                    In the Missouri Court of Appeals
                            Eastern District
                                      DIVISION THREE

ATC COMPANY, INC.,                )                      No. ED100501
                                  )
     Plaintiff,                   )
                                  )
     vs.                          )
                                  )
STEVEN M. MYATT and JEANNE MYATT, )                      Appeal from the Circuit Court of
                                  )                      St. Charles County
     Respondents,                 )
                                  )                      Honorable Nancy L. Schneider
and                               )
                                  )
PINEWOODS INVESTMENTS, LLC,       )
                                  )
     Appellant.                   )                      Filed: June 30, 2014


                                      I. INTRODUCTION

       Pinewoods Investments, LLC (“Purchaser”) appeals, for the second time, a judgment of

the Circuit Court of St. Charles County in favor of Steven and Jeanne Myatt (collectively,

“Seller”) on Purchaser’s claims for declaratory relief and breach of contract and Seller’s claim

for breach of contract. In their claims, both Purchaser and Seller asserted a right to earnest

money under a real estate sale contract. Purchaser argues the trial court erred on remand in

entering its judgment ordering payment of the earnest money to Seller because the judgment

misapplies the law and is against the weight of the evidence. We reverse the judgment and

remand the case to the trial court for entry of judgment in accordance with this opinion.
                     II. FACTUAL AND PROCEDURAL BACKGROUND

        In 2003, Seller entered into a real estate sale contract (the “Sale Contract”) with real

estate broker Sharon Boyet as purchaser. Under the Sale Contract, Seller agreed to sell four

tracts of land in two separate closings. Tracts one and two would be sold at the first closing,

scheduled to occur no later than March 2004. Tracts three and four would be sold at the second

closing, scheduled to occur within five years after the date of the Sale Contract, or no later than

July 2008.

        The Sale Contract included several contingencies for the purchaser’s benefit, including a

contingency for “favorable results of a feasibility study regarding Purchaser’s contemplated

development after analysis of relevant factors.” Acceptance of the feasibility study was within

the purchaser’s discretion. The Sale Contract required the purchaser to provide Seller with

copies of any reports and studies prepared with regard to the contingencies. The Sale Contract

also provided: “All terms and conditions of the sale/closing of Tract 1 and Tract 2 shall also

pertain to the closing of Tract 3 and Tract 4 . . . .”

        The Sale Contract required the purchaser to deposit $40,000 as earnest money with the

title company, to be retained until the second closing. Ms. Boyet deposited $40,000 with a title

company that later transferred the money to escrow agent ATC Company, Inc. (“ATC”).

        Ms. Boyet and her client, Purchaser, had difficulty securing required zoning approval for

tracts one and two and requested the date of the first closing be postponed until April 2004.

Accordingly, Seller and Ms. Boyet as the purchaser entered into a Real Estate Sale Contract

Extension Agreement (the “Extension Agreement”).            The Extension Agreement required

Purchaser to make a nonrefundable payment of $15,000 directly to Seller as consideration for




                                                    2
postponing the first closing. 1 Paragraph one of the Extension Agreement provided: “Purchaser

agrees that the Contract is no longer contingent, and is binding on the Purchaser and Seller, and

in the event the property does not close for any reason, Sellers will be entitled to the full . . .

($40,000) earnest money without any claim thereto by Purchaser.” The terms “Contract” and

“property” were not defined in the Extension Agreement. At some point after execution of the

Extension Agreement, Ms. Boyet assigned the Sale Contract and Extension Agreement to

Purchaser.

          The first closing occurred as planned in 2004. However, on June 26, 2008, Ms. Boyet

notified Seller’s counsel that Purchaser was “declining acceptance” of tracts three and four based

on the feasibility contingency in the Sale Contract. When both parties asserted a right to the

$40,000 in earnest money, ATC filed a petition for interpleader against Seller and Purchaser as

defendants. ATC deposited the earnest money into the trial court’s registry for a determination

of which party was entitled to the funds. 2

          Purchaser filed a declaratory judgment cross-claim and a breach of contract cross-claim

against Seller, asserting Purchaser was entitled to the earnest money. The basis for both cross-

claims was Purchaser’s argument that the removal of contingencies in the Extension Agreement

concerned only the first closing, not the second closing. In response, Seller filed a breach of

contract cross-claim against Purchaser for the earnest money, alleging the Extension Agreement

removed all contingencies for both closings.

