Ash Park, LLC v. Alexander & Bishop, Ltd., 2013AP1532.

• Decision Date: 07 July 2015
• Docket Number: No. 2013AP1532.,2013AP1532.
• Citation: 363 Wis.2d 699,866 N.W.2d 679
• Court: Wisconsin Supreme Court
• Parties: ASH PARK, LLC, Plaintiff–Respondent–Petitioner, v. ALEXANDER & BISHOP, LTD., Defendant, Re/Max Select, LLC, Intervening–Defendant–Appellant, Ash Investors, LLC, Intervenor.

363 Wis.2d 699

866 N.W.2d 679

ASH PARK, LLC, Plaintiff–Respondent–Petitioner

v. ALEXANDER & BISHOP, LTD., DefendantRe/Max Select, LLC, Intervening–Defendant–AppellantAsh Investors, LLC, Intervenor.

No. 2013AP1532.

Supreme Court of Wisconsin.

Argued March 4, 2015.

Decided July 7, 2015.

For the plaintiff-respondent-petitioner, briefs were filed by George Burnett and the Law Firm of Conway, Olejniczak & Jerry, S.C., Green Bay, and oral argument by George Burnett.

For the intervening-defendant-appellant, briefs were filed by Michael O. Marquette and Marquette Law–Attorneys, S.C., Green Bay, and oral argument by Michael O. Marquette.

For the intervenor, there was a brief by Bridget M. Hubing and Reinhart Boerner Van Deuren, S.C., Waukesha, and oral argument by J. Bushnell Nielsen.

An amicus curiae brief was filed by Debra P. Conrad for the Wisconsin Realtors Association, Madison.

Opinion

SHIRLEY S. ABRAHAMSON, J.

¶ 1 This is a review of a published decision of the court of appeals.¹ The sole question presented is whether Ash Park, LLC (the seller of a parcel of vacant land) is liable to pay a broker's commission to Re/Max Select, LLC (the broker for the land).

¶ 2 The one-party listing contract between Ash Park and Re/Max provides in relevant part that Ash Park shall pay a broker's commission to Re/Max if Ash Park enters into an “enforceable contract” for the sale of the land. Ash Park entered into a contract for the sale of the land with Alexander & Bishop, Ltd. Whether Re/Max is entitled to a broker's commission turns on whether the purchase contract between Ash Park and Alexander & Bishop constitutes an “enforceable contract” within the meaning of the listing contract between Ash Park and Re/Max, even though Alexander & Bishop breached and the sale of the land was never consummated.

¶ 3 The Circuit Court for Brown County, William M. Atkinson, Judge, granted summary judgment to Ash Park, declaring that Ash Park owed no broker's commission to Re/Max. The circuit court ordered Re/Max's broker lien discharged from the property.

¶ 4 The court of appeals reversed the circuit court's summary judgment and remanded the cause to the circuit court with instructions to determine and award Re/Max its broker's commission, prejudgment interest, costs, and reasonable attorney's fees. The court of appeals further instructed the circuit court to determine whether Re/Max's broker lien should be reinstated.

¶ 5 This court granted review of the sole issue presented by Ash Park in its petition for review:

Is a vacant land offer to purchase an “enforceable contract” so as to require a seller to pay three hundred seventy-eight thousand dollars ($378,000) in commission under a real estate listing contract when the seller obtained a judicial order for specific performance, but the buyer (who the realtor found) lacked the funds to purchase and could not be compelled to honor that order?

¶ 6 We did not grant review of the issue of whether Re/Max's broker lien should be reinstated.²

¶ 7 We now affirm the decision of the court of appeals. We conclude that the purchase contract between Ash Park and Alexander & Bishop constitutes an “enforceable contract” within the meaning of the listing contract between Ash Park and Re/Max. Re/Max is therefore entitled to a broker's commission from Ash Park even though Alexander & Bishop breached the purchase contract and the sale was never consummated.

I

¶ 8 The facts are undisputed for purposes of this review.

¶ 9 Ash Park wished to sell a parcel of vacant land located in the Village of Ashwaubenon in Brown County, Wisconsin.

¶ 10 On March 12, 2007, Ash Park and Re/Max entered into a one-party listing contract. Ash Park and Re/Max used a standard form contract (titled “WB–3 VACANT LAND LISTING CONTRACT”) approved by the Wisconsin Department of Regulation and Licensing.

¶ 11 The listing contract provided that the list price would be $6.2 million and that the listing would be for Alexander & Bishop only. It further provided that Re/Max would be entitled to a broker's commission equal to six percent of the purchase price if, during the term of the listing, Ash Park “sells or accepts an offer which creates an enforceable contract for the sale of all or any part of the Property.”

¶ 12 During the term of the listing, Alexander & Bishop offered to purchase Ash Park's land for $6.3 million ($100,000 more than the list price). Ash Park accepted the offer.

