The Trusted Adviser November 2009 | Volume 2 - Number 9



Vendor and Purchaser

Ash Park LLC v Alexander & Bishop, Ltd, 767 NW2d 614 (Wis Ct App 2009).

Facts:Ash Park LLC (Ash Park) entered into a contract with Alexander & Bishop, Ltd (Alexander & Bishop) in which Alexander & Bishop agreed to purchase a property for commercial development from Ash Park for $6.3 million. Alexander & Bishop provided a $50,000 earnest money payment. The agreement between the parties including a leasing contingency that provided that should Alexander & Bishop fail to secure an anchor tenant by July 20, 2007, the agreement would be terminated and the earnest money refunded. The contract provided that this leasing contingency could be extended twice, each for two-month periods, by payment of additional, nonrefundable $25,000 extension fees. Closing was scheduled to take place on December 14, 2007.

On July 20, Alexander & Bishop invoked the leasing contingency. Rather than request a refund of the earnest money, however, Alexander & Bishop and Ash Park reinstated the contract through a new agreement. This new agreement made the original earnest money nonrefundable and required Alexander & Bishop to deposit an additional nonrefundable $25,000. All other terms were unchanged from the original agreement.

In October 2007, Alexander & Bishop informed Ash Park that their intended anchor tenant would not be leasing the property as planned. Ash Park and Alexander & Bishop did not manage to negotiate a new agreement regarding the property. When Alexander & Bishop failed to close the sale on December 14, Ash Park filed suit. The circuit court granted summary judgment for Ash Park and granted specific performance. Alexander & Bishop filed this appeal.

Holding:Affirmed. Alexander & Bishop appealed, claiming that summary judgment was inappropriate and that the judge erred in granting specific performance damages.

On the issue of summary judgment, Alexander & Bishop argued that an issue of material fact existed in that its failure to deposit the $25,000 extension fee with the escrow agent meant that the revised agreement had not been executed. Alexander & Bishop argued that the $25,000 was an option that would reinstate the contract only if paid. The court, however, declared that, when the contract is read in totality, it was clear that the payment was not an option, but a requirement. Therefore, the contract had been executed regardless of the payment, and Alexander & Bishop was now in default for not making the payment.

Alexander & Bishop further contended that even if summary judgment had been properly granted, the order for specific performance was improper. It argued that specific performance could not be granted because Ash Park had an adequate remedy at law for money damages. The court, however, pointed toHeins v Thompson & Flieth Lumber Company, 165 Wis 563, 571, 163 NW 173 (1917), which provided that the rights of purchasers and sellers are "mutual as to remedies" and that, therefore, a seller was just as entitled to specific performance as a buyer, despite the adequacy of money damages. Alexander & Bishop further opposed the fact that they were being forced to purchase the property. The court, however, countered that the circuit court had not provided any such order. Rather, the court ordered Alexander & Bishop to take action to complete the transaction, which would allow Alexander & Bishop to find another buyer, amongst other things.

Finally, Alexander & Bishop argued that circuit court erred by awarding interest to Ash Park. It argued that interest awards were inappropriate on specific performance judgments. The court, however, disagreed, finding that specific performance on a purchase contract in favor of the seller essentially constituted a judgment for the purchase price and that interest could be awarded on such a judgment.






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[Last update: 10-21-09]