COURT OF APPEALS DECISION DATED AND FILED December 13, 2007 David R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
from an order of the circuit court for
Before Dykman, Vergeront and Bridge, JJ.
¶1 DYKMAN, J. Capwin 19, LLC, appeals from an order granting summary judgment to Michael Zingg and Parsons Investments, LLC in Capwin’s action against Zingg and Parsons for breach of contract. Capwin contends that the trial court erroneously granted summary judgment to Zingg and Parsons based on their affirmative defense that Capwin anticipatorily breached the contract for the sale of land from Capwin to Parsons prior to the closing date. Capwin argues that summary judgment was inappropriate because there were disputed issues of material fact as to (1) the parties’ intent as to contested provisions in the contract; (2) whether Capwin clearly expressed to Parsons that it would not close under the contract absent its proposed contract modifications; and (3) whether Parsons breached its duty to use diligent efforts to bring the transaction to a timely closing. Capwin argues alternatively that it is entitled to summary judgment on these issues based on the undisputed facts in the record. We conclude that the record reveals that there are alternative reasonable inferences to be drawn from undisputed facts, preventing summary judgment. We therefore reverse and remand for trial.
Background
¶2 The following facts are undisputed. In July 2004, Zingg (and/or assigns) offered
to purchase six acres of land from Capwin.
Capwin accepted the offer. The
accepted offer set the closing date as November 30, 2004, at a title company in
¶3 During the week before the scheduled May 13 closing, counsel
for Parsons (James Smith) and counsel for Capwin (A.J. Griffin III) engaged in
discussions about a Closing Agreement and a Tripartite Agreement for the
parties to sign at closing. The
discussions included negotiations over the terms to include in the agreements
concerning storm water management and whether Parsons would indemnify Capwin from
the
¶4 Capwin sued Parsons and Zingg for breach of contract. Both defendants denied liability and each moved for summary judgment, arguing that Capwin had anticipatorily breached the contract by demanding terms inconsistent with their contract as a condition of closing. Zingg also denied liability by virtue of his assignment to Parsons and an unfulfilled lease contingency in his original offer to purchase. Capwin opposed summary judgment as to both defendants, arguing that there were either disputed issues of material fact that precluded summary judgment or that the undisputed facts required the court to grant summary judgment for Capwin sua sponte under Wis. Stat. § 802.08(6) (2005-06).[3]
¶5 The trial court concluded that the defendants were entitled to summary judgment because the undisputed facts in the record established that Capwin had anticipatorily breached the contract prior to closing by unequivocally demonstrating that it was unwilling to close absent Parsons’ consent to its proposed contract modifications. Capwin appeals.
Standard of Review
¶6 Summary judgment is only appropriate where there are no
genuine issues as to any material facts and the moving party is entitled to
judgment as a matter of law. Driver
v. Driver, 119
The court must initially examine the pleadings to determine whether a claim has been stated and whether a material issue of fact is presented. If the complaint states a claim and the pleadings show the existence of factual issues, the court examines the moving party’s affidavits or other proof to determine whether the moving party has made a prima facie case for summary judgment under sec. 802.08(2). If the moving party has made a prima facie case for summary judgment, the court must examine the affidavits and other proof of the opposing party to determine whether there exist[] disputed material facts, or undisputed material facts from which reasonable alternative inferences may be drawn, sufficient to entitle the opposing party to a trial.
¶7 On a summary judgment motion, a court does not decide issues
of fact. Fortier v. Flambeau Plastics Co.,
164
Discussion
¶8 “It is a well-settled principle of law that a repudiation of
the terms of a contract, and demand for performance substantially different
from that provided for in such contract, constitutes an anticipatory breach
which entitles the other contracting party to rescind.” Morn v. Schalk, 14
¶9 Parsons[4] argues that Capwin anticipatorily breached the contract because it demanded that Parsons sign the Closing Agreement and Tripartite Agreement in order to close as scheduled, and that both documents contained terms modifying the parties’ contract. Capwin responds that the record establishes that it only proposed the Closing and Tripartite Agreements and did not demand either as a condition of closing, and that extrinsic evidence establishes that both agreements memorialized the intent of the parties under the contract rather than introducing new obligations. Thus, to sustain the court’s ruling on summary judgment in favor of Parsons and Zingg on grounds that Capwin anticipatorily breached the contract, the record must establish both that Capwin’s proposed terms sought to modify the contract and that Capwin manifested its intent not to close absent Parsons’ consent to those agreements.
