Opinion
Nos. CW 08 01006, CA 08 01223, CA 08 01224.
March 4, 2009.
APPEAL FROM THE TWENTY-EIGHTH JUDICIAL DISTRICT COURT PARISH OF LASALLE, NOS. 36,028 and 36,029 HONORABLE R. J.P. MAUFFRAY, JR., DISTRICT JUDGE.
R. Joseph Wilson, Attorney at Law, Jena, LA, Counsel for Defendant/Appellee: Obtuse Triangle Investments, L.L.C.
William F. Henderson, Attorney at Law, Alexandria, L, Counsel for Defendant/Appellant: Avenue D Development, L.L.C.
Elaine F. Setliff, In Proper Person, Alexandria, LA.
Court composed of JOHN D. SAUNDERS, OSWALD A. DECUIR and ELIZABETH A. PICKETT, Judges.
This case involves two concursus proceedings where a real estate agent deposited the earnest money given by the buyer to the seller on two separate, but nearly identical contracts to purchase land. The only differences between the contracts are the property conveyed, the amount paid for the property, and the amount of earnest money deposited for the land. The two concursus proceedings were consolidated. Both the buyer and the seller filed a motion for summary judgment claiming entitlement to the earnest money.
The trial court found that the seller was entitled to the money because of the buyer's failure to notify the seller of its intentions by the deadline set in the contracts. The buyer filed for supervisory writs that were later consolidated into this appeal. Like the trial court, we find that the clear language of the contracts dictates that the seller is entitled to the earnest money. As such, we affirm the trial court's judgment.
FACTS AND PROCEDURAL HISTORY:
Obtuse Triangle Investments, LLC (Obtuse) is the record owner of two tracts of land, one containing nearly one acre and the second containing nearly two and a half acres. On August 2, 2007, Obtuse, as the seller, entered into two Agreements drafted by Avenue D Development LLC (Avenue D), the buyer.
Under the terms of the Agreements, Obtuse was to convey the smaller tract of land to Avenue D for the price of $200,000.00, and the larger tract of land for $650,000.00. The first Agreement required Avenue D to deposit with Lagniappe Realty, LLC the sum of $5,000.00 as earnest money, and the second Agreement required Avenue D to make an earnest money deposit of $19,500.00.
Both of the Agreements provided for a due diligence period of ninety (90) days which would end on October 31, 2007. At Paragraph 10 of each, the Agreements further provided a limited basis for the extension of the due diligence period. Paragraph 10 also provided that if Avenue D did not intend to consummate the transaction, it must notify Obtuse of that intent prior to expiration of the due diligence period or it would forfeit the earnest money deposited with Lagniappe Realty, LLC.
On October 24, 2007, in a letter addressed to Obtuse, Avenue D purported to extend the due diligence period to November 29, 2007. Obtuse, while acknowledging that it received the letter, did not accept, consent to, or confirm the notice of Avenue D, either formally or informally, or otherwise agree to any extension of the due diligence period.
The sales contemplated by the two Agreements were not closed on or before November 30, 2007. Further, Avenue D failed to notify Obtuse that it did not intend to consummate the transactions prior to October 31, 2007.
On December 18, 2007, Obtuse gave written notice to Louisiana Lagniappe Realty, LLC that it considered both Agreements breached by Avenue D. Thus, it requested that the earnest money be paid to it as provided by the Agreements. Elaine Setliff responded by invoking two concursus proceedings, impleading Avenue D and Obtuse as defendants to each, asking that the court resolve which party was to receive the deposited, earnest money. Both proceedings were consolidated by Order signed May 6, 2008. Avenue D and Obtuse filed competing motions for summary judgment each claiming entitlement to the money. They were heard on June 19, 2008.
The trial court found the language of the Agreements was clear and that it indicated that Obtuse was entitled to the funds deposited by Setliff in the court's registry. The trial court rendered judgment granting Obtuse's motion for summary judgment while denying Avenue D's motion. Avenue D then filed a motion and order to fix time for filing a writ application regarding the denial of its motion for summary judgment and the granting of Obtuse's motion. This court, in the interest of judicial efficiency, granted the writ application, and, for the limited purpose of judicial economy, consolidated the writ applications with this appeal. Both Avenue D and Obtuse briefed the four assignments of error raised by Avenue D. They are as follows:
ASSIGNMENTS OF ERROR:
1. The trial court erred in failing to grant the motion for summary judgment of Avenue D.
2. The trial court erred in granting the motion for summary judgment filed by Obtuse.
3. The trial court erred in failing to find an automatic extension under the contract between Avenue D and Obtuse.
4. The trial court erred in failing to grant attorney's fees to Avenue D as a result of the breach of the contract by Obtuse.
ASSIGNMENT OF ERROR NUMBER THREE:
Avenue D alleges that the trial court erred in failing to find an automatic extension under the contract between it and Obtuse. We do not agree.
Louisiana Civil Code Articles 2045— 2057 govern the rules of contractual interpretation. Article 2045 states, "[i]nterpretation of a contract is the determination of the common intent of the parties."
