LUCAS v. BISHOP

LUCAS v. BISHOP
1998 OK 16
956 P.2d 871
69 OBJ 847
Case Number: 82265
Decided: 03/03/1998
Mandate Issued: 03/27/1998
Supreme Court of Oklahoma

JAY LUCAS, Appellant,
vs.
BILL BISHOP and VICKIE LYNN BISHOP, husband and wife, Appellees.

FOR OFFICIAL PUBLICATION
CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION 2

[956 P.2d 872]

¶0 Suit for money damages and to foreclose a lien in real property arising out of a contract for deed. The District Court of Bryan County, Honorable Rocky L. Powers, Trial Judge, denied the seller's, Jay Lucas's, motion for summary judgment, and granted the buyers', Appellees Bill Bishop and Vickie Lynn Bishop's, motion for summary judgment. The trial court also awarded the Bishops an attorneys' fee. The Court of Civil Appeals, Division 2, reversed, holding that the trial court should have treated the contract for deed as a mortgage and remanded the matter to the trial court with instructions to grant Lucas's motion for summary judgment.

CERTIORARI PREVIOUSLY GRANTED, COURT OF CIVIL APPEALS OPINION VACATED, JUDGMENT OF THE TRIAL COURT REVERSED AND MATTER REMANDED WITH INSTRUCTIONS.

Robert S. Settles, Antlers, Oklahoma, For Appellant; Bob E. Savage, Tishomingo, Oklahoma, For Appellees.

WATT, J.:

FACTS AND PROCEDURAL BACKGROUND

¶ 1 On November 26, 1989 Jay Lucas agreed to sell a house in Bryan County, Oklahoma, to Bill Bishop and Vickie Lynn Bishop under the terms of a contract for deed. The Bishops made a $5,000.00 down payment and agreed to pay a balance of $25,000.00 in $249.97 per month installments with interest at 10% per annum. The contract for deed provided that the Bishops "shall be responsible for ad valorem taxes upon said property." Paragraph 6 of the contract for deed states:

. . . should [the Bishops] fail to make the payments described herein for a period of (3) three months that this agreement shall be considered null and void at the option of [Lucas] and that [Lucas] may retain all payments received, said payments to be considered liquidated damages and further, [the Bishops] agree to give immediate possession of the property to [Lucas].

¶ 2

¶ 3

¶ 4

All contracts for deed . . . made for the purpose of establishing an immediate and continuing right of possession . . . shall to that extent be deemed and held mortgages and shall be subject to the same rules of foreclosure . . . as are prescribed in relation to mortgages.

Consequently, Lucas was required to foreclose his lien in the Bishop property. There is no dispute concerning the applicability of § 11A here.

¶ 5

¶ 6

¶ 7

¶ 8

DISCUSSION
I.

Paragraph 6 of the Contract for Deed Does Not Require That Three Consecutive Payments be Missed Before Foreclosure Proceedings May be Begun.

¶ 9

¶ 10

The words of a contract are to be understood in their ordinary and popular sense rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.

15 O.S. 1991 § 157.

¶ 11 When construing the term "for a period of (3) three months" in the contract for deed, the term "must be viewed in the context of the contract and must be given its plain ordinary meaning" as required by 15 O.S. 1991 § 157. Kerr-McGee Corp. v. Admiral Ins. Co., 1995 OK 102 ¶ 11, 905 P.2d 760. Lucas made a prima facie showing that the Bishops missed two full payments, and underpaid two other installments, in addition to not having paid one year's ad valorem taxes. In the face of the Bishops' multiple defaults we cannot accept their argument that, as a matter of law, Lucas had no right to demand that they be paid despite those defaults. The trial court erred in holding otherwise.5

¶ 12 The Bishops apparently failed to bring themselves current under the contract [956 P.2d 875] for deed even after Lucas filed suit against them. Because the trial court erred in entering summary judgment for the Bishops it also erred in granting them an attorneys' fee because the Bishops were not the prevailing party.

II.

Disputed Issues of Material Fact Must be Resolved Before a Determination Can Be Made as to Whether Lucas is Entitled to Foreclose his Lien in the Property.