¶10 We first address Capwin’s argument that the parties’ contract
was ambiguous, and that the court improperly construed the parties’ intent
under the contract on summary judgment.
The disputed provision states as follows: “Buyer will be responsible for and pay for all
storm water detention improvements on its site and any related storm water
costs west of its site.” The parties
dispute whether this provision obligated Parsons to accommodate
post-development storm water runoff from the lots east of Parsons’ site. Capwin argues that the provision clearly
obligates Parsons to do so, and if not, the provision is ambiguous and requires
a factual determination of the parties’ intent.
Parsons argues that Capwin has only advanced an argument that the
contract is indefinite (and therefore unenforceable) rather than ambiguous,
under Management Computer Services, Inc. v. Hawkins, Ash, Baptie & Co.,
206
¶11 Parsons’ first argument, that Capwin’s ambiguity argument establishes
indefiniteness rather than ambiguity, is unavailing. Parsons does not develop this argument
further than to say that Capwin’s argument that “the language paints with a
broad brush” does not establish ambiguity, and that Capwin confuses ambiguity
with indefiniteness.[5] Because neither party has developed an
argument that the contract is unenforceable based on indefiniteness, we decline
to address this issue further.
¶12 “A contract provision is ambiguous if it is fairly susceptible
of more than one construction.” Management
Computer Servs., Inc. 206
¶13 “In summary judgment cases involving contract claims, [the
supreme court] has held that summary judgment should not be granted when the
contract is ambiguous and the intent of the parties is in dispute.”
¶14 We
turn, then, to the materials submitted with the parties’ summary judgment
pleadings. The focus of the parties’
arguments and the trial court’s order is a series of emails exchanged between
Smith and
1. May
5, 2005, Smith to
Jay: I talked to Craig [Parsons] following our telephone conversation of this date. Neither Craig nor I understand the substance of the agreement on Craig’s part to take care of storm water on lots 2 and 3. Where does that obligation arise? I don’t see it in the contract or any of the amendments. Are we talking pre and post construction runoff? I obviously need to know where this obligation comes from and what it entails. Also, please get me the agreement that you spoke of involving the obligation to build on lot 1 and pay the taxes and future assessments relating to lot 1. Thank you for your continuing efforts to get this matter concluded. JS
2. May
6, 2005,
Jim, thanks for your email message of yesterday afternoon. I understand that Craig Parsons may have spoken with CapWin’s engineer, Ron Klaas, who advised him that Lot 1 was to accommodate all stormwater run-off from Lots 2 and 3 only until such time as either Lot 2 or Lot 3 is developed. I will discuss this matter with my client this morning and get back to you.
Pursuant to your request, I am
transmitting a draft of the proposed “Tripartite Agreement” among our
respective clients and the
3. May
9, 2005,
Jim, a revised draft of the Tripartite Agreement follows as an attachment. I believe new paragraph 5 addresses the issue which we discussed last Friday. Please review it and let me know if it is acceptable.
We are hoping to obtain the Village’s input on the Tripartite Agreement before closing, but this may not be possible. However, I would like to have the agreement in a form which at least may be executed by our clients at the closing. I believe the demonstrated assent of two of the three parties to the Agreement may be of assistance in obtaining the ultimate approval of the Village.
I am hoping to complete a draft of the Closing Agreement by tomorrow. At the present time I am awaiting input which my client has requested from Blake George. One of the issues I would like to address in the Closing Agreement is what our clients will do in the event the Village seeks to modify the Tripartite Agreement before it will agree to execute it. In such a case, I would like our clients to agree to work cooperatively with one another and with the Village in order to negotiate a form of agreement which is acceptable to all three parties. Moreover, should the Village ultimately decide not to release CapWin, as currently contemplated by paragraph 6, I would like to require in the Closing Agreement that your client indemnify CapWin from and against the default or failure of your client to perform and satisfy fully each of the obligations it is assuming under the Tripartite Agreement.
Please let me know your thoughts concerning the revised draft which follows. Note that I have highlighted the revisions by underlining.
4. May
12, 2005, Smith to
Dear Jay:
I am enclosing a revised Paragraph 1 of the “Closing Agreement” which I believe accurately and correctly describes the agreement between the parties relating to storm water management as set forth in the offer to purchase, as amended.
