Margaret Ryan v. Patricia Lewis

IN THE COURT OF COMMON PLEAS OF THE STATE OF DELAWARE

lN AND FOR SUSSEX COUNTY

l\/IARCARET RYAN,

Plaintiff,
C.A. No. CPU6-'l4-iltl0l3()

PATRIClA ]. LEWIS,

\/\/\/\./\./\./\./\_/

Defend ant,

Submitted june 24, 2014
Decid@d july `,18, 2014

patrick Scanlon, Esqcrire, counselfor Plaz`ntz`jj”
Wz'llz`anz B. Wilgzls, Esquire, counselfor Defendant

DECISION AFTER TRIAL

In this action to collect on an alleged debt, the Court is called upon to determine
whether Defendant is in default for non-payment of a promissory note. Following the
]une '17, 2014 bench trial, the Court reserved decision and requested the parties to
submit briefs as to whether the Court may imply a reasonable time for performance
under the circumstances of the case. 'l`his is the Cotlrt's clecisioii following a review of

the relevant law and evidence presented by the parties.

FACTUAL BACKGROUND

On june 17, 2014, the Court held a bench trial regarding this action filed by
Margaret Ryan ("Plaintiff”) against Patricia Lewis (”Defendant"). Per the February 14,
2014 Complaint, Defendant is in default for non-payment of the Promissory Note
("Note") signed by the parties and notarized on july 6, 201]. The Note indicates that
Defendant owes Plaintiff $29,000.00 in repayment of a loan that Defendant used to
purchase a mobile home located at Rehoboth Bay Parl< in Rehoboth Beach, Delaware. At
trial, Defendant admitted that she owes $29,000.00 to Plaintiff. As of the date of trial,
Defendant has not made any payments on the Note. Per the Complaint, Plaintiff
requests the Court to award her $27,()00.00 in damages' with costs, fees, post-judgment
interest at the legal rate and attorney's fees?.

The parties are two women of advanced age who have known each other for
approximately twenty years. l°’laintiff loaned Defendant the money to purchase the
Rehoboth Beach mobile home because Defendant wanted to reside to Delaware, but

could not afford to purchase a residence without financial assistance On july 6, 2011,

' 'l`he Complaint prays for $27,000.00 in relief. The sum of $30,000.00 is typewritten in the Note as the
amount owecl. 'l`liat aniount is crossed out and rep|acecl by the sum of $29,00().00 which is initialed by
each party. Sct’ l’laintiff's "l".xliitvit l"_ /\t tria|, l’laintiff testified that she changed the amount owed to
$27,000.00, but does not reniembei' when this occurred or her reason for doing so. Sue l’laintiff's ”lixhibit
2". Noting the error as to the damage request immediately before trial, l’laintiff motioned to amend the
Cornplaint to reflect the clamage amount as stated in the Note prior to l’laintiff's unilateral anieiidn\ents_
l)efendant objected to the niotioii. 'l`he Court denied l’laintiff's motion as untimely because l’laintiff had
ainple time between the filing of the (_`oiiiplaiiit and the date of trial to 'aniencl the Complaint.

3 ”lf the indebtedness evidenced by this [’rtiiiiissory l\lote is collected ivy or through an attorney, the
lloltiei' shall be entitled to recover reasonable attorney’s fees to the extent perniittecl by applicable lavv'."
$i't' l’laiiitiff's "l§)<liibit l".

the parties signed a Note which states, in pertinent part, that "[this] loan and
promissory note is to purchase a 1987 single wide Schult trailet [sic]...The [sic] Patricia
]. Lewis shall pay a lum [sic] sum of the loan upon selling of [sic] her property in
Surfside, l\/lyrtle Beach, Ner-th-Qarel~ina, S.C.".~l Upon executing the agreement, both
parties were aware that the S0uth Carolina property was on the market and the
property would be sold in the normal course of business. The parties were also aware
that the property was marketable and that Defendant had accepted an offer shortly
before the execution of the loan, however, that sale later fell through.

Two months after the execution of the agreement, Defendant took the South
Carolina property off the market because other homes in the area were not selling
quickly." Defendant has not relisted the property since that time. Rather, Defendant has
leased out and collected rental income on the property since approximately September,
Z()ll.

