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Yates v. Halford (7/18/2003) sp-5712
Yates v. Halford (7/18/2003) sp-5712
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT L. YATES, )
) Supreme Court No. S-10438
Appellant, )
) Superior Court No.
v. ) 3AN-98-11656 CI
)
RICHARD W. HALFORD and ) O P I N I O N
VECO CORPORATION, )
)
Appellees. ) [No. 5712 - July 18,
2003]
)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, John Reese, Judge.
Appearances: William F. Brattain II, Baker
Brattain LLC, Anchorage, for Appellant.
Thomas E. Williams, Keith A. Christenson,
Eagle River, for Appellee Halford. Todd J.
Timmermans, Price & Price, Anchorage, for
Appellee VECO Corporation.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
MATTHEWS, Justice.
The question in this case is whether summary judgment
was properly granted in favor of a party who had strictly
foreclosed a land sale contract. We conclude that summary
judgment was improper because the grounds relied on by the movant
were both factually disputed and legally insufficient and the
movant failed to show that he was entitled to strict foreclosure
as a matter of law.
I. STATEMENT OF FACTS
A. Background
In 1994 Richard Halford sold Robert Yates real property
consisting of a lodge and some seventy-four acres located near
the Denali Highway. The sale was accomplished under an Agreement
for Purchase and Sale of Real Estate and Personal Property. The
purchase price was $320,000, payable by means of a $6,000 deposit
upon execution of the agreement, $34,000 cash at closing, and the
remainder of $280,000 to be paid per the terms of a promissory
note: $30,000 in principal for each of the following two years
plus interest, with the balance due in August 1997. The
promissory note was secured by a deed of trust on the property.
Yates hoped to renovate the lodge in order to start an ecotourism
venture. The agreement contained default remedies, including an
option for termination of the agreement upon written notice.1
After apparently fulfilling his obligations at least
through 1995,2 Yates defaulted on his obligations. Rather than
foreclose, Halford proposed that the parties enter into a new
agreement. Yates agreed and the parties on July 30, 1997, signed
a new agreement characterized as a conveyance back and resale
that both incorporated and made changes to the 1994 Agreement.3
Notably, the purchase was narrowed to only the fifteen acres,
immediately surrounding the Lodge, and the purchase price was
reduced to $118,035.80. The price was payable as follows:
$5,000 upon execution of the agreement; $33,035.80 at closing;
followed by sixteen quarterly installments of $5,000 each plus
interest. The new agreement also included a two-year option,
personal to Robert Yates,4 to purchase the remaining acreage for
$200,000.
The parties closed the new agreement on September 16,
1997. Yates paid the required down payment and the parties
signed a separate document entitled Closing of Sale Contract,
containing the following language:
The Purchaser has repaired the lodge
roof and has agreed to re-roof prior to
September 1, 1998.
The Purchaser represents that all the
taxes are current at this time.
Thirty days after written notice of
default, the Seller may declare a default and
repossess the property.
Both the Seller and the Purchaser agree
that all other terms and conditions in the
Agreement for Purchase and Sale are binding
and in full effect.
(Emphasis added.)
According to Yatess subsequently filed complaint,
almost three months after the closing of the sale contract
Halfords attorney, Thomas E. Williams, advised Jerald Briske, who
was acting as an agent and assistant to [Yates], that [Yates]
would have to pay an additional sum of $500 for attorneys and
platting waiver fees. Yates claims that Briske delivered a check
to Williams in that amount, drawn on the account of Coast-Line
Enterprises, Inc. and signed by Briske. Briske supports this
account in an affidavit.
On January 28, 1998, four months after the closing,
Williams sent Yates a letter that declared the transaction a
failure and purported to terminate the agreement. Williams
alleged that Yates was unable or unwilling to complete the terms
of closing and listed multiple delinquencies, including failure
to pay past due taxes as well as the quarterly payment due in
December 1997.
On February 18, 1998, Yatess attorney, Joan Travostino,
responded by letter claiming that termination of the contract was
premature because Halford had never given thirty days written
notice of default, not even in the January 28th letter. A
written notice of default states what performance is in default
and what is owing. The January 28 letter does not do this. She
concluded therefore that Yates still had time to cure.
Enclosed with Travostinos letter were three checks,
each in the amount of $4,010. A breakdown detailed that the
$12,030 covered all the back taxes, some survey work, a platting
waiver fee, and the missed payment, including interest through
December 15. Each check came from a different bank and
referenced a different maker, Yates, Briske, and John Lutz.
On March 5 Williams refused the uncashed checks and
explained why Yates was deficient in his efforts to cure the
defaults.5 Williams stated that the new agreement clearly
established that this sale was to be directly to Mr. Yates and
should there be a subsequent sale, the loan would be accelerated.
