Farley Inv. Co. v. Webb

• Court: Maine Supreme Court
• Writing for the Court: Before WATHEN; RUDMAN
• Citation: Farley Inv. Co. v. Webb, 617 A.2d 1008 (Me. 1992)
• Decision Date: 14 December 1992
• Parties: FARLEY INVESTMENT CO. v. Ralph Dudley WEBB, et al.

Page 1008

617 A.2d 1008

FARLEY INVESTMENT CO. v. Ralph Dudley WEBB, et al.

Supreme Judicial Court of Maine.

Argued Nov. 20, 1992.

Decided Dec. 14, 1992.

Robert H. Stier, Jr. (orally), Bernstein, Shur, Sawyer & Nelson, Portland, for plaintiff.

James F. Cloutier (orally), Cloutier, Barrett, Cloutier & Conley, Portland, for defendants.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, COLLINS and RUDMAN, JJ.

RUDMAN, Justice.

Defendants ¹ appeal from a judgment on a jury verdict entered in the Superior Court (Cumberland County, Wernick, A.R.J.) in favor of the plaintiff, Farley Investment Company (Farley), for an amount in excess of $1.2 million. On appeal, the defendants contend that the court made numerous errors, primarily in its ruling on a motion in limine and in its instructions to the jury. We affirm the judgment of the Superior Court.

In 1985, Farley acquired one parcel of land (the Farley property) and options on two other adjacent parcels of land located on the Portland waterfront in order to construct a mixed-use development complex. Farley turned over its development plans to Ralph Dudley Webb, a successful real estate developer, who then delegated responsibility for the project to Christopher Fleming and his partners, Charles F. Norton, Jr., and W. Godfried Wood, collectively known as St. James Properties.

On April 17, 1986, Agritech Systems, Inc., (Agritech), a biotech company, expressed an interest in moving into the building on the Farley property. Farley advised Agritech to negotiate with Webb since he was coordinating the project. Webb, in order to induce Agritech to enter into a lease of the premises, offered to pay $1 million to renovate the space in the existing building and add a number of high tech improvements. On August 5, 1986, Agritech executed a 10-year lease for the space with Portland Development Associates (Portland Development), a limited partnership formed by Webb to eventually purchase the property.

Although Portland Development's financing never materialized, renovations on the existing building proceeded and Agritech moved into the space in November of 1986. In mid-December, prior to the scheduled closing date, the parties learned that the air conditioning and ventilating equipment added during the renovations were causing the roof to sag and that a heavy snow fall might cause the roof to collapse entirely. Agritech, concerned that Portland Development, its landlord under the terms of its lease, was not yet the owner of the building, requested and received assurances from Farley that it would honor the terms of the lease until the property was transferred to Portland Development. In doing so, Farley agreed to assume the obligations of the landlord under the lease on the condition that Webb and the other defendants indemnify Farley for any expenses incurred.

Since Webb was still unable to arrange financing to purchase the Farley property, the parties agreed to extend the closing date. In early January of 1987, Portland Development and Farley signed a number of agreements concerning the transaction, including: (1) a purchase and sale agreement; (2) unconditional guarantees from the individual defendants of Portland Development's full performance of the purchase and sale agreement; (3) an indemnity agreement from the individual defendants covering expenses relating to the Agritech lease; and (4) a limited partnership agreement, under which Farley was to become a limited partner in Portland Development.

After numerous attempts over the next few months to reschedule the closing date proved unsuccessful, Farley brought suit against Webb, his partners, and their various limited partnership entities, alleging losses in excess of $1.2 million resulting from breaches of the purchase and sale agreement, the personal guaranty agreements and the indemnity agreement. Following a jury trial, a verdict against the defendants was returned in the amount of $1,228,513.56.

I. The Prior Letter Agreement

Defendants first argue that the trial court erred by granting Farley's motion in limine to exclude evidence concerning a letter agreement between the parties dated March 4, 1986. That letter set forth the intent of both parties to develop the waterfront property in Portland. The Superior Court concluded that the parol evidence rule barred admission of the letter agreement due to the subsequently agreed on purchase and sale agreement. At issue are portions of the letter, omitted from the subsequent purchase and sale agreement, detailing what would happen in the event that the property was not rezoned or the plan was disapproved. In excluding that evidence, the court found that:

[t]he totality of the circumstances, here, leads the court to conclude that the Purchase and Sale Agreement is fully integrated. The court holds it to be the entire agreement of the parties which has merged within its four corners all the prior negotiations, expressions of intent and understandings of the parties.

The parol evidence rule "operates to exclude from judicial consideration extrinsic evidence offered to vary,...