JAS Apartments, Inc. v. Naji

354 S.W.3d 175, 2011 Mo. LEXIS 219, 2011 WL 5546957
CourtSupreme Court of Missouri
DecidedNovember 15, 2011
DocketNo. SC 91523
StatusPublished
Cited by24 cases

This text of 354 S.W.3d 175 (JAS Apartments, Inc. v. Naji) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
JAS Apartments, Inc. v. Naji, 354 S.W.3d 175, 2011 Mo. LEXIS 219, 2011 WL 5546957 (Mo. 2011).

Opinion

ZEL M. FISCHER, Judge.

This is the second appeal by JAS Apartments, Inc. (“JAS”) arising from a contract for the sale of real estate. In the first appeal, the court of appeals reversed the circuit court’s judgment and remanded the case for further proceedings. The circuit court did not make the appropriate determinations of law consistent with the decision of the court of appeals in the first remand, and so this Court reverses the judgment and remands once again. This case has a complex history, but it all boils down to one issue: when the preliminary title commitment states that the spouse of the seller must join in the real estate transaction (to release the seller’s spouse’s marital interest and convey marketable title), does the spouse’s failure to join constitute a breach of the contract? This Court holds that the language of the preliminary title commitment required the seller’s spouse to join in the real estate transaction, and the failure to do so constituted a breach of the real estate contract.1

Facts

In November 2002, Mohamad Ali Naji (“Naji”) and his wife (“Wife”), residents of California, owned a 137-unit apartment building on Armour Boulevard in Kansas City, Missouri. The Najis had purchased the property in partnership with other individuals but subsequently had bought out the others. Naji’s attorney caused the ownership of the property to be vested solely in Naji’s name. The property was subject to a deed of trust securing a loan [177]*177with the remaining principal balance in 2002 of approximately $500,000.

Naji engaged a broker to list the property for sale. After a year on the market, JAS, a Minnesota corporation, commenced negotiations through a broker working on its behalf, ultimately offering $3.5 million with a $350,000 carryback. The parties’ brokers, apparently unassisted by legal counsel, used a standard form contract issued by the Kansas City Metropolitan Board of Realtors and added a few nonuniform provisions.

Naji accepted the offer and signed the agreement as an individual, without any recitation of his marital status and without informing his wife. He learned shortly thereafter that his wife did not want him to sell the property.2 Nevertheless, Naji fully intended to be bound by the contract.

The contract provided for a closing date of February 11, 2003. The contract also provided:

8. Seller shall deliver and pay for an owner’s ALTA3 title Insurance policy Insuring marketable fee simple title in Buyer in the amount of the purchase price as of the time and date of recordation of Seller’s General Warranty Deed, subject only to the Permitted Exceptions defined below. Seller shall, as soon as possible and not later than fifteen (15) days after the Effective Date of this Contract, cause to be furnished to Buyer a current commitment to issue the policy (the “Title Commitment”), issued through Chicago Title (the “Title Company”). Buyer shall have ten (10) days after receipt of this Title Commitment (the “Review Period”) in which to notify Seller in writing of any objections Buyer has to any matters shown or referred to in the Title Commitment. Any matters which are set forth in the Title Commitment and to which Buyer does not object within the Review Period shall be deemed to be permitted exceptions to the status of Seller’s title (the “Permitted Exceptions”). With regard to items to which Buyer does object within the Review Period, Seller shall have until Closing to cure the objections. If Seller does not cure the objections by closing, this contract shall automatically be terminated unless Buyer waives the objections on or before Closing.

Naji informed his broker that his wife would not sign any documents because she did not agree with his plan to sell the building. He indicated that he would continue trying to obtain her consent. He asked that the broker communicate his concerns to the buyer.

Naji secured a preliminary title commitment from the title company, Chicago Title, on January 8, 2003. The commitment provided that upon closing of the transaction and the recording of the deed, “the form and execution of which is satisfactory to [Chicago Title],” the policy “will be issued containing exceptions in Schedule B thereof to the following matters (unless the same are disposed of to the satisfaction of [Chicago Title]).”

Chicago Title, like most other title companies, uses forms of commitment suggested by ALTA. At the time of the transaction, Chicago Title listed both exceptions [178]*178and requirements on one schedule B.4 The introductory paragraph of schedule B in this case stated as follows:

Upon payment of the full consideration to, or for the account of, the grantors or mortgagors, and recording of the deeds and/or mortgages, the form and execution of which is satisfactory to the Company, the policy or policies will be issued containing exceptions in Schedule B thereof to the following matters (unless the same are disposed of to the satisfaction of the Company)[.] 5

Schedule B of the commitment then set forth 19 items. Pertinent to this appeal, item 15 stated: “The spouse, if any, of Mohamad Ali Naji must join in the proposed agreement.” JAS did not object in writing to any of the 19 items in schedule B during the review period provided by the contract.

As the closing approached, Naji repeatedly sought Wife’s consent to the transfer. Naji continued to hope to secure his wife’s cooperation until late January 2003. In early February 2003, Naji was in contact with the Chicago Title closing officer, Bonnie Vestal (“Vestal”). He informed Vestal of Wife’s determined unwillingness to agree to the transaction. He understood that JAS would not agree to close the transaction without the consent of his wife. Naji was concerned that the transaction would not close.

An attorney for JAS spoke with Vestal on February 7, four days before the proposed closing. They discussed the fact that Wife was still refusing to sign or approve the transaction, and Vestal stated that the transaction “would not close” •without Wife’s signature. On February 10, the day before the proposed closing, an attorney for JAS called Naji, who evidently was still not represented by legal counsel. Naji confirmed that his wife would not sign. The attorney threatened litigation if Naji could not secure Wife’s consent. The next day, the attorney sent Naji a letter referring to the conversation, noting the damages that would result from a failure to close. Naji evidently did not respond.

JAS regarded the lack of consent from Wife as a default by Naji. Instead of appearing at closing, JAS sought to enforce the contract in circuit court by legally extinguishing Wife’s interest. JAS tried to accomplish this by obtaining a declaration that the transfer would not be in fraud of her marital rights and obtaining an order of specific performance. JAS’s lawsuit asked the circuit court to declare an extin-guishment of Wife’s interest so that Naji could convey marketable title and Chicago Title would insure marketable title (because JAS anticipated that it would overcome the statutory presumption that the proposed sale would be a fraud against the marital rights of Wife).

Naji secured legal representation and countered with his own counterclaim for breach of contract for JAS’s refusal to close as scheduled.

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Cite This Page — Counsel Stack

Bluebook (online)
354 S.W.3d 175, 2011 Mo. LEXIS 219, 2011 WL 5546957, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jas-apartments-inc-v-naji-mo-2011.