Chapter 7 Follow The Rules -9.x
From the textbook on page 24, please take the next 10 minutes to read and answer the questions at the end.
Capcor at Kirby Main LLC v. Moody National Kirby Houston, LLC,
Court of Appeals, Texas, Houston
(1st District) 509 S.W. 3d 379
Moody National Kirby Houston, L.L.P. (Moody Kirby) owned a vacant lot near the Texas Medical Center. Capcor agreed to purchase the land from Moody Kirby using a standard “Unimproved Property Contract” promulgated by the Texas Real Estate Commission. The contract specified a definite date for closing and provided that Buyer pay the Sales Price in good funds acceptable to the escrow agent. If a party failed to close the sale by the closing date, the other party was entitled to exercise its contractual remedies, which included terminating the contract and receiving the earnest money as liquidated damages.
The parties agreed to use Moody National Title Company, L.P. (Moody Title), a company wholly owned by Moody Kirby’s sole owner, Brett Moody, as the title company. The day prior to closing, the Moody Title escrow agent informed Capcor’s lawyer that Moody Title needed to receive the purchase funds in the form of a wire transfer. She informed Capcor’s principal of the same requirement when he arrived at Moody Title’s office the next morning to sign the closing documents, noting that the wired funds must be received by 3:30 p.m. Sometime after 5:00 p.m. on the day of closing, Capcor’s principal showed up with a cashier’s check for the balance due for closing.
The title company informed Capcor that it could not accept the check because it was against their underwriter’s policies. The seller terminated the contract the next morning for failure of the buyer to close. Capcor refused to sign a release of earnest money and sued Moody Kirby and Moody Title. The appellate court affirmed the trial court who found that Capcor had defaulted and that the title company had not breached its fiduciary duty. While the Texas Department of Insurance says a cashier’s check is good funds, it does not require a title company to accept a cashier’s check. The TREC form specifies, “Buyer shall pay the Sales Price in good funds acceptable to the escrow agent.” (Paragraph 9.B.2.)
The title company during trial testified that a cashier’s check is subject to a three-day hold, and it is their policy not to accept them as good funds. The contract affirmatively bestowed upon Moody Kirby the right to terminate if Capcor defaulted by failing to timely deliver good funds acceptable to the escrow agent. Escrow funds and attorney fees were awarded to Moody Kirby.