Opinion
No. A-12-700
08-20-2013
PHIL A. ANANIA ET AL., APPELLANTS, v. RIVERFRONT PARTNERS, LLC., A NEBRASKA LIMITED LIABILITY COMPANY, APPELLEE.
Allan A. Armbruster, Jr., of Armbruster Law Office, for appellants. Richard P. Jeffries, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., for appellee.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
Appeal from the District Court for Douglas County: JAMES T. GLEASON, Judge. Affirmed.
Allan A. Armbruster, Jr., of Armbruster Law Office, for appellants.
Richard P. Jeffries, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., for appellee.
PIRTLE and RIEDMANN, Judges, and MULLEN, District Judge, Retired.
RIEDMANN, Judge.
INTRODUCTION
This case involves a contractual dispute between Phil A. Anania and other purchasers (Purchasers) and Riverfront Partners, LLC (Riverfront). The Purchasers argue that the trial court erred in construing one of the provisions of the purchase agreement entered into between the parties, in finding another provision ambiguous, and in relying on extrinsic evidence to interpret that ambiguous provision. We agree with the trial court in all respects. Accordingly, we affirm the trial court's order.
FACTUAL BACKGROUND
The parties stipulated to the following facts: Riverfront develops and sells tower and townhouse condominium units located on Lot 1, Riverfront Place, in Douglas County, Nebraska. Riverfront purchased Lot 1 from the city of Omaha in May 2005. Because the city of Omaha owned Lot 1, Douglas County did not add the property to its assessment roll of taxable real property until Riverfront purchased it. Douglas County first issued Riverfront a real estate tax bill in December 2005.
In October 2006, Riverfront subdivided Lot 1 into tower and townhome units and recorded the property deeds. That same month, buyers began to close on the units and occupy them. In December, Douglas County issued separate 2006 real estate tax bills to the owners of each tower and townhome unit. Douglas County issued separate real estate tax bills for each unit in all subsequent years.
Each year, Douglas County levies real estate property taxes on or before October 15 and they become due on December 31. Taxpayers may pay the taxes in two installments the following year, however, before they become delinquent. In 2005, Riverfront was taxed $12,365 for the entirety of Lot 1. The real estate tax for 2005 was first payable on December 31, 2005, and it became delinquent in 2006. Riverfront paid the 2005 real estate tax in installments in April and July of 2006. At all times, Riverfront paid real estate taxes in two equal payments in the year they would have otherwise become delinquent.
Between October 2006 and March 2007, Riverfront conveyed units to each of the Purchasers pursuant to the terms of a purchase agreement for Riverfront Place condominiums (hereinafter Purchase Agreement). Paragraph 10(f) of each Purchase Agreement provides:
(f) Seller shall pay its prorate [sic] share of all real estate taxes which become delinquent if not paid in the year of Closing and all installments of special assessments, if any, payable with respect to the Parcel for all calendar years prior to the calendar year in which the Closing occurs, and such taxes shall not be prorated. With respect to real estate taxes for the calendar year in which the Closing occurs:
(i) If a separate real estate tax bill with respect to the Unit Ownership will not be issued for the calendar year in which the Closing occurs: Purchaser's share of real estate taxes which become delinquent if not paid in the year of Closing shall be the product of (a) the real estate taxes which become delinquent if not paid in the year of Closing for the Tract, multiplied by (b) Purchaser's percentage interest in the Common Elements, which product shall thereupon be multiplied by (c) a fraction the denominator of which is the number of days in the calendar year in which the Closing occurs and the numerator of which is the number of days from and after the Closing Date to and including December 31, of the calendar year in which the Closing occurs.
(ii) If a separate real estate tax bill for the Unit Ownership will be issued for the year in which the Closing occurs, but is not yet available at Closing, the parties shall prorate the real estate taxes as of the Closing Date based on Seller's good faith estimate of the total taxes payable with respect to the Unit Ownership in the year in which Closing occurs. After the County's issuance of a separate tax bill for taxes payable in the year in which Closing occurs for the Unit Ownership, and upon request by either party hereto, the parties shall cooperate in the reconciliation and payment of the amount of any difference between the tax proration that was estimated at Closing and the proration of such taxes based on the final separate tax bill. This reconciliation obligation shall survive closing. Purchaser hereby waives the right of any protest of real estate assessed values less than the assessed value at the time of sale as defined by the TIF (Tax Incremental
Financing) bonds, and this waiver of the right to protest assessed value less than the value at the time of sale shall survive the Closing.
