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COURT OF APPEALS
DECISION
DATED AND FILED
February 5, 2009
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 No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT IV
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Frank E. Baldwin,
Plaintiff-Appellant,
v.
F.C. Land, LLC,
Defendant-Respondent.
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APPEAL
from a judgment of the circuit court for Dane County: richard
g. niess, Judge. Affirmed.
Before Vergeront, Lundsten and Bridge, JJ.
¶1 VERGERONT, J. This appeal arises out of a
contract between F.C. Land, LLC, and Frank Baldwin for the sale of vacant
land owned by F.C.
Land. Baldwin
initiated this suit after a contingency concerning approval of a certified
survey map was not fulfilled within the relevant time period and the
transaction did not close. The circuit
court dismissed on summary judgment Baldwin’s claim for breach of the duty of
good faith implied in every contract and, after a trial to the court, concluded
that F.C. Land
was not obligated to convey the land upon Baldwin’s
unilateral waiver of the contingency. Baldwin challenges both these decisions. For the reasons explained below, we affirm.
BACKGROUND
¶2 Baldwin executed an offer to purchase certain vacant land in
the City of Sun Prairie and F.C. Land
accepted the offer on August 2, 2004.
The property was identified as two lots—Lot
1 and Outlot 1—on a proposed certified survey map attached to the offer to
purchase. We will refer to these two lots
as “the Property.” The closing date was
September 15, 2004. One of the contingencies
provided: “This offer to purchase is
contingent upon Certified Survey Map approval by the City of proposed use prior
to closing.” Baldwin’s
plan was to construct an office building on the Property.
¶3 The closing date was extended three times by agreement of the
parties—to October 15, 2004, to February 15, 2005, and to April 15, 2005. As of April 15, 2005, Sun Prairie had not
approved a certified survey map (CSM) to create the lots that were to be
conveyed to Baldwin under the contract. Baldwin informed F.C. Land
that he wanted to either close the transaction on April 15 or extend the
closing date for another thirty days. F.C. Land
responded by returning the earnest money and did not close the
transaction. The City approved the
Montana Avenue CSM on May 17, 2005, and it was recorded on June 17, 2005. According to an affidavit submitted by Baldwin, the Montana Avenue CSM that was approved and
recorded was not the same as the proposed CSM attached to the offer to purchase. While both contained the Property, the
Montana Avenue CSM contained property in addition to that contained in the proposed
CSM in order to accomplish the extension of Montana Avenue to Ironwood Drive.
¶4 Baldwin filed this action
seeking specific performance and monetary damages. The amended complaint alleged that F.C. Land
breached the duty of good faith implied in every contract by not promptly
applying for and obtaining approval of a CSM before the deadlines. The complaint also alleged that F.C. Land
breached the contract by not obtaining approval of a CSM and by not closing the
transaction.
¶5 F.C.
Land moved for
summary judgment on both claims. The
circuit court concluded that F.C. Land was entitled to summary judgment on the claim
that F.C. Land had breached its duty of good faith
by failing to timely apply for and obtain approval of a CSM. It therefore dismissed that claim. As to the breach of contract claim, the court
concluded that there was a disputed issue of material fact—specifically,
whether the contingency was solely for the benefit of Baldwin,
as he claimed, and thus could be unilaterally waived by him, or whether it
benefited both parties. After a trial to
the court on the contract claim, the court determined that the contingency was
beneficial to both parties and therefore could not be unilaterally waived by Baldwin.
Accordingly, the court concluded that F.C. Land
had not breached the contract by failing to convey the Property without an
approved CSM, and it dismissed the contract claim.
DISCUSSION
¶6 On appeal Baldwin contends
that the court erred in dismissing both claims.
First, he asserts there were competing reasonable inferences from the
evidence that entitled him to a trial on his claim for breach of the duty of
good faith. Second, Baldwin contends
that the court erred in determining that, because the contingency benefited F.C. Land
as well as him, he could not unilaterally waive it.
I. Summary Judgment
on Breach of Duty of Good Faith Claim
¶7 A party is entitled to summary judgment if there are no genuine issues of material fact and
that party is entitled to judgment as a matter of law. Wis.
