Herder v. Simms , 281 F. App'x 187 ( 2008 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1594
MARIAN HERDER,
Plaintiff - Appellee,
v.
DOUGLAS SIMMS,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:06-cv-01140-GBL)
Argued: May 15, 2008 Decided: June 12, 2008
Before SHEDD, Circuit Judge, HAMILTON, Senior Circuit Judge, and
Terry L. WOOTEN, United States District Judge for the District of
South Carolina, sitting by designation.
Reversed by unpublished per curiam opinion.
ARGUED: Wyatt B. Durrette, Jr., DURRETTEBRADSHAW, PLC, Richmond,
Virginia, for Appellant. Kenneth A. Martin, MARTIN & ASSOCIATES,
PLLC, McLean, Virginia, for Appellee. ON BRIEF: Christine A.
Williams, Halliday Moncure Merrick, DURRETTEBRADSHAW, PLC,
Richmond, Virginia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Douglas Simms (Simms), the defendant in a breach of contract
action under Virginia law, appeals from the district court’s entry
of judgment in favor of the plaintiff, Marian Herder (Herder),
following the district court’s grant of Herder’s motion for summary
judgment. We reverse.
I.
The parties executed the contract at issue (the Contract), on
February 4, 2005, which provided for the sale of a thirty–seven
acre tract of real property located in Spotsylvania County,
Virginia (the Property). Herder, a citizen of Pennsylvania, was
the seller under the Contract, and Simms, a citizen of Virginia,
was the purchaser. The parties executed the Contract after an
auction of the Property conducted by Herder’s agent, Daniel Mastin,
III (Agent Mastin). (J.A. 42). The Contract set the total
purchase price at $1,000,000.00.
Per the Contract, Simms paid Herder a ten percent deposit of
$100,000.00, to be held in escrow until closing. Agent Mastin held
the entire $100,000.00 deposit in escrow, and according to Herder’s
arrangement with Agent Mastin, Agent Mastin would retain $50,000.00
of such deposit as his auction commission upon closing. The
Contract also provided that, in the event Simms defaulted on the
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Contract, Simms “shall forfeit the deposit and the deposit shall be
equally divided between [Herder] and [Agent Mastin] . . . .” Id.
Of relevance to the issues on appeal, Paragraph 4 of the
Contract states, in pertinent part:
BUYER shall have the right to have the title examined
prior to closing and shall notify SELLER promptly of any
defect rendering title to the property unmarketable. In
the event such defect cannot be cured within a reasonable
time, or SELLER elects not to cure the same, SELLER not
being so required; then this contract may, at the option
of BUYER, be cancelled before closing, and it is
specifically agreed that the BUYER’S sole remedy shall be
the return of the hereinabove deposit, without interest,
and this contract and all rights and obligations of the
Parties hereto, shall be terminated and of no further
force and effect. In the event that the BUYER defaults
on this contract and does not proceed to closing, then
the BUYER shall forfeit the deposit and the deposit shall
be equally divided between the SELLER and the AGENT
. . . .
Id.
The Contract required “closing” the transaction “within 90
days [of execution], unless extended to a later date by a mutual
consent of all parties. TIME IS OF THE ESSENCE.” Id. Thus,
according to the terms of the Contract, the closing had to occur no
later than May 5, 2005. However, shortly after the auction, Herder
orally notified Agent Mastin that she wanted to delay the closing
until later in the year out of concern for her capital gains tax
liability. Agent Mastin relayed Herder’s desire to delay the
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closing date to Simms, who orally agreed to extend the closing date
past May 5, 2005.1
At some point after May 5, 2005, Herder notified Agent Mastin
that she had changed her mind and now desired to close the
transaction sooner rather than later. After Agent Mastin relayed
Herder’s latest desire to Simms, Simms began taking the necessary
steps to close. On or about May 17, 2005, the parties agreed to
close the transaction during a closing conference scheduled for
June 6, 2005, at the Fredericksburg, Virginia law office of Simms’
attorney, H. Glenn Goodpasture (Attorney Goodpasture).
Shortly before the June 6, 2005 closing conference, a title
search was performed. The title paperwork contained information
about certain out-conveyances off a forty-five acre tract.
