Addie v. Kjaer

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Citation737 F.3d 854,60 V.I. 881
Docket Number11–2485,Nos. 11–2419,11–2527.,s. 11–2419
PartiesRobert ADDIE; Jorge Perez; Jason Taylor, Appellants in 11–2419 v. Christian KJAER; Helle Bundgaard; Steen Bundgaard; John Knud Fürst; Kim Fürst; Nina Fürst; Kevin F. D'Amour. Robert Addie; Jorge Perez; Jason Taylor v. Christian Kjaer; Helle Bundgaard; Steen Bundgaard; John Knud Fürst; Kim Fürst; Nina Fürst; Kevin F. D'Amour, Kevin F. D'Amour, Appellant in 11–2485. Robert Addie; Jorge Perez; Jason Taylor v. Christian Kjaer; Helle Bundgaard; Steen Bundgaard; John Knud Fürst; Kim Fürst; Nina Fürst; Kevin F. D'Amour, Christian Kjaer, Helle Bundgaard, Steen Bundgaard, John Knud Fürst, Kim Fürst, and Nina Fürst, Appellants in 11–2527.
Decision Date16 December 2013

OPINION TEXT STARTS HERE

Robert L. Byer, Esquire, Duane Morris, LLP, Pittsburgh, PA, Robert M. Palumbos, Esquire, John J. Soroko, Esquire (Argued),Duane Morris, LLP, Philadelphia, PA, for Appellants Robert Addie and Jorge Perez.

Maria T. Hodge, Esquire, (Argued), Mark D. Hodge, Esquire, Gaylin Vogel, Esquire, Hodge & Francois, St. Thomas, USVI, for Appellee Kevin F. D'Amour.

Carol G. Hurst, Esquire, Carol G. Hurst, P. C., St. Thomas, VI, Sherry L. Talton, Esquire, (Argued), Dallas, TX, for Appellees Christian Kjaer, Helle Bundgaard, Steen Bundgaard, John Knud Fürst, Kim Fürst, Nina Fürst.

Before: SMITH, HARDIMAN and ROTH, Circuit Judges.

OPINION

ROTH, Circuit Judge:

These appeals and cross-appeals involve a dispute over the sale of a small island in the U.S. Virgin Islands and an accompanying launching point on St. Thomas. Robert Addie, Jorge Perez, and Jason Taylor entered into two contracts of sale to purchase these two properties from Christian Kjaer and his relatives, Helle Bundgaard, Steen Bundgaard, John Knud Fürst, Kim Fürst, and Nina Fürst (collectively, the Sellers). As part of the contracts, Addie, Perez, and Taylor made a $1 million deposit and later paid an additional $500,000 to push back the closing date for the sale of the properties. The sale was never consummated, however, and Addie, Perez, and Taylor demanded the return of the deposits. Kjaer and his relatives refused, and this litigation ensued.

Addie, Perez, and Taylor appeal the District Court's orders dated August 14, 2009, March 1, 2011, and May 13, 2011. In the cross-appeal, Kjaer and his relatives appeal the District Court's orders dated March 1, 2011, and May 13, 2011. In the second cross-appeal, Kevin D'Amour, who was the sole owner and principal of the escrow agent for the transaction and who served as Kjaer's attorney, appeals the District Court's orders dated February 23, 2009, April 28, 2009, and September 24, 2010. For the reasons that follow, we will affirm in part and reverse in part.

I. Factual Background

The Sellers own two properties in the Virgin Islands: Estate Great St. James, which is an island off the coast of St. Thomas, and Estate Nazareth, which is a launch point providing access to Estate Great St. James from St. Thomas. In 2004, Robert Addie, a Florida real estate investor, and Jorge Perez, a financial advisor to high-net-worth individuals, sought to purchase these properties. Perez persuaded Jason Taylor, his client and a former Miami Dolphins player to join the deal.

A. Terms of the Contracts

In June 2004, Addie, Perez, and Taylor (collectively, the Buyers) entered into two land contracts (Contracts of Sale) and an Escrow Agreement to purchase Estate Great St. James and Estate Nazareth from the Sellers for $21 million and $2.5 million, respectively. Premier Title Company, Inc.,1 served as the escrow agent and was party to the Escrow Agreement. Kevin D'Amour, the Sellers' attorney-in-fact, was the sole owner and principal of Premier. The Buyers assert that they were not aware of D'Amour's role at Premier when they entered into the Escrow Agreement.

