Golf Resorts, Inc. v. Peshak, 91-2251
| Decision Date | 19 July 1993 |
| Docket Number | No. 91-2251,91-2251 |
| Citation | 991 F.2d 799 |
| Parties | NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit. GOLF RESORTS, INC. and Jan Muskatevc, Plaintiffs-Appellants, v. Theodore J. PESHAK, Margaret Peshak, Keith Kampert and Leona Kampert, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
July 19, 1993.
Before BAUER, Chief Judge, POSNER, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.
The plaintiffs, Golf Resorts, a Wisconsin corporation, and Jan Muskatevc, a former Wisconsin resident presently living in Florida, brought this action to enforce an alleged agreement with the defendants, all Illinois residents, to purchase the Lost Creek Golf Course in Door County, Wisconsin. 1 The district court held that an agreement existed between the parties and ordered specific performance. The defendants now appeal.
In 1985, Golf Resorts leased the Lost Creek Golf Course from Par Five, a Wisconsin corporation. In 1986, the defendants, Leona and Keith Kampert and Margaret and Theodore Peshak, acquired title to the golf course by a sheriff's sale. The defendants agreed to subordinate their rights in the golf course to Golf Resorts' rights under the lease. The lease ran to December 31, 1985, renewable at the option of the tenant for up to three years. It was successively renewed so that it expired December 31, 1988.
In January, 1988, Mr. Muskatevc and the defendants had negotiated for sale of the property to Golf Resorts. On March 22, 1988, Mr. Muskatevc, Mr. Peshak and Mr. Kampert signed handwritten documents entitled "Intention to Agree." Mr. Peshak and Mr. Kampert later prepared a typewritten document entitled "Intention to Agree to Purchase Lost Creek Golf Course." It was dated March 22, was generally similar to the handwritten ones, but contained several changes. They signed it and sent it to Mr. Muskatevc, asking him to sign and return it. At trial, the defendants asserted that the typewritten paper was never returned to them. The district court found, as Mr. Muskatevc testified, that he had signed and returned one copy to the defendants, but failed to sign the copy he retained.
The document describes the property and states that Golf Resorts and/or Mr. Muskatevc "agrees to purchase" the property from Mr. Peshak and Mr. Kampert for $545,000 ($500,000 for the real estate and $45,000 for equipment). The document sets out a payment schedule for payments totaling $90,000 ($5,000 upon acceptance of the offer, $2,500 on the first of each month for six months (May to October), $20,000 on May 15, $25,000 on November 1, all in 1988, and $25,000 on March 31, 1989). The document states that a "formal, legal closing agreement" shall be made on or before March 31, 1989, or when a total of $90,000 has been paid. The document then states, "Present lease between buyer and sellers is now considered void." The document goes on to provide that the sellers will furnish a deed and title with a first mortgage of $455,000 held by the sellers at an interest rate of 8%, payable in six installments per year for five years, with a balloon payment March 31, 1994.
The lease had required the tenants to make a security deposit of $20,000, only $7,000 of which had been paid. The March 22 typewritten document stated:
Sellers agree to allow present $7,000 security deposit to be part of the November 1, 1988 payment and to forgive all interest due or to become due on the $13,000 security deposit not paid. Any late payments gives the sellers the right to immediate foreclosure and a penalty of two (2) percent of the payment due for any month or fraction thereof that payment is late.
Buyer agreed to maintain and to insure the property.
The document made no reference to Mrs. Peshak or Mrs. Kampert or their interest in the property. They did not sign.
Mr. Muskatevc made the initial $5,000 payment and for each of the following six months, he sent a $2,500 check to the defendants with the notation "additional down payment on purchase of Lost Creek Golf Course per 3-22 agreement."
With respect to the initial $5,000 payment, Mrs. Peshak testified that she understood that it was being paid as part of the purchase price and she accepted and deposited it because she believed there was an agreement whereby Muskatevc would be purchasing the golf course.
Mrs. Kampert testified that her husband signed in her behalf as well as his and that if the payments had been made, she would have given a deed. The six $2,500 payments were the same amounts which would have been due during the summer of 1988 under the lease. Judge Evans found that defendants "continued to accept his monthly payments, clearly marked as going toward the purchase of the course."
