Deleon Enterprises, Inc. v. Zaino

BISHOP, Judge. This action involves two appeals and one cross appeal from judgments of the Circuit Court for Anne Arundel ⁴⁰³ County (Martin A. Wolff, J.). The first appeal is between appellant DeLeon Enterprises, Inc. (“DeLeon”) and appellees Beverly Zaino, individually and as Personal Representative of the Estate of Sophie Kramer, a/k/a Sophie Kramer Roth, Kramer Associates, et al. (“Kramers”). DeLeon appeals the decision of the Circuit Court denying its request, as the purchaser, to require the Kramers, the sellers, to specifically perform a contract for the sale of land.

The second appeal is between appellants Kramers and appellees Gary Hart & Associates, Ltd. (“Hart”) and Terry Black (“Black”). The Kramers appeal the decision of the Circuit Court ordering them to pay $4,100 attorney’s fees to Hart and Black. Cross-appellants Hart and Black claim the award was inadequate. FIRST APPEAL Issues Presented Appellant DeLeon asks the following questions: I. Given Maryland’s unflinching adherence to the objective law of contracts, may a trial judge vary the terms of an unambiguous, integrated contract by resorting to extrinsic evidence of what one party to the contract claims to have actually intended?

II

May a trial court refuse to enforce a contract because of a unilateral mistake by one of the parties to the contract?

III

May a trial court refuse to enforce specifically a contract for the sale of real estate because, in the view of the trial judge, the contract represents a bad deal? Statement of Facts Appellees listed the subject property, commonly known as 185 Green Street, Annapolis, Maryland (“the property”) for sale with Steffey Realtors, Inc. The multiple listing service (MLS) described the property as “185 Green Street” “L[ot] S[ize] 25' X 60'” “2 Units” “2B[ed] R[ooms].” ⁴⁰⁴ In 1967 Edward and Sophie Kramer acquired the property and additional properties by a deed which included three parcels of land and premises. The deed was recorded in the Land Records of Anne Arundel County at Liber 2071, Folio 305. Parcel No. 3, which includes the property, is 25' x 135'.

The description of Parcel No. 3 in the deed refers to “the building known as 185 Green Street,” “the dwelling known as 185 Green Street,” and “Known as 185 Green Street and intended to be that portion of the conveyance from ... Sarles and wife to Rosa Maggio by deed dated October 8, 1936 ... Liber F.A.M. No. 154, Folio 591....” The rear of Parcel No. 3 abuts with the rear of other properties known as 111-115 Main Street forming an “L” shape. There are two structures on Parcel No. 3.

Fronting on Green Street is a structure containing two apartments and bearing the house number 185. To the rear of this structure, about mid-span of Parcel No. 3, is a fence. Beyond the fence is a second structure that connects with the back of a structure located on the 113 Main Street property. The second structure bears the house number 185V2 and is used as a kitchen and for storage by Fran O’Brien’s Restaurant which occupies 113 Main Street.

Terry Black, a realtor for Gary Hart & Associates, alerted DeLeon that the property was for sale. DeLeon, whose father was a title attorney for most of his adult working life and whose brother is a real estate Settlement Officer, personally went to the tax office to obtain the liber and folio number; investigated tax information and maps and the land records; obtained a copy of the deed found at Liber 2071, Folio 305 dated April 15,1967; and viewed the property on several occasions. The proposed contract submitted by DeLeon, was prepared by Black on a Gary Hart & Associates contract form. After negotiations on the purchase price, the Kramers accepted the contract for the price of $85,000.

The contract described the property as “situate and lying in County Anne Arundel Subdivision 110 Liber 2071 Folio 305 State of Maryland being the property known as 185 Green Street ⁴⁰⁵ Lot 32 Block 17 Section 0291....” The Lot, Block, and Section refer to the tax map. The contract contained an integration clause. On or about the day of settlement, the Kramers became aware of the discrepancy between dimensions of the property they intended to sell, as identified in the listing agreement, and the dimensions of the property DeLeon intended to buy, as allegedly identified in the deed description of Parcel No. 3, and refused to close. DeLeon filed suit against the Kramers for breach of contract and sought specific performance.

