Session September 18, 2019
from the Chancery Court for Shelby County No. CH-18-0162 Jim
Kyle, Chancellor No. W2019-00175-COA-R3-CV
appeal involves a dispute related to the interpretation of a
lease purchase agreement. However, because the trial court
did not make sufficient findings of facts and conclusions of
law, we are unable to conduct a meaningful appellate review.
Accordingly, we vacate the order and remand for further
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Vacated and Remanded
Richard L. Rikard, Germantown, Tennessee, for the appellant,
Scottie O. Wilkes, Memphis, Tennessee, for the appellee,
Dennis McGee, J., delivered the opinion of the court, in
which J. Steven Stafford, P.J., W.S., and Kenny W. Armstrong,
DENNIS MCGEE, JUDGE
Facts &Procedural History
Butler was a licensed real estate agent and owner of two
businesses that provided services to disabled individuals,
including access to affordable housing. In April 2013,
Yolanda Carter accompanied her sister to view a property
owned by Mr. Butler. Ms. Carter's sister was an employee
of Mr. Butler and was interested in renting one of his
properties. Ms. Carter, her sister, and Mr. Butler met at a
home located at 3200 Cherrywood Cove in Memphis, Tennessee.
After viewing the property and discussing the amount of rent,
Ms. Carter's sister indicated that she could not afford
to rent the home. Ms. Carter then inquired whether Mr. Butler
had any properties for sale. Ms. Carter also informed Mr.
Butler that she had a limited budget, as she had no job or
credit and intended to file for disability. She further
explained that she would be unable to secure a traditional
loan. Shortly thereafter, Ms. Carter and Mr. Butler executed
a one page document that he drafted entitled "Lease
Purchase Agreement for 3200 Cherrywood Cove Memphis TN,
38128." Throughout the document, Ms. Carter is
referenced as "tenant" and Mr. Butler as
"landlord." However, the agreement was signed by Ms.
Carter as "Buyer, Yolanda Carter." In accordance
with the agreement, Ms. Carter agreed to pay Mr. Butler $1,
000 per month for four and one-half years, or fifty-four
months. The agreement contained a provision stating that it
began on April 23, 2013 and would end on October 23, 2017. It
further provided that if Ms. Carter defaulted, the
"security deposit" of $10, 000 would be
Butler contends that there was another document that
contained options for purchase of the property that he
prepared and discussed with Ms. Carter when the lease
agreement was signed; Ms. Carter denies this. The second
document was not referenced in the lease agreement, nor was
it initialed or signed by either party. The document was
entitled "Lease Option for 3200 Cherrywood Cove Memphis
38128." The type-written provisions of the document
simply stated: "1) Purchase of $65, 000 2) Financing
search start 3 months prior to lease expire 3) Sales contract
drawn at end of lease to address Cnty [sic] City taxes and
attorney fees 4) Sales option extended with buyer completing
lease as agreed[.]" The document also contained
hand-written notes, some of which are illegible, that Mr.
Butler described as "doodling."
March 2016, after she had been approved for disability and
received a lump-sum back-payment, Ms. Carter contacted Mr.
Butler about paying the balance in full. Mr. Butler responded
by letter, stating that he had reviewed the "lease
purchase." He further stated that the agreement provided
that the monthly payments would continue until October 23,
2017, and that the parties needed "to follow the
agreement." In October 2017, Ms. Carter paid what she
considered to be the final payment on the property. It is
undisputed that Ms. Carter made all monthly payments from
April 2013 until October 2017. After that time, Ms. Carter
and Mr. Butler exchanged several text messages disputing the
terms of the agreement.
January 2018, Mr. Butler filed a forcible entry and detainer
warrant in general sessions court, demanding possession of
the property and unpaid rent. One month later, Ms. Carter filed
a complaint in chancery court seeking specific performance,
damages for breach of contract, and a lien lis pendens on the
property. She also sought an injunction to prevent Mr. Butler
from prosecuting his general sessions claim. Subsequently, a
consent order was entered transferring the general sessions
case to chancery court.
hearing was held in July 2018. The only witnesses were Ms.
Carter's sister and the parties. Ms. Carter testified
that her understanding of the lease purchase agreement was
that the purchase price for the property was $54, 000 and
that Mr. Butler was financing the property. She stated that
the $10, 000 she paid down was a fee for Mr. Butler
owner-financing the property. She further testified that once
all payments in accordance with the agreement were made, she
and Mr. Butler were to schedule a closing date, so that the
property could be deeded in her name. Ms. Carter also
testified that a second document to the lease agreement was
never discussed. She stated that she was not aware of the
second document until her counsel showed it to her, after he
received it in response to his discovery requests. She
testified that, when she exchanged text messages with Mr.
Butler, he never mentioned that she had other terms to
fulfill before she could purchase the property.
Butler testified that he drafted the lease purchase
agreement. He indicated that he no longer had a real estate
license, but knew how to "write a sales contract."
He testified that his understanding of the agreement was that
Ms. Carter was leasing the property from him for $1, 000 a
month for fifty-four months. He testified that, once Ms.
Carter had fulfilled the terms of her lease, she had the
option to purchase the property for an additional $55, 000.
He indicated the actual purchase price was $65, 000; however,
her $10, 000 down payment would be applied, leaving a
remaining balance of $55, 000 for the purchase of the home.
He further testified that the terms for the purchase of the
property were explained on the second document which he and
Ms. Carter discussed "line by line" on the day they
executed the lease purchase agreement.
close of the evidence, the trial court issued its oral
ruling. A written order memorializing the court's ruling
was entered on August 1, 2018. The trial court found that:
(1) the agreement was a "lease purchase agreement,"
(2) Ms. Carter had made all payments required under the
agreement, (3) Mr. Butler was responsible for all property
taxes through the date of the order, (4) Ms. Carter was
responsible for obtaining an attorney to close on the
property, (5) Mr. Butler will cooperate with closing on the
property, (6) the closing would take place within 45 days
from entry of the order, and (7) each party was responsible
for his or her own attorney's fees.
August 10, 2018, Mr. Butler filed a motion to reconsider and
his first motion to alter or amend judgment. On August 29,
2018, Mr. Butler filed an amended motion to alter or amend
judgment. Then on August 30, 2018, Mr. Butler filed a second
amended motion to alter or amend judgment. Each of Mr.
Butler's motions to alter or amend along with the motion
to reconsider provided that the motions were supported by a
memorandum "to be filed hereafter." On September
18, 2018, Ms. Carter filed a response to the amended motion
along with a memorandum in support thereof. On September 28,
2018, Mr. Butler filed a memorandum in which he argued, among
other things, that the trial court correctly found the
agreement was a lease purchase but erroneously treated it as
a finance agreement. After a hearing, the court denied the
motions, finding that: (1) the agreement was a lease purchase
agreement, (2) it contained numerous ambiguities, (3) based
upon the ambiguous provisions, the contract was construed
against the drafting party, (4) Mr. Butler had superior
knowledge of real estate law, and (5) Ms. Carter's
testimony and version of the facts was "more
credible" than Mr. Butler's. Mr. Butler timely filed
a notice of appeal.