I am also suggesting that the last sentence in Paragraph 3 of the “Closing Agreement” be restated as follows:
Buyer further covenants and agrees that in the event the Village shall refuse to enter into the Tripartite Agreement or otherwise fail to release Seller from liability for the performance for all of the obligations assumed by Buyer thereunder, Buyer shall nevertheless be required to perform and shall perform all of the duties and obligations which it has assumed as set forth in the Tripartite Agreement.
Please review this language with your client and get back to me.
5. May
12, 2005,
Following as attachments are the revised Warranty Deed … and Closing Agreement …. Please note the following revisions in each document:
….
Closing Agreement—note that I have revised the final sentence of paragraph 3 to incorporate some of the language which you have proposed; however, my client and I still believe the indemnity of the [Seller] must be included, albeit in a slightly more limited fashion.
Due to prior commitments, I will need to leave the office by 4:00 p.m., today. I also will need to make arrangements to meet with Mr. Ziegler this evening in order to obtain his signature on all required documents. Please let me know if the accompanying documents are now acceptable to you and your client.
6. May
12, 2005, Smith to
Jay: After reviewing the proposed closing agreements and discussing it with Craig Parsons, it is our position that closing on this transaction cannot proceed. Simply put, there is no area left on lot 1 which can be used to create additional storm water management facilities. It was never intended that lot 1 was to be used as a reservoir to catch and handle the storm water from lots 2 and 3 after they are developed. It is impossible to meet this condition and Parsons never contracted to do so. Second, paragraph 4 of the closing agreement does not address the fact that the Buyer is already paying an additional $15k at closing to cover the cost of the temporary access road. So he is being asked to pay that money unconditionally toward the cost of construction of the road, and in addition, he is putting in $10k as part of the escrow agreement.
[It] is clear that the $15k may simply be kept by the seller, and not used at all for road construction purposes. The closing agreement states that the seller is a party to the escrow agreement, and in fact is not a party. Finally, we have no resolution of the Tripartite agreement, nor an agreement on the part of the Village to sign it. Closing is therefore not possible at this point, as there are too many unresolved major issues. JS
¶15 Smith faxed a letter to Griffin following his email, stating
that Parsons “was ready, willing and able to close on the purchase of Lot 1 on May
13, 2005, according to the terms and conditions of the offer to purchase, as
amended (“Contract”),” but that the disagreements between the parties over the
terms in the proposed agreements “which have arisen in the last 48 hours render
closing impossible.”
¶16 The communications between counsel demonstrate that the
parties’ intent under the contract was in dispute.[7] Thus, the issue of what the parties intended
under the contract cannot be resolved on summary judgment. Parsons argues, however, that whether or not
the agreements imposed new obligations as to storm water management, they
introduced for the first time the issue of Parsons indemnifying Capwin against
the
¶17 Parsons contends that the communications between Smith and
¶18 Finally, Zingg argues that we should sustain the court’s summary judgment ruling as to him on alternative grounds; that is, that he was released from liability through his assignment to Parsons and the fact that the lease contingency in his original offer to purchase was never satisfied.[9] Capwin replies that the facts do not establish more than a mere assignment, which is insufficient to relieve Zingg of liability, and that Zingg is barred from raising his lease contingency argument based on waiver and estoppel. We conclude that there are factual disputes as to these issues precluding a ruling on summary judgment.
¶19 Zingg argues that even though an assignment itself is not sufficient to preclude his liability, the record establishes “facts other than the other contracting party’s mere consent to the assignment” that relieve him of liability, citing Mandel v. Fischer, 205 A.D.2d 375, 376 (N.Y. App. Div. 1994). Specifically, Zingg points to Capwin’s negotiating exclusively with Parsons after the assignment as establishing that Capwin knew that Zingg was merely a “straw man” in the transaction between Zingg and Parsons. Capwin disputes this categorization of the record, and argues that the exchanges merely show that Capwin consented to the assignment, which is insufficient under Mandel to cut off Zingg’s liability. Because resolving this dispute requires factual and credibility determinations as to the meaning of Capwin’s exclusive negotiations with Parsons, we are unable to do so on summary judgment.
¶20 Zingg’s other argument as to his liability is that his original
offer to purchase contained a lease contingency that was never satisfied, thus relieving
him of liability under the contract.
