MS Real Estate Holdings, LLC v. Donald P. Fox Family Trust
| Decision Date | 29 July 2014 |
| Docket Number | No. 2013AP679.,2013AP679. |
| Citation | 356 Wis.2d 307,853 N.W.2d 627 |
| Parties | MS REAL ESTATE HOLDINGS, LLC, Plaintiff–Appellant, v. DONALD P. FOX FAMILY TRUST, Jean A. Fox Revocable Living Trust, Jean A. Fox, Michael J. Fox, Thomas P. Fox, Karen L. Brazee, Carol L. Brewer, Ellen J. Fox and Amy J. Alaniz, Defendants–Respondents. |
| Court | Wisconsin Court of Appeals |
On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Jordan J. Hemaidan and Michael P. Screnock of Michael Best & Friedrich LLP, Madison.
On behalf of the defendants-respondents, the cause was submitted on the briefs of Charles D. Koehler and Michael C. Menghini of Herrling Clark Law Firm Ltd., Appleton.
Before HOOVER, P.J., MANGERSON and STARK, JJ.
¶ 1 MS Real Estate Holdings, LLC, formerly Tidy–View Dairy, Inc., (“Tidy–View”) appeals a grant of summary judgment in favor of the Donald P. Fox Family Trust, the Jean A. Fox Revocable Living Trust, Jean A. Fox, Michael J. Fox, Thomas P. Fox, Karen L. Brazee, Carol L. Brewer, Ellen J. Fox, and Amy J. Alaniz (collectively, “the Foxes”). Tidy–View argues the circuit court erred in concluding its Right of First Refusal (“ROFR”) agreement with Jean and Donald Fox was indefinite as to duration and terminable after a reasonable time. We agree with Tidy–View, reverse the judgment, and remand for further proceedings consistent with this opinion.
¶ 2 In 1998, Tidy–View agreed to the ROFR with Jean and Donald Fox. The ROFR grants Tidy–View two rights: a right of first refusal to purchase property located in Outagamie County, and a right of first refusal to lease the property. The purchase provision of the ROFR states:
The lease provisions are similar to this purchase provision, but also contain a subsection governing the duration of Tidy–View's lease rights:
The ROFR is “binding upon the respective parties, their heirs, personal representatives, successors in interest and assigns.” Tidy–View paid about $4,000 for these rights.
¶ 3 Tidy–View began leasing the property in 2001. In 2007, Donald Fox signed a five-year lease extension with Tidy–View, to expire in January 2012. On July 29, 2011, and again on October 26, 2011, Jean Fox1 notified Tidy–View that its lease agreement would soon expire, and requested a bid to lease for the 2012 crop year. Fox also solicited offers from other potential lessees, and received two. The first offer, from Tinedale Cropping, was not acceptable to Fox, but the second, from Kavanaugh Farms, was. Pursuant to Section 2, Fox presented Tidy–View with the Kavanaugh offer.
¶ 4 Tidy–View commenced this lawsuit against the Foxes, arguing it was permitted to lease the property under the Tinedale offer's terms. On March 6, 2012, Jean Fox notified Tidy–View that she was terminating the ROFR in its entirety, claiming it was unenforceable for vagueness as to its term.
¶ 5 The Foxes initially filed a motion to dismiss Tidy–View's lawsuit, arguing the Tinedale proposal was never acceptable and, therefore, Tidy–View could not exercise its lease rights under those terms. Later, the Foxes sought summary judgment, arguing the ROFR was void upon Jean Fox's notice of termination. The parties reached an interim agreement regarding whether Tidy–View could lease under the terms of the Tinedale offer. Thus, the sole remaining issue before the court was whether the ROFR was terminable for indefiniteness.
