Title: REHNBERG v. HIRSHBERG

State: wyoming

Issuer: Wyoming Supreme Court

Document:

REHNBERG v. HIRSHBERG2003 WY 2164 P.3d 115Case Number: 02-106Decided: 02/20/2003
OCTOBER TERM, A.D. 2002

 

                                                                                                                                   

 

 

MAILE 
A. REHNBERG,

 

Appellant(Plaintiff),

 

v.

 

ALAN 
S. HIRSHBERG,

 

Appellee(Defendant).

 

 

Appeal 
from the District Court of Teton County

The 
Honorable D. Terry Rogers, Judge

 

Representing 
Appellant:

 

            
Jessica Rutzick of the Law Offices of Lawrence B. Hartnett, Jackson, 
Wyoming.

 

Representing 
Appellee:

 

            
Joseph F. Moore, Jr. and R. Scott Garland of Moore, Myers & Garland, 
LLC, Jackson, Wyoming.

 

 

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

            
VOIGT, Justice.

 

[¶1]      Maile A. Rehnberg 
(Rehnberg) appeals from the district court's Order Granting Defendant's Motion 
to Dismiss.  Rehnberg's complaint 
alleged breach of a real estate sales contract, breach of the covenant of good 
faith and fair dealing, and tortious interference with contract, and also sought 
contractual attorney's fees.  We 
affirm the district court's dismissal of the complaint pursuant to W.R.C.P. 
12(b)(6) for failure to state a claim upon which relief can be 
granted.

 

ISSUES

 

[¶2]      Rehnberg raises 
the following issues:

 

            
1.         
Is paragraph 12 of Attachment "A" to the contract 
ambiguous?

 

            
2.         
Does the complaint allege facts that, if taken as true, establish a cause 
of action for breach of contract, breach of the duty of good faith and fair 
dealing and contractual attorney's fees?

 

            
3.         
Does the complaint allege facts that, if taken as true, establish a cause 
of action for tortious interference with contract?

 

[¶3]      The appellee, 
Alan S. Hirshberg (Hirshberg), does not present a separate list of issues, but 
raises the following additional arguments in his appellate 
brief:

 

            
1.         
Did the contract merge into the warranty deed?

 

            
2.         
Did a condition precedent fail to occur?

 

            
3.         
Are Rehnberg's claims barred by the statute of 
frauds?

 

            
4.         
Was there a lack of consideration?1

 

FACTS2

 

[¶4]      Hirshberg owned 
Lot 2 of McNeely Mountain subdivision in Teton County.  In 1998, Hirshberg and others sued 
Countryside I, LLC for its alleged breach of contractual duties to honor 
licenses to fish along certain creeks and to honor use agreements for the dining 
lodge and other facilities located within Crescent H Guest Ranch.3  Hirshberg's interest in the fishing 
licenses and use agreements derived from his ownership of Lot 2.  The civil action against Countryside 
seeks, among other things, specific performance with respect to the fishing 
licenses and use agreements.

 

[¶5]      In 1999, 
Hirshberg listed Lot 2 for sale, with an asking price of $895,000.00 with the 
Crescent H fishing rights, and $595,000.00 without those fishing rights.  The property was again listed for sale, 
with the same asking prices, in January 2000.  Later in 2000, Hirshberg again listed 
Lot 2 for sale, this time with an asking price of $649,000.00 and no mention of 
fishing rights.  In September 2000, 
after Rehnberg's initial offer to purchase Lot 2 expired, Hirshberg listed it 
again, this time with an asking price of $895,000.00.  Later in September 2000, Rehnberg 
offered to purchase Lot 2 for $735,000.00.  
The offer was contained in a standard form Contract to Buy and Sell Real 
Estate.  During the negotiations 
that followed, Hirshberg and his real estate agent told Rehnberg that she would 
have the right to substitute herself for Hirshberg in the Countryside case.  On October 25, 2000, Hirshberg accepted 
Rehnberg's counteroffer of $795,000.00.  
Paragraph 12 of Attachment "A" to the Contract to Buy and Sell Real 
Estate reads as follows:

 

This 
offer is based upon said property being sold without any fishing rights.  However, should litigation, which is 
currently underway, result in fishing rights, Seller agrees to transfer all 
fishing rights to Buyer.

