KUTZIN V. PIRNIE 591 A.2d 932 (1991) CASE BRIEF

KUTZIN V. PIRNIE

591 A.2d 932 (1991)

NATURE OF THE CASE: Kutzin (P), sellers, sought review of a judgment that awarded them the deposit paid on a property sale contract but denied them any interest or credit due to increased capital gains taxes paid. The trial court had found that Pirnie (D), buyers, had breached the sale contract, but that Ps were only entitled to keep the portion of the deposit equal to their actual losses.

FACTS: P and D signed a contract for the sale of P's house for $365,000. The contract was a standard form contract. D agreed to pay a partial deposit of $1,000 on signing the contract and the remainder of the deposit, $35,000, within seven days. The contract does not contain a 'forfeiture' or 'liquidated damages' clause; with reference to the disposition of the deposit should the sale not take place, the contract merely states, 'If this contract is voided by either party, the escrow monies shall be disbursed pursuant to the written direction of both parties.' Ps' attorney communicated his approval of the contract with one exception: he wanted to hold the deposit in his trust account pending closing. It was agreed to allow P's attorney to hold the deposit but D's attorney also mailed a number of proposed attachments. D's attorney enclosed with the letter his standard rider for protection of buyers of real estate. The rider was silent on the issue of what would happen to the deposit if the sale were not completed. Eventually the attorneys agreed on certain changes. D sent the balance of the deposit. And the papers were sent for P to sign in Florida. But within 4 days, D mailed a letter which indicated that they no longer wanted to purchase the home. P refused to return the deposit and promptly sued for specific performance of the contract. D counterclaimed for return of their $36,000 deposit, contending that the contract had been validly rescinded either pursuant to the attorney-review provision or by agreement of the parties. P eventually sold the house to another buyer for $352,500 and amended their complaint to seek only damages. The trial court ruled that the parties had entered into a binding contract that had not been rescinded either by agreement or pursuant to the attorney-review clause. It held that Ps were entitled to $17,325 in damages. That amount consisted of the $12,500 difference between the price agreed to and the price the house was eventually sold for, 3,825 in utilities, real-estate taxes, and insurance expenses that P had incurred during the six-month period between the originally-anticipated closing date and the date of actual sale; and $1,000 the Kutzins had paid for a new basement carpet, which their realtor had recommended they buy to enhance the attractiveness of their house to prospective buyers. The court denied recovery of interest and the increased capital-gains tax P had paid as a result of the breach. The court ordered P to return the $18,675 balance of the deposit to D. The Appellate Division held that P is entitled to retain the deposit even though the court was 'sympathetic to the trial judge's ruling that Ds were entitled to the return of the balance of their $36,000 contract deposit in excess of Ps' actual damages.' This appeal resulted. P claims that they should recover the lost interest and the increased capital-gains tax they had incurred, or, alternatively, that they should be allowed to retain the deposit. D claims entitlement to the entire deposit, again asserting that the contract had been validly rescinded.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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