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Morton v. Rogers

Court of Chancery of Delaware

February 22, 2018

Daniel F. Morton, Jr.
v.
Ernest L. Rogers, Jr, Tammie L. Rogers, and Charles Douglas Morton, Jr.

          Submitted: November 30, 2017

          Dorey L. Cole, Esquire Moore & Rutt, P.A.

          Dean A. Campbell, Esquire Law Office of Dean A. Campbell, LLC

          Dear Counsel:

         Daniel F. Morton, Sr. (hereinafter "Daniel") filed a petition against Respondents Ernest Rogers, Jr. (hereinafter "Ernest"), Tammie Rogers (hereinafter "Tammie"), and Charles Douglas Morton, Jr. (hereinafter "Charles), on August 22, 2017 seeking a declaratory judgment confirming the validity of a contract for the sale of real property, specific performance of the sales contract, alternative relief and damages, costs and attorney's fees based upon intentional misrepresentation, equitable fraud, common law fraud and civil conspiracy.[1] Pending before me is Respondents' October 12, 2017 motion to dismiss the petition under Court of Chancery Rule 12(b)(6). Respondents argue that Daniel has failed to state a claim for specific performance because the contract lacks definite essential terms and is unenforceable, and once specific performance is denied, the other claims should be dismissed for lack of subject matter jurisdiction because those claims seek remedies at law. The motion is fully briefed.

         I recommend that the Court deny Respondents' motion to dismiss. This is a final report.

         BACKGROUND

         Daniel entered into an alleged contract to purchase approximately two acres of land from Ernest and Tammie (hereinafter "two-acre property"), which was part of the 118 acres they owned on the west side of Blacksmith Shop Road in Greenwood, Delaware, in June 2014. The contract is memorialized in two receipts dated June 17, 2014 and October 8, 2014 and signed by Daniel and Ernest. The June 2014 receipt stated:

I DANIEL F. MORTON ON THIS DAY OF JUNE 17, 2014 GIVE TO ERNIE ROGERS [$]1, 000.00 TOWARD THE PURCHASE OF LAND, SOUTH AND ADJACENT TO CHARLES, CHUCK, MORTON. THIS LAND CONSIST[S] OF PLUS OR MINUS (2) ACRES, MEASURING 284 ft. BACK FROM ROAD
(BLACKSMITH SHOP ROAD) AND APPROXIMATELY 300' PLUS ON FRONT DEPENDING WIDTH OF RIGHT OF WAY [letters scratched out] OR SERVICE LANE REQUESTED BY MR. ROGERS.

         The October 2014 receipt provided:

I DANIEL F. MORTON GIVE TO ERNIE ROGERS THE 2nd$1, 000.00 PAYMENT TOWARD THE PURCHASE OF LAND, SOUTH AND ADJACENT TO CHARLES MORTON. THIS LAND CONSIST[S] OF PLUS OR MINUS (2) ACRES, MEASURING 284 FEET BACK FROM BLACKSMITH SHOP ROAD AND APPROXIMATELY 300' PLUS ON FRONT DEPENDING ON WIDTH OF MR. ROGER'S RIGHT OF WAY OR SERVICE LAND TO THE SOUTH AS REQUESTED BY MR. ROGERS. THIS IS THE SECOND PAYMENT AND WE ARE CURRENTLY WAITING FOR AN OFFICAL [sic] SURVEY. THIS PAYMENT IS TOWARD THE ORIGINAL AGREED PURCHASE PRICE TOTAL OF [$]29, 500.00 (TWENTY NINE THOUSAND, FIVE HUNDRED DOLLARS), WHICH WASN'T NOTED ON THE FIRST RECEIPT.