The trial court found that the language of the contract was ambiguous with respect to the dimensions of the property and, therefore, admitted parol evidence of the intention of the parties. It found that there was no meeting of the minds as to the description of the property and held the contract unenforceable. In addition, the trial court held that even if the language of the contract was not ambiguous, specific performance should be denied. A mistake on the part of the Kramers would result in the Kramers losing double the size of the property they intended to sell for less than half of its value.

The difference in the $85,000 purchase price and $250,000 value of the property claimed by DeLeon would result in a windfall to him. DeLeon appeals from that judgment. Discussion I. DeLeon contends that the trial judge was clearly erroneous in concluding the contract was ambiguous and abused his discretion by looking outside the four corners of the contract to arrive at this conclusion. We disagree and hold that the trial court was not clearly erroneous when it found the language of the contract ambiguous and admitted extrinsic evidence.

Specific performance must be based on a valid and enforceable contract. Washington Homes, Inc. v. Baggett, ⁴⁰⁶ 23 Md.App. 167, 173 , 326 A.2d 206 (1974) cert. denied, 273 Md. 720 and 723 (1975). Although such a contract is a prerequisite, it is not sufficient to entitle a party to specific performance. Brooks v. Towson Realty, Inc., 223 Md. 61, 69-70 , 162 A.2d 431 (1960).

A contract entirely valid at law will not necessarily be enforced specifically by a court of equity____ “Facts that are not sufficient to invalidate a contract and that may nevertheless be sufficient to induce the refusal of a decree for specific enforcement are commonly segregated under such headings as mistake, innocent misrepresentation, unconscionable contract, inadequacy of consideration, harshness, oppression, sharp practice, overreaching, as well as hardship.” Id. To grant specific performance there must be a meeting of minds. This requires that the contract be clear, certain, and definite in all its essential and material terms. Klein v. Weiss, 284 Md. 36, 63 , 395 A.2d 126 (1978).

A description of the land sufficient to enable the court to identify and locate the parcel of land definitely and with certainty is an essential term in a contract for the sale of land. Maryland State Housing Co. v. Fish, 208 Md. 331, 334 , 118 A.2d 491 (1955) (quoting Helmik v. Pratt, 153 Md. 685, 690 , 139 A. 559 (1927)). See also Martin v. Michaels, 259 Md. 346, 349-50 , 269 A.2d 833 (1970). We begin our discussion of the contract in the case sub judice with a review of the applicable rules of construction.

General rules of construction of contracts apply to contracts for the sale of realty. Kasten Constr. v. Rod Enterprises, 268 Md. 318 , 301 A.2d 12 (1973). “The cardinal rule in the construction and interpretation of contracts is that effect must be given to the intention of the parties, unless it is inconsistent with some principle of law[.]” Id. at 328 , 301 A.2d 12 (citations omitted). For the purpose of contract interpretation, Maryland applies the theory of ‘objective law’ of contracts. Id.

(quoting ⁴⁰⁷ Slice v. Carozza Properties, Inc., 215 Md. 357, 368 , 137 A.2d 687 (1958)). This theory holds that the written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the subjective intent of the parties at the time the parties enter into the contract, if the language of the contract is clear and unambiguous, and free of fraud, duress, or mistake. Kasten, 268 Md. at 328 , 301 A 2d 12 (citing Ray v. Enrice, 201 Md. 115 , 93 A.2d 272 (1952)). Under these conditions the intent of the parties is determined by an objective test, namely, the meaning a reasonable person would attribute to the plain language of the contract.

Kasten, 268 Md. at 328 , 301 A.2d 12 (citing Slice, 215 Md. at 368 , 137 A.2d 687 ). Where the language of the contract is ambiguous and not clear, and doubt arises from the writing itself as to what the parties meant by the language employed, extraneous evidence of what the parties intended may be admitted to assist the court in determining the agreement of the parties. Missler v. Anne Arundel County, 271 Md. 70, 80 , 314 A.2d 451 (1974); Hardy v. Brookhart, 259 Md. 317, 326-27 , 270 A.2d 119 (1970). “This in no way controverts the principle that the written language ... alone will govern the rights of the parties ... if that language is, on its face, clear and unambiguous.” Missler, 271 Md. at 80 , 314 A.2d 451 . In addition, Maryland employs the following rule of construction when interpreting contracts. “It is a fundamental rule of contract construction that the entire contract, and each and all of its parts and provisions, must be given meaning, and force and effect, if that can consistently and reasonably be done.

