Albright v. McDermond

Brief Fact Summary. The Petitioner, M. Ashley Albright (Petitioner), appeals a District Court ruling affirming the County Court order to return to the Respondents, Duane K. McDermond and Denise M. Klimas (Respondents), their $4000 deposit. The petitioner alleges that Respondents breached the contract for the sale of Petitioner’s home and that the District Court erred in abrogating the contract.

Synopsis of Rule of Law. In reviewing a breach of contract case, the reviewing court must defer to trial court’s findings of fact if the record supports them and review its conclusions of law de novo.

Facts. On December 6, 1998 Respondents and Petitioner entered into a standard real estate contract for the sale of Petitioner’s home. Respondents paid a $4,000 deposit that was held in escrow. The inspection provision of the contract allowed Respondents to inspect the property and submit to Petitioner written notice of any unsatisfactory conditions. Both parties had until the resolution deadline to come to an agreement in writing to settle these conditions. If no agreement was reached by the resolution deadline, the Respondent had three days to waive the objections. Without this waiver the contract would terminate three days after the resolution deadline. Pursuant to this section, Respondents inspected the house and timely submitted written objections to the condition of the house, requesting that these objections be remedied by Petitioner at her cost prior to closing. Petitioner counter offered, requesting to escrow the cost of the repairs and complete them after closing. Prior to
the resolution deadline, Respondents contracted to buy another house. Petitioner, also, accepted a bid on her house and executed a contract of sale with someone else. Petitioner retained Respondents deposit claiming it as liquidated damages from Respondents breach of contract. Respondents’ agent took the position that Petitioner had refused to agree to Respondents’ terms and Respondents could terminate the contract for any or no reason. Petitioner brought suit for the return of the deposit.

Issue.
Whether Respondents breached the contract and therefore are not entitled to recover their $4,000 deposit

Whether the trial court erred by abrogating the contract.

Held.
No. The evidence supports the trial court’s finding that there was no anticipatory breach or breach of the implied covenant of good faith and fair dealing by Respondents as a result of their failure to agree to Petitioner’s counter offer or as a result of entering into another residential contract before the resolution deadline.

No. The parties did not reach agreement on the resolution of Respondents’ timely inspection objection under the Inspection Provision of the Contract. Consequently, the contract ended under its terms and the Respondents are entitled to have their deposit returned.

Discussion. The Colorado Supreme Court first stated that it would defer to the trial court’s findings of fact if the record supports them, and review its conclusions of law de novo. The purpose of the Commission that created the standard real estate contract used in this case is protection of the public. The form sets out the basic contractual rights and remedies for parties engaged in the sale of real property in Colorado. The Inspection Provision allows Buyers to inspect the property, object to the physical condition of the property, obtain resolution of their objections and in absence of this resolution, trigger termination of the Contract. Although the contract anticipated that Petitioner and Respondents had until the end of the Resolution Deadline to resolve their differences, it became apparent to both parties that they were deadlocked. The action of both parties in entering into different contracts evinces their intent to abandon their efforts to reach an agreement. Contr
ary to Petitioner’s contention, there was no anticipatory breach or breach of the implied covenant of good faith and fair dealing by Respondents in their action of not agreeing to seller’s proposal or entering into another residential contract. The record supports the trial court’s factual findings to this end. Had Petitioner agreed Respondents terms before the resolution deadline, Petitioner would have had a claim to the deposit as liquidated damages. Petitioner did not and therefore the contract terminated.