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2008-UP-335 - D.R. Horton v. Campus Housing Company

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

D.R. Horton, Inc., Respondent,

v.

Campus Housing Company, LLC, Appellant.


Appeal From Beaufort County
Curtis Coltrane, Special Circuit Court Judge


Unpublished Opinion No.   2008-UP-335  
Heard May 8, 2008 – Filed July 1, 2008


AFFIRMED


Barry Johnson and Jason Ward, both of Okatie, for Appellant.

James Herring and G. Hamlin O’Kelley,  both of Bluffton, for Respondent.

PER CURIAM:  Campus Housing Company, LLC (Campus Housing) appeals the trial court’s order denying its claims for reformation and specific performance of a land sale contract entered into with D.R. Horton, Inc. (Horton).  We affirm.   

FACTS

On January 29, 2003, Horton and Campus Housing entered into a contract for the purchase of real estate in Beaufort County.  Pursuant to the contract, Campus Housing was obligated to make deposits into escrow in four separate amounts at specific times.[1]  The contract also provided the “Seller will have reasonable ARB [Architectural Review Board] approval over the product that will be built by the Purchaser, with said ARB guidelines being provided to the Purchaser by the Seller during the Due Diligence Period.”

On November 19, 2003, the parties amended the original contract with an “Addendum to Purchase Agreement” (Addendum).  In the Addendum, Campus Housing had until April 25, 2004 to complete its due diligence study on the property to determine the suitability of the property for its intended use.  Campus Housing could then choose to either terminate the agreement or make the final deposit into escrow.

On April 2, 2004, Horton and Campus Housing entered into a new contract for the purchase and sale of additional property in Beaufort County.  The new contract also gave Campus Housing until April 25, 2004 to complete its due diligence study to determine if it wanted to make the final deposit into escrow.

By letter dated April 21, 2004, Campus Housing informed Horton that pursuant to the contract, it believed the deadline for delivering its ARB guidelines (guidelines) to Campus Housing was April 7, 2003, more than a year prior to the date of the letter.  Therefore, Campus Housing argued the due diligence period should be extended for a period equal to the time between the due date and the date Horton would be providing the guidelines to Campus Housing.  In a second letter, Campus Housing further claimed it was not required to close until Horton provided the guidelines, even though the original contract set the closing for fifteen days after the end of the due diligence period.  Horton rejected Campus Housing’s argument, claiming the delivery of the guidelines was not a condition precedent to Campus Housing’s obligation to make the escrow deposits.

As of April 26, 2004, Campus Housing had not made the final deposits into escrow or terminated either contract.  On April 26, Campus Housing sent notices to Horton alleging Horton was in default under the terms of both contracts.  Specifically, Campus Housing claimed Horton failed to timely provide the guidelines because Horton was obligated under the contracts to provide the guidelines to Campus Housing during the time period Campus Housing was required to complete its due diligence studies.  The following day, Horton sent a notice of default to Campus Housing for failure to make the escrow payments.  According to the original contract, each party was entitled to written notice of default and would have fifteen days from the receipt of the notice to cure the alleged defect.

On April 30, 2004, Horton wrote to Campus Housing providing the guidelines Horton intended to impose on the land:

[T]he only [guidelines] which Horton will impose on [the land] . . . would be Horton’s prior written approval of the design and exterior color of any improvements [to the land] within 100’ of the properties’ common boundary line with property owned by [Horton] and within 150’ of the intersection of any right of way at the point where such right of way crosses from property owned by [Horton] into properties owned by Campus Housing.

The letter further stated “if [Campus Housing] purchases all properties . . . currently under contract to purchase from [Horton] there will be no [guidelines] imposed by [Horton].”

On May 3, 2004, Campus Housing wrote to Horton asking for clarification as to what guidelines Horton planned to employ.  In response, Horton wrote Campus Housing the next day addressing Campus Housing’s questions.  However, Campus Housing contended Horton’s letters did not sufficiently provide the “architectural guidelines” required by the contract.  Neither the original contract nor the Addendum defines what the parties intended by the term “guidelines.”

Subsequently, Horton wrote to Campus Housing informing them Horton was willing to enter into negotiations to revive the January 29 contract because Horton considered the contracts to be terminated due to Campus Housing’s failure to timely make their payments.  The same day, Campus Housing wrote to Horton contending Horton had not provided the guidelines as required and rejecting Horton’s assertion the contracts had been terminated.

On May 26, 2004, Horton filed a declaratory judgment action against Campus Housing for breach of contract.  On June 2, Campus Housing filed its answer and counterclaims for reformation and special performance.  After a trial without a jury, the trial court issued its order denying both parties’ claims.  Both parties filed Rule 59(e), SCRCP, motions to alter or amend, which the court denied on February 8, 2007.  This appeal followed.

