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Morris v. Hagler

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 25, 2008

VINCENT MORRIS, PLAINTIFF-APPELLANT,
v.
MARK HAGLER AND JULIE HAGLER, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, L-0583-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 19, 2007

Before Judges Wefing, R. B. Coleman and Lyons.

Plaintiff Vincent Morris (Morris) appeals pro se from a March 5, 2007 order granting summary judgment in favor of defendants Mark Hagler and Julie Hagler (the Haglers), dismissing plaintiff's complaint and declaring the parties' real estate contract null and void. After reviewing the record in light of the arguments advanced on appeal, we affirm.

The relevant facts of this case are as follows. On September 19, 2006, the Haglers signed an offer in the form of a standardized "Coldwell Banker Purchase Agreement" (the Contract) for the purchase of real estate in Tewksbury, New Jersey, from Morris. On September 21, 2006, Morris signed the Contract and delivered it to the Haglers the next day. The Contract contained the following three contingency clauses:

7F. PHYSICAL INSPECTION: This Contract is contingent upon Buyer obtaining at Buyer's expense and furnishing to Seller a written inspection report of the presence of UFFI, asbestos, mold or other contaminating substances and the functioning air conditioning, plumbing, heating, electrical, roof, well (if applicable), basement and structural aspects of all buildings on the Property made by a reputable inspection firm within ten (10) calendar days of the date of delivery of the signed Contract to Buyer and Seller. In the event the inspection report discloses any structural damage or other deficiencies in any of foregoing items, Seller must notify Buyer, in writing, within five (5) calendar days after receiving the inspection report whether Seller intends to remedy such damage or deficiencies. If Seller is unwilling to remedy the deficiencies and correct all of the damage or deficiencies, then either party may void this Contract unless Buyer agrees, in writing, within five (5) calendar days of receipt of Seller's written notice, to accept the Property in an "AS-IS" state. If Seller is willing to remedy all deficiencies and correct all damage, prior to Closing, then this Contract shall be binding. In the event this Contract is voided as provided herein, then Buyer shall be entitled to a refund of Buyer's deposit plus all interest accrued which may be due to Buyer. 7G. SEPTIC INSPECTION: It is agreed that Buyer may have tests made of the existing soil on the Property at Buyer's expense within ten (10) calendar days of the date of delivery of the signed Contract to Buyer and Seller, by a sanitary engineer, reputable testing service or a governmental official or agency having jurisdiction to determine whether the existing soil meets all of the governmental standards for individual subsurface sewage disposal systems pursuant to N.J.A.C. 7:9A-1.1 et seq. to service the dwelling and any other buildings on the Property. If the test results are satisfactory, i.e. there are no violations of applicable governmental standards, this Contract shall be binding. If the test results are not satisfactory, Buyer shall be entitled to a return of Buyer's deposit plus all accrued interest which may be due to Buyer. 7I. RADON INSPECTION: This Contract is contingent upon the Buyer obtaining at Buyer's expense and furnishing to the Seller a certification of the level of radon gas in the Property made by a reputable inspection firm within ten (10) calendar days of the date of delivery of the signed Contract to Buyer and Seller. Pursuant to N.J.S.A. 26:2D-73, Buyer has a right to receive the results of previous radon tests conducted at the Property. In the event the presence of radon gas is in excess of four (4) picocuries per liter, or any applicable standard promulgated by the DEP and the EPA, Seller must notify Buyer, in writing, within ten (10) calendar days after receiving the report whether Seller will make the necessary installations and repairs to reduce the level of radon gas prior to Closing below the applicable requirement or standard. If Seller agrees to make the necessary installations and repairs, this Contract shall be binding. If the level is not so reduced and a certification furnished to that effect by Seller to Buyer, Buyer may void this Contract by notifying Seller in writing and Buyer shall be entitled to a return of Buyer's deposit plus all accrued interest which may be due to Buyer or waive the unremediated condition and take title without an abatement in the Purchase Price.

On September 26, 2006, the Haglers served a disapproval letter on Morris's attorney and the real estate agents. The letter contained proposed amendments that would make the Contract acceptable to the Haglers. On October 2, 2006, Morris agreed to the proposed amendments, thereby completing the attorney review period and establishing a firm contract.

Thereafter, on October 5, 2006, Morris's attorney received a copy of the home inspection report, provided with a cover letter from the Haglers, requesting the repair of specific items as well as a credit for the well motor and pump, which defendants alleged was wrongfully represented as 2006 replacements. The Haglers also notified Morris that the septic system needed to be repaired. The next day, the Haglers faxed an amendment to the home inspection report, indicating that the well pump and motor were dated 1997 and that the front entrance hall door needed repair.

