Ocean Atl. Dev. Corp. v. Aurora Christian Schools

• Decision Date: 14 March 2003
• Docket Number: No. 01-2239.,No. 01-3400.,01-2239.,01-3400.
• Citation: 322 F.3d 983
• Parties: OCEAN ATLANTIC DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. AURORA CHRISTIAN SCHOOLS, INC., Defendant-Appellee. Ocean Atlantic Chicago Corporation, Plaintiff-Appellant, v. Dale Konicek, Wayne Konicek, Lois Konicek, and Isenstein-Pasquinelli, L.L.C. Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

322 F.3d 983

OCEAN ATLANTIC DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. AURORA CHRISTIAN SCHOOLS, INC., Defendant-Appellee.

Ocean Atlantic Chicago Corporation, Plaintiff-Appellant, v. Dale Konicek, Wayne Konicek, Lois Konicek, and Isenstein-Pasquinelli, L.L.C. Defendants-Appellees.

No. 01-2239.

No. 01-3400.

United States Court of Appeals, Seventh Circuit.

Argued November 26, 2001.

Decided March 14, 2003.

Submitted January 23, 2002.

Patrick J. Hughes (argued), William P. Farrell, Jr., Gardner, Carton & Douglas, Chicago, IL, for Plaintiff-Appellant in No. 01-2239.

John A. Lipinsky (argued), Coman & Anderson, Naperville, IL, for Defendant-Appellee in No. 01-2239.

William P. Farrell, Jr. (submitted), Gardner, Carton & Douglas, Chicago, IL, for Plaintiff-Appellant in No. 01-3400.

Bruce A. Brown (submitted), Goldsmith, Thelin, Dickson & Brown, Aurora, IL, for Defendants-Appellees Dale Konicek, Wayne Konicek and Lois Konicek in No. 01-3400.

Ronald Cope (submitted), John F. Donahue, Ice Miller Donadio & Ryan, Chicago, IL, for Isenstein-Pasquinelli, L.L.C. Defendant-Appellee in No. 01-3400.

Before ROVNER, DIANE P. WOOD, and WILLIAMS, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

In these two cases, which we have consolidated for decision, the Ocean Atlantic Development Corporation and the Ocean Atlantic Chicago Corporation ("Ocean Atlantic") tendered letter offers to the owners of undeveloped land that Ocean Atlantic wished to purchase and the owners signed those offers. Each offer expressly anticipated that the parties would, in due course, sign a contract for the purchase and sale of the properties. As it turned out, however, the ensuing negotiations did not produce a final contract in either case. From the property owners' perspective, this meant that they had no obligation to sell their properties to Ocean Atlantic. But Ocean Atlantic, believing otherwise, filed suit, contending that the signed offers themselves constituted binding agreements that entitled the company to purchase the properties on the terms stated in those offers. In Ocean Atlantic's suit against Aurora Christian Schools ("Aurora Christian"), now-Chief Judge Kocoras granted summary judgment in favor of Aurora Christian, reasoning that the unambiguous language of the offer revealed no intent by the parties to be bound by its terms. Subsequently in Ocean Atlantic's suit against Dale, Wayne, and Lois Konicek and Isenstein-Pasquinelli, L.L.C., Judge Holderman adopted Judge Kocoras's reasoning, likewise concluded that the offer did not amount to a binding agreement, and granted summary judgment in favor of the defendants on that basis. Because we agree that in neither instance did the offer constitute a binding agreement to sell the land to Ocean Atlantic, we affirm.

I.

A. Aurora Christian Schools

Ocean Atlantic is a real estate development company that is incorporated in Virginia and maintains its principal place of business in Alexandria, Virginia. Ocean Atlantic has purchased and developed land in DuPage, Kane, and Will Counties—three of the suburban "collar" counties that surround Chicago and Cook County.

In April 1999, Ocean Atlantic commenced discussions with Aurora Christian about purchasing land that Aurora Christian owned in Kane County near Aurora, Illinois. Aurora Christian is an Illinois not-for-profit corporation that provides Christian-oriented education to students in kindergarten through the twelfth grade. By letter offer dated June 9, 1999, Ocean Atlantic proposed to buy 116 acres of land from Aurora Christian at $35,000 per acre, for a total of $4,060,000. Aurora Christian App. A117.¹ Aurora Christian rejected the offer and, among other things, sought an increase in the per-acre purchase price as well as a decrease in the acreage to be sold. On August 2, Ocean Atlantic submitted a revised offer to purchase 78 acres of land from Aurora Christian at $42,000 per acre for a total of $3,276,000. Aurora Christian App. A125. Aurora Christian again rejected the offer, still demanding a higher price. Three days later, on August 5, Ocean Atlantic tendered yet another offer to Aurora Christian proposing a per-acre purchase price of $45,000, for a total of $3,510,000. Aurora Christian App. A131. Aurora Christian found the third offer to its liking and on August 6, 1999, Aurora Christian President Paul House signed the offer. Aurora Christian App. A134. Later that same day, Aurora Christian Treasurer Keith Gibson faxed a copy of the signed offer to Ocean Atlantic along with a cover letter stating that "your captioned letter offer has been accepted" and "we look forward to an excellent relationship." Aurora Christian App. A141.