         Daniel asserts that the parties originally agreed to settle "after completion of the survey and subdivision, " but "at the Rogers' request the parties agreed instead for Daniel to begin making monthly payments toward the purchase price, with settlement to occur at such a time as the purchase price was paid in full."[2]

         In addition to the June and October 2014 payments, Daniel made 26 monthly payments towards the purchase of the two-acre property between December 2014 and January 2017.[3] Daniel provided written receipts for each payment, with Ernest signing each receipt, sometimes after the notation "payment received by" or "received by."[4] Ernest and Tammie owned the two-acre property by joint tenancy with the right of survivorship. Tammie did not sign any of the receipts. Daniel alleges that Tammie "was present during [the contract's] negotiation and execution and [she] provided every indication that she accepted its terms and Mr. Rogers' authority to bind her to the same."[5] He also asserts that Tammie was present "almost every time a monthly payment was delivered and accepted" by Ernest, and, on occasion, Ernest would hand the funds directly over to Tammie.[6]

         Daniel contends that he contacted the Rogers about completing the survey and purchase of the two-acre property in the spring of 2016, but they indicated the "survey could not be completed until after the first of the year" because of the terms of an existing farm lease that would expire on December 31, 2016.[7] Daniel presented evidence that his son, who he intended to live on the property, had house plans drawn up in July 2016 to build a house on the 2-acre property.

         Through a deed dated November 10, 2016, Ernest and Tammie transferred their entire 118-acre property, without payment of monetary consideration and without reserving the two-acre property, to Charles. Subsequent to that transfer, the Rogers continued to accept monthly payments from Daniel on the two-acre property on November 21, 2016, December 20, 2016, and January 20, 2017. Daniel claims that, between January 20th and mid-February 2017, he received permission from the Rogers to survey the two-acre property and, on one occasion, Charles joined him to assist with the measurements in placing corner markers on the property but did not inform Daniel that the Rogers had deeded the entire 118-acre property to him. During the same time, the Rogers began asking to extend the proposed service lane from 10-15 feet to 40-50 feet. Then in mid-February 2017, Charles asked Daniel to contact a particular attorney, and the attorney told Daniel about the transfer between the Rogers and Charles, which the attorney said was a gifted transaction, and stated his view that the contract was unenforceable and invalid.

         ANALYSIS

         A. Standard of review for failure to state a claim under Rule 12(b)(6)

          The Court may dismiss parties' claims for failure to state a claim under Court of Chancery Rule 12(b)(6). The facts for purposes of the motion to dismiss under Rule 12(b)(6) are drawn from the complaint and all well-pled allegations in the complaint are assumed to be true and the petitioner receives the benefit of all reasonable inferences.[8] Conclusions in the complaint are not accepted as true without allegations of facts to support them.[9] But vagueness or lack of detail are not sufficient grounds alone to dismiss for failure to state a claim so long as the complaint provides the defendant with notice of the claim.[10] Failure to plead an element of a claim is grounds for dismissal of that claim.[11] A broad brush must be used in determining sufficiency of claims - whether a plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof.[12] If recovery on a particular claim is not reasonably conceivable, then the Court grants the motion and dismisses that claim under Rule 12(b)(6). If recovery is reasonably conceivable, the motion to dismiss is denied.[13]

         B. Standard of review for specific performance

         Daniel seeks specific performance of his contract with the Rogers for the sale of the two-acre property.[14] A party seeking specific performance of an agreement for the sale of real estate must establish by clear and convincing evidence that he has a valid contract, he is ready, willing and able to perform his obligations under the contract, and that the balance of equities tips in his favor.[15]He must also show that no adequate legal remedy exists.[16] Specific performance is an "extraordinary remedy" available at the discretion of the court.[17] The legal standard here is whether it is reasonably conceivable that Daniel can establish a right to specific performance of the real estate contract by clear and convincing evidence.

