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Seaton v Wise Properties-TN, LLC

Case No. E2011-01728-COA-R3-CV (TN Ct. App., Jun. 22, 2012)

This appeal concerns a contract for the purchase and sale of property. The buyer refused to close pursuant to the terms of the contract and stopped payment on its earnest money check. The sellers brought an action for specific performance and breach of contract. The buyer alleged that the sellers breached the contract first. The trial court found in favor of the buyer, holding that because the sellers did not cause title to be examined ten days from the effective date of the contract, the buyer had a right to withdraw the earnest money payment. The sellers appeal. We affirm the judgment of the trial court.

In late 2007 or early 2008, Wise Properties-TN, LLC (“Wise”) and Paul Ray (“Ray”) Seaton’s real estate agent, Tad Bromfield, discussed the possibility of a real estate transaction involving parcels of land in Athens, Tennessee, owned by Mr. Seaton and his son, David R. Seaton (collectively “the Seatons”). According to Wise, it was interested in acquiring the land for a commercial car wash and an apartment complex. Along with Mr. Bromfield, the primary facilitator of the negotiations was William (“Bill”) Alt, a Chattanooga attorney. It appears that Mr. Alt had represented Wise in a number of legal matters; however, he had represented the Seatons for a much longer period of time. Mr. Alt never discussed any potential conflict of interest with Wise. He communicated with both Wise and the Seatons about the parcels at issue, and proceeded to draft relevant documents.

In January 2008, the parties circulated a draft purchase and sale agreement (“the Agreement”) whereby Wise would purchase the Seatons’ land in Athens for $1,000,000 total, $50,000 of which was to be paid in escrow as a down payment. Pertinent sections of the Agreement provided as follows:

3. Stipulations. The following provisions and stipulations are a part of this Agreement:

A.) The parties agree that the Purchaser shall have the right for a period of 45 days from the Effective Date of this Agreement to inspect the Property following the execution of this Agreement, which shall include the right to come upon the Property and perform such tests and examinations thereof as it may deem appropriate. Purchaser agrees that upon completion of such tests and examinations it will promptly restore the Property to its prior condition. Seller agrees to hold Purchaser harmless and will indemnify them against any claim, liability, loss, damages, or litigation arising from or related to the Seller or its representatives being upon the Property or any activities conducted with respect to the Property.

















 

 

Judge(s): John W. McClarty
Jurisdiction: Tennessee Court of Appeals
Related Categories: Property
 
Trial Court Judge(s)
Lawrence Puckett

 
Court of Appeals Judge(s)
John McClarty
Charles Susano, Jr.
Michael Swiney

 
Appellant Lawyer(s) Appellant Law Firm(s)
Wayne Chattanooga

 
Appellee Lawyer(s) Appellee Law Firm(s)
Gary Patrick

 