He also noted that the option to purchase the remaining acreage
was personal to Mr. Yates. Williams also accused Yates of
misrepresentation concerning payment of taxes and failing to
fulfill a condition of the contract:
The new sale was merely a contract to
purchase. On September 16, 1997, Mr. Yates
represented to Mr. Halford that the 1996
taxes had been paid. In fact, they were not
paid until Mr. Halford himself paid them in
1998; therefore, the conditions of the sale
contract were never completed.
Williams also implied that Yates had received adequate notice of
default because Mr. Yates and Mr. Halford had many telephone
exchanges between September and the termination of the contract
whereby Mr. Halford told Mr. Yates that he needed to finish the
details of the closing.
On April 2, 1998, Yates renewed his effort to cure the
default by re-tendering $12,030. This tender was rejected. On
October 20, 1998, Yatess new attorney, Marshall K. Coryell,
advised Halford that a sum covering the December 1997 payment
plus the March, June, and September 1998 payments plus other sums
in dispute had been deposited with a title company and would be
available to Halford upon reinstatement of the transaction. This
offer was ignored. Meanwhile, on or about June 30, 1998, Halford
sold all the property to VECO Corporation. When Yates learned of
the sale he vacated the property.
B. Proceedings
Yates sued Halford and VECO on December 22, 1998,
seeking to set aside the strict foreclosure and reinstate the
sale contract.
After settlement negotiations Halford offered Yates
three different settlement options, ostensibly under Alaska Civil
Rule 68, requiring Yates to either pay off the debt or bring
payments current on specified dates; interest was included in
each option. But Yates objected to the interest calculations and
no agreement was reached.6 Depositions of Halford and
Yates were taken. At his deposition Yates disclosed the
existence of a Memorandum of Understanding between himself,
Briske, and Lutz. In response to this disclosure Halford moved
for sanctions against Yates. Halford argued that Yates should
have disclosed these relationship earlier, and that Yates had
mischaracterized Briskes role in the complaint by referring to
him as an agent and assistant. Halford also contended that the
existence of the memorandum of understanding proved that Yates
had already sold the property, thus triggering the due on sale
clause and nullifying the option to purchase the 200 acres.
Halford added that, because Briske and Lutz were real parties in
interest to the property, they were indispensable parties to the
action for specific performance.7
Halford attached to the motion a copy of the memorandum
of understanding. Of particular concern to Halford was the
following portion of the memorandum:
1. It is the intent of the Partners to
obtain share equal ownership of the property
and to create an appropriate business entity
organized under Alaska law for the purposes
of such equal ownership;
. . . .
3. It is the intent of the Partners to
accept an assignment of all rights and
delegation of all duties heretofore held by
Robert Yates under the terms of the July 30,
1997 Agreement[.]
Yates did not contest the existence of an understanding
between himself, Briske, and Lutz. Rather, he argued that
Halford had always been fully aware of the relationship and that
any nondisclosure was an irrelevant oversight. Yates attached an
affidavit from Briske detailing his numerous contacts with
Halford regarding the property. Briske added:
Another associate, JOHN LUTZ, and I have
had an agreement in place since September,
1997 with Mr. Yates whereby we would become
partners in the Susitna Lodge operation after
Mr. Yates purchased the property and
exercised his option on the additional
acreage around the Lodge under the terms of
the 1997 Agreement Mr. Yates had with Mr.
Halford to buy the property. At no time have
we ever claimed a current interest in the
property . . . .
(Emphasis in original.) Finally, Yates attached a segment of
Halfords deposition where Halford acknowledged having a
conversation with Lutz about the property and hearing, by rumor,
that Briske had made a $500 payment on behalf of Yates.
Superior Court Judge John Reese denied Halfords motion
for sanctions. The order stated:
Defendant Halford requests sanctions for
plaintiffs failure to disclose his
relationship to Lutz and Brisk[e]. The
record does not disclose a close enough
relationship to the property by these two men
to make their non-disclosure a requirement
under Civil Rule 26. The motion is DENIED.
Halford subsequently moved for summary judgment,8
premising the motion partly on the courts ruling that Lutz and
Briske were not closely associated with the property:
[The motion for sanctions] was denied by the
Court. In making that decision, the Court
effectively made the determination that Mr.
Yates ostensible partners are not
indispensable parties to the Plaintiffs case.
That determination thereby became the law of
the case.
