Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 1 of 14 PageID #: 1278
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`CASE NO. 4:14-CV-761
`Judge Mazzant
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`SPIEGEL DEVELOPMENT, INC.
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`v.
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`U.S. BANK NATIONAL ASSOCIATION
`AS TRUSTEE, SUCCESSOR-IN-
`N.A., AS TRUSTEE, SUCCESSOR BY
`MERGER TO LASALLE BANK
`NATIONAL ASSOCIATION, AS
`TRUSTEE, FOR BEAR STERNS
`COMMERCIAL MORTGAGE
`SECURITIES IN., COMMERCIAL
`MORTGAGE PASS-THROUGH
`CERTIFICATES, SERIES 2001-TOP2, and
`CWCAPITAL ASSET MANAGEMENT
`LLC
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`MEMORANDUM OPINION AND ORDER
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`Pending before the Court are Plaintiff’s Motion for Summary Judgment (Dkt. #42) and
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`Defendants’ Motion for Summary Judgment (Dkt. #43). After reviewing the relevant pleadings,
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`the Court finds that the Plaintiff’s Motion for Summary Judgment be granted in part and denied
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`in part and Defendants’ Motion for Summary Judgment should be denied.
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`BACKGROUND
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`David Spiegel (“Mr. Spiegel”) is the President of Spiegel Development Inc. (“SDI” or
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`“Plaintiff”), and he is the Managing Member of DS Vista Creek LLC (“Vista Creek” or the
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`“Borrower”) (Dkt. #42 at p. 2; #47 at p. 3). In February of 2001, the Borrower became indebted
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`pursuant to a Loan (the “Loan”) in the principal amount of $3,400,000 (Dkt. #43 at p. 4). The
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`Promissory Note (the “Note”) executed in connection with the Loan was secured by a first
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`priority lien on and security interest in the property known as Vista Creek Shopping Center
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`located at 2240 S. IH-35 E, Lewisville, Texas (the “Property”) (Dkts. #43 at p. 4; #42 at p. 3).
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`1
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 2 of 14 PageID #: 1279
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`Pursuant to a series of assignments, U.S. Bank National Association (“USB”) became the holder
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`of the Note and the related Loan Documents (Dkt. #43 at p. 4).1 The Loan matured on March 1,
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`2013, and Vista Creek defaulted due to nonpayment (Dkts. # 42 at p. 5; #42 at p. 3).
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`CWCAM is the Special Servicer of the Loan (Dkts. #42 at p. 3; #43 at p. 4). Defendants
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`maintain that “in connection with the contemplated sale at issue in this litigation, [CWCAM]
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`served as the Lender’s agent.” (Dkt. #43 at p. 4). Plaintiff argues that, “[f]ollowing default of the
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`Note, [D]efendant CWCAM, acting as servicer on the loan, considered options of foreclosing on
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`the Property, selling a portion of the Property to TxDot, or selling the Note and collateral
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`documents at auction” (Dkt. #42 at p. 3).
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`Defendants assert that “[t]he Lender obtained the appointment of a receiver for the
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`Property in the Denton County Texas State Court with Mr. Spiegel’s consent.” (Dkt. #47 at p. 4).
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`Defendants also claim that “[t]he Lender evaluated business strategies to mitigate or recover its
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`losses in the face of Borrower’s default, among which were a condemnation buyout of the
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`Property from the Texas Department of Transportation (“TxDot”) and a sale of the Promissory
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`Note on Auction.com.” (Dkt. #47 at p. 4). According to Defendants, “Mr. Spiegel was apprised
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`of both options.” (Dkt. #47 at p. 4).
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`Defendants also explain that “[o]n November 13, 2013 the final dual-track business
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`strategy for the Loan was adopted by CWCAM.” It states in part:
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`The Note will be marketed for sale through Auction.com with a subject-to-reserve
`price of $1,155,000… Simultaneous with the marketing of the Note, CWCAM
`will pursue the early condemnation buy-out that the Borrower and Receiver are
`currently negotiating with TXDOT. The Borrower is expecting an offer by
`11/30/13. If the offer from TXDOT is in excess of the $1,185,000 CWCAM as-is
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`1 USB is Trustee, and is successor-in-interest to Bank of America, N.A., which was Trustee, and was successor by
`merger to LaSalle Bank National Association, which was Trustee for Bear Stearns Commercial Mortgage Securities
`Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-TOP2, by and through CWCapital Asset
`Management LLC, in its capacity as Special Servicer, (the “Lender”) and CWCapital Asset Management LLC, in its
`individual capacity, (“CWCAM”) (collectively, “Defendants”). See Dkt. #43 at p. 1.