Attorney Goodpasture assumed that the out-conveyances did not
impact the thirty-seven acre tract that Simms was purchasing and,
according to Attorney Goodpasture, the title paperwork contained
nothing to suggest otherwise. When Herder and her attorney, David
Still (Attorney Still), arrived at Attorney Goodpasture’s office
for the closing conference on June 6, 2005, Attorney Goodpasture
showed them a plat of the Property as described in the Contract,
which plat had been created on behalf of Simms to confirm that it
1
According to Herder’s brief in the present appeal: “By the
terms of the contract, the Parties were allowed to mutually agree
to extend the Closing Date. Therefore, Herder and Simms acted in
accord with the contract when they verbally agreed to extend the
Closing Date . . . .” (Herder’s Br. at 7).
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accurately depicted the property to be conveyed under the
Contract.2
Herder then advised Attorney Goodpasture that the plat was
incorrect, as she had previously conveyed two smaller parcels out
of the Property. Neither Herder nor her attorney could accurately
identify the location of these out-conveyances on the plat. At
that point, Attorney Goodpasture could not determine exactly what
property Herder was going to convey, what property Simms was going
to purchase, or on what property the bank would get a lien.3 The
2
Per the customary arrangement between Simms and Attorney
Goodpasture, Simms did not plan to physically attend the closing
conference on June 6, 2005. Under this customary arrangement,
Simms executes his necessary paperwork and transfers the necessary
funds to Attorney Goodpasture prior to the closing conference.
3
With respect to when Attorney Goodpasture first learned of
the title defects created by the two out-conveyances, Attorney
Goodpasture testified during his deposition in this case, without
contradiction, as follows:
The survey which reached me very late in the transaction,
I don’t know if it got to me at all before the 6th, but
[Simms’ lender] was requiring that the survey be recorded
as a part of the transaction. . . . And in reviewing the
survey with the seller and with the title search, the
seller told me that the survey was not accurate, that
there was property that she had conveyed off of that
tract of land which was not -- which was included within
the survey, that it wasn’t accurate. . . .
* * *
At the settlement table the title company had not
provided me with copies of the deeds of off-conveyance.
I did not have them. That’s probably why I didn’t know
what was being conveyed and what was being purchased.
(J.A. 178, 181).
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evidence in the summary judgment record is undisputed that Herder,
her attorney, and Attorney Goodpasture consequently agreed to try
to resolve the confusion created by these out-conveyances and then
close as soon as reasonably practical. Notably, the summary
judgment record contains the deposition testimony of Herder
herself, testifying that she left the closing conference on June 6,
2005, “with the understanding that things had to be fixed in order
for the deal to be completed[.]” (J.A. 170). Moreover, Herder
testified that although she could not explain exactly what such a
fix entailed, “[she] kn[e]w it had to be fixed.” Id. Herder left
the June 6, 2005 closing conference with the deed to the Property
still in her possession.
During the next few days, the location and size of the two
out-conveyances were determined to be: (1) 0.723 acres conveyed to
Reginald S. Tyler, by deed recorded on January 19, 2005; and (2)
2.00 acres conveyed to Catherine M. Dunbar, by deed recorded on
February 11, 2005 (a week after the parties executed the Contract).
After several telephone conversations between Attorney Goodpasture
and Attorney Still, the two attorneys reached a proposed agreement
to resolve the title defect issues, which each attorney would
recommend to his respective client. Attorney Goodpasture then
drafted a document memorializing the proposed agreement, which
document he forwarded to Attorney Still by letter dated June 9,
2005.
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By letter dated June 23, 2005, addressed to Agent Mastin with
a copy to Attorney Goodpasture, Herder (through her attorney)
attempted to declare Simms in default of the Contract for failing
to close within ninety days of February 4, 2005. Herder further
insisted in the letter that Simms had thereby forfeited his
$100,000.00 deposit being held in escrow by Agent Mastin and
demanded that Agent Mastin disburse half of Simms’ $100,000.00
deposit to her, per the terms of Paragraph 4 of the Contract.
On October 10, 2006, Herder filed the present federal court
action against Simms, based upon diversity of citizenship
jurisdiction. The sole cause of action at issue in the present
appeal is Herder’s breach of contract claim under Virginia common
law alleging that Simms breached the Contract by failing to notify
her of any title defects prior to the closing conference on June 6,
2005 and by failing to close on the Property on June 6, 2005. As
a remedy, Plaintiff sought $50,000.00 (half of Simms’ $100,000.00),
plus prejudgment interest, at the statutory rate, commencing on May
5, 2005.4
Herder made a motion for summary judgment with respect to her
breach of contract claim, which the district court ultimately
granted. In so granting, the district court reasoned that Simms
was contractually obligated to close the transaction no later than
4
Herder also asserted a claim alleging slander of title, upon
which the district court ultimately entered judgment in favor of
Simms.
