Town of Lisbon v. Thayer Corp., 7641

• Decision Date: 29 April 1996
• Docket Number: No. 7641,Docket No. A,7641
• Citation: 675 A.2d 514
• Parties: TOWN OF LISBON v. THAYER CORPORATION et al. DecisionLawnd-95-471.
• Court: Maine Supreme Court

Page 514

675 A.2d 514

TOWN OF LISBON v. THAYER CORPORATION et al.

Decision No. 7641.

Law Docket No. And-95-471.

Supreme Judicial Court of Maine.

Argued April 1, 1996.

Decided April 29, 1996.

Roger Therriault (orally), Bath, for Plaintiff.

Harold N. Skelton (orally), Jonathan R. Doolittle, Skelton, Taintor & Abbott, Auburn, for Thayer Corp.

Elizabeth Knox Peck (orally), Thompson & Bowie, Portland, for Industrial Roofing Corp.

Edward W. Gould, Gross, Minsky, Mogul & Singal, Bangor, for H.E. Sargent.

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

DANA, Justice.

Thayer Corporation and various other lienholders, ¹ appeal from a summary judgment entered in the Superior Court (Androscoggin County, Fritzsche, J.) in favor of the Town of Lisbon on their counterclaims for a breach of contract. The Town cross-appeals from a summary judgment in favor of the lienholders on the Town's complaint for injunctive relief alleging a breach of contract and interference with contractual relations. The lienholders contend that the court erred in interpreting the term "sale" in an agreement between the parties to not include the leasing of a substantial portion of a development known as Farwell Mill. The Town contends that the court erred in determining that it had not complied with M.R.Civ.P. 7(d). We vacate the summary judgment on the lienholders' counterclaims and affirm the summary judgment on the Town's complaint.

After the failure of a private developer's attempt to develop the Farwell Mill property in Lisbon into apartments and prior to the Town's acquisition of title to the failed development by tax lien, the Town and the lienholders entered into an agreement that provided the lienholders would not pay the delinquent taxes and would allow the Town to foreclose, vesting title in the Town. In return, the Town agreed to recognize the lienholders' liens as surviving the foreclosure process, to prepare and actively market the sale of the mill property, and to pay the lien claims out of the proceeds of a sale of the property. After the Town acquired title to the property it continued to develop the property and by August 1994 had leased 40 residential apartments and was collecting approximately $15,000 per month in rent. The Town refused to pay over any of the rental proceeds to the lienholders. Additionally the Town rejected two offers to purchase the entire project.

The Town commenced an action against the lienholders alleging that an executive with Thayer Corporation, on its behalf and as a representative of the other lienholders, interfered with a potential sale of the mill. The Town sought an award of damages for the interference, an injunction against further interference, and a declaratory judgment that the interference constituted a breach of the agreement between the Town and the lienholders. The lienholders counterclaimed, alleging that the Town breached the agreement by not recognizing that its leasing of portions of the mill property constituted a "sale" pursuant to the terms of the agreement. The lienholders filed motions for a summary judgment on their counterclaims and the Town's complaint. The court granted their motions for a summary judgment on the Town's complaint and entered a summary judgment in favor of the Town on their counterclaims. This appeal followed. ²

In reviewing an appeal from the grant of a summary judgment we view the evidence in a light most favorable to the party against whom the judgment was entered and review the trial court's decision for errors of law. Gonzales v. Commissioner, Dept. of Pub. Safety, 665 A.2d 681, 682 (Me.1995). When there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law we will affirm a summary judgment. Id. at 682-83.

I.

Paragraph 5 of the agreement between the Town and the lienholders states in relevant part:

Upon the sale of the premises, as defined below, the entire Lien Judgment Amount shall be due and payable at once to be paid out of the proceeds of sale. "Sale" is defined as the sale, conveyance, or other transfer of the title or ownership of the Premises, or any part thereof, or the passage of any interest of the Town, either voluntarily or involuntarily by operation of law or otherwise. In the event of a default in payment by the Town then the Mechanics Lienors shall have the right to seek enforcement of their lien claims under sale provisions of 10 M.R.S.A. § 3259.

Because the monthly lease payments would not likely be sufficient to immediately pay the lienholders in full, the court concluded that the term "sale" in the agreement does not include the leasing of a portion of the mill.

The lienholders contend that the leasing of space in the mill constitutes a "sale" as that term is defined in the agreement. The Town contends that a lease of individual units was not the kind of sale or transfer the parties contemplated would trigger payment to the lienholders because a lease transaction does not produce "proceeds of sale," rather it produces a stream of income over the period of the lease. The Town further contends that paragraph 7 of the agreement, that provides that the Town must prepare and market the property for a sale in conformity with the requirements of its agreement with HUD, requires the Town to complete and lease units of the mill. ³

Whether contract language is ambiguous is a question of law. Fitzgerald v. Gamester, 658 A.2d 1065, 1069 (Me.1995). The interpretation of unambiguous language in a contract is a question of law. Top of the Track Assocs. v. Lewiston Raceways, Inc., 654 A.2d 1293, 1296 (Me.1995). If contract language is ambiguous, however, its interpretation is a question of fact that must be determined by the factfinder. Tondreau v. Sherwin-Williams Co., 638 A.2d 728, 730 (Me.1994). When a written contract is ambiguous and the record does not completely eliminate the possibility of an issue of material fact regarding the intent of the parties, a summary judgment is inappropriate. Id. "Contract language is ambiguous when it is reasonably susceptible to different interpretations." Fitzgerald, 658 A.2d at 1069 (citation omitted).

The plain language of paragraph 5 defines "sale" to include "the passage of any interest of the Town." A lease conveys a possessory interest in the land to another for a period of time. See Inderlied v. Campbell, 119 Me. 303, 305, 111 A. 333, 334 (1920) ("[A]ssignment of a lease is a contract concerning an interest in lands...."); 3 Thompson, Thompson on Real Property, § 1015 at 7 (1980) ("A leasehold is an interest in real property subject to lis pendens."). The court's conclusion that these leases were unambiguously not sales within the meaning of the agreement is not supportable. At the very least the agreement is ambiguous as to whether the leasing of a portion of the mill property constitutes a "sale."

Because the agreement is ambiguous, its meaning should not have been determined at the summary judgment stage. Devine v. Roche Biomedical Lab., Inc., 637 A.2d 441, 445 (Me.1994) ("The proper interpretation of the ambiguous language must be determined by the trier of fact on the basis of evidence presented to it at the time of trial.").

II.

The lienholders filed a motion for a summary judgment on the Town's complaint supported by a statement of material facts. Incorporated in its memorandum in opposition the Town advanced additional uncontroverted facts supported by record references. The...