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`2
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 3 of 14 PageID #: 1280
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`value, the assigned Asset Manager will pull the asset from the Auction.com Note
`sale.
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`(Dkt. #47 at p. 4 (citing 43-1)). Defendants maintain that they “informed Mr. Spiegel that the
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`sale on Auction.com would be pulled if a satisfactory offer was received from TxDot.” (Dkt. #47
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`at pp. 4-5). On December 12, 2013 Plaintiff won the auction for the Note. (Dkt. #42 at p. 4).
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`The Loan Sale Agreement (“LSA”) was entered between Lender and Plaintiff SDI that day with
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`the purchase price of $1,325,000.00 (Dkt. #42 at p. 4). According to Plaintiff, “[o]n December
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`18, 2013, seller’s counsel provided Mr. Spiegel with a fully executed LSA and informed him that
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`the closing would take place in January.” (Dkt. #43 at p. 4).
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`On December 30, 2013, the receiver received an offer from TxDot in the amount of
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`$3,093,328.00 for a portion of the Property (Dkts. #42 at p. 4; #47 at p. 5).2 According to
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`Plaintiff, “[o]n January 15, 2014, a representative of the Seller notified Mr. Spiegel that the
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`‘Initial Closing Date under the [LSA] for the Vista Creek Shopping Center loan is being
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`extended to February 21, 2014 (the ‘Extended Closing Date’).’” (Dkt. #42 at p. 5). Then, on
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`January 27, 2014, CWCAM informed Mr. Spiegel that the Lender would not be moving forward
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`with the sale to SDI because it had accepted the TxDot offer (Dkts. #42 at p. 5; #47 at p. 5).
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`According to Defendants, “[o]n November 5, 2014, after SDI engaged in negotiations
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`with TxDot, the Receiver, CWCAM, and USB agreed to accept $3,918,938 from TxDot for a
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`portion of the Property.” (Dkt. #42 at p. 6). Defendants also maintain that
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`[d]uring the pendency of this case, Vista Creek, SDI, USB, the receiver, CWCAM
`and an escrow agent entered into a Disbursement and Escrow Agreement that
`required the TxDot proceeds to be deposited into escrow, and that from those
`proceeds (a) the receivership expenses would be paid; (b) USB would be paid
`$1,325,000 representing the purchase price under the LSA; and (c) the prevailing
`party in this lawsuit would receive the net balance, subject only to the
`performance of the terms of sale in the LSA.
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`2According to Defendants, “[a]t the time of the TxDot offer the Loan had a balance of $2,884,277.57.” (Dkt. #47 at
`p. 5)
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`3
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 4 of 14 PageID #: 1281
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`(Dkt. #42 at p. 6). Plaintiff asserts a claim for breach of contract.3
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`On October 5, 2015, Plaintiff filed its Motion for Summary Judgment (Dkt. #42). On
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`November 2, 2015, Defendants filed their response (Dkt. #47). On November 16, 205 Plaintiff
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`files its reply (Dkt. #48). On November 23, 2015, Defendants file their sur-reply (Dkt. #51).4
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`On October 6, 2015, Defendants filed their Motion for Summary Judgment (Dkt. #43).
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`On November 2, 2015, Plaintiff files its response (Dkt. #46). On November 16, 2015,
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`Defendants filed their reply (Dkt. #49).
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`LEGAL STANDARD
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`The purpose of summary judgment is to isolate and dispose of factually unsupported
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`claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment
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`is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits
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`“[show] that there is no genuine dispute as to any material fact and that the movant is entitled to
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`judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is genuine
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`“if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
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`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all
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`reasonable doubts in favor of the party opposing the motion for summary judgment. Casey
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`Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations
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`omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.
