STEPHEN LOWELL DRUKER * NO. 2022-CA-0261
VERSUS * COURT OF APPEAL MICHAEL JAMES BERTEL, * FULL SAIL INVESTMENTS, FOURTH CIRCUIT LLC, 1100 PATTERSON, LLC * AND BERTEL STATE OF LOUISIANA CONSTRUCTION, LLC *******
APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2021-02788, DIVISION “D” Honorable Nakisha Ervin-Knott, Judge ****** Judge Rachael D. Johnson ****** (Court composed of Judge Joy Cossich Lobrano, Judge Rosemary Ledet, Judge Rachael D. Johnson)
Charles L. Stern, Jr. THE STEEG LAW FIRM, L.L.C. 201 St. Charles Avenue Suite 3201 New Orleans, LA 70170
Richard L. Traina THE STEEG LAW FIRM, LLC 201 Saint Charles Avenue, Suite 3201 New Orleans, LA 70170
COUNSEL FOR PLAINTIFF/APPELLANT
Will C. Griffin Galante & Bivalacqua, LLC 650 Poydras Street Suite 2615 New Orleans, LA 70130
Anna Lellelid LOUISIANA COMMUNITY LAW OFFICE 2415 Bienville Street New Orleans, LA 70119 Salvador I. Bivalacqua GALANTE & BIVALACQUA LLC 650 Poydras Street Suite 2615 New Orleans, LA 70130
COUNSEL FOR DEFENDANT/APPELLEE
AFFIRMED December 5, 2022 RDJ Stephen Lowell Druker (“Mr. Druker”) seeks review of the trial court’s JCL November 30, 2021 judgment granting Full Sail Investments, LLC’s (“Full Sail”), RML motion for summary judgment. After consideration of the record before this Court
and the applicable law, we affirm the judgment of the trial court.
FACTS AND PROCEDURAL HISTORY
On March 10, 2020, Mr. Druker and Full Sail executed a Louisiana
Residential Agreement to Buy or Sell (the “Contract”) preparatory to the sale of
immovable property located at 1117 Patterson Road, New Orleans, Louisiana (the
“Property”). The Contract concerns the sale of a new home upon the completion
of its construction, with an original act of sale date of July 31, 2020, or earlier with
mutual written consent of the parties. The Louisiana Residential Agreement to
Buy or Sell contains an option for parties to include an addendum if the sale
involves the construction of a new home. Mr. Druker and Full Sail elected to
attach a New Construction Addendum to the Contract, along with several other
1 addenda, including an Addendum to Purchase Agreement, a Hurricane/Disaster
Addendum, and a Deposit Addendum.
The Addendum to Purchase Agreement contains the following provisions:
Seller shall notify Buyer in writing when Certificate of Occupancy has been obtained, all construction is complete and permanent utilities are in place at the property. Buyer’s Due Diligence and Inspection period shall commence at the time this notification is communicated to the Buyer from the Seller.
Once the Due Diligence/Inspection period has commenced, Buyer and Seller must go to the act of sale for this property within 40 days from that date unless all parties agree to extend this deadline in writing, or unless the Buyer terminates the contract prior to the expiration of the Due Diligence/Inspection period.
...
Architectural drawings and associated documents are for reference only. The information contained within the attached documents is intended to depict design and basic construction detailing. The overall design of the building, including it’s [sic] number of rooms, doors, windows and their general placement shall be considered the object of this contract by both the Seller and the Buyer. Other than these main elements, Seller reserves the right to deviate from construction documents at Seller’s sole discretion without approval from Buyer.
Such deviations shall not be considered a breach of contract on the part of the Seller. Buyer reserves the right to cancel this agreement at any time prior to the expiration of the Due Diligence/Inspection period and shall be entitled to a full refund of the Deposit.
Additionally, the New Construction Addendum states:
Completion: Subject to any delays beyond the control of Builder, such as inclement weather or other adverse working conditions, fire or other casualty, riots, material delivery delays or on account of any acts of God, the home shall be completed on or before June 22, 2020 unless otherwise amended between parties. All changes
2 to construction or allowances shall be in writing and signed by all parties.
