In re Jordan

• Decision Date: 03 July 2013
• Docket Number: Adversary No. 10-4183,Case No. 10-41434
• Parties: In re: JOSEPHINE H. JORDAN xxx-xx-7154 Debtor
• Court: U.S. Bankruptcy Court — Eastern District of Texas

IN RE: JOSEPHINE H. JORDAN xxx-xx-7154 Debtor

Case No. 10-41434

Adversary No. 10-4183

UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

Filed: July 3, 2013

NOT FOR PUBLICATION

Chapter 7

FINDINGS OF FACT AND CONCLUSIONS OF LAW¹

Upon trial of the complaint in the above-referenced adversary proceeding, the Court issues the following findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52, as incorporated into adversary proceedings in bankruptcy cases by Fed. R. Bankr. P. 7052.

FINDINGS OF FACT

1. The complaint seeks a determination of the dischargeability of the debt owing by the Debtor-Defendant, Josephine Hudgins Jordan ("Defendant"), to the Plaintiff, David M. Kennedy ("Plaintiff").

2. In June 2002, the Plaintiff sought to sell his residence at 403 W. Belden St., in Sherman, Texas, and contracted with the Defendant, in her role as a real estate broker and agent, to market and sell that residential property.

3. In that regard, the Plaintiff executed a series of listing agreements with the Defendant,² culminating in the execution of a "Residential Real Estate Listing Agreement Exclusive Right to Sell" under which the Defendant possessed an exclusive listing that would expire on September 1, 2004.³

4. The listing agreement contained a 45-day "Protection Period" which could entitle the Defendant to the payment of a commission in the 45-day period following the expiration date of September 1, 2004, if written notice of the parties shown the property prior to the expiration date was sent to the Plaintiff within 10 days following the expiration of the listing agreement.⁴

5. On August 24, 2004, the Plaintiff notified the Defendant of his intent to forego renewal of the listing agreement upon its expiration and to seek the services of a new listing agent.⁵

6. Despite certain efforts, no offer was communicated to the Plaintiff prior to September 1, 2004.

7. Shortly after September 1, 2004, the Defendant brought a sales contract to the Plaintiff from John and Leslie Merrell, proposing to buy the Plaintiff's Belden Street residence.

8. After one counteroffer tendered by the Plaintiff, the Merrells tendered, and the Plaintiff signed, in September 2004, a sales contract for the sale of the Plaintiff's Belden Street residence for a sales price of $475,000.00 (the "Merrell Contract").⁶

9. The Merrell Contract contained two major contingencies: (1) the procurement of third party financing in the amount of $427,500 and (2) the sale of the Merrells' property in Southlake, TX.⁷

10. The "Sale of Other Property" contingency provided that if the Plaintiff accepted another offer, the Merrells would have two days to waive the contingency. Such waiver required formal written notification and the deposit of $1,000 as additional earnest money.⁸

11. The Merrell Contract provided for a closing date of November 19, 2004 and further provided that the Plaintiff would be required to relinquish possession of his Belden Street residence within seven (7) days of the closing date.⁹

12. The Plaintiff presumed, without contradiction from the Defendant, that the Merrell Contract would fall within the provisions of the 45-day protection period which would reward a commission to the Defendant upon the sale of the Belden Street residence because the Merrells had seen the property prior to the September 1, 2004 expiration of the listing agreement.

13. During the pendency period of the Merrell Contract, the Plaintiff believed, based upon discussions with the Defendant, that, notwithstanding the contingencies, the Merrells likely possessed the financial capacity to close on the Belden Street residence without the necessity of obtaining financing or selling their Southlake property.

14. During the pendency period of the Merrell Contract, the Plaintiff began to investigate, at times with the Defendant's assistance, the limited residential rental options for his family in Sherman.

15. The Defendant answered most of the Plaintiff's inquiries regarding the progress of the resolution of the Merrells' contingencies during the pendency period by her contention that the Merrells were having "lender problems," but she urged continued patience with the process.

16. During the pendency period, the Plaintiff agreed with the Defendant that the Belden Street residence should be continued to be shown to other potential purchasers to enhance the possibility that, through the receipt of a competing contract, the Merrells would be compelled to address the outstanding contingencies and proceed with the closing of the pending contract.

17. Subsequent to the showing of the residence to a couple from Arizona who expressed great interest in acquiring the property in early November, the Defendant contacted the Plaintiff and represented that the Merrells had learned of the interest expressed by a competing purchaser.

