Court of Appeals of Missouri, Western District, First Division
FROM THE CIRCUIT COURT OF BUCHANAN COUNTY, MISSOURI THE
HONORABLE DANIEL F. KELLOGG, JUDGE.
Before: Cynthia L. Martin, Presiding Judge, Victor C. Howard,
Judge and Alok Ahuja, Judge.
C. HOWARD, JUDGE.
Smith (plaintiff) and Mohammad and Homa Najafi (defendants)
appeal the judgment of the Buchanan County Circuit Court. The
court determined that Smith was entitled to specific
performance of a contract for the sale of real property and
damages. Smith claims on appeal that he was entitled to
damages due to the increase in interest rates available to
complete the sale of the real property. We agree and modify
the judgment pursuant to Rule 84.14. The Najafis claim in two
points on appeal that the trial court erred in finding a
contract between the parties. Those points are denied. The
judgment is affirmed as modified. Further, the case is
remanded to the trial court for determination of reasonable
attorneys' fees on appeal.
October 16, 2017, James Smith filed a petition in Buchanan
County Circuit Court against Mohammad and Homa Najafi. It
alleged that Smith and the Najafis entered into a contract
for Smith to purchase real property from the Najafis and that
the Najafis failed to convey the real property. The petition
sought specific performance and damages for breach of
contract. ReMax Professionals of St. Joseph
("ReMax") filed a motion for joinder. ReMax had
filed suit against the Najafis on October 18, 2017, for the
real estate commissions earned pursuant to the contract
between Smith and the Najafis and pursuant to a prior
contract. The cases were joined for trial on February 16,
matter proceeded to a bench trial. The trial court found the
following: The Najafis entered into an Exclusive Right to
Sell Listing Contract with ReMax for certain real property
("the Property") on April 22, 2017. This contract
provided that the listing agent would be entitled to a real
estate commission of 6%. On April 30, 2017, Curtis Walker
made an offer to purchase the Property. This offer was
rejected by the Najafis by way of a counter-offer. The
counter-offer included a sale price of $138, 000. Walker
accepted the counter-offer on May 3, 2017. The Najafis
refused to close on the sale.
August 25, 2017, James Smith made an offer to purchase the
Property. Again, the Najafis rejected Smith's offer by
way of counter-offer. The counter-offer, which included a
sale price of $138, 000, was accepted by Smith on August 31,
2017, and closing was set for September 27, 2017. The Najafis
were informed of the closing date. At no time did they inform
their agent or anyone else they did not believe a contract
for sale had been agreed upon. The only mention was Mrs.
Najafi's concern that "this price is too low."
and his wife obtained the necessary financing and had the
funds delivered to the closing company on the closing date.
The Najafis indicated they would execute the documents and
have them delivered via FedEx to the title company. The
Najafis failed to do so. The Najafis later agreed to come to
St. Joseph personally on a weekend to close the sale. They
again failed to do so.
on the Najafis' representations, Smith gained access to
the Property to begin making improvements. At the time of the
original closing date, the interest rate Smith had locked in
was 4.375%. The best interest rate available to Smith as of
the date of trial was 5%. Smith incurred costs and legal fees
associated with the purchase of the Property in the amount of
$19, 247.00. ReMax incurred costs and fees in the amount of
trial court found that ReMax was entitled to two commissions
for $8, 280.00 each for a total of $16, 560.00 for
commissions earned upon procurement of a buyer on two
separate occasions. The court also awarded ReMax
attorneys' fees and costs in the respective amounts of
$5, 860 and $151.25. The court found in favor of Smith and
ordered specific performance of the contract for the sale of
the Property. It further found that Smith incurred damages in
the amount of $450.00 for a new appraisal and attorneys'
fees pursuant to the contract in the amount of $10, 247 for a
total of $10, 697.
review of a court-tried case, an appellate court will affirm
the circuit court's judgment unless there is no
substantial evidence to support it, it is against the weight
of the evidence, or it erroneously declares or applies the
law." ROH Farms, LLC v. Cook, 572 S.W.3d 121,
125 (Mo. App. W.D. 2019) (internal quotation marks omitted).
"Appellate courts accept as true the evidence and
inferences ... favorable to the trial court's decree and
disregard all contrary evidence." Id. (internal
quotation marks omitted). "Circuit courts are free to
believe any, all, or none of the evidence presented at
trial." Id. (internal quotation marks omitted).
"Deference is ... given to the trial court's
findings of fact." Id. (internal quotation
performance is purely an equitable remedy and must be
governed by equitable principles." Id.
