In re: AFFORDABLE PATIOS & SUNROOMS, Dba Reno Patio and Fireplaces

FILED
NOV 17 2022
SUSAN M. SPRAUL, CLERK
NOT FOR PUBLICATION U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. NV-22-1063-FTB
AFFORDABLE PATIOS & SUNROOMS,
DBA Reno Patio and Fireplaces, Bk. No. 3:20-bk-50017-NMC
Debtor.
Adv. No. 3:20-ap-05033-NMC
CHRISTOPHER BURKE, Chapter 7
Trustee,
Appellant,
v. MEMORANDUM*
LEGACY FIRE SERVICES, LLC,
Appellee.
Appeal from the United States Bankruptcy Court
for the District of Nevada
Natalie M. Cox, Bankruptcy Judge, Presiding
Before: FARIS, TAYLOR, and BRAND, Bankruptcy Judges.
INTRODUCTION
Appellee Legacy Fire Services, LLC (“Legacy”) submitted a “formal
offer with the intent to purchase” property from appellant Christopher
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
Burke, chapter 71 trustee (“Trustee”). Legacy invited the Trustee to contact
its representatives to “discuss possible contingencies and further terms of
an agreement.” The Trustee accepted the proposal and sought court
approval of the sale, without attempting to resolve these “possible
contingencies and further terms.” Legacy refused to purchase the property,
arguing that the missing terms meant that there was no valid, enforceable
contract. The Trustee sold the property to another buyer for a lower price
and sued Legacy for the difference. The bankruptcy court granted
summary judgment for Legacy, holding that there were numerous
unsettled material terms that precluded contract formation.
The Trustee appeals, arguing that Legacy had presented a binding
offer that he accepted and that any missing terms were actually conditions
precedent to performance that could be resolved at a later time.
We discern no error and AFFIRM.
FACTS
A. The chapter 7 bankruptcy case
Affordable Patios & Sunrooms (“Affordable Patios”) filed a chapter 7
petition and listed “Reno Patio and Fireplaces” as a name under which it
did business. It was also affiliated with a Nevada limited liability company
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
named “Reno Patio and Fireplaces, LLC.”
Affordable Patios represented that it did not own any real property.
But Reno Patio and Fireplaces, LLC held title to commercial real property
located at 910 Glendale Avenue in Sparks, Nevada (the “Property”), which
Affordable Patios listed as its principal place of business.
The Trustee was appointed to administer Affordable Patios’ estate. In
February 2020, he filed an adversary proceeding asserting that all of
Affordable Patios’ business entities (including Reno Patio and Fireplaces,
LLC) were alter egos of each other and seeking substantive consolidation of
the entities’ assets and debts. He sought a declaration that the Property was
property of the estate that the Trustee may use, sell, or lease under § 363.
B. Legacy’s letter offering to purchase the Property
Around this time, the Trustee took steps to sell the Property. Legacy
reviewed a sales flyer created to market the Property. The sales flyer stated
that three buildings were included in the sale.
Legacy contacted the Trustee and expressed an interest in purchasing
the Property. On February 14, three members of Legacy, including
managing member Michael Glover, met with the Trustee and toured the
Property. They could not enter at least one of the buildings because it was
unsafe and occupied by squatters. (Although the parties now agree that
three buildings are located on the Property, at the time, there was
uncertainty as to the number of buildings included in the sale.) The
Property also contained vehicles, machinery, and other personal property.
3
Three days later, Mr. Glover e-mailed the Trustee’s assistant and
indicated that Legacy was interested in making a cash offer to purchase the
Property “[that] would be contingent that the three buildings on the
property are sold together as shown on the information provided.” He
closed the e-mail with: “We would like to know what our next steps would
be in making a formal offer and the possibility of the purchase.” Mr. Glover
also sent a text message to the Trustee.
The Trustee did not immediately respond. He did take steps to
protect his ability to sell the property and filed a motion for a temporary
restraining order seeking to prevent the sale of the Property outside of the
bankruptcy court’s oversight. The bankruptcy court entered a temporary
restraining order on February 24 and set a further hearing on March 3.
On February 26, Mr. Glover again inquired about the status of the
Property. The Trustee informed Mr. Glover of the March 3 hearing in the
adversary proceeding against Affordable Patios. He stated, “If you want to
make me a formal offer on your company’s letterhead it will help move
this along.”2
On February 28, Legacy transmitted to the Trustee a one-page letter
(“Legacy Letter”) on its business letterhead titled “LETTER OF OFFER.”