Stat. § 802.08(2) (2007-08).
We employ the same methodology as the
circuit court and our review is de novo. Green Springs Farms v. Kersten, 136 Wis. 2d 304, 314-16, 401
N.W.2d 816 (1987). In analyzing the
factual submissions, we view them most favorably to the opposing party and draw
all reasonable inferences
in favor of that party. Burbank Grease Servs. v. Sokolowski,
2006 WI 103, ¶40, 294 Wis.
2d 274, 717 N.W.2d 781. Whether an inference is reasonable and whether
more than one reasonable inference may be drawn from particular evidence are
questions of law, which we review de novo.
H&R Block E. Enters. v. Swenson, 2008 WI App 3, ¶11, 307 Wis. 2d 390, 745 N.W.2d
421 (Ct. App. 2007).
¶8 The duty of good faith, implied in every contract, includes a
good faith effort to accomplish the goal of the contract. Estate of Chayka, 47 Wis. 2d 102, 107, 176
N.W.2d 561 (1970). The absence of good
faith may consist of “inaction … evasion of the spirit of the bargain, lack of
diligence and slacking off,” among other conduct. Foseid v. State Bank of Cross Plains,
197 Wis. 2d
772, 797, 541 N.W.2d 203 (Ct. App. 1995) (citations omitted).
¶9 In support of its motion for summary judgment on Baldwin’s
claim that F.C. Land
had breached its duty of good faith, F.C.
Land submitted the affidavit of Jerry
Connery, a member of F.C.
Land. His affidavit and attached exhibits contain
the following explanation for the length of time involved in the process of
obtaining approval of the Montana Avenue CSM.
The Property is located in an area that is being developed by means of at
least two other projects. One of the other
projects is West Prairie Village, also owned by F.C. Land. The Montana Avenue CSM could not be recorded
until the recording of the West Prairie Village Plat, which established the
location of what is now Ironwood
Drive. Ironwood
Drive, in conjunction with an extension of Montana Avenue, provides access from the
Property to Highway 19. In addition, under
the City of Sun Prairie’s requirements, F.C. Land’s
acquisition of the land for Ironwood
Drive necessitated that a CSM for land directly
west of the Montana Avenue CSM, owned by someone other than F.C. Land,
first be approved and recorded. (We will
refer to this CSM as the Winter CSM.) Finally, in establishing the location of Ironwood Drive, F.C. Land
discovered that a wetland area was affected, and the requisite approvals and
permits to fill and relocate the affected wetlands were not granted until May
2005. Connery’s affidavit details
numerous steps, with dates, that F.C. Land took in the course of obtaining approval of the Montana Avenue CSM, including
those involving storm water management plans for West Prairie Village and for
the Property and the sewer system for West Prairie Village. The West Prairie Village Plat and the Winter
CSM, like the Montana Avenue CSM, were approved on May 17, 2005.
¶10 Baldwin did not submit any
factual materials contradicting the above averments in Connery’s affidavit. His position in the circuit court, as it is
on appeal, is that there are reasonable inferences that can be drawn from
undisputed facts and F.C.
Land’s submissions that
show a breach of the duty of good faith.
We agree with the circuit court that the inferences Baldwin
relies on are not reasonable inferences.
¶11 First, Baldwin contends that a reasonable fact finder could
infer a breach of the duty of good faith from the fact that F.C. Land never
submitted the proposed CSM attached to the offer to purchase for approval. We agree with the circuit court that the
contract for sale does not plainly require that the attached proposed CSM be
approved; it is reasonable to read the contingency as referring to approval of
a CSM that contains the Property.
Therefore, it is not reasonable to infer lack of good faith from the
fact that F.C. Land submitted for approval a
somewhat different CSM containing the Property.
¶12 Second, Baldwin contends that a reasonable fact finder could
infer a breach from the fact that F.C. Land did not submit the Montana Avenue
CSM until March 14, 2005. However, there
is no basis in the evidence for reasonably inferring that it could have been
submitted sooner or, if it had been, that it would have been approved sooner. Without these inferences, there is no
reasonable basis for inferring that the failure to submit the Montana Avenue CSM
approval sooner was a breach of the duty of good faith.