'I`hereafter, Deferidant sold the mobile horne in Rehoboth Beach for $29,000.()0,
the amount Plaintiff loaned her to purchase the property. Defendant, moved into an
apartment in Rehoboth Beach and used the proceeds of the sale to pay for her living

expenses and repairs to her commercial properties in Peniisylvariia.

"S¢‘c Plailitiff's "lixliibit 2".

l At trial, l\'larla l_)il$zittistzi, l~’lziiiitiff's friend and an acquaintance of I)efeiiclaiit, testified that she
overheard [)efeliciaiit explain to Plaintiff when and why she took the South Carolitia tvroperty off the
market. ()n cross~exariiiriation, l)efericiziiit was repeatedly asked when she took the South Caroliiia
tvr<_)riertrv off the niarket. l)efendant's answers were rion-l'esidonsive. '[`he (`oilrt finds Ms. t)il$zittista's
testiniony credible and gives no \~veiglit to l')efv.nitlarit's testinioriy on this issue.

'.¢J

In ]uly, 2012, Defendant and her home owners' association were named as
Defendants in a personal injury action for an injury that allegedly occurred at the South
Carolina residence.§ Defendant testified that she was advised not to list the property for
sale during the pendency of the lawsuit. As of the date of trial, the lawsuit is still
pending and Defendant has not listed or sold the South Carolina residence.

DISCUSSION

'I`o prevail on a breach of contract claim, a plaintiff must prove three (3) elements
by a preponderance of the evidence:

(1) the existence of a contract, whether express or implied;
(2) the breach of an obligation imposed by the contract; and
(3) resultant damage to the plaintiff."

In this case, there is no dispute that the parties entered into a contract.’ Thus, the
issues presented to this Court are: (1) whether Defendant satisfactorily performed her
duties under the contract, and (2) if Defendant breached her contractual duties, whether
Plaintiff is owed any damages

At trial, Plaintiff argued that the time for performance was not expressly stated

in the contract and, therefore, the Court could infer a reasonable time for perforrnance.

5 Sec l)efendant's "lixliibit l".

" W.IW Tccli)rolci£<;_z/, I.I.C z). Heziil¢'!f- P¢lcl<zzrd Cr)., 840 /\.Zd 606, 612 {Del. 2(](]3).

7 "lt is a common sense rule that promissory iiotes are a variety of coritract and are to be so construed and
enforced." Hml Brznk, 558 i). l.cit'ks, 791 /\.2d 752, 757 fn. 13 (Del. Ch. 2000) (citatioiis and quotations
oniitteci)_

Defendant argued that the conciitioii triggering Defendant’s obligation to pay has not
yet occurred and, therefore, Defendant has not yet breached the agreement. Defendant
further argued that the Court may not review extrinsic evidence in deciding whether
Defendant has breached because the contract is unambiguous as to Defendant’s
contractual obligations.

After a review of the law, the Court finds Defendant's argument unpersuasive.
Defendant maintained exclusive control over the sale of the South Carolina residence
which is the condition preceding Defendant’s obligation to repay the loan. ln other
words, Defendant suggests that satisfaction of this condition is at her convenience.

ln cases where the contract is silent as to the time for performance and in cases
where satisfaction of the contractual obligations is at the convenience of one of the
parties, the law allows the trial court to infer a reasonable time for performance ”If a
contract does not include a performance tlate, courts will imply that performance must
occur within a reasonable time."~“ Additionally, ”a contract to make payment at the
convenience of the debtor does not necessarily mean that payment need never be made,
if not convenient."" "The law considers such a contract to mean that payment should be
made after a reasonable time.""‘ "What constitutes a reasonable time is determined on a

case~by-case basis. 'l

5 Cee¢l v /Vl<)_l/¢')', 2012 Wl. 4857367, at *4 (l)el. 811 per_ (,)L`t. l[], 2()`12) (Coocli, R.j.) (citatioiis omitted).

" A/lrilri_f'rr)iiti` i). 'l'iirer:_i/, 1991 W|. 2|5()()(], at "`3 ([)el. Super, /\pri| 22, 199 l) (l ler|ihy, _I.) (citations omitted).
m SL’L' fd.

" $rv L}om{, 2012 Wl. 48573()7, at *4.

