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Ludington v. LaFreniere
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Decision:		1998 ME 17
Docket:		And-96-798
on Briefs:		November 10, 1997
Decided :		January 22, 1998




	[¶1]  Stephen M. LaFreniere and Craig Dostie appeal from a judgment
entered following a non-jury trial in the Superior Court (Androscoggin
County, Perkins, J.) finding them jointly and severally liable to specifically
perform their contract with plaintiff Howard J. Ludington, III.  On appeal,
they contend that the Superior Court erred by: (1) finding Dostie personally
liable on the contract, (2) ordering specific performance when an adequate
remedy existed at law, (3) improperly awarding interest at the contractual
rate of 12% per annum rather than at the statutory rate, and (4) not
recognizing the plaintiff's failure to mitigate his damages.  Finding no merit
in appellants' contentions, we affirm the judgment.
	[¶2]  Several years prior to the transaction that is the subject of this
litigation, LaFreniere sold the same real estate in Passadumkeag to
Ludington.  Ludington brought an action against LaFreniere alleging a
fraudulent sale.  A judgment was entered in favor of Ludington and against
LaFreniere for $200,000, based on LaFreniere's failure to disclose that
endangered species habitat, flood plain problems, and title defects made the
property undevelopable.  LaFreniere later proposed that he re-purchase the
property from Ludington for $50,000, with the idea of developing it and
using the proceeds to satisfy the judgment.{1}  A contract to that effect was
signed by Ludington as the seller, but was not signed by LaFreniere.
Ostensibly because LaFreniere did not want to complicate matters with his
pending divorce or attract the attention of the Department of Environmental
Protection, Dostie, who is LaFreniere's cousin, signed the contract as the
buyer to make it appear that LaFreniere was not invloved in the transaction.
	[¶3]  Dostie signed the contract on December 4, 1992.{2}  In 1994,
after several mutually acceptable postponements of a closing date,
LaFreniere announced that he was not going to complete the transaction
contemplated by the contract.  Ludington sued both Dostie and LaFreniere
for specific performance and the actions were consolidated.  After a non-jury
trial the court found that Dostie and LaFreniere were jointly and severally
liable on the contract, and ordered specific performance.  The court also
awarded Ludington interest on the $50,000 contract amount, at the rate set
out in the contract, twelve percent per annum, from April 1, 1993 until all
amounts are paid in full.  This appeal followed.
	[¶4]  Dostie argues that he signed the contract as the agent of
LaFreniere and, accordingly, should not be bound personally.{3}  The court
concluded that both defendants were liable, finding that:

Dostie signed both individually and as an agent for . . . LaFreniere. 
Dostie intended to and did personally bind himself to the
Agreement; Dostie intended to and did bind Lafreniere [sic] to
the Agreement.  Lafreniere has admitted that he is bound by the
Agreement and that he and Dostie have a separate agreement
between them providing that Lafreniere will indemnify Dostie
with respect to his financial obligations under the Agreement.

	[¶5]  The intent of the parties in entering a contract is a question of
fact.  See Seashore Performing Arts Center, Inc. v. Town of Old Orchard
Beach, 676 A.2d 482, 484 (Me. 1996).  We review the Superior Court's
finding that Dostie was liable for clear error, Harmon v. Emerson,
425 A.2d 978, 982 (Me. 1981).  Although Dostie argues that he signed the
contract only in his capacity as an agent and that he is not personally liable
as a signatory on the contract, at one point in his testimony he stated that
he intended to be personally bound.{4}  Moreover, Ludington's former
attorney testified that he understood that LaFreniere and Dostie would both
be responsible for the obligations in the contract.  LaFreniere also testified
that he had agreed to reimburse Dostie if Dostie should have to perform the
contract obligations or satisfy a judgment for the purchase price.  Dostie
signed the contract in his own name.  His testimony that he intended to be
bound and LaFreniere's agreement to indemnify him support the court's
conclusion that the parties intended the contract to bind Dostie as well as
	[¶6]  LaFreniere and Dostie contend that the court improperly
granted specific performance to Ludington as the seller of the real estate. 
The contract provided that upon breach of the Buyer, the "Seller may, at his
election, pursue any other remedies available to him, including an action for
specific performance of this agreement."  The Superior Court found that
Ludington was entitled to specific performance by the express terms of the
contract, and because the improbability of re-selling the property to anyone
other than Dostie and LaFreniere made money damages an inadequate
remedy.  It also concluded that specific performance would "place
Ludington and LaFreniere in the positions they were in before Lafreniere
ever sold this defective property to Ludington in 1988."  
	[¶7]  Specific performance is a substitute for the legal remedy of
compensation whenever, in the discretion of the court, "the legal remedy is
inadequate or impracticable."  McIntyre v. Plummer, 375 A.2d 1083, 1084
(Me. 1977); see also Brown & Sons v. Boston & Maine R.R. Co.,
106 Me. 248, 255 (Me. 1909) (grant of specific performance "is uniformly
deemed a matter of sound judicial discretion").  In appropriate
circumstances, sellers may be entitled to specific performance.  See
Progressive Iron Works Realty Corp. v. Eastern Milling Co., 155 Me. 16, 21,
150 A.2d 760 (1959) (upholding decree of specific performance for seller
where buyer was without right to rescind an escrow agreement for purchase
of real property).
	[¶8]  The Superior Court heard evidence that the property would be
very difficult to sell, and that LaFreniere, as someone experienced in land
development, was better suited than Ludington to develop the land.  The
court's finding that Ludington lacked an adequate remedy at law was
supported in the record, and the court acted within its discretion in
ordering specific performance of the contract.
	[¶9]  LaFreniere and Dostie also contend that the contract provision
requiring the buyer to pay interest at 12% until the closing{5} means that
once the contract was breached, the statutory rate pursuant to
14 M.R.S.A. § 1602 should  then apply.  The court did not err by
disregarding section 1602.  That section provides a statutory rate of
prejudgment interest for "all civil actions, except those actions involving a
contract or note which contains a provision relating to interest . . . ." 14
M.R.S.A. § 1602(1)(A) (1996 Supp.) (emphasis added).  By its plain terms
section 1602(1)(A) does not apply here because the contract provided for
the calculation of interest.{6}  The court correctly ordered repayment of
interest at the contract rate.{7}	
	[¶10]  Finally, LaFreniere and Dostie cite as error the fact that the
court made no reduction in Ludington's damages even though he did not list
the property with a real estate agent after the breach.  It is true that a
"plaintiff has a duty to use reasonable efforts to mitigate his or her damages."
Doughty v. Sullivan, 661 A.2d 1112, 1122 (Me. 1995) (emphasis added)
(internal punctuation removed).  In deciding upon specific performance, the
court specifically found it unlikely that Ludington would ever sell to anyone
other than LaFreniere and Dostie, a finding amply supported in the record,
and that Ludington was entitled to specifically enforce the contract.  In the
absence of any showing that Ludington rejected reasonable offers made, or
that he rebuffed actual inquiries, the court did not err in not concluding that
Ludington failed to mitigate his damages.{8}
	The entry is:
			Judgment affirmed.

