Seashore Performing Arts Center, Inc. v. Town of Old Orchard Beach, 7660

• Decision Date: 10 May 1996
• Docket Number: No. 7660,Docket No. Y,7660
• Citation: 676 A.2d 482
• Parties: SEASHORE PERFORMING ARTS CENTER, INC. et al. v. TOWN OF OLD ORCHARD BEACH. DecisionLawor 94 391.
• Court: Maine Supreme Court

Page 482

676 A.2d 482

SEASHORE PERFORMING ARTS CENTER, INC. et al. v. TOWN OF OLD ORCHARD BEACH.

Decision No. 7660.

Law Docket No. Yor 94 391.

Supreme Judicial Court of Maine.

Argued Dec. 7, 1995.

Decided May 10, 1996.

Joseph V. Lenkowski (orally), Nicholas C. Scaccia, Scaccia, Lenkowski & Aranson, Sanford, for Plaintiffs.

William E. Saufley (orally), Monaghan, Leahy, Hochadel & Libby, Portland, for Defendant.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and LIPEZ, JJ.

RUDMAN, Justice.

Seashore Performing Arts Center, Inc. (SeaPAC) appeals from the summary judgment entered in favor of the Town of Old Orchard Beach (the Town) in the Superior Court (York County, Fritzsche, J.) on SeaPAC's claim for rescission of its contract with the Town to buy the facility known as the Ballpark. SeaPAC also appeals from the summary judgment entered by the court in favor of the Town on its counterclaim seeking to enforce an agreement whereby SeaPAC had agreed to indemnify the Town against certain specified claims even though it failed to purchase the Ballpark. We affirm both the judgment in favor of the Town on SeaPAC's claim for rescission and the judgment in favor of the Town regarding the indemnification agreement.

In 1989 SeaPAC entered into a purchase and sale agreement to buy the Ballpark from the Town. The agreement included a provision that SeaPAC could use the Ballpark but delay the transfer of title one year at a time for three years. At the time SeaPAC and the Town executed the purchase and sale agreement they also signed two other agreements: an operating agreement to govern SeaPAC's use of the Ballpark prior to the actual transfer of title, and an indemnification agreement requiring SeaPAC to defend and indemnify the Town against certain identified claims.

At the time the purchase and sale agreement was entered into, the Town municipal ordinance set maximum nighttime noise levels at the Ballpark at 60 dBA. The Ballpark, however, abutted an area with a maximum night noise level limited by ordinance to 45 dBA. During 1990 SeaPAC produced several rock concerts at the Ballpark that precipitated controversy over the noise generated. SeaPAC and the Town officials conducted extended discussions to try to resolve the noise issue but came to no permanent solution. The Town did enact an emergency ordinance increasing the maximum allowable noise level for the Ballpark area to 75 dBA for the 1991 summer concert season. Monitoring by the Town revealed no violation of the 75 dBA ordinance during the summer of 1991. The emergency ordinance expired in August 1991, and the Town enacted a new ordinance setting 62 dBA as the maximum permitted noise level for activities at the Ballpark. Town officials knew at the time of enactment of the new ordinance that noise levels exceeded 62 dBA at every Ballpark concert in 1991.

After the Town passed the 62 dBA noise ordinance, SeaPAC did not make the next scheduled payment to extend the date of closing and instead notified the Town it would not purchase the Ballpark. SeaPAC demanded that the Town return the promissory notes and payments SeaPAC had delivered to the Town during the course of the operating agreement. The Town refused to return the notes and funds.

SeaPAC filed a multi-count complaint against the Town seeking rescission of the purchase and sale agreement and return of SeaPAC's promissory notes and payments. The Town counterclaimed, seeking among other remedies a declaration that SeaPAC was required to fulfill its obligations under the terms of the indemnification agreement between the parties even though the sale of the Ballpark had not been consummated. Having stipulated to a dismissal of all other claims, SeaPAC appeals from the summary judgment ¹ entered in favor of the Town on SeaPAC's claim for rescission and restitution and from the summary judgment entered on the Town's counterclaim declaring the indemnification agreement enforceable.

When reviewing the granting of a summary judgment, we view the evidence presented in the light most favorable to the party against whom the judgment has been granted and review the trial court's decision for an error of law. Keyes Fibre Co. v. Lamarre, 617 A.2d 213, 214 (Me.1992). A party is entitled to a summary judgment if there is no genuine issue of material fact and the party on the undisputed facts is entitled to a judgment as a matter of law. Chadwick-BaRoss, Inc., v. T. Buck Constr., Inc., 627 A.2d 532, 534 (Me.1993). We review the trial court's decisions on questions of law de novo. Bliss v. Bliss, 583 A.2d 208, 210 (Me.1990).

