SMHG Phase I LLC v. Eisenberg
Docket Number | CIVIL 1:22-cv-00035-DBB |
Decision Date | 23 August 2023 |
Parties | SMHG PHASE I LLC, a Delaware Limited Liability Company, Plaintiff, v. MICHAEL EISENBERG, NOURIEL ROUBINI, and DAVID SHUSTERMAN, Defendants. |
Court | U.S. District Court — District of Utah |
MEMORANDUM DECISION AND ORDER DENYING [10] DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND DENYING [19] PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
This lawsuit is centered on a real estate purchase contract whereby Plaintiff SMHG PHASE I LLC, (“Plaintiff”) agreed to sell and Defendants Michael Eisenberg and Nouriel Roubini agreed to buy Lot No. 71 in the Villages at Summit Powder Mountain. The matter is before the court on Defendants Michael Eisenberg, Nouriel Roubini, and David Shusterman's (collectively “Defendants”) motion for summary judgment,[1]and Plaintiff's cross-motion for partial summary judgment.[2] The court heard oral argument on the motions on April 21, 2023. For the reasons that follow the court denies both motions.
On April 6, 2017, Defendants Eisenberg and Roubini entered into a Real Estate Purchase Contract (“REPC”) with Plaintiff to purchase Lot No. 71, Villages at Summit Powder Mountain, Summit Eden Phase IC Plat.[3]Plaintiff drafted the REPC.[4] The parties agreed on a purchase price of $735,500.[5]The REPC specified that Defendants would pay an Earnest Money Deposit totaling $147,100.00[6] in two parts: $36,775.00 by April 10 2017; and $110,325.00 by April 26, 2017.[7]
The Earnest Money Deposit was to be held in escrow and released to the Seller “Upon the expiration of the later of the Review Period or the Response Period.”[8]Initially, the “Review Period” was to conclude on April 20 2017-14 days after the April 6, 2017 “Contract Date.”[9] However, it was extended until April 26, 2017.[10] The REPC set a closing date of August 31, 2017.[11]
The REPC contains a “No Financing Contingency,” and expressly provides that the “Buyer's obligation to purchase the Lot is not conditioned upon Buyer qualifying for financing or the results of an appraisal of the Lot,” and “Buyer acknowledges that he or she shall be responsible for obtaining their own financing for the purchase of the Lot.”[13]
The REPC also establishes the parties' respective rights and remedies in the event of either Buyer or Seller default. In the event of Buyer default, Seller's contractual remedies are provided in Section 4.1.
4.1 Buyer Default. If Buyer fails to timely perform any of its obligations under this REPC, including the deposit of all necessary documents and funds by the Closing Deadline, Seller may deliver to buyer a written notice demanding that Buyer comply with the terms of this REPC within twenty (20) calendar days from receipt of notice to Buyer. If at the expiration of such period, Buyer has not complied, then Seller, in Seller's sole and absolute discretion, may elect either to: (i) terminate this REPC and retain the Deposit as liquidated damages without being subject to the dispute resolution procedures contained in Section 5, and thereafter the parties shall be released of all further duties and obligations under this REPC; (ii) obtain specific performance of Buyer's duties and obligations under this REPC; or (iii) pursue any other remedy available at law or in equity. Notwithstanding the foregoing, if Buyer defaults after depositing earnest money with the Title Company equal to 15% or more of the Purchase Price (exclusive of interest, if any), and Seller elects to terminate this REPC, then Seller will refund to Buyer such portion of the Deposit in excess of the greater of: (i) 15% of the Purchase Price or (ii) Seller's actual damages. Notwithstanding anything to the contrary in this REPC, and specifically, this Section __, the indemnity obligations of Buyer under this REPC are separate and distinct obligations of Buyer that are not subject to the liquidated damage provisions contained in this REPC. Further, notwithstanding anything to the contrary in this REPC, the liquidated damages provisions contained in this REPC will not act to limit the amount of damages recoverable by Seller against Buyer if Buyer improperly, negligently, recklessly or intentionally records a lis pendens or other document or instrument that impairs or could impair Seller's ability to sell the Lot to another Buyer.[14]
Conversely, in the event of Seller's default, Buyer's contractual remedies are provided in Section 4.2 of the REPC:
4.2 Seller Default. If Buyer has complied with all of Buyer's obligations and Seller materially breaches this REPC, then Buyer may deliver to Seller a written notice demanding that Seller comply with the terms of this REPC within twenty (20) calendar days from the receipt of notice to Seller. If at the expiration of such period Seller has not complied, then Buyer may, as its sole and exclusive remedy, terminate this REPC and recover the Deposit and any other payments made by Buyer to Seller, and the parties shall be released of all further duties and obligations under this REPC. Buyer acknowledges that Buyer shall have no right to specifically enforce this REPC or record a lis pendens or other document or instrument that impairs or could impair Seller's ability to sell the Lot to another buyer. IN NO EVENT WILL SELLER BE LIABLE FOR CONSEQUENTIAL DAMAGES OR DAMAGES BASED UPON ANY INCREASED VALUE OF THE LOT. BUYER HEREBY RELEASES AND WAIVES ANY CLAIMS FOR SUCH DAMAGES. A material breach is a failure of performance by Seller which defeats the very object of this REPC.[15]
The REPC provides the following additional statement regarding the Seller's contractual right to Liquidated Damages if Buyer fails to purchase the property due to any default of Buyer:
The REPC establishes the following requirements for notices:
10.1 Notices. All notices or deliveries required by this REPC must be delivered to the address set forth on the signature page to this REPC and: (i) be in writing; (ii) signed by the party giving notice; and (iii) received by the other party or the other party's agent no later than the applicable date referenced in this REPC. Notices may be hand-delivered, sent by a nationally recognized overnight delivery service requiring a written acknowledgement of receipt or providing a certification of delivery or attempted delivery, sent by certified mail, return receipt requested, or set by electronic mail (email). All notices so given shall be considered effective: (i) if hand-delivered, when received; (ii) if delivered by e-mail, upon transmission; (iii) if sent by overnight delivery service, one (1) business day after timely deposit with the service, charges prepaid; or if sent by certified mail, three (3) calendar days after deposit. Either party may change the address to which future notices shall be sent by notice given in accordance with Section 8.[17]
The addresses set forth on the signature page for Mr. Eisenberg and Mr. Roubini in the REPC are listed as follows:
Finally, the REPC expressly states: “Time is of the essence regarding the dates” in the agreement, and “[e]xtensions must be agreed to in writing by all parties.”[19]Although the REPC established an initial closing date of August 31, 2017,[20] the Sixth Addendum to the REPC extended the closing date to July 31, 2018.[21]
As required under the REPC, Defendants paid the Earnest Money Deposit in the amount of $147,100.00 by...
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