Wolvos v. Meyer

• Decision Date: 12 July 1996
• Docket Number: No. 71S05-9503-CV-376,71S05-9503-CV-376
• Parties: Gloria WOLVOS, Appellant (Defendant Below), v. Steven M. MEYER, Appellee (Plaintiff Below).
• Court: Indiana Supreme Court

Page 671

668 N.E.2d 671

Gloria WOLVOS, Appellant (Defendant Below), v. Steven M. MEYER, Appellee (Plaintiff Below).

No. 71S05-9503-CV-376.

Supreme Court of Indiana.

July 12, 1996.

John C. Firth, Brent E. Inabnit, Sopko & Firth, South Bend, for appellant.

John C. Hamilton, Doran, Blackmond, Ready, Hamilton & Williams, Donald E. Wertheimer, South Bend, for appellee.

SELBY, Judge.

Two questions are presented in this appeal: (1) whether a real-estate option agreement between the parties is an "agreement to agree" or a binding contract under which the purchaser may seek specific performance, and (2) whether the trial court abused its discretion in denying the seller's motion for relief from judgment. We hold that the trial court did not err on either ground and we affirm the trial court's decision.

FACTS

Gloria Wolvos ("Wolvos") is a licensed real-estate agent and broker. Dr. Steven M. Meyer ("Meyer") is a physician specializing in ophthalmology. (R. at 22). Meyer obtained a law degree in an effort to provide a medical malpractice consulting service, but he is not licensed to practice law in any state. (R. at 69). At the time they entered into the agreement, Wolvos had no knowledge of Meyer's law degree, and Meyer had no On March 15, 1993, Wolvos and Meyer executed the following agreement:

knowledge of Wolvos' real estate license. Wolvos and Meyer negotiated directly with one another, without the involvement of an agent or attorney on either side.

The undersigned Gloria Wolvos, Owner of certain real eastate [sic] described hereafter, for the sum of $50.00, receipt of which is hereby acknowledged, hereby grants to and confers upon Steven M. Meyer M.D. as optionee an exclusive right and option to purchase certain real estate on the terms and conditions stated below, which real estate is commonly known as 332 North Michigan Street, South Bend, Indiana....

The terms and conditions controlling this potential acquisition of real estate by Meyer from Wolvos are:

1. The purchase price of the subject real estate shall be $160,000.00. The real estate shall be as described in the legal description above and shall include the building, parking lot, and sign all in the same condition that it is in currently.

2. The option shall remain in effect for 120 days.

3. Wolvos agrees that, as owner, she has the obligation to undertake, at her expense, an environmental study of the subject real estate which she shall order at the time this option agreement is executed and must be completed within 45 days. If said study reveals the existence of contamination and/or pollutants to an extent that EPA, city, county, or state standards and levels are violated and/or exceeded, then Wolvos shall correct and remedy such or any violations and excesses if optionee exercises option. If the cost of such correction is less than $10,000 then the purchase price shall be reduced by the amount less than $10,000 that Wolvos must spend.

4. Wolvos shall be given a six week period to undertake and complete such corrective and remedial work as necessitated and disclosed by the environmental report from the time Meyer exercises option. Meyer shall be given a copy of such environmental report at the same time Wolvos receives it.

5. The subject real estate, at the time of the closing of this transaction after this option is exercised shall be within EPA accepted and safe levels of all contaminants and pollutants and Wolvos shall present a statement from the EPA confirming this fact.

6. The exercise of this option shall be in writing and transmitted by Meyer to Wolvos at....

7. It is acknowledged by both parties that the subject of this option is confidential and optionee could be harmed by the disclosure of this information. Owner acknowledges this fact and agrees not to disclose the option or potential purchase to any other party.

8. At the time this option is exercised, the parties shall enter into a written purchase agreement on forms typically utilized by realtors and brokers in St. Joseph County. The closing shall be within 30 days after the necessary corrective and remedial EPA work has been completed. The manner of purchase shall be cash/conventional financing.

(R. at 8-9). Both Meyer and Wolvos signed this agreement. On May 11, 1993, within the 120 day period provided for in the option agreement, Meyer sent notice to Wolvos that he intended to exercise the option. (R. at 11, 58-59).

