Howard v. Gordon a. Gundaker Real Estate Co. Inc.

Decision Date16 April 2002
Docket NumberED79283
Citation81 S.W.3d 101
PartiesKenneth Howard, Plaintiff/Appellant/Cross-Respondent, T. French Youngman and Beverly A. Youngman, Defendants/Third-Party Plaintiffs/Respondents/Cross-Appellants, Patricia J. Waelter, Defendant/Respondent, Coldwell Banker Ira E. Berry, Inc., Defendant/Respondent, and David Goings, Defendant/Respondent/Cross-Appellant, v. Gordon A. Gundaker Real Estate Co. Inc., Third-Party Defendant/Cross-Respondent, Gordon A. Gundaker, Third-Party Defendant, and Marilyn B. Doorack, Third-Party Defendant. ED79283, ED79302, ED78303 and ED79710 Missouri Court of Appeals Eastern District 0
CourtMissouri Court of Appeals

Appeal From: Circuit Court of St. Louis County, Hon. Bernhardt C. Drumm, Jr.

Counsel for Appellant: W. Stanley Walch and Jeffrey R. Fink

Counsel for Respondent: Steven L. Leonard, Steven M. Cohen, Gregg M. Lemley, Michael E. Franklin and Paul F. Devine

Opinion Summary:

This consolidated appeal involves multiple contract and tort issues arising from the parties' treatment of the waiver provisions of a financing contingency clause in a standard residential real estate contract. Kenneth Howard contracted to purchase a home from French and Beverly Youngman but did not timely apply for the loan described in the contingency clause and obtained different financing. The Youngmans treated their contract with Howard as terminated, contracted to sell the home at a higher price to David Goings and refused to close on Howard's contract. Howard, who took the position that he had waived the financing contingency by not making the timely loan application, filed a lawsuit against the Youngmans, Goings and the Youngmans' real estate agent to declare and enforce his rights under the contract and to recover damages for breach of contract and tortious interference with contract. The defendants responded with counterclaims, cross-claims, and a third-party claim against Howard's real estate broker.

The court entered summary judgment against Howard, holding that the contract had terminated and that he had not met his burden with respect to any of the elements of his tortious interference claim against the Youngmans' real estate agent. It awarded the Youngmans and Goings costs and attorney's fees. By summary judgment or dismissal, the court denied relief on the remaining counts of the Youngmans' counterclaim against Howard, the Youngmans' third-party claim against the real estate broker, and Goings' counterclaim against Howard for tortious interference with Goings' contract.

Division One holds:

HOWARD'S APPEAL

1. The court erred in entering summary judgment in the Youngmans' and Goings' favor on Howard's declaratory judgment and breach of contract claims. By not applying for a loan by July 9, 1998, Howard waived the financing contingency. He was obligated to perform the contract and the contingency that he obtain a loan commitment no longer wasoperative. Likewise, the Youngmans were required to perform the contract. The provisions of the financing clause relating to notices to be given if the contingency was still in effect for the additional 15 days had no viability after the financing contingency was waived.

2. The court erred in entering summary judgment denying Howard's tortious interference claim against the Youngmans' real estate broker and agent. The broker and agent did not show undisputed facts that negated any of the elements of that claim or that Howard would not be able to produce sufficient evidence to allow the trier of fact to find the existence of any one of those elements.

3. The award of attorney's fees to the Youngmans and Goings must be reversed because they are no longer prevailing parties.

THE YOUNGMANS' APPEAL

1. The court did not err in dismissing Counts II and III of the Youngmans' counterclaim against Howard for acts of the real estate broker representing both Howard and Goings because, even if a claim based on respondeat superior had been stated and existed, a party cannot recover a judgment against the principal if the agent has been found not to have committed a tort.

2. The court did not err in dismissing Count IV of the Youngmans' counterclaim against Howard for breach of contract for failure to state a claim based on breach of a duty of reasonable diligence.

3. The court did not err in dismissing Count V of the Youngmans' counterclaim against Howard for abuse of process because they failed to allege facts showing an illegal and unauthorized use of process.

4. Summary judgment in the broker's favor on Counts I and II of the Youngmans' third-party petition will not be reversed because they failed to support their three-sentence argument with relevant authority.

GOINGS' APPEAL

1. The court did not err in dismissing Goings' tortious interference claim against Howard because Howard filed a lawsuit to enforce his contract. If two parties have separate contracts with a third party, each may resort to any legitimate means at his or her disposal to secure performance of his or her own contract, even though a breach of the other contract will necessarily result.

