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SHULMAN v. VOYOU

March 12, 2003

JOHN D. SHULMAN ET AL., PLAINTIFFS,
v.
VOYOU, L.L.C., DEFENDANT.



The opinion of the court was delivered by: Urbina, District Judge.

MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART THE DEFENDANT'S MOTION TO DISMISS

I. INTRODUCTION

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

II. BACKGROUND

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 Contract.

Id.

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. ΒΆ 12. According to the plaintiffs, however, the ...


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