18. The Defendant subsequently notified the Plaintiff that the Merrells had actually removed all of the contingencies existing in the Merrell Contract and had tendered the additional earnest money required by the contract.

19. At that time, the Defendant placed a "sold" sign in the front yard of the Plaintiff's Belden Street residence — not a "contract pending" sign.¹⁰

20. Upon being notified of these positive developments occurring in early November 2004, and with November 19 remaining as the designated closing date under the contract, the Plaintiff intensified his efforts to locate a suitable rental property in Sherman as a residence for his family.

21. The Plaintiff even utilized the services of the Defendant in those renewed efforts to locate a suitable rental property. At no time in early November did the Defendant indicate that the closing of the contract was not imminent.¹¹

22. On or about November 12, 2004, the Plaintiff learned that a newly-constructed house in a desirable neighborhood had just been listed for lease.

23. On Friday, November 12, 2004, the Plaintiff executed a Residential Lease for the premises located at 600 Clay Lane in Sherman.¹² The lease term was fromNovember 15, 2004 until November 30, 2005 for a monthly rental amount of $1,900.00.

24. On Monday, November 15, 2004, the Plaintiff tendered to the leasing agent the required sum of $4,100.00 for the Clay Lane rental property¹³ and began actions to move his family to that location, including the placement of required utility deposits.

25. On Tuesday, November 16, 2004, as a postscript to an unrelated real estate inquiry, the Plaintiff indicated to the Defendant that the "sold" sign was gone and inquired as to whether the closing date had been revised.¹⁴

26. On that same date, the Defendant answered that inquiry with a handwritten response that the Merrells' broker was waiting on their lender to provide any specific revision to the designated closing date.¹⁵

27. On that same date, the Plaintiff began the process of moving his family to the Clay Lane rental property.

28. The Plaintiff received no more communications from the Defendant in advance of the scheduled closing date of Friday, November 19, 2004.

29. The closing of the Merrell Contract did not occur on November 19, 2004.

30. Immediately before the Thanksgiving Day holiday scheduled for November 25, having heard nothing about the status of the closing from the Defendant, the Plaintiff contacted Stacey Olmstead, who was the Merrells' real estate agent.

31. Stacey Olmstead informed the Plaintiff that the contingencies in the Merrell Contract had, in fact, never been removed and that any closing on the contract was now in serious doubt because Mr. Merrell had been involved in a serious automobile accident on November 4, 2004, resulting in numerous subsequent surgeries for him.

32. Stacey Olmstead further informed the Plaintiff that the Merrells' willingness, if not their ability, to close the contract was now in serious jeopardy because of the accident.

33. Stacey Olmstead further informed the Plaintiff that the Defendant had known about the auto accident for a number of days and she expressed shock that she had not forwarded the information to him.

34. It was not until December 3, 2004, in response to a demand letter written by the Plaintiff to the Defendant and to the RE/MAX brokerage firm,¹⁶ that the Defendant communicated to the Plaintiff that: (1) the contingencies had, in fact, never been removed; and (2) the Merrells had terminated the contract on November 29, 2004 pursuant to their rights under the unsatisfied contingencies.¹⁷

35. Approximately one year later, after the subsequent sale of their Belden Street residence through the auspices of another broker, the Plaintiff initiated litigation against the Defendant and against the RE/MAX brokerage firm on December 27, 2005 before the County Court at Law #1 in and for Grayson County, Texas, in cause no. 2005-1-234CV (the "State Court Litigation").¹⁸

36. Two and one-half years later, on the eve of trial, the Plaintiff and the Defendant reached a settlement of the claims asserted in that State Court Litigation.

37. No issue was actually litigated by the trial court in that litigation.

38. Pursuant to the agreement of the parties, on May 16, 2008, the County Court at Law #1 entered judgment for the Plaintiff and against the Defendants, jointly and severally, in the amount of $27,500.00, with post-judgment interest thereon at the highest legal rate from the date of Judgment (5% per annum) until paid, along with all costs taxed to the Defendants (the "Judgment").¹⁹

39. Between the entry of the Judgment in May 2008 and Spring 2009, the Defendant tendered partial payments to the Plaintiff toward satisfaction of the Judgment amount in an approximate amount of $8,000.00 to $9,000.00.

40. The Defendant filed her voluntary petition for relief under Chapter 13 of the United States Bankruptcy Code on May 3, 2010. The Defendant voluntarily converted her case to a case under Chapter 7 on August 23, 2010.

41. The Plaintiff timely filed his Complaint Objecting to the Discharge of a

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