COURT OF APPEALS DECISION DATED AND RELEASED November 27, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-2877
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
T & T MASONRY,
INC., JOHN S. MILELLA, d/b/a
W.C.I. REALTY, and
GEORGE C. WIDULE, d/b/a
PROPERTY EXCHANGE
COMPANY,
Plaintiffs-Appellants,
TOM TORP and MARIANNE
C. WIDULE, d/b/a
PROPERTY EXCHANGE
COMPANY,
Added-Plaintiffs-Appellants,
v.
ROXTON ASSOCIATES, c/o
STEWART HARRISON,
president, and STEWART
HARRISON,
Defendants-Respondents,
MICHAEL SCHWANTES and
CREATIVE REAL ESTATE
ASSOCIATES, INC.,
Defendants-Respondents-
Cross Appellants-Cross Respondents,
JOHN DOE, unknown
title holder,
Defendant-Respondent,
FRANK MURPHY COWLES, JR.,
Defendant-Third Party Plaintiff-
Respondent-Cross
Respondent-
Cross Appellant,
v.
CONTINENTAL CASUALTY
COMPANY,
Third Party Defendant-Respondent-
Cross Appellant-Cross Respondent,
MICHAEL SCHWANTES,
CREATIVE REAL ESTATE
ASSOCIATES, INC., and
CONTINENTAL CASUALTY
COMPANY,
Fourth Pty Plaintiffs,
HANAWAY, ROSS,
HANAWAY, WEIDNER and
BACHHUBER, S.C., and
ABC INSURANCE
COMPANY, a fictitious
entity,
Fourth Pty Defendants-Respondents,
EDGEWATER BLUFF
VILLAS, INC., CREATIVE
COMMERCIAL REAL
ESTATE, INC.,
CREATIVE REAL ESTATE
ASSOCIATES, INC.,
ALLAN ROSS, JOHN
SCHMIDTKE,
HANAWAY, ROSS,
HANAWAY, WEIDNER
and BACHHUBER, S.C.,
and ASSOCIATED
BANC - CORP.,
Added-Defendants-Respondents.
APPEAL and CROSS-APPEALS
from a judgment of the circuit court for Waukesha County: ROGER MURPHY, Judge. Reversed and cause remanded.
Before Anderson, P.J.,
Brown and Snyder, JJ.
PER
CURIAM. This appeal is taken from a summary judgment
dismissing claims arising from a failed real estate transaction. The cross-appeals are protective and seek
reinstatement of cross-claims in the event that the summary judgment is
reversed. We conclude that an issue of
fact exists as to whether the financing contingency was unconditionally waived. We reverse the judgment dismissing claims
between the parties and remand the case for further proceedings.
On April 26, 1993,
Roxton Associates, by its president, Stewart Harrison, offered to purchase
a shopping center owned by T & T Masonry, Inc. for three million
dollars. A portion of the price would
be paid by an exchange of 7.1 acres of vacant land known as the Edgewater
property. Thomas Torp, president of T
& T, accepted the offer. Real estate
brokers John Milella and George Widule acted on behalf of T & T. Marianne Widule holds an ownership interest
in the real estate brokerage firm which acted on T & T's behalf. T & T, Milella, the Widules and Torp are
appellants in this appeal and will be collectively referred to as T & T.
The exchange agreement
contained a requirement that the Edgewater property be zoned for construction
of condominiums before the closing. It
also included a financing contingency to be satisfied by May 16, 1993, or the
"exchange will be null and void."
The closing date was extended three times. Eventually, Roxton's purchaser's interest was assigned to Frank
Murphy Cowles, Jr. The last written
extension required the financing clause to be satisfied by August 25, 1993,
and the closing to be held on August 31, 1993. On August 25, T & T was orally informed by Michael Schwantes,
Cowles' real estate broker, that the financing was complete. On August 26, T & T received written
confirmation signed by Cowles that "the finance contingency is hereby
removed on August 24, 1993." The
closing was never held.
T & T commenced this
action to recover damages allegedly occasioned by Cowles' failure to close on
the exchange agreement. T & T's
claims against Cowles are for breach of contract and for fraudulent and negligent
misrepresentations as to his net worth.
T & T asserts fraudulent and negligent misrepresentation claims
against Roxton Associates and Harrison.
Negligence and misrepresentation claims are asserted against Schwantes,
his real estate company and insurer, Creative Commercial Real Estate, Inc. and
Continental Casualty Company respectively (hereafter, Schwantes). T & T also brought claims against
Cowles' attorneys for interference with contract. A negligence claim was asserted against Associated Banc-Corp.,
the bank Cowles was working with for financing.
