Staples v. Conley

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

HAMILTON STAPLES AND KIMBERLY WOOD-STAPLES,
Plaintiffs/Appellants,

v.

ROSSANA CONLEY AND CARL CONLEY,
Defendants/Appellees.

No. 1 CA-CV 23-0439
FILED 04-23-2024

Appeal from the Superior Court in Yuma County
No. CV2022-00257
The Honorable Mark W. Reeves, Judge

VACATED AND REMANDED

APPEARANCES

Hamilton Staples and Kimberly Wood-Staples, Rotonda West, Florida
Plaintiffs/Appellants

Rossana and Carl Conley, Las Cruces, New Mexico
Defendants/Appellees
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Decision of the Court

MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Jennifer B. Campbell joined.

B R O W N, Judge:

¶1 Plaintiffs Hamilton Staples and Kimberly Wood-Staples
(“Buyers”) challenge the superior court’s order granting summary
judgment against them on their claims for breach of contract and specific
performance of an agreement to purchase land from defendants Rossana
and Carl Conley (“Sellers”). For the following reasons, we vacate the order
and remand for further proceedings.

BACKGROUND

¶2 In February 2022, the parties entered an agreement
(“Contract”) in which Buyers agreed to purchase a 45-acre parcel of land in
Yuma County (“Property”) from Sellers. Although the parties did not use
agents for the transaction, the Contract is a 10-page form “Vacant Land/Lot
Purchase Contract” apparently originating with a real estate organization.
The $93,750 purchase price would consist of $1,000 in earnest money to be
paid to the title company upon ratification of the Contract, a $24,000 down
payment to be paid at the close of escrow, and $68,750 to be financed by
Sellers.

¶3 The Contract designated Chicago Title Agency Inc. (“Chicago
Title”) as the title company and listed April 25, 2022, as the close of escrow
date (“COE”). Under the Contract, Buyers were required to:

deliver to Escrow Company a cashier’s check, wired funds or
other immediately available funds to pay any down payment,
additional deposits or Buyer’s closing costs, and instruct the
lender, if applicable, to deliver immediately available funds
to Escrow Company, in a sufficient amount and in sufficient
time to allow [closing] to occur.

At Buyers’ request, however, the Contract also stated that “time is not of
the essence in the performance of the obligations described herein.”
Addressing remedies, the Contract contained a cure period, stating:

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A party shall have an opportunity to cure a potential breach
of this Contract. If a party fails to comply with any provision
of this Contract, the other party shall deliver a notice to the
non-complying party specifying the non-compliance. If the
non-compliance is not cured within three (3) days after
delivery of such notice [], the failure to comply shall become
a breach of Contract.

¶4 Escrow did not close on April 25, 2022, and there is some
indication that Buyers wished to use a different title company. In May 2022,
Buyers filed a complaint in superior court alleging that Sellers had breached
the Contract by failing to perform certain obligations before the planned
COE and had since refused to comply with the Contract. Buyers requested
specific performance, breach of contract damages, and a temporary
restraining order preventing Sellers from transferring, selling, or
encumbering the property until the lawsuit had reached resolution. In their
answer, Sellers denied that they failed to perform their contractual
obligations and raised several defenses.

¶5 Soon after, Sellers moved for summary judgment, asserting in
part that “[p]erformance of the contract became impossible due to” Buyers’
failure to “deposit the requisite $1,000” earnest money. The motion
included an affidavit from Sellers stating that Buyers “never attempted to
deposit the $1,000.” Buyers opposed the motion, including with an
affidavit declaring that “during the end of the week of February 21, 2022,”
they mailed Sellers a $1,000 check payable to Chicago Title. Alternatively,
Buyers argued Sellers could not properly claim breach based on lack of
earnest money because they failed to notify Buyers of the breach under the
Contract’s three-day cure provision.

¶6 After oral argument, the court granted summary judgment
for Sellers and dismissed the case with prejudice. The court explained that
because Buyers failed to pay the earnest money, which was “denoted as
consideration” in the Contract, “there was never a contract in existence to
be breached.” Buyers timely appealed the final judgment, and we have
jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶7 Summary judgment is proper “if the moving party shows that
there is no genuine dispute as to any material fact and the moving party is
entitled to judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We review
the superior court’s entry of summary judgment de novo, viewing the

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evidence and reasonable inferences in the light most favorable to the non-
moving party. Zambrano v. M & RC II LLC, 254 Ariz. 53, 58, ¶ 9 (2022).
Contract interpretation is a question of law, which we review de novo.
Worldwide Jet Charter, Inc. v. Toulatos, 254 Ariz. 331, 334, ¶ 9 (App. 2022).

