Charley and Debora Steen v. Short Term Properties, LLC

NOT FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

10-372

CHARLEY & DEBORA STEEN, ET AL.

VERSUS

SHORT TERM PROPERTIES, L.L.C.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20073326
HONORABLE EDWARD D. RUBIN, DISTRICT JUDGE
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SYLVIA R. COOKS
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, and
Elizabeth A. Pickett, Judges.

AFFIRMED IN PART; REVERSED IN PART.

Pickett, J., concurs in the result.

J. Isaac Funderburk
Funderburk & Herpin
101 S. St. Charles Street
P.O. Drawer 1030
Abbeville, LA 70511-1030
COUNSEL FOR PLAINTIFFS/APPELLEES:
Charley & Debora Steen, et al.

James P. Doherty, III
Frederick Law Firm
1025 Coolidge Blvd.
P.O. Box 52880
Lafayette, LA 70505
(337) 269-5143
COUNSEL FOR DEFENDANTS/APPELLANTS:
Short Term Properties, L.L.C.

COOKS, Judge.

In October of 2006, the Plaintiffs, Charley and Debora Steen, Zeke and Cindy

Bossley, Billie and Rosemarie Hagle, and Abby James Broussard, entered into

separate purchase agreements with Defendant, Short Term Properties, LLC, (Short

Term) to purchase a four-plex condominium complex in Lafayette. Each of the four

units was to cost $130,000.00. Each set of Plaintiffs paid a $1,300.00 deposit.

Pursuant to the terms and conditions of the purchase agreements, Short Term was to

complete the construction in a good and workmanlike manner. There was no

expressed completion date in any of the contracts.

On November 9, 2006, Mrs. Steen sent an e-mail to Short Term on behalf of

all Plaintiffs, confirming that she was correct in assuming the condominiums would

be completed by the end of November 2006 or the beginning of December 2006.

Short Term’s agent, Damian Speiss, replied to the e-mail and stated “[y]ou are correct

on completion date.” However, the condominiums were not completed by that date.

On February 6, 2007, the Lafayette Consolidated Government’s Planning,

Zoning and Codes Department completed its final inspection and granted its final

approval of the four units’ construction. On February 12, 2007, Plaintiffs conducted

a walk-through of the units with the builder and made a punch list of items for

completion or repair.

On February 26, 2007, Defendant, through its agent, advised Plaintiffs it was

prepared to proceed to closing and requested a closing date of March 6, 2007. On

March 4, 2007, Plaintiffs conducted another walk-through of the units. That same

day, the Steens sent a letter, via certified mail and e-mail, to Short Term withdrawing

from the purchase agreement because the unit was not completed. On March 12,

2007, all other Plaintiffs sent a letter, via U.S. Mail and facsimile, declaring the

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purchase contract null and demanding return of the each down payment, as well as

penalties owed by Short Term as set forth in the contract.

On June 25, 2007, Plaintiffs filed suit, claiming breach of contract by Short

Term. In turn, Short Term filed a reconventional demand, asserting breach of

contract by the Plaintiffs for withdrawing from the purchase of the condominiums and

failing to proceed to closing. Plaintiffs answered the reconventional demand and

moved for summary judgment. Short Term filed a cross-motion for summary

judgment. The motions were heard, and the court granted Plaintiffs’ summary

judgment motion and denied Short Term’s motion, setting forth the following written

reasons for judgment:

The plaintiffs cited Davis Gulf Coast vs. Anderson Exploration
Co., Inc., [06-180 (La.App. 3 Cir. 5/31/06), 933 So.2d 227, writs denied,
06-2148, 06-2166 (La. 2/2/07), 948 So.2d 1076, 1077] in support of
their motion for summary judgment. In that case, the court found that
the letters exchanged between the parties constituted a novation of their
agreement. Similarly, this court finds that the email notifications sent
to the defendant on November 9, 2006 by the plaintiffs constituted a
novation of their original agreement. This court finds that the
defendant’s [sic] breached the agreement by not having the
condominiums completed as agreed upon by the end of November or
early December. Accordingly, this court [grants] the plaintiffs’ motion
for summary judgment and [denies] the defendant’s cross motion for
summary judgment.

The judgment, along with granting Plaintiffs’ motion for summary judgment, ordered

Short Term to return each $1,300.00 deposit. Additionally, the trial court awarded

each plaintiff contractual penalties of $1,300.00, as well as contractual attorney fees

in the amount of $1,487.50. Charlie and Debora Steen were also awarded special

damages in the amount of $623.50, Zeke and Cindy Bossley were awarded $225.50

in special damages, and Billie and Rosemary Hagle were awarded $225.00 in special

damages. Short Term appealed the judgment.

ANALYSIS

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Favored in Louisiana, the summary judgment procedure is designed to secure

the just, speedy, and inexpensive determination of every action and shall be construed

to accomplish these ends. La.Code Civ.P. art. 966(A)(2); King v. Parish Nat'l Bank,

04-337 (La. 10/19/04), 885 So.2d 540. An appellate court reviews a district court's

decision granting summary judgment de novo, using the same standard applied by the

trial court in deciding the motion for summary judgment. Cyprien v. Bd. of Sup'rs ex

rel. Univ. of La. Sys., 08-1067 (La.1/21/09), 5 So.3d 862. Under this standard,

summary judgment shall be granted “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, 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.Code Civ.P. art. 966(B). Pursuant to that article, the burden

of producing evidence at the hearing on the motion for summary judgment is on the

mover, who can ordinarily meet that burden by submitting affidavits or by pointing

out the lack of factual support for an essential element in the opponent’s case. At that

point, the party who bears the burden of persuasion at trial must come forth with

evidence which demonstrates he or she will be able to meet the burden at trial. Once

the motion for summary judgment has been properly supported by the moving party,

the failure of the non-moving party to produce evidence of a material factual dispute

mandates the granting of the motion. Cyprien, 5 So.3d 862.

