Heflin v. Brackelsberg

374 S.W.3d 755, 2010 Ark. App. 261, 2010 Ark. App. LEXIS 256
CourtCourt of Appeals of Arkansas
DecidedMarch 17, 2010
DocketNo. CA 09-912
StatusPublished
Cited by1 cases

This text of 374 S.W.3d 755 (Heflin v. Brackelsberg) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heflin v. Brackelsberg, 374 S.W.3d 755, 2010 Ark. App. 261, 2010 Ark. App. LEXIS 256 (Ark. Ct. App. 2010).

Opinion

D.P. MARSHALL JR., Judge.

| ]Mr. and Mrs. Brackelsberg agreed to sell their house to Mr. and Mrs. Heflin for $450,000.00. The Heflins backed out. They did so because the home appraised for $420,000.00 and their bank would not loan them more than that amount on the property. The Brackelsbergs did not return the Heflins’ $5,000.00 earnest money. They eventually sold their house to someone else for $422,500.00. More than a year after their deal fell apart, the Heflins sued the Brackelsbergs for the earnest money. The Brackelsbergs counterclaimed, alleging that the Heflins were the ones in breach and seeking actual damages. The circuit 'court granted the Brackelsbergs summary [¿judgment. The court awarded the Brackelsbergs the difference between the amount the Heflins had agreed to pay and the later sales price (less the retained earnest money). The circuit court also awarded attorney’s fees and costs, but refused any pre-judgment or post-judgment interest. The Heflins appeal. The Brackelsbergs cross-appeal.

I.

The material facts were undisputed. We view them in the light most favorable to the Heflins. Sykes v. Williams, 373 Ark. 236, 239-40, 283 S.W.3d 209, 213 (2008).

The parties’ form contract had three “Purchase Price” options: new financing, loan assumption, or cash. The new-financing option, in turn, contained two possibilities, a new loan or other financing. Embedded within the new-loan route, there were several different types of loans (e.g., conventional, VA, FHA) to choose among and a condition: the contract would be “[s]ubject to the Property appraising for not less than the Purchase Price and the Buyer’s ability to obtain a loan to be secured by the Property in an amount of.... $_” on particular terms. The other financing route left more details open. Under this provision, the contract would be “[s]ubjeet to the Buyer’s ability to obtain financing in the amount of $_ from a source and being payable as follows: _”

The Heflins agreed to secure other financing. They filled in the form-contract’s blanks, making the deal subject to their ability to obtain “$445,000.00” in financing |son “Terms set forth by Bank.” The contract also required the Heflins to “make a complete application for a new loan” within five business days of the Brackelsbergs’ acceptance. To satisfy this obligation, the Heflins “agree[d] to provide lender with any requested information and pay for any credit report(s) and appraisals required to make the loan.” The contract also provided that “Buyer understands that failure to make a complete loan application as defined above may constitute a breach of this Real Estate Contract.”

•The Heflins called a loan officer at their bank within five business days of signing the contract. She told them that they first needed to get an appraisal. The Heflins ordered one, which was completed several weeks later. This appraisal valued the Brackelsbergs’ home at $420,000.00. The Brackelsbergs had their own appraisal, which came in at $440,000.00. The Hef-lins’ loan officer, however, said that the bank would not loan the Heflins more than the home’s appraised value. The Heflins told the Brackelsbergs about their inability to obtain financing and backed out. The Heflins acknowledged that they never completed a loan application.

On the undisputed facts, the Heflins were in breach of this unambiguous contract. The Heflins agreed to buy this house if a bank would loan them $445,000.00. Their obligation was not contingent on the Brackelsbergs’ home appraising for a particular amount. Their obligation, moreover, was not contingent on |4the loan being tied exclusively to this property. They did not complete a loan application, an important omission. For if the Heflins had filled out an application, then their loan officer would have learned what discovery in this case revealed: the Heflins had a $750,000.00 unsecured line of credit with the bank, a substantial yearly income, and a net worth of several million dollars. The other-financing option chosen by the Heflins was wide open: it unambiguously made the sale contingent only on them securing some kind of bank financing, not just a typical mortgage, for the purchase price. On the undisputed facts, the circuit court correctly granted the Brackelsbergs’ judgment as a matter of law on breach.

II.

The Heflins also argue that the circuit court erred by allowing the Brackelsbergs to seek actual damages. The parties’ contract gave the Brackelsbergs a choice. “If Buyer fails to fulfill his obligations under this Real Estate Contract ... the Earnest Money may, at the sole and exclusive option of the Seller, be retained by the Seller as liquidated damages. Alternatively, Seller may return the Earnest Money and assert all legal or equitable rights which may exist as a result of Buyer breaching this Real Estate Contract.” The Heflins contended that the Brackelsbergs elected liquidated damages by sitting on the $5,000.00 earnest money for more than a year. The circuit court, however, awarded actual damages — the Brackelsbergs got to keep the $5,000.00 | ¡-.earnest money and received a judgment for $22,500.00 more— plus attorney’s fees.

The parties argue this point as an election of remedies. This is, we conclude, the right idea but the wrong label. This is not the paradigm case on a land contract where the election is either damages or specific performance. E.g., Bigger v. Glass, 226 Ark. 466, 290 S.W.2d 641 (1956). Instead, the Brackelsbergs had an election within their damages remedy: liquidated or actual damages. Though we have not located any authority directly on point, we conclude that the same general principles apply to an election within a remedy as to an election between remedies.

“[I]f a party has two or more inconsistent remedies on a single cause of action, only one remedy may be ultimately pursued and only one remedy satisfied.” Howard W. BRIll, Ajikansas Law of Damages § 2:9, at 32 (5th ed.2004); see also Cater v. Cater, 311 Ark. 627, 630-31, 846 S.W.2d 173, 175 (1993). A party may— intentionally or unintentionally — elect his or her remedy out of court. Brill, supra § 2:10, at 37-38. The Brackelsbergs cite cases where the election occurred in a pleading or other court paper. E.g., Sutterfield v. Burbridge, 223 Ark. 854, 856, 268 S.W.2d 900, 901-02 (1954). But the precedent makes clear that acts outside of court will suffice. E.g., Smith v. Walt Bennett Ford, Inc., 314 Ark. 591, 610-11, 864 S.W.2d 817, 828 (1993). Moreover, “[t]he passage of time or delay in selecting available options may constitute an election.” Brill, supra § 2:10, at 38. Timeliness is a fact question. Howard W. Brill, The Election of Remedies Doctrine in Arkansas, 37 Ark. L.Rev. 385, 400 (1983); see also Herrick v. Robinson, 267 Ark. 576, 587, 595 S.W.2d 637, 644 (1980).

The Brackelsbergs first argue that the Heflins’ election argument is not preserved because the Heflins did not assert it in response to the Brackelsbergs’ counterclaim. We disagree. Election was in this case from the start.

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Related

Brackelsberg v. Heflin
386 S.W.3d 636 (Court of Appeals of Arkansas, 2011)

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Bluebook (online)
374 S.W.3d 755, 2010 Ark. App. 261, 2010 Ark. App. LEXIS 256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heflin-v-brackelsberg-arkctapp-2010.