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`The party moving for summary judgment has the burden to show that there is no genuine
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`issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the
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`3 Plaintiff also requested that the Court decree that “SDI is the owner and holder of the $3,400,000 Promissory Note
`and that [Vista Creek] is the current debtor of the Promissory Note and that all portions of the Note and collateral
`documents are valid and in full force and effect.” (Dkt. #15 at ¶ 40). However, as discussed in footnote eight,
`Plaintiff appears to have dropped its request for specific performance.
`4 On November 25, 2015, Plaintiff filed its sur-sur-reply (Dkt. #52). However, Plaintiff did not ask for leave of the
`Court. Therefore, the Court will not consider the sur-sur-reply because “[a]bsent leave of court, no further
`submissions on the motion are allowed.” Local Rule CV-7(f).
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`4
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 5 of 14 PageID #: 1282
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`movant bears the burden of proof on a claim or defense on which it is moving for summary
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`judgment, it must come forward with evidence that establishes “beyond peradventure all of the
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`essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th
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`Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge its
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`burden by showing that there is an absence of evidence to support the nonmovant’s case.
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`Celotex, 477 U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).
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`Once the movant has carried its burden, the nonmovant must “respond to the motion for
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`summary judgment by setting forth particular facts indicating there is a genuine issue for trial.”
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`Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce
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`affirmative evidence. Anderson, 477 U.S. at 257. No “mere denial of material facts nor . . .
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`unsworn allegations [nor] arguments and assertions in briefs or legal memoranda” will suffice to
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`carry this burden. Moayedi v. Compaq Computer Corp., 98 F. App’x 335, 338 (5th Cir. 2004).
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`Rather, the Court requires “significant probative evidence” from the nonmovant in order to
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`dismiss a request for summary judgment supported appropriately by the movant. United States
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`v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). The Court must consider all of the evidence, but
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`must refrain from making any credibility determinations or weighing the evidence. See Turner v.
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`Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
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`ANALYSIS
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`The disputes at issue in this case are limited to contractual interpretation. “Under
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`Maryland law, the interpretation of a contract, including the determination of whether a contract
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`is ambiguous, is a question of law.” Gresham v. Lumbermen’s Mut. Cas. Co., 404 F.3d 253, 260
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`(4th Cir. 2005).5 “Summary judgment is appropriate when the contract in question is
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`5 The parties agree that in construing the LSA, the Court should apply Maryland Law (Dkts. #42 at p. 7 (citing 42-21
`at § 11.11 (“This Agreement shall be construed, and the rights and obligations of the Seller and the Buyer hereunder
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`5
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 6 of 14 PageID #: 1283
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`unambiguous or when an ambiguity can be definitively resolved by reference to extrinsic
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`evidence.” Washington Metro. Area Transit Auth. v. Potomac Inv. Properties, Inc., 476 F.3d
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`231, 235 (4th Cir. 2007). “A contract is not ambiguous merely because the parties do not agree
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`to its meaning.” Maslow v. Vanguri, 896 A.2d 408, 420 (2006). “To prevail in an action for
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`breach of contract, the plaintiff must prove that the defendant owed the plaintiff a contractual
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`obligation and that the defendant breached that obligation.” Taylor v. NationsBank, N.A., 776
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`A.2d 645, 651 (2001).
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`Conditions Precedent
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`Plaintiff maintains that “[D]efendants have failed to close on the sale of the Note as
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`required by the LSA.” (Dkt. #42 at p. 8). Plaintiff argues that “[a]s a result of Defendants’
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`election in its January 15, 2014 letter, the closing on SDI’s purchase of the Note was required to
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`occur on or before February 21, 2014 (the ‘Extended Closing Date’).” (Dkt. #42 at p. 8 (citing
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`Dkts. #42-9; #42-21)). Plaintiff states that “[i]t is undisputed that Defendants purported to
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`terminate the LSA without any legal justification prior to the Extended Closing Date and have
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`refused to close on SDI’s purchase of the Note.” (Dkt. #42 at p. 8).
