Chase Lumber & Fuel Co., Inc. v. Chase

• Decision Date: 15 April 1999
• Docket Number: No. 98-1887., No. 98-0620, No. 98-0532
• Citation: 596 N.W.2d 840,228 Wis.2d 179
• Parties: CHASE LUMBER AND FUEL COMPANY, INC., Plaintiff-Respondent, v. Frederic CHASE and Helen Chase, Defendants-Appellants, SOO LINE RAILROAD COMPANY, Defendant. Frederic L. CHASE, and Helen B. Chase, Plaintiffs-Co-Appellants, HESSLINK LAW OFFICES, S.C., Appellant, v. CHASE LUMBER AND FUEL COMPANY, INC., Defendant-Respondent. CHASE LUMBER AND FUEL COMPANY, INC., Plaintiff-Respondent, v. Frederic L. CHASE, and Helen B. Chase, Defendants-Co-Appellants, HESSLINK LAW OFFICES, S.C., Appellant, SOO LINE RAILROAD CO., Defendant.
• Court: Wisconsin Court of Appeals

228 Wis.2d 179

596 N.W.2d 840

CHASE LUMBER AND FUEL COMPANY, INC., Plaintiff-Respondent, v. Frederic CHASE and Helen Chase, Defendants-Appellants, SOO LINE RAILROAD COMPANY, Defendant.

Frederic L. CHASE, and Helen B. Chase, Plaintiffs-Co-Appellants, HESSLINK LAW OFFICES, S.C., Appellant, v. CHASE LUMBER AND FUEL COMPANY, INC., Defendant-Respondent.

CHASE LUMBER AND FUEL COMPANY, INC., Plaintiff-Respondent, v. Frederic L. CHASE, and Helen B. Chase, Defendants-Co-Appellants, HESSLINK LAW OFFICES, S.C., Appellant, SOO LINE RAILROAD CO., Defendant.

Nos. 98-0532, 98-0620, 98-1887.

Court of Appeals of Wisconsin.

Submitted on briefs February 4, 1999.

Decided April 15, 1999.

On behalf of the defendants-appellants/plaintiffs-co-appellants/defendants-co-appellants and the appellant, the cause was submitted on the briefs of Robert M. Hesslink, Jr. of Hesslink Law Offices, S.C. of Verona.

On behalf of the plaintiff-respondent/defendant-respondent, the cause was submitted on the brief of Allen A. Arntsen and Michael S. Heffernan of Foley & Lardner of Madison.

Before Eich, Roggensack and Deininger, JJ.

DEININGER, J.

Fredric Chase appeals an order and a judgment for specific performance requiring him to convey several parcels of land to the Chase Lumber and Fuel Company (the Company), as specified by an option to purchase contained in a lease between Chase and the Company.¹ Chase also appeals a subsequent order enforcing that judgment. Chase's attorney, Robert Hesslink, appeals an order requiring Hesslink to pay the Company $3,480 in attorney fees as a sanction for continuing a frivolous defense against the enforcement of the court's judgment. We affirm the trial court's judgment and orders.²

The Company also requests an award of attorney fees under RULE 809.25(3), STATS., contending that Chase's appeal of the order to enforce the judgment is frivolous. We conclude that Chase's appeal is not so meritless as to be frivolous, and we therefore deny the Company's request for attorney fees for that appeal. We conclude, however, that the Company is entitled to additional attorney fees for defending Hesslink's appeal of the trial court's award of attorney fees. We remand so that the trial court can modify its award of attorney fees accordingly.

BACKGROUND

In 1991, the Company took over a lumber yard that had been operated by Chase DeForest, Inc. Fredric Chase was a stockholder of Chase DeForest, Inc., and he owned or leased from railroad companies several parcels of land on which the lumber yard operated. The Company purchased the lumberyard assets owned by Chase DeForest, Inc. The Company would have purchased the land from Chase as well, but title to the land was unclear. As an alternative to an outright purchase, the Company leased the land from Chase with an option to purchase individual parcels. The lease required Chase to resolve the uncertainties in the title to the land, and to attempt to acquire those parcels that were owned by the railroad companies. The option required Chase to assign to the Company his interest in any leases of railroad-owned parcels to which he was unable to acquire title.

Numerous title problems persisted through the first years of the lease. In 1993, a descendant of a former owner of one of the railroad parcels claimed reversionary ownership of a portion of the leased land, and later sued to evict the Company and Chase. In 1994, the Company notified Chase that:

Because of the question of ownership of certain properties we are leasing from you, we shall make the lease payments to the escrow account until the ownership question is resolved. Hopefully you will get the problem resolved soon.

The Company deposited all further lease payments into its lawyer's trust account until 1997, when it notified Chase that it intended to exercise its option to purchase the leased land. The Company's "Notice of Exercise of Options" indicated that, pursuant to the terms of the lease, Chase had fourteen days to provide the Company with a current survey of the parcels and a title insurance commitment as evidence of Chase's title to the parcels. Chase did not respond to the notice.