 

[¶6]      At closing, 
Rehnberg was not provided with any written assignments of the fishing rights or 
use agreements.  During the next few 
months, her attempts to contact Hirshberg or his attorney to obtain such 
assignments were unsuccessful.  In 
May 2001, Michael Olin (Olin) offered to purchase Lot 2 from Rehnberg, but he 
wanted an assignment of the fishing rights and use agreements.  In response to a communication from 
Rehnberg to Hirshberg's realtor, Hirshberg informed Rehnberg and Olin that he 
would provide Rehnberg with an assignment of the fishing rights for $125,000.00, 
would provide Olin with an assignment of the fishing rights and use agreements 
for an additional $75,000.00 plus another $50,000.00 in the event the 
Countryside lawsuit was successfully resolved.

 

[¶7]      As a result of 
Hirshberg's demands for additional payments, Olin withdrew his offer to purchase 
Lot 2.  Hirshberg continues to 
pursue his own interests in the Countryside lawsuit, including damages for 
"deprivation of use, preclusion from the fishing lands, inability to use the 
club facilities, and diminution in value of his real property holdings 
. . .," but is not pursuing Rehnberg's interest in obtaining a fishing 
license and use agreement.

 

STANDARD 
OF REVIEW

 

[¶8]      Hirshberg filed a 
Motion to Dismiss based on W.R.C.P. 12(b)(6), which provides for a motion 
alleging "failure to state a claim upon which relief can be granted[.]"  We recently restated our standard of 
review applicable to the dismissal of claims under this 
rule:

 

            
"When claims are dismissed under W.R.C.P. 12(b)(6), this Court accepts 
the facts stated in the complaint as true and views them in the light most 
favorable to the plaintiff.  Such a 
dismissal will be sustained only when it is certain from the face of the 
complaint that the plaintiff cannot assert any facts that would entitle him to 
relief.  Story v. State, 2001 
WY 3, ¶ 19, 15 P.3d 1066, ¶ 19 (Wyo.2001).  
Dismissal is a drastic remedy and is sparingly granted; nevertheless, we 
will sustain a W.R.C.P. 12(b)(6) dismissal when it is certain from the face of 
the complaint that the plaintiff cannot assert any set of facts that would 
entitle that plaintiff to relief.  
Robinson v. Pacificorp, 10 P.3d 1133, 1135-36 
(Wyo.2000)."

 

Manion 
v. Chase Manhattan Mortgage Corp., 
2002 WY 49, ¶ 6, 43 P.3d 576, 577 (Wyo. 2002) (quoting Van Riper v. Oedekoven, 
2001 WY 58, ¶ 24, 26 P.3d 325, ¶ 24 (Wyo. 2001)).

 

[¶9]      Our rules of 
contract construction are well known.  
First, we do not need to construe contracts that are not ambiguous.  Evans v. Farmers Ins. Exchange, 
2001 WY 110, ¶ 9, 34 P.3d 284, 286 (Wyo. 2001).

 

            
Whether a contract is ambiguous is a question of law.  O'Quinn Enterprises [v. Central 
Wyoming Regional Water System Joint Powers Board], 975 P.2d [1062], 1064 
[(Wyo.1999)].  When deciding whether 
a contract is ambiguous, we endeavor to determine the intention of the 
parties.  Wolter [v. Equitable 
Resources Energy Company, Western Region], 979 P.2d [948], 951 
[(Wyo.1999)].  An ambiguity exists 
when a contract's language conveys an obscure or double meaning.  Kirkwood v. CUNA Mutual Insurance 
Society, 937 P.2d 206, 208 (Wyo.1997).  
When contract provisions are not ambiguous or uncertain, the document 
speaks for itself.  937 P.2d  at 
209.  With an unambiguous agreement, 
we secure the parties' intent from the words of the agreement as they are 
expressed within the four corners of the document.  Wolter, 979 P.2d  at 951.  All conversations, contemporaneous 
negotiations, and parol agreements between the parties that occurred prior to 
the written agreement are merged into the written agreement.  O'Quinn Enterprises, 975 P.2d  at 
1064.  We turn to extrinsic evidence 
and rules of contract construction only when the contract language is ambiguous 
and its meaning is doubtful or uncertain.  
Wolter, 979 P.2d  at 951.

 

Sowerwine 
v. Keith, 
997 P.2d 1018, 1020 (Wyo. 2000).4  And finally, a "district court judgment 
may be affirmed on any proper legal grounds supported by the record."  Bird v. Rozier, 948 P.2d 888, 892 
(Wyo. 1997).

