Sunset Realty, Inc. and North American Land Development Corporation v. Buddy Pearson and Janet Pearson

Judgment rendered November 10, 2020.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 53,555-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

SUNSET REALTY, INC. AND Plaintiffs-Appellants
NORTH AMERICAN LAND
DEVELOPMENT
CORPORATION

versus

BUDDY PEARSON AND JANET Defendants-Appellees
PEARSON

*****

Appealed from the
Fourth Judicial District Court for the
Parish of Ouachita, Louisiana
Trial Court No. 20162110

Honorable Robert C. Johnson, Judge

*****

JOE D. GUERRIERO, LLC Counsel for Appellants
By: Joe D. Guerriero

BUDDY PEARSON In Proper Person,
Appellee

JANET PEARSON In Proper Person,
Appellee

*****

Before PITMAN, STONE and McCALLUM, JJ.

McCALLUM, J.

The trial court awarded Sunset Realty Inc. and North American Land

Development Corporation $13,205.00 in contractual interest and $10,000.00

in attorney fees. They appeal that judgment arguing that the trial court erred

in not awarding them a larger amount of $52,288.14 in contractual interest

and in denying them $26,562.53 in other construction costs. Buddy Pearson

and Janet Pearson have not appealed the judgment. They have also not filed

a response to the appeal before us now.

FACTS

On May 8, 2015, Buddy Pearson and Janet Pearson (“the Pearsons”)

entered into a contract with Sunset Realty Inc. (“Sunset”) and North

American Land Development Corporation (“NALDC”). Under the

applicable terms of the agreement, the Pearsons agreed to purchase land

from Sunset as well as pay for the construction of a home to be built by

NALDC. The price of the land was set at $87,712.00. However, regardless

of the price of the land, the total price for the lot, house and commission was

not to exceed $190.00 per square foot. With a total square footage of 2,780,

the maximum price of the lot, house and commission could therefore not

exceed $528,200.00. All parties agreed to a closing date of twelve months

after the execution of the contract. The closing date was therefore May 8,

2016.

Important to our consideration are the following two contractual

paragraphs, as follows:

It is further understood and agreed by the parties hereto that
Pearson must close on the house and lot and pay for the house
and lot described hereinabove to Sunset, within twelve (12)
months from the date of this agreement, in default of which
NALD and/or Sunset may file in Court for specific performance

of this agreement. In addition, Sunset agrees to pay all claims
of NALD in connection with the construction of said house.

If Sunset and/or NALD has to file suit to enforce this
Agreement, Pearson agrees to be liable for the entire sum set
forth hereinabove and also for all attorney fees incurred by
NALD and/or Sunset for having to file suit to enforce this
agreement.

Prior to the closing date of May 8, 2016, the Pearsons requested from

Sunset and NALDC an extension period to close on the home. Sunset and

NALDC agreed to extend the closing date by six months; however, they

demanded certain new terms in order to agree to such an extension. By

contract titled, “Amended Contractual Agreement,” executed on April 11,

2016, all parties agreed to the following notable provisions:

WHEREAS, the Parties desire to amend the aforementioned
paragraph to extend the time period to close on the property.

WHEREAS, the Parties hereby agree that the amended closing
date on the property shall be no later than November 8, 2016.

WHEREAS, Pearson, in consideration of the aforementioned
extension, agrees to pay interest at the rate of five percent (5%)
per annum, from May 8, 2016 until the date of closing on the
total cost of the property, including the construction costs of the
house and any other costs or fees associated therewith.

WHEREAS, the Parties declare that all other provisions, not
herein amended or added, remain in full force and effect.

Thereafter, the Pearsons failed to close on the house by the amended

closing date of November 8, 2016. Sunset and NALDC sold the home on

May 8, 2019 for $560,000.00. The realty commission costs and taxes were

$25,800.00 and $2,292.42 respectively. The original price of the home for

the Pearsons was $528,200.00. Therefore, Sunset and NALDC saw a profit,

after realty commission costs and taxes, of $3,707.50, exceeding the

maximum contractual amount with the Pearsons.

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We do note that Sunset and NALDC filed suit against the Pearsons

prior to the amended closing date. They sought specific performance and

damages which the trial court denied as premature. Thereafter, Sunset and

NALDC amended their petition three times and subsequent to the sale of the

home, a trial was held on October 21, 2019. At trial, Sunset and NALDC

acknowledged that their original cause for specific performance was not a

practical solution for the court to entertain. Ultimately, Sunset and NALDC

sought damages for the breach of contract by the Pearsons, including

enforcement of the contractually agreed interests, attorney fees, and damages

for alleged add-ons of construction.

