HARBOR PARK MARKET INC V WILLIAM GRONDA
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STATE OF MICHIGAN
COURT OF APPEALS
HARBOR PARK MARKET, INC.,
FOR PUBLICATION
October 25, 2007
9:10 a.m.
Plaintiff/Counter-DefendantAppellee,
No. 267207
Emmet Circuit Court
LC No. 04-008520-CK
v
WILLIAM and LINDA GRONDA,
Defendants/Counter-Plaintiffs-
Appellees,
and
CARLETON ENTERPRISES, INC.,
Defendant-Appellant.
HARBOR PARK MARKET, INC.,
Plaintiff/Counter-DefendantAppellee,
v
No. 267288
Emmet Circuit Court
LC No. 04-008520-CK
WILLIAM and LINDA GRONDA,
Defendants/Counter-PlaintiffsAppellants,
Official Reported Version
and
CARLETON ENTERPRISES, INC.,
Defendant.
Before: Hoekstra, P.J., and Sawyer and Murray, JJ.
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MURRAY, J.
I. Introduction
This case involves a contract dispute. Following a bench trial, the trial court entered a
final order granting judgment for plaintiff, Harbor Park Market, Inc., and ordering specific
performance of a contract for sale of a liquor license and fixtures between defendants William
and Linda Gronda and Harbor Park Market. Defendant Carleton Enterprises, Inc., which had
submitted an offer for the purchase of the Grondas' business (including liquor license and
fixtures) and property, appeals the judgment as of right, as do the Grondas. The dispositive issue
on appeal is whether the Grondas' act of simultaneously submitting the two agreements to their
attorney for his approval improperly interfered with the condition precedent contained in the first
signed agreement, i.e., the Harbor Park Market agreement. We conclude that it did not, and
therefore reverse the trial court's order and remand for entry of a judgment in favor of all
defendants.
II. Facts and Procedural History
The material facts presented at trial are essentially undisputed. William and Linda
Gronda owned a party store and land along with fixtures, equipment, and a liquor license. On
October 11, 2004, Harbor Park Market submitted a $55,000 offer to the Grondas for the purchase
of their liquor license and fixtures. On October 14, 2004, the Grondas accepted Harbor Park
Market's offer to purchase the liquor license and fixtures; the acceptance, however, was
expressly conditioned (and agreed to by Harbor Park Market) on their attorney's approval of the
purchase agreement. The specific language within the agreement was: "This Purchase
Agreement is subject to review & approval of attorney Lynn Stedman, on or before Oct 22,
2004." Before their attorney had an opportunity to review the purchase agreement, the Grondas
conditionally accepted a second offer, this one from Carleton Enterprises, to purchase the real
property, along with the business, liquor license, and fixtures, for $250,000. That acceptance,
too, was expressly conditioned on the approval of the purchase agreement by the Grondas'
attorney.
Lynn Stedman, the Grondas' attorney, reviewed the competing agreements together when
he returned from a vacation. He approved the Carleton agreement. The Grondas thereafter
refused to complete the sale to Harbor Park Market, and, instead, attempted to close their sale
with Carleton. However, Harbor Park Market filed suit for breach of contract against the
Grondas and Carleton and requested specific performance of the contract.
After a one-day bench trial, the trial court concluded that, by soliciting and submitting a
competing purchase agreement to Stedman for review, the Grondas placed an obstacle in the way
of Stedman's approval of Harbor Park Market's agreement and hindered the fulfillment of the
condition precedent:
Here the Grondas violated their implied agreement by placing an obstacle
in the way of attorney Stedman's approval of the Plaintiff 's Agreement. The
testimony of attorney Stedman establishes beyond dispute that it was the more
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favorable terms of the Carleton Agreement, procured by the Grondas after they
made their Agreement with Plaintiff, that caused him to approve the Carleton
Agreement and disapprove the Plaintiff 's Agreement.
It was the improper action of the Grondas, in procuring a competing
Agreement for sale of the same liquor license, which, at a minimum hindered
fulfillment of the condition precedent for approval of the Plaintiff 's Agreement by
attorney Stedman.
Thus, the trial court ordered specific performance of the purchase agreement between Harbor
Park Market and the Grondas.
III. Analysis
The dispositive issue on appeal is whether the Grondas interfered with, and therefore
waived, the condition precedent by simultaneously submitting to Stedman a second conditional
agreement. We review the trial court's factual findings after a bench trial and in an equitable
action for clear error, and its legal conclusions de novo. Villadsen v Mason Co Rd Comm, 268
Mich App 287, 303; 706 NW2d 897 (2005); Samuel D Begola Services, Inc v Wild Bros, 210
Mich App 636, 639; 534 NW2d 217 (1995). A trial court's findings are clearly erroneous only
when the appellate court is left with a definite and firm conviction that a mistake has been made.
