Moorman v. Blackstock, Inc.

• Citation: 661 S.E.2d 404,276 Va. 64
• Decision Date: 06 June 2008
• Docket Number: Record No. 070988.
• Parties: Stephen B. MOORMAN, Executor of the Estate of Doris H. Moorman, et al. v. BLACKSTOCK, INC., et al.
• Court: Virginia Supreme Court

661 S.E.2d 404

276 Va. 64

Stephen B. MOORMAN, Executor of the Estate of Doris H. Moorman, et al. v. BLACKSTOCK, INC., et al.

Record No. 070988.

Supreme Court of Virginia.

June 6, 2008.

Frank K. Friedman (William B. Poff; Claude M. Lauck, Roanoke; William L. Heartwell, III; Woods Rogers; Glenn, Feldmann, Darby & Goodlatte, on briefs), for appellants.

Monica Taylor Monday (J. Scott Sexton, Roanoke; Kevin W. Holt; Gentry, Locke, Rakes & Moore, on brief), for appellees.

Present: All the Justices.

OPINION BY Justice LAWRENCE L. KOONTZ, JR.

This appeal arises from a dispute over the sale of a certain tract of real property. The principal issue we consider is whether the statute of frauds, Code § 11-2, prohibits the enforcement of the purported oral contract between the parties for the sale of the land. We also consider whether, under the circumstances of the case, principles of equitable estoppel or part performance are applicable so as to justify granting the requested specific performance of the purported oral contact.

BACKGROUND

The Moorman family has owned a farm consisting of 194 acres, more or less, situated along what is now Smith Mountain Lake in Franklin County since the 1800s. At the time the present dispute over the sale of the farm arose in 2002, the farm was owned by a number of the Moorman family members and a certain trust for a family member. C. Riley Moorman and Sophie Moorman, husband and wife, owned a one-half interest in the property. The other one-half interest was owned in one-tenth shares by Stephen B. Moorman, David V. Moorman, Susan Moorman Durham and Lisa D. Moorman, four of the five children of Warren and Doris Moorman, who had previously owned this one-half interest in the farm. The remaining one-tenth interest was divided between a one-twentieth interest vested in fee simple in Mark A. Moorman, the brother of Warren and Doris Moorman's other four children, and a one-twentieth interest held in the Mark A. Moorman Trust, which had been created by Doris Moorman for the benefit of Mark A. Moorman and which named David V. Moorman as trustee.¹

In 2002, the Moormans decided to sell their farm and began attempts to determine the interest of prospective purchasers. Because of their affection for the farm, and because several family members intended to live on adjacent property, the Moormans desired to find a purchaser who would agree to restrictive covenants in the sales contract that would allow the Moormans to exert a degree of control over the farm's development for residential use.

One of the prospective purchasers the family contacted regarding the sale was Dr. Joseph R. Blackstock (Blackstock), a part-time real estate developer and president of Blackstock, Inc., his construction and land development company.² In 1999, Blackstock had shown an interest in purchasing the Moormans' farm and developing it into a residential subdivision. When contacted in 2002, Blackstock confirmed his continued interest in purchasing the Moormans' property.

On November 21, 2002, David Moorman sent a letter³ to Blackstock explaining that the "family [had] received competing purchase proposals from two prospective buyers of our property" and soliciting a "final" proposal from Blackstock. This letter also set forth nine terms and conditions that were to be incorporated into Blackstock's final proposal. One of these conditions required the purchaser of the property to provide the family with a mutually agreeable development plan and a corresponding set of restrictive covenants within ninety days of the signing of a contract. A second condition required the purchaser to pay a $10,000 deposit upon contract signing and the balance of the purchase price at closing.

Blackstock responded with a letter "[t]o [t]he Moorman [f]amily," dated November 25, 2002, that "offer[ed]" to purchase the farm for $1.7 million. In this letter, Blackstock agreed to "abide by the [requested] restrictions," proposed to sign a contract within thirty days, and promised to pay the Moormans in full within nine months of signing the contract. He also "request[ed]" that the family help him obtain a small tract of land located in the center of the Moormans' farm that was owned by Laird R. Heatwole.

