Where the parties’ settlement agreement allowed either party to offer to buy certain real property by depositing $100,000 with the Chapel Hill branch of Investors Title by 5:00 p.m. on November 3, 2020, plaintiffs did not fully comply with the agreement when their counsel placed a trust account check for $100,000 in the mail, addressed to Investors Title, on November 3, 2020.
We affirm the trial court’s ruling that plaintiffs neither fully complied with nor substantially performed under the terms of the settlement agreement.
The term “deposit with” as used in the agreement’s term “deposit . . . with Investor’s Title” is not defined in the agreement. The verb “deposit”1 is defined as “[t]he act of giving money or other property to another who promises to preserve it or to use it and return it in kind; esp., the act of placing money in a bank for safety and convenience.” Deposit, Black’s Law Dictionary (11th ed. 2019). The preposition “with” is generally defined as “in the care, guidance, or possession of[.]” Webster’s Third New International Dictionary 2626 (2002).
Taken together, the term “deposit with” means “giving or placing in the care, guidance, or possession of.” Accordingly, the agreement required plaintiffs, as the offering party, to give or place the earnest money in the care, guidance, or possession of Investors Title Insurance Company–Chapel Hill Branch at the same time they submitted their Initial offer to defendant, and no later than “5 pm EST on November 3, 2020[,]” when the agreement expired.
By placing the earnest money check drawn on plaintiffs’ counsel’s trust account into the mail on 3 November 2020 around 4:00 p.m., plaintiffs did not give or place a non-refundable earnest money deposit in the amount of $100,000 in the care, guidance, or possession of Investors Title Insurance Company–Chapel Hill Branch at the same time they submitted their initial offer to defendant and before the expiration of the agreement “at 5 pm EST on November 3, 2020.” Accordingly, plaintiffs failed to fully comply with the agreement.
Plaintiffs also argue that they substantially performed under the agreement; however, a “time is of the essence” clause makes completion dates and times a material term of a contract, causing a material breach if performance is late. The doctrine of substantial performance traditionally has not applied where the parties, by the terms of their agreement, make it clear that only strict or complete performance will be satisfactory.
Here, the agreement includes a “time is of the essence” provision, making the time for depositing a non-refundable $100,000 earnest money deposit with Investors Title and the time for the expiration of the agreement material terms of the agreement. Accordingly, the parties made it clear by the terms of their agreement that only strict or complete performance would be satisfactory, so the doctrine of substantial performance does not apply.
Even if the substantial performance doctrine did apply, it would not excuse plaintiffs’ breach in this case. Although plaintiffs’ counsel mailed the check on 3 November 2020, Investors Title did not receive it until 16 November 2020, 13 days after the expiration of the agreement. As no portion of the earnest money was deposited with Investors Title prior to the expiration of the agreement, plaintiffs did not perform at all, much less substantially perform, under the agreement.
Ricky Spoon Builders, Inc. v. EmGee LLC (Lawyers Weekly No. 011-212-22, 13 pp.) (Allegra Collins, J.) Appealed from Chatham County Superior Court (Alyson Adams Grine, J.) Donald Harris for plaintiffs; Charles George and Mary Kate Gladstone for defendant. 2022-NCCOA-790