Full Sail was not the builder of the new residence on the Property. Full Sail
contracted with Bertel Construction, LLC (“Bertel Construction”) to complete
construction of the home.1 Mr. Druker is not a party to the contract between Full
Sail and Bertel Construction, and Mr. Druker did not enter into any other
agreement with Bertel Construction.
It is undisputed that Bertel Construction experienced significant delays
during the course of construction. Pursuant to the terms of the Contract, the parties
mutually agreed in writing to extend the act of sale date on two separate occasions.
First, they agreed to an act of sale date of November 30, 2020, and they later
agreed to an act of sale date of March 30, 2021. Mr. Druker offered to extend the
act of sale date a third time, but Full Sail refused. Construction of the new home
was not completed by the March 30, 2021 act of sale date.
On March 22, 2021, Mr. Druker filed a petition for specific performance,
damages, and injunctive relief against Full Sail, Bertel Construction, Michael
Bertel (“Mr. Bertel”), and 1100 Patterson, LLC (“1100 Patterson”), (collectively,
“Defendants”). In his petition, Mr. Druker sought specific performance from
Defendants to complete construction of the new home. He also sought a
preliminary injunction to enjoin them from stopping construction on the new
residence. Mr. Druker alleged that he would suffer irreparable harm if the new
home was not completed and sought damages, attorney’s fees, and costs.
1 There is some ambiguity in the record as to the exact corporate entity with which Full Sail
contracted, as the New Construction Addendum of the Contract lists “Michael Bertel 110 Patterson, LLC,” as the builder of the residence.
3 On May 12, 2021, the trial court heard and denied Mr. Druker’s application
for preliminary injunction. On June 17, 2021, Druker filed an amended petition,
alleging fraud against Defendants.
On June 18, 2021, Full Sail filed a motion for summary judgment. Full Sail
argued that the Contract was unenforceable because it contained a suspensive
condition based solely on Mr. Druker’s whim. Alternatively, Full Sail asserted that
the Contract failed because both Full Sail and Mr. Druker were unable to perform
their respective conditional obligations on the March 30, 2021 act of sale date. As
to its own obligation, Full Sail alleged that it was unable, through no fault of its
own, to convey merchantable title of the new residence on the Property because
construction was incomplete on March 30, 2021. Concerning Mr. Druker’s
obligation, Full Sail further alleged that Mr. Druker was also unable to perform on
the March 30, 2021 act of sale date because he could not obtain financing for the
sale of the Property.
On September 22, 2021, Mr. Druker filed an opposition to Full Sail’s motion
for summary judgment. Mr. Druker subsequently filed a supplemental opposition
on November 4, 2021, after hiring new counsel. In his supplemental opposition,
Mr. Druker argued that summary judgment was inappropriate because it was
premature. Alternatively, Mr. Druker asserted that Full Sail’s motion for summary
judgment failed as a matter of law because: (1) Full Sail’s performance was not
excused due to impossibility of performance or force majeure; (2) Full Sail’s
interpretation of the Contract concerning its lack of enforceability due to a
suspensive condition based solely on Mr. Druker’s whim was incorrect; and (3)
Full Sail, likely motivated by a desire to sell the home for a higher price, breached
the Contract when it refused to extend the act of sale date for a third time.
4 On November 12, 2021, Full sail filed a reply. Full Sail argued that
summary judgment was proper and that it was entitled to judgment as a matter of
law because Mr. Druker failed to meet his burden of proof that there were any
genuine issues of material fact. Full Sail also contended that Mr. Druker
mischaracterized Full Sail’s arguments in discussing impossibility of performance
and force majeure, as Full Sail never raised those legal arguments in its motion for
summary judgment. Rather, Full Sail asserted that “the conditions in the
[Contract] simply failed through no fault of either party.” Next, Full Sail argued
that the express language of the Contract allowed Mr. Druker to cancel the
Contract at any time subject to his whim and that the Contract is therefore null and
unenforceable. Moreover, Full Sail contended that Full Sail did not have a duty to
extend the Contract a third time because the plain language of the Contract
required mutual written consent for any changes to the act of sale date. Finally,
Full Sail asserted that there was no need for parol evidence because the language
of the Contract is unambiguous.