How to determine that common intent of the parties starts by looking to the language of the contract. Article 2046 states, "[w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." Thus, our first step is to look to the language of the contract to determine whether it meets the criteria of La.Civ. Code art. 2046.
Whether language to a contract is clear or ambiguous is a question of law. McKinley v. Scott, 98-263 (La.App. 3 Cir. 10/28/98), 721 So.2d 1018, writ denied, 99-117 (La. 3/12/99), 739 So.2d 207. Such questions of law are subject to a de novo review of the language of the contract. Boykin v. PPG Indus., Inc., 08-117 (La.App. 3 Cir. 6/18/08), 987 So.2d 838, writ denied, 08-1635 (La. 10/31/08), 994 So.2d 537.
The center of the dispute involves the due diligence period for Avenue D to determine if the properties it intended to purchase from Obtuse were suitable for its potential client, Walgreens. Section 8 of the contracts grants Avenue D a ninety (90) day period to complete any due diligence on the property. The specific language is as follows:
The Buyer shall have until 90 days after the execution of the Purchase Agreement, unless such date is a Saturday, Sunday or legal holiday, in which event the date shall be extended to the next business day, to complete any investigation and due diligence on the Property. If the Buyer elects not to consummate the sale and so notified the Seller prior to the expiration of the Due Diligence Period, the Buyer shall receive a full refund of all Earnest Monies paid and the parties shall have no further obligation to each other, however if Buyer decides to continue with the contract, the $19,500.00 earnest money will become non-refundable and deposited with Seller.
The second contract between Avenue D and Obtuse states the amount as $5,000.00 which is consistent with the differing prices of the two pieces of property.
Paragraph 10 of the contract between Avenue D and Obtuse is at the center of this particular assignment of error, and the interpretation of this paragraph is potentially the ultimate issue in this case. It reads as follows:
10. SPECIAL PROVISIONS:
(a) The ability of the Buyer to obtain prior to the Act of Sale all necessary zoning, variances, and approvals to construct and operate a new retail facility. Said variances, permits and approvals shall or may be issued by the City of Jena, Louisiana, it's City Planning Commission, Board of Zoning Adjustments, Department of Safety and Permits, Board of Building Standards, Historic Districts Landmarks Commission, Louisiana Deprtment of Transportation and/or any other agency or individual with regulatory authority.
(b) The ability of the Buyer to obtain a lease with Buyer's Tenant on or prior to Closing.
(c) All existing leases, if any, are to terminate at the Closing. The property is to be delivered clear of any and all leases and liens.
(d) In the event items a, b, or f are delayed by said boards, committees, agencies or authorities, all dates herein, including the Closing date on the Contract, shall automatically be extended by thirty (30) days for each said delay not to exceed a total of three (1) thirty (30) day periods by Buyer notifying Seller in writing.
(e) It is further agreed and understood that the Buyer has the right to assign his rights under this contract.
(f) The property is subject to a Level 1 Site Inspection at Buyer's expense and should any hazardous substance be found in, on or upon the property, the Buyer may declare this Agreement null and void, or, at Buyer's option, continue this Agreement.
(g) The ability of the Buyer to simultaneously close abutting properties needed by Buyer for Buyer's proposed development.
Avenue D had plans to purchase the properties, construct and operate a retail facility on those properties, and lease the facility to Walgreens. Avenue D was unable to obtain a lease with Walgreens prior to the expiration of the initial ninety day due diligence period. The reason evidenced in the record for this failure to secure a lease is that the Walgreens' Senior Operations Vice President, who was responsible for consideration of the sites, suffered an illness that delayed the sites' inspection for suitableness.
Avenue D contends that an automatic extension of the deadlines listed in Section 8 occurred when it sent Obtuse an "Extension letter" on October 24, 2007. Its contention is that the letter extended the deadlines as stated in Paragraph 10(d).
Obtuse contends that this letter did not extend any deadlines in the Agreements because none of "items a, b, or f" in Paragraph 10 above were "delayed by said boards, committees, agencies or authorities" as required in Paragraph 10(d). We agree with Obtuse's contention.
We find that the language in Section 8 and Paragraph 10 of the contract is "clear and explicit," and it does not lead to "absurd consequences." There was no automatic extension of the deadlines set in Section 8 by Paragraph 10(d) because the delay in Paragraph 10(b), the failure to obtain a lease on the property on or prior to closing, was not caused "by said boards, committees, agencies or authorities." Rather, the delay was caused by a Walgreens executive's illness.
The "said boards, committees, agencies or authorities" of Paragraph 10(d) were referenced in Paragraph 10(a) where various specific bodies are listed, none of which are Walgreens. Moreover, Paragraph 10(a) includes the expansive phrase "any other agency or individual with regulatory authority." Again, a Walgreens employee is not an "individual with regulatory authority."
Accordingly, given that the delay was caused by a Walgreens employee rather than an individual qualifying under the expansive phrase above, we find that the trial court was correct in finding no automatic extension under the contract between Avenue D and Obtuse. The deadline for Avenue D to complete its due diligence investigation and to inform Obtuse of its intentions was October 31, 2007, ninety days after the execution of the Agreements on August 2, 2007.