Paragraph 10(g) of the Purchase Agreement provides: "Except as specifically provided in this Agreement to the contrary, all prorations at Closing shall be final."
At the closing of each of the Purchasers' condominium unit, Riverfront's escrow agent adjusted the final settlement based on whether Riverfront had paid any of the taxes that would otherwise have become delinquent if not paid in the year of closing. If Riverfront had not paid any of the real estate taxes coming delinquent in the year of the closing before the closing occurred, it gave the purchaser a credit in the amount of its pro rata share. The purchaser was then required to pay the real estate taxes due for the purchaser's property on or before the date of delinquency. If Riverfront had paid all of the real estate property taxes becoming delinquent before the closing, it charged the purchaser a pro rata share of the bill already paid.
For the Purchasers who closed on their units in 2006, the escrow agent calculated each Purchaser's pro rata share of real estate taxes that would have become delinquent in 2006 by multiplying the Purchaser's percentage of interest in the "Common Elements" by $12,365, which was the amount of Riverfront's 2005 real estate tax bill.
The parties stipulated that the prevailing custom and practice in Douglas County, Nebraska, is to prorate real estate taxes which would become delinquent if not paid in the year of closing.
PROCEDURAL BACKGROUND
In September 2011, the Purchasers filed a complaint in the district court for Douglas County alleging that Riverfront calculated the parties' respective real estate tax liabilities contrary to the terms of the Purchase Agreement. In particular, the Purchasers argued that Riverfront incorrectly charged them a pro rata share of the real estate tax coming delinquent in the year of the closing, failed to pay its pro rata share of the real estate tax levied in the year of the closing, and failed to reconcile the mistakes. The Purchasers argued that the Purchase Agreement required Riverfront to pay the entire real estate tax that was becoming delinquent in the year of closing and that the parties were to apportion the real estate tax levied in the year of closing. Riverfront, on the other hand, contends that the Purchase Agreement required the parties to apportion the real estate tax becoming delinquent in the year of closing and the Purchasers to pay the entire real estate tax levied in the year of closing.
The parties agreed to a bench trial on stipulated facts. The trial court found that the Purchase Agreement was not ambiguous as it related to the real estate taxes which became delinquent in the year of, but held that the phrase "real estate taxes for the calendar year in which the Closing occurred," used in the second sentence of paragraph 10(f), was ambiguous. The trial court concluded that the Purchase Agreement unambiguously required the parties to prorate the tax that would be delinquent in the year of closing and considered extrinsic evidence to determine that ambiguous phrase referenced above required the Purchasers to pay the real estate tax levied in the year of closing. Accordingly, the court found Riverfront had fully satisfied its duty under the Purchase Agreement.
ASSIGNMENTS OF ERROR
On appeal, the Purchasers argue, condensed, renumbered, and restated, that the trial court erred in (1) construing the clause regarding proration of taxes becoming delinquent in the year of closing, (2) finding any part of paragraph 10(f) to be ambiguous and using extrinsic evidence to aid in its interpretation, (3) finding that the conduct of the Purchasers at closing constituted a waiver of the right to request reconciliation, and (4) failing to find that the Purchasers were entitled to prejudgment interest.
STANDARD OF REVIEW
The meaning of a contract and whether a contract is ambiguous are questions of law, on which an appellate court is obligated to reach conclusions independent of the determination reached by the court below. Kluver v. Deaver, 271 Neb. 595, 714 N.W.2d 1 (2006). If a court finds ambiguity, then the trial court's findings of fact have the effect of a jury verdict and will not be disturbed upon appeal unless clearly wrong. Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb. 615, 780 N.W.2d 416 (2010). An appellate court does not reweigh the evidence but considers the judgment in a light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence. Id.
ANALYSIS
Ambiguity: Is First Sentence of Paragraph 10(f) Ambiguous?
In interpreting a contract, an appellate court must first determine if the contract is ambiguous. Ruble v. Reich, 259 Neb. 658, 611 N.W.2d 844 (2000). A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable or conflicting interpretations or meanings. Id. A determination as to whether ambiguity exists in a contract is to be made on an objective basis, not by the subjective contentions of the parties; thus, the fact that the parties have suggested opposing meanings of the disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous. Id.
The Purchasers do not take a position on whether the first sentence of paragraph 10(f) is ambiguous, claiming that regardless of this determination, the trial court erred in construing its meaning. The Purchasers contend that the sentence requires Riverfront to pay the real estate taxes that become delinquent in the year of closing without proration. We disagree.