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`Defendants state that “SDI cannot establish the Lender’s breach of the [LSA] because the
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`conditions precedent that inured to the benefit of the Lender were never satisfied.” (Dkt. #43 at
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`p. 12). Plaintiff argues that there was no “failure of the conditions precedent in § 5.2(b) and (d)
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`of the LSA” (Dkt. #46 at p. 8). Section 5.2 states:
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`Conditions for the Benefit of Seller. Notwithstanding anything in this Agreement
`to the contrary, Seller’s obligation to sell and assign the Assigned Rights and
`Obligations shall be subject to and contingent upon the satisfaction (or waiver by
`Seller) of the following conditions precedent to or on the Closing Date:
`( . . . )
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`determined, in accordance with the local law of the State of Maryland.”)); #43 at pp. 8-9).
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`6
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 7 of 14 PageID #: 1284
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`(b) All Closing documents necessary to consummate the transaction as
`contemplated in this Agreement shall have been executed and delivered by Buyer
`as required by this Agreement.
`( . . . )
` (d) Receipt by Seller of all requisite approvals including, but not limited to, the
`approval of servicers, trustee approval and all other approvals that may be
`required pursuant to any documents which govern Seller, and the waiver or
`assignment of any purchase option rights as required under the documents which
`govern Seller.
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`(Dkt. #42-22 § 5.2(b) and (d)).
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`Under Maryland law, “[w]here a contractual duty is subject to a condition precedent . . .
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`there is no duty of performance and there can be no breach by nonperformance until the
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`condition precedent is either performed or excused.” (Dkt. #43 at p. 12 (citing Goldberg v.
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`Anastasi, 321 A.2d 155, 157 (1974); 6 A. Corbin, Contracts § 1252, at 2 (1962) (same); Myers v.
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`Kayhoe, 892 A.2d 520, 529-30 (2006) (explaining that an original contract was void for failure
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`of a condition precedent))). Therefore, Defendants assert that since “the Lender had no
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`contractual obligation to sell under the [LSA] because the conditions precedent in Section 5.2
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`were unfulfilled . . . there has been no breach of the [LSA] by the Lender.” (Dkt. #43 at p. 12).
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`Defendants assert that they were not obligated to make the sale unless and until they got
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`approval of the sale from CWCAM (Dkt. #43 at p. 12). Plaintiff maintains that “Defendants
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`simply ignore the limiting language that the approvals discussed in § 5.2(d) are limited to those
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`“that may be required pursuant to any documents which govern Seller . . .” (Dkt. #46 at p. 9
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`(citing Dkt. # 42-21 § 5.2(d))). Plaintiff argues that “[t]here is no evidence in the record that
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`CWCAM’s approval of USB’s sale of the Note was required by any documents that govern
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`USB.” (Dkt. #46 at p. 9).
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`Defendants assert that “Plaintiff misconstrues this section to mean that the ‘approval of
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`servicers’ is limited to approvals of servicers that are ‘required pursuant to any documents which
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`7
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 8 of 14 PageID #: 1285
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`govern Seller.’” (Dkt. #47 at p. 11 (citing Dkt. #46 at p. 9)). Defendants argue that a plain
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`reading of this section demonstrates that “[t]he approval of servicers, such as CWCAM, is not
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`limited to ‘all other approvals that may be required pursuant to any documents which govern the
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`seller’” (Dkt. #47 at p. 11). Defendants go on to state that “[a] [p]roper grammatical
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`construction of the LSA requires that the descriptive modifier ‘that may be required pursuant to
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`any documents which govern Seller’ applies only to the immediately preceding term ‘all other
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`approvals’ and not to the separately delineated approvals of ‘servicers’ and ‘trustees.’” (Dkt. #47
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`at p. 11).6 The Court agrees that a plain reading of this section of the contract demonstrates that
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`the approval requirement is not limited to approvals required pursuant to governing documents.
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`Therefore, the Court finds that USB was required to get approval from ‘required’ servicers, even
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`if such a requirement was not included within a governing document.
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`Plaintiff maintains that CWCAM’s internal planning memorandum of November 14,
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`2013 “is merely an outline of CWCAM’s plan as of that date and creates no requirement that
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`CWCAM approve USB’s sale of the Note, and it most certainly is not a document that ‘governs’
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`USB.” (Dkt. #46 at p. 9). Plaintiff also asserts that there is no agreement between USB and
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`CWCAM that contains such a requirement (Dkt. #46 at p. 9). Whether or not CWCAM is a
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`6 According to Defendants, “[w]hen a comma is used to set off a modifying phrase from other clauses it indicates
`that the ‘language is to be applied to all of the previous phrases and not merely the immediately preceding phrase.’”
