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Ordower v. NRT Missouri, LLC

Court of Appeals of Missouri, Eastern District, Second Division

September 19, 2017

HENRY M. ORDOWER, ET AL., Appellants,

         Appeal from the Circuit Court of the City of St. Louis Cause No. 1522-AC06493 Honorable Paula P. Bryant



         Henry and Ilene Ordower ("Appellants"), plaintiffs in the trial court, appeal certain aspects of the trial court's order and judgment against Kono Enterprises, LLC ("Seller"). Appellants argue the trial court erred by (1) failing to assess NRT Missouri, LLC's (the "Escrow Agent") attorney's fees against Seller per the Residential Sale Contract (the "Contract"); (2) failing to categorize the Escrow Agent's attorney's fees as damages incurred by Appellants per the terms of the Contract; and (3) assessing Appellants' attorney's fees to be $2, 500 as this amount undervalues the time and value of Mr. Ordower's labor.

         I. Factual and Procedural History

         On April 11, 2015, Appellants and Seller entered into the Contract for the Appellants' purchase of real property owned by Seller. In accordance with the Contract, Appellants tendered $15, 000 earnest money to the Escrow Agent. On April 21, 2015, Seller's agent sent Appellants' agent an e-mail with documents including a "Condominium Resale Certificate, " which stated that Seller intended the documents to comply with the Contract and disclosure requirements under Missouri law § 448.4-109.[1] Appellants sent notice to Seller that they were terminating the Contract because there was no accompanying balance sheet with the Condominium Resale Certificate as required by § 448.4-109. Appellants also provided the necessary termination documents and requested that the Escrow Agent return the earnest money to them. Seller notified Appellants that it disputed Appellants' right to terminate the Contract.

         The Contract provided that, in the event of a dispute over the earnest money, Escrow Agent was to hold the money until it obtained a written release from all parties consenting to its disposition, or until the matter was decided by the courts. Escrow Agent sought Seller's release, but Seller refused. Escrow Agent informed Appellants that under the terms of the Contract, it was unable to return the money to them. On May 27, 2015, Appellants filed a three-count petition against the Escrow Agent claiming: (1) it had retained the funds unlawfully because the Contract was void; (2) the court should award Appellants $15, 000 in damages and $10, 000 in punitive damages for the tort of conversion because the Escrow Agent willfully and maliciously retained the funds unlawfully after the Contract became void; and (3) the court should award attorney's fees and punitive damages of $10, 000 as provided in the Uniform Condominium Act under § 448.4-117. Appellants did not bring any claims against Seller at that time.

         In response, the Escrow Agent filed a counterclaim/third party petition in interpleader against Appellants and Seller. In its petition, the Escrow Agent pleaded that it had requested Seller to execute a mutual release to allow the Escrow Agent to return the earnest money to Appellants, but Seller had refused. The Escrow Agent further pleaded it had no interest in the earnest money and was ready, willing, and able to pay it, but it "has received conflicting claims…from [Appellants] and [Seller]…and is uncertain as to which party is entitled to payment." The Escrow Agent offered to pay the earnest money into the court and requested the court deduct its fees, costs, and expenses from the earnest money directly, then discharge it from any further liability. The record does not reflect a court order granting any of the requested relief and it appears the money was never deposited into the registry of the court as Escrow Agent had sought to do. Appellants, however, did not dismiss their claims against the Escrow Agent.

         Seller filed a third-party crossclaim against Appellants for breach of contract, claiming Appellants wrongfully terminated the Contract and Seller was therefore entitled to the earnest money. Appellants filed a counterclaim against Seller for abuse of process and an additional claim against the Escrow Agent for indemnity on the breach of contract claim filed against them by Seller. The case proceeded to trial and the parties submitted their claims to the court for disposition.

         The trial court found that the "Condominium Resale Certificate" was incomplete, Appellants had the right to terminate the Contract, and entered judgment in favor of Appellants on Seller's breach of contract claim against them. Appellants were awarded $2, 500 in reasonable attorney's fees from Seller for successfully defending against Seller's claim for breach of contract and the court dismissed as moot Appellants' request for indemnification from the Escrow Agent for the breach of contract claim because Appellants prevailed on that claim. The court found against Appellants on their claims against the Escrow Agent for unlawfully withholding the earnest money, conversion, and attorney's fees/punitive damages pursuant to § 448.4-117, and their claim against Seller for abuse of process. The court ordered the $15, 000 earnest money be returned to Appellants less $13, 650.65 for the Escrow Agent's attorney's fees and cost of litigation incurred in its defense against Appellants' claims.

         Appellants appealed the trial court's judgment and while the appeal was pending reached a settlement with the Escrow Agent. Prior to oral argument, Appellants filed a motion to dismiss with prejudice any claims on appeal against the Escrow Agent. Our Court dismissed the appeal of the judgment as to the Escrow Agent only.

         In their brief, Appellants raised three points on appeal. First, they argue the clear and unambiguous language of Section 13 of the Contract provides for reasonable attorney's fees to be assessed against the losing party, Seller, and not the prevailing party, Appellants. Second, and in the alternative, Appellants contend the court erred in failing to assess the Escrow Agent's attorney's fees as damages incurred by Appellants which are recoverable under Section 13 by the prevailing party from the losing party. Third, Appellants assert the court erred in determining Appellants' reasonable attorney's fees were $2, 500 because this amount is inadequate and undervalues Mr. Ordower's labor.

         II. Standard of Review

         We will affirm the trial court's decision if it is supported by substantial evidence, it is not against the weight of the evidence, and it does not erroneously declare or apply the law. Miken Techs., Inc. v. Traffic Law Headquarters, P.C., 494 S.W.3d 609, 611 (Mo. App. E.D. 2016) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). "This Court defers to the trial court for factual findings, but reviews its legal conclusions de novo." Id. "Interpretation of a contract is a question of law reviewed de novo by this Court." City of Univ. City v. AT&T Wireless Servs., 371 S.W.3d 14, 17 (Mo. App. E.D. 2012).

         III. Discussion

         a. Regarding Appellants Points I and II, the trial court did not err in assessing the Escrow Agent's attorney's fees and expenses against the earnest money, as they were not governed by the terms of the Contract.

         Both Points I and II hinge on the applicability of Section 13. Appellants argue in Points I and II that the trial court erred (1) in failing to assess the Escrow Agent's reasonable attorney's fees as a "cost of litigation" against Seller (Point I), or alternatively, (2) in failing to assess the fees as Appellants' "damages" (Point II), because Appellants were the "prevailing party" and Seller was the "losing party" on Seller's breach of contract claim. Section 13 provides, "[i]n the event of litigation between the parties, the prevailing party shall recover, in addition ...

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