Tennessee Supreme Court hears arguments over enforceability of escalating earnest‑money clauses in $80 million hotel sale

NASHVILLE — The Tennessee Supreme Court heard oral argument in October in SH Nashville LLC v. FWREF Nashville Airport LLC over whether a series of purchase agreements and amendments that increased earnest‑money deposits in a proposed $80,000,000 hotel sale should be enforced as liquidated damages or struck as an unenforceable penalty.

At the hearing, Sarah Miller, counsel for FWREF Nashville Airport LLC, urged the court to affirm a business‑court ruling granting summary judgment for the seller. "This case centers around 25 agreements under which the plaintiffs repeatedly agreed and failed to purchase an $80,000,000 hotel property," Miller said, adding that the agreements are unambiguous and repeatedly stipulate that the earnest money would be "deemed earned and non‑refundable." She told the court the agreements and related addenda "show both the clear parties in the contract and the circumstances around which they entered into those contracts."

Opposing counsel Donald Caporello, representing the purchasers, argued the trial court erred by denying discovery into how the earnest‑money figure grew over repeated amendments and by resolving the matter on summary judgment. Caporello told the justices the purchasers had produced an affidavit asserting the amendments were part of coercive negotiations and said, "Over…