`(Dkt. #47 at p. 11 (citing Elliot Coal Min. Co. v. Dir., Office of Workers’ Comp. Programs, 17 F.3d 616, 630 (3d
`Cir. 1994))). Therefore, Defendants maintain that “in the LSA the modifying phrase ‘that may be required pursuant
`to any documents which govern the Seller’ is not set off separately by a comma, and therefore applies only to its last
`antecedent ‘all other approvals,’ not to every word or phrase in the section as Plaintiff argues.” (Dkt. #47 at pp. 11-
`12) (citations omitted).
`The Court agrees with Plaintiff that “Maryland law . . . does not make the absence of a comma dispositive
`of whether a modifying clause at the end of a series of items is meant to govern all of the items.” (Dkt. #48 at p. 7
`(citing Laurel Race Course, Inc. v. Regal Const. Co. Inc., 333 A.2d 319, 327 (1975) (rejecting a construction that
`“would permit a simple comma to alter what we regard as the clear intent of the agreement”); McCree v. State, 105
`A.3d 456, 465-66 (2014) (last antecedent rule does not apply where the sense of the entire provision requires that a
`qualifying clause applies also to several preceding words); Emp’t. Sec. Admin. V. Weimer, 400 A.2d 1101, 1105
`(1979) (construing phrase “pension or annuity under a private pension plan” and rejecting the view that the
`modifying phrase “under a private pension plan” modifies only the word “annuity”))). Therefore, the Court’s
`interpretation is based on a plain reading of the agreement.
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`8
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 9 of 14 PageID #: 1286
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`‘required’ servicer, and whether or not CWCAM actually gave the requisite approval, are
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`questions of fact.
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`Plaintiff argues that “even if CWCAM were required to approve the sale, it indisputably
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`did so on December 13, 2013 when it executed the Auction Contract, where CWCAM is listed as
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`‘Seller,’ and the LSA, where CWCAM signed ‘in its capacity as Special Servicer.’” (Dkt. #46 at
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`p. 10 (citing Dkts. #42-19 at pp. 1604, 1611; #42-21 at p. 1638)).7 However, it is a question of
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`fact whether CWCAM’s signature represents its action solely as an agent for USB, or if it signed
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`and thereby expressed its approval of the agreement, as the Special Servicer. Therefore, whether
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`or not CWCAM was a ‘required’ servicer whose approval was necessary under section 52(d),
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`and whether CWCAM gave such approval, are both questions of fact appropriate for a jury’s
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`consideration.
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`Defendants also assert that Plaintiff is prevented from any recovery in this matter because
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`it failed to comply with section 5.2(b). Defendants contend that “[i]t is undisputed that SDI
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`never executed any of the Closing Documents that evidenced the assignment of the Loan
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`Documents, which was required by the [LSA].” (Dkt. #43 at p. 6). Defendants states that “[f]or
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`this reason alone, the Lender is entitled to summary judgment on all of Plaintiff’s claims.” (Dkt.
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`#43 at p. 12).
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`Plaintiff maintains that “Defendants’ unilateral refusal to close cannot be an excuse for
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`their breach of the LSA.” (Dkt. #42 at p. 10). “It is well settled that, where cooperation is
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`necessary to the performance of a condition [in a contract], a duty to cooperate will be implied,
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`7 Plaintiff also argues that Defendants cannot argue that CWCAM’s “approval of both the Auction Contract and the
`LSA was subject to a subsequent TxDot offer, because there is no such condition in either document and because
`CWCAM’s personnel made express and contemporaneous admissions that the auction sale was not subject to such a
`condition.” (Dkt.46 at p. 10). See Dkt. #42 at p. 10 (citing Dkts. #42-13; #42-15). However, the Court does not
`need to address this argument because it does not appear that Defendants are asserting that any approval was given
`with such a condition but is instead arguing that no approval was given by CWCAM in its capacity as a special
`servicer, and references the subsequent TxDot offer to explain why approval was not given.
