Ely v. Alter

561 S.W.3d 1
CourtMissouri Court of Appeals
DecidedOctober 2, 2018
DocketWD 80734; RELATED CASE: WD 80757
StatusPublished
Cited by2 cases

This text of 561 S.W.3d 1 (Ely v. Alter) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ely v. Alter, 561 S.W.3d 1 (Mo. Ct. App. 2018).

Opinion

Anthony Rex Gabbert, Judge

Introduction1

Joseph S. Ely and Donald D. Upp ("Buyers" collectively) appeal the circuit court's judgment denying relief on their "Petition for Declaratory Relief, Injunctive Relief, Quiet Title, Recission and Restitution" and granting relief to William E. Alter, Merijo J. Alter, and Rivercene Bed and Breakfast, LLC ("Business")2 on particular counterclaims. Buyers raise four points on appeal. They contend that the trial court erred, 1) in awarding Sellers both the $247,500 "amount due" as damages for Buyers' default on the License and Membership Interest Purchase Agreement ("LMA") and all rights and title to the Business and its assets, 2) in awarding $247,500 as damages for Buyers' default on the LMA, 3) in finding that Sellers are entitled to enforce the two deeds of trust, *3and 4) in permanently enjoining Buyers from using the Business Trade Names.

Sellers cross appeal contending that the trial court erred, 1) in refusing to award Sellers attorneys' fees for enforcing the LMA, and 2) in refusing to award Sellers damages for Buyers' infringement of the Trade Names.

We reverse the portion of the circuit court's judgment denying Sellers attorneys' fees for enforcing the LMA (Sellers' first point on cross-appeal), and affirm the circuit court's judgment in all other respects.

Factual and Procedural Background

In 2004, Merijo and William Alter formed Rivercene Bed & Breakfast, LLC, for the purpose of purchasing real estate located at 127 County Road 463, New Franklin, Missouri, the contents of this real estate, and the Business that was operating on this real estate. In 2005, Sellers purchased adjoining real estate located at 115 County Road 463, New Franklin, Missouri ("White House"). The 127 County Road property and the White House property include approximately eight acres of land. (These two properties will collectively be referenced as the "Rivercene Property").

Sellers operated the Business at the Rivercene Property under the trade names "Rivercene Bed & Breakfast" and "Rivercene Mansion Bed & Breakfast" ("Trade Names" collectively). In about March 2010, Buyers offered to purchase the Rivercene Property, its contents, and the Business for a total price of $695,000. Sellers accepted the offer. On March 27, 2010, the parties executed a contract reflecting the agreement. The contract included the sale of the White House to Buyers for the price of $1.00. Closing was scheduled for May 10, 2010. The contract was conditioned upon Buyer Upp selling his house at 226 West Spring Street, Boonville, Missouri. Upp asked $198,500 for the Spring Street house but received no offers. The Alters agreed to purchase the property at the full asking price to help facilitate the closing on the Rivercene Property, the contents of the Rivercene Property, and the Business.3

Buyers were unable to obtain financing to complete the sale. Consequently, the parties agreed to split the purchase into two transactions. The real estate was sold to Buyers for $462,000, including the White House for $1.00, and the Business and contents were to be sold separately up to a year later for $233,000. The sale of the Rivercene Property closed on January 4, 2011. Contemporaneous with the closing on the Rivercene Property, the parties executed the LMA. The primary terms included postponement of payment of the remaining amount due from the original agreed $695,000 purchase price ($247,500 with the addition of closing costs and cost of a business plan) while Buyers operated, under the LMA, the Business with use of the contents and Trade Names. Buyers had until January 4, 2012, to close. In exchange, Buyers agreed to pay a nominal $75.00 per month license fee to Sellers. The LMA provided Sellers with a security interest in the licensed assets of the Business, and deeds of trust on the Rivercene Property.

The LMA provided, among other things, that an event of default was a failure of Buyers to pay the remaining $247,500 under the agreement. The LMA provided that if Buyers (the Licensees under the agreement) defaulted:

*4Licensee shall have no further rights in the Licensed Assets of the Business, nor shall Purchaser [Buyers] have the right to purchase the Membership Interest. Furthermore, Purchaser shall pay to Licensor [the Bed and Breakfast, LLC] the full amount of net revenue received from operation of the Business during the term of the License, plus interest at the Default Rate. In addition, Licensor and Seller shall have all rights and remedies available under the Security Agreement, Deed of Trust and the Second Deed of Trust, in addition to any court costs and reasonable attorneys' fees for enforcing the terms of this Agreement, whether or not legal action is taken.

Immediately following the Rivercene Property closing, Buyers began operating the Business, utilizing the contents of the Rivercene Property, and exclusively using the licensed Trade Names. Sellers allowed Buyers to use Sellers' Missouri State tax number for reporting sales.

Buyers were unable to obtain funding to finalize the sale by the January 4, 2012 deadline. The deadline was extended to May 1, 2012, and then again to May 1, 2013. Buyers paid a $5,000 deposit and agreed to increase the license fee to $989 per month. The license fee increase was due, in part, to prospective lenders desiring to confirm Buyers' ability to repay the requested mortgage amount. During the ensuing months, Buyers paid Sellers the monthly $989 license fee. The May 2013 closing date expired, and Sellers verbally agreed to extend the closing to January 2014. Buyers continued to operate the Business and utilize the contents of the Rivercene Property and the Trade Names.

In late fall 2013, Buyer Ely met with the Alters and a real estate agent. Ely requested additional credits toward the $247,500 payment price. The LMA had previously been amended to give Buyers a credit of $10,000 ($2,500 for their work at the Business before closing, $2,500 for the business plan, and $5,000 for their deposit paid with the amendment to the LMA) as well as one-half credit for license fees paid (the monthly payment of $75 and later $989) if they closed on May 1, 2013.

On January 27, 2014, Buyers' counsel emailed Sellers and their counsel claiming that Buyers were the owners of the Business and fully authorized to take action on behalf of the Business. The email announced Buyers' repudication and breach of the LMA and its Amendment, demanding that Sellers accept only $175,000 as the full amount due at the closing.4 In response to the January 27, 2014 email and further communications from Buyers' counsel that Buyers would not perform under the agreements, Sellers recorded the second deed of trust on the 127 County Road property and filed a UCC-1 Financing Statement. Pursuant to the LMA, the first deed of trust on the White House had already been recorded.

In March of 2014, Buyers, without permission of Sellers, filed with the Missouri Secretary of State several registrations of the Trade Names and variations thereof. Buyers then filed suit against Sellers. Buyers alleged, among other things, that the LMA, the deeds of trust, and the security agreement should be rescinded. Buyers claimed that they owned the Business, and that the Trade Names were invalid because they were not "registered" as trademarks.

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Bluebook (online)
561 S.W.3d 1, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ely-v-alter-moctapp-2018.