A hearing on the motion for summary judgment was held on November 19,
2021. The trial court concluded:
Article 770 of the Louisiana Civil Code states in pertinent part, “ . . . a suspensive condition that depends solely on the whim of the obligor makes the obligation null.” The [Contract] contained the following language: “Buyer reserves the right to cancel this agreement at any time prior to the expiration of the due diligence/inspection period and shall be entitled to a full refund of the deposit.”
So the Louisiana Real Estate Commission provides a mandatory form for Louisiana residential agreements to buy or sell which contain a due diligence period to provide the buyer an opportunity to terminate the [Contract] if he or she chooses. The decision to terminate is presumed to be based on facts found during
5 the physical inspection of the property and can be exercised only during the limited inspection period. Now in this case, this agreement . . . altered the typical due diligence clause to allow Mr. Druker to cancel the agreement at any time prior to the expiration of the due diligence inspection period. The agreement provides for a due diligence . . . period of 14 days, and this period is identical to the due diligence period provided for in the LREC’s mandatory form. However, the due diligence period does not begin until after [Full Sail] obtains a certificate of occupancy, which is explained in the Addendum to the Purchase Agreement, which means that Mr. Druker can cancel the agreement at any time before the 14-day due diligence period begins, and his cancellation does not have to depend on the home not passing inspection or unacceptable deviations. Under the agreement, Mr. Druker can cancel without any valid reason before the due diligence period.
As such, looking at all of this and considering the arguments of Mr. Traina, Mr. Druker can cancel without any valid reason before the due diligence period, and I find that the agreement is unenforceable because the suspensive condition based on the whim of Mr. Druker renders the agreement null in accordance with [Louisiana] Civil Code Article 770. So for the reasons I’ve outlined, the Motion for Summary Judgment is hereby granted.
DISCUSSION
Mr. Druker’s Assignment of Error
On appeal, Mr. Druker’s sole assignment of error is that the trial court erred
in granting Full Sail’s motion for summary judgment. Mr. Druker first argues that
had the trial court properly followed Louisiana’s rules of contract interpretation, it
would have concluded that the parties intended that Mr. Druker would have only
been able to cancel the Contract during the Due Diligence/Inspection period.
Second, Mr. Druker contends that the Addendum to Purchase Agreement contains
a resolutory condition and not a suspensive condition. Third, Mr. Druker asserts
that even assuming arguendo that the Addendum to Purchase Agreement contains
6 a suspensive condition, Mr. Druker could only cancel the Contract in good faith
and based on his will as opposed to his whim.
Full Sail argues that the trial court correctly granted its motion for summary
judgment because the Contract between Full Sail and Mr. Druker failed as a matter
of law. Full Sail further argues that the Contract “expired without penalty because
the suspensive conditions therein failed.” In the alternative, Full Sail contends that
the Contract was unenforceable as written because Mr. Druker could cancel the
Contract solely on his whim.
Standard of Review
“Appellate courts review the grant or denial of a motion for summary
judgment de novo, using the same criteria applied by trial courts to determine
whether summary judgment is appropriate.” Chatelain v. Fluor Daniel Const. Co.,
14-1312, p. 3 (La. App. 4 Cir. 11/10/15), 179 So.3d 791, 793 (quoting Mandina,
Inc. v. O’Brien, 13-0085, p. 9 (La. App. 4 Cir. 7/31/13), 156 So.3d 99, 104-05).
The standard for granting a motion for summary judgment is set forth in La. C.C.P.
art. 966(A)(3), which provides that, “[a]fter an opportunity for adequate discovery,
a motion for summary judgment shall be granted if the motion, memorandum, and
supporting documents show that there is no genuine issue as to material fact and
that the mover is entitled to judgment as a matter of law.” La. C.C.P. art.
966(A)(3). Generally, the burden of proof on a motion for summary judgment lies
with the mover. La. C.C.P. art. 966(D)(1). If the moving party “will not bear the
burden of proof on the issue that is before the court on the motion for summary
judgment,” however, then the mover need only “point out to the court the absence
of factual support for one or more elements essential to the adverse party’s claim,
action, or defense.” Id. The burden of proof remains on the “adverse party to
7 produce factual support sufficient to establish the existence of a genuine issue of
material fact or that the mover is not entitled to judgment as a matter of law.” Id.
