City of Topeka v. Watertower Place Development Group

• Decision Date: 29 May 1998
• Docket Number: No. 78862,78862
• Citation: 265 Kan. 148,959 P.2d 894
• Parties: CITY OF TOPEKA, a Kansas Municipal Corporation, Appellee, v. WATERTOWER PLACE DEVELOPMENT GROUP and Watertower Place Development Corporation, Appellants.
• Court: Kansas Supreme Court

Page 894

959 P.2d 894

265 Kan. 148

CITY OF TOPEKA, a Kansas Municipal Corporation, Appellee, v. WATERTOWER PLACE DEVELOPMENT GROUP and Watertower Place Development Corporation, Appellants.

No. 78862.

Supreme Court of Kansas.

May 29, 1998.

Syllabus by the Court

1. Rules of summary judgment are stated.

2. Because the interpretation and legal effect of written instruments are matters of law, the standard of review of an appellate court is unlimited. As a result, regardless of the construction given a written contract by the trial court, an appellate court may construe a written contract and determine its legal effect.

3. Where a court determines that a written instrument is not ambiguous, no other fact findings or conclusions of law are necessary.

4. If evidence was admitted over proper objections, and in his or her reasons for the decision the judge does not state that such evidence, specifying the same with particularity, was not considered, then it shall be presumed in all subsequent proceedings that the evidence was considered by the judge and did enter into his or her decision.

Dwight D. Sutherland, Jr., of Lathrop & Gage L.C., Kansas City, Missouri, argued the cause and was on the brief for appellants.

Anne Lamborn Baker, of Wright, Henson, Somers, Sebelius, Clark & Baker, LLP, Topeka, argued the cause, and Thomas E. Wright, of the same firm, was with her on the brief for appellee.

LOCKETT, Justice:

The City of Topeka (City) and the Watertower Place Development Group (Watertower)

entered into a contract giving Watertower exclusive rights to develop an area in the City. The City filed a declaratory action, claiming Watertower had breached the contract and, therefore, the City was no longer bound by the contract. Watertower filed a counterclaim for specific performance and monetary damages. The district court entered summary [265 Kan. 149] judgment for the City, finding the contract to be unambiguous and that the City had properly terminated the contract due to Watertower's breach. Watertower appealed, claiming (1) an alleged breach of contract is an issue of fact to be determined by a jury; (2) the district court's determination that the City had properly terminated the contract was not supported by substantial competent evidence; (3) the district court incorrectly based its grant of summary judgment upon the testimony of an expert; (4) the district court had previously ruled the City had committed an anticipatory breach of the contract; and (5) the district court failed to address all of Watertower's arguments.

BACKGROUND

In an attempt to stimulate growth in blighted business districts within cities, the Kansas Legislature passed the Redevelopment of Central Business District Areas Act, K.S.A. 12-1770 et seq. Under the Act, the legislature authorized cities to acquire property and issue special obligation bonds. K.S.A. 12-1770. Pursuant to the Act, the Topeka City Council established the Watertower redevelopment district. As a result, the City was authorized to acquire the property and issue special obligation bonds to pay for the acquisition. The bonds were to be financed by an increase in ad valorem taxes that the City anticipated would result from the redevelopment. K.S.A. 12-1771(h).

The parties decided to take advantage of the Act. On January 16, 1990, the City entered into a contract granting Watertower the exclusive rights for 15 years to develop the Watertower redevelopment district in Topeka. Although the contract comprises 34 pages, the parties' disagreements arise from "Section 11. Commitment to be provided by the Developer," which provides in part:

"Within one hundred eighty (180) days of the City's adoption of any Redevelopment Project Plan ..., the Developer ... shall provide to the City either: (i) the commitment of a purchaser of Tax Increment Financing Special Obligation Bonds (the 'Bonds') to be authorized and issued by the City for the Project's financing in accordance with the authority granted the City under the Act...." Under Section 11, the monies generated by the bonds were to be used to acquire the property in the development area and to prepare the area for construction of the development.

