PAUL A. BONIN, Judge.
Leah and Michael Tubbs agreed to purchase the home of Mignon and Thomas Schafer and gave the Schafers a promissory note as a good faith deposit that they would perform under the written agreement. The Schafers sued the Tubbs to collect the note because the Tubbs failed to appear for the closing, or act of sale, scheduled by the Schafers.
The Tubbs contended that their obligation to pay the note was extinguished because the purchase-sell agreement became null and void when they were unable to obtain specified financing for the purchase, all as provided by the agreement itself. Arguing that the Tubbs misrepresented the status of their financing arrangements, the Schafers countered that the financing condition was fulfilled by operation of law due to the fault of the Tubbs. The Tubbs, in their reconventional demand, however, sought damages, attorneys' fees, and costs for the Schafers' alleged breach of the agreement by refusing to return the promissory note.
The trial judge ruled that the Tubbs' obligation to purchase the home was extinguished by the failure of the financing condition, which rendered the agreement null and void, and that the Schafers must return the promissory note to the Tubbs. On the reconventional demand, however, the trial judge, finding a breach of the Schafers' obligation under the same purchase-sell agreement, awarded the Tubbs damages and attorneys' fees. The Schafers appeal the trial judge's rulings ordering the return of the promissory note (implicitly dismissing their principal demand) and at the same time awarding the Tubbs damages and attorneys' fees under the agreement which the trial judge concluded was null and void. The Tubbs answer the appeal and seek an increase in damages in an amount equal to the promissory note.
We explain our decision in considerably greater detail in the following Parts.
We begin, in this Part, our explanation with an extended description of the course of the proceedings and of the arguments of the parties.
Upon the acceptance of the purchase-sell agreement by the Tubbs and Schafers, the Tubbs delivered to the Schafers a promissory note, payable to the Schafers, in the amount of $53,050. The note was given in lieu of cash and constituted the Tubbs' good faith deposit that they would perform their obligation under the agreement. As the expiration of the time period covered by the agreement, as extended by the parties, approached for the act of sale to close, the Schafers set the closing before a notary. The Tubbs did not appear for the closing.
The Schafers then filed this suit seeking to enforce collection of the promissory note as stipulated damages for the alleged breach by the Tubbs of their obligation to purchase the home. The Tubbs, as they had before the scheduled closing, stated that the purchase-sell agreement was null and void because they had been unable to secure financing for the purchase. The agreement, they contended, was conditioned upon their ability to obtain financing as specified in the agreement. Their financing commitment was, however, conditioned upon the sale of their home, and their home was not sold before the commitment expired. The failure of that condition not only rendered the agreement null and void but necessarily rendered the secondary obligation of forfeiture of their good faith deposit unenforceable.
The Tubbs also interjected that the Schafers were responsible for their inability to timely secure financing. The Tubbs pointed out that the Schafers had introduced them to some friends who were looking to move into the Tubbs' neighborhood. Believing that those friends, the Warners, were financially able to purchase their home as agreed in a purchase-sell agreement, different from the one which we have under consideration, the Tubbs did not advertise their home for sale. The condition of their financing by the lender was that the Tubbs sell their home on Broadway and use a significant portion of the net proceeds toward the purchase price of the Schafers' State Street home. In effect, the Tubbs were reconvening and claiming that the Schafers breached their obligation to sell the house and owed the Tubbs an amount equal to their good faith
Reacting to this interjection, the Schafers contended that the Tubbs concealed from them that the lender had conditioned its financing of the purchase of the State Street home on the sale of the Broadway home. The Schafers countered that they would never have agreed to such a condition. Moreover, the Schafers argued that the Tubbs actively misrepresented the status of their financing and thus, due to the Tubbs' fault, the suspensive condition of the purchase-sell agreement was deemed fulfilled such that the Tubbs forfeited the good faith deposit by not appearing for the closing and purchasing the home.
Following a bench trial, the trial judge decided that the purchase-sell agreement was null and void and that the promissory note was not enforceable. Despite this finding, however, the trial judge went on to find that the Schafers breached the agreement and condemned them to pay the Tubbs damages in the amount of $5,000 as well as the Tubbs' attorneys' fees.