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June 6, 2005, regardless of the title defects, because although
Simms knew (through his attorney) of the title defects prior to the
June 6, 2005 closing conference, he failed to notify Herder of any
such defects prior to that conference. The district court entered
final judgment in favor of Herder in the amount of $50,000.00, plus
prejudgment interest, at the statutory rate, commencing May 5,
2005. This timely appeal followed.
II.
The crux of Simms’ position on appeal is that he cannot be held
to have breached the Contract by failing to close the transaction
on June 6, 2005, when the uncontradicted evidence shows that, on
June 6, 2005, the parties mutually agreed to delay closing the
transaction until as soon as reasonably practical in order to clear
up the title defects regarding the out-conveyances. We review de
novo the district court’s grant of summary judgment in favor of
Herder, applying the same standard as did the district court and
construing the facts in the light most favorable to Simms, the
nonmoving party. See Holland v. Washington Homes, Inc., 487 F.3d
208, 213 (4th Cir. 2007). Summary judgment is appropriate when the
evidence demonstrates that no genuine issue of material fact exists
and that the moving party is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(c).
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After carefully considering the summary judgment record, we
hold that even viewing the evidence in the light most favorable to
Herder, no reasonable juror could find that Simms breached the
Contract by failing to close the transaction by June 6, 2005. The
Contract required a closing date “within 90 days [of execution],
unless extended to a later date by a mutual consent of all parties.”
(J.A. 42) (emphasis added). Herder agrees that she and Simms
mutually agreed to extend the first closing date from May 5, 2005
to June 6, 2005. With respect to whether the parties mutually
agreed to extend the closing date past June 6, 2005, we hold that,
even viewing the evidence in the light most favorable to Herder,
a reasonable jury could only find that the parties mutually agreed
to extend the closing date past June 6, 2005, in order to clear up
the title defects created by the two out-conveyances.
First, although Herder argued below, and continues to argue on
appeal, that she never agreed to extend the closing date beyond June
6, 2005, her deposition testimony in this case conclusively belies
her litigation position. Herder testified that she left the closing
conference on June 6, 2005, taking her purported deed of conveyance
with her, “with the understanding that things had to be fixed in
order for the deal to be completed[.]” (J.A. 170) (emphasis added).
She further testified that although she could not explain exactly
what such a fix entailed, “[she] kn[e]w it had to be fixed.” Id.(emphasis added). No reasonable juror could hear this testimony and
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reach any finding other than Herder agreed, at the June 6, 2005
closing conference, to extend the closing date to a time in the near
future once the title defects at issue had been cured.
Second, wholly consistent with Herder’s just-quoted testimony,
the record contains the uncontradicted testimony of Attorney
Goodpasture that he, “Ms. Herder[,] and [Attorney] Still
. . . discussed the situation and agreed that [they] would in good
faith figure out what the fact[s] were, get a correct description
of the property, and then close as soon as reasonably practical.”
(J.A. 187) (emphasis added).
Fatal to Herder’s defense of the judgment below is the fact
that there is no evidence in the record to contradict either her or
Attorney Goodpasture’s testimony.5 The icing on the cake is the
5
Herder argues that we must ignore Attorney Goodpasture’s
testimony regarding her agreement to extend the closing date beyond
June 6, 2005, because Simms testified during his deposition that he
personally was “not aware” of a conversation whereby Herder agreed
to extend the closing date past June 6, 2005. Herder’s argument is
without merit. Given the well established principle of Virginia
law that “[c]ommon law agency principles apply to the
attorney–client relationship,” Newman v. Newman, 593 S.E.2d 533,
538 (Va. Ct. App. 2004), the fact that Simms himself did not attend
the June 6, 2005 closing conference, and thus did not himself
personally agree to extend the closing date beyond June 6, 2005,
nor personally witness Herder make such an agreement, is of
absolutely no moment in the proper resolution of this appeal. The
record conclusively establishes that Attorney Goodpasture had
actual and apparent authority to agree, on behalf of Simms, to
extend the closing date beyond June 6, 2005, in order to cure the
title defects, and to accept, on behalf of Simms, Herder’s
agreement to do the same. C.I.R. v. Banks, 543 U.S. 426, 436
(2005) (“The relationship between client and attorney, regardless
of the variations in particular compensation agreements or the
amount of skill and effort the attorney contributes, is a
quintessential principal-agent relationship.”) (“Even where the
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timing of Herder’s June 23, 2005 letter (through her attorney)
attempting to declare Simms in default of the Contract. Herder
(through her attorney) did not send this letter until after she
received Attorney Goodpasture’s June 9, 2005 letter memorializing
the proposed agreement that he had hammered out with her attorney
to cure the title defects. No reasonable juror could look at the
sequence of events in this case and reach any other conclusion but
that Herder consented, at the June 6, 2005 closing conference, to
extend the date to close the transaction past June 6, 2005, in order
to cure the title defects, but then subsequently regretted her
decision to consent and, thus, attempted to retract her consent.