An interpretation which gives reasonable meaning to all its provisions will be preferred to one which leaves a portion of the writing useless or inexplicable.” Orkin v. Jacobson, 274 Md. 124, 130 , 332 A.2d 901 (1975) (quoting 17 Am.Jur.2d Contracts § 259 (1964). ⁴⁰⁸ In the case sub judice, the contract described the property in three different ways: “situate and lying in County Anne Arundel Subdivision 110 Liber 2071 Folio 305, State of Maryland being the property known as 185 Green Street,” and “Lot 32 Block 17 Section 0291.” Although, land may be sufficiently described by proper reference to deeds or by a particular name by which it is known in the locality, Maryland State Housing Co., 208 Md. at 335 , 118 A.2d 491 (citations omitted), the descriptions in this contract are insufficient for a reasonable person to identify the parcel of land definitely and with certainty. The deed in the case sub judice contains descriptions of three distinct parcels of land, only one of which is claimed to be conveyed in the contract. DeLeon claims that Parcel No. 3 in its entirety is conveyed by the contract. Yet the references to “185 Green Street” and the corresponding metes and bounds provided in the description of Parcel No. 3 refer only to a single structure — “the southeast corner of the building known as 185 Green Street,” located at South 43° 30' West 165.02', North 46° 30' West 6.11', and “the southeast wall of the dwelling known as 185 Green Street” located at South 44° 23' West 26.02', North 44° 26 West 79.17'.

(Emphasis added.) The reference to the other structure (the structure attached to Fran O’Brien’s presently) contained within Parcel No. 3 is to “a dwelling on the herein described property” and is distinguished from the “northeast wall of 185 Green Street.” The only other reference to “known as 185 Green Street” found in the deed reads: “Known as 185 Green Street and intended to be that portion of the conveyance from ... Sarles and wife to Rosa Maggio by deed dated October 8, 1936 ... Liber F.A.M. No. 154, Folio 591....” In Neavitt v. Lightner, 155 Md. 365 , 142 A. 109 (1928), the Court addressed the issue of a reference deed contained within the deed actually conveying the property sold. The conveyance deed stated that the reference deed “is hereby made for a more full and perfect description of the property hereby conveyed.” The reference deed described the origi ⁴⁰⁹ nal tract of land as 213 acres.

The deed actually conveying the property described the tract as “two hundred and twenty acres, more or less.” A subsequent survey of the property established that the correct area of the tract was 17972 acres. The purchaser contended the property had been sold to him through misrepresentation, fraud, and concealment as to the number of acres and sought an abatement of the purchase price to compensate for the reduced number of acres. The Court denied relief, giving as part of its reasoning: “There is no doubt that a tract of land may acquire by reputation a name different from that which it bears in the patent, and may pass by such acquired name.” Huddleston v. Reynolds, 8 Gill, 332, 336 ; Cadwalader v. Price, 111 Md. 310, 315 [ 73 A. 273 ]. Again the deed to the appellant [purchaser] was made to conform more closely to the situation of the property at the time of its sale by describing the tract conveyed as adjoining the lands of the successors in title of those similarly named in the [referenced deed].

It thus appears that the reference to the [referenced deed] “for a more full and perfect description” was a mere conveyancer’s inaccuracy, and was chiefly useful as giving the chain of title. By calling the tract by name which it had acquired, and giving its boundaries ..., the property intended to be conveyed was identified, and a subsequent defective description or mistaken reference will not vitiate the contract description or defeat the conveyance as intended, but will be regarded as surplusage. Creswell v. Lawson, 7 G. & J. 227 , 252____ As has been frequently decided, in construing the provision of a deed they must be considered as a whole, and very little stress is to be placed on words of recital and general description as to the extent of a conveyance where there is a particular description____ Neavitt, at 374-75, 142 A. 109 . The Court found that the referenced deed was not controlling.