STANDARD OF REVIEW

“A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue.”  Gordon v. Colonial Ins. Co. of Cal., 342 S.C. 152, 155, 536 S.E.2d 376, 378 (Ct. App. 2000).[2]  Reformation of a contract and an action for specific performance are actions in equity.  Glasscock, Inc. v. U.S. Fidelity & Guar. Co., 348 S.C. 76, 81, 557 S.E.2d 689, 691 (Ct. App. 2001); Ingram v. Kasey’s Assocs., 340 S.C. 98, 531 S.E.2d 287 (2000); see Godfrey v. E.P. Burton Lumber Co., 88 S.C. 132, 133, 70 S.E. 396, 397 (1910).  In an action in equity, tried by the judge alone, the appellate court has jurisdiction to find facts in accordance with its views of the preponderance of the evidence.  Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).  However, we are not required to disregard the factual findings of the trial court, who saw and heard the witnesses and was in a better position to judge their credibility.  Smith v. Barr, 375 S.C. 157, 160, 650 S.E.2d 486, 488 (Ct. App. 2007).

LAW / ANALYSIS

I.  Architectural Guidelines

Campus Housing argues the trial court erred in finding Horton fulfilled its obligation to provide guidelines to Campus Housing because the materials provided were not as contemplated by the parties.  We disagree.

Campus Housing contends Horton’s letters did not provide the guidelines required by the contract; however, the contracts did not define what the parties intended by the use of the word “guidelines.”  The January 29 contract provided the “Seller will have reasonable ARB [Architectural Review Board] approval over the product that will be built by the Purchaser, with said ARB guidelines being provided to the Purchaser by the Seller during the Due Diligence Period.”  In a letter to Campus Housing, Horton stated the only guidelines Horton would impose on the land would be Horton’s prior written approval of the design and exterior color of any improvements to the land within 100 feet of the properties’ common boundary line with property owned by Horton and within 150 feet of the intersection of any right of way at the point where such right of way crosses from property owned by Horton into properties owned by Campus Housing.  Horton also added the review rights would not be unreasonable and Campus Housing was “free to develop its property as it likes.”  The letter further stated that if Campus Housing purchased all the properties it was under contract to purchase from Horton, Horton would not impose any guidelines.

Thus, sufficient evidence in the record supports the trial court’s finding the contracts did not state what the parties meant by “guidelines” and Horton’s letters were sufficient to fulfill its obligation under the contract.

II.  Specific Performance

Campus Housing also claims the trial court erred in holding Campus Housing was required to prove it was financially ready to close the deal to demand specific performance.  We disagree.

“Specific performance should be granted only if there is no adequate remedy at law and specific enforcement of the contract is equitable between the parties.”  Ingram v. Kasey’s Assocs., 340 S.C. 98, 106, 531 S.E.2d 287, 291 (2000).  In Ingram, the Supreme Court of South Carolina held to compel specific performance, a court of equity must find:

(1) [T]here is clear evidence of a valid agreement; (2) the agreement had been partly carried into execution on one side with the approbation of the other; and (3) the party who comes to compel performance has performed his or her part, or has been and remains able and willing to perform his or her part of the contract.

Id.

Here, Campus Housing meets the first two elements of specific performance as evidenced by record: (1) Horton and Campus Housing had a valid agreement and (2) Campus Housing met its obligations prior to April 26, 2004.  However, Campus Housing also had to prove the ability to perform part of the contract on June 2, 2004, the date it brought an action for specific performance.  While evidence in the record suggests Campus Housing made efforts to obtain the money to close on the contracts, the evidence presented fails to show Campus Housing had the funds to do so on June 2, 2004.  Also, the managing director of Campus Housing, Craig Germain, testified during his deposition that Campus Housing did not have the money to close the deal as of May 10, or June 10, 2004.  Germain also stated Campus Housing did not have the money in its account to pay the final escrow deposits when they were due on April 26, 2004.

Therefore, Campus Housing failed to meet the third required element of its claim for specific performance and the trial court did not err by determining Campus Housing did not have the funds to purchase the property at the time it filed its action for specific performance.      

CONCLUSION

Because the contracts did not define what the parties intended by the use of the word “guidelines,” the trial court was correct in finding Horton’s letter fulfilled its obligation to Campus Housing.  Also, the trial court correctly held Campus Housing failed to meet a required element of its claim for specific performance because the evidence presented showed Campus Housing did not have the necessary funds to purchase the land when the action was filed.  Therefore, the order of the trial court is  

AFFIRMED.

HEARN, C.J., and SHORT and KONDUROS, JJ., concur.


[1]  By July 2003, Campus Housing made the first three required deposits into escrow.

[2]  The claims presented to the trial court were both legal and equitable.  Horton filed a complaint alleging breach of contract, which is an action at law.  Auto Owners Ins. Co. v. Langford, 330 S.C. 578, 581, 500 S.E.2d 496, 497 (Ct. App. 1998).  Campus Housing answered alleging claims for reformation and specific performance, which are actions in equity.  Because Horton did not appeal the trial court’s order, we need only look at the scope of review for an action in equity.  See Kiriakides v. Atlas Food Sys. & Servs, Inc., 338 S.C. 572, 580, 527 S.E.2d 371, 375 (Ct. App. 2000) (quoting Corley v. Ott, 326 S.C. 89, 92 n.1, 485 S.E.2d 97, 99 n.1 (1997) (“When legal and equitable actions are maintained in one suit, each retains its own identity as legal or equitable for purposes of the applicable standard of review on appeal.”)).