The Contracts of Sale required the Buyers to submit an initial deposit of $1 million. Closing was to occur “at a mutually acceptable time of day within sixty (60) days of the execution of this Agreement.”The contracts permitted the Buyers to extend the closing an additional thirty days by paying a $500,000 nonrefundable deposit. The duty of the Buyers under the contract was to pay the purchase price at closing, less the deposit. The duty of the Sellers was to deliver “Clear and Marketable” title and [a]ssignments of all permits, submerged land leases and other licenses necessary for the existence and occupancy of the dock and other improvements on the Real Property, together with the required governmental consents thereto.” The Contracts of Sale defined Clear and Marketable title as “such title as is acceptable to and insurable by Buyer's title insurance company on ALTA Form B Owner's Policy (or other reasonable form) free and clear of exceptions except licenses and easements, if any, for public utilities serving only the Real Property.”

The Escrow Agreement required Premier to receive the Buyers' deposits and then to release the deposits to the Sellers. Premier agreed to release the first deposit to the Sellers within twenty-four hours after the Sellers delivered the escrow documents to the Buyers, as long as Premier received written notice from the Buyers that they were satisfied with the documents. The escrow documents were to include (a) Insurable Warranty Deeds for both properties, (b) tax letters for both properties, (c) assignments of all permits, submerged land leases and other licenses necessary for the existence and occupancy of the dock and other improvements on the Island and the Nazareth Property, together with the required governmental consents thereto, including but not limited to assignments of Coastal Zone Permits; (d) a Foreign Investment in Real Property Tax Act (FIRPTA) Affidavit, (e) Sellers' affidavits that might be reasonably requested by Buyers' insurance company, and (f) an ALTA Form B Owner's Title Insurance Policy in the Seller's name, showing that the properties are free and clear of all exceptions.

Under the Contracts of Sale, the Buyers agreed to forfeit the deposits to the Sellers as liquidated damages in the event of the Buyers' default or failure or refusal to perform, through no fault of the Seller. The Sellers agreed to return the deposits in the event of the Sellers' default or failure or refusal to perform, through no fault of the Buyer. The Contracts of Sale required the non-defaulting party to send written notice of default, and the defaulting party would have ten days from the receipt of written notice to cure the default.

B. Closing on the Contracts

On June 4, 2004, Addie, Perez, and the Sellers' attorney, Kevin D'Amour, met in Miami to sign the Contracts of Sale and the Escrow Agreement. Unable to attend the meeting, Taylor signed the Contracts of Sale and Escrow Agreement on June 15, 2004, and faxed them to D'Amour.

Taylor alone funded the initial $1 million deposit by sending three wire transfers to the escrow account between June 9 and June 11. During July, D'Amour, acting on behalf of Premier, made several deliveries of escrow documents to the Buyers. Included in the documents were the Coastal Zone permits for the use of the docks at Estate Nazareth and Estate Great St. James. The permits for both docks had already expired. Also among the documents, the commitment for title insurance contained a number of exceptions to the required coverage, including an exception for “any portion or portions of the [properties] subject to or contiguous with property subject to the Virgin Islands Open Shoreline Act and an exception for a Right of Way Agreement for a road on Estate Nazareth.

D'Amour began to request that the Buyers authorize the release of the deposit to the Sellers. On August 3, Perez authorized release of the deposit in an email stating: “I have spoken to Hank Smock [local counsel to the Buyers], and he has advised me that we can go ahead and release the first deposit of $1,000,000.00.” Based on this email, D'Amour, acting on behalf of Premier, released the deposit to the Sellers.

Taylor also unilaterally funded the second deposit of $500,000 to extend the closing date by sending three wire transfers to the escrow account between August 5 and August 19. On August 20, D'Amour emailed the Buyers asking them to “confirm by return email that the Escrow Agent [Premier] may release the [second deposit], subject to the terms of the Escrow Agreement.” D'Amour did not receive written confirmation from the Buyers but nonetheless, acting on behalf of Premier, released the deposit to the Sellers.

In early September, the Sellers and the Buyers discussed extending the closing a second time. D'Amour informed the Buyers that the Sellers agreed to extend the closing date, stating:

As a follow-up to my conversation with Jorge yesterday, my clients have consented to a one week extension of time to close. The original closing date was September 4, 2004. Since this fell on a Saturday, the next business day was September 7, 2004. (see Section 4). The closing date is now September 14, 2004. Time is of the Essence. This extension shall not be deemed a waiver of any rights the sellers have under the Contract.

As of September 14, the Buyers had not paid the purchase price and the Sellers had not conveyed either updated assignments of permits or a Clear and Marketable title. On September 16, D'Amour sent the Buyers a notice of default, informing them that they had ten days to cure. On September 22 and 23, the Buyers demanded the immediate return of the escrow money, claiming that the Sellers were unable to deliver Clear and Marketable title. On September 24, D'Amour sent a request to the Buyers that they confirm their intentions to cure the default. The Buyers never responded.

II. Procedural Background

On October 15, 2004, the Buyers filed suit in the District Court of the Virgin Islands, asserting claims against the Sellers for breach of contract, unjust enrichment, negligent...

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