¶ 13 Alexander & Bishop's offer to purchase Ash Park's land did not include a financing contingency. It did, however, include a lease contingency. The lease contingency provided that the “Offer is contingent upon the Buyer negotiating a lease [o]r leases for the subject property with terms and conditions acceptable to the Buyer ... within [120] days of [the seller's] acceptance” of the offer. The lease contingency further provided that if Alexander & Bishop were “unable to negotiate a lease or leases,” Alexander & Bishop could terminate the offer.

¶ 14 Because Alexander & Bishop was unable to negotiate an acceptable lease within the specified timeframe, it exercised its right to terminate the offer.

¶ 15 Later on, however, Ash Park and Alexander & Bishop signed an agreement to reinstate the offer.

¶ 16 Alexander & Bishop did not exercise its right to terminate the reinstated offer. Alexander & Bishop's offer to purchase Ash Park's land ripened into a binding purchase contract on September 20, 2007.

¶ 17 On October 9, 2007, Alexander & Bishop informed Ash Park that the party with whom it had been negotiating a lease was not interested in immediately leasing the property. Accordingly, Ash Park and Alexander & Bishop discussed potential modifications to the purchase contract. Their negotiations were unsuccessful.

¶ 18 The closing of the sale, which had been scheduled for December 14, 2007, did not take place. Alexander & Bishop failed to purchase the property.

¶ 19 Shortly after the date that had been set for closing, Ash Park sued Alexander & Bishop, seeking specific performance of the purchase contract. Ash Park prevailed in the circuit court, in the court of appeals,³ and in this court.⁴

¶ 20 Despite the specific performance judgment against it, Alexander & Bishop failed to pay for or acquire the property.

¶ 21 In December 2010, after protracted litigation and after Alexander & Bishop had threatened bankruptcy, Ash Park and Alexander & Bishop agreed to settle their dispute. Alexander & Bishop paid Ash Park $1.5 million. This sum was equivalent to Ash Park's holding costs, that is, the interest and other charges Ash Park had paid while it unsuccessfully sought to compel Alexander & Bishop to purchase the property.⁵

¶ 22 On January 12, 2011, prior to final adjudication of the lawsuit between Ash Park and Alexander & Bishop, Re/Max filed a motion to intervene.

¶ 23 Re/Max argued that Ash Park had entered into an “enforceable contract for the sale of all or any part of the Property” and thus that under the listing contract, Re/Max had earned a six-percent broker's commission. Re/Max sought to claim its commission, along with prejudgment interests, costs, and attorney fees. Re/Max also sought to enforce a broker lien it had recorded on the property.

¶ 24 Ash Park asserted various affirmative defenses and moved for summary judgment. Re/Max opposed Ash Park's motion for summary judgment and filed its own motion for summary judgment.

¶ 25 The circuit court granted Ash Park's motion for summary judgment and ordered Re/Max's broker lien discharged from the property. The circuit court concluded that the purchase contract between Ash Park and Alexander & Bishop does not constitute an “enforceable contract” within the meaning of the listing contract between Ash Park and Re/Max. Accordingly, the circuit court determined that Re/Max had not earned a broker's commission.

¶ 26 The circuit court explained its reasoning as follows:

This contract is not enforceable. Now, perhaps we don't do a good enough job of defining “enforceable.” Maybe we should have a phrase called “enforceable in law,” and maybe that would make sense because I found it was enforceable in law, that the case could proceed through the court system, but it clearly wasn't enforceable in fact. If it was enforceable in fact, Alexander & Bishop would [have bought the land] and the realtor would have his commission. Everybody would end up happy....

....

The reality of it is the realtor brought to these sellers a buyer who couldn't afford to buy the property.... [H]e couldn't get financing for it, he didn't have enough money in a bank account, he didn't have a deep enough pocket to go to, he couldn't do it. In the end this contract was not enforceable in fact and that's why the contract between these parties required it actually be enforceable in fact.

¶ 27 After the circuit court issued its decision, Ash Park sold the land to Ash Investors, LLC.⁶

¶ 28 The court of appeals reversed the circuit court's summary judgment, holding that the purchase contract between Ash Park and Alexander & Bishop constitutes an “enforceable contract” within the meaning of the listing contract between Ash Park and Re/Max. The court of appeals reasoned as follows:

We conclude the term “enforceable contract” is plain and unambiguous. Given the dictionary definition of “enforce” and the principle that an “enforceable contract” is one that provides a remedy for a breach, it is clear that an “enforceable contract” is one where an individual can compel observance of the contract by seeking a remedy for a breach. In this case, the contract between Ash Park and Alexander & Bishop was enforceable—the contract recognized Ash Park's rights under the contract and provided various remedies for Ash Park based on Alexander & Bishop's breach.⁷

¶ 29 The court of appeals cited the “law of the case” doctrine as an additional rationale for its conclusion that the purchase contract between Ash Park and Alexander & Bishop is enforceable. According to the court of appeals, this court's prior...