REEM PROPERTY, LLC v. TRANSFER FINANCIAL, LLC

KARSTETTER, J. Reem Property, LLC ("Reem") sued Transfer Financial, LLC ("Transfer Financial") for the return of a $10,000.00 deposit that Transfer Financial held as liquidated damages for any breach of contract for the sale of real estate. The chief issue at trial was whether Reem implicitly waived a "time is of the essence" provision of the contract. The trial judge found that Reem had not waived the provision and was entitled to return of the deposit when Transfer Financial failed to provide certain documents needed to close on time. We affirm.

Facts. The trial judge entered written findings of fact and rulings of law. He found that Reem was the highest bidder at a foreclosure auction for real property located in Milford, Massachusetts, and pursuant to the terms of a Memorandum of Sale ("MOS") dated May 30, 2014, Reem paid Transfer Financial a $10,000.00 deposit at the foreclosure sale. By the terms of the MOS, the parties agreed that the closing would take place on or before noon on June 30, 2014 and that "time was of the essence." In the week before the scheduled closing, counsel for both parties exchanged a number of e-mail communications.

In one e-mail, counsel for Reem advised counsel for Transfer Financial that the foreclosure's legal advertisement (notice) had an error regarding one of the publication dates. He requested an actual copy of that advertisement and an affidavit from the pertinent newspaper confirming that the mistake was a typographical error in a form that would be acceptable to his client and the title insurer. A series of e-mails between the parties' counsel regarding an original "tear sheet" from the newspaper and the content of the requested affidavit followed, as did communication regarding other requested edits to closing documents. On the Friday before the Monday closing date, the parties' counsel exchanged e-mails again regarding the closing documents, including a request for an Eaton affidavit. [Note 1]

On Monday morning, June 30, 2014, the date set for closing, Transfer Financial's counsel e-mailed Reem's counsel. He attached a proposed Eaton affidavit and stated that he had the requested tear sheets. Less than an hour before the closing time of noon, Reem's counsel asked to see the signed documents and requested a specific format for the affidavit with the problematic newspaper notice. Five minutes later, Transfer Financial's counsel replied that he "had the attached documents for signature and was working on the affidavit." The judge further found that at 11:47

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A.M., Reem's counsel replied that "the corrected documents were 'ok' to be signed but [he] needed to see the newspaper page along with the affidavit confirming authenticity." The judge also found that Reem's counsel "stated that he also needed the signed documents 'to close as scheduled per the memo of sale.'"

After the time set for closing of noon (at 1:08 P.M.), Transfer Financial's counsel represented that the authenticity affidavit would be executed that day. He stated that "he was ready to close today at 3:30 p.m." at the Worcester County registry of deeds. Reem's counsel responded twenty-seven minutes later, stating that the closing time had been scheduled for noon that day and that Reem was "reserving all rights as . . . 'this is now past the time of performance'" and that he had not received signed copies of several documents. After a further e-mail exchange, Reem's counsel wrote that it appeared that Transfer Financial did not have the necessary documents to convey proper title and that he had spoken to his client who had requested the return of the $10,000.00 deposit. Counsel for Transfer Financial testified at the trial that the e-mails from Reem's counsel "indicated to him that he had been granted an implicit extension of the [noon] closing time."

Analysis. A "time is of the essence" clause means that "contractual deadlines will be strictly enforced. A waiver of a deadline will not be found unless one is demonstrated by the actions of the parties." Owen v. Kessler, 56 Mass. App. Ct. 466, 466-467 (2002), citing McCarthy v. Tobin, 429 Mass. 84, 88-89 (1999). Parties will be held to the deadlines they have imposed upon themselves when they agree in writing that time is to be of the essence. McCarthy, supra at 88; Vickery v. Walton, 26 Mass. App. Ct. 1030, 1031 (1989). Waiver is the voluntary or intentional relinquishment of a known right. Merrimack Mut. Fire Ins. Co. v. Nonaka, 414 Mass. 187, 189 (1993). Whether a waiver has occurred is determined by an objective assessment. Owen, supra at 470-471. A subjective belief by the other party that there has been a waiver is insufficient, and the evidence reflecting waiver must be compelling. Id. The burden of proving waiver is on the party asserting it. Dunkin' Donuts, Inc. v. Panagakos, 5 F. Supp. 2d 57, 60-61 (D. Mass. 1998).

There is no doubt that Reem did not explicitly waive the "time is of the essence" clause. Transfer Financial argued instead that counsel's conduct constituted an implicit waiver, and there have been instances where implicit waivers have been found. In Church of God in Christ, Inc. v. Congregation Kehillath Jacob, 370 Mass. 828 (1976), for example, the acceptance of payments and continued dealings between the parties after their deadline established a waiver. Id. at 832-835. In McCarthy v. Tobin, supra, a waiver was established based on the fact that the lawyers continued to deal with one another in an effort to craft a mutually satisfactory agreement. Id. at 88-89. "In the only express communication concerning the execution of the agreement, [one of the lawyers] implied that a date later than [the deadline] was satisfactory." Id. at 89. The parties continued negotiating for nearly two weeks beyond the deadline.

The trial judge ruled that Transfer Financial failed to meet its burden to show a waiver of the time is of the essence clause, stating, "None of the actions cited by [Transfer Financial] amount to the sort of unequivocal actions required by the case law . . . to prove waiver." At best, the trial judge ruled, Reem "might have considered closing past the noon deadline if all of the requested documents were forthcoming. Nothing [Reem] did suggested that it would actually grant such a waiver." To

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the contrary, at 11:47 A.M. on the date set for the noon closing, Reem's attorney informed Transfer Financial's attorney that he still required the newspaper page with the correct date along with the corresponding affidavit (and the signed closing documents) "in order to close as scheduled per the memo of sale."

The trial judge's objective assessment of this evidence was that it could not reasonably be viewed as a waiver; it was more appropriately viewed as a clear assertion of the need for contractual obligations to be fulfilled "as scheduled." See Owen, supra at 470-471. We see no error in that objective assessment and agree with the trial judge that the present case is more analogous to Owen where the possibility of an extension had been discussed but a willingness to consider an extension was not the actual grant of one, any subjective belief notwithstanding. [Note 2] Said another way, it is clear from the record that the judge addressed the issues conscientiously -- the decision-making process was conducted within the established framework of relevant standards and took into account all the proper factors identified by relevant case law as necessary to inform the discretionary exercise. Long v. Wickett, 50 Mass. App. Ct. 380, 386 n.8 (2000).

Judgment affirmed.