Then, following the ruling, the parties tacked in a different direction. Still contending that the agreement was not null and void, the Schafers alternatively argue that the only basis for an award of damages and attorneys' fees would be the null agreement such that there is no legal basis for the awards. The Tubbs, in their change of course, answered
The gateway to our decision must necessarily be an exposition of the particular purchase-sell agreement. The Tubbs-Schafers' agreement is a species of contract. See La. Civil Code art. 2623; 1100 South Jefferson Davis Parkway, LLC v. Williams, 14-1326, p. 5 (La.App. 4 Cir. 5/20/15), 165 So.3d 1211, 1216. And, of course, it is axiomatic that a contract has the effect of law between the parties, and the courts are bound to interpret them according to the common intent of the parties. See La. Civil Code Arts. 1983 and 2045.
If the words of a contract are clear, unambiguous, and lead to no absurd consequences, we may not look beyond the contract language to determine the true intent of the parties. See La. Civil Code art. 2046. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. See La. Civil Code art. 2050. "When a contract is not ambiguous or does not lead to absurd consequences, it will be enforced as written and its interpretation is a question of law for a court to decide." Lalla v. Calamar, N.V., 08-0952, p. 8 (La.App. 4 Cir. 2/11/09), 5 So.3d 927, 932, quoting American Deposit Ins. Co. v. Myles, 00-2457, p. 5 (La. 4/25/01), 783 So.2d 1282, 1286. Meaning and intent of parties to a written instrument is ordinarily determined from the instrument's four corners and extrinsic evidence is inadmissible either to explain or to contradict the instrument's terms. See Lalla, 08-0952, p. 8, 5 So.3d at 932. And, notably, the interpretation of a contract's provisions is typically a matter of law. See Hall v. Malone, 12-0264,
The general object of this agreement is, obviously, the purchase of the home by the Tubbs and the sale of the home by the Schafers. After several rounds of offers and counter offers, the Tubbs on February 23, 1999, presented the Schafers with the offer that was to form the basis of the purchase agreement. The Schafers, by way of letter dated February 25, 1999, accepted the Tubbs' offer. As confected by the parties, the purchase agreement obligated the Tubbs to purchase, and the Schafers to sell, the State Street home at a price of $530,500. The purchase agreement at issue, therefore, is "a bilateral promise of sale or contract to sell." La. Civil Code art. 2623. It is, in other words, an "agreement whereby one party promises to sell and the other promises to buy a thing at a later time, or upon the happening of a condition, or upon performance of some obligation by either party." Id. (emphasis added). "Such an agreement gives either party the right to demand specific performance." Id. The Schafers' primary obligation under the purchase agreement was to deliver and warrant merchantable title. See La. Civil Code art. 2475.
The first specific feature of this agreement, however, is that the parties' respective obligations to purchase or sell the home are clearly conditioned upon the Tubbs' ability to secure financing: "This sale is conditioned upon the ability of the purchaser to borrow upon this property as security the sum of $424,400.00 by a mortgage loan or loans at a rate of interest not to exceed 7% per annum, interest and principal payable in equal monthly installments, over a period of 30 years." The agreement afforded the Tubbs forty-five days from the acceptance of the agreement to secure financing and, especially important for our purposes, expressly provided for the consequence of the inability of the Tubbs to obtain financing: "Should the loan stipulated above be unobtainable by the purchaser, seller or agent within 45 days from date of acceptance hereof, this contract shall then become null and void, and the agent is hereby authorized to return the purchaser's deposit in full."
The second specific feature of this agreement is a provision which required the purchaser to deposit a demand promissory note in the amount of 10% of the purchase price. With reference to this deposit, the agreement further provided that upon the failure of the Tubbs to comply "with this agreement within the time specified, the seller shall have the right to declare the deposit, ipso facto, forfeited,...; or the seller may demand specific performance." Conversely, as we have already indicated, the agreement also provided a remedy to the Tubbs in the event of the Schafers' failure to comply: "the purchaser shall have the right either to
A third specific feature of this agreement is the provision which states that "[e]ither party hereto who fails to comply with the terms of this offer, if accepted, is obligated to pay all fees and costs incurred in enforcing collection and damages." It is this provision of the agreement that is the basis for the trial judge's award of $5,000 damages plus attorneys' fees to the Tubbs.