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`9
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`and that a party owing such a duty cannot prevail if such failure operates to hinder or prevent
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`performance of the condition.” Dexter v. Dexter, 661 A.2d 171, 174 (1995) (quoting Alois v.
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`Waldman, 149 A.2d 406, 409 (1959)). Plaintiff argues that “[Plaintiff], at all relevant times,
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`insisted that Defendants go to closing and refused to accept a refund of its deposit until the
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`Disbursement Agreement was negotiated in August of 2015.” (Dkt. #48 at p. 4). Plaintiff also
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`points out that “[i]t is undisputed that SDI demanded that USB go to closing and that USB
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`refused.” (Dkt. #46 at p. 11 (citing Dkt. # 42-40 ¶ 14)). Defendants do not appear to dispute that
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`Plaintiff attempted to close and that the closing documents were not served as a result of its own
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`actions. Therefore, the Court finds that to the extent that Defendants assert that they are entitled
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`to prevail because Plaintiff failed to fulfill the condition precedent set for in section 5.2(b),
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`Plaintiff’s motion for summary judgment is granted and Defendants may not rely on section
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`5.2(b) as an excuse for their non-performance.
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`Defendants’ Breach
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`After a careful review of the record and the arguments presented, the Court is not
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`convinced that Plaintiff has met its burden by demonstrating that there are no material issues of
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`fact entitling it to judgment as a matter of law. The issue should proceed to trial.
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`Plaintiff’s Performance
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`After a careful review of the record and the arguments presented, the Court is not
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`convinced that Plaintiff has met its burden by demonstrating that there are no material issues of
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`fact entitling it to judgment as a matter of law. The issue should proceed to trial.
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`10
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`Case 4:14-cv-00761-ALM Document 56 Filed 06/29/16 Page 11 of 14 PageID #: 1288
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`Parties to the Agreement
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`After a careful review of the record and the arguments presented, the Court is not
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`convinced that Defendants have met their burden by demonstrating that there are no material
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`issues of fact entitling it to judgment as a matter of law. The issue should proceed to trial.
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`Relief Sought
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`Defendants maintain that the relief sought by Plaintiff is barred by the LSA, and therefore
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`Defendants assert that they are entitled to summary judgment on all of Plaintiff’s claims (Dkt.
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`#43 at p. 2). Defendants argue that section 9.1(a) of the LSA clearly states that “[Plaintiff]
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`agreed to waive any right to specific performance, other equitable relief and money damages,
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`and further agreed that its sole and exclusive remedy for any purported breach of the [LSA] by
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`the Lender was a return of its Deposit” (Dkt. #43 at p. 8).
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`Plaintiff argues that “Defendants’ interpretation of § 9.1(a) is flawed.” (Dkt. #42 at p.
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`13). Plaintiff maintains that section 9.1(a) “serves as an ‘impossibility of performance’ escape
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`clause for Seller” (Dkt. #42 at p. 13). Section 9.1(a) states that
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`[i]f (i) the conditions precedent set forth in Section 5.2 shall have been satisfied or
`waived in writing by Seller, (ii) Buyer shall have performed fully or tendered
`performance of its obligations hereunder and (iii) Seller shall be unable or fail to
`perform its obligations hereunder, Seller shall be allowed a reasonable
`opportunity to cure such failure or inability to perform. If such failure or inability
`to perform cannot be cured, then Buyer, as its sole and exclusive remedy, shall
`terminate this agreement by written notice delivered to Seller and Escrow Holder
`and the entire amount of the Deposit shall be delivered by Escrow Holder to
`Buyer. In such event of termination of the Agreement, … Buyer specifically
`acknowledges and agrees that … (B) Buyer may not recover any consequential or
`punitive damages resulting from Seller’s breach of the Agreement, and (C) Buyer
`waives any right to specific performance or other equitable relief.
`
` (Dkt. #42-20).