'J\

The Court also takes instruction from the Superior Court's decision in Ray z)_
flarris which states, in pertinent part:

The Court's role in reviewing contracts is to ascertain the shared intention
of the parties. Generally, contracts are to be read as a whole, and are
assumed to be self-contained. If the language of the contract is "clear and
unambiguous" the ordinary meaning of the words and terms govern the
parties' intent. The presumption that the parties are bound by the
language of the agreement they negotiated applies with even greater force
when the parties are sophisticated entities that have engaged in arms-
length negotiations. Parties are considered ”sophisticated" entities and
businesspeople when, for example, they are extensively experienced in
their industry and have ample access to counsel.

However, in the last twenty years, several Delaware Supreme Court
decisions strongly suggest a trend toward allowing leniency in the
traditionally strict rules of contract interpretation in some situations.
Delaware has abandoned the usual "four corners" of the contract
approach for the modern view where extrinsic evidence is imperative to
contract interpretation because the primary search is for the common
meaning of the parties, not one imposed by law, and the meaning of
words used in an agreement can only be known through an appreciation
of the context and circumstances in which they were used.‘z

ln this case, as in Ra_i/, supra, the agreement was contemplated and drafted by
unsophisticated parties using sparse language that is suggestive of outside contexts.“
l\/loreover, the Note memorializes a loan from one elderly friend to another without the
aid of courrsel.“ Given these facts and the absence of a contract provision expressly

stating the time for performance, the Court may look beyond " the four corners" of the

'-’ Ra_i/ ?>. ll¢irris, 2008 WL ]UZOS, at "3-4 (Del. Stiper. l~`eb. 26, ZOOS)(Witliain, R._].)
ll .“>`t't’ t¢f.
" .§1‘¢‘ flf.

l\lote and consider evidence of the circumstances and context of the agreement to
determine the parties' intent as to a reasonable time for performance.'~"

On july 6, 2011, the parties signed the Note which states, in pertinent part, that
”[this] loan and promissory note is to purchase a 1987 single wide Schult trailet
[sic]..."l`he [sic] Patricia ]. Lewis shall pay a lum [sic] sum of the loan upon selling of
[sic] her property in Surfside, l\/lyrtle Beach, Neir-th-Garel»ina, S.C.”.‘° At the time of
execution, it was the parties’ understanding that the South Carolina residence was
marketable and would be sold in the ordinary course of business. ln fact, Defendant
had accepted an offer prior to the signing of the Note.

The Court finds that, at the time of contracting, the parties did not contemplate
that Defendant would take the South Carolina property off the market two months after
the execution of the agreement and thereafter collect rental income on the property or
that Defendant would sell the Rehoboth Beach mobile home and use the proceeds to
fund her living expenses and repair her investment properties. The Court further finds
that the parties did not intend that Defendant would postpone payment for three years
because she was advised to relist the South Carolina property only after termination of
the personal injury suit. l\/loreover, no evidence was presented to the Court to

demonstrate that Defendant could not, by statute or otherwise, relist and sell the

"' “[S]litiuld the Court construe the provisions in L]Liestioii to be silent on the time of performance of the
condition, then, the law would presume iiert'oriiiaiicr\ of the condition was intended within a reasonable
time. 'f`he evidence of the oral agreement would then be c‘videiice of what the parties considered would
be a reasonable time for performance of the coiulitioii." (`.liirl\')i)ri)) z', Hu!;iiirrii, 51 /\.2(1487, 491 (]947).

'*" Sn' l’laintiff's "l§><liiliit 2".

property. Clearly, Defendant controls when she sells the South Carolina property and,
therefore, mistakenly believes that payment may be postponed indefinitely

The law presumes that performance is intended within a reasonable time. lt does
not imply that Defendant may repay the loan when it suits her or otherwise permit
Defendant to hold her contractual obligations hostage for several years, Defendant must
complete her obligations within a reasonable time. Given the facts as stated above, the
reasonabie time as intended by the parties has passed. Therefore, the Court finds that
Defendant has breached her duty to make timely payment Plaintiff is entitled to
damages in the requested amount of $27,0()0.00.

CONCLUSION

The Court enters judgment in favor of the Plaintiff, Margaret Ryan, for $27,000.00
against the Defendant, Patricia Lewis, with costs, fees, post-judgment interest at the
legal rate and reasonable attorney's fees. Plaintiff's counsel shall have thirty (30) days to
submit an affidavit regarding his fees.

IT IS SO ORDERED, this /%/day of ]uly, 2014.

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,»~@ _ j __ /
Th I-lonorabl Ros mary Betts