C.T. HOME BUILDERS, INC. and * IN THE CIRCUIT COURT HI-TECH HOMES, INC. * FOR WORCESTER COUNTY Plaintiffs * STATE OF MARYLAND

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1 C.T. HOME BUILDERS, INC. and * IN THE CIRCUIT COURT HI-TECH HOMES, INC. * FOR WORCESTER COUNTY Plaintiffs * STATE OF MARYLAND v. V. * CASE NO. 23-C PS STERLING S. WYAND, and * CAROLYN W. BYERS * Defendants * * * * * TRIAL MEMORANDUM NOW COME Plaintiffs, by by and rough eir undersigned counsel, Bruce F. Bright and Ayres, Jenkins, Gordy & Almand, P.A., and, for set for herein requests at is Honorable Court enter judgment in Plaintiffs Plaintiffs' favor: STATEMENT OF FACTS The facts of is case, as presented at at trial, are relatively simple, and ere are few factual disputes. The parties entered into an Unimproved "Unimproved Land Agreement of Sale Sale" ( Agreement ) ("Agreement") on or about June 4, 4, Under e Agreement, Plaintiff Hi-Tech Homes, Inc. ( Hi-Tech ("Hi-Tech Homes") Homes ) and its assigns agreed to purchase a a piece of of unimproved property located in Ocean Pines from Defendants Sterling Wyand ( Wyand ) ("Wyand") and Carolyn Byers ( Byers ). ("Byers"). Plaintiff C.T. Homebuilders, Inc. ( C.T. ("C.T. Homebuilders"), Homebuilders ), is e assignee of Hi-Tech Home's Home s rights and obligations under e Agreement. Terry Moeller, who testified at at trial on Plaintiffs Plaintiffs' behalf, is a shareholder and officer of Hi-Tech Homes and CT Homebuilders, and acted on behalf bo corporations in connection wi e subject transaction. Tr. at p. 42. The agreed-upon purchase price was $51,000. 1

2 Under e terms of e Agreement, settlement was originally scheduled for July 19, The transaction was a cash "cash deal, deal," meaning at ere was no financing fnancing contingency in e Agreement, and Plaintiffs did not have to apply for and obtain a mortgage loan in order to finance e purchase of e property. Sometime prior to July 19'",, e parties agreed to an extension of e settlement date to 1 July 30, 2002.' A written addendum to e Agreement was eventually signed by Mr. Moeller on July 19, 2002, and by Mr. Wyand and Ms. Byers on July 23, 2002, formally extending e settlement date to July 30, On July 27, 2002, Mr. Wyand and Ms. Byers visited Will Esham s Esham's office offce to sign all of e settlement documents (e settlement statement, seller s seller's affidavit, and deed). Mr. Esham permitted em to sign e documents early as an accommodation to eir scheduling needs. Tr. at pp On July 29, 2002, Mr. Moeller contacted e offices of T.E.B. Associates, a private 1 Mr. Moeller testifed testified at at trial at, in in late late June 2002, he realized at e originally agreed upon settlement date of July 19' would confict conflict wi a a family vacation, so so he contacted his realtor, Charlie Kurrle, in order to secure an extension of of e settlement date. Tr. Tr. at at pp. pp Mr. Moeller testified testifed at, by late June or early July, he knew at e settlement was not going to occur on July 19, 2002, and at it was re-scheduled for July 30, A written addendum to at effect was signed by Mr. Moeller on July 19, 2002, and was signed by by Mr. Wyand and and Ms. Ms. Byers on on July July 23, 23, Mr. Moeller testified testifed similarly during his deposition at, "at at least a couple of weeks" weeks prior to July 19',, he had arranged for e extension rough his realtor, Mr. Kurrle. See Tr. at pp Mr. Moeller testified testifed furer during his deposition at Mr. Kurrle notifed notified him sometime in in early July at Mr. Wyand and Ms. Byers had agreed to e extension. Tr. at p. 72. (Those portions of Mr. Moeller's Moeller s deposition transcript were read into evidence during e trial by Defendants' Defendants counsel). Chuck Leo, e Defendants' Defendants real estate agent, testified testifed at he was not contacted about e extension until shortly before July 19',, perhaps as early as July 17',, and at, alough e written addendum was not signed until later, e extension was orally agreed to by Mr. Wyand and Ms. Byers as early as July 17'.. Tr. at at pp , Mr Wyand testifed testified at he he and Ms. Byers orally agreed to e extension on July 18 18'.. Tr. at p. 86. Mr. Kurrle (Plaintiffs' (Plaintiffs real estate agent) testified testifed at Mr. Moeller notifed notified him sometime shortly before July 19`h at he was "was going to be out of town town" on e originally agreed upon settlement date, and at he immediately took steps to arrange for an extension. Tr. at pp

