NRC Golf Course, LLC v. JMR Golf, LLC

ERVIN, Judge,

concurring in part and concurring in the result in part.

*507 Although I concur in the Court’s decision to limit our consideration of Plaintiff’s challenge to the trial court’s order to the matters at issue between Plaintiff and Defendant JMR; the Court’s decision to treat Plaintiff’s interlocutory appeal as a petition for the issuance of a writ of certiorari and to issue the requested writ in order to reach the merits of the dispute between Plaintiff and Defendant JMR; and the Court’s holdings that the trial court did not err by failing to find that Defendant JMR’s challenge to the validity of the modified purchase option was barred by the doctrine of quasi-estoppel, that Plaintiff’s challenge to the preliminary and mandatory injunctive relief granted in the trial court is moot given the fact that Plaintiff has regained control of the golf course, and that the issue of the amount of compensation that should be paid for the use of certain golf course property is not properly before us at this time, I am unable to agree with the Court’s determination that the modified purchase option was not supported by adequate consideration. However, given that the price term contained in the modified purchase option was not sufficiently definite to create an enforceable contractual provision, I concur in the Court’s ultimate decision to affirm the trial court’s decision to enter summary judgment in favor of Defendant JMR. Moreover, given that a determination that the modified purchase option is invalid obviates the necessity to determine whether the modified purchase option is a separate contract or a part of the original contract, I do not believe that we should reach that issue. As a result, I concur in the Court’s decision in part and concur in the result reached by the Court in part.

Consideration

According to basic principles of contract law:

An enforceable contract is one supported by consideration. Moreover, where a contract has been partially performed, as is the case here, a modification of its terms is treated as any other contract and must also be supported by consideration. It is well established that consideration sufficient to support a contract or a modification of its terms consists of “any benefit, right, or interest bestowed upon the promisor, or any forbearance, detriment, or loss undertaken by the promisee.”

Lee v. Paragon Group Contractors, 78 N.C. App. 334, 337-38 , 337 S.E.2d 132, 134 (1985) (citing Investment Properties v. Norburn, 281 N.C. 191, 196 , 188 S.E. 2d 342, 345 (1972) and quoting Brenner v. School House, Ltd., 302 N.C. 207, 215 , 274 S.E. 2d 206, 212 (1981) *508 (other citation omitted)), disc. review denied, 316 N.C. 195 , 345 S.E.2d 383 (1986). Mutual promises exchanged between contracting parties constitute sufficient consideration to support an enforceable agreement. See, e.g., Howe v. O’Mally, 5 N.C. (1 Mur.) 287 , 289 (1809):

A conveyed to B a tract of land, containing 221 acres, more or less. Some years afterwards it was mutually agreed to have the land surveyed, and if it were found to contain more than 221 acres, the defendant should pay the Plaintiff ten dollars per acre for the excess: if it fell short, Plaintiff to refund to Defendant at the same rate. Here are mutual promises, and one is a good consideration, to support the other.

See also, e.g., Penley v. Penley, 314 N.C. 1, 16 , 332 S.E.2d 51, 60 (1985) (stating that the parties’ “mutual promises to accept the division of shares and to continue to operate the business as before, followed by the transfer of jointly owned property,” constituted sufficient “consideration to support the promise, on the part of each of the parties, to split the shares in the incorporated business equally”); Brenner, 302 N.C. at 215 , 274 S.E.2d at 212 (stating that a modification to a contract between a school and a parent was supported by adequate consideration when, “[i]n return for defendant’s promise to refund the tuition paid, plaintiff would relinquish his right to have his child educated in defendant school”); IWTMM, Inc. v. Forest Hills Rest Home, 156 N.C. App. 556, 562 , 577 S.E.2d 175, 179 (2003) (stating that “consideration need not consist of a promise to pay money for goods or services” and that consideration can, “[i]nstead, . . . take the shape of mutual promises to perform some act or to forbear from taking some action.”); Brumley v. Mallard, L.L.C., 154 N.C. App. 563, 568 , 575 S.E.2d 35, 38 (2002) (finding “ample consideration to support the modification of the contract at the property closing” in a situation in which the plaintiff “accepted a different buyer” and the defendant “agreed to guarantee the transactions”), aff’d, 357 N.C. 247 , 580 S.E.2d 691 (2003); Martin v. Vance, 133 N.C. App. 116, 122 , 514 S.E.2d 306, 310 (1999) (stating that “[m]utual binding promises provide adequate consideration to support a contract.”) (citations omitted). As long as both parties promise to give up an otherwise' existing right at the time that they entered into a contract modification, that modification is supported by sufficient consideration.

