## Facts

- Robert Strouse owned 239 acres of land near Niangua in Webster County, Missouri.
- Terry D. Starbuck and Holly M. Starbuck became interested in buying the acreage and asked Jerri Delcour, a real estate agent and friend, to inquire whether it was for sale.
- When Delcour first asked Strouse about selling, he said he was not interested.
- After Delcour told Strouse she had a buyer, Strouse signed an “Authorization to Show Property to Terry Starbuck Only” on February 20, 1996.
- On February 21, 1996, Strouse and the Starbucks entered into a real estate sale contract for $225,000.
- The contract required the Starbucks to obtain $175,000 in financing and contained a liquidated-damages clause stating that if the contract did not close due to the buyer’s fault, the buyer would pay 10% of the total sale price as liquidated damages, with the contract reciting that actual damages were difficult, if not impossible, to ascertain.
- The parties executed later addenda, but they were not material to the appellate court’s dispositive analysis.
- The Starbucks were unable to obtain the necessary financing and notified Strouse about one week before the scheduled closing that they would not be able to close.
- Strouse sued the Starbucks (and also named the escrow holder, Clair Land Co., Inc., d/b/a Century 21 – Heritage Realty) seeking liquidated damages and alleging the Starbucks failed to use reasonable diligence and good faith to obtain financing.
- A total of $10,000 in earnest money was held in escrow, deposited into the court registry before trial, and became the subject of the trial court’s disposition.
- At a court-tried (bench) trial on April 11, 1997, Strouse attempted to show harm by testifying that Delcour’s wife told prospective purchasers the property had been sold, which, according to Strouse, prevented him from selling to someone else.
- The trial court entered judgment for the Starbucks without findings of fact or conclusions of law and ordered the $10,000 deposited with the court released to the Starbucks.
- Strouse appealed; the appellate court treated the liquidated-damages point as dispositive.

## Issues

1. Whether a seller may recover 10% liquidated damages under a real estate contract when the buyers fail to close after they cannot obtain required financing.
2. Whether Missouri law requires the seller seeking liquidated damages to prove actual harm accrued from the breach, and whether Strouse made that showing.

## Decision

- The Missouri Court of Appeals, Southern District, Division One affirmed the judgment for the Starbucks.
- The court held Missouri law requires proof of actual harm before a liquidated-damages clause may be enforced, and Strouse did not prove damages in fact accrued as a consequence of the failure to close.
- The court sustained the trial court’s result returning the $10,000 earnest money (held in the court registry) to the Starbucks.
- Because the case was tried without a jury and the trial court made no findings, the appellate court presumed all fact issues were resolved in a manner consistent with the judgment and deferred to the trial court’s implicit credibility determinations.

## Legal Principles

- In Missouri, a party seeking liquidated damages must prove not only breach, but also that damages in fact accrued as a consequence of the breach; a liquidated-damages clause is not automatic.
- Contract language stating that actual damages are difficult or impossible to measure does not remove the requirement to show some actual harm.
- Evidence that is speculative—such as generalized claims that a property was “off the market” or that unidentified buyers may have been turned away—may be found insufficient to prove actual harm in a given case.
- In a court-tried case decided without findings of fact or conclusions of law, appellate review presumes the trial court made all factual findings necessary to support the judgment, and the appellate court does not reweigh witness credibility.

## Conclusion

The court affirmed judgment for the buyers because, even assuming the Starbucks’ failure to close triggered the contract’s liquidated-damages language, Missouri law required Strouse to prove actual harm from the breach, and the trial court could reasonably find his testimony about lost opportunities did not establish damages in fact accrued; accordingly, the 10% liquidated-damages claim failed and the earnest money was released to the Starbucks.


Strouse v. Starbuck, 987 S.W.2d 827 (1999)