Addie v. Kjaer

737 F.3d 854 (3rd. Cir. 2014)

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Nature of the Case

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Facts

Ds own two properties in the Virgin Islands: Estate Great St. James, which is an island off the coast of St. Thomas, and Estate Nazareth, which is a launch point providing access to Estate Great St. James from St. Thomas. Addie, a Florida real estate investor, and Perez, a financial advisor to high-net-worth individuals, sought to purchase these properties. Perez persuaded Taylor, his client and a former Miami Dolphins player to join the deal. Ps entered into two land contracts (Contracts of Sale) and an Escrow Agreement to purchase Estate Great St. James and Estate Nazareth from the Sellers for $21 million and $2.5 million, respectively. Premier Title Company, served as the escrow agent and was party to the Escrow Agreement. Kevin D'Amour, Ds' attorney-in-fact, was the sole owner and principal of Premier. Ps assert that they were not aware of D'Amour's role at Premier when they entered into the Escrow Agreement. Ps were required to submit an initial deposit of $1 million. Ps could extend the closing an additional thirty days by paying a $500,000 nonrefundable deposit. Ps were under a duty to pay the purchase price at closing, less the deposit. Ds were to deliver “Clear and Marketable” title and “assignments of all permits, submerged land leases and other licenses necessary for the existence and occupancy of the dock and other improvements on the Real Property, together with the required governmental consents thereto.” The Contracts of Sale defined Clear and Marketable title as “such title as is acceptable to and insurable by Ps' title insurance company on ALTA Form B Owner's Policy (or other reasonable form) free and clear of exceptions except licenses and easements, if any, for public utilities serving only the Real Property.” Premier to receive Ps' deposits and then to release the deposits to Ds. Premier agreed to release the first deposit within twenty-four hours after Ds delivered the escrow documents to Ps, as long as Premier received written notice from Ps that they were satisfied with the documents. Ps agreed to forfeit the deposits to the Ds as liquidated damages in the event of Ps' default or failure or refusal to perform, through no fault of the D. Ds agreed to return the deposits in the event of the Ds' default or failure or refusal to perform, through no fault of Ps. The non-defaulting party was to send written notice of default, and the defaulting party would have ten days from the receipt of written notice to cure the default. Taylor alone funded the initial $1 million deposit. D'Amour, acting on behalf of Premier, made several deliveries of escrow documents to Ps. D'Amour began to request that Ps authorize the release of the deposit. Perez authorized release of the deposit. Taylor unilaterally funded the second deposit of $500,000 to extend the closing date. D'Amour emailed Ps asking them to release the second deposit. D'Amour did not receive written confirmation from Ps but nonetheless, acting on behalf of Premier, released the deposit to Ds. Ps and Ds discussed extending the closing a second time. D'Amour informed the Buyers that Ps agreed to extend the closing date. It stated time is of the essence and that the extension shall not be deemed a waiver of any rights Ds have under the Contract. September 14 arrived and Ps had not paid the purchase price and Ds had not conveyed either updated assignments of permits or a Clear and Marketable title. D'Amour sent Ps a notice of default, informing them that they had ten days to cure. Ps demanded the immediate return of the escrow money, claiming that Ds were unable to deliver Clear and Marketable title. D'Amour sent a request to Ps that they confirm their intentions to cure the default. Ps never responded. The court held a trial and made its rulings and everyone appealed.