The opinion
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
_______________________________________________________
)
LOYAL FEATHERSTONE ) Shelby County Chancery Court
CONSTRUCTION, )
)
VS.
Plaintiff/Appellee. )
)
) C.A. No. 02A01-9709-CH-00213
FILED
) October 26, 1998
ROBERT COLEMAN, ET UX, )
) Cecil Crowson, Jr.
Defendants/Appellants. ) Appellate C ourt Clerk
)
______________________________________________________________________________
From the Chancery Court of Shelby County at Memphis
Honorable Neal Small, Chancellor
John C. Scheeper, Jr., SCHEEPER LAW FIRM, Memphis, Tennessee
Attorney for Defendants/Appellants.
William L. Hendricks, Jr.,
Venita Marie Martin,
GLANKLER BROWN, PLLC, Memphis, Tennessee
Attorney for Plaintiff/Appellee.
OPINION FILED:
REVERSED AND REMANDED
FARMER, J.
CRAWFORD, P.J., W.S.: (Concurs)
LILLARD, J.: (Concurs)
Defendants Robert and Janice Coleman appeal the trial court’s final judgment awarding
Plaintiff/Appellee Loyal Featherstone Construction, Inc., the sum of $30,067.18 in this breach of
contract action. We reverse the trial court’s judgment based on our conclusion that the record
contains insufficient evidence to support the trial court’s finding that the Colemans breached the
subject contract.
The construction company instituted this breach of contract action in June 1996 when
it filed a complaint seeking damages and other relief against the Colemans. The complaint alleged
that in April 1995 the parties entered into a contract for the sale of a newly constructed residence
located at 7540 Starfire Cove in Memphis, Tennessee. The contract, which was attached to the
complaint and admitted in the answer, contained the following provisions relative to the Colemans’
obligation to close the sale upon the construction company’s completion of the home:
It is understood and agreed between the parties that Seller shall be
deemed to have performed this Contract as to construction of the
improvements when a clear final inspection has been obtained from
the FHA and/or DVA and/or the Shelby County Building
Department. . . . Purchaser shall completely inspect the residence
prior to closing with Seller or Seller’s Agent. Purchaser and Seller
shall agree in writing, those items that will be repaired or completed
by Seller within a reasonable time. Seller will make his best effort to
correct all reasonable defects; however, it may not be possible to do
so prior to closing. Purchaser agrees to immediately close the said
loan and purchase the [subject] Property within three (3) working
days after the completion of Property, loan approval, and preparation
of closing documents. Failure of Purchaser to close within three (3)
working days after these conditions have been met can result in
forfeiture of all monies paid to Seller, or in the alternative, a charge
of Twenty-five Dollars ($25.00) per day shall be assessed against
Purchaser for every day after the three (3) days Purchaser fails to
close this sale in order to reimburse Seller for costs in holding this
Property by Seller for Purchaser.
The gravamen of the construction company’s complaint was that the Colemans breached the contract
by failing to close the sale of the property by the scheduled closing date of January 31, 1996. The
complaint further alleged that on April 9, 1996, the Colemans’ counsel recorded the contract with
the Shelby County Register’s Office at Instrument Number FU 2741, thereby creating a cloud on the
title of the subject property. The Colemans responded to the complaint by filing an answer and a
countercomplaint in which they sought specific performance of the contract and other relief.
At trial, most of the evidence was undisputed. The initial closing date was scheduled
for August 31, 1995. On that date, however, the construction of the house was incomplete, so the
parties agreed to extend the closing date by several months. On January 2 or 3, 1996, the parties
compiled a punch list containing approximately twelve items which needed to be completed or
corrected. Loyal Featherstone, the owner of the construction company, agreed to complete or correct
most of the items on the punch list. On January 18, 1996, however, Featherstone sent a letter to the
Colemans in which he refused to reframe the upstairs bathroom ceiling as requested by the
Colemans. Featherstone explained that reframing the bathroom ceiling would be too costly, and he
proposed an alternate method of addressing the problem, such as moving the shower head.
On January 26, 1996, at the request of the bank which had approved the Colemans’
mortgage loan, an appraiser performed a final inspection and appraisal of the home. The appraiser
indicated that all construction work was complete on that date. The bank previously had given its
final approval of the Colemans’ mortgage loan application on December 18, 1995, subject to
performance of the final appraisal. Taking the position that all conditions precedent for closing the
sale of the home had been met, therefore, the construction company insisted that the Colemans close
the sale on or before January 31, 1996.