2
Later, Mr. Glover testified that he understood that the Trustee needed to
represent to the bankruptcy court that he had a serious buyer. He said that he only
drafted the letter to help the Trustee during the March 3 hearing so that the Trustee
could start the process of negotiating a sale. The Trustee similarly testified that it was
important to be able to tell the bankruptcy court that he had an offer in hand.
4
The Legacy Letter referenced “Property at 910 Glendale Ave. Sparks,
Nevada” and stated:
The intent of this letter is to inform you that Legacy Fire
Services, LLC located in Sparks Nevada, is interested in
purchasing the property referenced above. Please consider this
a formal offer with the intent to purchase the three buildings
and associated land for a total cash purchase price of:
$1,458,000.00
This offer is predicated upon having any and all liens that may
be associated with the referenced property satisfied resulting
with Legacy Fire having clear title of ownership. We are
pleased to submit this offer and hopeful for favorable
consideration. Please feel free to contact our office to discuss
possible contingencies and further terms of an agreement.
Mr. Glover signed the Legacy Letter as managing member of Legacy.
C. The Trustee’s response to the Legacy Letter
On March 3, 2020, the Trustee and Reno Patio and Fireplaces, LLC
entered into a stipulation allowing the Trustee to sell the Property. The
following day, the Trustee filed a motion to sell the Property free and clear
of liens. He represented that he had received an offer for $1,458,000 and
attached a copy of the Legacy Letter.
Also on March 4, the Trustee sent a letter (“Trustee Response”) to
Legacy purporting to accept its offer. The Trustee Response stated:
This is in response to your letter of February 28, 2020
regarding purchasing the commercial building at 910 Glendale
Ave., Sparks, Nevada. Yesterday, the Court gave me
5
permission to accept your offer. Thus, I, as the Trustee, accept
your offer to purchase 910 Glendale Ave., Sparks, Nevada for
$1,458,000.
Currently, there is a hearing scheduled for March 13, 2020
at 10:00 a.m. for the Court to approve the sale of 910 Glendale
Ave., Sparks, Nevada to Legacy Fire Services.
My attorney, Michael Lehners, Esq., will be in touch with
you soon to explain the next steps in this process. However, in
the meantime, if you have any questions please feel free to call
me.
The Trustee filed the motion to sell before resolving the additional
terms and contingencies. Legacy retained counsel, who contacted the
Trustee and took the position that there was no binding contract of sale.
The discussions did not resolve the dispute. Legacy objected to the motion,
arguing that no valid contract existed because there was no agreement as to
all material terms, and thus no meeting of the minds.
The bankruptcy court held a hearing and granted the motion to sell.
But its written order provided that it “makes no findings as to whether or
not there is or was an enforceable contract between the Trustee and
Legacy . . . .”
Legacy refused to consummate the sale. The Trustee found another
buyer for the Property a month later. The bankruptcy court approved the
sale for $1,350,000, and the sale closed on September 11.
D. The adversary proceeding
In December 2020, the Trustee filed an adversary complaint against
6
Legacy and others. He sought a declaratory judgment directing Legacy to
turn over $108,000 to Affordable Patios’ estate.
The Trustee asserted two claims for relief. First, he sought turnover
under § 542(b), arguing that the parties had entered into “a legally binding
contract” that obligated Legacy to purchase the Property for $1,458,000. As
such, Legacy owed the estate a debt for $1,458,000; the resale of the
Property for $1,350,000 reduced the Trustee’s damages to $108,000.
Second, the Trustee asserted unjust enrichment. He alleged that
Legacy received an exclusive right to purchase the Property and retained
the benefit without paying the sale price.
E. Legacy’s motion for summary judgment
Legacy filed a motion for summary judgment (“Motion”). It argued
that the Trustee could not show the existence of a valid contract. It took the
position that the Legacy Letter evidenced preliminary negotiations, not a
formal offer, and those negotiations “do not constitute a binding contract
unless the parties have agreed to all material terms.” Legacy contended
that it “did not exhibit a manifestation of willingness to enter into a
contract whereby an ‘acceptance’ by the Trustee would leave nothing
further to negotiate. There was much more to negotiate and do before a
contract could be formed.”