ASSIGNMENTS OF ERROR NUMBERS ONE AND TWO:
Avenue D contends that the trial court erred in granting the motion for summary judgment filed by Obtuse. Rather, Avenue D asserts that it should have been granted its motion for summary judgment.
Louisiana Code of Civil Procedure article 966 states, in pertinent part:
A. (1) The plaintiff or defendant in the principal or any incidental action, with or without supporting affidavits, may move for a summary judgment in his favor for all or part of the relief for which he has prayed. The plaintiff's motion may be made at any time after the answer has been filed. The defendant's motion may be made at any time.
(2) The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action, except those disallowed by Article 969. The procedure is favored and shall be construed to accomplish these ends.
. . .
C. (1) After adequate discovery or after a case is set for trial, a motion which shows that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law shall be granted.
(2) The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
The standard of review for whether a motion for summary judgment is proper is that of de novo. Covington v. McNeese State Univ., 08-505 (La.App. 3 Cir. 11/5/08), 996 So.2d 667. Thus, we will look to the Agreements between Avenue D and Obtuse to determine if either is entitled to the monies deposited with the court under the summary judgment standard in Article 966.
Both of the Agreements provided the following in Section 8:
The Buyer shall have until 90 days after the execution of the Purchase Agreement, unless such date is a Saturday, Sunday or legal holiday, in which event the date shall be extended to the next business day, to complete any investigation and due diligence on the Property. If the Buyer elects not to consummate the sale and so notified the Seller prior to the expiration of the Due Diligence Period, the Buyer shall receive a full refund of all Earnest Monies paid and the parties shall have no further obligation to each other, however if Buyer decides to continue with the contract, the $19,500.00 earnest money will become non-refundable and deposited with Seller. The parties did not consummate either Agreement. Avenue D did not notify Obtuse of its intentions regarding the Agreements prior to the deadline, October 31, 2007. These facts are not in dispute, thus, absent any extension of the due diligence period established in Section 8, it is clear that Obtuse is entitled to a judgment as a matter of law awarding it with the earnest money deposited in the court's registry. Avenue D claims that its October 24, 2007, "Extension letter" was adequate to extend the due diligence period under the terms of Paragraph 10(d). We have already decided that the "Extension letter" did not extend the due diligence period in Assignment of Error Number Three above because the failure to obtain a lessee for the planned buildings on the property was not caused by a listed reason necessary to obtain the automatic extension. Avenue D now argues that the "Extension letter" was an adequate form of communication to change the due diligence period. This argument is also without merit.
The second contract between Avenue D and Obtuse states the amount as $5,000.00 which is consistent with the differing prices of the two pieces of property.
Paragraph 15 of the Agreement (emphasis added) states, in pertinent part:
AGREEMENT OF PARTIES: This contract incorporates all prior agreements between the parties, contains the entire and final agreement of the parties, and cannot be changed except by their written consent. Neither party has relied upon any statement of representation made by the other party or the sales representative bringing the parties together not contained herein. Neither party shall be bound by any terms, conditions, oral statements, warranties, or representations not herein contained.
Using the La.Civ. Code arts. 2045 and 2046 cited above, we find that the language of Paragraph 15 is clear, explicit and does not lead to absurd results. In order for Avenue D to change any terms of the Agreements, it needed to procure Obtuse's written consent. Further, as evidenced by the last sentence cited in Paragraph 15, Obtuse cannot be bound by any representations made in the "Extension letter" as the letter was not contained in the Agreements. The only other arguments made by Avenue D that the due diligence deadline was extended were either already addressed by us in Assignment of Error Number Three, or involve reliance upon evidence outside the four corners of the agreement. We have found the language of the Agreements clear, thus no further interpretation is allowed under La.Civ. Code art. 2046. Further, even if we were to find that the language of the Agreements were ambiguous, given that Avenue D drafted the Agreements, the ambiguity would most likely be interpreted against them. See McKinley, 721 So.2d 1018.
Accordingly, we find that the trial court was not in error in granting Obtuse's motion for summary judgment. Consequently, we also find no error in the trial court's denial of Avenue D's competing motion for summary judgment. As such, we affirm the trial court's judgment awarding Obtuse the earnest monies deposited in the registry of the court.
ASSIGNMENT OF ERROR NUMBER FOUR:
This assignment is pretermitted by our resolution of the issues raised by Avenue D above. We found Avenue D was not entitled to any relief, thus, it follows that it is not entitled to any attorney's fees under the Agreements nor for work done on appeal.
CONCLUSION:
Avenue D raised four assignments of error. We found that none of the four assignments had any merit. The language of the Agreements is clear and Obtuse is entitled to the proceeds deposited by Setliff in the concursus proceedings. All costs of these proceedings are to be paid by Avenue D.
AFFIRMED.
This opinion is NOT DESIGNATED FOR PUBLICATION. Rule 2-16.3, Uniform Rules, Courts of Appeal.