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be examined within ten days from the effective date of the agreement was not a material concerning the existence of a genuine issue of material fact shall be resolved * * * a. . . . as far as i know, everybody was very clear that this deal was a long as found by the trial court, it is undisputed that the seatons did not order a title remedy the title objections. if seller has not so satisfied or remedied the title agreement. there are no genuine issues of material fact and that the moving party is * * * law, a seller of real estate is not entitled to hold a buyer responsible for breach when the that the moving party is entitled to a judgment as a matter of law.” tenn. r. in january 2008, the parties circulated a draft purchase and sale agreement (“the serv., 960 s.w.2d 585, 588 (tenn. 1998). if the moving party fails to make the sellers brought an action for specific performance and breach of contract. the buyer have to be renegotiated.”6 covenants, reservations or restrictions, other than the permitted exceptions, subjects addressed included rezoning, a possible utility easement, and a claimed right-of-way. 80 (1975); 91 c.j.s. vendor & purchaser § 104b (1955); alexander & shankle, inc. v. producing additional evidence establishing the existence of a enter into this agreement. suspended and the default by wise occurred prior to the time when they were required to their obligation to perform would have been futile, as recognized by mr. wise’s admission judgment will fail. byrd, 847 s.w.2d at 215. agreement. objections by the closing date, as hereinafter defined, then purchaser may: mccarley, 960 s.w.2d at 588; accord byrd, 847 s.w.2d at 215 n. 6. the david r. seaton, et al. v. wise properties-tn, llc upon receipt furnish a copy of the commitment for title insurance on the sellers appeal. we affirm the judgment of the trial court. because causing title to the property to be examined within ten days from the based on the seatons not providing wise with a commitment for title addressed in other provisions of this agreement, then the non-defaulting or after wise repudiated the agreement by stopping payment on the earnest money date of the contract, the buyer had a right to withdraw the earnest money payment. the the effective date of the agreement was not a material breach of the as well as a measure of total acreage, the property in the revised agreement was described agreement provided as follows: agreement was “of the essence.” given that the failure to timely perform contractual judgment fails.” mccarley, 960 s.w.2d at 588; accord staples, 15 s.w.3d at to secure financing. therefore, they argue that any duty they had to examine title and provide rather just a promise or covenant they undertook. they also contend that not causing title to that wise was entitled to an award of summary judgment. of the metes and bounds of the property at issue. a condition precedent assumed by a party must be fulfilled by that party before get financing right now. depositions, answers to interrogatories, and admissions on file, together with to the property. the matters that are set forth in such written notice are rely upon any failure to perform by the vendee.” nichols v. blocker, no. 87-110-ii, 1988 wl only as “portions of the real property which are within the deed descriptions of” three following the execution of this agreement, which shall include the right to blair v. w. town mall, 130 s.w.3d 761, 768 (tenn. 2004). if the moving close pursuant to the terms of the contract and stopped payment on its earnest money check. finance wise’s purchase. wise and ray seaton both executed the amendment on february payment on the escrow check, he did not realize that the right to terminate had been removed from the financing for the proposed project was not available. around two weeks before the closing5 (i) terminate this agreement and the earnest money shall be returned to withdrawing his deposit. and then, of course, it was also treated as terminated * * * wise’s conduct does not represent a clear or express intent to waive any condition. there property. while the parcels were described in the initial agreement by metes and bounds, potential conflict of interest with wise. he communicated with both wise and the seatons sum of money or the performance of any act or thing, it is of the essence of this escrow deposit. so that’s the ruling of the court. standard, the seatons materially breached the agreement and lost the ability to require represented the seatons for a much longer period of time. mr. alt never discussed any the seatons argue that causing title to the property to be examined within ten days in akins, we acknowledged that “[t]he party entitled to insist on the timely obligations set forth in this agreement to be performed prior to the closing, performance of a contract for the purchase and sale of real property can waive the condition on february 20, 2008, mr. alt contacted david siklosi, a title attorney in athens, to didn’t – anyway, i just remember getting a phone call and tad said, listen, your condition wise’s purchase of the property on the ability to obtain financing. until i get some financing in place there’s no sense tying up a bunch of money. an order granting summary judgment that incorporated by reference the above reasoning 2000 tenn. app. lexis 270 at *10-11. the material breach by the seatons thus preceded purchase to be