Le v. Hoang Thi Nguyen

380 S.W.3d 485, 2011 Ark. App. 20, 2011 Ark. App. LEXIS 30
CourtCourt of Appeals of Arkansas
DecidedJanuary 12, 2011
DocketNo. CA 10-399
StatusPublished

This text of 380 S.W.3d 485 (Le v. Hoang Thi Nguyen) 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
Le v. Hoang Thi Nguyen, 380 S.W.3d 485, 2011 Ark. App. 20, 2011 Ark. App. LEXIS 30 (Ark. Ct. App. 2011).

Opinion

ROBERT J. GLADWIN, Judge.

| Appellants Tina Le, Dennis T. Le, and Tony Le contend that the Pulaski County Circuit Court erred in denying their complaint for unlawful detainer against appel-lee Hoang Thi Nguyen. Appellants claim that the circuit court erred in determining that the agreement between the parties was an enforceable contract and that the circuit court acted outside the scope of the unlawful-detainer action in ruling that the agreement was enforceable. We reverse and remand.

Statement of Fads

Beginning in 2003, appellee Hoang Thi Nguyen rented property located in North Little Rock, Arkansas, from appellants Le under an oral agreement. Tony Le filed bankruptcy under Chapter 13 of Title 11 of the United States Code on May 4, 2005. While the |2bankruptcy was pending, on June 1, 2006, Tony Le signed a document entitled Agreement to Sell Real Estate, in which he agreed to sell the property to Nguyen and to carry a loan for the purchase price of $106,000. Tony Le was a twenty-five-percent owner of the real property, his former wife, appellant Tina Le, owned a twenty-five-percent interest, and his brother, appellant Dennis Le, owned a fifty-percent interest.

On June 23, 2006, Tony Le filed a motion to sell property in the bankruptcy court. The bankruptcy trustee objected to the terms of the sale, specifically to Tony Le carrying the note, and requested that the motion be denied. On July 26, 2006, the bankruptcy court issued an order withdrawing Tony Le’s motion to sell the property.

It is undisputed that Nguyen continued to occupy the property after Tony Le signed the agreement and that she paid various sums of money to Tony Le. The purpose of those payments is in dispute. Tony Le asserts that the payments were for rent on the property and repayment of personal loans to him. He claims that he did not accept payment under the agreement because the bankruptcy court had not approved the sale. On the contrary, Nguyen asserts that payments made after the agreement was signed, as well as certain payments made before the agreement was signed, were part of the purchase price of the property at issue.

Since August 2007, Nguyen has made the payments into her attorney’s trust account. On March 20, 2008, Tina Le filed a complaint in unlawful detainer in Pulaski County Circuit Court, seeking possession of the property. The complaint was amended on August 14, 2008, to add Tony Le and Dennis Le as plaintiffs. Following a hearing on November 4, 2008, the |scircuit court denied the Les’ motion for the issuance of a writ of possession in their favor. On April 6, 2009, the circuit court held a bench trial on the Les’ amended complaint for unlawful detainer. Tony Le testified that he was discharged from bankruptcy in December 2008. The trial court issued a letter ruling on April 8, 2009, finding that the lease between the Les and Nguyen “ended on June 1, 2006, when the parties entered into an agreement to sell [the property].” Consequently, the trial court denied the Les’ complaint in unlawful detainer. The trial court further ruled in its letter as follows:

The Plaintiffs claim that the real estate agreement was never an executory contract because of Plaintiff Tony Le’s bankruptcy. In other words, the Plaintiff is raising as a defense to the real estate contract’s validity his own negligence or fraud in drafting or executing the contract. The Plaintiff may not benefit from his actions and he may not now claim that this is a rental agreement. The Court finds that the Plaintiffs Complaint in Unlawful Detainer is dismissed because the Plaintiffs are not entitled to possession of the property.

After reviewing the proposed precedent prepared by Nguyen’s attorney on June 23, 2009, the trial court entered an order requiring the parties to brief the issue of whether the signatures of all three owners of the property were required on the agreement for the sale of the property. The trial court then entered an order on November 25, 2009, finding that even though Tony Le did not have the authority to bind Dennis Le and Tina Le to the agreement to sell the property, the agreement was nevertheless ratified by them. The trial court concluded,

Therefore, even though the contract for sale is invalid because it lacks the signatures of two of the owners it is enforceable against the Plaintiffs because those owners have ratified Tony Le’s unauthorized acts.

14Appellants filed a timely notice of appeal from the order, and this appeal followed.

Standard of Review

A circuit court’s conclusion on a question of law is reviewed de novo and is given no deference on appeal. Fayetteville Pub. Schs. v. Dial, 2010 Ark. App. 296, 2010 WL 1379801. The standard of review on appeal from a bench trial is whether the circuit court’s findings were clearly erroneous or clearly against the preponderance of the evidence. Id. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court upon considering all the evidence is left with a definite and firm conviction that a mistake has been committed. Id.

Discussion

Appellants contend that the trial court erred in finding that the agreement was an enforceable contract for sale because the bankruptcy court did not approve the sale; thus, the agreement was void and without legal effect. They cite Siddiqui v. Gardner (In re Williamson), 327 B.R. 578 (Bankr.E.D.Va.2005), where, under Virginia law, the court held that a competing bidder and real estate agents did not tortiously interfere with the winning bidder’s contract for the purchase of the Chapter 13 debtors’ house by submitting a higher and better offer than the purchaser’s initial offer. The court held that the purchaser had no protected expectancy, as both contractually and as a matter of bankruptcy law, her contract was contingent on court |fiapproval, and prior to the hearing on approval of the contract, the property remained on the market where it was subject to higher or better offers. Id. Appellants argue that the trial court’s conclusions — that Tony Le could not benefit from action he took to the detriment of Nguyen and that the agreement was enforceable because it was ratified by Dennis Le and Tina Le — are irrelevant to the central issue, which is whether the property could be sold without the permission of the bankruptcy court.

In contrast, Nguyen contends that the issue of bankruptcy is moot because Tony Le was discharged from bankruptcy, and the property was not sold during the bankruptcy pendency. She argues that the bankruptcy trustee did not object to the sale itself, but only to the terms of the sale. Subsequently, Tony Le withdrew his motion to sell; therefore, Nguyen reasons that the executory sale was neither approved nor disapproved by the bankruptcy court. Thus, she asserts that the issue of bankruptcy is moot, as the circuit court did not rule that the agreement was enforceable until after Tony Le had been discharged from bankruptcy.

We disagree. As appellant correctly points out, an executory contract is a contract that is entered into before a bankruptcy is filed, not during the course of the bankruptcy. 2 Hon. William L. Norton, Jr. & William L. Norton, III, Norton Bankruptcy Law and Practice § 46:1 (3d ed.2010).

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Related

Webb v. Herpin
233 S.W.2d 385 (Supreme Court of Arkansas, 1950)
Siddiqui v. Gardner (In Re Williamson)
327 B.R. 578 (E.D. Virginia, 2005)
Waterall v. Waterall
155 S.W.3d 30 (Court of Appeals of Arkansas, 2004)
Cortiania v. Franco
208 S.W.2d 436 (Supreme Court of Arkansas, 1948)

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Bluebook (online)
380 S.W.3d 485, 2011 Ark. App. 20, 2011 Ark. App. LEXIS 30, Counsel Stack Legal Research, https://law.counselstack.com/opinion/le-v-hoang-thi-nguyen-arkctapp-2011.