At the trial, the court listened to testimony from the Pearsons, as well

as from employees of Sunset and NALDC. It accepted the original contract

and the amended contract into evidence. It further accepted voluminous

records and accounting materials detailing the construction costs of the

house and the price of the land upon which the home was built. After

considering the evidence and testimony, the court filed a written ruling. It

thereafter signed a judgment with the following five enumerated points:

(1) Finding that petitioners are not entitled to any damages in
this case, for any loss of profits because there is no difference in
this case between the contract price of the home and the value
of the home on the date of the breach.

(2) Finding that petitioners are entitled to five (5%) percent
interest on the amended contract entered into between the
parties on the contract price of $528,200.00 from May 8, 2016
until November 8, 2016. The Court specifically finds that
petitioners are not entitled to any further interest beyond
November 8, 2016.

(3) Finding that petitioners are entitled to legal interest in this
case on any judgment that they are awarded, from the date of
judicial demand, until paid in full[.]

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(4) Finding that petitioners are entitled to an award of
reasonable attorney fees in this case in the amount of
$10,000.00.

(5) Finding that each party in this matter pay fifty percent
(50%) of the total court cost due in this case.

Thereafter, Sunset and NALDC appealed the trial court’s ruling and

judgment. In their brief to the Court, they were explicit that they only place

before this Court for review two alleged errors: (1) the trial court erred in not

awarding any interest after the amended closing date; and (2) the court erred

in not awarding add-on construction costs.

DISCUSSION

On appeal before us is the question of damages. Neither party appeals

the liability of the Pearsons for breach of contract. In fact, the record clearly

shows that the breach occurred. Instead, at issue is merely the trial court’s

interpretation of the contracts at issue, and therefore the consequent award

that the trial court’s contractual interpretation mandates.

Contract Interpretation and Contractual Interest

Sunset and NALDC assert that the trial court erred in its interpretation

of the contractual provisions relating to the 5% interest. The original

contract in question required that the Pearsons close on the home on or

before May 8, 2016. The amended contract extended that closing date to

November 8, 2016. In addition to the extension, the Pearsons agreed to pay

5% percent interest on the price of the home from the original date of

closing to the new closing date. The trial court ruled that the new closing

date was set by the amended contract at November 8, 2016. It found that the

contractual interest could therefore not accrue after that date and signed a

judgment, calculating the interest to be $13,205.00.

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Sunset and NALDC argue that the amended “closing date” of the

home was the date that the home actually sold, May 8, 2019. Essentially,

Sunset and NALDC contend that because the Pearsons did not close on the

home by November 8, 2016, the contractual “closing date” envisioned by the

5% interest became whatever date the home actually sold. They assert that

the trial court erred and that the correct amount of contractual interest should

be $52,288.14.

Louisiana is a civil law jurisdiction, owing its legal system to its

history as a colony under the influence and rule of France and Spain. Our

legal system is in contrast to that of our neighboring common law states.

Whereas they may look to the courts to provide a significant portion of their

law, we look to our Civil Code, enacted by the people through their

representatives in the legislature. Therefore, we must first look to our Civil

Code, relying on the mandates of the legislature, and applying them to the

situations that come before us.

We are thus reminded of the legislature’s clear mandates with regard

to contract interpretation. “Interpretation of a contract is the determination

of the common intent of the parties.” La. C.C. Art. 2045. “When the words

of a contract are clear and explicit and lead to no absurd consequences, no

further interpretation may be made in search of the parties’ intent.” La. C.C.

Art. 2046. “The words of a contract must be given their generally prevailing

meaning.” La. C.C. 2047. “Words susceptible of different meanings must

be interpreted as having the meaning that best conforms to the object of the

contract.” La. C.C. Art. 2048. “A provision susceptible of different

meanings must be interpreted with a meaning that renders it effective and

not with one that renders it ineffective.” La. C.C. Art. 2049. “Each
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provision in a contract must be interpreted in light of the other provisions so

that each is given the meaning suggested by the contract as a whole.” La.

C.C. Art. 2050. “Although a contract is worded in general terms, it must be

interpreted to cover only those things it appears the parties intended to

include.” La. C.C. Art. 2051.

