KCREW Investments, LLC v. Johnathan Dangelo Clark

• Court: Louisiana Court of Appeal
• Decided: May 10, 2023
• Docket: 55,092-CA
• Status: Published

Opinion

Judgment rendered May 10, 2023. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.

No. 55,092-CA

COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA

*****

KCREW INVESTMENTS, LLC Plaintiff-Appellee

versus

JOHNATHAN DANGELO Defendant-Appellant CLARK

Appealed from the First Judicial District Court for the Parish of Caddo, Louisiana Trial Court No. 624,785

Honorable Brady O’Callaghan, Judge

NEUPERT & ASSOCIATES, LLC Counsel for Appellant By: Charles J. Neupert, Jr.

WILLIAM E. BYRAM, LTD., APLC Counsel for Appellee By: William E. Byram

Before STONE, HUNTER, and ELLENDER, JJ. ELLENDER, J.

Johnathan Clark, the seller, appeals a judgment ordering specific

performance of a residential real estate buy-sell agreement with KCREW

Investments, the buyer, and ordering Clark to pay KCREW’s attorney fees

of $9,366.00. For the reasons expressed, we affirm.

FACTUAL BACKGROUND

In 2007, Clark, who was unmarried at the time, bought a house and lot

on Jessica Drive, in Forbing Woods Subdivision in southwest Shreveport,

for $82,000. At some point, he married Shanika and the couple used the

house as their marital home; they also placed an FHA second mortgage on it.

By January 2020, however, the couple had separated and Clark had relocated

to Irving, Texas. He then decided to list the house (along with another

property) for sale with Eunice Johnson-Strickland, an agent with Keller

Williams Realty.

A prospective buyer, KCREW Investments LLC, acting through its

agent, John Lorick of Re/Max Realty, made an offer of $60,000. Clark

rejected this, so KCREW counteroffered $65,000, which Clark accepted.

The parties DocuSigned a “Louisiana Residential Agreement to Buy

or Sell” (“the Agreement”) on January 20, 2020. This listed Ms. Johnson-

Strickland as seller’s agent, Keller Williams as seller’s broker, and Clark

and his wife as sellers. It listed Re/Max as the “selling firm,” John Lorick as

buyer’s agent, and KCREW as buyer. It stated a closing date of February

18.

At Clark’s request, the parties pushed back the closing date several

times; each time, Ms. Johnson-Strickland prepared an addendum.

Addendum #1 moved the closing to March 3, 2020; like the Agreement, it listed both Clark and his wife as sellers. Addendum #2 moved the closing to

March 27; it listed only Clark (not his wife) as seller, but listed Nathan

Lorick (not John Lorick) as buyer. Addendum #3 moved the closing to

April 3 and listed Clark as seller and Nathan Lorick as buyer. Addendum #4

moved the closing to April 6; it also listed Clark as the sole seller and

Nathan Lorick as buyer.

On April 6, at the appointed time and place (11:00 am CDT, at an

attorney’s office on Ashley Ridge Blvd.), John Lorick appeared along with a

representative from his mortgage lender. However, Clark did not appear.

The attorney’s secretary, Ms. Strozier, tried calling and emailing him, but he

did not respond. The realtor, Ms. Johnson-Strickland, told them he would

not come because he had to bring $7,000 to the closing to settle the FHA

mortgage, a fact that he was unhappy with. Ms. Johnson-Strickland also told

them that, in her view, Clark could not convey clear title because his wife,

Shanika, had acquired an interest in the property. Later in April, KCREW

sent Clark a demand letter, which went unanswered.

PROCEDURAL HISTORY

KCREW filed this suit, to enforce specific performance of a real

estate agreement, on July 13, 2020. Clark never answered, so KCREW took

a default judgment, which the district court confirmed on September 10,

ordering specific performance and awarding attorney fees of $2,000.

Notice of judgment apparently got Clark’s attention; he retained

counsel and took an appeal. This court reversed the default judgment on

grounds that service had been made on Clark’s estranged wife at an address

other than the one in the citation, and that no sheriff’s return appeared in the

2 record. KCREW Inv. LLC v. Clark, 54,003 (La. App. 2 Cir. 6/30/21), 324

So. 3d 242.

