Contractual Obligations Are 'Payable' at Maturity Regardless of Available Funds, Triggering Put-Right Remedy
Read the Court's Opinion (PDF)
Judge Brian Stagner
In The Mark at Weatherford Owner v. German, Division 8 granted summary judgment holding that acquisition fees contractually due at closing were legally "payable" even when insufficient funds existed to satisfy them, and that defendants' failure to remit those fees constituted a material default triggering plaintiff's put-right provision in a $4.7 million seller-financed real estate transaction. The court rejected defendants' argument that lack of liquidity excused performance, holding that "[a] contractual obligation does not evaporate simply because the obligor lacks liquidity."
Court Staff Summary
Granting summary judgment on a claim that, under a contract, fees were legally owed at closing and therefore “payable,” whether or not funds were available to pay, and that failure to pay constituted a default, which triggered a put-right provision.
Background: A Restructured Apartment Sale with Seller Financing
Plaintiff The Mark at Weatherford Owner, LLC agreed in December 2022 to sell a multimillion-dollar Weatherford apartment complex to defendants Darwin German and Darcorp Management Group, Inc. for approximately $76.75 million. As closing approached, the deal encountered difficulty and the parties amended their agreement multiple times. Plaintiff ultimately extended $4.7 million in seller credit to salvage the transaction, accepting membership units in the buying entity as collateral on the shared understanding that it would be repaid in full within months.
The Contractual Framework and Protective Provisions
As a condition of the seller financing arrangement, plaintiff negotiated a "Put Right" provision. If certain "Automatic Triggers" occurred—including any contractual default by defendants—plaintiff could demand that defendants immediately repurchase the membership interest for cash. The parties' agreements also required defendants to turn over certain fees that were "payable" to defendants at the closing of the property sale.
The Dispute: What Does "Payable" Mean?
More than three years after the December 2022 agreement, plaintiff remained unpaid and the parties became deadlocked over whether any Automatic Trigger was activated. The court framed the central issue:
Most of the dispute turns on a single word: "payable." Plaintiff contends that the parties' agreements required Defendants to turn over certain fees that were "payable" to Defendants at the closing of the property sale—fees that became due at closing regardless of whether sufficient cash was on hand to satisfy them.Defendants argued that the fees were not truly "payable" because there were insufficient funds to pay them at closing.
The Court's Analysis: Liquidity Does Not Excuse Performance
Division 8 rejected defendants' reasoning in unequivocal terms. The court held that contractual maturity creates a legal obligation independent of the obligor's financial capacity:
A contractual obligation does not evaporate simply because the obligor lacks liquidity. The fees were due and payable at closing, and Defendants' failure to remit them triggered the Put Right.Finding no genuine dispute of material fact, the court granted plaintiff's traditional motion for summary judgment.