“A doubtful provision must be interpreted in light of the nature of the

contract, equity, usages, the conduct of the parties before and after the

formation of the contract, and of other contracts of a like nature between the

same parties.” La. C.C. Art. 2053. “Equity, as intended in the preceding

articles, is based on the principles that no one is allowed to take unfair

advantage of another and that no one is allowed to enrich himself unjustly at

the expense of another.” La. C.C. Art. 2055. “In case of doubt that cannot

be otherwise resolved, a provision in a contract must be interpreted against

the party who furnished its text.” La. C.C. Art. 2056. “In case of doubt that

cannot be otherwise resolved, a contract must be interpreted against the

obligee and in favor of the obligor of a particular obligation.” La. C.C. Art.

2057.

A strict reading of the original contract in question clearly shows that

the parties agreed to a certain, determinable time period for the date of

closing. The contract set a time period of “within twelve (12) months from

the date of this agreement,” which was May 8, 2016. Thereafter, the

Pearsons, unable to close by that date, sought an extension with Sunset and

NALDC. That extension was granted via the amended contract. The

amended contract was also clear that the extended closing date “shall be no

later that November 8, 2016.”

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The language of the amended contact is also unequivocal that

“Pearson, in consideration of the aforementioned extension, agrees to pay

interest at the rate of five percent (5%) per annum, from May 8, 2016 until

the date of closing.” From the unambiguous language of the contract along

with the testimony and evidence admitted at trial, it is clear that the parties

intended to enter into an amended contract that would extend the closing

date in exchange for the Pearsons paying interest until they closed on the

home.

We cannot find error in the trial court’s conclusion that the contracts

did not allow for the 5% interest to continue to accrue after the November 8,

2016 date. The Pearsons intent in seeking the extension of the closing date

was in order for them to have time to close on their home. The language of

the contracts and the testimony of the parties show no intent by the Pearsons

to agree to the alleged infinite accrual of interest until the home sold to a

third party. They entered into the amended agreement with Sunset and

NALDC to extend the closing date range for a finite period, at which they

would agree to pay interest for that period. Therefore, we find no error by

the trial court in its judgment as regards the contractual interest.

Furthermore, in light of the aforementioned civil code provisions,

even if such was in doubt because of ambiguous terms in the contract, we

must interpret the contract against the party that furnishes the text. It is

undeniable that Sunset and NALDC furnished the contracts and the language

within them. Therefore, we find no error by the trial court in its

interpretation of the contracts at issue and its award with regard to

contractual interest.

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We also note the trial court’s notion that awarding interest past the

date of November 8, 2016, would have amounted to “double-dipping” and

unjust enrichment. The trial court referenced that the home ultimately sold

for $560,000.00; yet, the maximum contractual amount with the Pearons was

$528,200.00. Therefore, Sunset and NALDC realized a profit greater than

under the contract with the Pearsons. They were further entitled to the

award of interest that accrued prior to November 8, 2016.

Additional Construction Costs

Sunset and NALDC contend that the trial court erred in denying their

claims for awards related to additional construction costs. The trial court

ruled Sunset and NALDC were not entitled to such awards. It found that the

maximum costs of the house, regardless of construction, was contractually

set at $528,200.00, yet the home eventually sold, as constructed for the

Pearsons, for $560,000.00. The court found no loss of profit to Sunset and

NALDC. It further found that the contract, capping the home price at

$528,200.00 for the Pearsons, disallowed the additional claims of

construction costs asserted by the petitioners. We agree.

The contract for the sale of the home to the Pearsons capped the price

of the home at no more that $528,200.00. The court was correct to point out

that Sunset and NALDC failed to provide any market value of the home at

the time of the breach or at the time of the sale of the home. Furthermore,

the contract was explicit that the total cost for lot, house and commission

could not exceed the sum of $190.00 per square foot. The square footage is

shown on the attached Exhibit “A” of the contract. The square footage

referenced was 2,780, which calculates out to a total price of no more that

$528,200.00. The amended contract does not specify or change the price of
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the home, except to add the 5% interest in consideration for the extended

closing date. Furthermore, the parties did not enter into any other contract

detailing additional price adjustments for add-ons. The intent of the parties

was to maintain that the maximum price of the entirety of the lot, house,

including all construction add-ons, and commission was not to exceed

$528,200.00.

CONCLUSION

The judgment of the trial court is AFFIRMED. All costs of this

appeal are assigned to the appellant.

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