Lafayette Land Acquisitions II, LLC v. Steven L. Walls

• Court: Supreme Court of Alabama
• Decided: April 21, 2023
• Docket: 2022-0765
• Status: Published

Opinion

Rel: April 21, 2023

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA OCTOBER TERM, 2022-2023

_________________________

SC-2022-0765 _________________________

Lafayette Land Acquisitions II, LLC

v.

Steven L. Walls

Appeal from Baldwin Circuit Court (CV-21-900417)

MITCHELL, Justice.

Whenever possible, we interpret a written contract based on the

language contained within the four corners of the document. Here, a SC-2022-0765

purchase agreement provided that the parties were obligated to close a

real-estate sale unless the buyer -- Lafayette Land Acquisitions II, LLC

("Lafayette Land") -- rejected the deal in writing before the end of the

due-diligence period. Although the parties dispute when that period

began, and how long it lasted, it is undisputed that Lafayette Land never

rejected the deal. Therefore, the parties are obligated to close. Because

the Baldwin Circuit Court held otherwise, we reverse and remand.

Facts and Procedural History

Lafayette Land offered to buy Steven L. Walls's property in Orange

Beach. Walls accepted the offer, and the parties entered into a purchase

agreement that became effective on February 26, 2021. The purchase

agreement provided, in part, that "Seller will provide and Buyer will

accept an existing survey or plat." It set a closing date of April 26, 2021,

and stated that "[t]ime is of the essence."

Two addenda -- Addendum #1 and Addendum #2 -- followed the

purchase agreement. Only Robert Isakson, Sr., the owner and manager

of Lafayette Land, accepted Addendum #1. Addendum #1 contained

Walls's signature at the bottom, but he did not check the "accepted" box

associated with the signature line. Instead, he checked the "countered"

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box and indicated that a counter-addendum was attached as "Addendum

#2."

Addendum #2, which both parties signed and accepted, contains

two clauses that lie at the heart of this dispute. The first clause defines

the length of the due-diligence period, stating: "Buyer shall have a period

of sixty (60) days subsequent [to] the date in which Buyer is in receipt of

Seller's Due Diligence materials ('Due Diligence Period') to determine

whether or not to purchase the 'Property.' " The second clause contains

key language on the role of silence during the due-diligence period:

"If Buyer does not give written notice to Seller of its election to not purchase the property prior to the expiration of the Due Diligence Period, then it is agreed that the Buyer shall be deemed to have approved the Property and the parties shall proceed to Closing subject to the provisions set forth herein."

The second clause further states that "Seller agrees to provide one 30-

day extension to the Due Diligence Period to extend the closing for the

deposit of the sum of $5,000 paid directly to Seller."

In the months that followed, the parties engaged in an extended

back-and-forth about whether each party was meeting the requirements

of the purchase agreement. First, they disagreed about whether Walls

had provided documents that Lafayette Land said that it had requested.

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Next, the parties disagreed about when the due-diligence period had

begun and ended. Finally, after Walls received multiple additional offers

for the property, including one that was $100,000 more than what

Lafayette Land had agreed to pay, Walls asked Lafayette Land to sign

an agreement releasing both parties from the deal. Lafayette Land

refused and proposed an amendment that would maintain the closing

date set out in the purchase agreement. Walls did not agree and insisted

that Lafayette Land sign the release. Sue Ginter, Walls's real-estate

agent, summarized the selling side's unwillingness to close the deal when

she told Isakson's paralegal that "[w]e all need to move on."

But Lafayette Land wanted to close. In an effort to protect its

rights, Lafayette Land filed a complaint in the Baldwin Circuit Court

several days before the closing date. In the complaint, it asked for a

judgment declaring that the purchase agreement was "valid and

binding." Lafayette Land also filed a notice of lis pendens in the Baldwin

Probate Court referencing the declaratory-judgment action and noting

that it was seeking a court order requiring Walls to convey the property.

Walls represented himself in the declaratory-judgment action and filed

an answer in which he asked the circuit court to declare the purchase

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agreement void. After conducting a bench trial, the circuit court entered

a declaratory judgment in favor of Lafayette Land. Walls then obtained

counsel and filed a motion to alter, amend, or vacate the judgment, which

the circuit court granted.

The circuit court conducted a second bench trial, at which it heard

testimony from Isakson, Walls, and Ginter. During the trial, Isakson

testified that he never rejected the deal in writing. Neither Walls nor

Ginter refuted that testimony. At the conclusion of the trial, the circuit

court issued a final judgment in favor of Walls. In doing so, it made three

factual findings. First, it determined that "the Purchase Agreement that

was entered into between the parties ... expired … and the Court finds

that [Lafayette Land] failed to exercise it's [sic] option to extend the due

diligence period of 30 days." Second, it reasoned that "no due diligence

materials were specified in the contract, therefore no due diligence

materials were due from [Walls] to [Lafayette Land]." Finally, it found

that Lafayette Land had received either a survey or a plat from Walls as

provided in the purchase agreement. It concluded by stating that "[t]here

are no remaining duties owed [Lafayette Land] or [Walls] under the

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Purchase Agreement." After the circuit court issued its judgment,

Lafayette Land appealed.