 

DISCUSSION

 

[¶10]   In his Memorandum of Points and 
Authorities in Support of Defendant's Motion to Dismiss, Hirshberg presented six 
theories:  first, the contract 
specifically excepted fishing rights; second, the contract made no mention of 
any use agreements; third, the contract did not obligate him to represent 
Rehnberg in the Countryside lawsuit; fourth, the integration clause of the 
contract forbids modification of its terms by any alleged oral agreements or 
representations; fifth, the statute of frauds forbids modification of the 
contract by any alleged oral agreements or representations; and sixth, the 
provisions of the contract merged into the deed, leaving Rehnberg to look to the 
deed, and not to the contract.  In 
her Response to Defendant's Motion to Dismiss, Rehnberg asserted first that the 
language of paragraph 12 of Attachment "A" creates a "current and continuing 
obligation" on Hirshberg's part to attempt to obtain the fishing rights or to 
allow Rehnberg to represent her own interests in the Countryside lawsuit.  Next, relying on the "collateral 
obligations rule," Rehnberg argued that the contract provisions did not merge 
into the deed because the assignment of fishing rights would have had to occur 
after closing.  Finally, Rehnberg 
contended that the integration clause is immaterial because the source of her 
rights is the ambiguous provisions of paragraph 12 of Attachment "A," rather 
than any oral representations or agreements.

 

[¶11]   In its Order Granting Defendant's 
Motion to Dismiss, the district court found that "[a]ll of the claims [in the 
Complaint] are based on paragraph 12 of Attachment A to the Contract . . 
.."  The district court then 
concluded that paragraph 12 was unambiguous, and that it "does not place any 
obligations on [Hirshberg] other than to transfer fishing rights if they are 
awarded in [the Countryside case]."  
Finally, the district court also emphasized paragraph XV of the Contract 
to Buy and Sell Real Estate, the integration clause, which provided as 
follows:

 

All 
prior representations made in the negotiations of this sale have been 
incorporated herein, and there are no oral agreements or representations between 
Buyer, Seller or Brokers to modify the terms and conditions of this 
Contract.

 

[¶12]   The nature of the district court's 
ruling raises the issue we find dispositive in this appeal.  Rehnberg drafted a complaint relying 
solely on the contract for sale.  
When Hirshberg raised the merger defense, Rehnberg countered with legal 
and factual arguments as to why the merger doctrine should not be applied.  Without directly ruling on the merger 
question, the district court based its dismissal on the contract for sale, which 
indicates that the district court agreed with Rehnberg that the contract for 
sale did not merge into the warranty deed.  
Rehnberg continues to assert on appeal that application of merger is 
inappropriate.  Hirshberg likewise 
continues to argue to the contrary.

 

[¶13]   A contract for the sale of realty 
is executory until closing, at which time the contract has been executed, it 
merges with the deed, and it is no longer separately enforceable.  Richardson v. Hardin, 5 P.3d 793, 
798 (Wyo. 2000); 40 North Corp. v. Morrell, 964 P.2d 423, 426 (Wyo. 
1998); Bakken v. Price, 613 P.2d 1222, 1227 (Wyo. 1980).  Thereafter, the rights and obligations 
of the parties are controlled by the deed.  
Bakken, 613 P.2d  at 1227.  
An exception to merger, called the "collateral obligations rule," 
provides that contractual obligations that are collateral to the transaction 
survive closing and may be enforced under the contract.  Richardson, 5 P.3d  at 799; 
American Nat. Self Storage, Inc. v. Lopez-Aguiar, 521 So. 2d 303, 305 
(Fla.App. 1988); and Lawrence Berger, Merger by DeedWhat Provisions of a 
Contract for the Sale of Land Survive the Closing?, 21 Real Estate L.J. 22, 
24 (1992).  A collateral obligation 
is one that is not "deed-related."  
Lawrence Berger, supra, 21 Real Estate L.J. at 32.  Deed-related provisions are those 
concerning "title, possession [and] quantities or emblements of the land . . 
..'"  Bakken, 613 P.2d  at 
1232 (McClintock, J., concurring in part and dissenting in part) (quoting 
Chavez v. Gomez, 77 N.M. 341, 423 P.2d 31, 33 (1967)).

