Ringstreet Northcrest, Inc. v. Bisanz
| Decision Date | 10 January 1995 |
| Docket Number | No. WD,WD |
| Citation | 890 S.W.2d 713 |
| Parties | RINGSTREET NORTHCREST, INC., Appellant, v. Robert BISANZ, et al., Respondent. 49369. |
| Court | Missouri Court of Appeals |
William M. Modrcin, Jr., Kansas City, for appellant.
John M. McFarland, Kansas City, for respondent.
Before FENNER, C.J., P.J., and HANNA and LAURA DENVIR STITH, JJ.
Appellant, Ringstreet Northcrest, Inc. (Ringstreet), appeals the order of the Circuit Court of Platte County, Missouri, granting summary judgment in favor of respondents Real Estate Equities Investment Fund-1981 and Robert Bisanz and Terrance Troy, general partners of Real Estate Equities (hereinafter collectively referred to as Respondents).
The cause of action involves a real estate contract entered into between Respondents and Ringstreet. 1 The contract was for the sale of a 153-unit apartment complex known as the Northcrest Apartments (the Property) located in Platte County. Ringstreet purchased the Property from Respondents on March 31, 1988. In the winter of 1989, the pipes in the apartment complex froze and burst causing extensive damage throughout the apartment complex.
On September 17, 1990, Ringstreet filed a First Amended Petition in the Circuit Court of Platte County. In Count I of the petition, Ringstreet alleged that Respondents knew or should have known of the problem with the pipes in the apartment complex freezing on a regular basis in cold weather, that Respondents failed to disclose this condition prior to the sale, that Ringstreet inspected the Property prior to the sale, that the defect could not be discovered through ordinary inspection, that the defect was material to the purchase, and that Respondents' actions in failing to reveal the condition were the direct and proximate cause of Ringstreet's damages. Ringstreet alleged that it suffered in excess of $15,000 in damages.
In Count II, Ringstreet alleged that on March 31, 1988, Ringstreet gave Respondents a wrap-around note (WAN) secured by a wrap-around deed of trust (WADOT). Ringstreet alleged that the WAN and WADOT have been fully paid and all obligations fully satisfied, that Respondents failed or refused, within thirty days, to acknowledge satisfaction of the WAN and WADOT and have failed to deliver a sufficient deed of release in accordance with section 443.130, RSMo 1986. 2 Rather, Respondents only delivered a partial deed of release. Ringstreet alleged that, under section 443.130, it is entitled to 10% of the amount of the WAN and WADOT as damages.
Ringstreet filed a Revised Second Amended Petition on March 14, 1994. This revised petition was in response to Respondents' Motion for Partial Summary Judgment alleging that Ringstreet's allegations of fraud were not sufficiently pled. Ringstreet's revised petition added more specificity to the allegations of fraud. The language in the revised petition was essentially as follows: In Count I of this revised petition, Ringstreet alleged that, either prior to or at the time of the sale, Respondents knew that the pipes in the apartment complex froze on a regular basis in cold weather. Ringstreet further alleged that although Respondents possessed such actual knowledge, they intentionally failed to disclose this condition to Ringstreet prior to the sale so that the transaction would go forward. Ringstreet alleged that due to the fact that Respondents were in a superior position and possessed material information not within the fair and reasonable reach of Ringstreet, Respondents had a duty to disclose this information to Ringstreet and failed to do so. Ringstreet allegedly relied upon this nondisclosure in its decision to purchase the apartment complex.
In Count II of its revised petition, Ringstreet alleged that the WAN and WADOT were fully paid and all obligations thereunder fully satisfied on November 3, 1989 and request for a sufficient release was made on the same date. Ringstreet further alleged that Respondents failed, or refused, within thirty days after the November 3, 1989 request and tender of costs, to acknowledge satisfaction of the WAN and WADOT and have failed to deliver a sufficient deed of release for the WAN and WADOT.
Count II) 3
As part of the financing for Ringstreet's purchase of the apartment complex, the parties executed a wrap-around promissory note (WAN) and a wrap-around deed of trust (WADOT) securing the note. The WADOT secured the WAN the face amount of which ($2,083,000.00) included the then outstanding obligations owed by Respondents on three prior loans against the Property (secured by two prior deeds of trust), plus the actual loan amount ($3,945.28) that Respondents were charging or "lending" Ringstreet to purchase the Property.
