The opinion of the court was delivered by: Urbina, District Judge.
GRANTING IN PART AND DENYING IN PART THE DEFENDANT'S MOTION TO DISMISS
A fundamental concept of contract law is pactu sunt servanda: promises should be kept. Perhaps Adam Smith put it best by stating:
Whoever offers to another a bargain of any kind,
proposes to do this: Give me that which I want, and
you shall have this which you want, is the meaning of
every such offer; and it is in this manner that we
obtain from one another the far greater part of those
good offices which we stand in need of. It is not
from the benevolence of the butcher, the brewer, or
the baker, that we expect our dinner, but from their
regard to their own interest.*fn1
Although not involving a butcher, brewer, or baker, this case concerns a residential property contract that comes before the court on the defendant's motion to dismiss the plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiffs, who are the property purchasers, seek relief via two claims of breach of contract and conversion. Specifically, the plaintiffs allege that in accordance with their contract, they gave the defendant, the seller of the property, a security deposit toward the purchase price of the property. Although the plaintiffs chose not to follow through with the agreement to purchase the property, the plaintiffs insist that the defendant should return the security deposit because the defendant subsequently found another buyer for the property and therefore has been unjustly enriched by keeping the deposit. The defendant, however, counters that the contract contained a liquidated-damages clause allowing the defendant to retain the deposit notwithstanding resale of the property. After consideration of the parties' submissions, the relevant law, and the record of this case, the court denies the defendant's motion to dismiss the breach-of-contract claim but grants the defendant's motion to dismiss the conversion claim.
In March 2000, the plaintiffs, residents of the District of Columbia, entered into a contract with defendant Voyou, L.L.C., a Virginia company, for the sale and purchase of residential property in the District of Columbia. Compl. ¶ 6. The contract provided for a purchase price of $2.5 million for the property. Id. ¶ 11. Pursuant to the contract, the plaintiffs gave the defendant a $200,000 deposit for the purchase of the property. Id. ¶ 7. Subsequently, the plaintiffs apparently decided not to purchase the property, and executed a termination agreement with the defendant on November 30, 2000. Id. ¶ 8, Ex. B at 1.
The termination agreement entered into by the parties contains two key provisions. First, it contains a liquidated-damages clause that states:
The Deposit shall remain the Property of the Seller
and the Purchaser shall have no claim at law or in
equity for the return of the Deposit. Purchaser fully
and completely waives and relinquishes any claim or
right in and to the Deposit.
Id. Ex. B at 1. Second, it contains a best-efforts clause that provides:
Seller shall use best efforts to resell the property
which is subject of the Contract at the highest
possible purchase price. Seller shall upon completion
of its remarketing, resale and final closing of the
property which is the subject of the Contract,
evaluate all costs, expenses, and fees it incurs in
its remarketing, resale and closing of the Property
and shall, in Seller's reasonable sole discretion and
upon Seller's reasonable sole evaluation, return to
Purchaser that portion of the Deposit which is not
needed in seller's reasonable sole opinion to make
Seller whole as a result of the Termination of the
The plaintiffs allege that after the execution of the termination agreement, the defendant resold the residence to a third party for the purchase price of $3.5 million. Id. ¶ 12. According to the plaintiffs, however, the ...