After proper service was made on Clark, he asserted that he was

justified in skipping the closing because he thought he could not deliver

merchantable title to the property.

The matter came to bench trial in January 2022. Called by KCREW,

Ms. Johnson-Strickland testified that she drafted the four addenda. She

admitted that, in Addendum #1, the agent’s name was not correct and

Clark’s wife was listed as a seller. She honestly believed that Shanika was

part owner, and she had so advised Clark. She also stated that she dealt only

with John Lorick, and had never met Nathan Lorick, even though the latter’s

name appeared in two of the addenda. She also pointed out that the Dotloop

verification on Addendum #4 was time-stamped 12:38 pm EDT, some 38

minutes after the closing was supposed to occur (11:00 am CDT). She

agreed, however, that despite the different names, she knew the buyer was

indeed KCREW; she and Clark both knew the closing was set for 11:00 am

on April 6; and Clark was the person who had requested all the delays.

Ms. Strozier, the attorney’s secretary, confirmed that Clark was a no-

show for the closing. She also testified that she had sent him a proposed

HUD-1 settlement showing that he owed $7,000 on the FHA loan.

John Lorick testified that he was a realtor with Re/Max and agent for

all of KCREW’s local dealings. Further, Nathan Lorick is his son, the 100%

owner of KCREW, a Colorado LLC, and Nathan might have DocuSigned a

few of the papers in this case, but KCREW was the actual buyer. John

Lorick added that it was Clark’s agent, Ms. Johnson-Strickland, who

inputted all data to the addenda. Finally, he testified that he wanted to 3 enforce the Agreement’s provisions for specific performance and attorney

fees.

Clark testified that he had lived in the house some 12 or 13 years, and

after he and his wife moved out, they retained it as a rental property; they

charged $825 a month rent, which barely offset the FHA mortgage of $760 a

month plus upkeep. He admitted that he attended the closing on his other

property one hour earlier, at 10:00 am April 6, but skipped this one because

this realtor told him he would have to pay $7,000 to settle the FHA mortgage

(a fact that, in his words, “blew my mind”) and because he was unsure

whether the house was community property.1 He also stated that paying

tenants had been in the house until four or five months before trial; after they

left, he let his brother stay there rent-free.

The court ruled from the bench that Clark had “credibility issues,” and

ignorance of the value of his FHA mortgage was not a defense. The court

allowed Lorick to inspect the property, after which Lorick advised that he

still wanted specific performance.

The court also told Lorick to submit an affidavit of attorney fees, and

Clark to traverse it. Lorick’s affidavit covered entries from April 2020

through February 2022, a total of 47.33 hours, at $200 an hour. Clark

countered that many of these hours related to the default judgment, which

was reversed; it would “defy sound judicial norms, logic and common

sense” to award fees for a judgment that the attorney lost.

1 Clark offered no evidence to show that he transferred the house, which was his separate property, to the community, or that it was otherwise transformed into community property. 4 The court rendered judgment ordering Clark to convey the property to

KCREW for the price of $65,000 and to pay attorney fees of $9,366.00

(46.83 hours at $200 an hour).2

Clark appealed devolutively, raising two assignments of error.

DISCUSSION

Existence of a Written Contract

By his first assignment of error, Clark urges the court erred in finding

there existed a written contract signed by the seller and the buyer, which

obligated Clark to appear at an 11:00 am closing on April 6, 2020. He

concedes the standard of review is manifest error, Ryan v. Zurich Amer. Ins.

Co., 07-2312 (La. 7/1/08), 988 So. 2d 214. He contends, however, that the

party seeking to enforce a contract must prove its existence, La. C.C. art.

1831; when the law requires a writing, the contract cannot be proved by

testimony or presumption, La. C.C. art. 1832; and any transfer of immovable

property must be by authentic act, La. C.C. art. 1839.