Section 11 also provided the methodology for Watertower's compliance with the commitment of a bond purchaser, providing:

"The Commitment shall not be deemed sufficient until approved and accepted in writing by the City, which approval shall not be unreasonably withheld, provided however, if the Commitment is not approved by the City within 21 days after receipt thereof by the City, the City shall specify with particularity the portion of the Commitment and with particularity the reason why such portion does not meet with its approval. The Developer shall have one additional ninety (90) day period thereafter to provide a Commitment acceptable to the City. In the event Developer fails to obtain the Commitment for a particular Project for which a Redevelopment Project Plan has been approved, Developer shall have no liability whatsoever as a result thereof relative to that particular Project, however, in such case the City may, subject to the provisions of Section 6 herein, (i) terminate this Agreement thereby extinguishing the Developer's exclusive right to develop the Projects contemplated by the Plan; or (ii) terminate the Redevelopment Project Plan for that particular Project under consideration and obtain a different developer for that Project; or (iii) act as is otherwise agreed to in writing by the City and the Developer." (Emphasis added.)

The parties dispute whether Watertower or the City failed to comply with Section 11.

As noted above, Section 11 required Watertower to provide a purchaser of bonds by a It was later discovered that the City Council did not follow the Kansas Open Meetings Act requirement when voting to terminate the contract. Instead, the city attorney, in executive session, explained to the council that he intended to terminate the contract with Watertower unless the council members talked to him after the meeting and objected to the termination of the contract. No council member objected, and the letter of termination was sent to Watertower on May 19, 1993.

                specific date.  Toward that end, Watertower provided a letter authored by B.C. Christopher, which promised to "pursue, on a best efforts basis, the financing for the required land acquisition, relocation, improvement, and demolition costs through the sale of tax increment bonds."   B.C. Christopher's commitment to use best efforts to market the bonds was subject to nine conditions.  It is undisputed that Watertower intended the B.C. Christopher letter to satisfy the requirements under Section 11.  It is also undisputed that the City did not accept the letter as fulfilling the commitment and considered Watertower to have breached the contract.  Due to the breach, the City sent a contract termination letter to Watertower
                

Subsequent negotiations attempting to breathe new life into the project, through modification of the old contract or the creation of a new contract, continued into 1994.

The City ultimately determined that further negotiations were fruitless and on July 27, 1994, the City brought a declaratory judgment action in the district court, seeking judicial declaration that the contract was terminated and Watertower was no longer the exclusive developer of the project. Watertower counterclaimed, seeking specific performance of the contract and damages from the breach of contract by the City. First, the district court granted summary judgment to the City on Watertower's claim it was entitled to specific performance of the contract. That judgment was appealed and upheld by the Court of Appeals. That ruling is not before this court.

Subsequently, the City filed for summary judgment, claiming that it had not breached the contract, but rather it had terminated the contract on May 19, 1993, pursuant to Section 11 of the contract. The district court found there were no material factual disputes. Therefore, the parties' disagreement was one of contract interpretation, which is a question of law to be decided by the court.

The district court then found that the contract was unambiguous in that it required a commitment to purchase bonds, rather than a best effort to market the bonds. The district court concluded that because the letter from B.C. Christopher had not complied with Section 11, the letter was insufficient; no cure occurred within 90 days as required by the contract and, as a result, the city attorney's letter of May 19, 1993, notified Watertower that the contract was terminated.

The district court, in granting summary judgment, rejected Watertower's argument that the City had not complied with Section 11 in that the City had failed to state, with particularity, its objection to the B.C. Christopher commitment letter. It held:

"The contract required the City to specify with particularity the portion of the commitment and the reason why the City did not accept the proposed commitment as sufficient. The City Attorney sent the developers a letter notifying the Developers that the B.C. Christopher letter, if intended to be a commitment, was not sufficient because it was not a commitment to purchase the Bonds but simply a promise to use their best efforts to market the Bonds. This notice was sufficient to inform the Developers that the contract required a definite commitment to purchase, not just a promise to market. Therefore the City is entitled [to] summary judgment as a matter of law with regard to the sufficiency of notice given to the Developers."

The district court similarly rejected Watertower's contention that the contract termination was ineffective because it did not come to a vote before the City Council and because the discussion of it was not held in public. The district court granted summary judgment in favor of the City. Watertower's subsequent motion for...