Title: Svalina v. Split Rock Land and Cattle Co.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Svalina v. Split Rock Land and Cattle Co.1991 WY 111816 P.2d 878Case Number: 91-48Decided: 08/28/1991Supreme Court of Wyoming
JACK SVALINA, APPELLANT 
(DEFENDANT),

v.

SPLIT ROCKLAND AND 
CATTLE COMPANY, A WYOMING PARTNERSHIP, APPELLEE 
(PLAINTIFF).

Appeal from the District 
Court, AlbanyCounty, Arthur T. Hanscum, 
J.

Georg Jensen of Law 
Offices of Georg Jensen, Cheyenne, for appellant.

Peter J. McNiff and 
Sherrill A. Veal of McNiff & Patton, Cheyenne, for appellee.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, MACY and GOLDEN, JJ.

OPINION

MACY, Justice.

[¶1.]     Appellant Jack Svalina 
seeks review of a summary judgment which determined the lease and 
option-to-purchase agreement he entered into with AppelleeSplitRockLand and Cattle Company was 
unambiguous and not unenforceable by reason of unconscionability.

[¶2.]     We affirm.

[¶3.]     Svalina presents these 
issues for our disposition:

     1. Did the district 
court err in granting summary judgment on the complaint and counterclaim herein 
ruling that the contract between the parties was not ambiguous?

     2. Did the district 
court err in determining that the contract was enforceable and denying the 
defendant's claims of unconscionability?

[¶4.]     On December 16, 1988, 
Svalina and SplitRockLand and Cattle Company entered into a 
"Ranch Lease Agreement With Option to Purchase." As consideration for the 
agreement, SplitRockLand and Cattle Company paid $91,852.97 to 
Svalina ($81,852.97 for a five-year lease of the property and $10,000 for the 
option to purchase). Svalina used this payment to retire a third mortgage on his 
land, which was in foreclosure, and to retire other debts. The agreement, 
warranty deed to the land owned by Svalina, assignments of state and federal 
leases held by Svalina, and escrow instructions were placed in an escrow file 
with the First State Bank of Wheatland.

[¶5.]     The option-to-purchase 
portion of the agreement provided SplitRockLand and Cattle Company 
could exercise its option to purchase if Svalina defaulted in his obligations 
under the agreement. It also provided the purchase price to be paid by Split 
Rock Land and Cattle Company, if the option to purchase were exercised, would be 
the assumption of liability for the first and second mortgages on the property, 
with Svalina retaining any sums Split Rock Land and Cattle Company had paid to 
him for any unexpired lease term. The agreement also provided Svalina with the 
right to repurchase the option to purchase upon giving notice to Split Rock Land 
and Cattle Company and upon tendering, within thirty days, the amount 
which Split Rock Land and Cattle Company had paid to Svalina for the lease and 
option to purchase, as well as any other sums Split Rock Land and Cattle Company 
had paid on behalf of Svalina during the lease term.

[¶6.]     On December 26, 1989, 
Svalina gave notice to SplitRockLand and Cattle Company 
that he intended to exercise his right to repurchase the option. However, he did 
not tender the sum of money (approximately $100,000) which was required by the 
agreement. By a letter dated January 26, 1990, SplitRockLand and Cattle Company informed Svalina 
it would exercise its option to purchase because Svalina had defaulted in 
meeting his obligations.

[¶7.]     On January 29, 1990, 
Svalina filed a petition for relief in the United States Bankruptcy Court for 
the District of Wyoming, thus precluding SplitRockLand and Cattle Company 
from taking any further action with regard to establishing its possessory and 
ownership interests in the Svalina property. Orders of the bankruptcy court 
dated May 17, 1990, released the Svalina land warranty deed to SplitRockLand and Cattle Company and lifted the 
automatic stay which had prevented SplitRockLand and Cattle Company 
from attempting to adjudicate its rights to the land in a state 
court.

[¶8.]     SplitRockLand and Cattle Company initiated this 
case by filing a complaint for a preliminary and permanent injunction and for 
declaratory relief. On June 15, 1990, the parties stipulated to the entry of a 
preliminary injunction which permitted SplitRockLand and Cattle Company to 
exercise dominion over the Svalina land and allowed Svalina to remain on the 
land and to use it for certain limited purposes. Svalina answered the complaint 
on June 26, 1990, and on July 5, 1990, he filed a counterclaim. Split Rock Land 
and Cattle Company filed a motion for summary judgment and, by an order entered 
on January 7, 1991, the district court determined that (1) the agreement was 
clear and unambiguous; (2) Split Rock Land and Cattle Company exercised the 
option to purchase in sufficient compliance with the agreement to create an 
obligation by Svalina to convey the property to Split Rock Land and Cattle 
Company; (3) Svalina's affidavit filed in opposition to the motion for summary 
judgment contained opinions and violated the parol evidence rule and, 
potentially, the statute of frauds; and (4) Svalina's allegations of fraud were 
not pleaded with sufficient particularity and were conclusory in nature. As a 
result, the district court granted a summary judgment in favor of SplitRockLand and Cattle Company and ordered 
specific performance of the agreement.