He also cites the “act of sale” clause of the Agreement: any change of

the date for execution of the sale “must be mutually agreed upon in writing

and signed” by both parties. He argues that the four addenda do not meet

this clause. First, the Dotloop verification on Addendum #3 was March 30,

two days after the expiration provided in Addendum #2, resulting in a two-

day gap in which there was no enforceable agreement. Second, the Dotloop

verification on Addendum #4 was April 6 at 12:38 pm EDT, 38 minutes

after the proposed closing; he contends this gave the buyer an extra 38

minutes to extract concessions out of the seller. He further contends that

2 This total reflects the full amount listed in KCREW’s affidavit, less 0.50 hours for preparing the affidavit. 5 Nathan Lorick did in fact extract these concessions, but he does not specify

what they were.

The interpretation of a contract is a determination of the common

intent of the parties. La. C.C. art. 2045; Olympia Minerals LLC v. HS Res.

Inc., 13-2637 (La. 10/15/14), 171 So. 3d 878. When the words of a contract

are clear and explicit and lead to no absurd consequences, no further

interpretation may be made in search of the parties’ intent. La. C.C. art.

2046; Olympia Minerals v. HS Res., supra; Lacas v. Monroe Credit LLC,

54,170 (La. App. 2 Cir. 12/15/21), 332 So. 3d 1264. Further, La. C.C. 1848

provides:

Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act[.] Nevertheless, in the interest of justice, that evidence may be admitted to prove such circumstances as a vice of consent or to prove that the written act was modified by a subsequent and valid oral agreement. (Emphasis added.)

In other words, the court may consider parol evidence as proof of a

subsequent agreement to modify or revoke a written agreement by mutual

consent of the parties. Torrey v. Simon-Torrey Inc., 307 So. 2d 569 (La.

1974); Lacas v. Monroe Credit LLC, supra, and citations therein.

On close review of the Agreement and the four addenda, we find

nothing that would negate the existence of a valid contract for Clark to sell

the property to KCREW for $65,000 at a closing at 11:00 am, April 6, 2020.

We concede the minor discrepancies in the Agreement (such as listing

Re/Max as the “selling firm” when it was, in fact, the buying firm) and

between the Agreement and the four addenda (two of which listed Shanika

as a seller, when she had no interest in the property, and two of which listed

Nathan Lorick as the buyer’s agent, when in fact this was John Lorick).

6 There is also the slight irregularity in the Dotloop verifications (fixing the

time after the closings were supposed to occur). However, none of these

errors had any genuine effect on determining the common intent of the

parties. Notably, the parties continued to execute new addenda, a fact which

dispels the contention that Clark’s intent to sell, and KCREW’s intent to

buy, did not exist. Collectively, these documents support the existence of

the contract.

Even if these discrepancies might have muddied the issue of intent,

the testimony, admissible under Art. 1848, totally confirms the existence of

a contract. Clark’s agent, Ms. Johnson-Strickland, testified that he knew the

identity of the buyer, and the date and time of the closing. The secretary,

Ms. Strozier, testified that she sent Clark a proposed HUD-1 settlement

showing that he owed $7,000 on the FHA mortgage. Clark candidly

admitted that the reason he skipped the closing was that he would have to

bring along $7,000 to complete the transaction, something he was unwilling

(and perhaps unable) to do. The fact that one side made a “bad deal” is not

an “absurd consequence” that would justify rescinding the contract. Gibbs

Const. Co. v. Thomas, 500 So. 2d 764 (La. 1987); Southern Farm Bur. Life

Ins. Co. v. Cox, 51,930 (La. App. 2 Cir. 4/11/18), 247 So. 3d 999, writ

denied, 18-0747 (La. 9/14/18), 252 So. 3d 486, and citations therein.

The district court was not plainly wrong in finding the Agreement was

a valid contract and in ordering specific performance. This assignment of

error lacks merit.

Attorney Fees

By his second assignment of error, Clark urges the attorney fees

awarded are unreasonable and excessive. He cites the court’s inherent 7 authority to reduce attorney fees that are excessive, Nations v. Excess Ins.