On summary judgment the
trial court determined that the real estate exchange agreement was not
enforceable. All claims against Cowles
were dismissed. The trial court also
dismissed T & T's negligence claims against Schwantes. Schwantes cross-claimed against Cowles for
breach of contract, indemnification based on intentional misrepresentations,
contribution based on negligent misrepresentation, and vicarious liability for
the acts and omissions of Harrison, Cowles' alleged employee. These claims were dismissed by the trial
court and Schwantes cross-appeals to reinstate these claims if the summary
judgment dismissing T & T's claims is reversed. Cowles cross-claimed against Schwantes for negligence and misrepresentation. Cowles cross-appeals from the dismissal of
his cross-claims.
We review decisions on
summary judgment by applying the same methodology as the trial court. M & I First Nat'l Bank v.
Episcopal Homes, 195 Wis.2d 485, 496, 536 N.W.2d 175, 182 (Ct. App.
1995); see § 802.08(2), Stats. That methodology has been recited often and
we need not repeat it here except to observe that summary judgment is
appropriate when there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. See M & I First Nat'l Bank, 195 Wis.2d
at 496-97, 536 N.W.2d at 182.
Although we review
summary judgment de novo, id. at 496, 536 N.W.2d at 182, it is
necessary here to first address what appears to be inconsistent conclusions
made by the trial court. The trial
court determined that there was no dispute of fact that Cowles' waiver of the
financing contingency was timely.
However, it then concluded that the exchange contract was unenforceable
because the financing contingency was never satisfied. It found that the bank agreed only to make a
loan to Cowles in partnership with another entity and that the partnership
never came into existence.
We agree with T & T
that once the financing contingency was waived by Cowles, the failure to obtain
the financing could no longer be an escape hatch for Cowles. See Godfrey Co. v. Crawford,
23 Wis.2d 44, 49, 126 N.W.2d 495, 498 (1964) (the buyer's waiver of a condition
that is for his benefit has the same effect of a consummated satisfaction of
that condition and obligates the buyer to pay the balance of the purchase price
at closing). After waiver of the
financing contingency, it was as if it had never been a part of the contract.
The trial court
concluded that Cowles' waiver was "of no legal effect" because
"Cowles' waiver depended upon a contingency which was never
achieved." This ruling has two
facets: Cowles was mistaken as to the
facts when he tendered his waiver and the waiver was conditional. The summary judgment record gives rise to
conflicting inferences about whether Cowles possessed sufficient knowledge and
intent to effect a waiver or whether a known condition was placed on the
waiver. The facts and circumstances
surrounding the waiver of financing contingency are sufficiently complex to
raise reasonable doubts about whether either T & T or Cowles is entitled to
summary judgment on the contract claim.
Matters of complex factual proof usually cannot be decided on the basis
of affidavits and depositions. Peters
v. Holiday Inns, Inc., 89 Wis.2d 115, 129, 278 N.W.2d 208, 215
(1979). "[S]ummary judgment does
not lend itself to many types of cases, especially those which are basically
factual and depend to a large extent upon oral testimony." Balcom v. Royal Ins. Co., 40
Wis.2d 351, 357, 161 N.W.2d 918, 921 (1968) (quoted source omitted). We conclude that summary judgment was
inappropriate here.
Cowles argues that the
trial court's judgment may be affirmed on the allegedly undisputed facts
that: (1) the financing contingency was
not timely waived; (2) other contract deadlines expired; (3) the required
condition precedent regarding zoning of the Edgewater property was not met; and
(4) the "naked assignment" of the exchange agreement to Cowles
"gave Cowles the right to purchase the shopping center, but not the
duty to purchase." Schwantes
contends that the parties abandoned the exchange agreement and thereby rendered
it unenforceable.
The timely waiver of the
financing clause turns on the parties' intent and conduct as to whether time
was of the essence or timely performance was waived. See Stork v. Felper, 85 Wis.2d 406, 411, 270
N.W.2d 586, 589 (Ct. App. 1978) (conduct of parties may be used to show whether
time was of the essence in the minds of the parties); Clear View Estates,
Inc. v. Vetich, 67 Wis.2d 372, 378, 227 N.W.2d 84, 88 (1975) (timely
performance can be waived or time for performance extended either expressly or
impliedly by parties' conduct).