Our independent review of the agreement satisfies us that in its salient provisions it is clear and unambiguous. The Tubbs' obligation to purchase the Schafers' home, as well as the Schafers' obligation to sell their home, is clearly conditioned upon an uncertain event, which is the Tubbs' ability to secure financing. Thus, neither party's obligation arising under the agreement can be enforced until the uncertain event occurs. See La. Civil Code art. 1767. And, importantly, "[i]f the condition that an event shall occur within a fixed time and that time elapses without the occurrence of the event, the condition is considered to have failed." La. Civil Code art. 1773.
The determination of whether the suspensive condition was fulfilled or failed is in this case a question of fact for the trier of fact, and we turn to the Schafers' argument and a review of the trial judge's factual findings.
In this Part we consider the Schafers' main argument that the trial judge erred in her implicit
The Schafers anchor their argument on a proposed extension agreement that the Tubbs sent to them in an attempt to secure a postponement of the April 30, 1999 closing date. They point specifically to the following language: "Purchaser further
We must, therefore, examine the parties' conduct leading up to the act of sale.
Mrs. Tubbs testified that on the afternoon of February 21, 1999, she, Mr. Tubbs, their two children, and her parents, the Smiths, were driving in uptown New Orleans when her parents spotted a for-sale-by-owner sign in the yard of the Schafers' State Street property. Mr. Tubbs and the Smiths suggested that she call the phone number on the sign and take a tour of the house. Mrs. Tubbs called, spoke with Mrs. Schafer, and arranged for a showing shortly thereafter. Later, the Tubbs, along with their children and the Smiths, spent approximately thirty to forty-five minutes walking through the Schafers' home.
After walking through the house, Mr. Tubbs, his father-in-law, and the children went outside to look at the back yard while Mrs. Tubbs remained inside and spoke with Mrs. Schafer. When he returned, he heard Mrs. Schafer urging Mrs. Tubbs to make an offer on the house. Mr. and Mrs. Tubbs both testified on cross-examination to telling Mrs. Schafer that before they could buy her home, they needed to first sell their current home, which was situated in uptown New Orleans on Broadway. The Tubbs then asked Mrs. Schafer about the process of selling their Broadway home, which was not listed at the time, without the assistance of a realtor. Mrs. Schafer, according to Mr. Tubbs, stated that the process was not a complicated one. Mr. Tubbs also testified that Mrs. Schafer informed them that her husband had experience at selling homes, could provide him with the necessary forms, and also guide him through the process. Mrs. Schafer, according to Mr. Tubbs, then asked about the Tubbs' Broadway home. Mr. Tubbs testified that after describing the home to her, Mrs. Schafer informed them that some friends of hers were looking to move into uptown New Orleans and that they might be interested in looking at the Tubbs' home.
The Tubbs then left. Although they had only $8,000 in cash on hand at the time, the Tubbs decided to make an offer. Mrs. Tubbs, testifying on cross-examination, explained their thinking: "And, you know, when Michael and I discussed it, once we left the house, I said, they've got someone interested, you know, why don't we put in an offer. You know, maybe they will come
The Tubbs both testified to receiving phone calls from Mr. Schafer the following morning. Although Mr. Schafer denied ever speaking with her, Mrs. Tubbs testified on cross-examination that he called her early the following morning to let her know that he had received the offer. According to Mrs. Tubbs, Mr. Schafer also stated that he had a friend who had just driven by the Tubbs' home, liked what he saw, and wanted to visit later that day. Mrs. Tubbs, however, asked Mr. Schafer to call her back after she had finished cleaning the house. Mr. Schafer never called back. Rather, Mrs. Tubbs testified that David Warner, the friend about whom the Schafers had spoken, called her after she spoke with Mr. Schafer, asked about the house, and arranged a visit for later that day. According to Mrs. Tubbs, Mr. Warner toured her home and then asked if he could come back later with his wife so that she could view the property. Mrs. Tubbs assented and, later that day, Mr. Warner returned to the Tubbs' home with Mrs. Warner. The Warners returned later that week, this time with their daughter, to again view the house.
Mr. Schafer, according to Mr. Tubbs, also called him on the telephone the morning of February 22, 1999, to say that he had received the offer, was reviewing it, and would probably make a counter offer. Mr. Schafer, according to Mr. Tubbs, also brought up the sell-by-owner process, told him that he had the necessary forms, which he offered to prepare for the Tubbs and "walk [them] through the process." Later that afternoon, according to Mr. Tubbs, Mr. Schafer hand-delivered his counter offer to the Tubbs' home. Mr. Schafer, however, denied ever visiting the Tubbs' Broadway home, claiming instead that he faxed the document to Mr. Tubbs.
