Homestead Golf Club v. Pride Stables, s. 98-4211 and 98-4217

• Decision Date: 12 September 2000
• Docket Number: Nos. 98-4211 and 98-4217,s. 98-4211 and 98-4217
• Citation: 224 F.3d 1195
• Parties: (10th Cir. 2000) HOMESTEAD GOLF CLUB, INC., a Utah corporation, Appellee and Cross-Appellant, v. PRIDE STABLES, a Utah limited partnership, Appellant and Cross-Appellee, v. VALLEY BANK AND TRUST COMPANY, Third-Party Defendant
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1195

224 F.3d 1195 (10th Cir. 2000)

HOMESTEAD GOLF CLUB, INC., a Utah corporation, Appellee and Cross-Appellant, v.PRIDE STABLES, a Utah limited partnership, Appellant and Cross-Appellee, v.VALLEY BANK AND TRUST COMPANY, Third-Party Defendant.

Nos. 98-4211 and 98-4217

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

September 12, 2000

Appeal from the United States District Court for the District of Utah(D.C.No. 95-CV-484-J)[Copyrighted Material Omitted]Stephen B. Mitchell(Richard D. Burbidge with him on the briefs), Burbidge & Mitchell, Salt Lake City, Utah, for the appellee and cross-appellant.

John G. Marshall, Marshall & Willis, Salt Lake City, Utah, for the appellant and cross-appellee.

Before LUCERO, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and ALLEY, Senior District Judge.^*

LUCERO, Circuit Judge.

After approximately ten years of litigation regarding an oral agreement to construct a portion of a golf course by plaintiff-appelleeHomestead Golf Club, Inc.("HGC") on property owned by defendant-appellant Pride Stables ("Pride"), allegedly in exchange for a loan, the district court decided that the parties had not created an enforceable contract and dismissed the case.Exercising jurisdiction pursuant to 28 U.S.C. §§ 158(d)and1291, we affirm.¹

I

HGC was organized to construct a golf course on property adjacent to the Homestead Resort in Midway, Utah.Pride owned a fifty-percent interest in the property on which the fourteenth hole of the golf course was to be built (the "fourteenth hole property"), as well as a fifty-percent interest in other property co-owned by Cal Clark on which other portions of the golf course were to be constructed (the "Clark-Pride property").In 1987, HGC and Pride began negotiating the construction of portions of this golf course on Pride's property.By Spring 1988, however, Pride was in default on loans secured by the Clark-Pride property from Valley Bank & Trust Co.("Valley Bank"), Davis County Bank("DCB"), and Crossland Savings & Loan ("Crossland") and was pursuing forbearance agreements with some of these lenders to forestall foreclosure proceedings.

On May 9, 1988, Pride purportedly granted an oral license to allow HGC to construct the golf course on portions of its property in exchange for a loan of $185,000--an amount Pride needed to obtain forbearance from its secured creditors on the Clark-Pride property.Notably, the parties dispute whether the loan related only to HGC's use of the Clark-Pride property or whether it related to HGC's use of both the Clark-Pride and fourteenth hole properties.

Pending written documentation of this oral agreement, Pride and the other property owners signed a letter of commitment on June 15, 1988, permitting HGC to begin construction of the golf course on the fourteenth hole property.The letter of commitment stated:

We . . . give this letter of commitment to the City of Midway . . . for the purpose of issuing a building permit to [HGC].By this letter we indicate our commitment to granting to [HGC] an appropriate easement or license over the property . . . for the purpose of their developing a golf course in Midway, Utah.The underlying agreements between the parties necessary to make such a commitment have been reached in principle and are awaiting final documentation, which is expected to be prepared and signed within the next two weeks.As such, we have no objection to the granting of a construction permit to [HGC] for the purpose of beginning construction on the proposed golf course in Midway, Utah.

(II Appellant's App.at 576.)During the next month, the City of Midway granted the permit, and HGC began construction.HGC also gave Pride's General Partner, Robert Condie, a check in the amount of $5,000 payable to Condie and Crossland.

Despite the letter of commitment, the parties were unable to agree in writing on the terms of their oral agreement.In August, Pride received a proposed license agreement from HGC for the Clark-Pride property and a promissory note for $185,000.HGC prepared a separate license agreement for the fourteenth hole property.Pride did not sign either of the license agreements.In the face of threatened foreclosure, Pride requested a modification of the loan and its payment, but HGC alleges it would not agree to the modifications unless Pride obtained agreements from its lenders to subordinate their loans to the license granted to HGC.Creditors would not sign the subordination agreements, and HGC refused to make the modified loans.

