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Keywords

contractbreach of contractplaintiffdefendantdamagestrialliquidated damages
contractbreach of contractplaintiffdefendantdamagestrialmotionoverruled

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Chris v. Epstein, 113 N.C.App. 751, 440 S.E.2d 581

Facts

In June 1988, after losing his job, Alan Epstein and his wife placed their home on the market. James and Linda Chris executed a contract to purchase the home for $465,000, contingent on Linda's approval. After several inspections revealed drainage and moisture problems, the plaintiffs terminated the contract and requested the return of their $20,000 earnest money deposit. The defendants did not return the deposit and subsequently sold the home for $394,500, significantly less than the original contract price.

Defendants then placed their home on the market for sale. Soon after the home was on the market for sale, plaintiff James P. Chris executed a contract to purchase the home for $465,000.00, contingent upon his wife, plaintiff Linda Chris, giving written approval.

Issue

Did the trial court err in excluding evidence of the actual sales price of the property after the breach, and did it properly instruct the jury on the measure of damages for breach of contract?

The issue for the jury in this case was whether there was any difference between the fair market value of the property at the time of the breach and the contract price.

Rule

In North Carolina, a seller's damages for a buyer's breach of a real estate sales contract are the difference between the contract price and the fair market value at the time of breach, plus any consequential damages that were within the contemplation of the parties at the time of the contract.

Generally, a seller's damages for a buyer's breach of a real estate sales contract are those damages which the parties might reasonably have contemplated to be the probable result of a breach at the time they made the contract.

Analysis

The court applied the rule by excluding evidence of the resale price one year after the breach, determining it was irrelevant to the damages calculation. The court instructed the jury on the proper measure of damages, which did not include the ultimate resale price, as North Carolina law does not recognize this as a valid measure. The court also found that the costs incurred by the defendants for painting and renting furniture were not foreseeable consequential damages.

Defendants' evidence established a breach by plaintiffs, who were the buyers. Accordingly, the trial judge instructed the jury on the aforementioned measure of damages for breach of contract when a buyer breaches a real estate sales contract in North Carolina.

Conclusion

The court affirmed the judgment for the vendors, ruling that the earnest money deposit did not serve as liquidated damages and that the vendors were entitled to recover actual damages in addition to the deposit.

We find no error in the jury's award. Plaintiffs' cross-assignment of error is overruled.

Who won?

The vendors, Alan and Joyce Epstein, prevailed because the court found that the purchasers breached the contract and that the vendors were entitled to damages as per the contract terms.

Defendants argue in their first assignment of error that the trial court erred when it allowed plaintiffs' motion in limine, preventing defendants from introducing evidence of the actual sales price of the subject real property because this evidence is admissible under North Carolina law.

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