The Schafers, specifically, countered with an offer to sell at $549,500. In his typed cover letter, which the Schafers introduced into evidence, Mr. Schafer writes: "As a counter offer to your offer, dated February 21, 1999, I submit the attached Agreement to Purchase or Sell, which I believe incorporates the terms and conditions of your offer." He noted that he left empty the form's section on purchaser financing, because he did not know the Tubbs' intentions on the topic, and invited the Tubbs to fill out this section. He also observed that because neither party is represented by an agent, he would "be glad to discuss this offer with" Mr. Tubbs in order "to allay whatever concerns [he] may have and consider any further conditions [he] may like to include in the agreement."
On the following day, February 23, 1999, the Tubbs responded in writing to the Schafers' counteroffer with their own counteroffer. Both parties introduced into evidence the Tubbs' counteroffer and accompanying cover letter. In the cover letter, Mr. Tubbs writes: "We have modified the Agreement to Purchase/Sell to reflect the changes to your counter offer dated 2/22/99. In discussing this with our mortgage company we believe we have
At the same time as the Tubbs negotiated with the Schafers on the terms of sale for the Schafers' home, the Tubbs also discussed with the Warners the terms of sale for their Broadway home. The Warners, according to Mrs. Tubbs, loved the house and asked on their first visit about their asking price. Mrs. Tubbs noted that Mr. Warner also told her specifically that he intended to pay cash for the house. The Tubbs, however, had not yet put a price on their house. According to Mrs. Tubbs, Mr. Warner stated that his primary residence was on Martha's Vineyard, and he intended the Broadway house to be his second home. Shortly thereafter, the Tubbs informed the Warners that they wanted $379,000 for the house. According to Mr. Warner, however, there were no negotiations with the Tubbs:
The Warners verbally accepted the Tubbs' offer to sell for $379,000 during the same week that the Schafers and Tubbs negotiated the terms of their respective purchase agreement. Mr. Warner asked Mr. Tubbs to prepare the purchase agreement and suggested that he ask Mr. Schafer for the requisite form. Mr. Schafer provided the form to Mr. Tubbs on February 23, 1999. Mr. Tubbs then filled out the form and mailed it to the Warners on March 3, 2015. The Tubbs and Warners both signed the agreement on March 7, 2015. The Warners' purchase agreement, notably, provides: "This sale is conditioned upon purchasers selling 440 Fairway Dr., N.O.L.A. 70124 [the Warners' home] for 725,000.00 cash & using 379,600.00 to buy 501 Broadway." Like the Tubbs' agreement with the Schafers, their agreement with the Warners provided that the act of sale was to transpire on April 30, 1999, before the Schafers' closing attorney.
As Mr. Tubbs noted on direct examination: "It was sort of too good to be true. We made an offer on a house, next day, we got a buyer on our house, agreed to a cash sale, agreed to our price, the number we needed to obtain the loan and pay the down payment. So it was — it was just almost too good to be true." Indeed it was. The two sales did not close on April 30. Rather, Mr. Tubbs testified that on March 25, 1999, he received a facsimile from Mr. Warner in which he wrote: "With regards to closing on April 30th, my purchaser does not want to close until June 1st and he will not consider doing it sooner. Please give me a call if you would like to discuss."
Mr. Tubbs then spoke with Gregory Faia, Mr. Schafer's closing attorney, in order to secure a suitable form to formalize the extension/amendment to the purchase agreement. Upon speaking with Mr. Faia, Mr. Tubbs learned for the first time that Mr. Warner was in bankruptcy. Testifying that he was "pretty shocked and concerned," Mr. Tubbs called Mr. Schafer who tried to assuage his fears: "He said I really shouldn't be concerned. He was aware of the bankruptcy. He had represented him in bankruptcy, that we were in actually better shape because there was, you know, a court — bankruptcy court approval that he was going to sell his home and buy ours, and we were in, you know, better shape than we were than most other transactions."