¶13 We address Baldwin’s third and
fourth points together. Baldwin contends
that it is reasonable to infer that F.C. Land’s efforts to obtain approval of
the West Prairie Village Plat were not necessary to obtain approval of a CSM
containing the Property, and thus F.C. Land’s efforts regarding the former do
not show any effort to obtain approval of the latter. As a basis for this inference, Baldwin points to the absence of any contingency in the
contract for sale relating to the West Prairie Village Plat and to evidence
indicating that the Property is not in that plat and not directly adjacent to
it. More particularly, Baldwin
asserts there was no need to provide access to the Property by means of an
extension of Montana Avenue
to the west and a new street, Ironwood
Drive, because Montana Avenue to the east was an already
platted right-of-way with access to Thompson
Road.
¶14 The fact that the West Prairie Village Plat is not mentioned as
part of the contingency and the fact that the Property is neither in this plat
nor directly adjacent to it do not in themselves give rise to a reasonable
inference that approval of the plat is unrelated to or unnecessary for approval
of a CSM containing the Property. Connery’s
affidavit avers that the plat was necessary to establish a road, Ironwood Drive, that
in conjunction with Montana Avenue
would provide access from the Property to Highway 19. Baldwin’s
submissions do not dispute that approval of the plat was necessary for this
purpose, nor do they dispute that Ironwood
Drive in conjunction with the extension of Montana Avenue
provides access from the Property to Highway 19. As a basis for his assertion that this new
access was unnecessary for the Property, Baldwin refers to a page in a document
prepared on behalf of F.C.
Land in connection
with the extension of Montana
Avenue, explaining the need for an extension. Baldwin does
not cite any particular language, but we assume he means us to read this portion
of the page:
The purpose of the project is to extend a roadway to
allow development of upland areas adjacent to it in a way deemed safe by the
Wisconsin Department of Transportation. (WisDOT). Montana Avenue is an existing platted
right-of-way and needs to be extended in order to avoid a long dead end street
that does not meet the City of Sun Prairie standards. The extension of this street will allow for a
connection to State Trunk Highway (STH) 19 and also County Trunk Highway (CTH)
C. The road will serve new office and
commercial development. This street is
an existing platted roadway that currently dead-ends approximately 1300 feet
west of Thompson Road.
The remainder of this paragraph
describes why an impact on the wetland is unavoidable.
¶15 Without further elaboration or reference to other evidence in
the record, we do not view the above-quoted language as a basis for reasonably
inferring that an extension of Montana
Avenue to the west was not necessary to provide
adequate access for the Property to State Highway 19 and County Highway C. We decline to search through the record to
see if we can gain more information on what access already existed from the
Property to Highway 19 and how that compared to the extension of Montana Avenue
westward to the new Ironwood Drive. In
addition, Baldwin refers us to no evidence
that provides the basis for a reasonable inference that the City would have
approved a CSM containing the Property before the extension of Montana Avenue and the
new road, Ironwood Drive,
were established by the plat.
¶16 We also observe that the evidence submitted by F.C. Land
shows that there were storm water management issues for both the Property and West Prairie Village. Baldwin
refers us to no evidence that would provide a reasonable basis for inferring
that the City would have treated these issues separately and on separate
timetables.
¶17 Baldwin’s fifth point is that a reasonable fact finder could
infer that F.C. Land’s
failure to inform Baldwin of a significant
obstacle—the need for a land exchange and another CSM to obtain the land for the
Ironwood Drive
intersection—constituted a breach of the duty of good faith. However, Baldwin points to nothing in the
record that shows, or provides a reasonable basis for inferring, that Baldwin did not know about this.
¶18 Finally, Baldwin contends that a reasonable fact finder could
infer that F.C. Land knew or should have known there
was no chance of closing the transaction. In support of this contention, Baldwin asserts
that the evidence gives rise to a reasonable inference that F.C. Land
was a sophisticated developer and knew of the City’s approval process and the
time necessary to obtain a CSM containing the Property. We agree it is reasonable to infer from the
evidence that F.C. Land was a sophisticated developer and we will assume
without deciding that it is reasonable to infer that F.C. Land
was generally familiar with the City’s plat and CSM approval process. We do not agree that this is a sufficient
basis for a reasonable fact finder to infer that F.C. Land
knew how long it would take to obtain approval of a CSM containing the
Property. Baldwin
points to no evidence showing that the timing of the approval process is
predictable. So far as the record
discloses, it is possible that a sophisticated developer with knowledge of the
approval process could have reasonably believed that the time frames were
adequate to obtain approval.