[¶9.]     Svalina asserts the 
district court erred in finding the contract was not ambiguous. To support this 
claim, Svalina points to his affidavit wherein he affirmed that he approached 
one of the partners in SplitRockLand and Cattle Company and that he proposed an 
agreement allowing SplitRockLand and Cattle Company to 
graze cattle on his ranch for five years. In exchange for those grazing rights, 
Svalina was to receive $100,000 and one-third of the calf crop. The agreement he 
signed, however, provided less cash for him than he had proposed. Svalina 
claimed that, when he signed the agreement, he did not realize he would not get 
one-third of the calf crop during the first year of the lease. Svalina also 
claimed he had an opportunity to sell his ranch at a profit in 1989, but he did 
not pursue it because he found out that, even if he repurchased and then sold 
the ranch, it would still be subject to the five-year lease. Svalina also 
claimed SplitRockLand and Cattle Company breached the 
agreement by failing to pay any compensation for the first year of the 
lease.

[¶10.]  In addition, Svalina argues this case was 
not appropriate for summary judgment because of the complex and extensive 
factual questions involved, because terms of the agreement were in conflict, and 
because terms of the agreement were subject to oral supplementation. The alleged 
ambiguities are that the agreement makes no provision for compensation to 
Svalina for the first year of the lease and that the agreement is not clear as 
to who will pay husbandry expenses prior to December 1989. Svalina also claims 
there are ambiguities in the portions of the agreement pertaining to the 
exercise of the option to purchase. Finally, Svalina contends the agreement 
results in a forfeiture or penalty and should not be enforced.

[¶11.]  We approach this case by employing our 
well established principles for reviewing summary judgments. Baros v. Wells, 780 P.2d 341 (Wyo. 
1989).

[¶12.]  In analyzing Svalina's contention that 
the agreement was ambiguous, we are guided by our precedent that, if an 
agreement is in writing and the language is clear and unambiguous, the intention 
of the parties is to be secured from the words of the agreement without 
resorting to extrinsic evidence. Mad River Boat Trips, Inc. v. Jackson Hole 
Whitewater, Inc., 803 P.2d 366 (Wyo. 1990). Rules of contract construction are 
utilized only when, without their aid, the meaning of a contract is doubtful or 
uncertain. Kimball v. DeYoe, 583 P.2d 1274 (Wyo. 1978). An ambiguity justifying the use of 
extrinsic evidence is not generated by the subsequent disagreement of the 
parties concerning the contract's meaning. Cliff & Co., Ltd. v. Anderson, 777 P.2d 595 (Wyo. 1989). Whether a contract is ambiguous is 
a question of law for the court. Id.

[¶13.]  We agree with the district court that the 
agreement is not ambiguous. It is forthright in stating the duration of the 
lease is from December 1, 1988, until December 1, 1993, and

the consideration for 
this lease is agreed to be the sum of Eighty-One Thousand Eight Hundred 
Fifty-Two Dollars and Ninety-Seven Cents ($81,852.97), and the consideration for 
the option to purchase is Ten Thousand Dollars ($10,000.00) * * *.

This sum was paid to 
Svalina at the time the agreement was executed. The agreement 
continues:

As additional 
consideration the Lessors shall receive one-third (1/3) of the calf crop each 
year during the lease term commencing with the second year of the lease term 
from the one hundred ifty (150) cows owned by the Lessee and to be cared for on 
the premises by the Lessors as hereinafter provided.

One of Svalina's 
principal arguments is that the agreement fails to provide "compensation" to him 
for the first year of the lease. The agreement does not purport to provide any 
"compensation" to Svalina for any period of the lease. However, the 
consideration for the lease and option is clear.

[¶14.]  Svalina claims the agreement is ambiguous 
as to who is to pay for veterinary and husbandry expenses for the first year of 
the lease. If this portion of the lease is not as clear as it might have been, 
it is clear from the record no disagreement existed between the parties. The 
agreement provides the veterinary and husbandry expenses, the death loss, and 
the calf crop are to be split one-third/two-thirds after December 1, 1989. For 
the entire duration of the lease, SplitRockLand and Cattle Company is 
responsible for providing salt and minerals, and Svalina is responsible for 
maintaining the cattle in accordance with good animal husbandry practices. In 
any event, to the extent there is any ambiguity, or more accurately 
"indefiniteness or incompleteness of expression," it simply has no relevance to 
this appeal.