Attorney for plaintiff: Phillip E. Johnson, Esq. Johnson, Webbert & Laubenstein, LLP P O Box 29 Augusta, ME 04332-0029 Attorneys for defendants: Sharon E. Nelson, Esq. P O Box 1776 Bangor, ME 04402-1776 (for Stephen LaFreniere) Charles W. Cox, Esq. Jude and Cox P O Box 327 Newport, ME 04953-0327 (for Craig Dostie)
FOOTNOTES******************************** {1} The judgment from the prior litigation has apparently now been satisfied. {2} The December 4, 1992 contract provided for conveyance of the property to the buyer in exchange for $50,000 plus interest at 12% per annum beginning to accrue on April 1, 1993 until the date of closing. The contract set the closing date at October 23, 1993, but allowed postponement by mutual agreement. {3} Because of the trial court's factually supported finding that Dostie intended to be personally bound, we need not address Dostie's contention that he is not liable because he was merely the agent for an undisclosed principal. See Restatement, Second, Agency § 320 (1958) ("Unless otherwise agreed, a person making or purporting to make a contract with another as agent for a disclosed principal does not become a party to the contract."); but see Nobleboro v. Clarke, 68 Me. 87, 93 (1878) (unequivocally requiring that when an agent purports to act for his principal and not for himself in the execution of a deed or contract, such an intention of the parties must appear within the four corners of the deed . . . "and no evidence aliunde, except evidence of the authority of the agent or attorney, can be received to show such intent"). {4} Dostie later testified that he did not intend to be personally bound on the contract. {5} Paragraph 8 of the contract states: Interest. Buyer shall pay to Seller interest on the $50,000 purchase price, at the rate of 12 percent per annum. Said Interest shall begin to accrue on April 1, 1993, with payments being made on the first of each successive month until the closing on the sale. {6} See also 5 Corbin on Contracts § 1045 (1964). ("The contract may also provide, either expressly or by reasonable implication, for the payment of interest at a specified rate after the maturity of an obligation, and, therefore, after a breach by non-performance of the contract. In such a case, even though there has been a breach of contract, the interest agreed upon may still be regarded as compensation for the use of money or for the credit extended.") (emphasis added); 71 Am. Jur. 2d § 217, Specific Performance (1973) ("The true rationale of decision in respect of compensation for delay is that the contract is being enforced retrospectively and the equities adjusted accordingly."). {7} Appellants also argue that Ludington's motion for a continuance resulted in a five-month delay of the trial, and that pursuant to 14 M.R.S.A. § 1602(1) interest should have been suspended during the time delayed by the motion. 14 M.R.S.A. § 1602(1) states: If the prevailing party at any time requests and obtains a continuance for a period in excess of 30 days, interest shall be suspended for the duration of the continuance. Because the interest rate is governed by the contract, 14 M.R.S.A. § 1602(1) is inapplicable. LaFreniere and Dostie also argue that the statutory rate, and not the contract rate as ordered by the court, should apply for post-judgment interest. Because the statutory rate since the judgment has been higher than 12%, however, LaFreniere and Dostie have not been harmed by the use of the contract rate. {8} Ludington argues that the appeal is "fruitless and meritless" and that therefore he should be awarded treble costs and attorneys fees pursuant to M.R. Civ. P. 76(f). We will impose sanctions "only in egregious circumstances." Biette v. Scott Dugas Trucking & Excavating, 676 A.2d 490, 498 (Me. 1996) (justifying sanctions for "unsubstantiated fraud allegations, unpreserved arguments, meritless contentions, and bad faith litigation") (internal punctuation removed). Although ultimately unpersuasive, appellants have provided adequate legal argument to make a credible appeal, and have raised issues that have required serious discussion to resolve. We cannot say that such an appeal is frivolous.