¶19 The specific evidence Baldwin points is a December 29, 2004
email from a city planner to F.C.
Land’s counsel in
response to an email from that counsel attempting to speed up the process for
approval of the plat. The city planner,
after a discussion with other city staff, set forth a schedule for submissions
by F.C. Land and meetings by the relevant city bodies whereby final approval
could be obtained on April 5, 2005, with the caveat that “this is the best case
scenario and the elected and appointed officials have the final decision-making
authority on whether the application moves forward or not.” Baldwin contends that, accepting Connery’s averment
that the plat had to be approved before the Montana Avenue CSM, and given that the
next regular city council meeting after April 5, 2005, was April 19, 2005, it
is reasonable to infer that, when F.C. Land agreed with him on February 8, 2005,
to extend the closing date to April 15, 2005, F.C. Land knew approval of the
CSM could not be obtained prior to April 15, 2005.
¶20 The flaw in this argument is that there is no reasonable basis
for inferring that F.C.
Land knew that, if
the plat was approved on April 5, 2005, the Montana Avenue CSM could not be
approved before April 19, 2005. It is
undisputed that the West Prairie Village Plat and the Montana Avenue CSM, as
well as the Winter CSM, were all approved on the same date by the city council,
May 17, 2005. To the extent F.C. Land is
relying on Connery’s affidavit as the basis for an inference that the plat had
to be approved at a city council meeting before the city council meeting at
which the CSM was approved and that F.C. Land knew this, that is not a
reasonable inference from his affidavit.
Connery avers that the “Montana Avenue CSM could not be recorded until after the ‘West Prairie
Village’ Plat was first recorded …”
and “… the Montana Avenue CSM could not be recorded
before the Winter CSM or the WPV Plat were approved
and recorded.” (Paragraphs 7 and 8)
(emphasis added). This does not address
the required order of approval between the plat and the Montana Avenue CSM, and
the contingency refers only to “approval.” However, even if we were to assume that
Connery meant the plat had to be approved
before the Montana Avenue CSM was approved,
there is no basis for inferring that this could not happen at the same city
council meeting and that F.C.
Land knew or should have
known that.
¶21 In short, we agree with the circuit court that Baldwin’s argument that he is entitled to a trial on the
good faith claim is based on speculation rather than on reasonable inferences
drawn from the record. F.C. Land
submitted detailed evidence showing the steps it took to obtain approval of the
Montana Avenue CSM, the Winter CSM, and the West Prairie Village Plat and
evidence of the connection between them.
In order to create a genuine issue of material fact for trial, it was
incumbent on Baldwin to submit evidence showing that F.C. Land unnecessarily
complicated or prolonged the process for obtaining approval of a CSM containing
the Property or otherwise acted in a manner inconsistent with a good faith
effort to meet the contingency by the agreed upon closing date. Baldwin did not do that, and the evidence F.C. Land submitted
does not reasonably allow the inferences that Baldwin
asks us to draw.
II. Trial on Breach
of Contract Claim
¶22 Baldwin’s challenge to the trial court’s determination that F.C. Land did
not breach the contract for sale is limited to his contention that he had the
right to unilaterally waive the contingency, thus obligating F.C. Land
to convey the Property. He does not
contest the court’s finding that the contingency benefited both parties. The court found that, although the
contingency was inserted by Baldwin’s counsel for Baldwin’s benefit, F.C. Land
accepted that contingency as beneficial to it, and it was beneficial to F.C. Land
because without fulfillment of the contingency the contract for sale would have
been void.
As we understand Baldwin’s
position, he asserts that, even if a contingency or condition benefits both
parties, the party who inserted it for its own benefit can unilaterally waive
it.
