THE CIRCUIT COURT OF CHESTERFIELD COUNTY Timothy J. Hauler,
All the Justices.
ARTHUR KELSEY JUSTICE.
case, a real estate broker, General Land Commercial Real
Estate Company, LLC (the "Broker"), sued Rastek
Construction & Development Corporation (the
"Seller") to obtain a sales commission despite the
fact that the contemplated sale ultimately never took place.
Awarding the sales commission to the Broker, the trial court
held that (i) the Broker was a third-party beneficiary of the
sale agreement, (ii) the parties to the sale agreement waived
its time-is-of-the-essence provision, and (iii) the Seller
improperly prevented the closing.
Seller appeals each of these holdings and contends that error
on any one of them warrants reversal. We reverse the judgment
below and hold that the trial court erred as a matter of law
by finding that the Seller improperly prevented the closing.
2010, the Seller agreed to sell a parcel of commercial real
property to G & G Harley Club, LLC (the
"Buyer"). They settled on a purchase price of $3,
000, 000 and agreed that "[c]losing shall take place no
later than October 1, 2010, time being of the essence."
2 J.A. at 661. When the closing did not occur on October 1,
2010, the deal eventually became subject to a "short
sale" that had to be approved by Union First Market Bank
(the "Lender"). Id. at 671-72. The Lender
held a deed of trust on the property that could potentially
exceed the property's net sales price. See id.
The short-sale agreement, among other things, provided
additional funds for the Seller to finish the construction of
a commercial building on the property, released a portion of
the parcel from the lien for a payment of $1, 620, 000 at
closing, and stipulated that the closing must take place no
later than March 31, 2011. See id.
sale agreement between the Seller and the Buyer also included
multiple conditions precedent to closing, which, if
unsatisfied by the closing date, would permit termination of
the agreement by "either party" through
"written notice to the other party." Id.
at 662. Upon such termination, "neither Seller nor
Purchaser shall have any liability hereunder except for any
obligations which expressly survive the termination of this
Agreement." Id. One of the conditions precedent
to closing listed in the sale agreement provided that
"Seller or Purchaser shall have obtained a
final Certificate of Occupancy from Chesterfield
County." Id. (emphasis added). The Broker
introduced a "Temporary Certificate of
Occupancy" into evidence that was obtained from
Chesterfield County on January 6, 2012. Id. at
681-82 (emphasis added).
Broker was not a named party to the sale agreement and did
not sign it. The Seller and the Buyer, however, included a
provision in their sale agreement stating that the
"Seller shall pay a real estate commission fee . . . at
the closing . . . to [the Broker] if and only if closing
occurs." Id. at 663 (emphasis added).
of terminating the sale agreement when the closing did not
take place on October 1, 2010, the parties executed several
amendments setting a series of new closing dates, all of
which failed due to unmet conditions precedent to closing.
The final amendment, the "Fourth Amendment to Purchase
and Sale Agreement, " provided that the closing would
occur on October 21, 2011. Id. at 720-21. Several
conditions precedent to closing still were not satisfied on
October 21, 2011, and the sale did not close.
the March 31, 2011 closing date established by the short-sale
agreement had long since passed, the Lender gave notice of
its intent to foreclose and set the foreclosure sale for
January 19, 2012. The Seller and the Buyer scrambled to find
a way to conclude a voluntary sale prior to foreclosure. On
January 18, 2012, in the late afternoon on the day before the
foreclosure, the Buyer's closing attorney forwarded a
proposed HUD-1 settlement statement to the Seller and the
Lender. The settlement statement claimed that the
Buyer had made a $620, 527.74 advance to the Seller for
construction costs and attributed $541, 847.64 to the Seller
in order to release mechanic's liens and judgment liens
that attached to the property during construction. The
settlement statement provided that the Seller would have to
bring $922, 596.05 to closing for payment of costs in order
Seller contested the figures on the settlement statement,
claiming that it included multiple inaccuracies and
overstated the charges attributed to the Seller for releasing
liens. The Buyer acknowledged some of these inaccuracies in
email exchanges with the Seller the evening before the
foreclosure but failed to provide a revised settlement
statement prior to the foreclosure sale. See id. at
399-400, 509, 683, 727-28; see also supra note 3. In
an effort to reduce its net payout so that the sale could
still close, the Seller nonetheless attempted to persuade the
Lender to accept even less payment on the debt owed than the
Lender had agreed to accept in the earlier short-sale
agreement. The Lender refused to do so. Thus, the last
attempt at a voluntary sale failed, and the Lender sold the
property at a foreclosure sale on January 19. The Lender
purchased the property at the foreclosure sale and later sold
it to the Buyer.
a sales commission, the Broker sued the Buyer and alleged
that they had an oral brokerage agreement between them.
See 2 J.A. at 473. The trial court dismissed the
suit because the alleged agreement violated the statute of
frauds. See id. The Broker thereafter brought the
present suit against the Seller to obtain a sales commission
based upon the theory that the Seller improperly prevented
the sale from closing and that, as a result, the Seller
violated the Broker's contractual right to a sales
commission through the Broker's capacity as a third-party
beneficiary under the sale agreement.
complaint against the Seller, the Broker alleged that the
sale did not close for only one reason: The Seller was
"unable to bring sufficient funds to closing to honor
its obligation under the [sale agreement] to provide title
free from all encumbrances to the purchasers." 1
id. at 4. The Seller filed a demurrer alleging that
"[n]o brokerage fee is due because no closing occurred,
" and thus, the Broker "is estopped . . . by the
plain language in the [sale agreement]." R. at 36. The
Broker responded that "the closing of the sale failed
because [the Seller] was unable to bring sufficient funds to
closing to clear the monetary liens and encumbrances, "
and thus, "[t]he prevention doctrine is applicable to
this case because the Agreement provides as a condition that
the real estate commission is payable only if closing
occurs." Id. at 48-49. The trial court denied
the Seller's demurrer. Id. at
54-55. Following a bench trial, the trial court
ruled in favor of the Broker and awarded the sales
appeal, the Seller asserts several assignments of error
clustered around three challenges to the trial court's
ruling: (i) the Broker did not qualify as a third-party
beneficiary to the sale agreement; (ii) the sale agreement
terminated of its own accord because closing did not occur on
the closing dates agreed upon because "time was of the
essence"; and (iii) even if the Broker was a third-party
beneficiary and the parties had waived the
time-is-of-the-essence provision, the Seller did not prevent
the closing in violation of the "prevention
doctrine" as a matter of law. See
Appellant's Br. at 10-11.
with this last assertion, we need not address the first two.
See Commonwealth v. White, 293 Va. 411, 419, 799
S.E.2d 494, 498 (2017) (recognizing that "the doctrine
of judicial restraint dictates that we decide cases 'on
the best and narrowest grounds available'"
(alteration and citation omitted)); see also Shareholder
Representative Servs. v. Airbus Americas, Inc., 292 Va.
682, 689, 791 S.E.2d 724, 727 (2016) (concluding that a
dispositive assignment of error obviates any need to address
other assignments of error).
addressing the prevention doctrine, we must first frame the
Broker's claimed status as a third-party beneficiary.
Relying on Code § 55-22, the Broker argues that the
provision in the sale agreement, which obligated the Seller
to pay the sales commission "if and only if closing
occurs, " 2 J.A. at 663, vested in the Broker an
independent contractual right of action even though the
agreement did not identify the Broker as a party to the
agreement and the Broker did not sign it. See generally
Thorsen v. Richmond SPCA, 292 Va. 257, 273, 786 S.E.2d