WY 90, ¶ 15, 94 P.3d 450, 457 (Wyo. 2004).

B. Analysis

1. The Statute of Frauds

[¶10] Mr. Davis makes no allegation of fraud, deceit, or mistake as to the identity of the property conveyed nor does he contend that he did not understand which parcel of land was the subject of the contract. Mr. Davis argues instead that the contract failed to sufficiently describe the property. As a result, he asserts the statute of frauds renders the contract invalid.

[¶11] Wyoming’s statute of frauds provides that "[e]very agreement or contract for the sale of real estate" "shall be void unless" the "agreement, or some note or memorandum thereof" is "in writing, and subscribed by the party to be charged therewith." Wyo. Stat. Ann. § 1-23-105(a)(v) (LexisNexis 2019); see also Linton v. E.C. Cates Agency, Inc. , 2005 WY 63, ¶ 26, 113 P.3d 26, 31–32 (Wyo. 2005). Generally,

a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which

(a) reasonably identifies the subject matter of the contract,

(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and

(c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

Restatement (Second) of Contracts § 131 (Am. Law Inst. 1981) ; see Richardson v. Schaub , 796 P.2d 1304, 1310 (Wyo. 1990) (adopting the Restatement).

[¶12] A contract for the sale of land "must indicate with reasonable certainty the nature of the transaction and must provide a basis for identifying the land ...." Restatement (Second) of Contracts § 131 cmt. e. In order to satisfy the statute of frauds, "[a] valid contract to convey land must expressly contain a description of the land, certain in itself or capable of being rendered certain by reference to an extrinsic source which the writing itself designates." Comet Energy Servs., LLC v. Powder River Oil & Gas Ventures, LLC , 2010 WY 82, ¶ 29, 239 P.3d 382, 391 (Wyo. 2010) (quoting Pullar v. Huelle , 2003 WY 90, ¶ 10, 73 P.3d 1038, 1041 (Wyo. 2003) ); see also Matter of Estate of Jackson , 892 P.2d 786, 789 (Wyo. 1995). "The relationship and connection between separate writings must appear on their face ...." Bereman v. Bereman , 645 P.2d 1155, 1159 (Wyo. 1982).

[¶13] Mr. Davis...