Welch v. U.S. Bancorp Realty and Mortg. Trust

• Decision Date: 19 June 1979
• Parties: Thomas K. WELCH, Respondent/Cross-Appellant, and Gordon R. Merrill, Plaintiff, v. U. S. BANCORP REALTY AND MORTGAGE TRUST, an Oregon Real Estate Investment Trust, dba U. S. Bantrust, Appellant/Cross-Respondent. TC 421-202; SC 25087.
• Court: Oregon Supreme Court

Page 947

596 P.2d 947

286 Or. 673

Thomas K. WELCH, Respondent/Cross-Appellant, and Gordon R. Merrill, Plaintiff, v. U. S. BANCORP REALTY AND MORTGAGE TRUST, an Oregon Real

Estate Investment Trust, dba U. S. Bantrust,

Appellant/Cross-Respondent.

TC 421-202; SC 25087.

Supreme Court of Oregon.

Argued and Submitted April 4, 1978.

Decided June 19, 1979.

[286 Or. 674-A] William M. McAllister, of Davies, Biggs, Strayer, Stoel & Boley, Portland, argued the cause for appellant/cross-respondent. With him on the briefs were Gregory R. Mowe and Charles F. Adams, of Davies, Biggs, Strayer, Stoel & Boley, and Wayne Hilliard, of Dezendorf, Spears, Lubersky & Campbell, Portland.

John R. Faust, Jr., of Hardy, McEwen, Weiss, Newmann & Faust, Portland, argued the cause for respondent/cross-appellant. With him on the brief was William Bradley Duncan, Forest Grove.

Before DENECKE, C. J., and HOLMAN, HOWELL, BRYSON, ^* LENT and LINDE, JJ.

LENT, Justice.

This is an action for damages for breach of contract in which plaintiff ¹ obtained verdict and judgment and defendant appeals. Plaintiff cross-appeals, asking for a new trial on the issue of damages alone. We affirm.

Trial of this case commenced on October 27, 1976, and culminated in jury verdict on November 26, 1976. Considering the length of the proceedings and that the transcript of testimony and proceedings runs to 2,619 pages, supplemented by at least 250 exhibits, we are impressed by the skill of counsel and the trial court, which has resulted in limiting this appeal to important questions in the resolution of this dispute. The assignments of error on appeal and cross-appeal go to the very heart of the issues of liability and damages, respectively, and both parties, in the main, forego raising trivial and inconsequential claims of error.

Defendant assigns as error the failure of the court to grant defendant's motion for a directed verdict. Defendant presents two main arguments that the trial court erred: (1) the evidence established that plaintiff had breached the contract and defendant was thereby excused from performance, and (2) the evidence was insufficient to submit to the jury plaintiff's claim for damages on the theory of lost profits. As to this assignment of error we are required to view the evidence in the light most favorable to the plaintiff and accept all conflicts in the evidence as having been resolved in plaintiff's favor. Wootten v. Dillard, 286 Or. 129, 136, 592 P.2d 1021 (1979). We cannot overturn the verdict unless we can affirmatively say there was no evidence to support it. Or.Const., Amend. Article VII, Section 3.

Background Facts ²

In late 1972 Lloyd Corporation (Lloyd) owned a tract of vacant land of approximately 68.44 acres near Washington Square in Washington County. This land was zoned for industrial use and was offered for sale through a realtor named Bowman. Plaintiff was a developer, who had experience in dealing with Washington County on zoning matters. Plaintiff approached Bowman about purchasing the property in November, 1972.

Harry Mangan was, among other things, a vice-president of a corporation named "Bancorp Management Advisors" (BMA), which acted as adviser to defendant. Plaintiff approached Mangan concerning financing the purchase and development of the tract. Plaintiff proposed a development of a mix of high density residential units with retail and office commercial units. This was proposed to be done as a planned unit development (PUD).

Further negotiations among Mangan and other agents of the defendant, plaintiff, Bowman and Lloyd, resulted in five documents, introduced into evidence as Exhibits 1 through 5. Exhibit 1 was an earnest money agreement dated June 8, 1973, between Lloyd and plaintiff for sale of the tract for $1,192,000. This document provided in part:

"This proposal is subject to the following additional conditions; (sic)

"1. Closing of this sale is dependent upon purchaser's ability to obtain Rezoning of the subject property to a planned unit development. In this connection, purchaser agrees to devote his best efforts to prepare a detailed presentation for submission to the Washington County Planning Commission no later than August 15, 1973. After the application is filed, purchaser agrees to use his best efforts to follow through the necessary procedures required by Washington County to process a rezoning application. In case the rezoning has not been accomplished by October 31, 1973, this contract terminates * * *

