2009 WI App 160
court of appeals of
published opinion
Case No.: |
2008AP1845 |
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Complete Title of Case: |
†Petition For Review Filed |
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Town Bank,
a Wisconsin Banking Corporation, Plaintiff-Appellant, v. City Real
Estate Development, LLC, Defendant-Respondent.† |
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Opinion Filed: |
October 28, 2009 |
Submitted on Briefs: |
May 19, 2009 |
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JUDGES: |
Neubauer, P.J., |
Concurred: |
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Dissented: |
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Appellant |
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ATTORNEYS: |
On behalf of the plaintiff-appellant, the cause was
submitted on the briefs of Paul R. Erickson and Kari H. Race of Gutglass, Erickson, |
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Respondent |
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ATTORNEYS: |
On behalf of the defendant-respondent, the cause was
submitted on the brief of Thad W. Jelinske, Jennifer S.
Walther, and Michael J. Anderson of |
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2009 WI App 160
COURT OF APPEALS DECISION DATED AND FILED October 28, 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. |
2008AP1845 |
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STATE OF |
IN COURT OF APPEALS |
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Town Bank,
a Wisconsin Banking Corporation, Plaintiff-Appellant, v. City Real
Estate Development, LLC, Defendant-Respondent. |
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APPEAL
from a judgment of the circuit
court for
Before
Neubauer, P.J.,
¶1 ANDERSON, J. Town
Bank, A Wisconsin Banking Corporation, filed a complaint for declaratory relief
against City Real Estate Development, LLC (CRED) asking the trial court to
grant declaratory relief and find that the parties entered into a stand-alone
$2.5 million loan and that Town Bank fully performed its obligations under that
loan. Town Bank moved the trial court to
grant summary judgment on its complaint and for dismissal of CRED’s
counterclaims on the grounds that the only loan obligations Town Bank had were
under a Term Credit Agreement (TCA) and an incorporated $2.5 million note and
that Town Bank fully performed those obligations. CRED contended that Town Bank was
also obligated to provide an additional $6.5 million loan under a prior loan
commitment and the TCA. Town Bank
responded that the TCA’s integration clause and the parole evidence rule
precluded consideration of any prior agreement in construing the TCA. The trial court denied Town Bank’s
motion finding that the TCA was ambiguous as to whether it was a stand-alone
transaction. The case was tried to the jury, and the
judgment was entered, ordering that CRED recover from Town Bank the sum of
$600,000, as claimed delay damages arising from Town Bank’s failure to provide
the additional loan amount of $6.5 million, plus statutory fees and costs in
the amount of $20,359.48.
¶2 Town Bank appeals, asking the court to reverse the judgment and remand this case to the trial court with instructions to enter judgment granting the declaratory relief sought by Town Bank and dismissing the counterclaims. Upon review, we hold that the TCA was an unambiguous stand-alone agreement between the parties and the only agreement under which Town Bank had loan obligations to CRED. Therefore, we conclude that the trial court erred in denying Town Bank summary judgment.
¶3 In early 2004, a member of CRED, David Leszcyzinski,
approached Town Bank for financing for a condominium project entailing the
acquisition and renovation of a
I. Credit Facility
$9,000,000 Construction Line
A) $2,500,000 initial funding for acquisition of building and completion of demolition, engineering, asbestos removal and marketing.
B) $6,500,000 additional funding for the construction of condominium units as pre-sales dictate. Bank financing will be based on 75% of the pre-sold units.
….
VI. Collateral
1st R/E mortgage on Subject Property—
1st Lien Security Agreement on Fixtures and
Other Assets
Assignment of Rents and Leases and Developer’s
Contracts
….
VIII. Additional Terms & Conditions
Closing of this loan is contingent upon but not limited to the following:
A. Subject to satisfactory review of appraisal, title commitment, Environmental report, construction plans, and final review of loan documents by the Bank’s legal counsel.
B. Borrower agrees to contribute $900,000 in up front equity capital prior to closing.
C. Borrower agrees to pay closing costs, including title, filing and documentation.
D. Borrower and guarantors agree to provide annual personal financial statements and tax returns.
….
In order to be effective in any regard, this letter must be properly executed and returned to the Bank by June 11, 2004. This commitment may be terminated at the sole option of Town Bank if the credit agreement is not executed by June 25, 2004.
