McLellan v. Charly
| Decision Date | 17 July 2008 |
| Docket Number | No. 2007AP1120.,2007AP1120. |
| Citation | 2008 WI App 126,758 N.W.2d 94 |
| Parties | Richard G. McLELLAN, Rick Bogle, and Primate Freedom Project, Plaintiffs-Respondents-Cross-Appellants<SMALL><SUP>†</SUP></SMALL> v. Roger L. CHARLY, Defendant-Appellant-Cross-Respondent. |
| Court | Wisconsin Court of Appeals |
On behalf of the defendant-appellant-cross-respondent, the cause was submitted on the briefs of Allen A. Arntsen, Michael S. Heffernan, and Theresa A. Andre of Foley & Lardner LLP, Madison, and Jon C. Manzo, of counsel, Middleton.
On behalf of the plaintiffs-respondents-cross-appellants, the cause was submitted on the briefs of Kendall W. Harrison and Steven A. Heinzen of Godfrey & Kahn, S.C., Madison.
Before DYKMAN, VERGERONT and BRIDGE, JJ.
Roger L. Charly appeals the circuit court's order that he convey certain real estate to Richard McLellan pursuant to an option to purchase. The circuit court concluded that leaseback and repurchase provisions in the agreement between Charly and McLellan constituted consideration for the option and Charly breached the agreement by revoking the option before the expiration of the specified time period. Charly contends there was no consideration for the option and, thus, he could revoke it at any time. He also contends the circuit court erred in concluding that the interest of third parties was not an appropriate factor in deciding whether to grant specific performance.
¶ 2 We conclude that, in order to make the option a binding option contract, consideration is required that is separate from the consideration for the sale. We further conclude that the leaseback and repurchase provisions are not consideration separate from the consideration for the sale. Finally, we conclude that the other grounds the plaintiffs advance as separate consideration—Charly's intent to be bound by the option, Charly's personal satisfaction, and the efforts of Rick Bogle, who is not a party to the option, to obtain financing—do not constitute the requisite separate consideration for the option. Charly was therefore free to revoke the option. Accordingly, we hold that the circuit court should have dismissed McLellan's breach of contract claim in addition to dismissing the breach of contract claims of Bogle and the Primate Freedom Project.
¶ 3 With respect to the plaintiffs' claims for relief under the doctrine of promissory estoppel, we conclude Bogle is not entitled to enforcement of Charly's oral promise to him under this doctrine and none of the three plaintiffs are entitled to enforcement of the option under this doctrine.
¶ 4 Because of these conclusions we need not address Charly's challenge to the court's order of specific performance.
¶ 5 Accordingly, we affirm the circuit court in part, reverse in part, and remand with instructions to dismiss the complaint. On remand the court is also directed to vacate its order dismissing Charly's counterclaim and enter an order consistent with this opinion.
¶ 6 The following facts are taken from the circuit court's findings of fact and are not disputed on appeal. The property in dispute is owned by Charly and located at 26 North Charter Street in Madison, between the University of Wisconsin's Harlow Primate Psychology Laboratory and the Wisconsin National Primate Research Center. In 2003 and again in early 2005 the University had expressed to Charly an interest in acquiring the property. Charly said he wanted one million dollars for the property and nothing further came of those conversations at the time.
¶ 7 In July 2004, Rick Bogle, an animal rights activist, met with Charly to ask about purchasing the property. Its location was appealing to Bogle because he opposed the work taking place in the two neighboring facilities. Bogle informed Charly he wanted to use the property for a National Primate Research Center Exhibition Hall, and Charly said he would sell the property to Bogle for $750,000. Charly understood that Bogle had to raise the purchase money. Dr. Richard McLellan agreed to borrow the money to purchase the property, with the understanding that Bogle would be responsible for making payments and reimbursing him. In October 2004, Bogle notified Charly that he had found the money and was moving to Madison.
¶ 8 The parties agreed that Bogle would have an attorney he had contacted draft an agreement. Charly and McLellan executed a document titled "Option to Purchase" effective May 10, 2005, that granted McLellan or his assign the option of purchasing the property for $675,000 within 180 days and permitted the buyer to extend the option for an additional ninety-day period. The agreement contained detailed provisions on the terms of the sale, including leaseback and repurchase provisions.