"2. On or before July 30, 1973, purchaser will supply evidence that the payment schedule listed herein will be guaranteed by the U. S. Bancorp REIT or other financial institution, provided the rezoning is accomplished. * * *

" * * * " (emphasis added)

Exhibit 2 is in the form of a letter dated June 25, 1973, from Bowman to plaintiff setting forth agreed modifications to the earnest money agreement. Written approval is endorsed upon the letter by plaintiff under date June 26, 1973, and by Lloyd under date June 27, 1973. The letter provides in part:

" * * *te

"It is agreed that the Lloyd Corporation shall have the right to appoint a qualified land planner to review your development plan and rezoning proposal. If the Lloyd Corporation is not satisfied with your plan, its representative will make suggestions and will attempt to work out mutually acceptable modifications. The purpose of this is so that the Lloyd Corporation will feel that The final plan will represent the highest and best use of the property, creating the highest potential land value.

" * * * " (emphasis added)

Exhibit 3 is a letter dated January 28, 1974, addressed to Lloyd on the letterhead of plaintiff and signed by plaintiff. The letter proposed the reinstatement of the earnest money contract, which by its own terms had terminated on October 31, 1973, but offered certain changes in the earnest money contract:

"1. The new contract will be with U. S. BanTrust, who will become the purchaser rather than guarantor of the payment schedule. The BanTrust and I will work together to insure that a thoroughly professional job is done in planning, preparation and presentation of The zone change Material.

"2. Within 60 days of your approval of this reinstatement, I will submit full information concerning The zone change to be requested to the U. S. BanTrust and to the Lloyd Corporation for approval. If either U. S. BanTrust or the Lloyd Corporation requests changes in the application, I will make every reasonable effort to incorporate them on a mutually satisfactory basis. If agreement cannot be reached on any such changes within 30 days of submission, our contract will then terminate. If approval is received from both U. S. BanTrust and Lloyd Corporation, I will submit The rezoning application to Washington County within 10 days thereafter.

"3. The normal time required for final approval of A rezoning proposal Is 90 days. It is necessary to secure not only the approval of Washington County, but also of CRAG (Columbia River Association of Governments) and the State of Oregon Department of Environmental Quality. If administrative delays beyond my control within any of these three governmental agencies prevent a final approval within 90 days after the application is filed, then the time allowed for completing The rezoning is to be extended to the next regularly scheduled meeting of each of the three organizations at which a decision could be made.

"If Rezoning is not approved within 90 days from the date of application or within the extended period mentioned above, this contract will then terminate.

"4. After Rezoning is approved, there is a 60-day period in which the county's decision can be challenged in court. Accordingly, closing of the sale is to be scheduled for the 61st day after Rezoning provided there is no such challenge. If The rezoning is challenged, the time for closing is to be extended no longer than 75 days after the suit is filed. If the sale has not been closed within the 75 days, seller would have the option of terminating the contract.

"5. * * * " (emphasis added)

Below the plaintiff's signature to the letter there were provided indicated spaces for approval by plaintiff, Lloyd and defendant. In the indicated spaces plaintiff signed approval on February 5, 1974, and Lloyd signed approval on February 28, 1974. Defendant did not sign.

Exhibit 4 is a letter on defendant's letterhead dated April 15, 1974, addressed to Lloyd and signed by defendant. The text of that letter follows:

"We have reviewed the letter agreement dated January 28, 1974 between Messrs. Thomas K. Welch, Gordon Merrill and yourselves extending the term of the earnest money agreement of June 8, 1973. The terms set forth in the agreement dated January 28, 1974 are satisfactory to us subject to one condition and one clarification.

"It is impracticable for us to take title to the property described in The earnest money agreement because of restrictions under the Internal Revenue Code relating to real estate investment trusts. Therefore, we prefer to have Messrs. Welch and Merrill enter into an agreement as provided in the Original earnest money agreement. Subject to the terms set forth in The earnest money agreement as amended we will guaranty that the contract purchasers will make the payments for which provision is to be made in the contract.

"Our obligation to guaranty is primarily conditioned upon successful resolution of A zoning application on a basis to be approved by both of us. We wish to make clear what the letter of January 28, 1974 implies, namely, that The zone change must be granted substantially in accordance with the application approved by us and that at the time we become bound on our guaranty the time for appeal from a favorable action on The zone change application must have expired or, if litigation is commenced, the litigation must have been disposed of and the time for appeal expired on a basis favorable to The zone change...