 

[¶14]   To apply these concepts, we must 
review the pertinent facts set forth in the complaint.  Once again, these facts are presented in 
the light most favorable to Rehnberg and are assumed to be true.  Hirshberg advertised Lot 2 for 
sale.  Rehnberg made an offer to 
purchase Lot 2.  Negotiations 
ensued, during which Rehnberg was told that she would be able to substitute 
herself for Hirshberg in the Countryside lawsuit.  Eventually, the parties signed the sale 
contract.

 

[¶15]   Rehnberg contends that, in addition 
to the duty to convey Lot 2, the sale contract created three other duties on 
Hirshberg's part:  the duty to 
assign the fishing rights, the duty to assign the Crescent H use agreement, and 
the duty actively to pursue Rehnberg's interests in the Countryside lawsuit or 
to allow her to be substituted for Hirshberg in that lawsuit.  Before we can determine whether any of 
these obligations merged with the deed, we must first determine whether they 
actually were created by the sale contract.

 

[¶16]   The district court made the dual 
findings that the sale contract was unambiguous and that it was a fully 
integrated contract.  We agree.  The integration clause clearly 
established the parties' intent that the written terms contain their entire 
agreement, which is not to be modified by prior negotiations.  Further, the pertinent portions of the 
sale contract are not ambiguous because the intent of the parties is clearly 
revealed in the words used.  We see 
no double meanings or obscure language.  
In such case, the search for the parties' intent is limited to the four 
corners of the document, and such intent may not be modified or determined 
through parol evidence.  Goglio 
v. Star Valley Ranch Ass'n, 2002 WY 94, ¶¶ 26, 31, 48 P.3d 1072, 1081, 1084 
(Wyo. 2002); Barlage v. Key Bank of Wyoming, 892 P.2d 124, 127 (Wyo. 
1995).

 

[¶17]   The question then is whether the 
unambiguous language of the sale contract created any of the duties alleged by 
Rehnberg.  Clearly, it did not.  There was no mention whatsoever in the 
contract of the Crescent H use agreements.  
Fishing rights are specifically excluded from the sale.  And any duty to assign fishing rights 
obtained in litigation was intended to arise only upon successful completion of 
that litigation.  Had the parties 
intended to create an obligation on Hirshberg's part actively to pursue fishing 
rights on Rehnberg's behalf, or to help Rehnberg substitute herself for 
Hirshberg in the lawsuit, such easily could have been stated.  It was not.

 

[¶18]   Our conclusion that the purported 
duties were not created by the contract obviates any necessity to determine 
whether those duties merged into the deed.  
Perhaps that was the district court's rationale for not ruling 
specifically on the merger issue.  
At any rate, we conclude that the decision of the district court must be 
affirmed.

 

[¶19]   One other issue requires 
mention.  In her complaint, Rehnberg 
alleged that Hirshberg's interests in the fishing rights and use agreement 
derived from his ownership of Lot 2, and that those interests were appurtenant 
to Lot 2.  That allegation is not 
pursued, however, and Rehnberg provides no cogent argument or citation to 
authority as to the effect, if any, of such appurtenant status.  Consequently, we will not pursue a 
detailed analysis of the issue.  
Eustice v. State, 11 P.3d 897, 904 (Wyo. 
2000).

 

CONCLUSION

 

[¶20]   The unambiguous and fully 
integrated contract for sale did not require Hirshberg to assign fishing rights 
or Crescent H use agreements to Rehnberg, nor did it require Hirshberg actively 
to pursue fishing rights on Rehnberg's behalf or to assist Rehnberg in 
substituting herself for Hirshberg in the Countryside 
lawsuit.

 

[¶21]   We affirm.

 

FOOTNOTES

  1Hirshberg's appellate brief lists 
eleven "legal arguments," but most are defenses to Rehnberg's claims rather than 
separate issues.

  2Because we are reviewing the 
dismissal of a complaint under W.R.C.P. 12(b)(6) for failure to state a claim 
upon which relief can be granted, we accept as true all the facts alleged in the 
complaint, and examine those facts in the light most favorable to Rehnberg.  Feltner v. Casey Family Program, 
902 P.2d 206, 207 (Wyo. 1995).

  3For a detailed analysis of this 
controversy, see Masinter v. Markstein, 2002 WY 64, ¶¶ 3-5, 45 P.3d 237, 
239-40 (Wyo. 2002).

  4Although it is a minor distraction 
in the parties' briefing, we feel compelled to mention that extrinsic evidence 
is limited by the "parol evidence rule," not the "parole evidence 
rule."