¶4 During June and July 2004, Leszcyzinski represented to Town
Bank the progress on the
1. Term Loan. (Check (a) or (b): only one shall apply)
….
(b) Multiple Notes; Multiple Advances. TIf checked here, and in consideration of extensions of credit from Lender to Customer from time to time, Lender and Customer agree that section 4 through 19 of this Agreement shall apply to each such extension of credit unless evidenced by a document which states it is not subject to this Agreement. The term “Loan” includes all such extensions of credit. The term “Note” includes each promissory note evidencing Customer’s obligation to repay an extension of Credit. This Agreement does not constitute a commitment by Lender to make such extensions of credit to Customer.
….
14. Entire Agreement. This Agreement, including the Exhibits attached or referring to it, the Note and the Security Documents, are intended by Customer and Lender as a final expression of their agreement and as a complete and exclusive statement of its terms, there being no conditions to the full effectiveness of their agreement except as set forth in this Agreement, the Note and the Security Documents.
The Note included the following clause among others:
9.
Interpretation. This Note is
intended by Maker and Lender as a final expression of this Note and as a
complete and exclusive statement of its terms, there being no conditions to the
enforceability of this Note. This Note
may not be supplemented or modified except in writing. This note benefits Lender, its successors and
assigns, and binds Maker and Maker’s heirs, personal representatives,
successors and assigns. The validity,
construction and enforcement of this Note are governed by the internal laws of
¶5 Town Bank and CRED continued their negotiations regarding the
construction financing after the July $2.5 million acquisition loan was
completed. On November 19, 2004, and on
December 28, 2004, Town Bank sent CRED letters informing that Town Bank was no
longer willing to proceed with the loan agreement proposed in the
Commitment. On December 23, 2005,
counsel for CRED sent a letter to Town Bank stating that CRED would file a complaint
if CRED did not receive a substantial settlement proposal with respect to
additional funds to be provided under the Commitment. In response thereto, Town Bank filed an
action for declaratory judgment, asking the court to find that the parties had
entered into a stand-alone $2.5 million short-term loan agreement, and that
Town Bank had fully performed its obligations under that loan agreement. CRED
filed an answer and counterclaims arguing, inter alia, that Town Bank breached
an agreement to finance an additional $6.5 million of construction financing
under the Commitment and that Town Bank’s failure to perform caused CRED delay
damages.
¶6 Town Bank initially filed a motion for summary judgment on
October 13, 2006, claiming that
any and all loan obligations with regard to CRED were set forth in the TCA and
such obligations were fully performed by the bank when it issued the Note. The trial court denied the motion, noting
that the matter might be ripe for summary judgment at a later date after
additional discovery. Town Bank filed
another motion for summary judgment on October 19, 2007. However, the trial court again denied the motion, finding that the TCA was ambiguous as
to whether it was a stand-alone agreement.
It ordered the case to proceed to a jury trial.
¶7 Town Bank argues that its
motion for summary judgment was erroneously denied because the TCA is
unambiguous and constitutes the only and entire agreement between the parties. CRED
claims that the TCA is not the sole agreement between the parties and that the
trial court properly denied a motion for summary judgment because there are
disputed issues of fact as to whether the Commitment is part of the terms of
the agreement set forth in the TCA. With respect to the Commitment, Town
Bank argues that the parol evidence rule bars the
introduction of the Commitment to construe the terms of the TCA. Town Bank further argues that even if the
terms of the Commitment are admissible, it had no obligation under the
Commitment because CRED failed to meet the conditions therein, thereby
repudiating the agreement.
¶8 We review a motion for summary judgment de novo, applying the
same standard as the circuit court. Green
Spring Farms v. Kersten, 136
¶9 In its motion for
summary judgment, Town Bank asked the
trial court to interpret the written contract between the parties. “[T]he cornerstone of contract construction
is to ascertain the true intentions of the parties as expressed by the contractual
language.” State ex rel. Journal/Sentinel,
Inc. v. Pleva, 155
¶10 In the present case, CRED appeals to the doctrine of partial integration, claiming that the TCA is only a partial integration and, thus, the Commitment should be examined in conjunction with the TCA to determine the parties’ intent. CRED claims that the Commitment itself establishes that the parties intended a two-part credit facility in the total amount of $9 million and that the Note attached to the TCA is for the exact amount of $2.5 million, which is the amount identified in the Commitment as the initial funding. CRED also argues that Town Bank’s internal document shows that Town Bank affirmed the existence of the Commitment and the two-phase nature of the loan. In effect, CRED contends that the TCA is the “vehicle,” or credit agreement, through which the second phase of the parties’ intended additional loan of $6.5 million was to be made and that extrinsic evidence should be considered when construing the TCA to establish the same. We do not consider CRED’s argument to be persuasive.