¶23 In order to resolve this issue, we must decide the correct
legal standard to apply to the facts found by the circuit court. This presents a question of law, which we
review de novo. McLellan v. Charly, 2008
WI App 126, ¶28, 758 N.W.2d 94.
¶24 Baldwin relies on Godfrey Co. v. Crawford, 23 Wis. 2d 44, 49, 126
N.W.2d 495 (1964), in support of his position.
In Godfrey the contract provision at issue stated that, if a
certain zoning revision was not consummated by a certain date, the contract
would become null and void and all money paid by the buyer would be
returned. Id. at 48. The court agreed that the provision benefited
both parties—the buyer because nonfulfillment of the zoning revision cancelled
his liability and returned to him the money he had paid, and the sellers
because nonfulfillment terminated their liability and freed them to sell the
property to someone else. Id. The court then noted “the general rule … that
a party to a contract can waive a condition that is for his benefit.” Id.
at 49. However, before concluding that
the buyer could unilaterally waive this provision, the court analyzed whether
such a waiver would interfere with the protections afforded the sellers by this
provision. Id.
The court concluded a waiver would not interfere because the sellers had
no protectable interest in whether or not the zoning
revision has been consummated as such, but only in knowing on March 1, 1963,
that either (1) the buyer is absolutely bound to immediately pay the balance of
purchase price, or (2) the contract is at an end and they are immediately free
to sell to someone else.
Id.
¶25 A later case, Goebel v. First Federal Savings & Loan Ass’n,
83 Wis. 2d
668, 677, 266 N.W.2d 352 (1978), made clear that one party may not waive a
provision in a contract where “waiver would deprive the non-waiving party of a
benefit under the provision in question.”
Goebel cited Godfrey in support of this
proposition. Id.
The Goebel court concluded that the provision in a mortgage note limiting
the term of the loan was not solely for the benefit of the lender because in
certain situations it would have the effect of relieving the borrower of the
obligation to pay an additional sum for increased interest. Id.
at 678. Therefore, the lender could not
waive that provision and extend the term of the loan. Id.
¶26 We read Godfrey and Goebel to permit a party
to a contract to unilaterally waive a contingency that protects the interests
of both parties only if waiver does not adversely affect the interests of the
non-waiving party that are protected by that provision. We see nothing in these cases that suggests
that it is relevant which party initially caused the provision to be inserted
in the contract, if the provision protects the interests of both parties.
¶27 Baldwin also argues that the contingency is not really
necessary to protect F.C.
Land from having to
convey the Property without approval of a CSM.
He appears to concede that it would be a violation of the Sun Prairie
ordinance to convey the Property without an approved CSM (or other specified
means of land division) and that a contract is void if it requires an illegal
act or if a penalty would be imposed upon performance. See
Hiltpold
v. T-Shirts Plus, Inc., 98 Wis.
2d 711, 716-17, 298 N.W.2d 217 (Ct. App. 1980).
However, he contends that, because the good faith implied in every
contract requires that F.C. Land would do what is necessary to lawfully convey
the Property even without the contingency, F.C. Land
would obtain approval of a CSM even without the contingency and the conveyance
would be lawful. We do not understand
this argument. It is inconsistent with the
circuit court’s finding that the contingency benefited F.C. Land, but Baldwin does
not develop an argument to dispute that finding. Moreover, following the logic of Baldwin’s
argument, as we understand it, the contingency is not necessary to protect his
interests either, because even without it F.C. Land
is obligated to obtain approval of a CSM before the closing date. Because this argument lacks coherence, we do
not address it further.
¶28 We conclude the circuit court applied the correct law to its
findings of fact in deciding that Baldwin was
not entitled to unilaterally waive the contingency. The court’s conclusion that F.C. Land
was not obligated to convey the Property was therefore correct.
CONCLUSION
¶29 The circuit court correctly determined that F.C. Land
was entitled to summary judgment in its favor on Baldwin’s
claim for breach of the duty of good faith.
The court also correctly determined that Baldwin did not prove at trial
that F.C. Land had breached the contract for
sale. Accordingly, we affirm.
By the Court.—Judgment affirmed.
Not recommended
for publication in the official reports.