The record establishes the purchase agreements signed by Plaintiffs did not

establish a specific time for completion. Louisiana Civil Code Article 1778 provides

when time for performance is not specified, “the obligation must be performed within

a reasonable time.” Thus, if the original purchase agreements remained in effect,

Short Term was required to complete the condominiums within a reasonable time.

However, the trial court found the parties effected a novation to the original

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agreement. We agree.

This court in Davis, 933 So.2d at 231, discussed novation:

“Novation is the extinguishment of an existing obligation by the
substitution of a new one.” La.Civ.Code art. 1879. Novation occurs
when the parties agree to substitute a new cause for a pre-existing
obligation or a substantially new performance for the one previously
owed. If a substantial part of the performance owed is unchanged, no
novation occurs. La.Civ.Code art. 1881. “The intention to extinguish
the original obligation must be clear and unequivocal. Novation may
not be presumed.” La.Civ.Code art. 1880. Novation will not occur
where there is a modification of an obligation unaccompanied by the
intent to extinguish the original obligation. La.Civ.Code art 1881. “The
execution of a new writing, the issuance or renewal of a negotiable
instrument, or the giving of new securities for the performance of an
existing obligation are examples of such a modification.” Id. The trial
court based its judgment on its interpretation of the letters. This is a
legal finding, and the standard of review for legal findings is de novo.
Busby v. Cappaert Manufactured Housing, Inc., 01-496 (La.App. 3 Cir.
10/3/01), 799 So.2d 608. The testimony adduced at the trial in this
regard is inconclusive. However, we need look no further than the four
corners of the agreement to determine the intent of the parties. “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.

In Davis, the parties agreed to participate in the benefits to be derived from

development of certain oil, gas, and mineral leases by executing a “Participation

Agreement,” wherein the owner, Davis, agreed to transfer a working interest in the

leases to the plaintiff. The parties became involved in a dispute regarding compliance

with certain terms and provisions of the Participation Agreement. The parties agreed

that a series of letters were exchanged in an attempt to work out the problems

between the parties. The plaintiff filed a petition for ownership against Davis, asking

that Davis be ordered to transfer its working interest set forth in the Participation

Agreement to the plaintiff. Davis argued the letters exchanged between the parties

constituted a novation of the Participation Agreement, and thus the plaintiff’s interest

in the well, if any had been earned, was forfeited by its failure to fulfill the

requirements of the letter agreement. The trial court found the letters did not

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constitute a novation and ruled in favor of the plaintiff. Davis appealed. This court

reversed the trial court, finding the letters constituted a novation in that it “provide[d]

for a substitute performance and term,” and “[t]hese changes in the parties’

obligations . . . constitute[d] a novation under the law.” Id. at 232.

The uncontroverted facts in this case show on November 9, 2006, Plaintiff,

Debora Steen, sent an e-mail to Short Term on behalf of all Plaintiffs, asking if she

was correct in assuming completion would occur by “end of the month [November,

2006] or early December.” Damian Speiss, Short Terms’ agent, replied to the e-mail

and stated “[y]ou are correct on completion date.” The original agreement obligated

Short term to sell the property “upon completion.” Short Term extinguished that

obligation to sell “upon completion” set forth in the original agreements, by agreeing

to sell near the end of November 2006 or early December 2006. This substitution was

set forth in writing. Therefore, as this court held in Davis, the e-mail exchange

substituted a new performance for that previously owed and thus constituted a

novation under Louisiana law. Therefore, the trial court did not err in granting

Plaintiffs motion for summary judgment and in denying Short Term’s cross-motion

for summary judgment.

DAMAGES

Along with the return of each plaintiff’s deposit, the trial court awarded each

plaintiff contractual penalties of $1,300.00, as well as contractual attorney fees in the

amount of $1,487.50. Charlie and Debora Steen were also awarded special damages

in the amount of $623.50, Zeke and Cindy Bossley were awarded $225.50 in special

damages, and Billie and Rosemary Hagle were awarded $225.00 in special damages.

Short Term argues the trial court erred in making any award of special damages under

the purchase agreement to any plaintiff. Short Term acknowledges the purchase

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agreements contained a provision for recovery of attorney fees by the prevailing party

“[s]hould either party institute legal proceedings to enforce the terms or conditions”

of the agreement, and a provision granting the buyer “the right to demand the return

of his/her deposit in full, plus an equal amount to be paid as a penalty by Seller.”

However, Short Term contends the purchase agreements do not refer to or

contemplate expenses such as title research, document copies and mortgage

certificates, which were the invoices introduced by plaintiffs to suppoprt its claim for

special damages. We agree. The purchase agreements do not allow for the recovery

of such special damages, and the trial court erred in making that award.

DECREE

For the foregoing reasons, we reverse the trial court’s award of special damages

to the respective plaintiffs. In all other respects the trial court’s judgment is affirmed.

All costs of this appeal are assessed to appellant, Short Term Properties, L.L.C.

AFFIRMED IN PART; REVERSED IN PART.

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