Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-01094/USCOURTS-ca10-89-01094-0/pdf.json

Parties Involved:
Brunswick Corporation
Appellee
VRG Development Partnership
Appellant

Document Text:

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

FI LED 

United States Court of Appeals 

Tenth Circuit 

VRG DEVELOPMENT PARTNERSHIP, a 

Colorado general partnership, 

Plaintiff-Appellant, 

v. 

BRUNSWICK CORPORATION, a Delaware 

corporation, 

Defendant-Appellee. 

MAY 4 1990 

) &OBERT L. HOECKER 

~ Clerk 

) 

) 

) No. 89-1094 

) (D.C. No. 88-B-1086) 

) (D. Colo.) 

) 

) 

) 

ORDER AND JUDGMENT* 

Before LOGAN, JONES,** and MOORE, Circuit Judges. 

**Honorable Nathaniel R. Jones, Circuit Judge, United States Court 

of Appeals for the Sixth Circuit, sitting by designation. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The case is therefore ordered 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 1 
Plaintiff appeals from an order of the district court 

grariting summary judgment in defendant's favor. We reverse and 

remand for further proceedings. 

The issues in this case involve the interpretation of the 

terms of a Receipt and Option Contract for the purchase of 

undeveloped commercial real estate. On February 10, 1986, 

def e ndant contracted to purchase the real estate from plaintiff's 

predecessor, which had sought an anchor tenant for a retail 

shopping area. Defendant purchased the property intending to 

construct a bowling center on the property. Paragraph 20 of the 

contract provided: 

Buyer shall represent and warrant to Seller at 

Closing that (i) it shall develop the Premises as a 40 

lane bowling center; (ii) construction of the bowling 

center and the accompanying parking shall be commenced 

no later than 30 days after Closing and completed no 

later than 160 days after commencement. Seller shall 

complete construction of the access roads and bring in 

the utilities so they will all be ready when Buyer has 

its construction completed. This covenant shall also 

survive the Closing. 

On October 16, 1986, the parties closed the property into 

escrow while awaiting approval for replatting of the property by 

Arap hoe County. The sale of the property was closed out of 

escrow on January 21, 1987, without a face-to-face closing. 

In fall, 1987, defendant informed plaintiff it was not going 

to construct a bowling center. 

action against defendant 

Plaintiff then commenced this 

alleging breach of the contract 

requirement that defendant construct a bowling center on the 

property. Defendant filed a motion for summary judgment arguing, 

inter alia, that paragraph 20 of the contract required only that 

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Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 2 
defendant make a representation and warranty at closing it would 

construct a bowling center, not that it actually promised to 

construct a bowling center. 

The district court granted summary judgment for defendant. 

The court determined that the language of paragraph 20, requiring 

onl y that defendant "represent and warrant at closing that it 

would construct a bowling center on the property[,]'' is clear and 

unamb iguous. Because defendant never made such a representation 

or warranty, plaintiff accepted the purchase price and never 

requested such representation or warranty at closing, and 

plaintiff delivered a deed which did not require defendant to 

build a bowling center, the district court concluded the agreement 

was merely an unenforceable "agreement to agree" and plaintiff 

waived the provisions of paragraph 20. 

We review the summary judgment order[] de novo, 

applying the same legal standard used by the district 

court under Rule 56(c) of the Federal Rules of Civil 

Procedure. Osgood v. State Farm Mut. Auto. Ins. Co., 

848 F .2d 141, 143 (10th Cir. 1988). Summary judgment 

should be granted only if "there is no genuine issue as 

to any material fact and ... the moving party is 

entitled to judgment as a matter of law." 

Fed. R. Civ. P. 56(c). When applying this standard, we 

are to examine the factual record and reasonable 

inferences therefrom in the light most favorable to the 

party opposing summary judgment. Gray v. Phillips 

Petroleum Co., 858 F.2d 610, 613 (10th Cir. 1988). 

