Pelligreen v. Wood

• Decision Date: 06 May 2003
• Docket Number: No. ED 81093.,ED 81093.
• Citation: 111 S.W.3d 446
• Parties: Nicholas G. PELLIGREEN and Amy L. Pelligreen, Respondents, v. Herman WOOD and Rosemary Wood, and The Liberty Program, Inc., d/b/a Interstate Court Services, and Stephen P. Austin, and Tess M. Bodecker-Cova, Appellants.
• Court: Missouri Court of Appeals

111 S.W.3d 446

Nicholas G. PELLIGREEN and Amy L. Pelligreen, Respondents, v. Herman WOOD and Rosemary Wood, and The Liberty Program, Inc., d/b/a Interstate Court Services, and Stephen P. Austin, and Tess M. Bodecker-Cova, Appellants.

No. ED 81093.

Missouri Court of Appeals, Eastern District, Division Two.

May 6, 2003.

Motions for Rehearing and/or Transfer to Supreme Court Denied July 3, 2003.

Application for Transfer Denied August 26, 2003.

Charles M.M. Shepherd, Shepherd, Taylor & Smallwood, L.L.P., Clayton, MO, for appellants The Liberty Program, Inc., d/b/a Interstate Court Services, Stephen P. Austin & Tess M. Bodecker-Cova.

Harold G. Johnson, Mitchell D. Johnson, St. Ann, MO, For Appellants Herman Wood and Rosemary Wood.

William J. Travis, Gregory C. Mollett, David Simmons, Greensfelder, Hemker & Gale, P.C., St. Louis, MO, for respondents.

GARY M. GAERTNER, SR., Judge.

Appellants, Herman and Rosemary Wood (collectively "sellers") and The Liberty Program, Inc., Interstate Court Services,¹ Stephen P. Austin, and Tess M. Bodecker Cova (collectively "tenants") appeal from the judgment, after a bench trial of the Circuit Court of St. Louis County regarding the attempted sale of real property ("property"). Nicholas and Amy Pelligreen ("plaintiffs") filed a petition against sellers for specific performance and equitable accounting ("Count I"), breach of contract ("Count II"), and fraud ("Count III"). Plaintiffs also filed a petition against both sellers and tenants for a declaratory judgment ("Count IV") concerning plaintiffs' rights in the property. Tenants filed a counterclaim/cross-claim for a declaratory judgment concerning tenants' rights in the property and for reimbursement of costs and attorney's fees from sellers. The trial court found in favor of plaintiffs on Count I, Count II, and Count IV. The trial court found in favor of sellers on Count III. The trial court found in favor of plaintiffs and sellers on tenants' counterclaim/cross-claim. We reverse and remand.

The property, which consists of a lot with a one-story building, is located at 10423 Liberty in Overland, Missouri. Sellers owned the property. On February 1, 2000 sellers and tenants entered into a five-year commercial lease with an option to purchase the property.

Stephen P. Austin ("Mr. Austin") signed the lease in his individual capacity and on behalf of Liberty Program, Inc. ("Liberty"). Tess Bodecker-Cova ("Ms. Bodecker-Cova") also signed the lease in her individual capacity. Mr. Austin and Ms. Bodecker-Cova were the sole stockholders of Liberty. Interstate Court Services ("ICS") shared space on the property but was not on the lease. The lease with the option to purchase was not recorded.

In June of 2000, Lee Pelligreen ("buyer"), a real estate broker in Missouri for approximately thirty-five years, contacted sellers and spoke to Herman Wood ("Mr. Wood") regarding the availability of the property for purchase. Buyer eventually met Mr. Wood at the property. Mr. Austin gave buyer a tour of the property.

On or about July 24, 2000, buyer prepared a sale contract ("contract") for the purchase of the property. The contract was a form contract approved by "Counsel for Real Estate Board of Metropolitan St. Louis." Buyer filled in the specific provisions by typewriter. The purchase price for the property was $110,000. The closing was to take place on October 16, 2000 at U.S. Title Insurance Company.

In the section entitled "LIST OF TENANTS", buyer typed "Interstate Court Services" under the "Names of Tenants" column. Under the columns entitled "Space Occupied," "Lease Expires," "Amount of Rent," "When Due," and "Date Paid To" buyer typed "Month to month Tenancy" and "NEW LEASE TO BE NEGOTIATED."

An addendum to the contract stated under paragraph 1:

This contract is subject to [buyer] negotiating a new Lease with present tenant of property, [ICS], within thirty (30) working days of acceptance of contract by [sellers].

Buyer delivered the contract to Mr. Wood and on July 25, 2000, sellers signed the contract, without making any changes, and returned the contract to buyer.

Less than thirty days later, buyer met with Mr. Austin and Ms. Bodecker-Cova at the property. Buyer and tenants did not enter into a lease following this meeting.

