December 27, 2007

Final plat approval and commitment letter conditions precedent clauses keep new home construction delays from constituting breach of contract

ASHRAF KHALIL, ET AL. v. CARCAR DEVELOPMENT, INC. (Tenn.Ct.App. December 26, 2007).

This appeal arises from two consolidated breach of contract actions involving two separate but nearly identical residential real estate transactions. The buyers brought suit alleging that the seller breached its contracts by failing to complete construction of their homes by the closing date set out in the contracts. After the close of the plaintiffs' proof, the defendant moved for involuntary dismissal under Rule 41.02 of the Tennessee Rules of Civil Procedure, arguing that the seller's obligation to sell the homes never arose due to the buyers' failure to satisfy several conditions in the contracts. The Chancellor granted the defendant's motion for involuntary dismissal and denied the plaintiffs' motions to alter or amend. We affirm.

Opinion may be found at:

"At the close of the plaintiffs’ proof, Seller moved for involuntary dismissal on the grounds that the evidence did not show that a lender commitment letter was received within 30 days of the execution of the contract or that final plat approval had been obtained. Seller argued that, because Buyers had not performed their obligations under the contracts, Seller had no obligation to sell them the homes. The Chancellor granted Seller’s motion for involuntary dismissal. The Chancellor concluded that, construing the evidence in the light most favorable to the plaintiffs as required under Rule 41, 'there is no evidence upon which the Court can reasonably infer that the Plaintiffs have sustained their burden of demonstrating that the Defendant failed to perform in accordance with the terms of the contracts.'" Id.