The opinion of the court was delivered by: Irving Ben Cooper, District Judge.
Alexander & Reed deny Fuller's allegations. They contend that
Fuller abandoned the escrow agreement either by instructing
them to act contrary thereto or by ratifying the acts Alexander
& Reed took in contravention of the written escrow agreement.
Thus Alexander & Reed deny that any of their acts damaged
The action was tried before this Court on June 4, 1990. In
addition to presenting in their post-trial papers the facts and
law supportive of their respective positions, Alexander & Reed
moved, at our direction, to amend the pleadings to conform to
the evidence admitted at trial pursuant to Federal Rule of
Civil Procedure 15(b). We base our disposition of the motion
and the substantive claims of this action on the findings of
fact and conclusions of law discussed hereunder.
Prior to March 13, 1986, Fuller agreed to loan $300,000 to
real estate developer Clinton E. Hutchcraft (not a party in the
instant action). The loan was made to pay certain closing costs
and expenses incident to the purchase of properties in
Tennessee which were to be developed into apartment complexes
by WildHorse Associates, Ltd. ("WildHorse") and SilkRock
Associates, Ltd. ("SilkRock") for which Fuller was to be
construction manager or general contractor. (Tr. 23)*fn1
WildHorse and SilkRock were two of thirteen limited
partnerships that were created for the purpose of developing
various apartment projects; Hutchcraft was general partner and
had employed Alexander & Reed as counsel. In addition,
defendant Alexander held a 0% limited partnership interest in
the two aforementioned partnerships. (Tr. 30-31)
On March 13, 1986, Hutchcraft went to New York with defendant
Alexander to secure the loan from Fuller. While in New York,
Hutchcraft signed a promissory note on behalf of the
partnerships and personal guarantees and then received the
$300,000. (Tr. 24) Later that day, Fuller brought up the
subject of an escrow agreement, which Fuller's attorneys,
Haythe & Curley, Esqs., subsequently prepared. (Tr. 24-25)
The escrow agreement, signed by Fuller, Hutchcraft on behalf
of WildHorse and SilkRock, and defendant Alexander on behalf of
Alexander & Reed, provided in pertinent part:
The Escrow Agent [Alexander & Reed] is hereby
authorized and directed to hold funds represented
by the certified check (the "Funds") in escrow
pending the closing (the "Closing") on or about
March 14, 1986 of the acquisition by WildHorse . .
. and SilkRock . . . of those certain properties
(the "Property") located in Nashville, Tennessee
contemplated to be developed by WildHorse and
SilkRock by the construction of apartment
complexes. The Escrow Agent is hereby authorized
to release the Funds to the designees of WildHorse
and SilkRock at the Closing in payment of certain
related costs and expenses; provided however, that
the Escrow Agent's authority to disburse the Funds
shall be subject to its holding a deed of trust
with respect to the Property in favor of Fuller .
. . in recordable form.
Upon the release of the funds from escrow, the
Escrow Agent agrees forthwith to cause the deed of
trust to be recorded with the appropriate state
and local authorities in Tennessee no later than
24 hours after the Closing.
In addition, the following handwritten terms were added to the
agreement and initialled by Fuller's president, Mr. Mango:
Both parties agree that said funds may be released
upon the closing of the land purchase by SilkRock
and that the Escrow Agent shall record a second
trust deed ...