3 group of real estate development investors wi which Mr. Moeller had a $300,000 line of credit (Tr. Jr. at at pp , 53-54), in in order to to make arrangements for e wiring of e settlement funds to Mr. Esham's Esham s escrow account. Tr. at p Mr. Moeller left a message wi his contact at T.E.B. Associates, Bob Black, who was not available to speak wi him at at at time. Tr. at p. 43. The next day (July 30, 2002), Mr. Moeller called T.E.B. Associates once again, and he was informed by Mr. Black's Black s secretary at he would be unavailable for several days (at a conference in Pittsburgh, Pennsylvania). Tr. at pp In order to make arrangements for wire transfers drawn from his line of credit, Mr. Moeller was required to deal directly rough Mr. Black. Tr. at p. 43. Accordingly, when he learned on July 30t' at Mr. Black would be unavailable for several days, Mr. Moeller contacted Mr. Esham's Esham s office, and informed his assistant, Carol, at e wiring of e settlement funds would be delayed for several days. Tr. at pp. 44, 47, 56. Around noon on July 30, 2002, Mr. Wyand visited Mr. Esham's Esham s office offce to receive e 3 settlement proceeds.' Mr. Esham informed Mr. Wyand at at time at Mr. Moeller had not wired e funds, and he asked Mr. Wyand to to come back later in in e e day. See Affidavit Affdavit of W. Esham; Tr. at p. 18. Later at same day, Mr. Wyand came back to Mr. Esham s Esham's office, and Mr. 2 Mr. Moeller had dealt wi T.E.B. Associates on at least ten occasions prior to e subject transaction, and he believed, based on his prior experience wi T.E.B. Associates, at he could arrange for e wire transfer to be effected on e same day at he contacted Mr. Black. Tr. at pp. 43, 49-50, 67. The subject transaction was e first time at Mr. Moeller had ever experienced any logistical problems wi e use of his credit line wi T.E.B. Associates. Tr. at p A formal settlement (at which e parties would all gaer togeer to sign all of e documents) was not necessary in is case, because Defendants had signed e documents on July 27" and, all at Mr. Moeller was required to to sign was e settlement statement, which he had arranged to do by facsimile. Tr. at pp , 70. 3

4 Esham informed him at Mr. Moeller had not yet wired e funds, and at he would send Mr.Moeller a fax on July 31 instructing him to wire e funds. See Affidavit Affdavit of W. Esham; Tr. at p. 19. Mr. Wyand expressed his displeasure at at time, but did not state at he would not go rough wi e transaction. See Affidavit Affdavit of W. Esham; Tr. at p. 19, 21. By facsimile letter sent in e morning of July 31, 2002, Mr. Esham informed Mr. Moeller as follows: "Please Please call me ASAP wi e name of your broker - so at I may obtain a tracking number for e wire. The Seller is not happy - I need to provide definite defnite information e money is on e way. Thank you. you." Affdavit Affidavit of of W. W. Esham. Later Later at at same day, July 31, 2002, Mr. Moeller called Mr. Esham's Esham s office to to provide e requested information regarding e source of e settlement funds, and assured him at e money would be wired wiin a few days. Affidavit of W. Esham. Also on July 31, 2002, Mr. Wyand visited Mr. Esham's Esham s offce office to see once again if if he could pick up his check. Affidavit Affdavit of W. Esham; Tr. at p. 21. When Mr. Esham informed Mr. Wyand at he did not have e check for him because e money had not yet been wired, Mr. Wyand stated at he viewed e e contract to to be be null "null and and void. void." Affidavit Affdavit of W. Esham; Tr. at p. 21. On August 1, 2002, Mr. Wyand and Ms. Byers met wi eir realtor, Chuck Leo, and reactivated eir listing and increased eir asking price by $15,000. Tr. at pp ; Plaintiff s Plaintiff's Trial Exh. 6. They were told by Mr. Leo during at meeting at an offer had recently been made to purchase a a neighboring lot lot for $70,000. Tr. at p. p. 26. Up to at point in time, Mr. Wyand had not been informed by anyone at Mr. Moeller did not intend to to follow rough wi e purchase. Tr. at p. 24. Indeed, at all relevant times, Mr. Moeller intended to follow-rough wi e transaction. Tr. at pp From July 31s` st forward, however, Mr. Wyand and Ms. 4

