ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA.
Before: GIBBONS, Chief Judge, MANSMANN, Circuit Judge, and McCUNE, District Judge.*fn*
This diversity case, tried to the court without a jury, involves a dispute over a contract for the sale of real property in Longport, New Jersey. The plaintiffs, Kenneth W. Richmond and Norman M. Rosengarten, appeal from a judgment in favor of the defendants, Edward P. Biggans and Kathleen B. Biggans. We will reverse.
The Bigganses are the sellers in a contract, dated February 8, 1985, in which they agreed to convey the property to "FRANCIS J. MORESCHI, or his nominee" for $100,000. The contract also provides that the Bigganses would pay to Rosengarten "a sales commission of Ten Thousand ($10,000) Dollars at the time of final settlement," and that the settlement would take place "on or before the 1st day of May, 1985." The contract contains no time of the essence clause. It provides:
Each of said parcels more particularly described in Exhibit "A" must be zoned for the construction of a single-family detached dwelling as evidenced by issuance of a zoning permit by the proper municipal authority.
Each of said dwelling units must have building permits for construction on or before April 1, 1985, at the buyer's expense.
Sale of the parcels is contingent upon receipt of a valid commitment loan for construction of two single-family dwelling units at a total sum of $240,000 at prevailing rates for a term of one (1) year. Said approval must be obtained by April 1, 1985 by or for the purchaser.
The closing did not take place on May 1, 1985. On July 24, 1985 the Bigganses conveyed there property to another purchaser for $100,000.
On November 4, 1985 Richmond and Rosengarten filed this action. Richmond alleged in the complaint that he was the nominee of Moreschi, and sought benefit of the bargain damages of $90,000 measured by the profits he would have realized had he been able to build on the lots and sell them. He also sought the expenses he incurred for zoning applications, architects' fees, and construction loan commitment fees. Rosengarten claimed $10,000 in lost commission.
The Bigganses filed an answer which admitted the allegations of paragraph 6 of the complaint, in which Richmond alleged that they "entered into a written agreement of sale with plaintiff, a nominee of a third party, Francis J. Moreschi." They admitted, as well, that a copy of that agreement was attached to the complaint. The answer put in issue only Richmond's compliance with the terms of the agreement and their breach. There was no pretrial order, and this issue was joined on the basis of the complaint and answer.
At trial, the evidence suggested that when Richmond obtained a title report he became aware that the Bigganses were indebted to Industrial Valley Bank in an amount exceeding the purchase price, and that the bank held a lien on the property. Moreover it was learned that the bank was threatening foreclosure, and would not release its lien unless it received the entire purchase price. The evidence is undisputed that neither Moreschi nor Richmond obtained building permits by April 1, 1985, or applied for construction loan commitments until after May 1, 1985. There is also evidence suggesting that Richmond approached the Bigganses about a downward adjustment of the purchase price, but that this overture was rejected. Because the bank had to be satisfied before releasing its lien, Richmond and Rosengarten, who are law partners, dealt primarily with the bank's counsel. On June 27, 1985, Rosengarten forwarded to the bank's counsel a copy of a construction loan commitment, together with a request that the bank extend the agreement to July 31, 1985 because of delays in obtaining building permits. Counsel for the bank agreed to this extension, but the Bigganses were not informed of it until July 16, 1985. On that date Rosengarten sent Mr. Biggans a copy of a letter to the savings and loan association which made the construction loan commitment, scheduling the settlement for July 30, 1985. The bank's counsel confirmed his understanding that the closing was scheduled. By letter dated July 22, 1985, and hand delivered, Rosengarten wrote to counsel for the bank and to the Bigganses confirming the July 30, 1985 settlement date. About the time this letter was being delivered, the Bigganses conveyed the property to another purchaser for the same price.
At trial Richmond testified that he was Moreschi's nominee, pursuant to a written assignment. Biggans testified that he was aware at least by June 18, 1985 that Richmond was one of the purchasers, and an exhibit was introduced, prepared by Mr. Biggans, dated June 18, 1985, showing a projection of settlement proceeds and listing the purchasers as "Francis M. Moreschi and Kenneth W. Richmond." No party, at any point during the trial, moved to modify the answer which admitted that Richmond was Moreschi's nominee.
At the end of the trial the parties were afforded the opportunity to file post-trial briefs. Thereafter the trial court filed a memorandum and an order entering judgment for the Bigganses. Post-judgment motions to reopen the ...