¶8 Buyers argue a genuine dispute of material fact exists as to
“who has or had possession of the earnest money.” But even assuming
Buyers did not deposit the earnest money, the court erred in concluding
that the Contract failed for lack of consideration. It is generally accepted
that “mutual promises are adequate consideration to support an
enforceable contract.” See Cook v. Cook, 142 Ariz. 573, 578 (1984) (citing
Palmer v. Kelly, 52 Ariz. 98, 103 (1938)); see also Restatement (Second) of
Contracts § 75 cmt. a (1981) (“In modern times the enforcement of bargains
is not limited to those partly completed, but is extended to the wholly
executory exchange in which promise is exchanged for promise.”). Here,
the parties’ promises to buy and sell the property suffice as consideration,
meaning the Contract was not unenforceable based on a lack of
consideration. See Queiroz v. Harvey, 220 Ariz. 132, 138, ¶ 20 n. 3 (App. 2008)
(rejecting Seller’s argument that “no enforceable contract existed because
Buyer’s failure to deposit earnest money” due to “the absence of any
authority to support the proposition that the earnest money deposit is
required consideration”), vacated on other grounds, 220 Ariz. 273 (2009).

¶9 Buyers’ alleged failure to deposit the earnest money may
constitute a breach. However, under the Contract’s terms, to cancel the
Contract for a breach the non-breaching party must provide the breaching
party with three days’ notice to cure the breach. Sellers do not argue, and
the record does not show, that they gave Buyers the three-day notice
required under the Contract. Therefore, we cannot affirm summary
judgment for Sellers based on their claim that Buyers failed to deposit the
earnest money.

¶10 Because we will affirm summary judgment for any reason
supported by the record, we analyze the other arguments Sellers relied on
in the superior court. See KB Home Tucson, Inc. v. Charter Oak Fire Ins. Co.,
236 Ariz. 326, 329, ¶ 14 (App. 2014) (recognizing that appellate courts will
“affirm summary judgment if it is correct for any reason supported by the
record, even if not explicitly considered by the superior court”).

¶11 First, Sellers argued that “[p]erformance of the contract
became impossible due to [Buyers’] failure to . . . deposit the requisite
$1000.” However, there is no indication the sale became impossible without
Chicago Title serving as the escrow company or that the failure to deposit

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the earnest money, which would not be transferred to the seller until COE,
rendered the remainder of the contract impossible to complete. In fact,
Sellers later permitted Buyers to change escrow companies. Failure to pay
the earnest money did not render performance impossible.

¶12 Second, Sellers claimed that performance is impossible
because Buyers are financially unable to perform their obligations under
the Contract. This argument fails because “[i]mpossibility of performing a
promise that is not due to the nature of the performance, but wholly to the
inability of the individual promisor, neither prevents the formation of a
contract nor discharges a duty created by a contract.” Restatement (First)
of Contracts § 455 (1932); see also Marshick v. Marshick, 25 Ariz. App. 588, 591
(1976) (“It is not enough that the contracting party is himself unable to
perform. The doctrine of impossibility does not operate unless the
contractual duties would be impossible for [a]nyone to perform.”).

¶13 Third, Sellers argued that because the Contract states that
“time is not of the essence in the performance of the obligations described
herein,” it creates an unenforceable illusory promise. A “time is of the
essence” clause means that late performance is presumed to be a material
breach. Chicago Title Ins. Co. v. Renaissance Homes, Ltd., 139 Ariz. 494, 497
(App. 1983). A promise is illusory and unenforceable when the words of
the promise “make performance entirely optional with the promisor.”
Restatement (Second) of Contracts § 77 cmt. a (1981) (cleaned up). But
merely removing the presumption of a material breach (by stating that time
is not of the essence) does not preclude a court from concluding that a
party’s failure to comply with a deadline, especially after receiving notice
and an opportunity to cure, constitutes a material breach. See Poggi v. Kates, 115 Ariz. 157, 161 (1977) (explaining that even if time is not of the essence,
“[a]n unreasonable delay is still a material breach”).

¶14 Finally, Sellers asserted the Contract is void for mutual
mistake because the parties agreed to transfer a 45-acre portion of land, but
Exhibit A to the Contract, which describes the land, mistakenly describes a
15-acre portion. Courts can reform a contract when “a writing that
evidences or embodies an agreement in whole or in part fails to express the
agreement because of a mistake of both parties as to the contents or effect
of the writing.” Restatement (Second) of Contracts § 155 (1981); see also
United Bank of Ariz. v. Ashland Dev. Corp., 164 Ariz. 312, 315 (App. 1990) (“If
there is a mutual mistake that the seller intended to sell and the buyer
intended to purchase a different piece of land than that described in the
deed, it forms a basis for an action in reformation.” (citation omitted)).

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Because both parties agree they intended that the 45-acre parcel would be
conveyed, reformation is the proper remedy.

CONCLUSION

¶15 We vacate the entry of summary judgment and remand for
further proceedings consistent with this decision. We award Buyers their
taxable costs incurred on appeal subject to compliance with ARCAP 21.

AMY M. WOOD • Clerk of the Court
FILED: TM

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