What Mr. Schafer was referring to, and what Mr. Tubbs would later discover, was that on March 11, 1999 — four days after the Tubbs and the Warners signed their purchase agreement — Mr. Warner filed a motion in bankruptcy court seeking authorization to sell his current home and purchase the Tubbs' home.
The hearing on the motion in Bankruptcy Court was set to occur on March 23, 1999 — two days before Mr. Warner called Mr. Tubbs asking for an extension — but was continued to April 13, 1999. Although he ruled from the bench in favor of Mr. Warner, the bankruptcy judge waited until May 11, 1999, to issue an order giving approval for the sale of Mr. Warner's Fairway Drive home, Mr. Warner's purchase of
The Tubbs, however, learned several weeks before the June 1 closing that several of Mr. Warner's creditors had petitioned the Bankruptcy Court to reconsider its approval of Mr. Warner's course of action.
Mr. Schafer testified that he called and spoke with Mr. Tubbs after first learning of the motion to set aside the sales. He also testified that he urged Mr. Tubbs to hire an attorney to represent his interests in the Warner bankruptcy. Mr. Tubbs testified, however, that Mr. Schafer attempted to dissuade him from hiring his own attorney, claiming that "it would screw up the works" and be a "waste of money." Noting that his "trust factor" in Mr. Schafer was eroding, Mr. Tubbs hired counsel to represent his family's interests in the Bankruptcy Court hearing. Mr. Warner and Mr. Tubbs, but not Mr. Schafer, attended the May 24, 1999 hearing.
Despite Mr. Schafer's assurances, the bankruptcy judge from the bench rescinded his approval of Mr. Warner's proposed course of action. Later that day, Mr. Tubbs' attorney spoke on the telephone with Mr. Schafer. She subsequently sent him a letter in which she noted that Mr. Schafer had offered to release the Tubbs from the purchase agreement: "I am writing to confirm that you have offered to release my clients, Michael and Leah Tubbs, from the Agreement to Purchase of Sell the property ... I will contact you shortly with my clients' response." Mr. Schafer replied later that day. His letter notes that he had discussed the conversation with his wife — a conversation she denied at trial — but that she was unwilling to agree to a release of the Tubbs. Instead, Mr. Schafer proposed a further extension of the closing date in order to allow the Tubbs "the opportunity to sell their home to another party, since that was their intention at the time of signing the contract to purchase 1100 State Street." Despite this language in his letter, Mr. Schafer testified at trial that he was unaware at the time he wrote it that the Tubbs' financing with Countrywide was conditioned upon the sale of their home. Rather, he explained, the language merely reflected his assumption that the Tubbs — a young couple with two small children — were intending to sell their home. Mr. Schafer also denied offering to release the Tubbs, claiming instead that the proposal was first mooted by Mr. Tubbs' attorney.
At this time — late May 1999 — the parties did not extend the closing date, aiming
The Tubbs then agreed to extend the act of sale to August 13, 1999, and put their home on the market. The Tubbs' lock-in agreement with Countrywide, unfortunately, expired on August 11, 1999. Because the interest rates had gone up since the initial lock-in agreement was issued in March of 1999, Countrywide would not consent to a further extension at an interest rate of 6.25% unless the Tubbs agreed to purchase discount points. If the Tubbs did not purchase discount points, Countrywide would have given them no less than an 8.375% interest rate. Mr. Tubbs testified that at this point he and his wife could not afford to purchase discount points, and the evidence indicates that the purchase agreement obligated him to secure an interest rate of no more than 7%. The Tubbs, accordingly, lost their conditional financing with Countrywide.
On August 12, 1999, the Tubbs notified the Schafers that they no longer had financing. Mr. Schafer testified that this was the first time that he learned that the Tubbs' financing was conditioned upon the sale of their Broadway home. The Schafers responded by setting the act of sale for August 13, 1999. The Tubbs did not attend and title was not passed. The Schafers, by way of letter to the Tubbs, subsequently declared the demand promissory note to be forfeited according to the terms of the purchase agreement. The Tubbs refused to pay any portion of the demand note and the Schafers filed suit shortly thereafter.
