Sawmill Golf Club, Inc. v. Ramsden
| Decision Date | 22 May 2023 |
| Docket Number | A22-1384 |
| Parties | Sawmill Golf Club, Inc., Appellant, v. Bruce A. Ramsden, et al., Respondents. |
| Court | Minnesota Court of Appeals |
This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).
Mark W. Vyvyan, Melissa R. Hodge, Fredrikson & Byron, P.A. Minneapolis, Minnesota (for appellant)
Mark A. Olson, Olson Law Office, Apple Valley, Minnesota (for respondents)
Considered and decided by Frisch, Presiding Judge; Bjorkman, Judge; and Jesson, Judge.
Appellant challenges the denial, following a court trial, of its claims that respondents breached a duty to negotiate in good faith the terms to purchase land that it leases from respondents. Appellant argues that respondents owed a good-faith duty under the contract between the parties and the common law and that the district court erred by determining that respondents did not breach that duty. We affirm.
Respondents Bruce and Barbara Ramsden, a married couple in their 80s, own land in Washington County, including a five-acre parcel where their home is situated (the home parcel) and a much larger parcel that appellant Sawmill Golf Club, Inc. has leased from the Ramsdens since 2001 for purposes of operating an 18-hole golf course (the leased property). In relevant part, the lease provides that if the Ramsdens elect to sell the leased property or the home parcel, or both, Sawmill has the exclusive right to purchase the land for "fair market value" in a cash sale. If Sawmill exercises that right the lease requires Sawmill and the Ramsdens to "meet and negotiate in good faith in an effort to agree upon the fair market value" of the land to be sold. If they "are unable to agree upon the fair market value" within 60 days, either party may request an appraisal.
In May 2008, the parties executed an addendum to the lease. It explains that the lease grants Sawmill the "exclusive right to purchase" the Ramsdens' property and provides the "mechanism for determining the price" but does not specify a timeline for such a sale or require the Ramsdens to sell. The addendum changes that, granting Sawmill "an option to purchase the property at any time after 12/31/2013," with the purchase option extending to "both the leased land and the . . . home parcel and corresponding outlots." And the addendum changes the nature of the transaction from a cash sale to a contract for deed, providing: "Terms and Conditions for the Contract for Deed will be determined by the Ramsdens at the time of sale."
In October 2018, Sawmill told the Ramsdens that it was electing to purchase "the property." The parties discussed terms of a sale. Sawmill offered to purchase the leased property for approximately $1,600,000, which the Ramsdens rejected. Neither party obtained an appraisal at that time. The parties also disagreed about whether the sale would include the home parcel, the length of the contract for deed, the interest rate, and other terms. In particular, the Ramsdens requested payment in the form of monthly installments for the rest of their lives plus six months, which Sawmill rejected on the ground that it could lead to Sawmill paying "more than the value of the land."
In December 2019, Sawmill initiated this action, alleging that the Ramsdens breached the lease and addendum "by their failure to negotiate in good faith and offer the sale of the Property based on the fair market value." Sawmill sought (1) specific performance of the lease and addendum in the form of an order requiring the Ramsdens to consult with an appraiser and "negotiat[e] in good faith" an offer to sell the property, and (2) money damages for delay.[1] Over the next year, while the litigation proceeded, the parties continued negotiating the terms of a sale and both retained appraisers to value the leased property and the home parcel. At some point, the parties agreed to a purchase price of $1,600,000 for the leased property but never memorialized the agreement in writing. Sawmill continued to reject the Ramsdens' other sale terms and conditions.
Over the course of a three-day trial in October 2021, the parties presented evidence of their disagreements regarding appraisal obligations, sale price, and other terms of a contract for deed. In particular, Sawmill's president testified to concerns that the Ramsdens' insistence on monthly payments for their lifetimes plus six months would affect the purchase price; Bruce Ramsden testified that the requested term was merely a means of ensuring consistent income for their lifetimes-as the lease arrangement did-and that payments would cease if Sawmill paid the full price before their deaths. He emphasized that such an outcome is unlikely given the Ramsdens' advanced age.
The district court dismissed Sawmill's claims, reasoning that the addendum grants the Ramsdens the exclusive right to "set the terms and conditions of the sale" and Sawmill failed to establish that they breached the lease or addendum by failing to "negotiate in good faith." Sawmill moved for amended findings, particularly urging the district court to amend its decision to "find that the Ramsdens breached their common law duty of good faith and fair dealing" in negotiating the terms and conditions of the sale. The district court denied the motion.
Sawmill appeals.
Contract interpretation presents a question of law, which we review de novo. Glacier Park Iron Ore Props., LLC v. U.S. Steel Corp., 961 N.W.2d 766, 769 (Minn. 2021). The purpose of contract interpretation is to enforce the parties' intent. Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004). To discern that intent, we look to the language of the contract as a whole, harmonizing all of its clauses, Trebelhorn v. Agrawal, 905 N.W.2d 237, 242 (Minn.App. 2017), and "giv[ing] all of its provisions meaning," Minn. Jud. Branch v. Teamsters Loc. 320, 971 N.W.2d 82, 88 (Minn.App. 2022) (quotation omitted). When the parties modify the contract, the resulting contract consists of the new terms and all old terms not changed by the new ones. Knight v. McGinity, 868 N.W.2d 298, 301 (Minn.App. 2015). If the language of the whole contract is unambiguous, "the plain and ordinary meaning of the contract language controls." Linn v. BCBSM, Inc., 905 N.W.2d 497, 504 (Minn. 2018) (quotation omitted).
The parties' contract consists of the addendum and all portions of the lease not changed by the addendum.[2] The only reference to good faith appears in the lease, which provides that, in the event of a sale, the parties "shall meet and negotiate in good faith in an effort to agree upon the fair market value" of the land to be sold. The addendum does not expressly reiterate this good-faith language but recognizes that the lease provides the "mechanism for determining the price." And because the addendum replaces the lease's cash-sale terms with a contract for deed, it adds: "Terms and Conditions for the Contract for Deed will be determined by the Ramsdens at the time of sale."
The parties dispute the scope of the Ramsdens' good-faith duty under these provisions. Sawmill construes the lease language broadly as imposing a duty to conduct all sale negotiations in "mutual good faith" and, by extension, an obligation to determine all terms and conditions of a sale in good faith. The Ramsdens urge a narrower interpretation that requires good faith only in negotiating fair market value. We agree with the narrower interpretation for two reasons.
First, that interpretation best accounts for the language of the lease. It refers to a duty to negotiate in good faith in a specific context: "in an effort to agree upon the fair market value." To read this provision as imposing a duty to conduct all sale negotiations in good faith would require us to ignore the reference to fair market value. Because we must give all contract terms meaning, Minn. Jud. Branch, 971 N.W.2d at 88, we decline to do so.
Second, the narrower interpretation best accounts for the addendum's language. The addendum recognizes that a contract for deed will require determination of "price" and other "[t]erms and [c]onditions." But it treats the two concepts differently. With respect to price, the addendum states that the original lease controls, meaning that the parties must negotiate fair market value in good faith and may consult an appraiser if they do not reach an agreement. With respect to other terms and conditions, the addendum provides simply that they "will be determined by the Ramsdens at the time of sale." It requires neither good faith nor even negotiation. So even if the lease is interpreted to require the parties to conduct all sales negotiations in good faith, that requirement does not constrain the Ramsdens' discretion in "determin[ing]" the terms and conditions of the contract for deed.
In sum the plain language of the lease and addendum establishes that the parties have an express contractual good-faith duty with respect to a sale. But the duty applies only to negotiation of the property's...
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