          In September 2011, the trial court held a bench trial on the claims of Purchaser and Seller

against each other. The trial court issued a judgment in Seller’s favor on: (1) Purchaser’s cross-

claims for declaratory relief and breach of contract; and (2) Seller’s cross-claim for breach of

1
    The second closing was not yet scheduled at this time.
2
    ATC is not a party to this appeal.


                                                   3
contract. The trial court ordered payment to Seller of the earnest money plus accumulated

interest. The trial court’s judgment did not include findings of fact. Purchaser appealed.

       In Purchaser’s first appeal, we held the word “Contract” in paragraph one of the

Extension Agreement was ambiguous because it could mean the Sale Contract in its entirety or

the first closing alone. ATC Co., Inc. v. Myatt, 389 S.W.3d 732, 736 (Mo. App. E.D. 2013)

(“Myatt I”). We also held the word “property” in the Extension Agreement was ambiguous

because it could refer to tracts one and two only or to all four tracts of land. Id. at 737. As a

result, we concluded it was necessary to look outside the contract to determine whether the

parties intended to remove contingencies for both closings or for the first closing alone. Id.

Because the record was silent as to whether the trial court resolved the ambiguity, we reversed

and remanded the case to the trial court for findings on the issue. Id. at 737-38. We requested

clarification if the trial court had already resolved the ambiguity in favor of Seller. Id. at 738.

On the other hand, if the trial court had not resolved the ambiguity, we instructed it to consider

extrinsic evidence of the contractual intent of the parties at the time they signed the Extension

Agreement. Id. This court stated: “The trial court may decide whether this contractual intent can

be determined from the testimony already heard over continuing objection or whether a new

hearing is needed.” Id.

       On remand from Myatt I, the trial court did not conduct a new hearing. Instead, the trial

court entered a “Judgment Ruling on Contractual Ambiguity” providing as follows:

             On [remand] from the Court of Appeals, the court now clarifies its prior
       Judgment.

               The court did find at trial the terms “Contract” and “Property” contained
       in the real estate sale contract extension to be ambiguous. The court then rejected
       Buyers’ (Appellants) urging to construe the document against Sellers
       (Respondents) and heard evidence of the intent of the parties over objection of
       Sellers. The court considered among other things the extensive experience of



                                                4
       Buyers’ witnesses in the areas of real estate sales and construction development
       versus the inexperience of Sellers, the stated reasons for Buyers’ decision not [to]
       proceed with the second closing, including the fact that land prices had “tanked”
       and their determination that the property was “not worth the price,” the extent of
       the “due diligence” and “feasibility study” done by the Buyers, the Sellers’
       reliance on the waiver of contingencies clause in the extension document, and the
       reason the Buyers’ [sic] did not immediately demand payment of the $40,000.00.

                The court then entered its Judgment in favor of [Sellers]. In view of the
       fact that neither party had requested the court make Findings of Fact at the time of
       trial, the court did not set forth the reasons for its Judgment.

Purchaser appeals this judgment.

                                 III. STANDARD OF REVIEW

       In an appeal from a court-tried civil case, our review is governed by Murphy v. Carron,

536 S.W.2d 30 (Mo. banc 1976). White v. Dir. of Revenue, 321 S.W.3d 298, 307-08 (Mo. banc

2010). Accordingly, this court will affirm the 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.

Murphy v. Carron, 536 S.W.2d at 32.

       “This Court applies de novo review to questions of law decided in court-tried cases.”

Pearson v. Koster, 367 S.W.3d 36, 43 (Mo. banc 2012). “The quintessential power of the

judiciary is the power to make final determinations of questions of law, and courts may not

delegate that authority to anyone else.” Id. at 44 (quotation omitted).

       The “weight” of the evidence “denot[es] probative value and not the quantity of

evidence.” White, 321 S.W.3d at 309. Thus, “[t]he weight of evidence is not determined by

mathematics, but on its effect in inducing belief.” Houston v. Crider, 317 S.W.3d 178, 186 (Mo.

App. S.D. 2010) (quotation omitted). “Although consideration of probative value necessarily

involves some consideration of evidence contrary to the judgment, we nevertheless defer to the

trial court as the finder of fact in our determination as to whether that judgment is against the




                                                 5
weight of the evidence.”      Id. (quotation omitted).   “[W]here the resolution of conflicting

testimony is required to determine the merits of an against-the-weight-of-the-evidence argument,

we defer to the trial court’s credibility determinations . . . .” Id. “To set aside a judgment as

‘against the weight of the evidence,’ this Court must have a firm belief that the judgment is

wrong.” White, 321 S.W.3d at 308.