The final description of the property in the contract is a reference to the tax map. The tax map, however, does ⁴¹⁰ nothing to cure the ambiguity created by the contract between the deed description and the contract description of the property “known as 185 Green Street.” In addition, since the tax map clearly states that it should not be used for the purpose of providing a legal description, we decline to find that the trial court erred in excluding its use for that purpose. In summary, the reference to the deed, Liber 2071 Folio 305, by itself does nothing to identify definitively the property to be sold by the contract for sale since it describes three distinct parcels of land only one of which is alleged to be conveyed by the contract. In addition, the description of Parcel No. 3 in the deed contains the same words used to describe the property in the contract — “known as 185 Green Street” — but uses these words only to refer specifically to the house in the southern end of Parcel No. 3 and not to the other structure or land upon which it sits.

For these reasons, we hold that the trial judge was not clearly erroneous in finding that the contract was ambiguous and going beyond the four corners of the document to determine the intent of the parties. “In the event of ambiguity in the terms of a contract, the courts must necessarily look to the intentions of the parties at the time of the making of the contract.” Hardy, 259 Md. at 326-27 , 270 A.2d 119 . A review of extrinsic evidence is more than sufficient to support the judge’s finding that the Kramers intended to sell only the dwelling known as 185 Green Street and the 25' X 60' parcel upon which it sits, including the land up to the fence that divides the front and back halves of Parcel No. 3. The listing advertizing the property in the MLS describes it as “185 Green Street” “L[ot] S[ize] 25' x 60'” “T[otal] F[eet] 1565'” “2 Units” “2B[ed] R[ooms].” DeLeon, the attorney for the estate of Sophie Kramer Roth, an employee of Fran O’Brien’s, and the real estate listing agent testified to the following facts. There was a five foot high fence dividing the 25' x 60' front parcel from the rear parcel.

The structure on the back parcel bears the house number 185V2. It is connected to Fran O’Brien’s building ⁴¹¹ addressed as 113 Main Street, and has been leased to and used by Fran O’Brien’s for several years. In addition, testimony to define the boundaries of the property by local reputation was solicited from the listing agent, who was a resident of the neighborhood, and the attorney for the estate of Sophie Kramer Roth, who at one time considered purchasing the property. They testified that they understood “185 Green Street” to consist of the front building with two apartments and the parcel of land up to the dividing fence.

The evidence is also sufficient to support the trial court’s finding that DeLeon intended to purchase the entire Parcel No. 3, including both buildings numbered “185”, and “185%”, and the land measuring 25' X 135'. DeLeon testified to this intent, and presented deeds and tax maps upon which he relied in concluding that 185 Green Street was situated on a 25' x 135' parcel. m Because the description of the property, which is an essential term in a contract for the sale of land, was not clear, certain, and definite, there was no meeting of the minds of the parties. The Kramers did not intend to sell the 25' X 135' parcel DeLeon intended to buy and DeLeon did not intend to buy the 25' X 60' parcel the Kramers intended to sell. Thus, no contract was formed and specific performance should not be granted.

A court of equity will decree specific performance almost as a matter of course if the terms of the contract are clear and unobjectionable____ Nevertheless, the discretion of the court will be exercised to deny relief where to grant it would be to compel the defendant to perform a contract which he did not intend to make or which he would not have entered into had its true effect been understood. Brooks, 223 Md. at 70 , 162 A.2d 431 (quoting Perlmutter v. Bacas, 219 Md. 406, 411 , 149 A.2d 23 (1959)). Based on our disposition of Issue I, it will not be necessary for us to address the other two issues. ⁴¹² SECOND APPEAL AND CROSS APPEAL Issues Presented Kramers raise the following issues: I. Did the trial court err in entering a judgment of sanctions against the Kramers and in favor of appellees Hart and Black, when there was no bad faith, the case was based on substantial justification and there was no adverse motive in filing the third party complaint?

II

Did the trial court err in awarding the sum of $4,100 as sanctions against the Kramers and in favor of Hart and Black? Cross-appellants Hart and Black make the following assertions: III. The Kramers had no substantial justification to continue litigating, and to bring to trial, a third party complaint for negligent representation and wilful misrepresentation where they had no knowledge, proof or evidence of any misrepresentation and where the party to whom the