¶ 9 In June 2005, Bogle organized a rally at the property and posted a sign reading "Future Home of the National Primate Research Exhibition Hall," which contained a picture of a monkey with a device screwed into its skull. Charly had agreed the sign could be put up. Soon after the rally, a University representative called Charly to express its opposition to having the exhibition hall on the property and said the University was still interested in the property. Charly responded that he still wanted $1,000,000 for the property.
¶ 10 Shortly thereafter, Charly took the agreement he and McLellan had signed to another attorney. In a letter to McLellan on Charly's behalf, the attorney stated that the option was "voidable and void due to lack of consideration" and offered to enter into an option with different terms. McLellan declined to do that.
¶ 11 On August 1, 2005, Charly received a proposed option to purchase from the University under which the University had the option of purchasing the property for $1,000,000. By notice dated August 12, 2005, McLellan attempted to exercise his option to purchase the property but the envelope was returned to him unopened. Through counsel, Charly informed McLellan there was no enforceable option and he declined to sell the property to him.
¶ 12 McLellan, Bogle, and the Primate Freedom Project, an organization Bogle founded, filed this action alleging claims for breach of contract and promissory estoppel and seeking specific performance of the agreement McLellan and Charly had signed. Charly answered, pleading lack of consideration among other defenses, and a counterclaim seeking a declaration that neither McLellan nor any other plaintiff had an interest in the property.
¶ 13 After a trial to the court, the court determined there was consideration for the option, with the result that Charly could not revoke the offer to sell the property within the specified time period. The court decided that the leaseback provision and the repurchase provision in the agreement each constituted adequate consideration. The court found Charly had asked for the leaseback provision so that he could continue to use the property for storage. It found he had negotiated a reduction in the price in the repurchase provision McLellan requested, a modification that he, Charly, perceived as having a tax advantage to him. The court rejected the plaintiffs' two alternative theories of consideration—Charly's personal satisfaction at selling to someone other than the University and the plaintiffs' efforts to obtain financing. With respect to this latter theory, the court found that there was no evidence that McLellan made any effort to obtain financing and Bogle's efforts to obtain funds to repay McLellan could not constitute consideration for the option given by Charly to McLellan.
¶ 14 Having concluded there was consideration for the option, the court decided that specific performance was the appropriate remedy, rejecting Charly's contention that the court should consider the harm to the interests of third parties and to the public as a basis for declining to award specific performance. The court ordered conveyance of the property to McLellan and dismissed the breach of contract claims of Bogle and the Primate Freedom Project. The court also dismissed Charly's counterclaim.
¶ 15 Although the court's ruling on consideration made it unnecessary to address the plaintiffs' promissory estoppel claims, the court did so. It concluded they were not entitled to relief on this alternative ground and dismissed the promissory estoppel claim of each plaintiff.1
¶ 16 Charly's motion for reconsideration was denied.
¶ 17 On appeal Charly contends the circuit court erred in determining the leaseback and repurchase provisions were adequate consideration for the option. Among other reasons, he asserts the consideration required to make an option a binding contract must be separate from the consideration for the sale and therefore cannot be satisfied by the terms negotiated for the sale. He also asserts that the court erroneously exercised its discretion in ordering specific performance.
¶ 18 The plaintiffs respond that the leaseback and repurchase provisions are sufficient consideration for the option, even if separate consideration is required. In the alternative, they argue that the court erred in rejecting their alternative theories of consideration. They also assert the circuit court properly exercised its discretion in granting specific performance. However, they challenge the court's ruling that they are not entitled to relief based on their claims of promissory estoppel and assert that this is an alternative basis for ordering specific performance.2
¶ 19 We first address the issue whether the consideration required for a binding option contract must be separate from the consideration for the sale of the property. We conclude it must be. We next address the issue whether there was separate consideration for the option in this case and we conclude there was not. Finally, we consider whether the doctrine of promissory estoppel entitles any of the three plaintiffs to relief, and we conclude it does not....
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