                                        IV. DISCUSSION

         In its sole point on appeal, Purchaser argues the trial court erred in construing the

ambiguities in the Extension Agreement in favor of Seller and determining the Extension

Agreement removed contingencies for the second closing. Purchaser asserts the trial court

misapplied the law by failing to give meaning to all provisions in the Extension Agreement and

harmonize the Extension Agreement with the Sale Contract. Purchaser also claims the judgment

is against the weight of the evidence because it is irreconcilable with the parties’ conduct. We

hold the trial court misapplied the law in addressing the mandate in Myatt I and its judgment in

Seller’s favor is against the weight of the evidence.

                               A. Trial Court Misapplied the Law

         In Myatt I, this court reviewed the introductory clauses in the Extension Agreement to

determine the document’s purpose. 3 389 S.W.3d at 736. We also reviewed the following

disputed language in the Extension Agreement: “Purchaser agrees that the Contract is no longer

contingent, and is binding on the Purchaser and Seller, and in the event the property does not

3
    These clauses provided:
         WHEREAS, the Parties entered into a SALE CONTRACT dated July 18, 2003;
         and
         WHEREAS, the last date for closing on the aforesaid Contract was March 15,
         2004; and
         WHEREAS, Purchaser wishes to extend the Contract until April 15, 2004.
         NOW THEREFORE, in consideration of the agreements herein made and Sellers
         agreeing to extend the time of closing, the Parties do hereby agree as follows:


                                                 6
close for any reason, Sellers will be entitled to the full . . . ($40,000) earnest money without any

claim thereto by Purchaser.” Id. We concluded the words “Contract” and “property” were

ambiguous. Id. at 736-37. We reversed the trial court’s judgment and remanded the case with

the following instructions:

               Because our de novo analysis concludes that the Extension Agreement is
       ambiguous, that ambiguity must be resolved. Resolving a contractual ambiguity
       is a question of fact for the fact-finder to resolve. Because the record on appeal is
       silent as to whether the trial court resolved the ambiguity, we remand for findings
       on this issue. If the trial court already resolved the ambiguity in favor of Seller,
       we ask for clarification. If the trial court has not resolved the ambiguity, we
       instruct the trial court to consider extrinsic evidence of the contractual intent of
       the parties at the time they signed the Extension Agreement. The trial court may
       decide whether this contractual intent can be determined from the testimony
       already heard over continuing objection or whether a new hearing is needed.

Id. at 737-38 (internal citation omitted). In other words, the task for the trial court on remand

was to issue a judgment with findings explaining how it resolved the ambiguity in light of the

contract and extrinsic evidence of the parties’ intent regarding contingencies for the second

closing.

       On remand from Myatt I, the trial court did not conduct a new hearing. The trial court

issued a “Judgment Ruling on Contractual Ambiguity” providing as follows:

             On [remand] from the Court of Appeals, the court now clarifies its prior
       Judgment.

               The court did find at trial the terms “Contract” and “Property” contained
       in the real estate sale contract extension to be ambiguous. The court then rejected
       Buyers’ (Appellants) urging to construe the document against Sellers
       (Respondents) and heard evidence of the intent of the parties over objection of
       Sellers. The court considered among other things [1] the extensive experience of
       Buyers’ witnesses in the areas of real estate sales and construction development
       versus the inexperience of Sellers, [2] the stated reasons for Buyers’ decision not
       [to] proceed with the second closing, including the fact that land prices had
       “tanked” and their determination that the property was “not worth the price,”
       [3] the extent of the “due diligence” and “feasibility study” done by the Buyers,
       [4] the Sellers’ reliance on the waiver of contingencies clause in the extension




                                                 7
       document, and [5] the reason the Buyers’ [sic] did not immediately demand
       payment of the $40,000.00.

                The court then entered its Judgment in favor of [Sellers]. In view of the
       fact that neither party had requested the court make Findings of Fact at the time of
       trial, the court did not set forth the reasons for its Judgment.

       The trial court’s “Judgment Ruling on Contractual Ambiguity” failed to provide the

clarification requested in Myatt I. The trial court did not make findings on the parties’ intent

regarding removal of contingencies for the second closing and did not explicitly state it resolved

the ambiguity in the Extension Agreement in Seller’s favor. Instead, the trial court considered

five factors that persuade us the court addressed a different issue on remand.