5 Byers considered e Agreement to be null "null and void, void," and ey had absolutely no intention of completing e transaction. Tr. at p. 25. On August 5, 2002, Mr. Moeller's Moeller s settlement funds ($52,141.43) were wired to Mr. Esham s Esham's escrow account. See Affidavit of W. Esham. That same day, Mr. Esham spoke wi Sterling Wyand and advised him at e settlement funds had been received, and at his check was ready to be picked up. Mr. Wyand told Mr. Esham "too too late," late, and informed him once again at he did not wish to complete e settlement. See Affidavit of W. Esham. Mr. Esham also notified notifed Chuck Leo on August 5, 5, 2002, at e settlement funds had been wired, and Mr. Leo, in turn, notified notifed Mr. Wyand of of e wire transfer at same day. Tr. at p. 84. QUESTION PRESENTED Wheer Plaintiffs are entitled to specifc specific performance of e contract, under circumstances where: (i) ere was no language in e Agreement making time of e essence; (ii) e six-day delay was not unreasonable; (iii) e delay was not wilful; and (iv) Defendants did not suffer any prejudice as a result of e delay. ARGUMENT The law in is State wi regard to specifc specific performance of a contract for e sale of real estate is well-settled. "[T]he [T]he general rule is is at time is is not of of e essence of e contract of sale and purchase of land unless a contrary purpose is disclosed by its terms or is indicated by e circumstances and object of its execution and e conduct of e parties. parties." Kasten Co. v. Maple Ridge Co., 245 Md. 373, 377 (1966). In oer words, in e context of real estate contracts, time is not of e essence unless it "it is clear at e parties have expressly so stipulated or eir intention is inferable from e circumstances of e transaction, e conduct of e parties, or e 5

6 purpose for which e sale was made. made." Id. at 377. In Soehnlein v. Pumphrey, 183 Md. 334 (1944), e Court of Appeal described e general rule as follows: The accepted doctrine is at in e ordinary case of contract for e sale of land, even ough a certain period of time is stipulated for its consummation, equity treats e provision as formal raer an essential, and permits e purchaser who has suffered e period to elapse to make payments after afer e prescribed date, and to compel performance by e vendor notwistanding e delay, unless it appears at time is of e essence of e contract by express stipulation, or by inference from e conduct of e parties, e special purpose for which e sale was made, or oer circumstances surrounding e sale. Id. at 338. The above-stated rule is subject to certain qualifications if e delay is is wilfully (i.e., intentionally) caused by e buyer, or if e delay results in some prejudice to e seller, en e buyer may not be entitled to specific specifc performance. Cadem v. Nanna, 243 Md. 536, 545 (1966); Soehnlein v. Pumphrey, 183 Md. at 338. Notably, in Kasten Co. v. Maple Ridge Co., even ough e Court of Appeals found at e buyer had been somewhat "somewhat neglectful in not paying e balance of e purchase money on e day it it was due, due," it it nevereless affirmed affrmed e lower court s court's decree awarding specific specifc performance. Kasten Co. v. Maple Ridge Co., 245 Md. at 378. The Court of Appeals has held at, when e contract of sale contains language to e effect at e deposit shall be automatically forfeited to e seller if settlement is not completed wiin e specifed specified time period, time is is implicitly of of e e essence wi regard to such contract. See Stern v. v. Shapiro, 138 Md. 615 (1921). When time is not of e essence, eier explicitly or implicitly, and e buyer's buyer s payment of e purchase price is delayed beyond e contractually agreed-upon settlement date, e "e important question is wheer [such delay] was reasonable." reasonable. Kasten Co. v. Maple Ridge Co., 245 Md. at 379. In e present case, it is undisputed at ere is no language in e original Agreement, or 6