Abercrombie v. City of Catoosa, Okla., 896 F.2d 1228, 1230 (10th 

Cir. 1990). 

Plaintiff's first argument on appeal relates to the ambiguity 

of paragraph 20. Plaintiff contends the district court erred in 

failing to determine that paragraph 20 clearly and unambiguously 

provides that defendant's promise to build the bowling center 

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Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 3 
within the stated time frame survived the closing. Additionally, 

plaintiff makes the argument that paragraph 20 does not provide 

only that defendant would make a representation and warranty at 

closing. 

Whether a contract is ambiguous is a question of law for the 

court to determine. KN Energy, Inc. v. Great W. Sugar Co., 698 

P. 2d 769, 776 (Colo.), cert. denied, 472 U.S. 1022 (1985). In 

deciding whether a part of the contract is ambiguous, the court 

looks at all provisions of the contract, Griffin v. United Bank 

of Denver, 599 P.2d 866, 868 (Colo. 1979), giving words their 

plain meaning, Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 

1310, 1314 (Colo. 1984); Buckley Bros. Motors, Inc. v. Gran Prix 

Imports, Inc., 633 P.2d 1081, 1083 (Colo. 1981). "Written 

contracts which are complete, clear in their terms, and free from 

ambiguity are enforced because they express the intention of the 

parties." Radiology Professional Corp. v. Trinidad Area Health 

Ass'n, Inc., 577 P.2d 748, 750 (Colo. 1978); see Matter of May, 

756 P.2d 362, 369 (Colo. 1988). The mutual intent of the parties 

is ascertained primarily from the written terms; only if the terms 

are ambiguous or are used in some special or technical sense not 

apparent from the document itself does the court look beyond the 

contract. KN Energy, Inc., 698 P.2d at 776. A mere difference of 

opinion between the parties regarding the interpretation of the 

contract does not constitute ambiguity. Matter of May, 756 P.2d 

at 369 ; Radiology Professional Corp., 577 P.2d at 750. 

After consideration of all provisions of the Receipt and 

Option Contract in light of the above principles for contract 

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Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 4 
construction, we conclude paragraph 20 is ambiguous. We therefore 

conclude the district court erred in granting summary judgment. 

The district court found paragraph 20 to be unambiguous on 

the ground that the first sentence of the paragraph said only that 

the buyer "shall represent and warrant to Seller at Closing" that 

it would commence construction of a bowling center within thirty 

days after closing and complete construction no more than 160 days 

later . Reading the sentence in isolation, it states only that 

defendant shall represent and warr ant at closing what it will do. 

It does not actually say defendant shall construct a bowling 

center. According to the sentence, it appears that plaintiff need 

only demand that defendant make the representation and warranty at 

closing and defendant has no option but to agree. For plaintiff 

to make such a demand, a closing out of escrow without a face-toface or telephonic closing would preclude such an express 

representation and warranty. While such an interpretation of the 

first sentence of paragraph 20 is perhaps plausible, it does not 

seem likely in light of the rest of the Receipt and Option 

Co ntract. If defendant does not exercise the option to terminate 

the contract contained in paragraph 131 and completes the closing, 

l Paragraph 13, as amended, provides 

On or before April 22, 1986, Buyer shall have the right in 

its absolute discretion to terminate this Contract for any reason. 

In the event Buyer does not notify Seller in writing on or before 

April 22, 1986, of its decision to exercise this option to 

purchase the Premises, then this Contract shall be null and void 

and the earnest money shall be returned to Purchaser. In the 

event Buyer notifies Seller of its exercise of the option, this 

Contract shall be in full force and effect and the earnest money 

shall be delivered to Seller in the event of breach by Buyer. 

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it can reasonably be expected that defendant will construct the 

bowling center in accordance with the terms of paragraph 20. 