Halford contended that Yates has admitted at deposition that he
didnt and doesnt have the financial ability to complete the
transaction he is trying to enforce. According to Halford, two
quotes in Yatess deposition indicated that Yates was not in a
financial position to accomplish the necessary renovation without
borrowing from some source. Halford then cited a recognized
requirement of Alaska case law:
It is axiomatic that to obtain specific
performance, a buyer must prove not only that
he was ready, willing and able to perform at
the time the contract was entered into but
that he continued ready, willing and able to
perform at the time suit was filed and during
the prosecution of the specific performance
action.[9]
Halford concluded that, because Yates was asking for specific
performance of the contract but was not actually in a position to
perform, the case must be dismissed.
At the time Yates was without counsel. He filed a
motion for extension of time. In case the extension was denied,
he also included in the same motion his opposition argument. The
opposition portion of his motion focused on his current ability
to pay: Currently, I certify to the Court that my financial
circumstances have improved and that with the assistance of
potential investors, I would be able to bring the Note payments
current.
On August 29, 2001, the superior court granted Halfords
motion for summary judgment, and subsequently entered final
judgment in favor of both Halford and VECO.
Yates appeals.
II. DISCUSSION
We review grants of summary judgment de novo.10 It is
the duty of the court to determine whether there are disputed
factual issues that would preclude the entry of judgment as a
matter of law.11 The facts offered in support of and in
opposition to a motion for summary judgment will be construed in
a light most favorable to the non-moving party.12 The burden is
on a party seeking summary judgment to show that there are no
genuine issues of material fact and that he is entitled to
judgment as a matter of law.13
In granting summary judgment, the superior court gave
no reasons in support of its order. In such circumstances we
review all grounds on which the movant relied to determine
whether any grounds were sufficient.14 In the present case
Halford and VECO offered only one reason in support of their
joint motion, namely that Yates was not entitled to specific
performance because he lacked the financial ability to perform
his obligations under the contract.
In making this argument Halford relied on the courts
ruling denying sanctions against Yates to the effect that Lutz
and Briske did not have a sufficiently close relationship to the
property to make their nondisclosure sanctionable under Civil
Rule 26. According to Halford, this ruling became the law of the
case. He argued that Yates stands alone with respect to his
purchase of this property . . . and it is Mr. Yates alone who
must establish his financial ability to fulfill the obligations
of the contract he is seeking to enforce.
But there was nothing in the courts order denying
sanctions that implied that Yates would be prohibited from
borrowing funds from Briske and Lutz, or from anyone else. The
courts ruling was nothing more than a determination that Yates
should not be sanctioned for discovery violations.
Halford and VECO also point to two passages in Yatess
deposition that they contend prove that Yates lacks the financial
ability to comply with his contractual obligations. The first
statement is: But, see, because I knew from the get-go that I
didnt have the . . . the clout to to go out and borrow $500,000
to do the remodel and so on . . . . This is a reference
concerning renovations necessary to convert the lodge to make it
suitable for Yatess ecotourism plans. The only alteration of the
lodge that Yates was contractually required to perform was to
replace the roof, surely not the whole subject of the $500,000
remodel that Yates is referring to in the above excerpt.
The second quote is fragmented.
Q: But financially, you alone, Im not
talking about borrowing from anyone else, no
matter whom, but you alone were not in a
position to accomplish the renovations?
A: Thats correct. Thats correct.
. . . .
A: Okay. Let me back up one step. The one
step is, I alone could not have done this
well, it would have made a heck of a lot of
difference if Id received the $250,000 that I
was going to get on the sale [of unrelated
property Yates owned in Montana], and that
was due in 1996. It obviously didnt happen.
So without that, surely, no, I was not able
to.
This fragment again is concerned with renovations rather than the
purchase price. Further, the fragment is artificially limited to
Yatess personal financial resources rather that what he might
obtain from his prospective partners or other sources.
VECO claims that Yates admitted by implication in his
pro se opposition in response to Halfords summary judgment motion
that he has not at all times since the making of the 1997
Agreement been financially able to fulfill his contractual
obligations. In his opposition Yates stated: I certify to the
court that my financial circumstances have improved and that with
the assistance of potential investors, I would be able to bring
the Note payments current. VECO apparently assumes that by using
the word improved Yates is here conceding that during the
litigation he lacked the financial ability to bring the payments
current.
VECOs argument is both factually and legally flawed.
Factually, because Yatess statement contains no specific time
reference and may merely be referring to circumstances in
December of 1997 when he missed the quarterly statement and
before he tendered the checks that would have brought him
current. Legally, because the premise that Yates must at all
times during the litigation have had the ability to perform is
wrong. Dismissing Yatess suit would give effect to a strict
foreclosure. Our case law cautions against strict foreclosure
remedies.15 We have never held that financial inability at an
interim point in litigation disqualifies a purchaser from
equitable relief that he can afford when the relief is granted.