The issue for a reviewing court to resolve when faced with a fact finding is not whether the trier of fact was right or wrong, but whether the fact-finder's conclusion was a reasonable one; even though an appellate court may feel its own evaluations and inferences are more reasonable than the factfinder's, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony. See Stobart v. State through Dept. of Transp. and Development, 617 So.2d 880, 882 (La.1993) (citations omitted). This review standard is based, in part, on the trial court's ability to better evaluate the testimony of live witnesses, compared with an
As pointed out in Lasyone v. Kansas City Southern R.R., 00-2628 p. 6 (La.4/3/01), 786 So.2d 682, 688-689, "[t]hese standards for manifest error review are not new. They are the guiding principles that aid our courts of appeal, which are our error correcting courts, when reviewing a trial court's factual determinations." The manifest error standard of review also applies to mixed questions of law and fact. See Bates v. City of New Orleans, 13-1153, p. 7 (La.App. 4 Cir. 3/26/14), 137 So.3d 774, 780. Lastly, we note that when reviewing questions of law we are simply to determine whether the trial court was legally correct or incorrect. See Goodrich Petroleum Co., LLC v. MRC Energy Co., 13-1435, p. 13 (La.App. 4 Cir. 4/16/14), 137 So.3d 200, 207.
The evidence fully supports the trial judge's conclusion that the Tubbs had a good faith belief that they had financing when they forwarded the proposed extension agreement to the Schafers on April 18, 1999. There is no doubt that Countrywide conditioned its loan approval with the Tubbs on the sale of their Broadway home. It is likewise clear that the Bankruptcy Court granted Mr. Warner's motion seeking authorization to sell his current home and purchase the Tubbs' home on April 13, 1999. Mr. Tubbs testified that at this point he learned from Mr. Schafer that the Bankruptcy Judge had approved the sales.
The record also supports the trial judge's conclusion that the Schafers knew that the Tubbs' financing with Countrywide was conditioned upon the sale of their Broadway home. As should be evident from our examination of the facts, the Tubbs have contended consistently that they told the Schafers about Countrywide's financing condition. The Schafers, on the other hand, have consistently maintained that they did not know of the condition until August 12, 1999, when they learned that the Tubbs no longer had financing. The trial judge, explicitly, found
When "a factfinder's finding is based on its decision to credit the testimony of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong." Rosell, 549 So.2d at 845. "[A]nd where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable." Id. We do not overturn a factfinder's reasonable credibility determinations. See Duncan v. Bartholomew, 11-0855, p. 13 (La.App. 4 Cir. 3/14/12), 88 So.3d 698, 709. Having reviewed the record, we cannot say that the trial judge's decision to credit the testimony of the Tubbs over that of the Schafers is manifestly erroneous or clearly wrong. Having credited the Tubbs, the trial judge could hardly have found them liable to the Schafers for misrepresentation.
Having concluded that the trial judge was not clearly wrong in rejecting the Schafers' main argument that the suspensive condition was fulfilled through the fault of the Tubbs, we turn now to review the trial judge's finding that the suspensive condition failed and the agreement is null and void.
In order to determine whether the Tubbs had timely obtained financing for their intended purchase, it was necessary for the trial judge to review the commitment letter that the Tubbs had received from their prospective lender, Countrywide Home Loans, Inc. Although Countrywide's commitment letter superficially satisfied the specific terms of the purchase-sell agreement's requirements respecting a mortgage loan in the amount of $424,400.00 at a rate of interest not to exceed 7% per annum, interest and principal payable in equal monthly installments, over a period of 30 years, the commitment letter itself contained a suspensive condition. The Schafers, it seems to us, pointedly overlook this indisputable feature of Countrywide's commitment letter.
The suspensive condition of the financing commitment was that the Tubbs must sell their own Broadway home and use a substantial amount of the proceeds toward the purchase price. Specifically, the lender conditioned its financing offer upon the Tubbs selling their Broadway home and applying $106,000 from the proceeds towards the purchase of the Schafers' home.
Countrywide's home loan consultant testified without contradiction that Mr. Tubbs was persistent in attempting to obtain more favorable or less onerous financing terms from Countrywide. Vicki Cummins, the consultant, testified that she worked with Mr. Tubbs as he sought to secure
Again, we review the trial judge's factual finding under the manifest error-clearly wrong standard. See Hall v. Folger Coffee Co., 03-1734, p. 9 (La. 4/14/04), 874 So.2d 90, 98. In order to reverse the such findings, "an appellate court must undertake a two-part inquiry: 1) the court must find from the record that a reasonable factual basis does not exist for the finding of the trier of fact; and 2) the court must further determine that the record establishes the finding is clearly wrong." Scarberry v. Entergy Corp, 13-0214, p. 16 (La.App. 2/19/14), 136 So.3d 194, 207.