terminated.” on october 10, 2008, the seatons filed this lawsuit. purchaser, together with the expense incurred by the title company providing wise signed the agreement but it appears that mr. alt revised it. the revised broker’s portion of the earnest money exceed the sum which real estate genuine issue for trial; or (4) submitting an affidavit explaining tends to disprove an essential factual claim made by the nonmoving party. see broker shall be paid in full at the time that the seller receives the purchase wise’s decision to stop payment on the earnest money check, and gave wise the ability to the judgment of the trial court is affirmed, and the case is remanded for any further broker would have received had the purchase and sale been normally the argument by the seatons that wise waived their nonperformance is without merit. and examinations it will promptly restore the property to its prior condition. or defense at which the motion is directed.” byrd, 847 s.w.2d at 215. a according to the seatons, they had a reasonable time within which to comply with the terms party is unable to make the required showing, then its motion for summary martin, 271 s.w.3d at 83-84. and the contract was definitely repudiated by his act of notifying you he was the moving party is entitled to judgment as a matter of law. see staples v. cbl 2. did the trial court err in granting wise’s motion for summary judgment fact is material if it must be decided in order to resolve the substantive claim -5- party to the strict terms of the contract.” id. at *9. however, “if there is to be a waiver, there 28, 2008, then this proposal shall be deemed terminated and neither party shall bill alt nor any person asked me to examine the title, nor perform a title search of the we find that the evidence does not preponderate against the findings of the trial court hereinafter referred to as “title objections.” in its amended answer to the seatons’ complaint, wise asserted that it had engaged in a good faith5 we do not find, however, that the trial court made a specific ruling. nowhere in its ruling the seller and the real estate broker after satisfaction of any expenses tenn. app. lexis 521, *25 (tenn. ct. app. aug. 13, 2007) (noting that “a contract siklosi could respond, mr. alt contacted him and told him to take no action. car wash, but the seatons would not agree to a new deal. according to mr. wise, at the time he stopped “terminate” the contract. akins v. tedder, 1988 tenn. app. lexis 648, *8-9 (tenn. ct. 5. title evidence. seller agrees to hold purchaser harmless and will indemnify them against any effort to obtain financing. several banks were approached but all declined to extend financing. wise commitment, . . . give notice in writing to [seller] of any objections to the title -10- h. wayne grant, chattanooga, tennessee, for the appellants, david r. seaton and paul ray proceeds due seller at closing. agreement by continuing negotiations and attempting to close the transaction. thus, that the seatons paid wise to ignore the strict time requirements of the contract. the actions siklosi was asked if he could insure a title to the seatons’ property that accounted for a claim, liability, loss, damages, or litigation arising from or related to the seller 88. 7, 2008. that the seatons had not provided proof of clear title or a title insurance policy. after a the court: well, [the agreement] says “shall cause title to the property to examination within ten days of january 30, 2008, and never issued a title commitment. “[a] 39569, at *5 (tenn. ct. app. apr. 29, 1988). the seatons did not act in accordance with this agreement and the seatons, as a matter of law, cannot compel wise to perform. groner, seatons’ promise to cause the title to the property to be examined within ten by the sellers, treated as terminated effective upon his withdrawal of his is also insufficient. mccarley, 960 s.w.2d at 588. the moving party must metro. gov’t of nashville & davidson county, no. m2006-011680-coa-r3-cv, 2007 stop payment on the check then because we’re not cashing the check because consummated, any excess being retained by seller. in the event seller obtains money deposited with this escrow agent, it shall be divided equally between claim or shows that the nonmoving party cannot prove an essential element of property. . . .” at the hearing, the trial court noted: proceedings that may be required. the costs on appeal are taxed to the appellants, paul ray undertake and complete at its expense all actions as are necessary to satisfy or days from the effective date of this agreement to inspect the property in the instant case provided that “[t]ime is of the essence of this agreement.” now, this contract is required to have things done promptly. time is of the its “failure of performance” under the agreement, the seatons “declare[d] the contract of (d) time is of the essence of this agreement. wherever a date certain is 3, 2008. mr. wise apparently was still interested in obtaining a smaller parcel of two or three acres for a on march 26, 2008 – nearly two months after the effective date in the agreement – mr. that existed in the inspection provision, and 2) change in the description of the subject4 seaton (collectively “the seatons”). according to wise, it was interested in acquiring the agreement contained at least two significant changes: 1) deletion of the right to termination -12- may deem appropriate. purchaser agrees that upon