Thereafter, Wolvos obtained an estimate of $19,000 for environmental remediation of the property. On June 1, 1993, Wolvos' attorney wrote to Meyer asserting that the option agreement was an unenforceable agreement to agree, and extended to him a different offer of sale. Wolvos offered to sell the property to Meyer upon execution of a written purchase agreement providing: (1) a purchase price of $160,000; (2) earnest money of $8,000; (3) remediation would not begin until Meyer obtained "an unconditional written commitment for mortgage financing;" (4) Wolvos would pay up to $10,000 for remediation and Meyer would pay for all remediation in excess of $10,000; (5) Wolvos would not "be obligated to 'present a statement from the EPA' confirming any aspect of the environmental condition of the real estate;" (6) Wolvos would provide commitment for an Meyer rejected these conditions, and brought this action for specific performance and for damages incurred by Meyer in reliance upon the agreement. Wolvos filed a counterclaim against Meyer for abuse of process. The trial court granted partial summary judgment on Meyer's specific performance claim, and ordered Wolvos to comply with the terms of the option agreement. (R. at 58-59).

owner's policy of title insurance; (7) Meyer would provide any survey he desired at his own expense; and (8) real-estate taxes and assessments would be prorated as of the closing date. (R. at 12-13).

Subsequently, Wolvos sought relief from the grant of partial summary judgment pursuant to IND.TRIAL RULE 60(B)(3), alleging that Meyer acted with unclean hands. In particular, Wolvos asserted that she learned for the first time after the summary judgment hearing that Meyer was a lawyer, that during negotiations Meyer had told Wolvos that they "did not need the assistance of a lawyer," and had Wolvos known Meyer was a lawyer, she "would have obtained a lawyer to review the Option Agreement." (R. at 60-62). After a hearing, the trial court denied Wolvos' motion for relief. In an unpublished opinion, the Court of Appeals reversed the grant of partial summary judgment to Meyer and remanded with instructions to enter summary judgment in favor of Wolvos. We granted Meyer's petition to transfer and now affirm the trial court.

I

In an appeal from the grant of summary judgment, the reviewing court faces the same issues as the trial court, Hooks SuperX, Inc. v. McLaughlin, 642 N.E.2d 514 (Ind.1994), as summary judgment is appropriate only if the pleadings and evidence show "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." T.R. 56(c). Thus, even though summary judgment is presumed to be valid and the appealing party bears the burden of persuasion, the appellate court follows the same process as the trial court. Drake v. Mitchell, 649 N.E.2d 1027 (Ind.1995). The reviewing court must provide careful scrutiny of the trial court's determination, to assure that the non-prevailing party is not improperly denied his day in court. Indiana Dept. of State Revenue v. Caylor-Nickel Clinic, P.C., 587 N.E.2d 1311 (Ind.1992).

Option contracts are most commonly used in the sale of property. They are useful in situations where a potential purchaser is interested in the ownership of land, but "may not at the moment have the money to pay for it, or ... may not be sufficiently sure" of such interest for the potential purchaser to buy the land immediately. 1A ARTHUR LINTON CORBIN, CORBIN ON CONTRACTS § 259 at 460 (1963). Instead, the potential purchaser pays a much smaller amount in order to convert the offer to sell into an irrevocable offer for a limited amount of time. The potential purchaser then has the specified length of time to decide whether to exercise the option. Upon timely exercise of the option, such agreements become enforceable contracts. Id.

In the present case, Wolvos argues that the agreement is not an option contract, but is simply an "agreement to agree," and thus is unenforceable. The law is well established that a mere agreement to agree at some future time is not enforceable. See generally Wallace v. Mertz, 86 Ind.App. 185, 156 N.E. 562 (1927). Wolvos argues that the language of paragraph eight of the agreement, "[a]t the time this option is exercised, the parties shall enter into a written purchase agreement," demonstrates that this option agreement was merely an agreement to agree since this language indicates that the parties contemplated further negotiations.

Nevertheless, parties may make an enforceable contract which obligates them to execute a subsequent final written agreement:

It is quite possible for parties to make an enforceable contract binding them to prepare and execute a subsequent final agreement. In order that such may be the effect, it is necessary that agreement shall have been expressed on all essential terms that are to be incorporated in the document. That document is understood to be 1 ARTHUR LINTON CORBIN AND JOSEPH M. PERILLO, CORBIN ON CONTRACTS § 2.8 at 133-34 (rev. ed. 1993) (footnotes omitted); see also International Shoe Co. v. Lacy, 114 Ind.App. 641, 53 N.E.2d 636 (1944). Our Court of Appeals more recently discussed this issue in McMahan Construction Co. v. Wegehoft Bros., Inc., 170 Ind.App. 558, 354 N.E.2d 278 (1976), stating that "[a] well known rule provides that mere reference to a more formalized contract does not void the presently existing agreement."

a mere memorial of the agreement already reached. If the document or contract...