Van Velson Corp. v. Westwood Mall Associates, 20297
| Decision Date | 27 October 1994 |
| Docket Number | No. 20297,20297 |
| Citation | 884 P.2d 414,126 Idaho 401 |
| Parties | VAN VELSON CORPORATION, aka Van Velsor Corporation, Plaintiff-Counterdefendant-Appellant-Cross-Respondent, v. WESTWOOD MALL ASSOCIATES, a New York Partnership, Isaack Bernstein, Isaac Perlstein, Martin Freidman, Fischel Bernstein, Munkas Tora Academy, individually and as partners in Westwood Mall Associates; National Bank of Detroit; Valley Bank; West One Bank, Defendants-Counterclaimants-Respondents-Cross-Appellants. Twin Falls, March 1994 Term |
| Court | Idaho Supreme Court |
Racine, Olson, Nye, Cooper & Budge, Pocatello, for appellant/cross-respondent. Fred J. Lewis, argued.
Ward, Maguire & Bybee, Pocatello, for respondent/cross-appellants. David H. Maguire, argued.
Van Velson Corporation (Van Velson) initially filed this suit as a foreclosure action against Westwood Mall Associates (Associates) claiming that Associates had defaulted on a $400,000 loan. Van Velson sought to recover the principal and interest on the loan, plus costs and attorney fees, and also to foreclose on the Westwood Mall property which Associates had mortgaged to secure the loan. Associates answered and counterclaimed, asserting that Van Velson had defaulted on a separate agreement with Associates to purchase the Westwood Mall and to use the $400,000 as a down payment on the purchase price, and as a result of Van Velson's default Associates was entitled to retain the $400,000 down payment as liquidated damages. The district court denied Van Velson's motion for summary judgment and granted summary judgment to Associates on their cross-motion.
On July 12, 1985, Associates, a partnership existing under the laws of New York, contracted to purchase the Westwood Mall in Pocatello, Idaho, from Floribec International Corporation, a Florida corporation. The closing date for this transaction was set for November 27, 1985. During the Fall of 1985 Associates and Van Velson, a New Jersey corporation, attempted to negotiate an agreement in which Van Velson would purchase Associates' rights in the Floribec/Associates purchase agreement. However, Van Velson and Associates were unable to reach an agreement prior to the closing between Associates and Floribec on November 27, 1985. Nevertheless, Van Velson and Associates did agree, by letter agreement dated November 26, 1985, that Van Velson would loan Associates $400,000 to enable Associates to close with Floribec. The parties further agreed they would continue to negotiate in an effort to reach an agreement whereby Van Velson would purchase the Mall from Associates, in which case the $400,000 mortgage would be applied as Van Velson's down payment on the Mall. Van Velson's loan to Associates was secured by a mortgage on the Westwood Mall property in case Van Velson and Associates could not consummate the sale of the Mall to Van Velson.
The parties originally agreed that if they could not close the transaction by December 23, 1985, Associates would immediately pay back the $400,000. The closing date was extended a number of times. On March 21, 1986, Van Velson's attorneys, Steve Harvis and Fred Umane from the New York law firm Harvis & Zeichner, sent to Associates' attorney, Joseph Hershkowitz of the New York law firm Frenkel & Hershkowitz, four duplicate originals of a purchase agreement, signed by Van Velson's president, Michael Bland. The cover letter for these contracts read as follows:
Dear Joe [Hershkowitz]:
Enclosed are four duplicate original contracts of sale for the Westwood Mall duly executed by Michael Bland, President of Van Velsor Corp. These documents are delivered to you subject to our approval of your comments and our review of the Floribec and Idaho Mortgage Holders Mortgages Please note that we have substantially revised the rider to the Associate's Note for clarity and the protection of all parties.
[126 Idaho 403] [first and second mortgages on the Mall]. Kindly contact us at your earliest convenience with your comments.
Very truly yours,
By letter dated March 24, 1986, Hershkowitz responded as follows:
Dear Fred [Umane]:
In accordance with Steve's [Harvis] request, I enclose herewith copies of the first and second mortgages and mortgage notes affecting the Westwood Mall property. Kindly review same and, assuming that you have no objection thereto, I will continue to work on the final revisions of the contract and, hopefully, forward to you a fully executed copy thereof today.