David Moorman responded to Blackstock's proposal in a memorandum to Blackstock dated December 3, 2002. In that memorandum, David Moorman noted that Blackstock proposed to pay the purchase price within nine months of contract signing and expressed concern regarding the family's ability to protect itself and ensure their receipt of final payment of the purchase price if ownership were to be transferred at closing without final payment at that time. He asked for clarification from Blackstock regarding this issue and also indicated to Blackstock that the family would meet to discuss the matter and choose between the competing purchasers' proposals. Blackstock responded, stating that he was willing for the transfer of ownership to be delayed until final payment of the purchase price was made and suggested that "[w]e can have your attorney draft the language to protect you." Following the family meeting, the Moormans were in agreement to accept Blackstock's proposed purchase price of $1.7 million for the farm.

Subsequently, on January 2, 2003, David Moorman transmitted a "draft" purchase agreement for Blackstock's review and comment. In the cover letter, he wrote that, although he had not discussed the draft with the family's attorney, William P. Davis (Davis), he wanted to avoid delay by providing the draft for Blackstock to review at that time. The cover letter indicated that the draft agreement was "based on [the parties'] earlier agreement and [Blackstock's] proposal," and included provisions requiring the Moorman family to help Blackstock to acquire the Heatwole property and permitting Blackstock to make site improvements prior to settlement. Settlement was to occur within nine months of the date of the agreement, and the purchase price of $1.7 million, less a deposit of $10,000, was to be paid at settlement. The draft was not signed by the Moormans.

On January 16, 2003, David Moorman notified Blackstock of four additional terms suggested by Davis, and requested that Blackstock's attorney, Bruce E. Welch (Welch), prepare a revised draft agreement incorporating the additional terms. Welch complied and on February 4, 2003 David Moorman forwarded the new draft to Davis for his review. On February 26, 2003, David Moorman advised Blackstock that, after reviewing the earlier "draft agreement," Davis wanted to discuss "several provisions" with Welch, but that he saw no "showstoppers or major concerns." One month later, on March 24, 2003, Welch provided Davis with another draft agreement, and acknowledged the parties' continuing dispute regarding the nine-month payoff for the balance of the purchase price. Thereafter, on April 9, 2003, David Moorman provided Blackstock with a draft of suggested restrictive covenants desired by the Moorman family. Blackstock did not respond directly to David Moorman regarding those covenants, but provided the draft to Welch. Blackstock subsequently had restrictive covenants prepared, but they were not incorporated in subsequent draft agreements prepared by Welch.

Communications between Blackstock and the Moorman family continued for the next six months without resolution of the parties' negotiations. According to Welch, by October 2003, there were "[n]o substantial disagreements" between the parties and that the parties had agreed that closing would take place six months, rather than nine months, after the date of acquisition of a right-of-way from Jewel Moorman.⁴ However, according to the Moormans, they continued to be concerned by the clause in the draft agreement giving Blackstock nine months to pay the full purchase price, the fact that Blackstock still had not provided development plans to confirm that the property would be an upscale development, and the fact that Blackstock had avoided discussion on the family's tendered covenants.

On October 17, 2003, Davis sent Welch another copy of the contract Welch had prepared containing "suggested changes" and two additions. In an accompanying letter, Davis asked Welch to telephone him in order to "finalize this agreement."

Unbeknownst to the Moorman family, on November 18, 2003, Blackstock individually in the asserted capacity as "sole owner by contract" entered into a contract to sell the farm to another developer for $3 million. In the course of negotiations leading to the signing of that contract, Blackstock cautioned the developer that the required signatures were not yet on his purported contract with the Moormans.

On January 21, 2004, Welch contacted Davis to inquire whether the Moormans had a signed contract that they were ready to present to Blackstock, as Blackstock was "anxious to get a signed contract." Welch wanted the Moormans to be the first to sign a contract because "every time [the parties] agreed on a term, there would be also something different that would come up."

Ultimately, on June 16, 2004, Welch sent Davis a draft contract for his review and modification, noting that it had not been signed, nor reviewed, by Blackstock. On July 2, 2004, David Moorman advised Davis that this draft had been circulated among the Moorman family members and that they had various questions and complaints regarding its provisions. He noted that the family had yet to see development plans and "protective covenants," that the draft contract failed to include provisions regarding the tax consequences arising from delayed payment of the purchase price, and that the draft contract failed to include a closing date. David Moorman also expressed concern as to whether he, as the trustee of the Mark A. Moorman Trust, could sign a contract on behalf of Mark Moorman, who had now refused to sign any contract for the sale of the farm to Blackstock.

On July 8, 2004, ...