Willcox Clinic, Ltd. v. Evans Products Co.

666 P.2d 500, 136 Ariz. 400, 1983 Ariz. App. LEXIS 472
CourtCourt of Appeals of Arizona
DecidedFebruary 15, 1983
DocketNo. 2 CA-CIV 4469
StatusPublished
Cited by1 cases

This text of 666 P.2d 500 (Willcox Clinic, Ltd. v. Evans Products Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Willcox Clinic, Ltd. v. Evans Products Co., 666 P.2d 500, 136 Ariz. 400, 1983 Ariz. App. LEXIS 472 (Ark. Ct. App. 1983).

Opinion

OPINION

HATHAWAY, Judge.

The appellant, Willcox Clinic, Ltd., has brought this appeal to challenge the lower court’s denial of its motion for summary judgment against appellees Boggs and the granting of appellees’ Boggs motion for summary judgment against the clinic, as well as the granting of summary judgment in favor of appellee Evans Products Company, and denying appellant’s motion against Evans Products.

The applicable facts are as follows. On January 26, 1978, the Boggs, sellers, and Willcox Clinic, Ltd., [Clinic] purchaser, entered into an agreement for the purchase of certain real estate in Cochise County for a total purchase price of $28,000. Boggs warranted that title to the property was subject only to 1978 taxes, to liabilities and obligations by reason of the land’s inclusion within the northern Cochise Hospital District, and the Bowie Volunteer Fire Company District, and to a mortgage in favor of Evans Products. Clinic agreed to pay the total price by making a $5,000 down payment, assuming the outstanding mortgage to Evans Products in the principal amount of $14,203.66, and paying Boggs the unpaid balance through monthly installments of $154.34 each. Boggs agreed to execute and place into escrow a warranty deed. In connection with the sale, USLife Title Insurance Company of Dallas issued a standard owner’s policy of title insurance to Clinic as [402]*402the named insured in the amount of $28,-000, evidencing clear and marketable title to the property subject only to the matters set forth in the contract.

On August 2, 1978, FMC Corporation filed a judgment lien foreclosure action against Clinic’s property based on a default judgment it had obtained in September 1972, and recorded at that time, against the Boggs’ predecessors in interest. Boggs, Clinic, and Evans Products remained as defendants. There is no contention that Boggs or the other parties to this action had actual knowledge of the existence of the lien of FMC. On September 6, 1978, FMC filed a motion for summary judgment against all the defendants and the judgment was entered in April 1979. Clinic lost the property when FMC purchased it at a sheriff’s sale for the sum of $25,000, an amount insufficient to satisfy FMC’s judgment for $29,657.20. On June 29, 1981, Clinic filed a motion for summary judgment seeking rescission based on failure of consideration and breach of covenants of title by Boggs. Clinic claimed that at that time it had lost its $5,000 down payment, monthly installments to Boggs totaling $2,289.30, regular payment on the mortgage to Evans Porducts in the amount of $2,039.50, and improvements and miscellaneous expenses for a total sum of $10,536.72 toward the $28,000 purchase price. After the court granted FMC’s motion for summary judgment for foreclosure, USLife paid Clinic $10,536.72, representing the sums paid by Clinic under its contract to purchase the property from Boggs. Boggs also filed a motion for summary judgment as did Evans Products. On October 28, 1981, the trial court granted Evans Products’ cross-motion for summary judgment and denied Clinic’s motion for summary judgment. On January 6, 1982, the trial court granted Clinic’s motion for summary judgment but at the same time ordered that Boggs have judgment against the Clinic. That inconsistency was apparently clarified in the March 5, 1982, minute entry wherein the court set forth its finding that the Clinic had received full compensation for its losses, and the earlier minute entry order was corrected to deny Clinic’s motion for summary judgment against Boggs. On March 26, 1982, the lower court entered judgment denying Clinic’s motion for summary judgment and granting Boggs’ cross-motion for summary judgment by ordering that Clinic take nothing by its cross-claim against Boggs. Finally, on April 12,1982, the lower court entered judgment on Evans Products’ cross-motion for summary judgment against Boggs and the Clinic. This appeal followed.

Appellant has presented three questions for our review:

1. Whether the trial court erred in granting summary judgment against Clinic where the record before the court demonstrated Clinic’s right to summary judgment as a matter of law;

2. Whether the trial court erred in granting summary judgment against Clinic where a fact issue regarding damages sustained by Clinic precluded the summary disposition of the issue in favor of Boggs; and

3. Whether the trial court erred in granting summary judgment in favor of Evans Products and against Clinic where the record supported Clinic’s position that Boggs’ breach of contract relieved Clinic of any legal obligation to Evans Products for the assumption of the mortgage between Evans Products and Boggs.

There is no question that failure to deliver marketable title to property under an agreement to provide a warranty deed constitutes a breach of the vendor’s contract. Sabin v. Rauch, 75 Ariz. 275, 255 P.2d 206 (1953); Bailey v. Kuida, 69 Ariz. 357, 213 P.2d 895 (1950); Brock v. Jernigan, 19 Ariz.App. 161, 505 P.2d 1052 (1973). When a seller contracts to sell property and for whatever reason is unable to convey good title to the purchaser upon payment of the price, the purchaser has a cause of action for the return of the purchase price paid together with interest. Cole v. Atkins, 69 Ariz. 81, 209 P.2d 859 (1949). The trial court’s entry of summary judgment which denied Clinic any relief against Boggs for [403]*403Boggs’ breach of contract was erroneous as a matter of law.

The trial court ruled the way it did because it found that Clinic had been fully paid by its title insurance policy. The court made an express finding of fact in the minute entry of March 5, 1982, that Clinic “has received compensation in full for its losses incurred herein.” Boggs argues that appellant would be unjustly enriched at their expense if it were to be successful in its claim against them. However, Clinic is entitled to rescission based on Boggs’ failure to provide marketable title as warranted. Bailey v. Kuida, supra; Lane v. Bisceglia, 15 Ariz.App. 269, 488 P.2d 474 (1971). Here, the facts are similar to those in Bailey v. Kuida, supra. The Boggs agreed and warranted that the property would be conveyed by warranty deed subject only to those matters which the parties knew about at the time of negotiations. The contract makes no reference to the FMC judgment lien. The record demonstrates that Clinic was entitled to rescission as a matter of law. Clinic made all required payments, met all of its obligations until it was deprived of its interest in the property purchased from Boggs by a judgment which vested superior title in FMC and deprived Clinic of equitable title it had in the property. Therefore, it was error for the trial court to enter summary judgment in favor of Boggs against Clinic, and that order is vacated and the trial court is ordered to enter summary judgment in favor of Clinic and against Boggs.

As noted, Boggs’ contention in their cross-motion for summary judgment is that Clinic had received full payment on its claim against Boggs from USLife. However, the question of whether it received full compensation for damages sustained as a result of the breach of contract is a fact question.

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666 P.2d 500, 136 Ariz. 400, 1983 Ariz. App. LEXIS 472, Counsel Stack Legal Research, https://law.counselstack.com/opinion/willcox-clinic-ltd-v-evans-products-co-arizctapp-1983.