If the non-moving party fails to do so, then summary judgment will be granted.
Failure of the Contract
A contract is defined as “an agreement by two or more parties whereby
obligations are created, modified, or extinguished.” La. Civ. Code. art. 1906. The
Contract at issue is a bilateral commutative contract. “A contract is bilateral, or
synallagmatic, when the parties obligate themselves reciprocally, so that the
obligation of each party is correlative to the obligation of the other.” La. Civ.
Code art. 1908. “A contract is commutative when the performance of the
obligation of each party is correlative to the performance of the other.” La. Civ.
Code art. 1911. Specifically, the Contract is an agreement preparatory to a sale.
“An agreement whereby one party promises to sell and the other promises to buy a
thing at a later time, or upon the happening of a condition, or upon some
performance of some obligation by either party, is a bilateral promise of sale or
contract to sell.” La. Civ. Code art. 2623. An agreement preparatory to a sale
“gives either party the right to demand specific performance” and “must set forth
the thing and the price, and meet the formal requirements of the sale it
contemplates.” Id.
The Contract at issue contains conditional obligations. “A conditional
obligation is one dependent on an uncertain event. If the obligation may not be
enforced until the uncertain event occurs, the condition is suspensive. If the
obligation may be immediately enforced but will come to an end when the
uncertain event occurs, the condition is resolutory.” La. Civ. Code art. 1767. “A
suspensive condition that depends solely on the whim of the obligor makes the
8 obligation null. A resolutory condition that depends solely on the will of the
obligor must be fulfilled in good faith.” La. Civ. Code art. 1770. “If the condition
is that an event shall occur within a fixed time and that time elapses without the
occurrence of the event, the condition is considered to have failed.” La. Civ. Code
art. 1773.
“Contracts have the effect of law and may be dissolved only through the
consent of the parties or on grounds provided by law. Contracts must be
performed in good faith.” La. Civ. Code art. 1983. “Interpretation of a contract is
the determination of the common intent of the parties.” La. Civ. Code art. 2045.
“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. Civ. Code art. 2046. “Each provision in a contract must be interpreted
in light of the other provisions so that each is given the meaning suggested by the
contract as a whole.” La. Civ. Code art. 2050. “The interpretation of a contract’s
provisions is typically a matter of law that properly may be decided on motion for
summary judgment.” Iteld v. Four Corners Const., L.P., 12-1504, p. 15 (La. App.
4 Cir. 6/5/13), 157 So.3d 702, 713 (citing Hall v. Malone, 12-0264, pp. 4-5 (La.
App. 4 Cir. 11/7/12), 104 So.3d 593, 596. “The interpretation of a contract is
normally a question of law.” Id., p. 16, 157 So.3d at 714 (citing Brown v. Drillers,
Inc., 93-1019 (La. 1/14/94), 630 So.2d 741, 749-50.
The principal obligations of each party in the Contract at issue were
conditioned upon uncertain events. More specifically, they both contained
suspensive conditions. Full Sail’s obligation to convey merchantable title was
conditioned upon the completion of construction of the new home, and Mr.
Druker’s obligation to purchase the Property was conditioned upon his ability to
9 obtain financing. As to Mr. Druker’s obligation, this Court has previously
determined that an obligation to purchase immovable property conditioned upon a
buyer’s ability to obtain financing is a suspensive condition. Rousset v. Smith, 14-
1409, p. 9 (La. App. 4 Cir. 9/23/15), 176 So.3d 632, 639; Kansas v. Schaeffer, 299
So.2d 474, 476 (La. App. 4th Cir. 1974); Treadaway v. Piazza, 156 So.2d 328, 330
(La. App. 4th Cir. 1963) (“It is well-settled that an agreement to purchase an
immovable, conditioned upon purchaser’s ability to obtain a stipulated loan to
finance the purchase, is a contract subject to a suspensive condition.”). Similarly,
Full Sail’s obligation to sell the Property was conditioned upon the suspensive
condition of the completion of construction of the new home in advance of the
March 30, 2021 act of sale date. It is undisputed that construction of the new home
on the Property was incomplete on the March 30, 2021 act of sale date.
