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Riley v. Welcometotulum Investment Properties, LLC

Court of Appeals of Arkansas, Division III

February 7, 2018



          Robert S. Tschiemer, for appellant.

          Sanders Law Firm, P.A., by: Michael E. Sanders, for appellee.


         Doug Riley appeals a judgment entered in favor of Welcometotulum Investment Properties, LLC (WIP). He argues that the circuit court's judgment should be reversed based on frustrated performance of the contract, estoppel, waiver, unclean hands, and substantial performance. We disagree and affirm.

         On 31 October 2013, James Green and Doug Riley entered into a real estate contract in which Green agreed to sell, and Riley agreed to purchase, property located at 114 Coca Bay Point, Hot Springs, Arkansas. Under the terms of the contract, the selling price was $425, 000, of which $85, 000 was paid, leaving $340, 000 due and payable on 31 October 2018. The contract provided that until the balance of the purchase price was paid, Riley would pay a "carrying charge" of $1800 a month, due and payable on the last day of each month. Riley was also required to obtain and maintain an insurance policy for the property. The contract also provided for a thirty-day grace period after the last day of the month within which to make that payment without being in default. However, after the expiration of that thirty days, Green had the option of declaring the contract forfeited, and Riley would be required to vacate the premises and return possession to Green.

         On 27 October 2016, Green quitclaimed his rights and interest in the property to WIP. That same date, Green also executed an assignment of contract that assigned his interest in the contract to WIP. On 1 November 2016, WIP gave Riley a notice of default, notice to quit, and demand for possession of property. The notice alleged that Riley had defaulted by failing to make payments in a timely manner, declared the contract terminated and forfeited, and demanded that Riley vacate the premises on or before 11 November 2016.

         Riley did not do so, and on 18 November 2016, WIP filed a complaint in unlawful detainer. WIP alleged that it was entitled to possession of the premises, reasonable rent for the period of time that Riley unlawfully occupied the premises, statutory damages for unlawful detainer, reimbursement for cleaning and repair costs, and attorney's fees. Riley answered and averred that he was current on all payments. He also denied receiving the notice of default and affirmatively pled a myriad of affirmative defenses, including unjust enrichment, unclean hands, waiver, and estoppel.

         The circuit court convened a bench trial on 3 April 2017. Michael Tankersley, the managing member of WIP, testified that he purchased the Coca Bay property and an assignment of contract and promissory note from James Green. After the purchase, Tankersley notified Riley of the purchase by mailing him a notice and by putting a copy of the notice on his front door. The notice instructed Riley to remit all payments to a post office box or to deliver payments in person to an address on Malvern Avenue between the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday. At the time of WIP's purchase of the contract, which was October 27, Riley had not made his payment that was due on September 30. Tankersley paid Green that amount, $1800, in anticipation of collecting the money from Riley.

         Under the grace-period clause of the contract, Riley had until October 30 to submit his September 30 payment to avoid default. On Saturday, October 29, Riley contacted Tankersley by text message, said that he (Riley) was sick, and offered to put the payment "through the door" at WIP's office. Tankersley responded that that was not a good idea, as there was construction going on and quite a few people going in and out, and that they should just see how Riley was feeling the next day. Riley text-messaged Tankersley again on Sunday, October 30, and said, "I know it's family day I can find u later this afternoon if not early tom your call." Tankersley told Riley to just give him a call in the morning, which would be Monday, October 31. They arranged to meet at 2:00 on Monday afternoon, but Riley did not show up for the meeting.

         On the morning of Tuesday, November 1, Riley texted Tankersley that the payment was "in the door at your office." Tankersley responded that they needed to meet "to discuss the matter of your outstanding balance." Riley replied, "I tried all afternoon to find you so I stuck it thru your door." In response, Tankersley said, "You didn't try all day. We had a meeting set for 2 you didn't show for, we need to meet today to discuss." Riley never responded.

         Tankersley explained that he received the September 30 payment thirty-two days after the actual due date, which is a default under the contract, so he asked Riley to vacate the property by delivering a notice of default to Riley's residence at the Coca Bay property on November 1. Riley was instructed to vacate on or by November 11. Tankersley received the check that Riley had put under the door, but he did not cash it because Riley was in default. Tankersley later received more checks from Riley, which were also not cashed.

         While Riley was in default, Tankersley received and paid an insurance bill for the property in the amount of $1244.49. He also noted damage to the property, including fire damage from a car fire in the driveway, that required repairs. Finally, Tankersley said that he had checked with the bank, and the checks he received from Riley were non-sufficient-fund checks.

         Joseph Patrico, vice president of Citizens Bank, testified that Tankersley asked him, on February 17 and March 6, to verify three checks from Riley and that there were ...

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