Legacy pointed to the language of the Legacy Letter, in which it
requested that the Trustee “contact our office to discuss possible
contingencies and further terms of an agreement.” It claimed that its view
7
was supported by the deposition testimony of Mr. Glover and the Trustee,
both of whom testified that they expected further negotiations.3
Furthermore, there was no meeting of the minds concerning exactly what
the Trustee intended to sell, particularly because the number of buildings
was unresolved.
Legacy contended that there was no contract because the parties had
not agreed to material terms as required by Nevada law. Pursuant to In re
Estate of Kern, 823 P.2d 275, 277 (Nev. 1991), material terms to a sale of real
property include: (1) subject matter; (2) price; (3) payment terms;
(4) quantity; and (5) quality. The parties had only agreed on a price; all of
the other material terms were unresolved.
Mr. Glover said that he was a layman with no experience purchasing
3
commercial property. He stated in his deposition:
[A]t no point in my wildest dreams would I assume that this would be
binding to a contract to where all of a sudden in three days, the Court is
going to approve it and we don’t have any of our due diligence done, we
don’t have any of the reports or inspection and we have no idea if we’re
even getting the three buildings, so we had a freak-out . . . .
Similarly, the Trustee testified:
Q. Okay. If the bankruptcy court had entered an order on your
motion to sell, was it your intent to negotiate other terms of the contract?
A. Other conditions.
Q. What type of conditions, Mr. Burke?
A. When the payment would be made, when did they seek to move
in, how long it would take to sell and get the personal property removed,
how they were going [to] pay for it. . . . I think those were the main things.
He admitted that he did not discuss these additional conditions with Legacy prior to the
hearing on the motion to sell.
8
Legacy argued that, even if the Legacy Letter was a formal offer, the
Trustee Response was not an effective acceptance because it did not mirror
the offer: Legacy stated that it wanted to purchase three buildings, but the
Trustee Response referenced “the commercial building” in the singular.
Finally, Legacy argued that the unjust enrichment claim failed
because the Trustee impermissibly sought to recover under an express,
written contract.
The Trustee opposed the Motion. First, he argued that the parties had
formed a contract, and the missing material terms that Legacy described
were conditions precedent that did not impede contract formation. In other
words, contingencies could be inserted into the contract post-formation,
and, “[h]ad the Trustee not been able to get rid of the squatters (he did) or
had any inspections failed, the contract would have evaporated.” 4
Second, the adversary complaint pled all of the elements of breach of
contract, even if there was no specific breach of contract claim.
Finally, the Trustee argued that he had stated a claim for unjust
4 In his declaration attached to the opposition to the Motion, the Trustee stated
that he believed that they had reached an agreement but that Mr. Glover would provide
him a list of contingencies to include in the contract:
I expected Mr. Glover to get me a list of what these conditions were, such
as pest inspection, mold inspection, removal of the squatters by a certain
date, a title search and so on. We both knew we were not using a Realtor,
so I felt it was reasonable for him to tell me what he wanted. Should I not
be able to fulfill a specified condition, then Legacy would have been
released from the contract.
9
enrichment because “the loss the Trustee suffered was the inability to
market the property for the period of time the offer was accepted.”
Legacy’s reply memorandum pointed out that the Trustee “admits
that nonspecific contingencies and other terms were left open for
discussion between the parties.” Legacy contended that there was no
meeting of the minds to support contract formation. Moreover, the
“unspecified contingencies” were not conditions precedent, but rather
material terms under Nevada law.
After a hearing, the bankruptcy court announced its ruling from the
bench. First, it held that the crux of the dispute was an alleged breach of a
contract, and although the Trustee had not pled a breach of contract claim,
it would liberally construe the complaint to allege such a claim.
Second, the bankruptcy court held that the parties’ correspondence
did not create a valid, enforceable contract. It recited applicable Nevada
law concerning contract formation and stated that “[p]reliminary
negotiations do not constitute a binding contract unless the parties have
agreed to all material terms. A valid contract cannot exist when material
terms are lacking or are insufficiently certain and indefinite.” It held that
the Legacy Letter and Trustee Response lacked “[a] number of essential
terms” including the material provisions that Kern holds are necessary to
create a valid agreement: “[T]he subject matter of the alleged agreement is
not clear. Was the agreement for one building or three buildings? There are
also no payment terms nor due dates mentioned, no deposit amount
10
specific [sic], and the quality of the property was never discussed.”
