Avery v. Hughes
2011 U.S. App. LEXIS 23037
| 1st Cir. | 2011Background
- Avery (plaintiff), Maine citizen, inherits lakefront NH home via mother's will and becomes co-executor with residual sale rights to satisfy creditors.
- Estate engages Prudential (seller’s broker) to market property; Hughes (defendant) desires to buy; purchase price set at $1,600,000; escrow deposit $25,000.
- Agreement provides deposit held in escrow (para. 3); para. 14 allows seller to treat breach as liquidated damages; para. 17 states deposit becomes non-refundable if seller accepts sale terms.
- Lease agreement obligates seller to lease property to Hughes at $3,000/month, interconnected with closing; seller to provide purchase-money financing at $1,250,000 first mortgage with $325,000 cash at closing.
- Hughes deposits $25,000 (April 12, 2007) directly to seller, bypassing escrow; closing delayed to Feb 2008, then Hughes breaches by March 2008; Hughes vacates April 2008.
- Estate relists property; sold to third party for $1,200,000 in Aug 2008; Estate assigns its claims to Avery; Avery sues for breach of Lease and breach of Agreement; largest damages stem from $400,000 price differential.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract language is ambiguous about liquidated damages. | Avery argues plain terms allow actual damages; deposit not solely liquidated damages. | Hughes argues ambiguity and intent to limit liability to $25,000. | No ambiguity; paragraphs 14 and 17 unambiguously permit actual damages if not elected as liquidated damages. |
| Whether the seller elected liquidated damages by accepting/retaining the deposit. | Avery asserts no valid election occurred; deposit retained does not prove election here. | Hughes contends retention implies election to liquidated damages under Orr-like logic. | No election; there was no affirmative or conduct-based election to liquidated damages; the seller pursued actual damages. |
Key Cases Cited
- Orr v. Goodwin, 157 N.H. 511 (N.H. 2008) (election of remedies requires clear election; conduct can establish election)
- C & M Realty Trust v. Wiedenkeller, 133 N.H. 470 (N.H. 1990) (nonrefundable deposit may be liquidated damages when election is explicit)
- In re Taber-McCarthy, 160 N.H. 112 (N.H. 2010) (ambiguity requires reasonable conflicting interpretations)
- Lassonde v. Stanton, 157 N.H. 582 (N.H. 2008) (ambiguity reviewed by whether language admits reasonable alternative meanings)
- Greenhalgh v. Presstek, Inc., 152 N.H. 695 (N.H. 2005) (contract interpretation uses plain meaning when no ambiguity)
- Oliva v. Vt. Mut. Ins. Co., 150 N.H. 563 (N.H. 2004) (self-serving beliefs about contract terms cannot create ambiguity)
- Eaton v. Penn-Am. Ins. Co., 626 F.3d 113 (1st Cir. 2010) (federal contract interpretation governs under Erie-prescribed rules)