The Company sued Chase, seeking specific performance of the option to purchase. Chase counterclaimed, seeking eviction.³ Chase also notified the Company that it was in default on the lease. The lease allowed the Company to cure the default within ten days, and the Company paid Chase $42,670 in back rent within that time. Both parties moved for summary judgment, which the trial court denied. After a trial to the court, the court dismissed Chase's eviction action and granted judgment for the Company, requiring Chase to comply with the option to purchase. The court ordered that a closing take place within thirty days. The trial court denied Chase's motion to stay the judgment pending appeal.

A few days before the scheduled closing, the Company and Chase disagreed on the language in an indemnification agreement, and a misunderstanding arose about the legal description of the property to be conveyed. The Company's counsel contended that a certain "parcel F" had been erroneously omitted from the warranty deed prepared by Chase's counsel. Chase's counsel contended that Chase was not required to convey parcel F, and he refused to modify the deed to include it. The Company offered to close in escrow, but Chase's counsel refused.

Within a week, attorneys for the parties had reached agreement about the indemnification agreement. The attorneys had also resolved the misunderstanding about the extent of the property to be conveyed. As it turned out, two small parcels had been referred to as "parcel F," and both parcels had been included (one by deed, one by lease assignment) in the documents prepared by Chase's attorney. With the disputed issues resolved, the Company attempted to reschedule the closing. Chase's attorney refused, contending that Chase had tendered performance as required by the court, that the Company had refused to accept the tender, and that, accordingly, Chase had no further obligation under the court's judgment. Chase filed a new eviction action.⁴ The Company filed a "Motion to Enforce the Judgment of Specific Performance" with the trial court and sought attorney fees for bringing the motion and defending the new eviction action.

The trial court took testimony regarding the events at the aborted closing and granted the Company's motion, ordering that a new closing take place the next day. After a hearing on the Company's request for attorney fees, the trial court concluded that Chase's attorney's refusal to reschedule the closing was "done in bad faith just to continue this litigation." The court awarded the Company $3,480 in attorney fees, to be paid by Hesslink alone.

Chase appeals the order and the judgment granting specific performance and the order to enforce the judgment. Hesslink appeals the award of attorney fees.

ANALYSIS

I. The order and judgment for specific performance.

[1]

Both parties filed motions for summary judgment as to whether the Company was entitled to specific performance. Both parties contend on appeal that they were entitled to summary judgment in the trial court. Generally, when both parties move by cross-motions for summary judgment, it is the equivalent of a stipulation of facts permitting the trial court to decide the case on the legal issues. See Millen v. Thomas, 201 Wis. 2d 675, 682-83, 550 N.W.2d 134, 137 (Ct. App. 1996). Although the trial court denied both motions for summary judgment and decided the case after a trial to the court, the parties now agree that the "evidence introduced at trial was consistent in all significant respects with the evidence submitted by the parties in support of their respective summary judgment motions." Thus, the material facts are undisputed, and the appeal of the order and judgment for specific performance presents only legal issues.

[2, 3]

Specific performance is an equitable remedy and rests in the discretion of the court. See Anderson v. Onsager, 155 Wis. 2d 504, 513, 455 N.W.2d 885, 889 (1990). However, "unless in the course of a trial court's exercise of discretion there are revealed factual or legal considerations which would make specific performance of the contract unfair, unreasonable or impossible, specific performance of a contract to sell land should be ordered as a matter of course." Id. at 512-13, 455 N.W.2d at 889. The question then, is whether the option to purchase the leased property matured into an enforceable contract to sell land. The interpretation of written documents, such as the lease and the Company's "Notice of Exercise of Options," is a question of law, subject to de novo review. See Foursquare Properties Joint Venture I v. Johnny's Loaf & Stein, 116 Wis. 2d 679, 681, 343 N.W.2d 126, 127 (Ct. App. 1983). We conclude that Chase was obligated to sell the property to the Company, and that the trial court properly awarded specific performance.

a. Forfeiture of the option to purchase.

Chase contends that the Company forfeited its option to purchase the property because it breached a material term of the lease by failing to timely pay the rent directly to Chase. Specifically, Chase argues that the Company forfeited the right to exercise the option because: (1) the express terms of the lease so provide; and (2) the Company violated the covenant of good faith and fair dealing implicit in every contract, thus excusing Chase from his obligation under the contract. We reject both arguments.

We consider first the express terms of the lease. Chase argues that the Company's failure to pay rent directly to Chase violated an express condition of the lease, and that Chase was not obligated to honor the option to purchase by virtue of the "no waiver" clause of the lease.⁵ The Company acknowledges that it violated a term of the lease by failing to pay rent directly to Chase, but it contends that the option clause was still...