Crandall, Jr., P.J., and Dowd, Jr., J. concur.

Kathianne Knaup Crane, Judge

This appeal involves multiple contract and tort issues arising from the parties' treatment of the waiver provisions of a financing contingency clause in a standard residential real estate contract. Plaintiff contracted to purchase a home from the defendant homeowners but did not timely apply for the loan described in the contingency clause and obtained different financing. The homeowners treated their contract with plaintiff as terminated, contracted to sell the home at a higher price to a different buyer, also a defendant, and refused to close on plaintiff's contract. Plaintiff, who took the position that he had waived the financing contingency by not making a timely loan application, filed a lawsuit against homeowners, the subsequent buyer, and the homeowners' real estate broker to declare and enforce his rights under the contract and to recover damages for breach of contract and tortious interference with contract. Defendants responded with counterclaims, cross-claims, and a third-party claim against plaintiff's real estate broker.

The trial court entered summary judgment against plaintiff, holding that the contract had terminated and that plaintiff had not met his burden with respect to any of the elements of his tortious interference claim against the homeowners' real estate broker. It awarded the homeowners and the subsequent buyer costs and attorney's fees. By summary judgment or dismissal, the trial court denied relief on the remaining counts of the homeowners' counterclaim against plaintiff, the homeowners' third-party claim against plaintiff's real estate broker, and the subsequent buyer's counterclaim against plaintiff for tortious interference with the subsequent buyer's contract. The buyer, homeowners, and subsequent buyer each appeal from the trial court's judgment. We reverse the summary judgment entered against plaintiff and remand. We also reverse the awards of attorney's fees. In all other respects, we affirm.

FACTUAL BACKGROUND

On July 7, 1998, plaintiff, Kenneth Howard, entered into a contract with defendants, T. French Youngman and Beverly Youngman, for the purchase of the Youngmans' home in Creve Coeur, Missouri. The parties used the St. Louis Association of Realtors Residential Form #2090, dated 9/97. The contract contained the following financing provision:

4. METHOD OF FINANCING

Conventional, FHA or VA Financing. Buyer agrees to apply for a loan, as described below, within __two__ days after "Acceptance Deadline" date. If Buyer does not apply within that time for the loan described below, Buyer waives this financing contingency. Buyer agrees to do all things necessary, including but not limited to, the execution of loan applications and other instruments, and to cooperate fully in order to obtain the financing necessary to complete this transaction. If Buyer does not obtain a written commitment for a loan on the same terms as described below, or waive this contingency in writing, by 5:00 p.m. on __July 24, 1998__ (or any written extension), this contract is terminated and earnest deposit will be returned to Buyer subject to paragraph 12, less any expenses incurred by or in behalf of Buyer. If Buyer wants to accept a loan commitment on terms other than described below, he must either notify Seller in writing of his acceptance of different terms, or waive the financing contingency in writing by the loan commitment deadline. If commitment is not obtained or waived by the loan commitment deadline, Buyer expressly waives any right to close this sale and acknowledges Seller's right to sell this property to another party. Any loan commitment requiring any of buyer's property to be sold and/or closed shall not be considered a commitment hereunder. (Note: Failure to "lock in", if available, may constitute a waiver by Buyer of the financing contingency.) Buyer to provide (and authorizes lender to provide) Seller and agents a copy of the loan commitment. Buyer to pay mortgage insurance, if required.

The "Acceptance Deadline" was July 7, 1998. The described loan was a conventional fixed or adjustable rate loan for 80% of the sale price with the initial interest rate not to exceed the prevailing market rate and an amortization of 15 or 30 years. The contract set closing on July 30, 1998.

"Gundaker Realtors/BHG" (defendant Gordon A. Gundaker Real Estate Co., Inc. (Gundaker)) was shown on the contract as the "selling agency" and Marilyn Middlekauff as the "selling agent". The contract provided that the "selling agent" was the "buyer's agent," acting on Howard's behalf as buyer. "Coldwell Banker" (defendant Coldwell Banker Ira E. Berry, Inc. (Coldwell Banker)) was shown as the Youngmans' "listing agency." Defendant Patricia Waelter was the Youngmans' "listing agent."

Howard did not apply for any loan by July 9, 1998. On July 10, 1998, Howard applied for a...

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