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Carter v. Butler

Court of Appeals of Tennessee, Jackson

October 8, 2019


          Session September 18, 2019

          Appeal from the Chancery Court for Shelby County No. CH-18-0162 Jim Kyle, Chancellor No. W2019-00175-COA-R3-CV

         This 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 proceedings.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Vacated and Remanded

          Richard L. Rikard, Germantown, Tennessee, for the appellant, Maurice Butler.

          Scottie O. Wilkes, Memphis, Tennessee, for the appellee, Yolanda Carter.

          Carma Dennis McGee, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Kenny W. Armstrong, J., joined.



         I. Facts &Procedural History

         Maurice 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."[2] 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[3] would be forfeited.

         Mr. 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."

         In 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.

         In January 2018, Mr. Butler filed a forcible entry and detainer warrant in general sessions court, demanding possession of the property and unpaid rent.[4] 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.[5]

         A 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.

         Mr. 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.

         At the 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.[6]

         On 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.[7]

         II. ...

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