As such, the claim for turnover failed because there was no debt for a
breach of contract. The bankruptcy court also held that unjust enrichment
was unavailable because the Trustee sought to recover under a written
agreement. The court concluded that there was no genuine issue of
material fact that would defeat Legacy’s motion for summary judgment.
The Trustee timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(A) and (E). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in granting Legacy summary
judgment on the basis that the Legacy Letter and the Trustee Response did
not create an enforceable contract.
STANDARD OF REVIEW
We review de novo the bankruptcy court’s decision to grant or deny
summary judgment. Boyajian v. New Falls Corp. (In re Boyajian), 564 F.3d
1088, 1090 (9th Cir. 2009). “De novo review requires that we consider a
matter anew, as if no decision had been made previously.” Francis v.
Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014) (citations
omitted).
We employ the same summary judgment standards as the
bankruptcy court. Summary judgment should be granted “if the movant
11
shows that there is no genuine issue as to any material fact and the movant
is entitled to judgment as a matter of law.” Wank v. Gordon (In re Wank), 505
B.R. 878, 886 (9th Cir. BAP 2014) (citing Civil Rule 56(a), made applicable in
adversary proceedings by Rule 7056).
Pure questions of law are appropriate for summary judgment. See
Schrader v. Idaho Dep’t of Health & Welfare, 768 F.2d 1107, 1110 (9th Cir.
1985). “Whether the parties have described their essential obligations in
sufficiently definite and certain terms to create an enforceable contract
presents a question of law that an appellate court reviews de novo.”
Grisham v. Grisham, 289 P.3d 230, 236 (Nev. 2012) (cleaned up).
DISCUSSION
As the bankruptcy court correctly stated, the dispositive question is
whether Legacy and the Trustee agreed to all material terms and formed an
enforceable contract. We agree with the bankruptcy court that there is no
genuine issue of material fact and that the parties did not agree to all
material terms. Summary judgment in favor of Legacy was not error.5
A. Legacy and the Trustee never formed an enforceable contract.
The Trustee argues that the parties agreed to all material terms for
the sale of the Property and that anything left to negotiate was a condition
precedent, not a material term. We disagree.
5
For the same reasons, we reject the Trustee’s argument that the bankruptcy
court should have granted him summary judgment under Civil Rule 56(f).
12
1. Nevada law requires that the parties to a contract have agreed
on all material terms.
The parties do not dispute the relevant law governing this case.
Under Nevada law,
[b]asic contract principles require, for an enforceable contract,
an offer and acceptance, meeting of the minds, and
consideration. With respect to contract formation, preliminary
negotiations do not constitute a binding contract unless the
parties have agreed to all material terms. A valid contract
cannot exist when material terms are lacking or are
insufficiently certain and definite. A contract can be formed,
however, when the parties have agreed to the material terms,
even though the contract’s exact language is not finalized until
later.
May v. Anderson, 119 P.3d 1254, 1257 (Nev. 2005) (citations omitted).
There is no enforceable contract unless the parties have reached a
definite agreement on all material terms:
[T]o enforce a contract at law, the offer must be sufficiently
definite or must call for such definite terms in the acceptance,
that the performance required is reasonably certain. In order
to be sufficiently definite, the parties must have agreed to all
material terms of a contract. In determining whether a contract
or its terms are definite, an important consideration is whether
the court can determine the putative contract’s exact meaning
and fix the legal liability of the parties.
Laguerre v. Nev. Sys. of Higher Educ., 837 F. Supp. 2d 1176, 1180-81 (D. Nev.
2011) (cleaned up) (emphases added); see also Grisham, 289 P.3d at 235 (“A
valid contract cannot exist when material terms are lacking or are
13
insufficiently certain and definite for a court to ascertain what is required
of the respective parties and to compel compliance if necessary.” (citations
and quotation marks omitted)).
The materiality of a term depends on the entire context. “A meeting
of the minds exists when the parties have agreed upon the contract’s
essential terms. Which terms are essential depends on the agreement and
its context and also on the subsequent conduct of the parties, including the
dispute which arises and the remedy sought.” Certified Fire Prot. Inc. v.
Precision Constr., 283 P.3d 250, 255 (Nev. 2012) (citations and quotation
marks omitted).
