Bourland, Heflin, Alvarez, Minor & Matthew, PLC v. Heaton

Rodney and Margaret Heaton (the Heatons) agreed to sell a parcel of commercial property to Loeb Properties, Inc. (Loeb) for $700,000. Pursuant to a real estate purchase agreement executed in October 2008, Loeb deposited $50,000 in earnest money into an escrow account maintained by Bourland, Heflin, Alvarez, Minor & Matthew, PLC (Bourland Heflin) (plaintiff). The purchase agreement included a clause providing for a 90-day inspection period during which Loeb was free to terminate the agreement and recover the deposit in response to inspection-related issues—for example, issues with the soil, zoning, or utilities. The agreement also contained an adverse-conditions clause allowing for termination in response to adverse changes occurring between the end of the inspection period and closing. In March 2009, Loeb informed the Heatons that Loeb was terminating the agreement due to the poor state of the economy and the anticipated difficulty in securing retail tenants, though the global economic crisis had actually begun in 2007. The Heatons refused to return the earnest money. Bourland Heflin filed a complaint for interpleader. At trial, Loeb argued that the inspection clause—or, alternatively, the adverse-conditions clause—unambiguously gave Loeb the ability to terminate the agreement for economic reasons. Both Loeb and the Heatons moved for summary judgment. The court granted summary judgment in favor of Loeb, holding that the economic downturn had triggered the adverse-conditions clause. The Heatons appealed.