[¶15.]  The central issue in this case is that 
portion of the agreement which provided that, in the event of certain defaults 
by Svalina, SplitRockLand and Cattle Company could exercise its 
option to purchase. If the option were exercised, SplitRockLand and Cattle Company's only obligation 
to Svalina would be to assume responsibility for the first and second mortgages 
on the property. The agreement gives to Svalina a right to repurchase the option 
if he refunds the entire $91,852.97 which was paid to him as consideration for 
the lease and the option to purchase, plus any amounts advanced or actually paid 
by SplitRockLand and Cattle Company to meet Svalina's 
obligations during the term of the lease. Even if Svalina effectuated a 
repurchase, the lease to SplitRockLand and Cattle Company 
would survive. The agreement also provided that, if Split Rock Land and Cattle 
Company never exercised its option to purchase during the lease term, Svalina 
would retain the total payments made by Split Rock Land and Cattle Company, the 
land, and Svalina's share of the calves for the last four years of the lease. 
The language in the agreement is not ambiguous. If Svalina has a remedy, it does 
not arise because of questions of ambiguity but arises because the contract is 
unconscionable or unenforceable.

[¶16.]  The concept of "unconscionability" is 
difficult to define. It is "`that which "affronts the sense of decency."'" J. 
Calamari & J. Perillo, The Law of Contracts § 9-40 at 406 (3rd ed. 1987). 
This Court has applied a test which looks to see if the contract is oppressive 
or unfairly surprises one party. Cline v. Safeco Insurance Companies, 614 P.2d 1335 (Wyo. 1980); Fulkerson v. Reese, 599 P.2d 550 (Wyo. 
1979); J. Calamari & J. Perillo, supra. Our opinions enumerate some of the 
factors to be considered in the identification of unconscionability:

1. Was a party deprived 
of a meaningful choice as to whether to enter into the contract?

2. Was a party compelled 
to accept the terms of the contract?

3. Was there an 
opportunity for a meaningful negotiation?

4. Was there a great1 inequality of bargaining 
power?

5. Was one party readily 
subject to deception?

6. Was one party in some 
manner surprised by fine print or concealed terms?

Fulkerson, 599 P.2d 550. 
See generally J. Calamari & J. Perillo, supra at Ch. 9, § G.

[¶17.]  The analysis employed in Fulkerson is 
dispositive. Svalina had a meaningful choice of whether to enter into the 
agreement. There is nothing in the record to suggest that he was compelled to 
accept the terms of the agreement - no evidence he had exhausted more 
traditional forms of obtaining money such as banks, insurance companies, or 
other lenders - or that Split Rock Land and Cattle Company employed overreaching 
or some form of duress to obtain Svalina's signature on the agreement. There was 
an opportunity for a meaningful negotiation. In fact, Svalina initiated the 
negotiations by making a proposal to SplitRockLand and Cattle Company. 
Nothing in the record demonstrates there was a great disparity in bargaining 
power or Svalina was readily subject to deception. SplitRockLand and Cattle Company may have been the 
more sophisticated of the two bargainers, but no evidence exists to suggest 
Svalina is anything other than an experienced businessman. There is no fine 
print in the contract, nor are there any terms of the contract which are 
difficult to read or understand because of convoluted verbiage or lack of 
directness in wording. The option to purchase is very similar to that used in 
Fulkerson, where we also held unconscionability was not present. See Hershey v. 
Simpson, 111 Idaho 491, 725 P.2d 196 (Ct.App. 
1986); Resource Management Company v. Weston Ranch and Livestock Company Inc., 
706 P.2d 1028 (Utah 1985); and Bekins Bar V 
Ranch v. Huth, 664 P.2d 455 (Utah 1983). See also Annotation, Construction 
and Effect of Options to Purchase at Specified Price and at Price Offered by 
Third Person, Included in Same Instrument, 22 A.L.R.4th 1293 (1983).

[¶18.]  Finally, Svalina presented no evidence to 
establish the proposition that the agreement's option-to-purchase provisions 
operated as a penalty or forfeiture. We hold the agreement was not 
unconscionable or otherwise unenforceable.

[¶19.]  Affirmed.

FOOTNOTES

1 In 
employing the term "great" instead of "gross," we do not intend to change in any 
way this particular element of the test. We employ "great" because the precise 
meaning of the term "gross" has seriously eroded in modern language usage.