Id.1
The goal of contract interpretation is to first determine, and then enforce, the intent of the
parties based on the plain language of the agreement. St Clair Medical, PC v Borgiel, 270 Mich
App 260, 264; 715 NW2d 914 (2006). If no reasonable person could dispute the meaning of
ordinary and plain contract language, the Court must accept and enforce the language as written,
unless the contract is contrary to law or public policy. Rory v Continental Ins Co, 473 Mich 457,
468; 703 NW2d 23 (2005). Plain and unambiguous contract language cannot be rewritten by the
Court "under the guise of interpretation," as the parties must live by the words of their
agreement. Upjohn Co v New Hampshire Ins Co, 438 Mich 197, 207; 476 NW2d 392 (1991).
The meaning of clear and unambiguous contract language is a question of law. Laurel Woods
Apts v Roumayah, 274 Mich App 631, 638; 734 NW2d 217 (2007).
The parties agree, and the trial court found, that the attorney-approval clause was a
condition precedent. A condition precedent, like the one at issue in this case, "'is a fact or event
that the parties intend must take place before there is a right to performance.'" Mikonczyk v
1
There is some authority for the proposition that little or no deference is due a trial court's
findings of fact when they are based solely on transcripts and exhibits. See People v Zahn, 234
Mich App 438, 445-446; 594 NW2d 120 (1999); MCR 2.613(C) ("regard shall be given to the
special opportunity of the trial court to judge the credibility of the witnesses who appeared
before it") (emphasis added). However, because our decision is based solely on the contract
language, we need not decide what deference is due the factual findings made in this case.
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Detroit Newspapers, Inc, 238 Mich App 347, 350; 605 NW2d 360 (1999), quoting Reed v
Citizens Ins Co of America, 198 Mich App 443, 447; 499 NW2d 22 (1993).2 If the condition is
not satisfied, there is no cause of action for a failure to perform the contract. Berkel & Co
Contractors v Christman Co, 210 Mich App 416, 420; 533 NW2d 838 (1995). However, the
Grondas, as promisors, cannot avoid liability on the contract for the failure of a condition
precedent where they caused the failure of the condition. As the Supreme Court has stated, when
a contract contains a condition precedent, "'"there is an implied agreement that the promisor will
place no obstacle in the way of the happening of such event . . . ."'" Mehling v Evening News
Ass'n, 374 Mich 349, 352; 132 NW2d 25 (1965), quoting Hayes v Beyer, 284 Mich 60, 64; 278
NW 764 (1938), quoting 13 CJ, Contracts, § 722, p 648; and see 17B CJS, Contracts, § 530, p
190. Where a party prevents the occurrence of a condition, the party, in effect, waives the
performance of the condition. Id. "'"Hence, the performance of a condition precedent is
discharged or excused, and the conditional promise made an absolute one . . . ."'" Mehling,
supra at 352, quoting Hayes, supra at 65, quoting 13 CJ, Contracts, § 722, p 648.
Our caselaw generally reflects that a party must prevent the condition from occurring by
either taking some affirmative action, or by refusing to take action required under the contract,
before a court will find a waiver of a condition precedent. For example, in Mehling, supra at
352, the Court concluded that the plaintiffs waived the condition precedent that the parties agree
on the appraiser's compensation before the property was appraised, because the plaintiffs refused
to meet with the defendant and two other appraisers to discuss compensation. In Stanton v
Dachille, 186 Mich App 247, 257-258; 463 NW2d 479 (1990), we held that the defendant
waived the conditions precedent that the plaintiffs obtain satisfactory financing and soil testing
when it voluntarily discontinued platting the property sold under the contract, and that without
the plat, the plaintiffs had no reason to perform under the contract. See, also, Lee v Desenberg, 2
Mich App 365, 369; 139 NW2d 916 (1966) (this Court held that the defendants could not rely
upon the fact that the sale of their property was not completed to defeat the real estate broker's
claim for commission because the defendants chose to settle their lawsuit against the buyers for
specific performance of the purchase agreement).
Here, the language of the contract was clear and unambiguous, and therefore its meaning
could be determined as a matter of law. Quite simply, the agreement stated that the Grondas'
acceptance of Harbor Park Market's offer was subject to their attorney's review and approval of
"this agreement." Thus, because there was no limitation on what aspects of the agreement were
subject to Stedman's approval, Stedman was authorized to review and approve (or disapprove)
any part of the contract, or the entire contract as a whole. Since the parties failed to include an
express limitation in the language of the condition precedent that restricted Stedman's approval
authority, we will not judicially impose one ourselves. Upjohn Co, supra at 207. Certainly,
2
We note at the outset that although we "'"are not inclined to construe stipulations of a contract
as conditions precedent"'" we will do so where, as here, the clear language of the contract
compels it. Able Demolition, Inc v City of Pontiac, 275 Mich App 577, 584; 739 NW2d 696
(2007), quoting Mikonczyk, supra at 350, quoting Reed, supra at 447.
-4-
language limiting the scope of Stedman's approval could have been included by the parties, but it
was not. Hence, because the contract language giving the Grondas' attorney complete discretion
to approve or disapprove the agreement for whatever reason was clear and unambiguous,3 it has
to be accepted and enforced as written. Rory, supra.