On September 1, 2000, buyer sent a letter to sellers that stated:

Per [the contract] [buyer] hereby notif[ies] [sellers] that [buyer is] waiving the contingency number one (1) per addendum to contract and will close per contract on or before October 16, 2000 at U.S. Title Company....

On September 8, 2000, sellers sent buyer a letter that stated:

This is to advise [buyer] that [sellers] are not waiving the contingency per addendum to the contract of July 24, 2000 regarding [the property].

Therefore, there will be no sale of [the] property at this time. This confirms what [sellers] have tried to communicate to [buyer] by telephone and in person. Should situations change, [buyer] will be contacted by [sellers].

On September 18, 2000, buyer sent another letter to sellers that stated:

... be advised that the contingency regarding a new lease with [ICS] was a contingency in favor of the [buyer] only and [sellers] do not have an option to decline the waiver of this contingency.

Nevertheless, as [buyer has] explained to [sellers], [buyer] remain[s] willing to negotiate a lease with [ICS] upon reasonable terms. The purpose of this notice was, however, to no longer make this lease a contingency in the [contract].

[Buyer is] willing to continue working on the lease, but nevertheless expect that the [contract] will be honored and we will close as scheduled....

On October 13, 2000, sellers sent a letter to U.S. Title Company that stated the property was not being sold.

On October 16, 2000, buyer and his son Nicholas Pelligreen appeared at U.S. Title Company. Buyer was prepared to close on the property. Once buyer determined sellers would not appear at the closing he decided to assign all of his rights, title and interest in the contract to plaintiffs.

Plaintiffs brought suit against sellers and tenants. Tenants filed a counterclaim for declaratory judgment and a cross-claim against sellers for costs and attorney's fees.

On October 29, 2001, a bench trial was held. Buyer and his son, plaintiff Nick Pelligreen, testified on behalf of plaintiffs. Mr. Wood testified on behalf of sellers. Ms. Bodecker-Cova testified on behalf of tenants. Tenants' counsel also testified in regards to tenants' claim for attorney's fees. The trial court received documentary evidence from the parties.

On January 25, 2002, the trial court made findings of fact and conclusions of law and issued its judgment. The trial court, as to Count I, found that sellers were required to specifically perform the contract and convey the property to plaintiffs within forty-five days.

As to Count II, sellers were found liable to plaintiffs for the rent collected on the property from October 16, 2000 to January 31, 2001, for a total of $30,000.²

As to Count III, the trial court dismissed plaintiffs' claim for fraud against sellers with prejudice.

As to Count IV, the trial court granted declaratory judgment in favor of plaintiffs.

As to the counterclaim filed by tenants for declaratory judgment, first, the trial court found that the lease was a valid lease between sellers and tenants, but the option to purchase set forth therein was unenforceable against plaintiffs. Second, the trial court found that tenants' rights, as optionees under the lease were subordinate to the rights of plaintiffs under the contract. Third, the trial court found that if plaintiffs closed on the property, tenants would not be entitled to a return of the $10,000 of rent previously paid to sellers and set aside for a down payment on the property because tenants waived their option to purchase with respect to plaintiffs and under the lease the $10,000 is forfeited if the option to purchase is not exercised.

As to the cross-claim against sellers by tenants, the trial court denied with prejudice tenants' request for an award of costs and attorney's fees.

Both sellers and tenants appeal.³ The appeals have been consolidated.

Any further relevant facts will be discussed below in relation to the specific points on appeal.

In a court-tried equity case, our review is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). Historic Hermann, Inc. v. Thuli, 790 S.W.2d 931, 932 (Mo.App. E.D.1990). The judgment will be affirmed unless there is no substantial evidence to support it, or unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. Id. This court defers to the factual findings of the trial court, which is in a superior position to assess credibility. Mullenix-St. Charles Props., L.P. v. St. Charles, 983 S.W.2d 550, 555 (Mo.App. E.D.1998). However, this court independently evaluates the trial court's conclusions of law. Id.

Sellers raise three points on appeal. Tenants raise five points on appeal. We will address sellers' second point on appeal first because it is dispositive.

In their second point on appeal, sellers contend the trial court erred in finding that buyer could waive the condition precedent to negotiate a new lease with tenants in the contract for the sale of the property. Sellers contend the condition precedent was not buyer's contingency to waive because the contingency was in favor of sellers. We agree.

A condition precedent is an act or event that must be performed or occur, after the contract has been entered into, before the contract becomes effective. In Missouri, it is well-settled law that a party to a real estate contract may waive any condition in that party's favor. Fleischer v. McCarver, 691 S.W.2d 930, 933 (Mo.App. E.D.1985). A party to a real estate contract may waive the occurrence of a condition precedent and enforce the other party's duty to perform if the condition was included...