Because Mr. Muskatevc was unable to recover the proceeds of the sale of a house, as he had planned, the larger payments of $20,000 due on May 15 and $25,000 (less $7,000) due on November 1, 1988 were not made. In January, Mr. Muskatevc offered a lower price of $500,000, but the offer was rejected. Approximately two months before the scheduled closing date, the defendants indicated that they would not convey the property to Mr. Muskatevc. The district court found that the defendants had received a better offer, $1 million, for the property. On March 1, 1989, thirty days prior to the scheduled closing date, Mr. Muskatevc brought this action in the federal district court for specific performance of the agreement.
On the same day, the defendants filed an action in state court to evict Mr. Muskatevc and Golf Resorts from the golf course. A judgment of eviction was entered on June 8, 1989, and the Wisconsin Court of Appeals later affirmed the judgment.
The state courts were well aware of the action in federal court and marked a boundary between the issues being decided in the state court action and those left for decision in the federal court action. Circuit Judge Koehn said in his opinion granting the Peshaks and Kamperts an order of eviction:
This action however is one for eviction wherein the possession of the property is sought.
The Federal Court action is one in which rights of ownership are alleged and are to be determined.
Later in the opinion, he wrote:
Defendants [in the state court, plaintiffs in federal court] argued that the
In the unpublished decision of the Court of Appeals, affirming the judgment of eviction, Judge Myse referred to the March 22 documents and stated that:
None of these documents give the Muskatevcs a possessory right to this property. These documents are not land contracts, nor do they vest Muskatevc with either equitable or legal title to the property.
While the Muskatevcs may claim a right to obtain a land contract interest in the property, all claims derived from these documents are pending in federal court.... The clear legal effect of these documents creates no right of immediate possession. At best the Muskatevcs have asserted a right to obtain a possessory right at some time in the future. This claim is not before this court.
The statements are significant in view of defendants' arguments concerning res judicata and collateral estoppel.
The district court found that Mr. Muskatevc had invested substantial time and money in the golf course. The court determined that the document was a sufficient writing to meet the requirements of the statute of frauds, Wis.Stat. § 706.02, and that even if the writing was somehow deficient, the doctrine of part performance from Wis.Stat. § 706.04(3) should allow enforcement. The court found:
The equities are on the side of the plaintiffs. Mr. Muskatevc enthusiastically put all his energies into improving the golf course. He testified that he worked exceedingly long hours. The course became almost an obsession with him.
So finding, the district court ordered specific performance of the agreement to purchase. The district court ordered that Mr. Muskatevc be allowed 60 days within which to pay the remainder of the first $90,000 and to demonstrate his ability to make the remainder of the payments. If both are not accomplished in 60 days, plaintiffs' rights will cease to exist. If both are accomplished, defendants must sell the property to the plaintiffs with a schedule of mortgage payments similar to the schedule in the March 22 typewritten agreement.
We must first consider the effects of the state court's judgment of eviction. The federal courts, generally, give the same preclusive effect to a state court judgment that the courts of that state would give to the judgment. Kunzelman v. Thompson, 799 F.2d 1172, 1176 (7th Cir.1985). In Wisconsin, "[a]n issue is barred by collateral estoppel only if it was litigated, determined, and necessary to the decision of the prior proceeding." Reckner v. Reckner, 105 Wis.2d 425, 436, 314 N.W.2d 159, 165 (Wis.Ct.App.1981).
On appeal of the judgment of eviction, Mr. Muskatevc argued that the signed agreement vested him with possessory rights to the property such that he could not be evicted. The prior lease had expired. The Wisconsin Court of Appeals determined that the agreement was not a land contract and, thus, did not confer present possessory rights upon Mr. Muskatevc. Since Mr. Muskatevc had no present possessory rights to the golf course, the court affirmed the judgment of eviction. A land contract consists of the transfer of equitable title to the buyer while the seller retains legal title to the property as security for the satisfaction of the buyer's payment obligations under the land contract. Anthony J. Handzlik, Comment, Mortgage Foreclosure as Fraudulent...
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