¶11 In ascertaining the intent of the parties, a court must adhere
to the plain meaning of the contract if a contract is unambiguous. Hortman v. Otis Erecting Co., Inc.,
108
¶12 CRED relies on Federal Deposit Insurance Corp. in
support of its argument that the Commitment should be introduced because the
TCA is a partial integration. However,
CRED overlooks the factual difference between Federal Deposit Insurance Corp.
and the present case. The factual
background of Federal Deposit Insurance Corp. involved a note that lacked a term that is
generally found in a negotiable instrument.
¶13 In denying Town Bank’s motion for
summary judgment, the trial court noted the fact that Town Bank checked the
“Multiple Notes; Multiple Advances” box.
However, we find that the language contained under the clause at issue,
which provides in relevant part that “[t]his Agreement does not constitute a
commitment by Lender to make such extensions of credit to Customer,” is
unambiguous and does not create an issue of fact. Therefore,
the unambiguous language of the
agreement, considered in conjunction with its integration clause, makes the TCA
a stand-alone agreement, which is a final, complete and conclusive expression
of the parties’ intent.
¶14 Having concluded that the TCA is an
unambiguous stand-alone agreement, we now turn to the Commitment and,
specifically, whether it commits Town Bank to provide an additional $6.5
million loan. Town Bank argues that CRED
repudiated the Commitment when it failed to meet the terms and conditions
thereof and, thus, Town Bank had no loan obligations under the Commitment. There
are three conditions that Town Bank claims CRED had failed to meet. These conditions required that: (1) Town Bank receive a “1st R/E
mortgage on Subject Property—
¶15 First, there is no evidence in the record that the mortgage requirement has been satisfied. Second, with respect to the issue of timely execution of a credit agreement, CRED argues that it did not fail to meet this condition because time was not of the essence. However, the Commitment clearly stated that the agreement “may be terminated at the sole option of Town Bank if the credit agreement is not executed by June 25, 2004.” Nevertheless, CRED argues that Town Bank waived nonperformance when Town Bank issued the TCA, which CRED claims to be the first phase of the two-phase loan. We do not agree. Rather, as discussed above, the TCA is a stand-alone, separate loan agreement; Town Bank issued the $2.5 million loan pursuant to the TCA and the attached and incorporated Note. The TCA, by its terms, provided for a $2.5 million loan and, contrary to CRED’s argument, nothing in that document waives CRED’s obligation under the Commitment.
¶16 The third condition at issue concerns the up-front equity payment in the amount of $900,000. CRED claims that the meaning of “up-front equity” presents a genuine issue of material fact because there can be multiple meanings allotted to the term “equity.” In support of its argument, CRED relies on the testimony of Ron Bero, Sr., CRED’s banking witness. However, we do not find any evidence from the record that CRED had contributed $900,000 under any definition Bero provided. CRED alternatively argues that the fact that Town Bank proceeded to close the $2.5 million loan evinces that the condition was, in fact, performed to its satisfaction. CRED also argues that Town Bank waived this condition when the $2.5 million loan was closed. Again, CRED’s basis for such claim fails as we have concluded that the TCA was a stand-alone agreement.[2]
¶17 The up-front equity capital requirement
was among the terms and conditions the closing of the Commitment is stated to
be contingent upon. Under general
contract law, “a condition precedent must be ‘exactly fulfilled or no liability
can arise on the promise which such condition qualifies.’” Woodland Realty, Inc. v. Winzenried,
82
¶18 Given that the Commitment was repudiated by CRED and that the TCA was unambiguous and a stand-alone agreement between the parties, the trial court erred in denying Town Bank’s motion for summary judgment. We reverse and remand with instructions that the trial court enter judgment for Town Bank.
By the Court.—Judgment reversed and cause remanded with directions.
[1] All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[2] CRED
makes other arguments that we do not address. When the resolution of one
or more issues resolves the appeal, we need not address additional issues
presented. See Barber v. Weber, 2006 WI App
88, ¶19, 292