       Factors [2] and [3] demonstrate the trial court framed the issue as whether Purchaser

breached the Sale Contract by failing to conduct an adequate feasibility study before invoking

that contingency to terminate the contract. The trial court’s factors [2] and [3] were: “[2] the

stated reasons for Buyers’ decision not [to] proceed with the second closing, including the fact

that land prices had ‘tanked’ and their determination that the property was ‘not worth the price,’

[and] [3] the extent of the ‘due diligence’ and ‘feasibility study’ done by the Buyers.” These

factors imply the trial court believed Purchaser terminated the contract for an impermissible

reason—price, given changed market conditions—and failed to conduct sufficient due diligence

to allow it to properly invoke the feasibility contingency.        However, Seller’s cross-claim

contained no allegation that Purchaser breached the contract by improperly invoking the

feasibility contingency. The question to be resolved pursuant to the parties’ pleadings and Myatt

I was whether the parties intended to eliminate all contingencies for the second closing. Factors

[2] and [3] do not assist in answering this question. A finding that there were no contingencies

would be inconsistent with the court’s apparent finding that Purchaser did not fulfill its

obligations concerning the feasibility contingency.



                                                 8
         As to factors [1], [4], and [5], the trial court did not provide an explanation as to how they

support a finding that the parties intended to eliminate contingencies for the second closing.

Those three factors were: [1] Purchaser’s “extensive experience” relative to Seller in real estate

sales and development; [4] Seller’s “reliance” on a removal of contingencies; and [5] “the reason

the Buyers’ [sic] did not immediately demand payment of the $40,000.00.” We cannot find

evidence in the record supporting these factors or showing how they might be relevant to the

parties’ intent regarding contingencies at the time they entered into the Extension Agreement.

With no explanation from the trial court or citation of relevant supporting evidence, it is unclear

how these factors support resolution of the contractual ambiguity in Seller’s favor.

         In summary, the mandate in Myatt I required the trial court to issue a judgment with

findings explaining how it resolved the ambiguity in light of the contract and extrinsic evidence

of the parties’ intent regarding contingencies for the second closing. The trial court did not make

findings in accordance with Myatt I, constituting a misapplication of law that requires us to

reverse the judgment. See JAS Apartments, Inc. v. Naji, 354 S.W.3d 175, 182-83 (Mo. banc

2011).

                  B. Judgment for Seller Is Against the Weight of the Evidence

         When a trial court fails to make a determination required by an appellate court’s mandate,

we may review the evidence to decide whether the issue that was to be addressed may be

resolved without a second remand to answer the same unanswered question. See id. at 183.

Accordingly, we review the record here to determine whether we can answer the question posed

in Myatt I: what was the parties’ intent at the time they signed the Extension Agreement

regarding contingencies for the second closing? See Myatt I, 389 S.W.3d at 736-38. Because the




                                                   9
trial court did not hold a new hearing on remand, our review is limited to the trial record from

Myatt I.

          “In discerning the meaning each party intended to assign to a disputed contract term, and

in exploring whether each party knew or had reason to know the meaning intended by the other

party, the court may utilize any evidence that is ordinarily admitted to prove a state of mind.”

5 MARGARET N. KNIFFIN, CORBIN ON CONTRACTS § 24.10 (Joseph M. Perillo ed., rev. ed. 1998).

          [I]t is often necessary to consider not only the contract between the parties, but
          subsidiary agreements, the relationship of the parties, the subject matter of the
          contract, the facts and circumstances surrounding the execution of the contract,
          the practical construction the parties themselves have placed on the contract by
          their acts and deeds, and other external circumstances that cast light on the intent
          of the parties.

Butler v. Mitchell-Hugeback, Inc., 895 S.W.2d 15, 21 (Mo. banc 1995) (quotation omitted).

“Equivocal terms in a contract may be interpreted in light of all the surrounding circumstances,

including applicable customs and usages, as well as the contracting parties’ own interpretation of

the contract.” Graham v. Goodman, 850 S.W.2d 351, 355 (Mo. banc 1993).

          Unsurprisingly, the parties’ trial testimony as to their own interpretation of the contract is

exactly in accordance with their respective positions in this litigation. Sharon Boyet, who signed

the Extension Agreement as the buyer, testified that she and the members of Purchaser intended

to eliminate contingencies only for the first closing, not the second closing. On the other hand,

Steven Myatt, who signed the Extension Agreement along with his wife as the seller, testified

that he intended a removal of contingencies for both closings. 4

          However, we must look beyond this testimony to evidence of the parties’ conduct for

insight into their contractual intent. In determining intent, “[u]nilateral self-serving actions . . .

would necessarily and logically tend to carry less weight than the conduct of the parties between

4
    The trial court made no credibility findings.


                                                    10
themselves.” Lee v. Bass, 215 S.W.3d 283, 290 (Mo. App. W.D. 2007). “It is well established

that in construing an ambiguous or disputed contract the interpretation the parties placed on it by

their conduct is of great weight in determining what the agreement actually was.” Landau v.