¶ 6 The circuit court granted the Foxes' summary judgment motion. It concluded that a contract must have “some reasonable delineation of the duration of the right,” without which it is indefinite and contrary to public policy. The court continued, “Between Fox and Tidy[-]View there is nothing to define a term other than this residual expectation inherent in ownership, that sooner or later there will be a proposed sale.” The court reasoned that without a definite term of months or years, or a term tied to the life span of a principle or his or her heirs, the ROFR created a “perpetual right” that was terminable after a reasonable time by law. Then, citing the price paid as consideration for the ROFR, the court concluded that “15 years clearly meets a standard for the passage of a reasonable time for an agreement regarded as terminable at will.” Tidy–View appeals.
¶ 7 We review a grant of summary judgment de novo. Chapman v. B.C. Ziegler & Co., 2013 WI App 127, ¶ 2, 351 Wis.2d 123, 839 N.W.2d 425. The summary judgment methodology requires that we first determine whether a claim has been stated and whether the answer disputes the facts underlying the claim. Id. If the pleadings join issue, we then assess whether there is a genuine issue of material fact. Id. Summary judgment is appropriate if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2).2
¶ 8 To determine whether the ROFR is indefinite, we must interpret the document. In interpreting a contract, we attempt to give effect to the intentions of the parties. See Nature Conservancy of Wis., Inc. v. Altnau, 2008 WI App 115, ¶ 6, 313 Wis.2d 382, 756 N.W.2d 641. If the contract language gives rise to one clear and unambiguous meaning, we will apply the language as written. Id. The contract is ambiguous if the language is susceptible to more than one meaning. Id. Extrinsic evidence of the parties' intent is relevant only to an ambiguous contract. Id. Absent ambiguity, the construction of a written contract is a matter of law. Levy v. Levy, 130 Wis.2d 523, 528, 388 N.W.2d 170 (1986).
¶ 9 It is undisputed the ROFR does not include a definite temporal limitation. That is, the agreement does not identify when the attendant rights and obligations are extinguished or lapse. Indeed, by binding the parties' “heirs, personal representatives, successors in interest and assigns,” it appears the parties envisioned a long-term contractual relationship.
¶ 10 The Foxes persuaded the circuit court that the parties' failure to include a definite temporal limitation rendered the ROFR indefinite, and therefore terminable after a reasonable time. “As a general rule, when a contract is of indefinite duration, we will imply a reasonable time for performance.” Schneider v. Schneider, 132 Wis.2d 171, 175, 389 N.W.2d 835 (Ct.App.1986). Courts do not favor contracts of indefinite duration, and are reluctant to interpret a contract as providing for perpetual or unlimited rights unless the relevant documents clearly state that to be the intention of the parties. Id.¶ 11 When this case was initially submitted, we were under the impression that the only issue on appeal was the enforceability of the ROFR's purchase provision, the lease issue having been settled.3 We issued an opinion holding that the purchase provision was enforceable and terminated upon sale of the property, an analysis we now adhere to.See infra, ¶¶ 12–23. In a motion for reconsideration, Tidy–View observed the parties' settlement extended only to the immediate dispute over the Tinedale lease offer, and not the enforceability of the lease provisions. Accordingly, Tidy–View requested that we also address the enforceability of its lease rights. We withdrew our opinion, ordered supplemental briefing, and now address the lease provision separately. See infra, ¶¶ 24–32.
¶ 12 We begin with the purchase provision's plain language. See BV/B1, LLC v. InvestorsBank, 2010 WI App 152, ¶ 25, 330 Wis.2d 462, 792 N.W.2d 622. Section 1 states that Tidy–View has the right to purchase the property “for the same price and on the same terms which Fox is willing to transfer such Property to another party.”4 The contract obligates the Foxes to provide written notice of an offer they are willing to accept. It then gives Tidy–View fifteen days within which to accept or reject the offer. If Tidy–View accepts the offer, it is substituted for the purchaser and the transaction is closed pursuant to the agreement. If Tidy–View rejects the offer, Fox is free to sell to the third party. If that sale is not consummated,...
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