On October 10, 2006, the Haglers' attorney forwarded Morris's attorney a copy of a septic report, outlining necessary repairs that amounted to approximately $4,800. Those repairs included: (1) installing a riser over the existing manhole access port, which was too low and not in accord with code at the time of its installation; (2) properly installing a waste line; and (3) installing a new distribution box. The report stated that approval from the Department of Health was necessary in order to make the repairs. In the letter sent with the report, the Haglers requested a credit of $1,800 because the company that installed the well tank had advised them the motor pump had a useful life of ten to fifteen years and would cost $1,800 to install. Additionally, the letter stated that mold testing would be performed.

On October 11, 2006, Morris's attorney received another letter from the Haglers' attorney advising him that the radon test revealed levels of radon gas in the house above six picocuries per liter. Such levels exceed the New Jersey Department of Environmental Protection (DEP) action level of four picocuries per liter. In the letter, the Haglers sought confirmation that Morris would "install a remediation system using a qualified radon remediation firm."

On October 16, 2006, Morris's attorney responded in writing to the various home repair requests presented by the Haglers. The attorney indicated the following: (1) Morris was offering a credit of $250 for repointing the chimney brick; (2) Morris replaced a missing screw on the furnace and had it inspected by a heating and air professional; (3) items 3-5 from the home inspection were corrected; (4) Morris replaced the entrance hall door; (5) Morris received an estimate of $1,400 to replace the tank and offered that amount as a credit; (5) the septic system had been inspected by and approved by the municipality, was in proper working order, and Morris would not make repairs or provide a credit; and (6) Morris had recently tested the property for radon twice and both tests were below the DEP's action levels, therefore, he suggested that the Haglers retest the property and that the parties be bound by the new test.

That same day, the Haglers, through their attorney, replied by declaring the contract terminated pursuant to the home inspection contingency clause. The Haglers' attorney wrote:

I am in receipt of your letter dated October 16, 2006. In that letter the Seller has refused to correct all deficiencies as requested by the Buyer. The Buyer declares the Contract is hereby terminated pursuant to the terms of the home inspection contingency.

As the termination is in accordance with the terms of the Contract, please sign below authorizing the release of the Buyer's deposit. The parties shall have no further liability to each other upon the release of the deposit.

In a letter dated October 18, 2006, Morris expounded upon his earlier responses, noting that he had twice recently tested the property for radon and the readings showed nominal levels. Therefore, he suggested it was reasonable to retest and if the retests disclosed unacceptable levels, he would remediate or, at the Haglers' discretion, offer a credit for remediation. The letter asked the attorney to advise if the Haglers insisted upon remediation without retesting.

The October 18, 2006 letter from Morris's attorney reiterated that the septic system was functioning properly, but added that "if the septic credit is a deal breaking issue for the [Haglers]," Morris was willing to reconsider that issue and provide the credit requested in the buyers' letter. The letter concluded as follows:

If the seller concedes these credits as set forth above, all of buyers['] home repair requests shall have been met. If there is something else I am missing[,] please advise.

Given all of the intense effort on all parties' behalf to date I am requesting you discuss the matter and this letter with your clients and confirm whether they will accept the credits in addition to the ones set forth in my prior correspondence in full satisfaction of their home inspection concerns and reinstate the contract.

By letter dated October 20, 2006, the Haglers reiterated their election to terminate the Contract stating unequivocally that they would not restore the contract:

[T]he Buyer terminated the Contract pursuant to the terms of the home inspection contingency. The Seller refused to correct all the deficiencies as requested by the Buyer. The Buyer is under no obligation, and will not renegotiate the home inspection issues after the fact. The Buyer declared the Contract terminated pursuant to the terms of the home inspection contingency and is entitled to the immediate return of the deposit.

The letter requested that Morris release the deposit and that if he failed to do so, the Haglers would have no choice but to take legal action.

On November 1, 2006, Morris filed his complaint against the Haglers, alleging breach of contract and seeking compensatory damages, punitive damages, specific performance of the contract, attorney fees and court costs. After they answered the complaint, the Haglers moved for summary judgment, which was granted. In granting the Haglers' motion for summary judgment, the trial court stated that "Morris was not in compliance with the Contract, and therefore [] [the Haglers] properly terminated the Contract." The court ordered Morris to release the deposit held in escrow to the Haglers. Morris then moved for reconsideration. In his motion for reconsideration, Morris argued that the trial court ignored relevant terms in the Contract and that his attorney did not have authority to make statements on his behalf without his permission. The court denied that motion, and Morris filed this appeal.

On appeal, Morris presents the following arguments:

1. The judgment of the lower court should be reversed and set aside because it erred in failing to grasp and apply the well settled legal distinction between the concepts of terms and conditions in the law of contract.

