Louisiana Personal Injury Lawyer Blog
In a case highlighting the importance of carefully crafted real estate contracts, the Louisiana Court of Appeal, Fourth Circuit, upheld a trial court’s decision awarding stipulated damages and attorney’s fees to sellers in a failed all-cash real estate transaction.
The case centered on a failed real estate purchase agreement, underscoring the importance of understanding contractual obligations and the potential consequences of non-performance.
Case Background:
The Blanchards listed their property for sale and received an offer from Mr. Zheng to purchase it for $990,000. The offer specified an all-cash sale. The Blanchards countered with additional terms, including a higher deposit and proof of funds. Mr. Zheng accepted the counteroffer but ultimately failed to secure financing and complete the purchase.
The Blanchards then sought to enforce the liquidated damages provision of the contract, which allowed them to terminate the agreement and receive 10% of the sale price plus the deposit and attorney’s fees. The trial court granted summary judgment in favor of the Blanchards on the breach of contract issue and, after a trial on damages, awarded them the stipulated damages along with attorney’s fees.
Key Issues on Appeal
Mr. Zheng appealed the judgment, primarily focusing on the trial court’s finding of a breach of contract. He argued that the requirement to provide proof of funds was a suspensive condition, the failure of which would void the contract. He also claimed that he made a good-faith effort to obtain financing and should not be held liable for the breach.
The Blanchards answered the appeal, seeking an increase in the attorney’s fees awarded.
Court’s Analysis:
The Court of Appeal addressed several critical points in its analysis.
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Breach of Contract: The court agreed with the trial court’s finding that Mr. Zheng breached the contract. It rejected his argument that the proof of funds requirement was a suspensive condition, clarifying that it was merely a term of the sale. The court emphasized that the contract clearly stated it was an all-cash sale, and Mr. Zheng’s failure to provide proof of funds constituted a breach.
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Stipulated Damages: The court upheld the award of stipulated damages, clearly outlined in the contract. It noted that such provisions are enforceable when they represent a reasonable estimate of damages at the time of contracting.
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Attorney’s Fees: The court declined to increase the attorney’s fees awarded, noting that the Blanchards failed to present sufficient evidence to support their request. It emphasized that the trial court has discretion in determining attorney’s fees and is not bound by contingency fee agreements.
This case reminds us of contracts’ binding nature and the potential consequences of breaching them. It highlights the importance of carefully reviewing and understanding contractual terms, particularly in real estate transactions.
The court’s decision also underscores the enforceability of stipulated damages clauses when they are reasonable and not punitive. Additionally, it emphasizes that while contingency fee agreements may be considered, they do not dictate the court’s determination of attorney’s fees.
Additional Sources: ROBIN BURGESS AND TERENCE BLANCHARD VERSUS SHI GANG ZHENG A/K/A TONY ZHENG
Written By Berniard Law Firm
Other Berniard Law Firm Blog Articles on Contract Related Lawsuits: When Does an Insurance Contract End? Louisiana Court Reverses Summary Judgment in Dispute Over Coverage Extension and Unilateral Signature On Contract To Buy Real Estate Invalid