"The equitable remedy of specific performance is not a
matter of right but is a remedy applied by courts of equity,
depending upon the facts in the particular case; and the
trial court has judicial discretion within the established
doctrines and principles of equity to award or withhold the
remedy." Id. (internal quotation marks
omitted). "Specific performance is purely an equitable
remedy which is invoked primarily that complete justice may
be done between the parties, and courts of equity will not
decree specific performance where it will result in
injustices." Id. (internal quotation marks
sole point on appeal, Smith claims the trial court erred in
not awarding damages due to increased interest rates. He
argues that an increase in interest rate was directly related
to the Najafis failure to perform. Smith states that the best
interest rate available to Smith for the purchase loan on the
original closing date was 4.375%, and the best interest rate
available to Smith at the time of trial was 5.000%.
a trial court awards a decree of specific performance to a
purchaser of land, inevitably a period of time elapses
between the date when the land should have been conveyed in
fulfillment of the contract and the date of the decree
ordering the performance." McDermott v. Burpo,
663 S.W.2d 256, 263 (Mo. App. W.D. 1983). "As incident
to its decree, the trial court has the discretion to relate
performance to the original date of the agreement through an
additional award of any costs caused by the delay."
Id. "This award does not arise as legal damages
from the breach of the contract; rather, it is more in the
nature of an equitable accounting between the parties in
affirmance of the contract." Id. This includes
compensating a non-breaching buyer for the increase in
interest rates in addition to granting specific performance.
Id. (citing Cal-Val Construction Co., Inc. v.
Mazur, 636 S.W.2d 391 (Mo. App. E.D. 1982)).
addition to ordering specific performance, the trial court
awarded Smith the cost of a new appraisal to complete the
purchase of the Property. Further, the trial court
specifically found that the interest rate Smith had locked in
at the time of closing was 4.375%. It also found that the
best interest rate available to Smith as of the date of trial
was 5%. It did not award Smith damages stemming from the
change in interest rate, however.
their respondent's brief, the Najafis argue that the
witness who testified about interest rates at the time of the
scheduled closing and the time of trial should not have been
allowed to testify about those things. They claim the
testimony was received into evidence without a sufficient
foundation for an expert opinion, that the witness could not
identify his methods, and that the witness relied on
documents prepared by a company rather than by himself.
Lichens testified at trial. He worked for the mortgage
company Smith went through to obtain a mortgage to buy the
Property. At the time of trial he worked for a different
lending partner. He testified Smith was fully approved for a
loan to facilitate the purchase of the Property. Exhibit 6, a
conditional commitment from the mortgage company, was
introduced into evidence at trial without objection. The loan
had a fixed interest rate of 4.375%.
generally works in home loans. He testified that since the
closing date of the property interest rated have increased
steadily. The Federal Reserve Bank has raised rates twice
since then and people projected a couple more raises by the
end of the year during which trial was occurring. Lichens
stated that if Smith entered into a loan commitment at the
time of trial his interest rate "would be in the high
4's to 5, again paralleling a 95 percent loan to value
and the profile we had at the time for no points, no extra
fees." He further testified they would need a new
appraisal at a cost of $450 to $500.
5 was a mortgage calculation for the Property with an
interest rate of 4.375%. The second page was a similar
calculation only with an interest rate of 5%. The total
amount paid over the 30 year life of the mortgage under the
5% calculation was $17, 700 more than the total amount paid
under the 4.375% calculation. The monthly payment was almost
$50 more per month under the 5% calculation.
testified that if a person took out a loan at the time of
trial for $9, 166.95 with a 30 year loan life and interest
rate of 5% that the total amount paid under the loan would be
$17, 715.66. Further, the initial loan was for $131, 100. If
$9, 166.95 was deducted from the initial principal amount
then the loan would be for $121, 933.05. If a 30 year loan
for $121, 933.05 was taken out at a 5% interest rate then the
total amount paid under the loan would be $235, 642.67. Under
the original loan commitment, Smith was to borrow $131, 100
at 4.375% over 30 years; the total paid would have been $235,
642.67. Thus, an initial payment of $9, 166.95 applied to the
principal of Smith's loan at a 5% interest rate would put
Smith in exactly the same position as if the loan had been at
all of this testimony was heard, Smith's attorney sought
to admit Exhibit 5 into evidence. For the first time, counsel
for the Najafis objected:
Counsel for Najafis: I'm going to object, Your Honor.
This actually calls for speculation. All of these scenarios,
what ifs, are based on assumptions about future interest
rates, terms of loan, the absence of refinancing in future
years. So this is all speculative and not sufficiently
precise to be admitted into evidence. And I would submit,
with respect to that, a decision__ I have copies here
somewhere. Catroppa vs. Metal Buildings Supply, Inc.,
Missouri Court of Appeals Southern District, 267 S.W.3rd 812,
which discusses the insufficient foundation and speculative
nature of evidence not specifically admissible to prove
damages in this type of contract controversy.
Counsel for Smith: Well, I believe he testified of the
knowledge of what the term __ what the rate was, what the
rate would be currently. He has that knowledge from his -
we've laid the foundation of his knowledge based on his
experience as a loan underwriter. As far as being speculative
in nature, it is what the best interest rate available is to
the Smiths at this time compared to what the interest rate
was at the time of closing. As far as any speculative nature
interest rates going up or down, that's defendant's -