Additionally, there was no finding by the trial court that the Grondas otherwise actively
interfered with Stedman's approval, such as instructing the attorney to disapprove the
agreement.4 The attorney-approval clause in Harbor Park Market's agreement required the
Grondas to submit the purchase agreement to their lawyer for review. The Grondas submitted
the agreement to Stedman in a timely manner, and the agreement required them to do no more.
Nor did it prevent the Grondas from submitting other offers to Stedman before he decided
whether to approve the Harbor Park Market offer. Thus, it cannot be disputed that the Grondas
did not fail to perform as required under the contract.
In similar situations, courts have routinely held that submitting a second, competing
agreement for review when not precluded by the contract does not constitute a waiver of the
condition precedent. Several of our sister states have provided some insightful cases on this
precise point. In Ulrich v Daly, 225 AD2d 229, 231; 650 NYS2d 496 (1996), for example, the
court ruled that bad faith in preventing the occurrence of an attorney's approval could not be
established by submitting a second offer to the attorney while the first conditional agreement was
still before the attorney:
It is clear that in comparing the various terms of the other offer with the
corresponding terms of the parties' contract, defendants' attorney considered the
contract. That the attorney's review of the matter included consideration of the
other offer does not establish bad faith, for the attorney approval clause does not
prohibit consideration of extrinsic matters.
3
In light of the clear and unambiguous language in the contract, we cannot consider what John
Zaremski's understanding was regarding the scope of the condition. One reason for this
conclusion is that the parties' disagreement regarding the meaning of contract language does not,
by itself, create an ambiguity. Gortney v Norfolk & W R Co, 216 Mich App 535, 540; 549
NW2d 612 (1996). Additionally, because we have already concluded that the language of the
condition is unambiguous, one party's understanding of what was intended by the language is
irrelevant to determining what the language actually says. Zurich Ins Co v CCR & Co (On
Rehearing), 226 Mich App 599, 604-605; 576 NW2d 392 (1997).
4
Indeed, Harbor Park Market did not present evidence or even claim that the Grondas told
Stedman to disapprove Harbor Park Market's agreement. William Gronda testified that he did
not speak with Stedman regarding either purchase agreement, and Stedman concurred that he did
not speak with either the Grondas or their real estate agent before he reviewed the purchase
agreements.
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Likewise, in Stevens v Manchester, 128 Ohio App 3d 305; 714 NE2d 956 (1998), the Ohio Court
of Appeals held that a broad attorney-approval clause gave the attorneys the right to reject the
contract for any reason, including a better competing offer:
In short, the evidence does not support the trial court's finding that the
sellers or their attorneys acted in bad faith in disapproving Stevens's offer. The
attorney-approval clause gave the sellers' attorneys the right to disapprove
Stevens's offer for any reason. Stevens did not object to the language contained
in the clause. The sellers' attorneys testified that they disapproved the contract
based on potential tax problems for their clients associated with the purchaseprice-allocation clause and the architect, inspection, and financing contingencies
contained in Stevens's offer. Even assuming, as the trial court did, that the
attorneys rejected Stevens's offer solely to accept the more favorable EZRA offer,
such action does not constitute bad faith. [Id. at 314.]
See also Flynn v Hanna, 204 Or App 760, 769, 775; 131 P3d 844 (2006), where the court found,
in part, that because the defendants submitted the agreement for review and did not instruct their
attorney to disapprove the agreement, they did not hinder the fulfillment of the condition
precedent that their attorney and accountant approve the purchase agreement.5
After a review of the record, we conclude that the trial court erred in holding that the
Grondas acted in bad faith by submitting to Stedman the Carleton and Harbor Park Market
conditional agreements at the same time. As we have already made clear, the contract did not
forbid the Grondas from considering other offers, and it did not require them to take their
property off the market while the attorney was reviewing plaintiff 's offer. Considering that the
second purchase agreement was not legally impermissible where the first was only conditionally
accepted, it was not a bad-faith act to accept it and submit it for review. Any conclusion to the
contrary is in disregard of the contract language, and is not a correct conclusion of law.
Finally, as we have noted previously, "'[w]here "dickering" as we know the term in our
system is going on there is nothing legally impermissible in trying to better an offer that has had
conditional acceptance only.'" Weitting v McFeeters, 104 Mich App 188, 198; 304 NW2d 525
(1981), quoting Meyering v Russell, 53 Mich App 695, 710; 220 NW2d 121 (1974) (O'HARA, J.
dissenting in part and concerning in part). Because the condition precedent in the Harbor Park
Market agreement was not satisfied, the purchase agreement is not enforceable, and the trial
court's order requiring specific performance of that agreement was error. Mikonczyk, supra at
350; Berkel, supra at 420.
5
Our reading of the plain language of the contract, as well as the foregoing caselaw, are
consistent with a well-known treatise that similarly indicates that when the conduct that is
alleged to have prevented performance is permitted by either the express or the implied terms of
the contract, the doctrine of prevention does not apply and the condition precedent is not waived
by the conduct. 13 Williston on Contracts (4th ed) § 39:11, pp 545-546.
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Reversed and remanded for entry of judgment in defendants' favor. We do not retain
jurisdiction.
/s/ Joel P. Hoekstra
/s/ David H. Sawyer
/s/ Christopher M. Murray
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