Volker Court, LLC v. Santa Fe Apartments

Facts

Lambi was the sole owner and member of P The limited liability company owned an apartment complex and sold the complex for an $800,000 profit. To defer capital gains taxes, P entered into an Internal Revenue Service-approved exchange agreement. To take advantage of the tax benefit, P had to identify three possible replacement properties within 45 days of the sale. In fulfillment of the agreement, P  identified the Santa Fe apartments. On September 26, 2001, county government authorities sold the Santa Fe Apartments in an auction on the courthouse steps. Atkins, on behalf of N.B. Forrest Management, Inc., outbid P and purchased the complex for $3.9 million. N.B. Forrest later transferred title in the apartment complex by warranty deed to D. David Atkins and Mark Atkins, brothers, were equal members and managers in D. After the auction, Lambi telephoned Atkins and asked about buying D, but Atkins refused to sell. Lambi's real estate broker, Aandrea Carter, called Atkins and told him that Lambi was interested in buying the apartments for $4.1 million to $4.2 million. Atkins rejected the offer but solicited Lambi's formal, written offer. Carter sent Lambi's written offer to Atkins. Lambi offered $4.1 million. Atkins rejected the offer.  Atkins sent Carter a letter, which said: Thanks for the offers on Santa Fe. I know that you have spent a bit of time on the deal.....$4.4M is better, but again with the owner financing you've suggested, it would take me years to recoup my out-of-pocket expense, let alone realize some cash profit. With that in mind, here is my suggestion: Price--$ 4.6M...I'll carry $ 580,000 at 10% for 6 years with interest-only payments...[Lambi] assumes my $ 3.9M or provides his own mortgage... [Lambi] covers all closing costs, except title insurance (I'll pay for that ), and pays the balance in cash. As far as your fee goes, I'd be willing to chip in 1 %; perhaps [Lambi] would be willing to pay the rest…. Let me know…..Bottom line: With some arm twisting [Lambi] gets into this deal for about $ 200,000 to $ 300,000 out of pocket. He'll earn that back within 2 years. Everyone wins. On October 29, 2001, Atkins sent a letter to Lambi,  which said: Bottom line (this week); $4.4M all cash (you take care of Aandrea) $4.6M, we'll carry $500,000 at 10% interest only, 5-year balloon (personal guarantees, lawyer stuff, etc… again you take care of Aandrea). If you can do one of these two things, we have a deal provided everyone's lawyer and bankers are happy. Keep in mind that I do have a partner and I don't want to ask him if this is OK. What I want to have is a signed, secure contract to stick under his nose. The stronger the contract, the more likely he'll agree. He doesn't want to sell it. What I need to compel him is something in writing. Lambi responded with a certified letter on November 2, 2001, which said: I hereby accept your offer dated October 29th, 2001, to purchase for $4.6 million dollars, as set out in your written offer dated October 29, 2001. I propose that we close this at the earliest time possible. Atkins telephoned Lambi and told him that they did not have a contract. Atkins sent Lambi a letter, which said: I can't understand why you feel you have a contract. I've been negotiating in good faith and have tried to make it amply clear that any offer that you might submit, or that I might suggest would have to be approved by my brother. My suggestions in my letter dated October 29th were simply suggestions. Atkins told Lambi that he was unable to convince his brother to sell the property 'in the mid $4M range' but that he thought he could get him 'to accept $ 4.9M with a $500,000 mortgage with the same terms that [they] had outlined earlier.' Ds prepared a formal real estate purchase agreement on behalf of Santa Fe setting the sale price at $4.9 million, signed it, and sent it to Lambi. Lambi did not respond. Ds delivered another contract to Lambi changing the terms and lowering the sale price to $4.6 million. Lambi did not respond again but, along with P, sued Ds for breach of contract and fraudulent misrepresentation. The circuit court granted summary judgment for Ds and P appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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