The first sentence of section 10(f) states in its entirety:
Seller shall pay its prorate [sic] share of all real estate taxes which become delinquent if not paid in the year of Closing and all installments of special assessments, if any, payable with respect to the Parcel for all calendar years prior to the calendar year in which the Closing occurs, and such taxes shall not be prorated.
The problem with this sentence is that the first clause requires Riverfront to pay its pro rata share of the real estate taxes that become delinquent in the year of closing, but the final clause of the sentence states that "such taxes shall not be prorated." If the term "such taxes" refers to the real estate taxes that become delinquent in the year of closing, the sentence requires those real estate taxes to be both prorated and not prorated. The district court read the phrase "such taxes" as referencing the special assessments, so that the sentence required Riverfront to pay its pro rata share of the real estate taxes that became delinquent in the year of closing, but required Riverfront to pay all of the special assessments that were assessed against the property in the years prior to the closing. To construe the sentence in this manner, "special assessments" would have to be defined as "taxes." We find authority for such a definition. See Ittner v. Robinson, 35 Neb. 133, 52 N.W. 846 (1892).
In Ittner, the Nebraska Supreme Court found that special assessments "'are a peculiar species of taxation'" and are "'in a certain sense taxes,'" albeit a "'peculiar class of taxes.'" Id. at 137, 52 N.W. at 847. See, also, Neb. Rev. Stat. § 16-637 (referencing special assessments as "special taxes assessed"). Because special assessments are a special type of taxes, "'the word "taxes" without more, is not generally understood to include assessments.'" Harlan County v. Thompson, 125 Neb. 65, 70, 248 N.W. 801, 803 (1933) (quoting Ittner v. Robinson, supra).
In this case, Riverfront modified the term "taxes" with the word "such." This modification limits the class of taxes discussed to a particular type. In this case, the type of tax is special assessments. Since special assessments are a particular type of tax, we agree that the phrase "such taxes," contained in the first sentence of paragraph 10(f), unambiguously refers to the special assessments. To reach any other conclusion would render the first clause of the sentence meaningless, contrary to our rule of construction that requires a court to give meaning to all parts of a contract and to avoid any interpretation which renders meaningless any part of the contract. See Gies v. City of Gering, 13 Neb. App. 424, 695 N.W.2d 180 (2005). As stated in Gies, "'If a particular construction renders part of a contract meaningless, it is indicative that the construction is not in accord with the parties' intentions.'" 13 Neb. App. at 435, 695 N.W.2d at 189.
We therefore agree with the trial court that the first sentence of paragraph 10(f) is not ambiguous and that it requires Riverfront to pay a pro rata share of the real estate taxes that become delinquent in the year of closing.
Ambiguity: Is Remainder of Paragraph 10(f) Ambiguous?
Turning to the remainder of paragraph 10(f), the parties offer differing interpretations of the phrase "real estate taxes for the calendar year in which the Closing occurs" contained in the second sentence of paragraph 10(f). The Purchasers argue that the phrase unambiguously refers to taxes levied in the year of closing and that subparagraph (ii) requires Riverfront to pay a prorated share of those taxes. The Purchasers base this interpretation on the fact that Neb. Rev. Stat. § 77-1601(1) (Reissue 2008) identifies the taxes levied "on or before October 15" as the "taxes for the current year" and then concludes that the statutory language "for the current year" is synonymous with the contractual language "for the calendar year." Riverfront, on the other hand, argues that the phrase refers to taxes which become delinquent in the year of closing and that subparagraph (ii) requires Riverfront to pay a prorated share of those taxes, but not the taxes that are levied in the year of closing. It bases its interpretation by identifying the second sentence as a phrase that turns the reader's attention back to the proration of taxes identified in the first sentence of paragraph 10(f). We conclude that the subject phrase is susceptible of more than one meaning and is, therefore, ambiguous.
A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable or conflicting interpretations or meanings. Ruble v. Reich, 259 Neb. 658, 611 N.W.2d 844 (2000).
The problem with the subject provision lies in the second sentence, which states, "With respect to the real estate taxes for the calendar year in which the Closing occurs." This clause is followed by subparagraphs (i) and (ii), which describe proration between the parties, depending upon whether a separate real estate tax bill is issued for the unit in the calendar year in which the closing occurs. The agreement does not define, however, "the real estate taxes for the calendar year in which the Closing occurs."
In subparagraph (i), the phrase can be reasonably interpreted to mean the real estate taxes that become delinquent in the year of closing. It states:
If a separate real estate tax bill with respect to the Unit Ownership will not be issued for the calendar year in which the Closing occurs: Purchaser's share of real estate taxes which become delinquent if not paid in the year of Closing shall be the product of . . . .(Emphasis supplied.) This is the position that Riverfront supports. It claims that pursuant to this provision, only the taxes that become delinquent in the year of closing are prorated.