Laughren, 357 S.W.2d 74, 80 (Mo. 1962) (emphasis added); accord MLPGA, Inc. v. Weems, 838

S.W.2d 7, 9 (Mo. App. W.D. 1992).

       Here, the only evidence presented as to the parties’ conduct shows they intended to

preserve contingencies for the second closing. On June 26, 2008, Ms. Boyet notified Seller’s

counsel that Purchaser was “declining acceptance” of tracts three and four. Approximately one

month later, on July 24, Seller’s counsel sent a letter to the title company demanding payment of

the earnest money to Seller. The July 24 letter stated Purchaser “has breached the contract, has

not done its due diligence, and has not provided me and my clients with necessary copies to

fulfill obligations in the contract.” On August 4, Seller’s counsel sent a letter to Purchaser

stating Seller was entitled to the earnest money because:

       You did not complete any of your due diligence as required by the contract and
       present us with copies thereof. Your agent, Sharon Boyet, has admitted to me that
       you did not actually do an appraisal, and I must assume that you did not do any of
       the other due diligence in the contract.

The July 24 and August 4 letters from Seller’s counsel establish that Seller believed Purchaser

had contingencies for the second closing but breached the contract by failing to complete due

diligence obligations associated with the contingencies. Neither letter even hints that Seller

believed there were no contingencies for the second closing.

       It was not until several months later that Seller asserted its current interpretation of the

Extension Agreement. In a November 10, 2008 letter to ATC, Seller’s counsel stated Seller was

entitled to the earnest money because the “written [Extension Agreement provided] that the

earnest money was non-refundable, and if the contract did not close ‘for any reason’ that [Seller]



                                                11
would be entitled to the full $40,000.00.” Given Seller’s different interpretation in the two

earlier letters, the November 10 letter is a belated, self-serving interpretation that does not show

the parties’ intent at the time they signed the Extension Agreement.

       Finally, the evidence concerning applicable custom and usage in real estate transactions

demonstrates the parties could only have intended to eliminate contingencies for the first closing.

See Graham, 850 S.W.2d at 355 (“Equivocal terms in a contract may be interpreted in light

of . . . applicable customs and usages . . . .”). Ms. Boyet testified that she had worked as a real

estate broker for thirty-two years and had been involved in over one hundred residential and

commercial real estate transactions. Ms. Boyet stated she had participated in four or five

transactions similar to this one in that they involved a first closing followed years later by a

second closing. Ms. Boyet testified that “nobody would release contingencies on a piece of

property to close five years down the road.”

       Likewise, the testimony of one former and one current member of Purchaser supports a

conclusion that under applicable custom and usage, the parties did not intend to remove

contingencies for the second closing. Royce Yust, a former member of Purchaser, testified that

he had worked in construction development for twenty-seven years and had been involved in

many real estate purchase transactions. Mr. Yust stated the purpose of contingencies like those

in the Sale Contract is “to see if it’s still a viable piece of ground to develop.” Mr. Yust stated:

“I would have never waived off on contingencies on something this far out.” Tom Johnson

testified that he was a current member of Purchaser and was involved in “design[ing] and

develop[ing] the ground.” Mr. Johnson stated he would never eliminate contingencies like a

feasibility study for a closing occurring five years after the contract date. Mr. Johnson explained




                                                12
that in such a case, “there [are] too many questions” such as whether rezoning and the

development of surrounding projects will occur as planned.

       Given the foregoing evidence of the parties’ conduct and applicable custom and usage,

the weight of the evidence shows the parties did not intend to remove contingencies for the

second closing. Therefore, the trial court’s judgment for Seller on the parties’ claims against

each other for the earnest money is against the weight of the evidence. Point one is granted.

                                       V. CONCLUSION

       We reverse the trial court’s judgment and remand the case to the trial court for entry of

judgment in accordance with this opinion.




                                                          ________________________________
                                                          Angela T. Quigless, Judge

Mary K. Hoff, P.J., and
Kurt S. Odenwald, J. Concurs.




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