In Kern, the Nevada Supreme Court provided a nonexclusive list of
the material terms of a real estate purchase contract. In that case, the
agreement at issue was skeletal, and the court noted that “several essential
elements of a valid contract are missing.” 823 P.2d at 276. In particular, it
stated that “material terms such as subject matter, price, payment terms,
quantity, and quality are either altogether lacking or insufficiently certain
and definite to support specific performance.” Id. at 277 (emphasis added).
The court held that, even though there was evidence that the property
owner intended to transfer the property, “such evidence is insufficient and
does not establish an intent to be bound by a contract.” Id.
2. The alleged agreement lacked material terms.
The bankruptcy court did not err in holding that the alleged contract
lacked material terms. It considered the five elements listed in Kern and
14
concluded that, while the agreement specified the price, it lacked the
remaining four elements.
Payment terms. The Legacy Letter said that Legacy was making a
“cash offer.” The Trustee argues that this statement is sufficient to establish
the agreed “payment terms.” But the Trustee’s own deposition testimony
belies this argument. When asked what additional conditions he expected
to negotiate with Legacy, he included “[w]hen the payment would be
made . . . [and] how they were going [to] pay for it.”
In other words, the Legacy Letter and the Trustee Response did not
specify whether Legacy would pay for the Property in (say) thirty days or
ten years. While the Trustee might have expected Legacy to pay the full
purchase price in a lump sum at closing, there was no agreement about the
closing date and no agreement to make full payment at that time. The
alleged agreement did not “fix [Legacy’s] legal liability” to pay for the
Property. 6
6
At oral argument, the Trustee argued that reasonable payment terms were
implied in the contract. But a court’s power to fill gaps in a contract with reasonable
provisions does not permit it to create essential terms to which the parties did not agree.
See Stoddart v. Miller, 238 P.3d 845, 2008 WL 6070835, at *4 (Nev. 2008) (table) (holding
that no enforceable contract existed when the parties had not agreed on essential terms,
because, “[w]hile a court may supply certain details for an otherwise substantially
complete contract, it cannot enforce a contract that is missing terms essential to its
interpretation . . .”); McCall v. Carlson, 172 P.2d 171, 187 (Nev. 1946) (“Our equitable
powers do not extend so far as to permit us to disregard fundamental principles of the
law of contracts, or arbitrarily to force upon parties contractual obligations, terms or
conditions which they have not voluntarily assumed.”).
15
Quality. The Legacy Letter and the Trustee Response did not
address “quality.” It is undisputed that the parties never discussed the
condition of the Property and any required remedial action. Further, the
parties did not discuss or reach an agreement on Legacy’s ability to inspect
the Property and ascertain its quality before closing. The condition of the
Property and inspection rights were particularly important in this case
because, due to the presence of the squatters and other dangerous
conditions, Legacy had not even seen the interior of one or more of the
buildings before making its offer.
Subject matter and quantity. The bankruptcy court said that the
subject matter of the alleged agreement was not clear, in particular because
the number of buildings including in the sale was unclear. The Trustee
contends that the sales flyer made it clear that there were three buildings,
and the bankruptcy court erred by not considering the sales flyer.
The Trustee is correct that the parol evidence rule7 did not bar
evidence of the sales flyer. However, contrary to the Trustee’s assertion, it
7
The parol evidence rule precludes the use of extrinsic evidence to vary the
meaning of an agreement that is written, unambiguous, and integrated. Clark v. JDI
Loans, LLC (In re Cay Clubs), 340 P.3d 563, 574 (Nev. 2014) (“The parol evidence rule
precludes the admission of extrinsic evidence that would change the contract terms
when the terms of a written agreement are clear, definite, and unambiguous. It applies
only when the contracting parties agree that the written agreement is the final statement
of the agreement. The rule does not bar extrinsic evidence that is offered to explain
matters on which the contract is silent so long as the evidence does not contradict the
agreement’s terms.” (cleaned up)). Parol evidence is generally admissible, however, to
prove the existence or nonexistence of an agreement. See W. Nat’l Ins. Co. v. Trent, 247
P.2d 208, 210 (Nev. 1952) (“It is well recognized that parol testimony is admissible [to
16
is unclear whether or not the bankruptcy court considered the flyer. But
even if the court erroneously overlooked it, the error is harmless, because
the absence of several other material terms discussed above defeats the
Trustee’s argument that there was an enforceable contract.8
B. The purported offer and acceptance were an unenforceable
“agreement to agree.”