It is also unlikely that the first sentence is an "agreement 

to agree" as found by the district court. An "agreement to agree" 

typically leaves an essential element of the contract open for 

negotiation. See J. Calamari & J. Perillo, Contracts § 2-9(a)(3) 

( 3d ed. 1987); see also Jackson v. Grant, 890 F.2d 118, 120 (9th 

Cir. 1989); Willowood Condominium Ass'n, Inc. v. HNC Realty Co., 

531 F.3d 1249, 1251 (5th Cir. 1976); 1 S. Williston, A Treatise on 

the Law of Contracts§ 45 (W. Jaeger 3d ed. 1957). All of the 

terms of the contract in this case were negotiated and set forth 

in the Receipt and Option Contract. There was nothing left to be 

negotiated by the parties. 

Construing the first sentence in defendant's favor makes 

sense only if the sentence is treated as an option to defendant to 

either promise to construct as a condition of closing or forfeit 

its earnest money. Such a reading requires consideration of other 

pr ovisions of the contract, particularly paragraph 7. Paragraph 7 

pr ovides: 

Time is of the essence hereof, and if any payment 

or any other condition hereof is not made, tendered or 

performed has [sic] herein provided, there shall be the 

following remedies. In the event a payment or any other 

condition hereof is not made, tendered or performed by 

the Purchaser, then this contract shall be null and void 

and of no effect, and both parties hereto released from 

all obligations hereunder, and all payments made hereon 

shall be retained on behalf of the Seller as liquidated 

damages. In the event that the Seller fails to perform 

any condition hereof as provided herein, then the 

Purchaser may, at his election, treat the contract as 

terminated, and all payments made hereunder shall be 

returned to the Purchaser; provided, however, that the 

Purchaser may, at his election, treat this contract as 

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Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 6 
being in full force and effect with the right to an 

action for specific performance and damages. 

Under paragraph 7, defendant may terminate the contract by failing 

to perform any condition. If the first sentence of paragraph 20 

is construed as a condition, defendant may terminate the contract 

by failing to make the appropriate representation and warranty at 

closing . Because the representation and warranty of the first 

sentence of paragraph 20 is to be made at closing, rather than 

pri o r to closing, it is unlikely the representation and warranty 

is a condition covered by paragraph 7. See Charles Ilfeld Co. v. 

Taylor, 397 P.2d 748, 750 (Colo. 1964)(intent to create a 

condition must be express or clearly implied; in uncertain 

situation courts interpret obligation as a promise rather than a 

condition). Additionally, it is unlikely the representation and 

warranty is a condition, because such a reading of the first 

sentence of paragraph 20 gives no effect to the last sentence of 

paragraph 20 that "this covenant shall also survive the Closing." 

Although we believe the first sentence of paragraph 20 

unambiguously sets forth a promise, it is unclear whether the last 

sentence of paragraph 20 refers to the entire paragraph or only to 

the preceding sentence. As plaintiff argues, paragraph 20 could 

be read to set forth a representation and warranty that does 

survive closing. The second sentence of paragraph 20 can be 

construed as being dependent upon the first sentence in that 

plaintiff's obligation to bring in utilities and build access 

roads depends upon defendant's construction of the bowling center. 

The references in the paragraphs contemplating action after 

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Appellate Case: 89-1094 Document: 01019969817 Date Filed: 05/04/1990 Page: 7 
closing, paragraphs 19 and 20, to the covenant surviving the 

closing reasonably support this construction. 

Defendant argues that the language in paragraph 20 that the 

"covenant shall also survive the Closing" refers only to the 

second, or preceding, sentence in the paragraph, setting forth 

plaintiff's obligation to construct access roads and bring in 

utilities by the time construction of the bowling center is 

completed. Such a construction, that plaintiff's obligation was 

independent of construction of the bowling center, is possible. 

Thus, paragraph 20 is ambiguous as to whether defendant's promise 

t o build was a promise to be made at closing or a promise that 

survived closing. 