The opening sentence of the August 5 offer that Aurora Christian signed indicated that "[t]his Letter Offer ... will serve to set forth some of the parameters for an offer from Ocean Atlantic Development Corp." to purchase from Aurora Christian the 78 acres of land identified in the letter's caption and in an exhibit attached to the letter. Aurora Christian App. A131. The offer then proceeded to identify the following parameters:

(1) Ocean Atlantic would purchase the property at a per-acre price of $45,000 for a total of $3,510,000, subject to verification of the total acreage.

(2) Ocean Atlantic would pay for the land wholly in cash on the closing date.

(3) The purchase of the land would be subject to a 90-day inspection period that would commence on the date that the parties signed a contract of purchase and sale. During that inspection period, Ocean Atlantic would have the right to enter the property in order to conduct soil, environmental, engineering, and other studies in order to determine whether the property was suitable for Ocean Atlantic's intended use.

(4) Within five business days after the parties executed a contract of purchase and sale, Ocean Atlantic would deposit into escrow $25,000 in earnest money toward the purchase of the property. In the event that Ocean Atlantic decided to terminate the contract during the inspection period, the deposit would be returned to Ocean Atlantic. However, if Ocean Atlantic elected upon expiration of the inspection period to proceed with the acquisition of the property, it would increase the earnest money deposit to a total of $100,000. This deposit was to serve as "full and complete liquidated damages" to Aurora Christian in the event that Ocean Atlantic defaulted on any of its obligations under the contract of purchase and sale.

(5) Upon satisfactory completion of the inspection period, Ocean Atlantic would have a six-month "entitlement period" in order to make arrangements with the appropriate municipal authorities for (a) rezoning and final plat approval for development of the property, (b) sufficient sanitary sewer and water capacity, and (c) necessary on- and off-site public improvements. The letter provided for a 60-day extension of the entitlement period in the event that Ocean Atlantic had completed its applications for rezoning and final plat approval within six months but was still waiting for approval or denial by local authorities. Ocean Atlantic also had the right to purchase additional 30-day extensions of the entitlement period for $5,000 each if it was still awaiting approvals.

(6) Closing of the purchase and sale was to occur within 30 days after Ocean Atlantic secured annexation, rezoning, and final plat approval for the property. Title to the property "shall be marketable and good of record and in fact and insurable as such at ordinary rates by a recognized title insurer free and clear of all liens and encumbrances or unacceptable exceptions."

(7) Ocean Atlantic had the right of first refusal with respect to the purchase of two additional, adjacent parcels of Aurora Christian property identified in the exhibit to the letter.

(8) Aurora Christian represented that it "will not further encumber the Property or negotiate, or agree to, its sale," that it would make no commitments or representations to other property owners or governmental authorities that would bind Ocean Atlantic or interfere with its ability to develop the property, and that it had no notice of any pending or threatened litigation, petition, proceeding or zoning application that would interfere with Ocean Atlantic's development plans.

(9) Ocean Atlantic and Aurora Christian warranted to one another that neither had a deal with any agent, broker, or finder other than the two brokers identified in the letter. Aurora Christian would pay a commission to those two brokers by separate agreement upon closing.

(10) "Upon such acceptance and return of this Offer, Purchaser shall prepare and present to the Seller a Contract of Purchase and Sale in accordance with the terms and provisions hereof. Purchaser and Seller shall work diligently to execute the Contract within Thirty (30) days of the execution of this Offer."

(11) The offer would become "null and void" if not executed by both Ocean Atlantic and Aurora Christian within 10 days.

Aurora Christian App. A131-34. Because it is the August 5 offer that Ocean Atlantic contends amounts to a binding agreement for the purchase and sale of Aurora Christian's property, we have reproduced the full text of the letter at Appendix A to this opinion.

After Aurora Christian signed the offer, Ocean Atlantic set to work drafting a contract for the purchase and sale of the land as called for in the offer. On August 25, 1999, Ocean Atlantic tendered a proposed contract to Aurora Christian, but the discussion and drafting process continued as the parties attempted to resolve outstanding issues. Aurora Christian App. A148. On October 29, Ocean Atlantic transmitted a final revised draft of the proposed contract to Aurora Christian. Aurora Christian App. A168. The terms of that draft were for the most part consistent with the parameters identified in the August 5, 1999 letter, but the draft contract also spelled out the terms...