¶ 13 Neither party's motion for summary judgment can be granted here as there remains unresolved the issue of whether, in the first instance, Lucas waived the Bishops' prompt payment of the $800.00 in missed payments and under payments and $209.97 in ad valorem taxes. A defendant in a foreclosure action who asserts the defense of waiver is entitled to have a determination made concerning whether late payments have been waived before the property is sold at foreclosure sale. Federal Deposit Ins. Corp. v. Tidwell, 1991 OK 119, 820 P.2d 1338.

¶ 14 Even if established, the defense of waiver waives only the debtor's failure to pay in the first instance. We have not previously addressed the question of what right a debtor has to declare a default under circumstances such as those present here, where the creditor has accepted late payments and partial payments without declaring a default.

¶ 15 We conclude that the fairest way to deal with a waiver of prompt payment is to hold that the creditor has not waived his right to declare a default, only that he waived his right to do so without notice that would give the debtor a reasonable time to cure the default before foreclosure would be appropriate. This approach is used in the Florida courts. CJ Restaurant Enterprises, Inc. v. FMS Management Systems, Inc., 699 So. 2d 252 (Fla.App. 1997), where the court held that the debtor should have the opportunity to cure its default where the creditor had accelerated the mortgage and sought foreclosure without prior notice. The court held, however:

We do not suggest by our holding that [the creditor] FMS has waived its right to declare a default under the stipulation agreement for nonpayment. Rather, we conclude only that FMS waived its right to do so without prior notice to [the debtor] CJ."

¶ 16 The Bishops did not pay in accordance with the terms of their agreement with Lucas, and Lucas was entitled to demand that the Bishops cure the default at any time. Thus, although Lucas may have waived the requirement of prompt payment in the first instance, Lucas was entitled to demand at a later date that the default be cured, and did so by suing the Bishops. The trial court, however, may give the Bishops the opportunity to pay the arrearage and avoid foreclosure.

¶ 17 The record does not make entirely clear whether the Bishops made up the payments they missed, and clearly reflects that they did not repay the 1990 ad valorem taxes after Lucas filed suit. The Bishop's have, apparently, paid as agreed in the contract for deed since Lucas filed suit.

¶ 18 Lucas's suit made clear his insistence that the Bishops both make up the late payments and reimburse Lucas for the ad valorem taxes. Thus, Lucas will be the prevailing party and could be entitled to an attorneys' fee under 42 O.S. 1991 § 176. Nevertheless, the trial court may as a matter of equity, and to avoid a forfeiture, allow the Bishops to make up the late payments, and ad valorem taxes with interest, and reinstate the contract for deed, rather than order the property sold at foreclosure sale. This will be a matter within the trial court's discretion. The amount to be awarded Lucas for attorneys' fees is also within the discretion of the trial court.

CERTIORARI PREVIOUSLY GRANTED, COURT OF CIVIL APPEALS OPINION VACATED, JUDGMENT OF THE TRIAL COURT REVERSED AND MATTER REMANDED WITH INSTRUCTIONS.

¶19 SUMMERS, V.C.J., HODGES, LAVENDER, WILSON, and WATT, JJ. - concur.

[956 P.2d 876]

¶20 KAUGER, C.J. - concurs in part; dissents in part.

¶21 HARGRAVE, J. - dissents.

¶22 OPALA, J., with whom SIMMS, J., joins, dissenting.

I would confine this court's certiorari review to the correctness of the counsel-fee award. That was the only timely-appealed district court ruling. See Lucas v. Bishop, 1995 OK 7, 890 P.2d 411, 412-16 (Opala, J., dissenting in part).

FOOTNOTES

1 In material part 12 O.S. 1991 § 1101 provides:

The defendant in an action for the recovery of money only, may, at any time before the trial, serve upon the plaintiff or his attorney an offer, in writing, to allow judgment to be taken against him for the sum specified therein. . . . If the plaintiff fails to obtain judgment for more than was offered by the defendant, he shall pay the defendant's costs from the time of the offer.

2 See Note 1 for the text of the relevant portions of 12 O.S. 1991 § 1101.