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Franklin Land Associates, LLC v. Sethi

Court of Appeals of Mississippi

January 29, 2019

FRANKLIN LAND ASSOCIATES, LLC APPELLANT
v.
S.L. SETHI APPELLEE

          DATE OF JUDGMENT: 01/23/2017

          LEFLORE COUNTY CHANCERY COURT HON. JON M. BARNWELL JUDGE

          ATTORNEYS FOR APPELLANT: CHRISTOPHER DANIEL MEYER JAHVIAH DYJUAN COOLEY

          ATTORNEYS FOR APPELLEE: WEBB FRANKLIN SAM N. FONDA

          BEFORE GRIFFIS, C.J., BARNES AND CARLTON, P.JJ.

          BARNES, P.J.

         ¶1. Franklin Land Associates LLC (Franklin), the Buyer, and S.L. Sethi, the Seller, entered into a real-estate purchase agreement (Agreement) in 2010. After two years and several amendments, Franklin terminated the Agreement in April 2012, claiming it failed to receive the necessary governmental approvals needed for the development of the property and was, therefore, entitled to a return of the $160, 000 held in escrow. A lawsuit was filed to determine which party was entitled to the escrow funds. The Leflore County Chancery Court determined that John Dinkins, Franklin's agent, had authority to bind the company to the Sixth Amendment to the Agreement, which permitted Franklin to receive a complete refund of the escrow money if it failed to receive the necessary onsite and offsite governmental approvals reasonably deemed necessary by Franklin. However, because Franklin elected to withdraw its applications prior to the governmental authorities' decisions, the chancery court held that Franklin's termination of the Agreement was without justification, and Sethi was entitled to the escrow money. Franklin appeals the judgment. Finding no error, we affirm.

         SUMMARY OF FACTS AND PROCEDURAL HISTORY

         ¶2. On April 27, 2010, Franklin and Sethi entered into a real-estate contract for the purchase of approximately sixty acres of land in Madison County, Mississippi.[1] The Agreement provided Franklin the exclusive right to inspect the property for the development of a high-end shopping center and required Franklin to deposit $50, 000 in earnest money with the escrow agent, Whittington, Brock and Swayze P.A. (WBS). Several amendments were made to the Agreement. The First Amendment, on May 26, 2010, required Franklin to deposit an additional $50, 000 in earnest money, modified paragraph 16 of the agreement, and extended the property inspection period.[2]

         ¶3. On August 24, 2010, Franklin terminated the Agreement in accordance with its terms. The following day, the parties executed a Reinstatement and Second Amendment of the Agreement, which extended the inspection period until November 30. Three months later, on November 29, Franklin again terminated the Agreement, and the escrow funds were returned to Franklin. On January 11, 2011, the parties executed a Reinstatement and Third Amendment of the Agreement, requiring Franklin to deposit the previously refunded escrow ($100, 000) with WBS, and the inspection period was extended to June 30, 2011. On June 6, the parties executed a Fourth Amendment, extending the inspection period to October 31.

         ¶4. The parties executed a Fifth Amendment on October 28, 2011. The amendment extended the inspection period to April 30, 2012, and required Franklin to deposit an additional $60, 000 into escrow at intervals of $20, 000 a month. Paragraph 8.C of the agreement was also amended to provide:

         Notwithstanding any provision of the foregoing:

1) If, on or before November 21, 2011, Buyer has not terminated the Agreement, the Earnest Money shall become non-refundable, but at Closing shall be applicable to the Purchase Price, provided, however, that the Earnest Money shall be fully refundable during the remainder of the Inspection Period if Buyer terminates the Agreement due to i) default by Seller; or ii) the condition of the title to the Property, or any current exceptions to title as reflected in the title commitment or on the Survey, or any requirements to the title commitment which are not satisfied; or iii) Buyer has not received all necessary governmental approvals ...

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