Flippo v. F & L Land Co., 900155

• Decision Date: 11 January 1991
• Docket Number: No. 900155,900155
• Citation: 241 Va. 15,400 S.E.2d 156
• Court: Virginia Supreme Court
• Parties: William W. FLIPPO, et al. v. F & L LAND COMPANY, et al. Record

Page 156

400 S.E.2d 156

241 Va. 15

William W. FLIPPO, et al. v. F & L LAND COMPANY, et al.

Record No. 900155.

Supreme Court of Virginia.

Jan. 11, 1991.

H. David O'Donnell (Green and O'Donnell, on brief), for appellants.

David A. Penrod (Hoover, Hoover, Penrod & Davenport, Harrisonburg, on brief), for appellee F & L Land Co.

No brief or argument for appellee Richard A. Claybrook, Jr.

Present: All the Justices.

COMPTON, Justice.

In this appeal in a purchaser's suit for specific performance of a contract for the sale of real estate, we determine whether the trial court erred in sustaining a seller's demurrer.

"A demurrer admits the truth of all material facts properly pleaded. Under this rule, the facts admitted are those expressly alleged, those which fairly can be viewed as impliedly alleged, and those which may be fairly and justly inferred from the facts alleged." Rosillo v. Winters, 235 Va. 268, 270, 367 S.E.2d 717, 717 (1988). On demurrer, a court may examine not only the substantive allegations of the pleading attacked but also any accompanying exhibit mentioned in the pleading. See Rule 1:4(i) (mention in pleading of accompanying exhibit makes exhibit part of pleading). A court in ruling upon a demurrer may consider documents not mentioned in the challenged pleading when the parties so stipulate. Elder v. Holland, 208 Va. 15, 18, 155 S.E.2d 369, 372 (1967) (stipulated that transcript of prior hearing be incorporated into motion for judgment for purposes of ruling on demurrer). Employing these principles, we will summarize the pleading challenged in this case.

In an amended bill of complaint, appellants William W. Flippo and Janice Flippo (collectively, Flippo) sought specific performance of a multi-party contract involving land in Harrisonburg, Virginia, and in Catawba County, North Carolina. Flippo named as defendants appellee F & L Land Company, William W. Self, David G. Parker, and appellee Richard A. Claybrook, Jr.

The contract, labelled "Exchange Agreement" and attached to the amended bill, was dated July 18, 1988. It was designed to provide a tax-free exchange of like-kind property and rollover of gain on the sale of a principal residence, as allowed by applicable provisions of the Internal Revenue Code. The property to be exchanged consisted of separate tracts of realty owned by Flippo, F & L, and Self. F & L was to convey to Claybrook as Escrow Agent its Harrisonburg property and to receive in exchange from Flippo $160,000 and a deed of trust note for $152,000. Flippo was to convey his North Carolina property, a principal residence, to the Escrow Agent and was to receive a deed to F & L's property, subject to the $152,000 deed of trust.

Self was to convey his North Carolina property, a principal residence, and to transfer $162,000 to the Escrow Agent, and to receive in exchange a deed to Flippo's property. Parker was to transfer to the Escrow Agent $160,000 and was to receive a deed to Self's property in exchange.

The deeds, the funds, and the deed of trust note were to be delivered to the Escrow Agent who, on the day of closing, would transfer the various assets to the appropriate party. The parties also were to deliver to the Escrow Agent additional documents and were to perform other acts necessary to complete the transaction. For example, the Escrow Agent was to prepare and deliver to each party a settlement statement to be endorsed and returned to him. Flippo, F & L, and Self were to provide mechanics' lien waivers. Flippo and Self were to provide termite inspection reports. Some of the documents were to be delivered to the Escrow Agent prior to settlement while others and the funds were to be delivered at settlement.

Paragraph 14 of the agreement detailed the sequence of events to effect a "simultaneous closing of the ... property exchanges." Paragraph 18(d) of the agreement provided that it was "specifically subject to" the condition that all parties be able "to simultaneously transfer the properties included under this agreement." Paragraph 18(e) prohibited amendment of the agreement "except in writing and signed by all the parties." Finally, the agreement provided for settlement on July 31, 1988, "or as soon thereafter as title can be examined and papers prepared, allowing a reasonable time to correct any defects reported by the Title Examiner."

In the amended bill, Flippo alleged that closing of the transaction never occurred but that he was "ready, willing and able to tender performance" of his obligations under the contract "in a timely fashion." Flippo further asserted that when it appeared that "F & L was attempting to avoid its obligations under the contract" by charging that Flippo failed to close in a timely manner, Flippo waived the simultaneous closing condition designed to benefit him, in an "effort to avoid loss of valuable contractual rights." Flippo also alleged that F & L was informed of a scheduled closing to be held in Harrisonburg on December 20, 1988, but that F & L refused to comply with the agreement. Additionally, Flippo alleged that both Self and Parker were "unable or unwilling" to perform under the contract.

In the prayer of the amended bill, Flippo asked that the defendants be ordered specifically to perform the agreement or, in the alternative, that F & L be ordered to deliver a deed to Flippo upon Flippo's "lawful waiver of the simultaneous closing condition, Flippo being ready, willing and hereby offering specifically to perform his portion of the agreement with F & L."

By stipulation, the parties agreed that the trial court should consider a series of seven letters for the purpose of ruling on the demurrer. This correspondence documents the conduct of the parties from August 12, 1988, the date of the first letter, to December 13, 1988, the date of the last letter.

On August 12, Claybrook, as attorney for F & L, wrote to Self. Claybrook "reminded" Self that closing under the terms of the agreement had been "set for July 31, 1988." Claybrook wrote that unless the closing could be completed by August 26, 1988, F & L would "consider the exchange agreement void." Claybrook noted that F & L "has provided for a reasonable extension of time in setting the closing date and is now in a position to allow no further extensions, because the company has had to forego following up on other potential purchase offers in attempting to accommodate the parties to the aforesaid exchange agreement."

On September 9, Claybrook, again as attorney for F & L, wrote Flippo advising "that due to the inability of the various parties to close on the required real estate transactions in a timely manner even after being granted several time extensions" beyond July 31, F & L "considers the Exchange Agreement null and void as of this date." Referring to prior letters written by Self, Claybrook stated that "Mr. Self gives no assurances that he and the other parties to these transactions will ever be in a position to comply with the requirements anticipated under our original Exchange Agreement." Claybrook wrote that F & L intended to have its property reappraised and invited a "new offer" from Flippo "for purchase of this property at the current market value for the commercial and non-commercial acreage."

On September 12, Dean M. Nichols, an attorney for Flippo, responded to the letter of September 9. Stating that F & L had no "legal right to void the exchange agreement," the attorney pointed out that the agreement did not make time of the essence for closing on July 31. Observing that "a reasonableness standard" should be used for determining the date of closing when time is not of the essence, Flippo's counsel asserted that the time delay had not been unreasonable, given the fact that the transaction involved four parties and three parcels of land "located a great distance apart." Counsel wrote that "we do not feel that if closing takes place prior to September 30, 1988, that there would be an unreasonable delay." Counsel then called on F & L to "change its position and agree to close this transaction as long as it closes by September 30, 1988."

Claybrook responded...