According to the record, the original purchase option provided that Plaintiff would be entitled to purchase the golf course for $2,500,000.00 at any time before the expiration of the Lease Agreement. The modified purchase option, on the other hand, pro *509 vided that Plaintiff could purchase the golf course for its fair market value as of the exercise date. As a result, at the time that it entered into the modified purchase option, Defendant JMR relinquished the right to sell the golf course for $2,500,000.00 and agreed to sell the golf course for its fair market value at the time the modified purchase option was exercised. Plaintiff, on the other hand, relinquished the right to buy the golf course for $2,500,000.00 and promised to pay a purchase price based on fair market value. Thus, the record clearly establishes that both parties agreed to relinquish the right to sell or to purchase the golf course for $2,500,000.00 and to accept or pay fair market value in lieu thereof. Thus, both parties made mutual promises, relinquished existing rights, and obtained new rights at the time that they entered into the modified purchase option, demonstrating, contrary to the result reached by my colleagues, that the modified purchase option was supported by adequate consideration. 1

Enforceability of the Modified Purchase Option Price Term

“One of the essential elements of every contract is mutual[ity] of agreement. There must be neither doubt nor difference between the parties. They must assent to the same thing in the same sense, and their minds must meet as to all the terms. If any portion of the proposed terms is not settled, there is no agreement. ... A contract, and by implication^] a provision, leaving material portions open for future agreement is nugatory and void for indefiniteness. . . . Consequently, any contract provision . . . failing to specify either directly or by implication a material term is invalid as a matter of law.”

Rosen v. Rosen, 105 N.C. App. 326, 328 , 413 S.E.2d 6, 7 (1992) (quoting MCB Ltd. v. McGowan, 86 N.C. App. 607, 608-09 , 359 S.E.2d 50, 51 (1987)). The price term set out in the modified purchase option provided that Plaintiff would be entitled to repurchase the golf course at a purchase price “based on fair market value at exercise date validated by an independent third party appraisal.” As stated by the trial court in Finding of Fact No. 48 2 :

*510 Here, Option B does not set forth an objective process or mechanism for determining a purchase price for the Golf Course. It simply provides that the purchase price for the Golf Course “shall be based on fair market value at exercise date validated by an independent third party appraisal.” (emphasis added) While there is a bare bones agreement as to use of a third party appraisal, there is no agreement as to what fair market value the appraisal is to “validate.” Among other things, there is no agreement as to how or [when] an initial determination of fair market value is to be made, how the parties would select an appraiser or that — as NRC contends and JMR disputes — a single party unilaterally could designate an appraiser and impose that person’s appraisal on the other party. In the absence of such an agreement, upon NRC’s decision to exercise Option B, there was nothing to prevent JMR from engaging its own appraiser and presenting an opposing contended fair market value. If that happened, the agreement does not contain any mechanism for resolving any discrepancies in the fair market value opinions of different appraisers. “With no specification in the agreement as to how to address such greatly varying estimates in the value of [JMR’s] property, the price term is not, as it must be, certain and definite.” Connor [v. Harless,] 176 N.C. App. [402,] 406, 626 S.E.2d [755,] 758 [(2006), disc. review denied, 361 N.C. 219 , 642 S.E.2d 247 (2007).]

I agree with the trial court’s conclusion that, because the modified purchase option fails to specify the manner in which an appraiser would be selected or how the fair market value of the golf course would be determined, it is invalid and unenforceable. The fact that the parties might, in the abstract, be able to obtain a determination of the property’s fair market value through litigation does not, at least to my way of thinking, necessitate the adoption of a different result given that there is little or no difference in principle between that result and an unenforceable agreement to agree. As a result, I agree with the Court, albeit for a different reason, that the modified purchase option was unenforceable and that the trial court properly granted summary judgment in favor of Defendant JMR. Having made this determination, I see no need to address the issue of whether the documents executed by the parties constitute a single contract or multiple contracts, since Defendant would be entitled to prevail regardless of the manner in which that issue was resolved.

*511 Conclusion

Thus, I concur with the Court’s preliminary rulings concerning the scope of the issues that are properly before us in this case and the extent to which we should address the enforceability of the modified purchase option on the merits. In addition, I concur with the Court’s ultimate decision that the trial court’s order should be affirmed given that the price term set out in the modified purchase option is too indefinite to be enforceable. However, I do not agree that the Court needs to address the issue of whether the modified purchase option constitutes a separate contract or part of the original lease, or with the Court’s holding that the modified purchase option is not supported by adequate consideration. As a result, I respectfully concur in the Court’s opinion in part and concur in the result reached by the Court in part.

. In its brief, Plaintiff argues that the modified purchase option was supported by its periodic lease payments required under the terms of the original lease. I agree with the Court’s determination that the periodic rent payments required under the original lease agreement do not adequately support the modified purchase option.

. As should be obvious, Finding of Fact No. 48 is a conclusion of law rather than a finding of fact.