Standard of Review

When a trial court hears ore tenus testimony, " 'its findings on

disputed facts are presumed correct and its judgment based on those

findings will not be reversed unless the judgment is palpably erroneous

or manifestly unjust.' " Fadalla v. Fadalla, 929 So. 2d 429, 433 (Ala. 2005)

(citation omitted). But " 'the ore tenus rule does not extend to cloak with

a presumption of correctness a trial judge's conclusions of law or the

incorrect application of law to the facts.' " Id. (citation omitted). Further,

"[i]f a contract can be interpreted without going beyond the four corners

of the document, the trial court's resolution of the question of law is

accorded no presumption of correctness, and this Court's review is de

novo." Exxon Mobil Corp. v. Alabama Dep't of Conservation & Nat. Res.,

986 So. 2d 1093, 1101 (Ala. 2007).

Analysis

Lafayette Land makes one dispositive argument on appeal -- that

the circuit court erred by failing to give effect to the provision in

Addendum #2 that directed the parties to close if Lafayette Land did not

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provide a written rejection before the due-diligence period ended. We

agree with that argument.

When the language of a written agreement is unambiguous, we

confine our review to the four corners of the document. See Kershaw v.

Kershaw, 848 So. 2d 942, 955 (Ala. 2022). Language is unambiguous

when it leads to only one reasonable interpretation. Ex parte Warren

Averett Cos., [Ms. 1210010, June 17, 2022] __ So. 3d __ (Ala. 2022). And

in that instance, we must accept that language for what it says and may

not "twist the plain meaning of the terms in a contract to create an

ambiguity under the guise of interpretation." Southland Quality Homes,

Inc. v. Williams, 781 So. 2d 949, 953 (Ala. 2000).

Here, the relevant language in Addendum #2 is unambiguous. It

states: "If Buyer does not give written notice to Seller of its election to not

purchase the property prior to the expiration of the Due Diligence Period,

then it is agreed that the Buyer shall be deemed to have approved the

Property ...." If no written rejection occurs, "the parties shall proceed to

Closing subject to the provisions set forth herein." We agree with the

circuit court's determination that the due-diligence period has ended.

Thus, all that had to be determined was whether Lafayette Land had

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provided written notice to Walls before the due-diligence period ended

that it elected not to purchase the property.

A review of the record shows that Lafayette Land never provided

any written rejection to Walls. The communications before Lafayette

Land filed suit reflect a continuous effort by Isakson to obtain more

information about the property to determine whether to continue with

the transaction; but there is no indication that Isakson, or any

representative of Lafayette Land, ever rejected the deal. On the contrary,

Isakson gave unrebutted testimony during the trial that he never

rejected the property as unsatisfactory. Walls neither cross-examined

Isakson on this point nor presented any evidence of his own indicating

that Isakson had rejected the deal. And, once Walls demonstrated an

unwillingness to fulfill his obligations under the purchase agreement,

Lafayette Land commenced this action, which further demonstrates its

good-faith intent to close. Because we agree with the circuit court's

finding that the due-diligence period ended, the parties were obligated to

close the deal.

Walls makes two arguments in an effort to avoid closing. First, he

points to a provision in the purchase agreement that addresses his

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options in the event Lafayette Land defaulted on the agreement. One of

those options gave Walls the "right to terminate this Agreement." But

Walls does not point to any facts or offer any sort of argument

demonstrating that Lafayette Land ever defaulted on the purchase

agreement. So his first argument fails.

Second, Walls contends that Lafayette Land waived the dispositive

issue outlined above by failing to cite proper authority. But Lafayette

Land cited our cases stating the longstanding rule that we give effect to

the plain language of written agreements. See, e.g., Shoney's, LLC v.

MAC East, LLC, 27 So. 3d 1216, 1223 (Ala. 2009) ("[W]e maintain our

long-held position that a contract, under Alabama law, should be

construed as written."); Reeves Cedarhurst Dev. Corp. v. First AmFed

Corp., 607 So. 2d 184, 186 (Ala. 1992) ("In interpreting a contract, the

' "words of the agreement will be given their ordinary meaning." ' "

(citations omitted)). And it pointed us to the operative language of

Addendum #2, which states that the parties "shall proceed to Closing."

Accordingly, Walls's second argument fails as well.

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Conclusion

Because Lafayette Land never rejected the deal to purchase the

property in writing and was willing to close on the date specified in the

purchase agreement, the parties are obligated to close. The circuit court

erred when it concluded that the purchase agreement had "expired" and

that, as a result, neither party owed a duty to the other. We therefore

reverse and remand.

REVERSED AND REMANDED.

Parker, C.J., and Mendheim, Stewart, and Cook, JJ., concur.

Shaw, J., concurs in the result, with opinion, which Wise and

Bryan, JJ., join.

Sellers, J., concurs in the result, without opinion.

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SHAW, Justice (concurring in the result).

I concur in the result. The "due-diligence period" referenced in

Addendum #2 to the purchase agreement must begin before the

language of that provision controls the outcome of this case. If it began,

there was no written notice of a refusal to purchase the property, as the

main opinion notes. But, if the period did not begin, which the parties

dispute in this appeal, the provision providing for written notice of a

refusal to purchase did not apply. Nevertheless, there was still no

refusal of the purchase of the property preventing the transaction's

closing.

Further, I see nothing supporting the trial court's separate

holding that the purchase agreement "expired" because of a purported

lapse of the due-diligence period. Addendum #2 indicates that a failure

to refuse to purchase of the property, in writing, during the due-

diligence period amounted to an acceptance of the sale and that the

parties would proceed to the transaction's closing. As noted above, no

refusal took place.

Wise and Bryan, JJ., concur.