The trial judge found as a fact that as of the date set for the sale closing called by the Schafers, the Tubbs had not sold their house. Here again, this finding cannot be contested on the basis of the evidence. Thus, the condition of the commitment letter failed. The Tubbs thus had no financing commitment, and as a consequence the condition of the purchase-sell agreement failed.
Under the purchase agreement, the Schafers' primary obligation was to deliver and warrant merchantable title. See La. Civil Code art. 2475. In the event of their breach, the Tubbs were entitled to a return of the deposit in full plus an equal amount to be paid as a penalty. This penal provision is a secondary obligation "for the purpose of enforcing the principal one." La. Civil Code art. 2005. The Civil Code provides clearly that the nullity "of the principal obligation renders the stipulated damages clause null." La. Civil Code art. 2006. The damage provision — or secondary obligation — in the purchase agreement at issue, therefore, was vitiated by the failure of the principal obligation. That is, the Tubbs' inability to obtain financing voided not only the Schafers' obligation to deliver title but also their right to enforce the purchase agreement's penal clause against the Schafers. See Richmond v. Krushevski, 243 La. 777, 782-785, 147 So.2d 212, 214 (1962); Stan Weber & Associates, Inc. v. Goodlett, 402 So.2d 745, 746-747 (La.App. 4th Cir.1981).
For the same reason that we find that the trial judge was not clearly wrong in her reasonable finding that the financing condition failed, thereby rendering the purchase-sell agreement null and void such that the Schafers could not recover the penalty of $53,050, we also find that the Tubbs cannot recover that amount — or any other amount — as damages.
We return to the Schafers' remaining argument that the trial judge's awards of damages and attorneys' fees to the Tubbs are legally erroneous. The trial judge indicated that she awarded the Tubbs damages because they "did not breach the purchase agreement" and were "entitled to the return of their promissory note." She, likewise, noted that her award of attorneys' fees was based upon language in the purchase agreement.
Given the trial judge's finding that the Tubbs were unable, through no fault of their own, to secure financing by the date set for the act of sale, her conclusion that the purchase agreement was thus rendered null should not be controversial. It is, in fact, the only logical legal conclusion. See La. Civil Code art. 1773 ("If the condition is that an event shall occur within a fixed time and that time elapses without the occurrence of the event, the condition is considered to have failed."). "When a purchaser, through no fault of his own, is unable to obtain the loan upon which the agreement is conditioned, the obligations imposed by the agreement are not binding upon the parties; the agreement is null and the parties are released from their obligations to perform." Bacon v. Ford, 522 So.2d 1232, 1234-1235 (La.App. 4th Cir.1988).
The trial judge, therefore, committed legal error when she awarded the Tubbs damages under the terms of the null purchase-sell agreement.
The award of attorneys' fees to the Tubbs also constitutes legal error. "In Louisiana, the prevailing party may not recover attorneys' fees except where authorized by contract or statute." Borgnemouth Realty Co., Ltd. v. Parish of St. Bernard, 13-1651, p. 17 (La.App. 4 Cir. 5/21/14), 141 So.3d 891, 902. The failure of the purchase-sell agreement's financing condition, as noted, rendered the entire agreement unenforceable. An award of attorneys' fees cannot be based upon the provisions of a null, unenforceable contract. See Morvant v. Arnoult, 490 So.2d 549, 552 (La.App. 4th Cir.1986). And the Tubbs have not directed us to any other source upon which to base an attorneys' fee award. We must, therefore, amend the trial court's judgment to delete its award of damages and attorneys' fees to the Tubbs. Likewise, we must also deny the Tubbs' answer to the appeal, which asked for an increase in the award of damages.
In this last Part of our explanation, we briefly address the Schafers' remaining incidental complaints, raised in assignments of error, and not otherwise disposed of.
Despite the objective and documented fact that Countrywide's financing commitment was conditioned on the sale by the Tubbs of their Broadway home, the Schafers contend that the trial judge, impermissibly using parol evidence, added a condition to the purchase-sell agreement not found in the written agreement. The Schafers are adamant that they knew nothing of this financing condition and had not made the sale of their State Street home conditioned on the Tubbs' sale of their Broadway home.