Seeking a declaration that it had the right to use the fourteenth hole property, HGC filed this adversary proceeding against Pride on April 28, 1989 in bankruptcy court.Pride had filed a petition under Chapter 11 of the United States Bankruptcy Code in May 1987, and a plan of reorganization had been confirmed by the bankruptcy court in March 1988.After trial on HGC's complaint, the bankruptcy court entered judgment in favor of Pride.On appeal, the district court reversed and remanded, finding insufficient evidence in the record to support the bankruptcy court's conclusion that HGC had breached the May 9, 1988 agreement in December of that year by failing to fund the proposed loan.

On remand, the bankruptcy court entered judgment for HGC, but on further appeal the district court again remanded, this time for consideration of "unresolved factual issues" that the bankruptcy court had failed to address.²After an evidentiary hearing, the bankruptcy court entered judgment for Pride and dismissed HGC's complaint, finding that HGC had anticipatorily repudiated the parties' loan agreement in September 1988.

On appeal for the third time, the district court affirmed the bankruptcy court's dismissal of HGC's complaint, but on alternative grounds.Without reversing the determination of the bankruptcy court that HGC had anticipatorily breached the agreement, the district court held that dismissal of HGC's complaint was required because no enforceable contract existed.Pride filed a motion to amend the judgment to alter the district court's holding that the parties did not create an enforceable contract, which the district court denied.The parties filed cross-appeals from the district court's judgment.³

II

Reviewing a district court's decision in its capacity as bankruptcy appellate court, we apply the clear error standard to a bankruptcy court's findings of fact and the de novo standard to its conclusions of law.SeePhillips v. White(In re White), 25 F.3d 931, 933(10th Cir.1994)."A finding of fact is clearly erroneous if it is without factual support in the record or if, after reviewing all of the evidence, we are left with the definite and firm conviction that a mistake has been made."Conoco, Inc. v. Styler(In re Peterson Distrib., Inc.), 82 F.3d 956, 959(10th Cir.1996)."It is especially important to be faithful to the clearly erroneous standard when the bankruptcy court's findings have been upheld by the district court."Osborn v. Durant Bank & Trust Co., 24 F.3d 1199, 1203(10th Cir.1994).Under Utah law, the existence of a valid, enforceable contract is a question of law which we review for "correctness."John Deere Co. v. A & H Equip., Inc., 876 P.2d 880, 883(Utah1994);see alsoHerm Hughes & Sons, Inc. v. Quintek, 834 P.2d 582, 583(Utah Ct. App.1992).⁴"The burden of proving the existence of a contract is on the party seeking enforcement of it."Oberhansly v. Earle, 572 P.2d 1384, 1386(Utah1977)(citingB & R Supply Co v. Bringhurst, 503 P.2d 1216, 1217(Utah1972)).

A

The parties dispute whether their oral agreement of May 9, 1988 is an enforceable contract."A condition precedent to the enforcement of any contract is that there be a meeting of the minds of the parties, which must be spelled out, either expressly or impliedly, with sufficient definiteness to be enforced."⁵Valcarce v. Bitters, 362 P.2d 427, 428(Utah1961)."[C]ontractual mutual assent requires assent by all parties to the same thing in the same sense so that their minds meet as to all the terms."Cessna Fin. Corp. v. Meyer, 575 P.2d 1048, 1050(Utah1978);see alsoSackler v. Savin, 897 P.2d 1217, 1220-22(Utah1995)(holding that to form an enforceable contract, there must be a meeting of the minds on the essential terms of the agreement).

Normally, the intentions of the parties"will be found from the instrument itself," but where, as here, the parties did not execute a written contract, "resort may be had to extraneous evidence manifesting the intentions of the parties."Oberhansly, 572 P.2d at 1386.The focus of our inquiry is the oral discussion on May 9, 1988, during which Pride purportedly granted a license to allow HGC to construct the golf course on portions of Pride's property in exchange for a $185,000 loan.

Based on its examination of the evidence of the oral agreement, the district court concluded that "[i]mportant material terms such as the funding date, interest rate, and payment schedule . . . were not determined at that time."(I Appellant's App.at 293.)Not only were important terms left open, but it is not even clear which property lease supported the proposed loan.HGC claims the loan related only to the Clark-Pride property, but Pride alleges the loan was supported by HGC's use of both the Clark-Pride and the fourteenth hole properties.If "there was simply some nebulous notion in the air that a contract might be entered into in the future, the court cannot fabricate the kind of a contract the parties ought to have made and enforce it."Valcarce, 362 P.2d at 428-29(citation omitted).We conclude this is the situation present here.

Because the parties did not ultimately memorialize their oral agreement, we must inquire beyond the verbal discussions into the attempts at written documentation.The aforementioned letter of commitment regarding the fourteenth hole property was signed by Pride and stated in relevant part:

By this letter w...