7 e addendum extending e settlement date, explicitly making time of e essence. In acknowledging at ere was no language in e Agreement or e addendum making time of e essence, Defendants Defendants' realtor, Chuck Leo, testified testifed at trial as follows: Had "Had I known better I definitely would have [inserted e appropriate language]. It's It s standard in our home contracts to have e time is of e essence clause. Why it s it's not standard in e land agreements, I don t don't know." know. Tr. at p. 80. Defendants have suggested at e e Default "Default" language in e Agreement implicitly made time of e essence. This is clearly not so. As e Court of Appeals held in Stern v. Shapiro, an automatic forfeiture clause may give rise to an inference at time is of e essence. In e present case, however, e Agreement does not provide for automatic forfeiture of e deposit in e event of e buyer s buyer's failure to settle on e settlement date. Instead, e Agreement provides (in paragraph 16) at: [i]f "[i]f e Buyer fails to make full settlement or is in default due to Buyer s Buyer's failure to comply wi e terms, covenants and conditions of is Agreement, e deposit may be retained by Seller as long as a release of deposit agreement is signed and executed by all parties, 4 expressing at said deposit may be retained by Seller. Seller." (emphasis added).' Neier e conduct of e parties, e purpose(s) for which e sale was made, or any oer circumstances surrounding e sale, can properly be be regarded as as implicitly making time of e essence. Indeed, at at no time until July 31, 2002, did Mr. Wyand or Ms. Byers ever indicate or express, eier orally or in any written document, at ey regarded e settlement date as essential. Mr. Moeller testifed testified emphatically at, at at all all relevant times, he he intended and desired to 4 That provision states furer at if "e e parties do do not agree to execute a release of deposit, Buyer and Seller shall have all legal and equitable remedies." remedies. 7

8 follow rough wi e transaction Jr. (Tr. at at p. p. 50), and his conduct roughout e chronology demonstrated so. There was absolutely noing about e purpose of e transaction or e surrounding circumstances at implicitly made time of e essence is was a garden "garden variety variety" arms-leng sale of an unimproved piece of of property. Accordingly, it is Plaintiffs Plaintiffs' position, and e record clearly demonstrates, at time was not of e essence, eier explicitly or implicitly, wi regard to to e e settlement date or any oer aspect of e Agreement. That being e case, e next part of e analysis is determining wheer e delay was willfully, "willfully," i.e., i.e., deliberately, caused by Mr. Moeller, and wheer Defendants suffered any prejudice or harm as a result of e six-day delay. The record is clear at e delay was not in in any way willful on e part of Mr. Moeller. His uncontradicted testimony was at e delay resulted from unforeseen logistical difficulties he encountered wi regard to to e wiring of e settlement funds. As Mr. Moeller testified, testifed, he called T.E.B. Associates on July 29' to make arrangements for e wire transfer. Tr. at p. 57. The individual wi whom Mr. Moeller had always dealt at T.E.B. Associates, Bob Black, was out of town at a conference, and e wire transfer could not be effected wiout Mr. Black s Black's involvement. Tr. at pp At worst, Mr. Moeller might arguably have been guilty of some level of neglect in not confirming confrming Mr. Black's Black s availability and/or arranging for e wire transfer earlier an July 29, 2002, but noing in e record demonstrates or even suggests at Mr. Moeller willfully delayed e settlement. As for e issue of prejudice to e Sellers, ere is no evidence any where in e record at Mr. Wyand or Ms. Byers suffered any prejudice as a result of e six-day delay. Indeed, alough Mr. Wyand testifed testified at he he planned to to use e proceeds for e sale toward e purchase 8