"[T]he issue of intent is not one that properly can be decided on a
motion for summary judgment.
Credibility of a person with respect to his subjective intent does not
lend itself to be determined by affidavit." Lecus v. American Mut. Ins. Co. of Boston, 81
Wis.2d 183, 190, 260 N.W.2d 241, 244 (1977) (quoted source omitted). Thus, the question of timely waiver of the
financing contingency is too factually complex for summary judgment.
We reject Cowles'
assertion that the sales contract was unenforceable because other deadlines had
expired. The fact that earlier
deadlines for obtaining financing expired in the absence of satisfaction does
not invalidate the contract. The
amendments extending the closing and financing contingency removal dates
govern.
We also reject Cowles'
claim that the agreement was unenforceable because the zoning provision with
respect to the Edgewater property was never satisfied. The record demonstrates that T & T and
Cowles had reached a meeting of the minds that the Edgewater property would not
be given in exchange. The closing
documents were prepared for a cash sale.
Torp indicated that it was Cowles' choice as to whether the Edgewater
property would be given as part of the purchase price. The failure to meet the zoning contingency
was not material after the parties agreed that the property would not be
exchanged. Although the agreement to
permit Cowles to choose whether the property would be given an exchange may be
characterized as an abandonment of the exchange agreement, the determination of
whether the parties so intended is not for summary judgment.
We summarily reject Cowles'
claim that the assignment of the purchase agreement did not bind him to the
terms. The assignment document
incorporated the original purchase agreement and bound Cowles to its terms. Peterson v. Johnson, 56 Wis.2d
145, 149, 201 N.W.2d 507, 509 (1972) (assignee is personally liable when he or
she enters into an express agreement with the purchaser assuming the
contractual obligation). Not only that,
Cowles entered into amendments to the agreement. He was in contractual privity with T & T.
In summary, we reverse
the judgment dismissing T & T's claims.
The question of whether there was a timely, valid and unconditional
waiver of the financing contingency does not lend itself to summary judgment
because of the complex factual proof.
Because of the factual complexity, we cannot enter partial summary
judgment in favor of T & T on its cross-motion for summary judgment. The same is true with respect to T & T's
fraud claim against Cowles.
We
must address the dismissal of claims against all other defendants. As to negligence claims against Schwantes,
the trial court could not "find from the evidence in this record that
there is sufficient proof that Schwantes ... was negligent." This is not the proper summary judgment
standard. Again, the factual proof
required is very complex and does not lend itself to summary judgment. In addition, dismissal of the negligence
claims against Schwantes was predicated in part on the unenforceability of the
exchange agreement. We reverse the
dismissal of T & T's claims against Schwantes.
The trial court's
decision does not reference the claims against Roxton Associates and
Harrison. Those parties have not
participated in this appeal. The
dismissal of claims against those parties is also reversed.
The trial court
explicitly dismissed the action as to "added defendants," including
Cowles' attorneys, Associated Banc-Corp. and Edgewater Bluff Villas, Inc., on
the ground that the exchange agreement was unenforceable. Those parties were not required to file
answers to the complaint against them and did not participate in the summary
judgment proceeding. Although the
viability of the claims against these defendants is questionable, it has not
yet been litigated. Our reversal based
on the possibility that the exchange agreement is enforceable requires that we
reverse the dismissal of T & T's claims against the "added
defendants."
We turn to the
cross-appeals of Cowles and Schwantes.
We have reversed the judgment dismissing T & T's claims against
these two parties. It follows that the
cross-claims between them should be revived.
Schwantes argues in his
cross-respondents' brief that "under no scenario" should the trial
court's dismissal of T & T's claim against Schwantes for punitive
damages be overturned. The claim for
punitive damages is so closely related to matters that are not appropriate for
summary judgment that we are unable to rule as a matter of law that the claim
should be dismissed. See Shopko
Stores, Inc. v. Kujak, 147 Wis.2d 589, 600-01, 433 N.W.2d 618, 623 (Ct.
App. 1988) (summary judgment is a poor substitute for trial of such issues).
By his cross-appellants'
brief, Schwantes seeks an order disqualifying Cowles' attorneys from further
representation of Cowles because they are potential witnesses. The trial court did not address Schwantes'
motion for disqualification because the motion was deemed moot after dismissal
of the entire action. The motion is not
properly before this court. We are not
in a position to rule on the motion or to give an advisory opinion.
No costs to the parties
on the cross-appeals.
By the Court.—Judgment
reversed and cause remanded.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.