Further, Yates was acting pro se and was responding to
allegations made by Halford based on quotes dealing with Yatess
ability to make renovations most of which he was not
contractually obliged to make. Drawing, as we must, reasonable
inferences in favor of the non-movant we conclude that Yates was
not admitting an inability to perform the contract after the
December 1997 default.16
We conclude that summary judgment was inappropriate
based on the grounds offered by Halford and VECO. But we also
observe that Halfords showing in support of summary judgment was
deficient in other respects as well. He did not show that he had
complied with the clause requiring thirty-days notice of default,
or that Yates had not timely tendered a cure of any default.
Further, he did not show that this case was inappropriate for the
sort of equitable relief from strict foreclosure that has
frequently been approved by this court.17
III. CONCLUSION
The judgment is REVERSED and this case is REMANDED for
further proceedings consistent with this opinion.
_______________________________
1 A section entitled DEFAULT; REMEDIES provided in part
that, in the event of a material breach or default by either
seller or purchaser, the injured party had the right to (a)
demand and have specific performance of this Agreement; or (b)
terminate this Agreement upon written notice without liability
[to the other.]
Also incorporated into the 1994 agreement was a deed of
trust concerning delivery of title upon fulfillment of the
promissory note. Regarding default, the deed of trust read as
follows:
Upon default by Trustor in payment of
any indebtedness secured hereby or in
performance of any agreement hereunder, all
sums secured hereby shall immediately become
due and payable at the option of the
Beneficiary. In the event of default
Beneficiary may execute or cause the Trustee
to execute a written notice of such default
and of his election to cause to be sold the
herein described property to satisfy the
obligation hereof, and, if the written notice
is executed, shall cause such notice to be
recorded in the office of the recorder of
each recording precinct wherein said real
property of [sic] some part thereof is
situated.
. . . .
In the alternative, the Beneficiary may
foreclose under AS 09.45.
2 Yates claimed in his deposition that $80,000 from a
land sale in Montana was forwarded to Halford as payment for the
land after closing.
3 Regarding the incorporation of the 1994 Agreement, the
1997 Agreement included the following paragraph:
The parties understand and agree that by
incorporating the June 22, 1994 agreement,
many provisions may no longer apply,
partially because of the Sellers three year
possession, and because of Sellers possession
between the date of signing this agreement
and the closing date of September 15, 1997.
The parties specifically agree to be
reasonable in re-applying the June 22, 1994
contract to this contract dated July 29,
1997.
4 The option stated that it cannot be sold or separated
from the purchase and sale of the Lodge.
5 We assume by the negative tone of Williamss March 5
letter that he refused the checks. He more explicitly made this
refusal in a June 23 letter.
6 Halford made another Rule 68 offer in July of 1999 to
settle in exchange for payment of arrearages simplified as to its
terms. But this offer again included full interest and Yates
again failed to accept.
7 Halford cited Sowash v. Garrett, 630 P.2d 8 (Alaska
1981).
8 VECO filed a joinder in motion for summary judgment
four days later.
9 Quoting Foster v. Hanni, 841 P.2d 164, 172 (Alaska
1992).
10 Beilgard v. State, 896 P.2d 230, 233 (Alaska 1995).
11 Drake v. Hosley, 713 P.2d 1203, 1206-1207 (Alaska
1986).
12 Beilgard, 896 P.2d at 233.
13 Powell v. Tanner, 59 P.3d 246, 248 (Alaska 2002);
Braund, Inc. v. White, 486 P.2d 50, 53-54 (Alaska 1971).
14 State v. Appleton & Cox of California, Inc., 703 P.2d
413, 414 (Alaska 1985); Austin v. Fulton Ins. Co., 444 P.2d 536,
540 (Alaska 1968).
15 Kennedy Assocs., Inc. v. Fischer, 667 P.2d 174, 182
(Alaska 1983) ([A] forfeiture of contractual rights is to be
avoided, whenever possible.); Hendrickson v. Freericks, 620 P.2d
205, 212 (Alaska 1980) ([F]orfeitures are not favored and never
enforced in equity unless the right thereto is so clear as to
permit no denial.) (quoting Shoemaker v. Shaug, 490 P.2d 439, 441
(Wash. 1971)); Moran v. Holman, 501 P.2d 769, 771 (Alaska 1972)
(It is also well established in this jurisdiction that equity
abhors a forfeiture and will seize upon slight circumstances to
relieve a party therefrom . . . where adequate compensation can
be made equity discharges the forfeiture, upon such compensation
being made. (quotations and citations omitted)); McCormick v.
Grove, 495 P.2d 1268, 1269 (Alaska 1972) (A trial court may in
its discretion refuse to enforce the forfeiture provisions of a
contract if the equities of a particular situation so dictate.).
16 Beilgard, 896 P.2d at 233.
17 See, e.g., Moran, 501 P.2d at 771, and authorities
there cited.