Capwin responds that Zingg executed amendments to the contract and
assigned his interest to Parsons after the date he claims the contract became
void due to failure to fulfill the lease contingency. Capwin argues that Zingg is thus precluded from
raising this argument through waiver and estoppel, citing Milas v. Labor Association of
Wisconsin, Inc., 214
¶21 We are unable to determine whether either waiver or equitable
estoppel apply at this point in the proceedings. As to waiver, which has been defined as a
“voluntary and intentional relinquishment of a known right,” we are unable to
determine if the “essential element” of Zingg’s “intent to relinquish” his
right to raise the issue of the lease contingency exists based on his further
involvement with the contract. See id. at 9. As to equitable estoppel, that doctrine
requires an action or non-action by the opposing party that induced reasonable
reliance by the claiming party to the claiming party’s detriment.
By the Court.—Order reversed and cause remanded with directions.
Not recommended for publication ion the official reports.
[1] The
three proposed parties to the Tripartite Agreement were Capwin, Parsons, and
the
Portions of the email communications between Smith and
[2] Because this summary judgment motion focuses on whether Capwin anticipatorily breached the contract by conduct prior to the closing, thus relieving Parsons of its obligation to attend the closing under the contract, only pre-closing conduct is relevant to this appeal. We thus do not address the parties’ recitations of facts that occurred during and subsequent to the scheduled closing.
[3] During
oral arguments, the circuit court asked the parties whether they agreed that
there were no material facts in dispute, as each party had requested the court
grant summary judgment in its favor.
Counsel for Capwin explained that Capwin believed it was entitled to
summary judgment based on the undisputed facts regarding the conduct of the
parties after closing, which it believed established that Parsons breached its
contractual obligation to attempt to resolve disputes between the parties. Counsel continued: “However, there are lots of issues of fact,
core disputes of fact between the people up to that point in time.” Regardless, even if parties agree on summary
judgment that the material facts are undisputed, both the circuit court and the
reviewing court must determine, as a matter of law, whether any material facts
are in dispute. Precision Erecting, Inc. v. AFW
Foundry, Inc., 229
All references to the Wisconsin Statutes are to the 2005-06 version unless otherwise noted.
[4] Although both Zingg and Parsons submitted summary judgment motions, their arguments as to whether Capwin anticipatorily breached the contract are parallel. Thus, in this portion of the opinion, we refer to Parsons to refer to the arguments advanced by Zingg and Parsons collectively. Later, we address the arguments raised by Zingg as to his individual liability separately.
[5] “Vagueness
or indefiniteness as to an essential term of the agreement prevents the
creation of an enforceable contract, because a contract must be definite as to
the parties’ basic commitments and obligations.” Management Computer Servs., Inc. v. Hawkins,
Ash, Baptie & Co., 206
[6] There
is some dispute between the parties as to when
[7] Capwin points to other material that it argues establishes that the parties intended Parsons to accommodate storm water runoff according to the terms of its proposed agreements. While those materials may support Capwin’s argument to resolve the dispute in its favor, our conclusion that the parties’ intent was in dispute precludes summary judgment in either party’s favor.
[8] Parsons also references the documents Capwin signed at the scheduled closing and an internal email among Capwin affiliates concerning the agreements. Because that material is not relevant to whether Capwin unequivocally manifested its intent to Parsons that it would not close absent its version of the agreements, we decline to consider them. Moreover, we do not agree with Parsons that the language in the proposed agreements establishes that Capwin demanded those terms. To the extent Parsons argues that the agreements state that Parsons must assume certain obligations, those demands amount to a repudiation only if Capwin also demanded that Parsons sign the agreements on threat of Capwin’s nonperformance. Thus, we will not consider the language of the proposed agreements in determining whether Capwin repudiated by demanding Parsons sign those agreements. Moreover, while the language of the agreements is relevant to whether the agreements would have modified the terms of the written contract, we have explained we cannot interpret the ambiguous contract provision on summary judgment to resolve this factual dispute.
[9] The trial court did not address Zingg’s arguments as to his personal liability, because it granted summary judgment to both defendants based on its finding that the record established that Capwin anticipatorily breached the contract. However, because we review summary judgment motions de novo, we are not precluded from considering it. See B&D Contractors, Inc. v. Arwin Window Systems, Inc., 2006 WI App 123, ¶4 n.3, 294 Wis. 2d 378, 718 N.W.2d 256.