Co., 377 So. 2d 433 (La. App. 2 Cir. 1979). He argues it is “customary” for

promissory notes to state a 25% attorney fee and for personal injury attorney

contracts to state 33%; by contrast, the “default of agreement by buyer”

clause of the Agreement stipulated damages of 10% of the purchase price, or

$6,500; he asserts $9,366 is 144% of damages and patently excessive. He

suggests an award of 25% of stipulated damages, or $1,625, would be

reasonable. In the alternative, he contends it was an abuse of discretion to

award attorney fees for time spent obtaining a default judgment that was

later reversed. He submits that only the hours logged after June 30, 2022,

should be allowed, 25.68 hours, or $5,136.

KCREW responds that an award of attorney fees is subject to the trial

court’s discretion, Hinds v. Hinds, 22-0444 (La. App. 4 Cir. 1/26/23), __ So.

3d __, and that this award is no abuse of discretion.

As a rule, attorney fees are not allowed in Louisiana unless they are

authorized by statute or provided for by contract. State v. Wagner, 10-0050

(La. 5/28/10), 38 So. 3d 240; Quinlan v. Sugar-Gold, 53,348 (La. App. 2

Cir. 3/11/20), 293 So. 3d 722. Courts may inquire into the reasonableness of

attorney fees as part of their inherent authority to regulate the practice of

law, regardless of the language of the statutory authorization or the method

employed by the trial court in fixing the award. Smith v. State, 04-1317 (La.

3/11/05), 899 So. 2d 516; Brightwell v. City of Shreveport, 54,824 (La. App.

2 Cir. 2/8/23), 356 So. 3d 586, and citations therein. Factors to consider in

assessing the reasonableness of a fee include (1) the ultimate result obtained,

(2) the responsibility incurred, (3) the importance of the litigation, (4) the

amount of money involved, (5) the extent and character of the work 8 performed, (6) the legal knowledge, attainment, and skill of the attorneys,

(7) the number of appearances involved, (8) the intricacies of the facts

involved, (9) the diligence and skill of counsel, and (10) the court’s own

knowledge. State v. Williamson, 597 So. 2d 439 (La. 1992); Quinlan v.

Sugar-Gold, supra. The appellate court reviews an award of attorney fees

for an abuse of discretion. Covington v. McNeese State Univ., 12-2182 (La.

5/7/13), 118 So. 3d 343; Quinlan v. Sugar-Gold, supra.

The Agreement states, in pertinent part:

The prevailing party to any litigation brought to enforce any provision of this Agreement shall be awarded their attorney fees and costs. The SELLER may also be liable for Broker fees.

Plainly, this provision does not limit attorney fees to 25% or 33%;

even though these percentages may be customary in some contracts, the

Agreement gives no basis for either suggested rate. The district court did

not abuse its discretion in failing to apply a nonexistent rate.

Finally, we have reviewed the award for abuse of discretion using the

factors of State v. Williamson, supra, and Quinlan v. Sugar Gold, supra.

The “ultimate result obtained” was a judgment in favor of KCREW, and this

satisfies the first and primary factor. We also consider the amount of money

involved. The liquidated damages, at $6,500, were relatively low, but the

true object of the litigation was to enforce the sale of a $65,000 house; by

that measure, the attorney fee is only 14.4% of the recovery and does not

strike us as excessive.

The other relevant factor is the extent and character of the work

involved. A court may find, in the interest of justice, that the prevailing

party is entitled to fees even for actions or procedures that were not

9 successful. Krielow v. La. State Univ. Bd. of Sup’rs, 19-0176 (La. App. 1

Cir. 11/15/15), 290 So. 3d 1194. This court’s prior action reversed a default

judgment on procedural grounds, not for substantive reasons. In the default

judgment, the district court set attorney fees at only $2,000. While Clark

had good reason to challenge that judgment on procedural grounds, his

substantive arguments in response to KCREW’s principal claim (such as

community property) were unsupported by the facts or the law. Clark’s

decision to move forward with the litigation involved the risk that he would

be unsuccessful in the end and expose himself to attorney fees far greater

than those initially awarded.

In light of these considerations, we do not perceive any abuse of the

district court’s discretion. This assignment of error lacks merit.

CONCLUSION

For the reasons expressed, we AFFIRM the judgment ordering the

specific performance of the Agreement and awarding attorney fees of

$9,366.00. Costs are to be paid by the appellant, Johnathan Dangelo Clark.

AFFIRMED.