completion of such tests seller did not perform all prerequisite conditions contained in the agreement. wise asserted judgment must show that there are no genuine issues of material fact and that seatons) would cause the title to the property to be examined no later than ten days “following” the effective material breach” by looking to see “whether ‘time is of the essence’ with respect to the negating an essential element of the nonmoving party’s claim; or (2) showing $50,000 of which was to be paid in escrow as a down payment. pertinent sections of the specific deeds. the revised agreement contained no measure of acreage, nor any description of the commitment for title insurance on the property (the “title the applicable summary judgment standard in this case was set out in the cases of trial. hannan v. alltel publ’g co., 270 s.w.3d 1, 5 (tenn. 2008); see also & assocs., inc., 15 s.w.3d 83, 88 (tenn. 2000); mccarley v. w. quality food the seatons treated the agreement as terminated. date in the agreement, on april 3, 2008, wise stopped payment on the $50,000 earnest the ten days. and there was no waiver because it wasn’t known. it was the issues raised in this appeal by the seatons are as follows: ways from going through because everybody was involved in the whole bank fruition. . . . at 215. the nonmoving party may satisfy its burden of production by: v. conclusion providing that time is of the essence is enforceable, and failure to meet the specific and to terminate the contract”). time requirements under such clauses mandate that courts divulge it. there’s no triggering of the default because he didn’t know it either to the property to be examined and upon receipt furnish to purchaser a copy be anything more said. the other party a basis to rescind the contract.” see 77 am. jur.2d vendor and purchaser § of the agreement and were ready and able to perform. the seatons additionally contend that 3. stipulations. the following provisions and stipulations are a part of this john w. mcclarty, judge insurance. from $50,000 to $5,000; and 2) the 45-day inspection period was increased to 75 days. was filed on july 26, 2011. the seatons filed a timely appeal. property was – the title was examined it says upon receipt they were to furnish -11- in favor of the nonmoving party. mccarley, 960 s.w.2d at 588. “a disputed (tenn. 1993). accordingly, a properly supported motion for summary * * * specific performance of this agreement, the commission due the real estate in the court of appeals of tennessee was required to be – i’m going to read it and quote it, “no later than ten days rendered by the real estate broker, that should it elect to retain the earnest nonmoving party that negates an essential element of the nonmoving party’s the moving party is entitled to summary judgment only if the “pleadings, -4- the necessity for further discovery pursuant to tenn. r. civ. p., “when time is of the essence, the failure of a party to meet a condition precedent gives requirement that the title be examined within ten days from the effective date of the seaton and david r. seaton. _________________________________ wise, however, made two changes to the agreement: 1) the escrow payment was reduced wise signed the revised agreement on january 30, 2008, after the required execution date. the fact that it could secure some financing through the seatons, wise needed another of proving that it has performed conditions precedent to the liability of the other party. john the affidavits . . . show that there is no genuine issue as to any material fact and land for a commercial car wash and an apartment complex. along with mr. bromfield, the and he said, well, per the contract we’ve got – and i said, well, i’m going to either expressly or by acts or conduct clearly indicating an intention not to hold the other tenn. r. app. p. 3 appeal as of right; judgment of the chancery court 3. did the trial court err in granting wise’s motion for summary judgment rule 56.06. mr. alt subsequently drafted an amendment to the agreement: 1) he changed the (a) no later than ten (10) days [?] the effective date, seller, shall cause title3 5. did the trial court err in ruling that wise did not waive performance of the affidavits or discovery materials is not triggered and the motion for summary available to it by law, in equity or by statute and the non-defaulting party shall by wise after the seatons’ breach – attempted renegotiation and failed attempts to secure incurred by seller relating to this agreement. in no event shall real estate jr. and d. michael swiney, jj., joined. holding that because the sellers did not cause title to be examined ten days from the effective fulfill any condition precedent. agreement”) whereby wise would purchase the seatons’ land in athens for $1,000,000 total, 4. did the trial court err in applying the incorrect summary judgment standard price proceeds. appears that mr. alt had represented wise in a number of legal matters; however, he had roadway easement at issue. however, immediately after sending this letter, and before mr. standard of review because it allegedly found that they were not entitled to specific if the moving party makes a properly supported motion, then the nonmoving if purchaser defaults hereunder, seller agrees, in consideration of the services 270 s.w.3d 1 (tenn. 2008). in martin, the court set out the standard as follows: iii. standard of review scenario. and there was no need to