The Colemans did not attend the scheduled closing, and, thus, the closing did not take
place by January 31, 1996. The Colemans decided not to attend the closing because, in their opinion,
the construction of the home was not complete. According to the Colemans, Loyal Featherstone had
failed to complete or correct many of the items on the punch list. In particular, the Colemans
contended that the upstairs bathroom ceiling was too low, and they did not want to close when
Featherstone had refused to repair the ceiling. Janice Coleman stated that the Colemans would have
closed the sale if Featherstone had corrected the height of the bathroom ceiling.
On February 8, 1996, a Shelby County building inspector inspected the subject house
and issued a final inspection report indicating that the house was substantially complete and that it
complied with all applicable codes. At the Colemans’ request, however, the building inspector
returned to the property on March 7 or 8 to reinspect the property. On that date, the building
inspector discovered that he had made a mistake in issuing the final inspection report because a
portion of the ceiling in the upstairs bathroom was too low and did not conform with the building
codes. After the building inspector discussed the code violation with Loyal Featherstone,
Featherstone agreed to correct the height of the bathroom ceiling. By April 1, 1996, when the
building inspector again returned to the property, the bathroom ceiling had been corrected.
According to the building inspector, he ordinarily did not miss code violations of the
type involving the bathroom ceiling, but occasionally violations did go undetected in the final
inspection. In such a situation, the building inspector’s usual practice was to ask the builder to
correct the problem. If the builder did not correct the problem, the inspector would withdraw his
final inspection report. In this case, the building inspector did not withdraw the final inspection
report because Featherstone had corrected the violation by April 1, 1996, when the inspector returned
to the property a second time. The building inspector stated, however, that he would have withdrawn
the final inspection report if he had discovered that the problem had not been corrected when he
returned on April 1.
Inexplicably, the record is silent as to any efforts to close the sale of the property after
the scheduled closing date of January 31, 1996. The construction company presented no testimony
or other evidence that Loyal Featherstone attempted to schedule another closing date after
January 31, 1996, when the scheduled closing failed to take place; or after February 8, 1996, when
the Shelby County building inspector performed his final inspection of the property; or after April 1,
1996, when Featherstone completed the work on the upstairs bathroom ceiling at the request of the
building inspector.
Although Loyal Featherstone failed to testify as to any efforts to close the sale of the
property after January 31, 1996, Robert Coleman testified that when the Colemans met the building
inspector at the property on March 7 or 8, Featherstone informed the Colemans that they were not
allowed on the property, and he threatened to call the police. Moreover, at the subsequent hearing
on damages,1 Featherstone admitted that, sometime in March 1996, he indicated that he would not
sell the property to the Colemans because they had breached the contract by not attending the January
1
These proceedings were bifurcated in that the liability phase of the trial was conducted
on December 18, 1996, while the hearing on damages took place on February 24, 1997.
1996 closing.
At the conclusion of the liability phase of the proceedings, the trial court found that
the Colemans breached the contract by failing to close the sale of the house. At the subsequent
hearing on damages, the trial court found the construction company’s total damages to be
$30,067.18, and the court entered a judgment for that amount in favor of the company. The trial
court’s judgment also terminated the subject contract and ordered it expunged from the records of
the Shelby County Register’s Office. This appeal by the Colemans followed.
On appeal, the Colemans have abandoned their claim for specific performance and
have limited their issues on appeal to whether the trial court erred in finding them to be in breach
of the subject contract and whether the court erred in awarding damages to the construction
company. This appeal, therefore, requires us to determine whether the conditions precedent of the
subject contract had occurred so as to impose upon the Colemans the obligation to close the sale of
the house by the scheduled closing date of January 31, 1996. Contrary to the trial court’s ruling, we
conclude that the necessary conditions precedent had not occurred and, thus, that the Colemans had
no obligation to close by January 31, 1996.
At trial, the construction company took the position that the occurrence of three
conditions triggered the Colemans’ obligation to close the sale of the home: (1) the approval of the
Colemans’ mortgage loan application by the bank; (2) the final appraisal performed by the appraiser
at the bank’s request; and (3) the final inspection performed by the Shelby County building inspector.
The record contains undisputed evidence that the Colemans’ loan was approved on December 18,
1995, and that the final appraisal was performed on January 26, 1996. It also was undisputed,
however, that the final inspection was not performed by the building inspector until February 8,
1996, more than one week after the scheduled closing date of January 31, 1996. In light of the
undisputed evidence that the third condition precedent had not occurred by the scheduled closing
date, we conclude that the Colemans had no obligation to close by January 31, 1996, and, thus, that
they did not breach the contract by failing to close on that date.
