Four Seasons Lakesites Inc v. Hrs Properties Inc
Decision Date | 23 July 2010 |
Docket Number | No. SD 30110.,SD 30110. |
Citation | 317 S.W.3d 193 |
Parties | FOUR SEASONS LAKESITES, INC. and Four Seasons Group, Inc., Appellants,v.HRS PROPERTIES, INC., Respondent. |
Court | Missouri Court of Appeals |
COPYRIGHT MATERIAL OMITTED
Lewis Z. Bridges & John E. Curran, Osage Beach, for Appellant.
James B. Deutsch, Thomas W. Rynard & Marc H. Ellinger, Blitz, Bardgett & Deutsch, LLC, Jefferson City, for Respondent.
Appellants Four Seasons Lakesites, Inc. and Four Seasons Group, Inc. (“Four Seasons”) 1 appeal the trial court's grant of partial summary judgment in favor of Respondent HRS Properties, Inc. (“HRS”) as to Count I of HRS' counterclaim seeking specific performance of an “Option to Sell” contained in an “Option Agreement.” Four Seasons asserts thirteen points relied on.
The record reveals that on December 28, 1995, Four Seasons and HRS entered into an “Asset Purchase Agreement” whereby HRS agreed to pay to Four Seasons $2,030,000.00 for its “Racquet Club Business” which consisted of real estate; a spa; and personal property including facilities for indoor and outdoor tennis, racquetball, swimming, and other fitness related endeavors. During the negotiations for the sale of the property, HRS was concerned with several amenities agreements Four Seasons had signed with various third parties relating to the facilities and services available at the Racquet Club and the Racquet Club's continued operation per those agreements.2 HRS felt that the Racquet Club “was encumbered with the continuing obligation that [it] ... always be available to other ... [p]roperty [o]wners in neighboring subdivisions” regardless of the profitability of the facility and that “it was further encumbered by the obligation not to terminate an amenity located thereon without substituting an amenity of comparable value.”
As a compromise, the parties entered into the Option Agreement which granted HRS an Option to Sell the property and facilities back to Four Seasons on the occurrence of what was termed the “Option Event” 3 and it likewise granted Four Seasons the “Option to Buy” the property from HRS. 4 Further, the Option Agreement inter alia, provided for the extinguishment of the Option to Sell:
Following the sale of the property to HRS, on July 19, 1996, HRS entered into the 1996 Amenities Agreement with the CCPOA a/k/a the Racquet Club Association; the FSLPOA; Four Seasons; Chase Resorts; and the Robert Trent Golf Course. The 1996 Amenities Agreement provided that in the event that HRS discontinued certain Racquet Club amenities or ceased to operate the Racquet Club altogether, then it would transfer six outdoor tennis courts to the Racquet Club Association. Further, it provided for the cancellation of the 1988 Amenities Agreement and the 1992 Declaration such that “HRS shall be entitled to use the Racquet Club Property free and clear of the terms and provisions of the 1988 [Amenities] Agreement and the 1992 Declaration and without restriction or encumbrance of any kind pursuant to this Agreement except as specifically provided herein.” 5 Additionally an “Election to Terminate Agreement and Election to Terminate Declaration of Restrictive Covenant (Amenities) ...” was entered into by Four Seasons and the CCPOA. This document also specifically revoked the 1988 Amenities Agreement and the 1992 Declaration as between those parties.
On February 14, 1997, Four Seasons advised HRS that it believed the Option to Sell was extinguished by the 1996 Amenities Agreement which removed any prior encumbrances on the properties arising from earlier amenities agreements. HRS disagreed with this assertion.
HRS presented evidence that it invested $6,943,823.30 for construction of a hotel on the property and also continued to operate the Racquet Club. As best we discern, from 1997 to 2003, both of these facilities operated at a substantial deficit such that on April 12, 2002, HRS and Four Seasons entered into a “Continuation Agreement” which extended the date for exercising the Option Agreement to May 31, 2004. Prior to the expiration of this time period, HRS notified Four Seasons on March 8, 2004, that it desired to exercise its Option to Sell. Negotiations began between the parties at that time and they were ultimately unable to resolve their differences in interpreting the various contracts and agreements in a timely matter such that a “Second Continuation Agreement” was executed. Negotiations continued thereafter and ultimately failed.
On August 15, 2006, Four Seasons filed its “First Amended Petition for Declaratory Judgment” in which it sought a declaratory judgment from the trial court to “adjudicate the rights of the parties pursuant to the Option Agreement in light of the 1996 Amenities Agreement....” Specifically, Four Seasons requested the trial court to declare one of the following: that “[t]he Option Agreement ... is extinguished, null, void and of no effect between the parties ...;” that “[t]he Option Agreement between the parties be declared extinguished, null and void upon the substitution of amenities found by the [trial c]ourt to be required to be provided to other property owners ...;” that “the Option Agreement ... be declared null, void and unenforceable as being inequitable as between the parties ...;” and for “such other and further orders [the trial court deems] appropriate....”
HRS then filed its “Answer and Counterclaim” on August 31, 2006, in which it asserted its affirmative defenses that Four Seasons had “failed to join indispensable parties” 6 and failed “to state a claim upon which relief may be granted.” It then asserted a two-count counterclaim. In Count I, HRS sought specific performance of the Option to Sell and maintained that the Option to Sell was not extinguished by the 1996 Amenities Agreement because “[a]t all times ... the property was and remains encumbered by the continuing obligation to make the property and [the] Racquet Club's ... facilities available for the use of the other property owners....” In Count II, HRS alleged fraudulent misrepresentation on the part of Four Seasons related to the title insurance commitment provided by Four Seasons during the property transaction.
On March 12, 2008, HRS filed a “Motion for Partial Summary Judgment” on Count I of its counterclaim for specific performance. In this motion it asserted that it had constructed a hotel on the property at issue, it had been operating at a loss since it purchased the property, it had given Four Seasons notice that it intended to exercise its Option to Sell, and it stood ready to go forward with the valuation process in relation to the Option to Sell. Thereafter, Four Seasons filed a motion to dismiss Count I of HRS' counterclaim.
However, while this lawsuit was pending, on February 15, 2008, HRS and Global Investors, L.L.C. (“Global Investors”) entered into a “Purchase and Sale Agreement” where HRS as “Seller” agreed to sell the property at issue, including the Racquet Club and other personal property, to Global Investors. 7 In conjunction with this conveyance, HRS, Global Investors, and First National Bank of Camdenton 8 (“Bank”) entered into an “Indemnity Agreement” because of Global Investors' “reluctance” to purchase the property without further assurances. The “Agreement” portion of the Indemnity Agreement also contained a recital inter alia, that “[u]pon the closing of the sale of the Property by HRS ... HRS ... shall indemnify and hold Global Investors and Bank harmless against any settlement, court order, injunction or specific performance enforcing the Option to Buy and the Option to Sell.” Furthermore, it set out that “if the outcome of the Litigation requires the sale of the Property, HRS ... shall indemnify and hold Global Investors and Bank harmless against any loss resulting from such outcome.” 9 It also set out that the “Option to Sell is not part of the Purchase Agreement, is not intended to [be] conveyed to Global Investors as part of the Purchase Agreement and this Agreement and its indemnities do not apply to any attempt by Global Investors to exercise the Option to Sell.” Likewise, the Indemnity Agreement set out that “[i]n return for the consideration above, Global Investors agrees to purchase the Property subject to the litigation and Option Agreement ... [and] agrees to reasonably cooperate with the HRS...
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