get a title policy and there was no need to the title objections, or (iii) elect to waive the title objections and close on that raises doubts about the nonmoving party’s ability to prove his or her claim about the parcels at issue, and proceeded to draft relevant documents. treated as terminated by the sellers . . . upon [wise’s] withdrawal of [the] escrow deposit.” john w. mcclarty, j., delivered the opinion of the court, in which charles d. susano, commitment”). if (i) the title commitment shows that seller does not have wise waived any right it had to hold them to their contractual obligations. have any obligation or claim against each other arising from such failure to answer “the question of whether failing to complete performance on time constitutes a agreement: entitled to judgment as a matter of law. byrd v. hall, 847 s.w.2d 208, 215 to the purchaser a copy of the commitment for title insurance. so based on the respect to the property. during this time period, wise had been searching for commercial financing. despite 10. default. should either party default in the performance of any of its 45-day inspection period to 75 days; 3) he rejected wise’s proposed revision of the $50,000 the title commitment; or (ii) unilaterally extend the closing date for a period to reach its erroneous conclusion that summary judgment was proper because burden of production to the nonmoving party by either: (1) affirmatively h. moore & sons v. adams, 324 s.w.2d 499, 501 (tenn. ct. app. 1959). no. e2011-01728-coa-r3-cv-filed-june 22, 2012 or its representatives being upon the property or any activities conducted with civ. p. 56.04; accord penley v. honda motor co., 31 s.w.3d 181, 183 (tenn. which was this easement. that’s all mr. alt ever did. date of the agreement, but assert that the document does not fix any time within which a copy of the subject to any defects, liens, encumbrances, easements, rights-of-way, get any of that because the deal was not looking like it was going to go to 2000). the moving party has the ultimate burden of persuading the court that money check. wise later testified as follows: inspection period is going to run out tomorrow and we’re going to need to cash performance by the other party can be demanded. interstate bldg. corp. v. hillis, 66 s.w.2d escrow fee; and 4) he set forth some details regarding the seatons’ agreement to partially martin v. norfolk s. ry. co., 271 s.w.3d 76 (tenn. 2008), and hannan v. alltel publ’g co., examine the property. they went straight to the problem with the property, * * * march 7, 2012 session property, and then in parentheses, (the title commitment.)” days from the effective date of the agreement. established, specified, or defined in this agreement for the payment of any iv. discussion at knoxville raise certain specific questions relating to potential issues regarding the title to the property; must be some proof of consideration or of estoppel.” id. app. oct. 21, 1988). clause or interfered with their ability to perform their obligations. there also is no evidence there be a breach by either party of any of their respective representations and check, mr. alt attempted to revive the deal contained in the agreement; however, his this showing, then “the non-movant’s burden to produce either supporting alleged that the sellers breached the contract first. the trial court found in favor of the buyer, obligations where “time is of the essence” constitutes a material breach, and that timely -6- wise with a copy of the commitment for title insurance prior to the closing date was be examined,” and mr. siklosi’s affidavit says nobody ever asked him to the seatons argue that wise waived their breach because it continued to seek financing after april6 i don’t have the money and i don’t have financing. so the deal – you know, the seatons was 20 days after the effective date of the agreement. he noted that “[n]either sitting by interchange.1 involving parcels of land in athens, tennessee, owned by mr. seaton and his son, david r. disputed fact presents a genuine issue if “a reasonable jury could legitimately seaton. performance is a condition precedent under such clauses, wise was entitled to rescind the not exceeding thirty (30) days to allow the seller to satisfy or otherwise cure evidence. byrd, 847 s.w.2d at 215. similarly, the presentation of evidence performance as a remedy due to their termination of the agreement in the june 4, 2008 letter. essential element of the claim, the moving party must point to evidence that from the effective date of the agreement was not a condition precedent to enforcement, but the trial court observed that the seatons’ attorney stated clearly that they treated the contract agreement. that the nonmoving party cannot prove an essential element of the claim at vendor . . . guilty of failure to perform a prerequisite condition . . . is not in [a] position to be entitled to recover its costs as a result of such default or breach, including effective date of the agreement was not a condition precedent under the john s. wise, iii, president and sole member.2 15. miscellaneous. essence as part of this contract. everybody is bound by that. as soon as the performance contingent upon the ability to obtain financing. the seatons argue that the agreement did not which default is not cured after five (5) days written notice thereof, or, should did the trial court consider or refer to the post-hannan standard. moreover, under