On appeal, the construction company contends that the Colemans were required to
close by January 31, 1996, because the contract’s final inspection requirement was satisfied on
January 26, 1996, when the appraiser for the bank performed his final inspection and appraisal.
Specifically, the construction company contends that the bank appraiser’s final inspection satisfied
the contract’s requirement of obtaining “a clear final inspection . . . from the FHA and/or DVA
and/or the Shelby County Building Department.” In support of this contention, the construction
company’s brief asserts that the “bank appraiser’s certification [was] used for the FHA inspection.”
We conclude that this argument is without merit. After carefully reviewing the record
on appeal,2 we are unable to find any testimony or other evidence which would equate the bank
appraiser’s final inspection and appraisal with a “clear final inspection . . . from the FHA.” We also
note that this is not the kind of fact of which this court may take judicial notice. See Ottinger v.
Ottinger, No. 03A01-9801-CV-00027, 1998 WL 497997, at *2 (Tenn. App. Aug. 20, 1998); In re
Dowling, No. 01A01-9706-PB-00268, 1998 WL 13067, at *4 (Tenn. App. Jan. 16, 1998); T.R.E.
201(b).
We further conclude that the record fails to contain any evidence to support the
finding that the Colemans breached the subject contract by failing or refusing to close the sale after
the January 31, 1996, closing date. In order to recover for a purchaser’s breach of a contract for the
sale of realty, the seller must demonstrate that he (the seller) was “able and ready to perform his part
of the contract, unless his inability was due to some act of the purchaser.” 92 C.J.S. Vendor &
Purchaser § 530 (1955) (footnotes omitted). Specifically, the seller “must perform, or offer to
perform, his part of the contract as a condition precedent to his right to maintain an action for its
breach by the purchaser, unless prior to the time set for performance the purchaser has repudiated
the contract or signified his unwillingness to comply therewith.” Id.; accord Lafferty v. Pate, No.
01A01-9303-CH-00085, 1993 WL 312682, at *3 (Tenn. App. Aug. 18, 1993) (indicating that, in
order to maintain breach of contract action, seller must prove readiness and willingness to perform
or show sufficient justification for not having done so).
In the present case, the construction company failed to present any proof regarding
2
The record on appeal does not include any trial exhibits.
its readiness or willingness to perform the subject contract after the Colemans failed to close by the
January 31 closing date.3 As previously discussed, the construction company presented no evidence
that it offered to perform the contract after the January 31 closing date, after the February 8
inspection by the Shelby County building inspector, or after April 1 by which time the construction
company had corrected the bathroom ceiling’s code violation. The only evidence on this issue
suggests that, after January 31, 1996, Loyal Featherstone no longer wished to sell the property to the
Colemans.
The construction company also presented no evidence that its failure to offer to
perform was justified. Although the Colemans refused to close the sale on January 31, 1996, as we
previously explained, the Colemans had no obligation to close at that time. Moreover, although the
Colemans insisted that the construction company repair the bathroom ceiling and other problems,
the record contains no evidence that the Colemans actually repudiated the contract at any time either
before or after January 31, 1996. Under these circumstances, we hold that the construction company
was not entitled to recover for the Colemans’ breach of contract.4
We reverse that portion of the trial court’s judgment finding the Colemans in breach
of contract and awarding damages to the construction company, and we remand this cause for further
proceedings consistent with this opinion. Inasmuch as the Colemans have abandoned their
counterclaim for specific performance, we leave in effect that portion of the trial court’s judgment
terminating the subject contract and ordering it expunged from the records of the Shelby County
Register’s Office. Costs of this appeal are taxed to the construction company, for which execution
may issue if necessary.
____________________________________
FARMER, J.
3
Inasmuch as the parties previously had extended the closing date, the parties apparently
did not consider time to be of the essence in the performance of the contract. See Tatum v.
Worsham, No. 03A01-9507-CH-00219, 1996 WL 87453, at *2 (Tenn. App. Mar. 1, 1996),
perm. app. denied (Tenn. May 28, 1996).
4
Inasmuch as the record contains no evidence that the construction company offered to
perform the contract after February 8, 1996, when the building inspector performed his final
inspection, we need not address what effect, if any, the inspector’s subsequent discovery of the
ceiling’s code violation had on the Colemans’ obligation to close the sale.
______________________________
CRAWFORD, P.J., W.S. (Concurs)
______________________________
LILLARD, J. (Concurs)