The real estate contract also included a Discount Agreement that obligated Ringstreet to share with Respondents any monetary savings realized by Ringstreet if and when Ringstreet succeeded in negotiating with the senior mortgage holders, prior to maturity, a discounted payoff of two of the senior loans. This Discount Agreement, set forth in section 2.1 of the real estate contract, provides, in pertinent part, as follows The [WAN] shall require the Buyer to make monthly payments to Seller in the amount of the sum of the monthly payments due on the Underlying Mortgages. Seller shall be obligated to make the monthly payments directly to the Underlying Mortgage holders, if Buyer has made the monthly payments to Seller.... If Buyer is able to realize any discount on the current amounts of the Underlying Mortgages, Buyer agrees to split the amount of such discount less the amount of the commission paid by Buyer pursuant to Section 16 hereof with Seller and to pay to Seller Seller's share of the same in cash at the time the discount is received by Buyer (emphasis added).
The WADOT secured payment from Ringstreet to Respondents of Ringstreet's WAN obligations and also secured the payment of Ringstreet's Discount Agreement obligations to Respondents under the contract, as is evidenced by the following language in section 1 of the WADOT:
This [WADOT] is given as security for the performance of the covenants contained in this Deed of Trust, as security for the payment of the balance due under [the WAN], ... and as security for [Ringstreet's] performance of its obligation to split with [Respondents] any discount on the current amounts of the Underlying Mortgages (as defined in the Real Estate Contract described below) under Section 2.1 of the Real Estate Contract between [Ringstreet] and [Respondents] dated March 22, 1988 which obligations shall survive the closing of the transaction described in the Real Estate Contract (emphasis added).
Additionally, the termination clause of the WADOT (section 13) provides, in pertinent part, as follows:
[Ringstreet] shall have the option to terminate this [WADOT] on or after January 1, 1989 by satisfying its obligations under the [WAN] described in Section 1 hereof by paying and discharging the indebtedness evidenced by the [WAN] or by assuming the outstanding obligations secured by the Senior Deeds of Trust and paying to [Respondents] the difference, if any, between the outstanding obligations under the Senior Deeds of Trust and the balance outstanding under the [WAN]. In the event [Ringstreet] assumes such obligations, [Respondents] shall promptly release this [WADOT] and return the [WAN] stamped "paid in full" to [Ringstreet].
If the [WAN] and all other debts secured by this [WADOT] are paid with interest when due, and if the agreements contained in this [WADOT] are faithfully performed, then this instrument, including the lease below set forth, shall be void, and the Property shall be released at the cost of [Ringstreet]. If, however, any event of default under this [WADOT] occurs, then the [WAN] and all other debts secured by this [WADOT] shall become due and payable at the option of [Respondents], and this [WADOT] shall remain in force.
The record reflects that on August 31, 1989, Ringstreet assumed all outstanding obligations secured by the senior deeds of trust. On November 3, 1989, Ringstreet tendered payments of $3,960.62 and $100.00 to respondents, constituting the difference between the outstanding obligations under the senior deeds of trust and the balance outstanding under the WAN, and interest thereon, and costs of recording a sufficient deed of release.
Respondents issued Ringstreet a Partial Deed of Release, dated December 21, 1989, reflecting Ringstreet's satisfaction of the WAN obligation, but indicating that the WADOT remained in force for the sole purpose of securing the payment of Ringstreet's Discount Agreement obligations to Respondents under the real estate contract. The Partial Deed of Release stated, in part, as follows:
[Ringstreet] has satisfied its obligations under the [WAN] described in Section 1 of aforementioned [WADOT] by assuming the outstanding obligations secured by the Senior Deeds of Trust and by paying the difference between the outstanding obligations under the Senior Deeds of Trust and the balance outstanding under the [WAN] to [Respondents]. Therefore, the [WADOT] is released insofar as the same stands as security for the [WAN] described therein.
[Ringstreet] is still obligated to pay to [Respondents] one-half of any discount [Ringstreet] realizes upon the prepayment or refinancing of the amounts due under the Underlying Mortgages ..., as stated in Section 1 of the [WADOT], less $10,000.00. Such discounts are due to [Respondents] as soon as they are realized by [Ringstreet]. The [WADOT] still secures this obligation and, to the extent and only to the extent it secures the same, the lien and effect of the [WADOT] remains in force (emphasis added).
Ringstreet had requested that Respondents comply with the terms of the WADOT by acknowledging satisfaction of the WAN, delivering to Ringstreet...
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