I

SeaPAC argues that the court, in entering a summary judgment for the Town on SeaPAC's claim for rescission and restitution, erred in finding that no genuine issue of material fact existed as to the terms of the purchase and sale agreement. In particular, SeaPAC contends that a genuine issue of fact remains as to the existence of an implied term in the contract providing that both parties intended that a facility usable for outdoor rock concerts would be conveyed. The intent of the parties in entering a contract is a question of fact. Top of the Track Assocs. v. Lewiston Raceways, Inc., 654 A.2d 1293, 1296 (Me.1995).

SeaPAC and the Town included in their purchase and sale agreement no express term articulating a mutual intent that the facility to be conveyed would be usable for rock concerts. Contractual intent, however, may be established as an implied term outside of a purchase and sale agreement's express terms.

[A] contract includes not only the promises set forth in express words, but, in addition, all such implied provisions as are indispensable to effectuate the intention of the parties and as arise from the language of the contract and the circumstances under which it was made.

Id. at 1295. If the evidence, taken in the light most favorable to SeaPAC, supports an inference that both parties intended by an implied term of their agreement that a facility usable for rock concerts was to be conveyed, then the court erred in finding that no material issue of fact remained.

Even an integrated contract, such as the purchase and sale agreement between the Town and SeaPAC, may include an unwritten implied term.

The salutary purpose of [an integration clause] is to preclude consideration of matters extrinsic to the agreement. It is of no relevance if the promise, albeit imperfectly expressed, is implicit in the contract as written.

Id. at 1296. In order for an unwritten provision to be implied in a contract, however, that provision must be absolutely necessary to effectuate the contract. Id. at 1295. SeaPAC contends that the intent of both parties that rock concerts take place at the Ballpark is a provision absolutely necessary to the purposes of the SeaPAC-Town purchase and sale agreement and is therefore implied in the contract.

Although the record does establish that the Town knew SeaPAC intended to produce rock concerts at the Ballpark, the evidence viewed in the light most favorable to SeaPAC does not support a finding that the Town intended that rock concerts take place at the Ballpark as an absolute necessity of the purchase and sale agreement. The purchase and sale agreement in fact speaks of SeaPAC's insistence on inspection to ensure the Ballpark's suitability "for presentation of outdoor concerts, presentation of other entertainment events, and other recreational use." The agreement goes on to state that "[i]t is the intent of Seller that Buyer shall be able to utilize the Real Estate for entertainment related purposes, including sporting events, conventions, trade shows, and performing arts, subject to the conditions set forth in this Agreement."

The party opposing a summary judgment has the burden of producing competent proof of facts that would be admissible to show that a genuine issue of material fact exists. Chadwick-BaRoss, Inc. v. T. Buck Constr., Inc., 627 A.2d at 534-35. SeaPAC has not carried its burden with respect to an intent on the part of the Town that the Ballpark of absolute necessity must be usable for SeaPAC's rock concerts.

Because the purchase and sale agreement between the Town and SeaPAC includes no implied term providing that both parties intended the Ballpark must be usable for rock concerts, the Town did not precipitate a failure of consideration by seeking to convey a facility in which rock concerts such as those SeaPAC produced could not be presented legally. The court properly determined as a matter of law that there was no failure of consideration on the part of the Town and that the Town was entitled to a summary judgment in its favor on SeaPAC's claims for rescission and restitution.

II

In addition to entering a judgment in favor of the Town on SeaPAC's claim for rescission, the court also entered a summary judgment in favor of the Town on its counterclaim declaring that SeaPAC must continue to perform its obligation to indemnify the Town. The indemnification agreement, executed at the time of the purchase and sale agreement, obliged SeaPAC to take over the defense of certain identified claims as they may arise and to indemnify the Town against any judgments that result from those claims. ²

The indemnification agreement identifies itself as consideration for the parties entering into the purchase and sale agreement.

WHEREAS, Buyer and Seller have entered into a certain Purchase and Sale Agreement dated as of April 1, 1989 with respect to the sale by Seller, and purchase by Buyer, of certain real estate located in Old Orchard Beach, Maine commonly known as "The Ballpark"; and

WHEREAS, in consideration thereof and as part of the Purchase Price thereunder, Buyer has agreed to indemnify, defend and hold Seller harmless against certain claims or demands with respect to Seller's ownership of The Ballpark;

....

NOW, THEREFORE, be it agreed by Buyer and Seller as follows:

1. Buyer, jointly and severally, shall indemnify,...