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Inc. v. DJ Mart, LLC

Court of Appeals of Arkansas, Division II

May 29, 2019



          Davidson Law Firm, by: Stephen L. Gershner, for appellant.

          One brief only.


         Appellant appeals from the circuit court's order granting the appellees'[1] rescission counterclaim, thereby returning to them their $96, 000 down payment for the subject property, a gas station. On appeal, appellant argues that the circuit court clearly erred in finding that it committed (1) fraud by omission by failing to disclose (a) unpaid real estate taxes and (b) the real status of the inoperability and disrepair of the gas pumps, and (2) misrepresentation. Additionally, it argues that it properly terminated the contract. We affirm.

         On August 30, 2017, appellee Daljit Singh met with Noor Ali as representative for AAN, Inc. (AAN), [2] at the gas station to discuss a potential sale or lease of the same. Singh and Sohail Cheema-who was the assistant to appellant's owner, Mohammad Lone, and the agent for appellant and AAN-met on September 1, 2017. During that time they agreed to the general terms of contract for the sale of the gas station. Singh made an earnest money deposit in the amount of $16, 000 to appellant, through Cheema, at that meeting.

         The parties entered into a contract on September 8, 2017. The gas station was purchased "as it is[.]" It was purchased for $640, 000 with a down payment of $96, 000[3] acknowledged as having been received by appellant, thereby leaving a balance of $544, 000 remaining. The remaining balance was to be paid in installments of $4, 889.63 monthly through October 1, 2032. One provision in the contract stated:

The [appellees agree] to keep and maintain the premises and the improvements thereon in a clear and orderly condition at all times, free of waste or destruction, and to make all necessary repairs thereon to keep the premises in a good and habitable condition at all times during this contract. The standard of maintenance to which the [appellees agree] to maintain the premises is the highest state of repair, which the same has been or may be at any time during the period of this contract.

         A provision on taxes stated that "[t]he Seller agrees to pay all taxes that come from this contract date forward for the year 2017 on the aforesaid property, and the Buyer agrees that the Buyer will pay the taxes for all subsequent years thereon." The contract's default provision stated that:

In the event that the Buyer should default in making the payment or in keeping the covenants on Buyer's part to be made and kept hereunder, and should a default in the making of any payment continue for a period of thirty (30) days from the date when such payment hereunder is due, the Seller may, at Seller's option, declare this contract to be thereupon terminated and forfeited by giving notice of Seller's election so to do to the Buyer at Buyer's telephone book or last known address. Thereupon, Buyer agrees that Buyer will promptly and forthwith vacate the premises and return possession thereof to the Seller without additional notice. To accommodate the agreement herein made to that effect, the Buyer hereby waives any and all notice to which Buyer may be entitled under the Laws of the State of Arkansas as a prerequisite to a suit against the Buyer for the unlawful detention of the property. Upon such a default by the Buyer and an election of the Seller to terminate this contract, the amounts theretofore paid by the Buyer to the Seller shall be retained by the Seller as liquidated damages for the breach of this agreement by the Buyer and as a reasonable rental for the property during the period of time when the same has been occupied pursuant to this contract by the Buyer.

         On February 8, 2018, appellant filed a complaint in unlawful detainer asserting that it received appellees' last payment in November 2017, and that appellees had since "unlawfully failed and refused to quit possession" of the property despite being requested to do so. It also asserted that appellees had failed to operate its business in a proper manner. Accordingly, appellant sought monetary damages in the form of payment of the monthly installments for all months appellees remained in possession of the property. Appellant also sought reimbursement of taxes it had to pay on the property that it asserted appellees were responsible for and a writ of possession.

         The appellees filed a counterclaim on March 16, 2018. The following facts were asserted therein. At a September 2, 2017 visit to the gas station, Singh learned that gasoline was unavailable for sale at the gas station because the gasoline distributor had "cutoff gas distribution for "several months due to various issues including the condition of the gasoline storage tanks and gas pumps." Singh "immediately" contacted appellant and requested the return of his earnest money, but was assured by Cheema that "all gasoline and equipment issues would be addressed to Singh's satisfaction[;] Cheema would not return the earnest money[.]" On September 7, 2017, Singh met with Lone who verbally assured Singh that appellant would install new gasoline tanks and pumps within two months. Regarding operation of the gas station:

On October 8, 2017, [DJ Mart, ] LLC began operation and management of the convenience store. The monthly payment from LLC to [appellant] was made on October 4, 2017. LLC accepted deliveries of gasoline from the Citgo petroleum supplier although only one tank of the four on the property could hold gasoline. LLC was waiting on the two-month period [appellant] represented would be required in order to replace the damaged or unserviceable equipment.

         On November 15, 2017, DJ Mart, LLC (DJ Mart), contacted Lone concerning replacing and/or repairing the equipment, for which DJ Mart had obtained an $85, 000 estimate. Appellant, through Lone, denied having agreed to repair or replace the equipment. Singh, on behalf of DJ Mart, demanded that appellant "fulfill its contractual obligation to provide tank replacement/repair and pump replacement." Appellant refused. Singh, again on behalf of DJ Mart, requested repayment of the $96, 000 down payment and rescission of the contract; appellant refused.

         Thereafter, on or about December 15, 2017, DJ Mart received notice that the gas station was delinquent in payment of taxes for the years 2013 through 2015, totaling $21, 507.24. The property was scheduled to be sold at public auction on April 10, 2018. Singh contacted Cheema regarding the notice and was advised that appellant would pay the delinquency. Singh advised that no further payments would be made until the delinquency was paid, asserting that the delinquency was a default under the contract. DJ Mart had already made its December payment by the time it received the notice and appellant had cashed that payment. No additional payments were made.

         Appellees asserted that appellant "[at] no time" advised that it intended to terminate the contract and appellees denied that appellant ever made a demand that DJ Mart vacate the property. Appellees filed an objection upon receipt of appellant's complaint and deposited payment for ...

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