In subparagraph (ii), the same phrase can be reasonably interpreted to mean the real estate taxes that are levied in the year of closing. It states in part:
If a separate real estate tax bill for the Unit Ownership will be issued for the year in which the Closing occurs, but is not yet available at Closing, the parties shall prorate the real estate taxes as of the Closing Date based on Seller's good faith estimate of the total taxes payable with respect to the Unit Ownership in the year in which Closing occurs. After the County's issuance of a separate tax bill for taxes payable in the year in which Closing occurs for the Unit Ownership, and upon request by either party hereto, the parties shall cooperate in the reconciliation and payment of the amount of any difference between the tax proration that was estimated at Closing and the proration of such taxes based on the final separate tax bill.(Emphasis supplied.) Since a tax bill for real estate taxes that become delinquent in the year of closing would be issued in October of the year prior to closing, the only tax bill that would not yet be available at closing is a tax bill for taxes levied in the year of closing. This interpretation is reinforced by the italicized language, because the taxes that are to be reconciled are those that are "payable in the year of Closing." Real estate taxes are "payable" on December 31 of the year in which they are levied. See Neb. Rev. Stat. §§ 77-203 (Reissue 2009) and 77-1601. This is the position that the Purchasers support. They claim that Riverfront is responsible for a pro rata share of real estate taxes levied in the year of closing.
Riverfront argues that subparagraph (ii) applies to only the narrow circumstance in which the county was not able to issue a tax bill prior to December 31. While Riverfront's interpretation of subparagraph (ii) is plausible, the interpretation set forth above is also a reasonable interpretation.
Since the phrase "real estate taxes for the calendar year in which the Closing occurs" used in the second sentence of paragraph 10(f) is defined to mean two different things, it is susceptible to different meanings, and is ambiguous.
Interpretation of Purchase Agreement.
If a contract is ambiguous, the meaning of the contract is a question of fact, and a court may consider extrinsic evidence to determine the meaning of the contract. Stackhouse v. Gaver, 19 Neb. App. 117, 801 N.W.2d 260 (2011). The parties stipulated that the prevailing custom in Douglas County is to prorate taxes which would become delinquent if not paid in the year of closing. At each closing, the parties acted in conformity with the usual custom. The trial court determined that this conduct evinced the parties' intent. When we consider the judgment in a light most favorable to Riverfront, as we must, we conclude that the trial court's factual finding that Riverfront was liable only for its pro rata share of taxes that became delinquent in the year of closing was not clearly erroneous. See Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb. 615, 780 N.W.2d 416 (2010).
Extrinsic Evidence.
The Purchasers argue that the trial court erred in considering extrinsic evidence in interpreting the contract. We disagree. If a contract is ambiguous, the meaning of the contract is a question of fact, and a court may consider extrinsic evidence to determine the meaning of the contract. Ruble v. Reich, 259 Neb. 658, 611 N.W.2d 844 (2000). Because the contract is ambiguous, the trial court properly considered extrinsic evidence.
Waiver.
The Purchasers assign error to the trial court's finding that their conduct at closing indicated they waived their right to reconciliation. In its response to the Purchasers' complaint, Riverfront asserted the affirmative defense of waiver. The trial court, however, did not make a finding that the Purchasers waived their right to reconciliation. The trial court considered the parties' conduct as evidence of their intentions in forming the contract, but it did not find that they waived their rights to request reconciliation. This assignment of error, therefore, is without merit.
Although the Purchasers argue in their brief that the trial court erred in finding that the Purchasers' conduct at closing reflected their contractual intentions, the Purchasers did not assign that argument as an error. In order to be considered by an appellate court, an alleged error must be both specifically assigned and argued. Olivotto v. DeMarco Bros. Co., 273 Neb. 672, 732 N.W.2d 354 (2007). Accordingly, we do not consider the argument that the trial court erred in finding that the Purchasers' conduct evidenced their intent.
Prejudgment Interest.
Because the trial court did not err in finding for Riverfront, the Purchasers were not entitled to prejudgment interest.
CONCLUSION
We agree with the trial court that the second sentence of paragraph 10(f) of the Purchase Agreement is ambiguous. Therefore, the trial court did not err in considering extrinsic evidence and it properly considered the parties' performance under the contract as evidence of their contractual intentions. Accordingly, we affirm the judgment of the trial court.
AFFIRMED.