Accordingly, the suspensive condition failed. Even assuming arguendo, as the
trial court assumed, that Mr. Druker was able to obtain financing to purchase the
Property, Full Sail could not fulfill its obligation to sell a newly-constructed home
on the March 30, 2021 act of sale date because the suspensive condition that
construction would be finished failed.
This Court has held that when a party to a purchase agreement cannot fulfill
an obligation due to the failure of a suspensive condition by no fault of the
obligated party, the purchase agreement is null. Bacon v. Ford, 522 So.2d 1232,
1234-35 (La. App. 4th Cir. 1988) (“When a purchaser, through no fault of his own,
is unable to obtain the loan upon which the agreement is conditioned, the
obligations imposed by the agreement are not binding upon the parties; the
agreement is null and the parties are released from their obligations to perform.”);
Rousset, 14-1409, p. 29, 176 So.3d at 649. (“Given the trial judge’s finding that the
10 [buyers] were unable, through no fault of their own, to secure financing by the date
set for the act of sale, her conclusion that the purchase agreement was thus
rendered null should not be controversial. It is . . . the only legal conclusion.”).
Full Sail repeatedly asserts that the construction delays were through no fault of its
own. Mr. Druker, on the other hand, contends that “[f]act issues exist as to the
reasons for the delays and whether the delays could have been avoided.” Even
assuming arguendo that some of the delays could have been avoided, there is no
evidence in the record that Full Sail, which was not the builder of the new home,
was at fault for Bertel Construction’s failure to complete construction in advance
of the March 30, 2021 act of sale date. Accordingly, we find that the trial court
correctly concluded that the Contract failed and is null.
Enforceability of the Contract
Mr. Druker contends that the trial court erred in concluding that he could
cancel the Contract at any time prior to the expiration of the Due
Diligence/Inspection period and that the “unambiguous language of the Contract
and its addenda shows that the right only existed between the commencement and
the expiration” of the Due Diligence/Inspection period.” Based on this
interpretation, Mr. Druker further argues that his right to cancel the Contract is a
resolutory condition and that, even if it were a suspensive condition, Mr. Druker
could only cancel the Contract based on his will and not on his whim. We
disagree. The plain language of the Addendum to Purchase Agreement provides
that Mr. Druker “reserves the right to cancel this agreement at any time prior to the
expiration of the date of the Due Diligence/Inspection period and shall be entitled
to a full refund of the deposit.” Accordingly, we find no support for Mr. Druker’s
11 assertion that he could only cancel the Contract within the Due
Diligence/Inspection period.
We agree with the trial court that the Contract was “unenforceable because
the suspensive condition based on the whim of Mr. Druker renders the agreement
null.” In McCall v. Focus Worldwide Television Network, Inc., this Court
concluded that an employment contract with modified terms to allow an employee
to continue her work at a company for as long as she wanted contained a
suspensive condition based solely on her whim that rendered the agreement null
pursuant to La. Civ. Code art. 1770. 12-0742, pp. 19-20 (La. App. 4 Cir. 6/12/13),
119 So.3d 876, 887. Similarly, the Contract at issue modified the standard terms
of the Louisiana Residential Agreement to Buy or Sell, which provides a 14-day
Due Diligence/Inspection period to allow the Buyer to cancel the agreement based
on facts ascertained during that 14-day period, such as construction defects or a
failed inspection, to allow Mr. Druker to cancel “at any time,” even prior to the
commencement of the Due Diligence/Inspection period. This effectively turned
Mr. Druker’s ability to cancel from a permissible suspensive condition based on
his informed decision making, or his will, arising from facts discovered during the
Due Diligence/Inspection period, into a suspensive condition dependent solely on
his whim because the express language of the Addendum to Purchase Agreement
allows him to cancel based on his unbridled discretion even in advance of the start
of the Due Diligence/Inspection Period. Accordingly, we find that the trial court
correctly determined that the Contract permits Mr. Druker to cancel “without any
valid reason” prior to the commencement of the Due Diligence/Inspection period
and is therefore a suspensive condition based solely on his whim that renders the
Contract null.
12 DECREE
For the reasons stated above, we affirm the trial court’s ruling finding that
there are no genuine issues of material fact regarding the validity and
enforceability of the Contract and that Full Sail is entitled to judgment as a matter
of law.
AFFIRMED