The Trustee does not dispute that the parties did not discuss the
terms addressed above. Rather, he contends that there was an enforceable
contract because he expected that the parties would discuss the missing
provisions at a future date. This contention does not help the Trustee’s
position. In effect, he views the Legacy Letter and Trustee Response as an
agreement to agree on the material terms for the sale of the Property. “An
agreement to agree on contract terms at a later date is not a binding
contract in Nevada.” Diamond Elec. Inc. v. Pace Pac. Corp., 346 F. App’x 186,
187 (9th Cir. 2009) (citing City of Reno v. Silver State Flying Serv., Inc., 438
P.2d 257, 261 (Nev. 1968) (“[A]n option agreement which leaves an
essential term to future agreement is not enforceable.”)); see Kohlmoos
negative the very existence of such a contract rather than to vary its terms], for the parol
evidence rule presupposes a valid and binding agreement.”); Baskin Distrib., Inc. v.
Pittway Corp., 141 F.3d 1173, 1998 WL 101691, at *4 (9th Cir. 1998) (table) (Under
Washington law, “[t]he parol evidence rule does not apply when the parties are seeking
to establish the validity or invalidity of a contract.”).
8
While the bankruptcy court did not mention it in its ruling, the parties never
discussed another facet of the subject matter of the sale: whether the vehicles,
machinery, and other personal property on site were included in the sale.
17
Enters. v. Pines, LLC, 129 Nev. 1131, 2013 WL 5476860, at *1 (2013) (table)
(“Nevada abides by traditional jurisprudence that agreements to agree are
generally too indefinite to enforce as final agreements.”). An alleged
agreement to iron out the material terms of the contract at a future date is
ineffective to create an enforceable contract.
C. The “conditions precedent” were material terms of the contract.
The Trustee attempts to save the contract by arguing that the missing
terms were conditions precedent to performance that could be negotiated
after the initial contract formation. The unstated premise of this argument
is that “conditions precedent” cannot be “material terms.” This premise is
incorrect.
A condition precedent “must be performed or happen before a duty
of immediate performance arises on the promise which the condition
qualifies. A condition precedent is either an act of a party that must be
performed or a certain event that must happen before a contractual right
accrues or a contractual duty arises.” Conditions Precedent, 13 Williston on
Contracts § 38:7 (4th ed.). “When contracting, a promisor may incorporate
into the agreement a ‘condition precedent’ – that is, an event that must
occur before the promisor becomes obligated to perform. An implicit
condition precedent can be inferred from a contract’s terms and context,
even when the contract does not explicitly so provide.” Cain v. Price, 415
P.3d 25, 28-29 (Nev. 2018) (citation omitted).
The Trustee offers no authority for the proposition that a “condition
18
precedent” is not a “material term,” and we see no reason to accept it. A
condition precedent is undoubtedly a contract term, and like any other
contract term it may be material depending on the context.9 In the context
of a real estate sale contract, a condition precedent based on, for example,
timing of payment or satisfactory inspection of the property is important.
While the Nevada Supreme Court has held that some conditions
precedent can be implied, they must be inferred “from a contract’s terms
and context.” Id. at 29. Although the Legacy Letter stated that there would
be conditions, there is nothing in either the Legacy Letter or the Trustee
Response that would allow a court to infer any particular condition
precedent.
CONCLUSION
The bankruptcy court did not err in granting Legacy summary
judgment. We AFFIRM.
9
The Restatement (Second) of Contracts observes that the word “condition” has
multiple legal meanings. It defines “condition” in the context of a contract as “an event
which qualifies a duty under a contract.” Restatement (Second) of Contracts § 224 cmt. a
(1981). It goes on to say that the contractual language that gives effect to an event (a
“condition”) is a term of the agreement:
A contracts to sell and B to buy goods pursuant to a writing which
provides, under the heading “Conditions of Sale,” that “the obligations of
the parties are conditional on B obtaining from X Bank by June 30 a letter
of credit” on stated terms. The quoted language is a term of the
agreement, not a condition. The event referred to by the term, obtaining
the letter of credit by June 30, is a condition.
Id. § 224 illus. 1 (emphasis added). In other words, the “conditions precedent” that the
Trustee admits needed to be negotiated were contractual terms.
19