Plaintiffs Ahmed Ussso and Genet Ayele sought the return of a $5,000 earnest money deposit made during a contract to purchase a house from defendant Bryan Winston for $392,500. Winston counterclaimed, alleging breach of contract by the plaintiffs and sought damages. The trial court ordered the return of the earnest money to the plaintiffs, leading to the appeal.
The contract required the plaintiffs to secure an 80% loan for 15 years. After being denied loans from two banks due to income insufficiency, the plaintiffs claimed entitlement to their earnest money. Winston contended that the plaintiffs failed to pursue loan qualification in good faith, resulting in damages and forfeiture of the earnest money.
During the evidentiary hearing, the court noted that the contract was contingent on the plaintiffs obtaining the loan based on standard underwriting criteria. The court found that the plaintiffs made earnest efforts to secure the loan but were denied. A conflicting testimony arose regarding the loan application process, where the plaintiffs claimed to have signed a blank application, while the loan officer asserted it was filled out when signed. Ultimately, the court concluded that the loan was not approved pending income verification, affirming the trial court's decision to return the earnest money to the plaintiffs. The appellate court, with a dissenting opinion, upheld the trial court's ruling.
Crowder's attempts to contact the plaintiffs were limited to two calls to their home, with no effort to reach their business phone, leading the Court to conclude that Crowder was not genuinely interested in facilitating the loan. The Court determined that if Crowder had obtained the necessary income verification from the plaintiffs, the loan would have been approved, and the plaintiffs would have accepted a thirty-year loan. The plaintiffs were unaware that Elizabethton Federal could have approved their loan, a situation the Court deemed not their fault. Consequently, the Court awarded the plaintiffs a refund of their earnest money and dismissed the counterclaim.
The appeal raises four key issues:
1. Whether the Court erred in finding that the plaintiffs acted diligently and in good faith despite not providing a necessary tax return for loan closing.
2. Whether the Trial Court erred in concluding that the bank had disapproved the loan when it was approved contingent upon receiving the tax return.
3. Whether the Trial Court incorrectly found that the plaintiffs applied for a fifteen-year loan instead of the thirty-year loan they actually applied for.
4. Whether the Trial Court erred in ruling that the bank officer was required to communicate with the plaintiffs in accordance with their contract.
The contract stipulates that the agreement relies on the buyer’s ability to secure a loan for 80% of the purchase price, with detailed obligations for the buyer regarding the application process and communication with the lender. It also specifies that if the plaintiffs default, their earnest money would be forfeited, and the seller could seek additional damages. Furthermore, it establishes that the prevailing party in any breach of contract dispute is entitled to recover costs, including attorney’s fees. Citing Henderson v. Quest Expeditions, Inc., the document emphasizes that contract interpretation should reflect the parties' intent as expressed in the clear language of the agreement.
Contract language must be interpreted in its plain, ordinary, and popular sense, aligning with the parties' intentions. If a written contract is unambiguous, it is to be interpreted as written, without consideration of any unexpressed intentions. In this case, the contract required the plaintiffs to close on a house if they could obtain a loan as defined, which included being qualified based on customary underwriting criteria, and to pursue this qualification diligently and in good faith. The court determined that Elizabethton Federal did not approve a loan for the plaintiffs nor inform them of conditional approval. However, evidence showed that a thirty-year loan was approved, pending a copy of a tax return, which the bank already had. Testimonies indicated the plaintiffs were informed of this approval but they expressed a preference against it, fearing high interest.
The court noted that the plaintiffs had obligations to pursue the loan diligently, having applied to three lenders, with two rejections and one potential approval that never requested further information. Ultimately, the court affirmed that the plaintiffs acted in good faith and diligence, warranting a refund of their earnest money. The trial court’s judgment was upheld, and the appeal costs were assigned to Bryan Winston.