Sincerely,
On March 26, 1986, Shlomo Sharon and Michael Bland of Van Velson, and Isaack Bernstein of Associates, flew to Pocatello to inspect the Mall. The three men inspected the Mall on March 27, 1986, and during the inspection they discovered problems with large portions of the Mall's roof and parking lot. In a phone conversation later that day, Bernstein, of Associates, informed Sharon and Morris Kaiser, of Van Velson, that it would cost approximately $250,000 to make the repairs needed on the roof and parking lot. Sharon testified at his deposition that Kaiser told Bernstein during the phone conversation that because of the needed repairs to the Mall, he [Kaiser] was not going to proceed with the deal.
The next day, March 28, 1986, Harvis and Umane, for Van Velson, and Hershkowitz, for Associates, met in New York to finalize the terms of the agreement. The attorneys discussed and changed a number of terms of the contract. Harvis initialed those provisions in the contract which were changed in any way.
It is undisputed that another closing date, set for April 15, 1986, was postponed to May 15, 1986, at the request of Van Velson. By letter dated April 21, 1986, Hershkowitz advised Van Velson's attorneys that Associates would postpone the closing date to May 15, but that in light of management considerations in operating the Mall, time for closing the transaction was of the essence. By a letter dated May 9, 1986, Umane advised Hershkowitz that Van Velson rejected Associates' attempt to make time of the essence, asserting that there were several additional points to negotiate. Umane stated that Van Velson would be prepared to close on or about June 15, 1986. By letters dated May 29 and May 30, 1986, Hershkowitz advised Harvis that Associates, contrary to Hershkowitz's advice, would agree to extend the date of closing one last time, to June 15, 1986, time again being of the essence. In a letter to Hershkowitz dated June 12, 1986, Harvis stated the following:
... As you know, we have been meeting and discussing the open items relating to the closing of this transaction. We consider that the open issues are material and go to the essence of whether or not a contract between the parties actually exists. Thus, we categorically dispute your right to arbitrarily create a "time of the essence" closing date.
While we are endeavoring to reach a conclusion with you concerning these matters, until such time as that in fact occurs, we cannot accept your assertion that a closing of title is to take place on either June 15 or June 16, 1986. Accordingly, we trust that we can continue to work to try to resolve the outstanding issues and assuming that this occurs, set a closing date as appropriate.
On June 17, 1986, after Van Velson again failed to appear at closing, Hershkowitz wrote to Harvis informing him that it was Associates' position that Van Velson was in default on the parties' purchase agreement and that Associates no longer had any obligation to Van Velson for the $400,000. Inasmuch as Van Velson defaulted on the purchase agreement, Associates contends Van Velson forfeited its $400,000 down payment, pursuant to Section 8.12 of the purchase agreement which states:
Liability of Purchaser. Seller agrees that in the event of a default on the part of the Purchaser of this agreement to look solely On August 29, 1989, Van Velson filed a Complaint for Foreclosure against Associates claiming that the parties never reached an agreement for the sale of the Mall, and therefore Associates was in default on the $400,000 loan. Associates counterclaimed asserting that the parties had entered a valid purchase agreement, that Van Velson had defaulted on the agreement, and that Van Velson's default entitled Associates to retain the $400,000 down payment as liquidated damages. On October 18, 1989, Van Velson moved for partial summary judgment. The motion was continued, and the matter was subsequently set for a court trial on April 15, 1991. The trial date was subsequently vacated, and on March 19, 1992, Associates filed a cross-motion for summary judgment.
[126 Idaho 404] to the monies deposited by the Purchaser upon the execution and delivery hereof as liquidated damages, and not look to the Purchaser for any further liability in connection therewith.
On July 21, 1992, the district court entered its Memorandum Decision and Order granting Associates' motion for summary judgment. The court concluded that the purchase agreement, which Van Velson's president Bland had executed and delivered to Associates, dated March 28, 1986, had been signed by Bernstein of Associates prior to or on the 28th. The court held that based on the undisputed facts in the record, this was a valid purchase agreement, Van Velson had breached the purchase agreement, and Associates was entitled to keep Van Velson's $400,000 down payment as liquidated damages. The court denied Van Velson's motion to alter or amend the judgment and entered judgment in favor of Associates, ruling that the $400,000 mortgage was satisfied and discharged. Van Velson appeals from this judgment and order. Associates cross-appeals from that portion of the judgment which denied its request for an award of attorney fees.
The following issues are presented for our decision in this appeal:
1. Whether the district court erred in concluding that the parties had formed a valid contract for the purchase...
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