In sum, even viewing the evidence in the light most favorable
to Herder, a genuine issue of material fact does not exist regarding
whether the parties mutually consented to extend the date to close
the transaction beyond June 6, 2005. The evidence only admits of
one conclusion--i.e., the parties mutually consented to extend the
date to close the transaction past June 6, 2005. Therefore, Simms
attorney exercises independent judgment without supervision by, or
consultation with, the client, the attorney, as an agent, is
obligated to act solely on behalf of, and for the exclusive benefit
of, the client-principal, rather than for the benefit of the
attorney or any other party.”); Va. Elec. & Power Co. v. Bowers, 25
S.E.2d 361, 363 (Va. 1943) (“an attorney is the agent of his
client” and has the authority to take all lawful steps for the
protection of his client’s interests). In other words, as long as
Attorney Goodpasture, acting as Simms’ agent, was aware of Herder’s
as well as her attorney’s agreement to extend the closing date past
June 6, 2005 in order to cure the title defects at issue, the fact
that Simms was not aware of such facts is not legally relevant.
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did not breach the Contract by failing to close the transaction by
June 6, 2005.
One final point is worth addressing--i.e., the fact that Herder
and her attorney arrived at the closing conference on June 6, 2005,
with the mutual belief that Simms was not claiming that any title
defects existed. The district court’s breach of contract analysis
focused upon Simms’ failure to notify Herder of the title defects
created by her two previous out-conveyances prior to the June 6,
2005 closing conference. According to the district court, by
waiting until the parties were at the closing table to raise the
issue of title defects, Simms had waived his right to cancel the
Contract and therefore, was required to close the transaction no
later than June 6, 2005, regardless of any title defects, or be in
breach of the Contract. Herder takes this position on appeal as
well.
The critical flaw in both the district court’s analysis and
Herder’s position is that they both rest upon a material misreading
of the operative unambiguous language of the Contract. Of relevance
to this issue, the Contract provides:
BUYER shall have the right to have the title examined
prior to closing and shall notify SELLER promptly of any
defect rendering title to the property unmarketable. In
the event such defect cannot be cured within a reasonable
time, or SELLER elects not to cure the same, SELLER not
being so required; then this contract may, at the option
of BUYER, be cancelled before closing, and it is
specifically agreed that the BUYER’S sole remedy shall be
the return of the hereinabove deposit, without interest,
and this contract and all rights and obligations of the
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Parties hereto, shall be terminated and of no further
force and effect.
(J.A. 42) (emphasis added). There is no evidence in this case
indicating that Attorney Goodpasture, acting as the agent of his
client Simms, once learning of the title defects at the June 6, 2005
closing conference, failed to promptly notify Herder or her attorney
of such defects. Moreover, the evidence in the record is undisputed
that Attorney Goodpasture notified Herder and her Attorney of the
title defects “before closing,” thus entitling Simms to cancel the
Contract “[i]n the event such defect[s] cannot be cured within a
reasonable time, or SELLER elects not to cure the same . . . .” Id.Indeed, all parties agree that although the parties attended a
closing conference on June 6, 2005, a “closing” of the transaction
that is the subject of the Contract never took place. Thus, there
is no breach to be found here either.
III.
In conclusion, because no reasonable juror, viewing the
evidence in the light most favorable to Herder, could find that
Simms breached the Contract, Herder cannot prevail upon her breach
of contract claim as a matter of law. Accordingly, we reverse the
judgment below. Therefore, Simms is legally entitled to a full and
complete return of his $100,000.00 deposit, which, as far as the
record discloses, is still being held in escrow by Agent Mastin.
To be clear, neither Herder nor Agent Mastin is legally entitled to
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any portion of the $100,000 deposit made by Simms. Any claim Agent
Mastin may have which flows from Herder’s breach of contract claim
is extinguished and in that regard Agent Mastin has no claim to the
$100,000 deposit made by Simms.
REVERSED
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