9 of one or more oer properties, he conceded at e six-day delay in in e wiring of e funds did not prevent or impede his ability to purchase any oer properties. Tr. at p. 41. There was extensive questioning of of Mr. Moeller during trial (by e Court and Defendants Defendants' counsel) regarding what steps he took, prior to e original settlement date of July 19, 2002, to prepare for settlement. First, according to e testimony elicited at at trial, Mr. Moeller was aware at least two (2) days prior to July 19',, and possibly much earlier, at e settlement was not going to occur on on July 19 19'.. See infra infa fn. 1. In In light of of e e fact at ere was noing for him to do to "prepare prepare for settlement" settlement oer an wire e funds, and he was operating on e reasonable assumption (based on prior experience wi T.E.B. Associates) at a wire transfer could be effected wi very little advance notice, it should not be surprising at Mr. Moeller did not take any steps to to prepare for for a a July 1919' settlement. By all accounts, Mr. Moeller already knew by no later an July 17' (and perhaps much earlier) at e settlement date had been extended. Secondly, even assuming arguendo at Mr. Moeller willfully delayed e settlement beyond July 19' (which he clearly did not), at would not provide a valid basis for denying Plaintiffs e remedy ey seek herein (specific (specifc performance). Because e Agreement was amended by e parties, and e settlement date was ereby extended from July 19, 2002 to July 30, 2002, Defendants forever lost whatever standing or right ey may once have had to complain about Plaintiffs Plaintiffs' (and Mr. Moeller's) Moeller s) conduct wi regard to e July 19' settlement date. In oer words, once e settlement date was extended by a written amendment signed by all of e parties to e Agreement, wheer and to what extent Mr. Moeller took steps to prepare for settlement on July 19' became completely irrelevant to to e issue at is at hand in is case, 9

10 Plaintiffs' Plaintiffs entitlement to to e remedy of specific performance. Defendants suggested at trial at Plaintiffs somehow breached paragraph 14 of e Agreement (dealing wi Buyer's Buyer s fnancial financial ability to to consummate e deal), and at ey should be denied relief on at basis. Paragraph 14 of e Agreement provides, in pertinent part, at [i]f "[i]f Buyer has misrepresented Buyer's Buyer s ability to to consummate e purchase of e Property,.... en buyer shall be in default and Seller may elect by written notice to Buyer, to terminate is Agreement and/or pursue e remedies set for under e Default paragraph." paragraph. Mr. Moeller never misrepresented Plaintiffs Plaintiffs' fnancial financial ability to to consummate e deal, and ere is absolutely no evidence demonstrating or suggesting at he he did. At all relevant times, Mr Moeller had a $300, line of credit at his disposal and available for use in connection wi e subject transaction. There was no application "application" process or oer underwriting review which was a necessary precursor to to Mr. Moeller s Moeller's use of his line of credit; all at was required for him to do was to make contact wi Mr. Black and arrange for a wire transfer. Indeed, e record is clear at all necessary settlement funds were, in fact, wired by T.E.B. Associates to Will Esham's Esham s escrow account on Monday, August 5, 2002, soon after Mr. Black s Black's return from his conference in Pittsburgh. Contrary to e apparent belief of Defendants and eir counsel, e phrase "cash cash deal," deal, as it is used in connection wi real estate transactions, does not mean or imply at e Buyer must provide all settlement funds out of his own checking or savings account. Raer, it simply means at e buyer s buyer's obligation to perform is not contingent upon or subject to his or her obtaining a mortgage loan for e purchase monies. In e present case, Plaintiffs had settlement funds available, in e form of e line of credit wi T.E.B. Associates, prior to entering into e 10

11 Agreement and at all oer relevant times. Plaintiffs were no less financially fnancially able to consummate e deal an if $300,000 had been on deposit in one of eir bank accounts. CONCLUSION For all of e foregoing reasons, Plaintiffs respectfully request at is Honorable Court grant Plaintiffs all of e relief ey seek in is case. Respectfully submitted, Bruce F. Bright Ayres, Jenkins, Gordy & Almand, P.A B Coastal Highway Ocean City, Maryland Attorney for Plaintiffs Plaintifs CERTIFICATE OF SERVICE The undersigned hereby certifies certifes at, on is 24 day of September, 2003, a copy of e foregoing Trial Memorandum was served, via frst first class mail, postage prepaid mail, upon: James C. Hubbard, Esq., Nicholas Lane, Ste. B-204, Berlin, Maryland, Bruce F. Bright 11