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`
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`Plaintiff points out that “Defendants’ interpretation of § 9.1(a) of the LSA is also in
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`conflict with § 8.2 of the LSA.” (Dkt. #42 at p. 14). Plaintiff explains that “[p]ursuant to § 8.2,
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`SDI agreed to release Defendants ‘except for claims or causes of action arising by reason of
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`Seller’s breach of this Agreement.’” (Dkt. #42 at p. 14 (citing Dkt. #42-20 § 8.2)). According to
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`Plaintiff, “[i]f § 9.1(a) were interpreted as limiting SDI’s recovery for breach of contract when
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`the conditions precedent to waiver under that section had not been met, then the carveout in § 8.2
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`would be rendered superfluous.” (Dkt. #42 at p. 14).
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`Maryland law holds that, “[a] recognized rule of construction in ascertaining the true
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`meaning of a contract is that the contract must be construed in its entirety and, if reasonably
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`possible, effect must be given to each clause so that a court will not find an interpretation which
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`casts out or disregards a meaningful part of the language of the writing unless no other course
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`can be sensibly and reasonably followed.” See DIRECTTV, Inc. v. Mattingly, 829 A.2d 626, 637
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`(2003). The Court agrees that Defendants’ interpretation of section 9.1(a) would render section
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`8.2 superfluous. Therefore, the Court finds that Plaintiff is entitled to recover damages other
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`than the return of its deposit, but only if Plaintiff also proves that Defendants were able to cure.8
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`Plaintiff argues that because Defendants’ failure to perform could be cured, section 9.1(a)
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`is inapplicable (Dkt. #42 at pp. 13-14). Defendants argue that their failure to perform could not
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`currently be cured because the Note has been extinguished (Dkt. #51 at pp. 7-8). However, the
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`Court agrees with Plaintiff that whether or not Defendants can currently cure their alleged breach
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`is irrelevant (Dkt. #48 at p. 7). However, whether or not Defendants were able to cure the
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`8 Plaintiff initially argued for specific performance (Dkts. #42 at pp. 14-15; #46 at pp. 15-16), but stopped seeking
`that remedy and now asserts that it is entitled to monetary damages. Plaintiff states that it is not seeking an order
`unwinding Defendants sale of property to TxDot (Dkt. #48 at p. 6). Plaintiff goes on to explain that
`It seeks a judgment that Defendants are in breach of the LSA and are liable for attorneys’ fees,
`with the remedies to be determined later by the Court. The primary remedy will be the disposition
`of the proceeds of the sale of Borrower’s property, as provided in the Disbursement Agreement.
`That agreement provides that the net proceeds remaining in the account (after the August 2015
`disbursement to Defendants of $1,325,000 representing the note price under the LSA and
`disbursement to the Receiver for certain expenses) should be disbursed to either Defendants or
`SDI based on this Court’s decision in this case. The remedy is not only possible; it has been
`agreed upon by all of the parties to this litigation.
`(Dkt. #48 at p. 6) (citations omitted). Therefore, the Court will not address whether specific performance would
`have been an appropriate remedy in the current case.
`
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`alleged breach in 2014 is a question of fact. See Dkts. #46 at p. 12; #47 at p. 13. Therefore, the
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`Court holds that summary judgment should be granted in favor of Plaintiff’s claim that it is not
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`barred from seeking damages if it proves that Defendants could have cured at the time of the
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`alleged breach.
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`Therefore, whether or not such relief should be granted in the current case is a question of
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`fact. After a careful review of the record and the arguments presented, the Court is not
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`convinced that Plaintiff or Defendants have met their burden by demonstrating that there are no
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`material issues of fact entitling them to judgment as a matter of law. The issue should proceed to
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`trial.
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`Attorneys’ Fees and Costs
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`
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`After a careful review of the record and the arguments presented, the Court is not
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`convinced that Plaintiff or Defendants have met their burden by demonstrating that there are no
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`material issues of fact entitling them to judgment as a matter of law. The issue should proceed to
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`trial.
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`CONCLUSION
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`
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`It is therefore ORDERED that Plaintiff’s Motion for Summary Judgment (Dkt. #42) is
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`hereby GRANTED IN PART AND DENIED IN PART. Defendants may not assert the
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`defense that they were excused from performance because Plaintiff violated section 5.2(b) of the
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`LSA. Plaintiff is not barred from seeking damages if it is able to prove that Defendants could
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`cure at the time of the breach.
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`It is further ORDERED that Defendants’ Motion for Summary Judgment (Dkt. #43) is
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`hereby DENIED.
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