          C. Is it reasonably conceivable that Daniel can prove a valid contract exists for specific performance?

         The essential terms of a real estate contract are the names of the buyer and seller, description of the property to be sold, sales price or the means of determining the price, the terms and conditions of the sale, and the signature of the party to be charged.[18] Specific performance will not be granted if the terms of the contract are unclear or if the court has to supply the meaning to essential terms of a contract.[19] In determining whether contract terms are sufficiently definite to support specific performance, the court avails itself of the usual contract construction aids, including common usage, reasonable implications of fact, and consideration of the uncertain part of the contract "in its relation to the contract as a whole."[20] Ambiguity can be explained by oral testimony or other evidence, and the intention of the parties disclosed by "presumptions arising in the light of the facts and circumstances and by the use of common sense."[21] An agreement may be enforceable "even where some of its terms are left to future determination."[22]

          Respondents argue that Daniel's claim for specific performance fails because the real estate contract lacks sufficiently definite essential terms to be enforceable. Respondents claim the missing essential terms are a definite settlement date, a sufficiently detailed description, and Tammie's signature. They also contend that the absence of Tammie's signature violates the Statute of Frauds and, without her signature, the contract is unenforceable because Ernest, a joint owner with the right of survivorship with Tammie, did not have the legal capability to convey the property since the contract intended the sale of a "fee simple interest."[23] Further, they assert that the need to obtain third-party approvals prior to conveyance of the two-acre property - for the subdivision from the county's planning and zoning office and for an entrance permit from the Delaware Department of Transportation (hereinafter "DelDOT") - precludes specific performance.

         Daniel responds that the two-acre property is uniquely suited to meet Daniel's purpose, and that the contract addresses all of the essential terms. He asserts that the June and October 2014 receipts memorialize contract terms, including the $29, 500 price, sufficiently describe the property, and contain Ernest's signature. He further argues that the settlement date was to occur when the price was paid in full, which the parties could ascertain based upon the payment arrangement; the survey and subdivision are not material to specific enforcement of the sales contract; the Rogers are equitably estopped from claiming the lack of a survey and subdivision as deficiencies invalidating the contract, since they prevented Daniel from obtaining the survey until the end of 2016; and Tammie, through her words and acts, evidenced her agreement to the contract and held Ernest out as having apparent authority to act as her agent. Further, Daniel claims that partial performance through his payments, and the Rogers' acceptance of those payments, at generally monthly intervals from June 2014 through January 2017, excepts the contract from the Statute of Frauds requirement that contracts for the sale of lands be signed by the person(s) charged. And, even if it is determined that only Ernest is bound by the contract, Daniel alleges that Ernest's share of the joint tenancy can be severed through his actions and a tenancy in common created though the sale of Ernest's one-half interest in the property.

         Here, I conclude it is reasonably conceivable Daniel can prove, by clear and convincing evidence, that a valid contract exists for purposes of awarding specific performance. First, I do not find Respondents' argument that the lack of an exact settlement date invalidates the contract persuasive. Courts have not always required that a real estate contract contain an exact settlement date, but instead have looked at whether the parties' intention as to the timing of the settlement can be determined.[24] In Walton v. Beale, a draft written contract between the parties contained a settlement date; however, that date had long since passed without a new date being set.[25] The Court found that since the parties "either had or planned to set a settlement date" at all times after the draft contract was prepared and before the dispute arose, the settlement date was sufficiently definite.[26] The Walton Court looked beyond the expired date in the draft contract to determine the parties' intentions - or plans - as to the timing of settlement, based upon the circumstances surrounding their agreement. Here, it is reasonably conceivable that evidence can be presented to show the parties' intentions concerning the timing of settlement.

         The Court's holding in Pulieri v. Boardwalk Properties, LCC concerning the definiteness of the timing of the property transfer is distinguishable from this case. In Pulieri, property was transferred between the parties under an oral agreement with the obligation that it be transferred back "upon the happening" of certain conditions (when the financial health of certain entities improved and when a particular individual's interests in those entities had been removed).[27] The Court found that the timing of retransfer was not sufficiently definite to prove specific performance because "upon the happening" was not defined, there was no metric specified for discerning when the financial health of the entities had improved, and the exact entities involved were not defined.[28]

         Unlike the Pulieri case, here, the parties' obligations were not controlled by vague metrics or factors. It is reasonably conceivable that, as Daniel asserts, the settlement date was to occur when the price was paid in full, and that the parties planned to set a date, based upon the payment history and practices associated with the contract.[29] I conclude that it is reasonably conceivable that, in this case, ...


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