Fischer v. Heymann

12 N.E.3d 867 (2014)

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Facts

This is the second appeal in protracted litigation over the breach of a real-estate sales contract. On February 4, 2006, Ds agreed to buy a condominium from P for $315,000. They signed a purchase agreement, and Ds paid $5,000 in earnest money. Ds could terminate if P refused to fix any 'major defect' discovered upon inspection, but did not permit them to terminate if P refused to perform 'routine maintenance' or make 'minor repairs.' Ds demanded that P fix an electrical problem after an inspection report revealed electricity was not flowing to three power outlets. Ds thought this was a 'major defect' under the Agreement and conditioned their purchase on P's timely response. P failed to timely respond to their demand but eventually fixed the problem for $117 on February 20. Ds tendered a mutual release. P refused to sign the release and later sued for specific performance, or damages in the alternative, on May 9, 2006-two days before the original date of closing. The court found that Ds reasonably believed the electrical problem was severe, which justified their termination of the Agreement. A divided panel of the Court of Appeals disagreed. The panel held that Ds' demand itself breached the Agreement because the demand stemmed from an objectively unreasonable belief that the electrical problem was a 'major defect.' The Court of Appeals reversed and remanded for the trial court to determine damages. P sought $306,616.73 in total damages, attorney fees, and court costs. This represented the difference between Ds' purchase price of $315,000 and the 2011 sale price of $180,000, $12,333.89 in closing costs, $139,075.54 for the cost of maintaining the condo from 2006, when the deal fell through, until 2011, when she sold the property, $11,222.50 in attorney fees and $8,984.80 in court costs. The court concluded P failed to mitigate her damages because she could have accepted an offer to sell the condo in 2007 for $240,000, instead of waiting to sell it in 2011 for only $180,000. Had she sold in 2007, she could have avoided all the carrying costs and maintenance expenses she incurred between 2007 and 2011. It ruled that P was only entitled to $93,972.18-the difference between the original $315,000 selling price and the $240,000 offer, plus all carrying costs, expenses, and attorney fees that accrued from the moment of breach until P rejected the $240,000 offer. P appealed.

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