In support of their proposition, the Schafers urge us to compare and contrast the Tubbs-Schafer purchase-sell agreement, which had no condition about the Tubbs selling their home, with the Warner-Tubbs purchase-sell agreement, which had a condition about the Warners selling their home. We grasp the difference, but the Schafers have misconstrued the trial judge's findings and conclusions. The Schafers, it seems, object to, as they characterize it, the trial judge's acceptance of evidence upon which to establish that the Schafers knew that Countrywide conditioned its loan approval with the Tubbs upon the sale of their Broadway home. They point to the trial judge's reference to two statements — one from Mr. Tubbs and one from Mrs. Tubbs — in her reasons for
Having reviewed the record, we are convinced that this testimony was not elicited to vary any of the terms of the purchase-sell agreement. To the contrary, it is apparent that these statements were elicited by the Schafers in their own defense of the Tubbs' claim, which they made in their reconventional demand. There the Tubbs contended that the Schafers were well-aware of the need for the Tubbs to first sell their own home to generate sufficient cash to purchase the Schafers' home. They pointed to the Schafers' role in informing the Schafers' friends, the Warners, as to the availability of the Tubbs' home for sale. The Tubbs were seeking to establish that the Schafers knew that Countrywide conditioned its loan approval upon the Tubbs' sale of their home yet misrepresented to them the ability of the Tubbs' prospective purchasers, the Warners, who were the close friends of the Schafers, to buy the Broadway home. This evidence is also relevant to the Tubbs' defense to the Schafers' claims that the Tubbs misled them into believing that they had loan approval, and breached the purchase agreement by failing to make a good faith effort to secure financing. Clearly, the complained-of testimony was not improperly relied upon parol evidence to expand the terms of the Schafers' purchase agreement with the Tubbs.
The Schafers also assign as error the trial judge's factual finding that Mr. Schafer drafted the purchase agreement, especially the provision which states that "[e]ither party hereto who fails to comply with the terms of this offer, if accepted, is obligated to pay all fees and costs incurred in enforcing collection and damages." We have reviewed the record on this point and find both that a reasonable factual basis exists for this finding and that the trial judge was not clearly wrong in her determination. But, more importantly, given her correct finding that the purchase agreement was unambiguous, it is unremarkable that the trial judge applied no presumption construing the purchase agreement against the Schafers. See La. Civil Code art. 2056 ("In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text."); see, e.g., Pollard v. Schiff, 13-1682, p. 10 (La.App. 4 Cir. 2/4/15), 161 So.3d 48, 55. Therefore, even if erroneous or clearly wrong, this factual error would not be so material as to require reversal or our de novo review of the record. See Ferrell, 94-1252, p. 4, 650 So.2d at 745. And, in light of our explanation in Part V, ante, the complaint, such that it is, is mooted.
The Schafers also assign as error that the trial judge erred as a matter of law by failing to apply the presumption arising from the failure to call a witness. See, e.g., Gurley v. Schwegmann Supermarkets, Inc., 617 So.2d 41, 43-44 (La.App. 4th Cir.1993). But the Schafers, however, did not raise this issue before the trial court below. Generally, issues not raised in the trial court will not be given consideration for the first time on appeal. See Rule 1-3, Uniform Rules-Courts of Appeal; Scott v. Zaheri, 14-0726, p. 14 (La.App. 4 Cir. 12/3/14), 157 So.3d 779, 788. We, therefore, do not consider this assignment of error.
The trial court judgment dated June 25, 2014, is amended in the following particulars:
The judgment rendered on June 25, 2014 is amended to read as follows:
IT IS ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of defendants, Leah Smith divorced wife/of and Michael F. Tubbs, and against plaintiffs, Mignon Rousset, wife of/and Thomas Schafer III, dismissing plaintiffs' suit with prejudice.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of plaintiffs-in-reconvention, Leah Smith divorced wife of/and Michael F. Tubbs, and against defendants-in-reconvention, Mignon Rousset, wife of/and Thomas Schafer III, decreeing the cancellation and return of the promissory note dated February 23, 1999, within ten days of the finality of this judgment
All costs are taxed to defendants-in-reconvention.
The judgment rendered on June 25, 2014, by the trial court, as amended by us, is affirmed.