Further indication of the ambiguity of the final sentence of 

paragraph 20 is found in paragraph 19. Paragraph 19 contains a 

final sentence similar to that of paragraph 20. 

provides: 

Paragraph 19 

Buyer understands that the Premises are a portion 

of a larger commercial development. Buyer agrees that 

the Premises may be subjected by Seller prior to Closing 

to reasonable covenants, conditions and restrictions 

("CC &R 's") for the benefit of the entire commercial 

development including agreements for reciprocal parking 

and ingress and egress easements, which easements shall 

be recorded. Seller shall prepare and deliver the 

CC&R's to Buyer for Buyer's review and approval, such 

approval not to be unreasonably withheld, no later than 

thirty days prior to Closing. The CC&R's shall make 

provision for adequate parking facilities and access 

roads for Buyer. If Buyer and Seller cannot agree on 

the aforesaid easements, this agreement shall be 

terminated and the earnest money plus interest shall be 

returned to it. In no event shall Buyer be required to 

pay for initial construction costs not directly 

associated with the premises to be conveyed to it. This 

covenant shall survive the Closing. 

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The parties agree that the final sentence of paragraph 19 refers 

on ly to the preceding sentence. Also, the language of paragraph 

19 is such that the final sentence could only apply to the 

pr ev i o us sentence, which is the only sentence in the paragraph 

relat ing to constructio n activities occurring after closing and 

defendant's taking of title to the property. Such is not the case 

wi t h paragraph 20. The language of paragraph 20 is such that the 

final sentence could refer either to the entire paragraph or only 

the preceding sentence. 

Defendant argues the requirement that it make representations 

and warranties at closing was extinguished by the subsequent 

de l ivery of an unrestricted deed. We disgree. The 

representations and warranties regarding construction stated in 

paragraph 20 are not the kind that normally appear in a deed. See 

Skidmore v. First Bank of Minneapolis, 773 P.2d 587, 589 (Colo. 

Ct. App. 1988)("By t he doctrine of merger, a buyer's acceptance of 

a deed tendered in perfo rmance of a contract to convey serves to 

extinguish those c o venants in the antecedent contract that relate 

t o t he title, possession, quantity, or emblements of the land."). 

Ra t her, they normally appear in a separate contract. A deed 

constitutes only part performance of a contract if there are other 

unperformed provisions of the contract, which do not merge into 

the deed. Glisan v. Smolenske, 387 P.2d 260, 263 (Colo. 1963); 

Reed v. Dudley, 533 P.2d 507, 508 (Colo. Ct. App. 1975)(dicta); 

see Stevens v. Vail Assocs., Inc., 472 P.2d 729, 731 (Colo. Ct. 

App. 1970)(collateral agreements are not included in or merged 

i n t o deed). The agreement in paragraph 20 was collateral to the 

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deed. To require that plaintiff demand an additional promise from 

defendant at closing would require the parties to draft yet 

another contract, and the Receipt and Option Contract does not 

expressly contemplate execution of a later agreement. It is 

plausible to construe the final sentences in paragraphs 19 and 20 

as intending to eliminate the need for a separate contract in 

addition t o the deed at closing. 

Based on the above discussion, we conclude paragraph 20 and, 

therefore, the contract are ambiguous. Because the language of 

the contract is not so clear that we can determine the intent of 

the parties from the language of the contract, the district court 

erred in granting summary judgment and should have considered 

extrinsic evidence to ascertain the intent of the parties. 

Accordingly, we remand to the district court for consideration of 

all relevant evidence bearing on the parties' intent at the time 

of drafting the contract, including the evolution of the drafting 

process and the subsequent conduct of the parties. See Pepcol 

Mfg. Co. v. Denver Union Corp., 687 P.2d at 1314. 

The judgment of the United States District Court for the 

District of Colorado is REVERSED, and the action is REMANDED for 

further proceedings consistent with this order and judgment. 

ENTERED FOR THE COURT 

PER CURIAM 

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