either good and marketable title to the property in fee simple; or (ii) the property is requirement of the agreement, especially since every date specified or established in the no. 24307 lawrence h. puckett, judge1 this appeal concerns a contract for the purchase and sale of property. the buyer refused to “effective date” of the agreement from january 28 to january 30, 2008; 2) he changed the on january 28, 2008, ray seaton executed the agreement as revised by mr. alt. the effective date, seller shall cause title to the property to be examined and significant source of capital before it could purchase or develop the seatons’ property as notwithstanding the foregoing, monetary liens may be satisfied out of the appeal from the chancery court for mcminn county no one admits to removing the right to terminate language.4 require something more than an assertion that the nonmoving party has no commitment for title insurance must be furnished to the buyer (wise). either produce evidence or refer to evidence previously submitted by the agreement. a.) the parties agree that the purchaser shall have the right for a period of 45 reasonable attorney’s fees and litigation costs. financing – do not constitute waiver as a matter of law. the seatons cannot establish that 597, 600-02 (tenn. ct. app. 1933). the party seeking to enforce a contract has the burden -7- planned. according to wise, by the end of march 2008, it became clear that adequate come upon the property and perform such tests and examinations thereof as it party is required to produce evidence of specific facts establishing that genuine . . . [y]ou never asked for an examination of the title according to mr. siklosi. in late 2007 or early 2008, wise properties-tn, llc (“wise”) and paul ray (“ray”)2 now, that was never done. it’s not even in dispute it was never done within primary facilitator of the negotiations was william (“bill”) alt, a chattanooga attorney. it the moving party may make the required showing and therefore shift the * * * (b) seller shall, upon receipt of notice of the title objections, promptly mr. siklosi stated in his affidavit that the first time he had any communication with -2- because not causing title to the property to be examined within ten days from 1. did the trial court err in granting wise’s motion for summary judgment a. . . . [a]t some point i guess the inspection period was running out. – i breach. further, the seatons assert that wise waived or excused performance of the * * * until – and could not know it unless the sellers told him. opinion the check. and i said, well, tad, we’re not cashing the check because i can’t resolve that fact in favor of one side or the other.” id. nichols case i’m going to grant summary judgment. claimed that the true intention of the parties prior to the execution of the agreement was to make wise’s gary r. patrick, chattanooga, tennessee, for the appellee, wise properties-tn, llc. something that only would be known to the buyer if the sellers chose to then purchaser shall, within two (2) days of its receipt of the title the purchase of the property without reduction in the purchase price. ii. issues -8- that were over-looked or ignored by the moving party; (2) . . . [i]t says you will cause within ten days an examination of the title. and hearing, the trial court ruled as follows from the bench: seaton’s real estate agent, tad bromfield, discussed the possibility of a real estate transaction the seatons also argue that the trial court applied an incorrect summary judgment it’s without dispute that you all didn’t do that. the closing date was set in the agreement for april 18, 2008. warranties as contained herein, which has not otherwise been specifically wise’s performance as a matter of law. explicit time requirements constitutes a breach which permits the non-defaulting party . . . a word or phrase is missing. the seatons contend that the agreement specified that the seller (the3 in other words, he had a right to withdraw his deposit. there doesn’t need to -3- issues of material fact exist. mccarley, 960 s.w.2d at 588; byrd, 847 s.w.2d mccarley, 960 s.w.2d at 588; byrd, 847 s.w.2d at 215 n. 5. both methods wise moved for summary judgment on may 10, 2011, arguing that under tennessee app. lexis 270, *10-11 (tenn. ct. app. apr. 28, 2000). section 15(d) of the agreement that he was unable and unwilling to perform under the agreement because of the inability the claim at trial. hannan, 270 s.w.3d at 5. we have held that to negate an rehabilitating the evidence attacked by the moving party; (3) i believe that i’m going to enforce the agreement, paragraph five, that the title as “terminated” and mentioned toward the end of its ruling that the agreement “was also -9- affirmed; case remanded 14. offer and acceptance. if this offer is not accepted by monday, january contract.” groner v. on-site grading, inc., no. e1999-00219-coa-r3-cv, 2000 tenn. is no allegation that wise “actively induced” the seatons to breach the title commitment attempts were unsuccessful. on june 4, 2008, mr. alt informed wise by letter that, due to mr. wise told the seatons: “i do want to continue working on the deal, but the contract will nonmoving party’s evidence must be accepted as true, and any doubts non-breaching party shall be entitled to exercise all remedies as may be (1) pointing to evidence establishing material factual disputes


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