2. The judgment of the lower court should be reversed and set aside because it improperly concluded that Plaintiff failed to meet his obligation under the Radon clause of the real estate contract.

3. The judgment of the lower court should be reversed and set aside because it erred in upholding Defendants' wrongful termination of the real estate contract after Plaintiff as Seller had conceded to all Buyers' demands without exception including those for which he was not legally or contractually obligated.

A motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2. Appellate courts employ the same standard when reviewing summary judgment orders. Prudential Property Ins. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998). Thus, a reviewing court must decide whether there was a genuine issue of material fact. Ibid. If there is no genuine issue of fact, the court will decide whether the trial court's ruling of law was correct. Ibid. In the present case, there are no genuine issues of material fact. Morris's arguments concern contract interpretation, which is purely a question of law. Accordingly, we review the trial court's legal conclusions de novo.

We address Morris's argument regarding the radon test first, because it is dispositive of the appeal. Morris argues that the results of the radon test paid for by the Haglers was flawed and that they used the result as a pretext to terminate the Contract. He maintains that his suggestion to retest the property and be bound by the results of the new test complied with the Radon Clause, Paragraph 7I of the Contract. We disagree.

Clause 7I states that if the test commissioned by the buyers revealed radon levels in excess of four picocuries per liter, Morris "must notify Buyer, in writing, within ten (10) calendar days after receiving the report whether Seller will make the necessary installations and repairs to reduce the level of radon gas prior to Closing below the applicable requirement or standard." If Morris did not so notify the Haglers, the Haglers were permitted to void the Contract and would be entitled to a return of their deposit plus interest.

"Consistent with established case law, we cannot make for sellers a better or more sensible contract than the one they made for themselves." Kotkin v. Aronson, 175 N.J. 453, 455 (2003) (citing Kempf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960)). "To determine the meaning of the terms of an agreement by the objective manifestations of the parties' intent, the terms of the contract must be given their 'plain and ordinary meaning.'" Nester v. O' Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life and Cas. Ins. Co., 828 F. Supp. 275, 282 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)); see also Davis v. Strazza, 380 N.J. Super. 476, 483 (App. Div. 2005) (General principles of contract interpretation require courts to give the language of an agreement its ordinary and reasonable meaning.).

In Kotkin, supra, 175 N.J. at 454-55, a real estate contract contained a provision permitting the buyers to inspect the dwelling for, among other things, radon gas. The same provision stated that when a defect, such as the presence of radon gas, was discovered, the buyers were authorized to terminate the agreement and receive a refund of their deposit.

Id. at 55. The buyers' inspection revealed the presence of radon gas. Ibid. The sellers attempted to eliminate the radon, but could only reduce it to an environmentally safe level. Ibid. Consequently, the buyers sought to terminate the contract. Ibid. The court held that a "straightforward reading of the contract persuade[d] [the Court] that the presence of radon gas is a basis for termination in these circumstances." Ibid.

Acknowledging the sellers' contention that almost all homes have some measurable level of radon gas, the Court in Kotkin encouraged parties to include in their agreement language that specifies the level of radon necessary to trigger a buyer's right to terminate. In the present case, the Contract contained such a specification. Paragraph 7I required Morris to notify the buyers in writing within ten calendar days that he was willing to remediate the presence of radon if the level was in excess of four picocuries per liter. Notice of the excess level of radon was given on October 11, 2006. In the attorney's October 18, 2006 letter, Morris did not agree to remediate. Instead, he suggested a retest at the Haglers' expense. Pursuant to the terms of the plain language of the Contract, the Haglers were authorized to terminate.

Morris's suggestion that the Haglers' retest, at best, constituted an anticipatory breach. "A non-breaching party to a contract faced with the other party's anticipatory breach may choose to attempt to persuade the breaching party to retract his repudiation and to perform. But the non-breaching party is not required to do so." Gaglia v. Kirchner, 317 N.J. Super. 292, 299 (App. Div. 1999). The Haglers were entitled to treat Morris's anticipatory repudiation as a basis to terminate the Contract, relieving both parties of any further obligation of performance. Ibid. See also Friedlander v. Gross, 63 N.J. Super. 470, 474-75 (App. Div. 1960). In other words, the Haglers had the right to terminate the Contract in accordance with the Radon Inspection Clause.

Because Morris's response to the results of the radon test was not an unqualified agreement to remediate, there was an independent and sufficient ground for the Haglers to terminate the Contract. R. 2:11-3e(1)(E). For that reason, the order of the trial court is affirmed. Based on this determination, we need not address Morris's remaining arguments.

Affirmed.

20080325

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