UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

J.S.K. REALTY COMPANY, a West 

Virginia corporation,

Plaintiff-Appellant,

v.  No. 00-2111 NEW PLAN REALTY TRUST, a

Massachusetts Business Trust; THE

KROGER COMPANY, an Ohio

corporation,

Defendants-Appellees. 

Appeal from the United States District Court

for the Northern District of West Virginia, at Wheeling.

Frederick P. Stamp, Jr., District Judge.

(CA-95-137-5)

Argued: January 25, 2001

Decided: May 1, 2001

Before NIEMEYER and KING, Circuit Judges, and

Gerald Bruce LEE, United States District Judge for the

Eastern District of Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: John Preston Bailey, BAILEY, RILEY, BUCH & HARMAN, L.C., Wheeling, West Virginia, for Appellant. Mark E. Kogan,
SATZBERG, TRICHON, KOGAN & WERTHEIMER, P.C., Philadelphia, Pennsylvania, for Appellees. ON BRIEF: Christopher Paull

Riley, BAILEY, RILEY, BUCH & HARMAN, L.C., Wheeling, West

Virginia, for Appellant. Christopher N. Jones, SATZBERG,

TRICHON, KOGAN & WERTHEIMER, P.C., Philadelphia, Pennsylvania; Ray A. Byrd, SCHRADER, BYRD & COMPANION,

P.L.L.C., Wheeling, West Virginia, for Appellees. 

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

J.S.K. Realty Company ("JSK") appeals the district court’s holding

that it and New Plan Realty Trust ("New Plan") are bound by a signed

written lease agreement and that JSK does not have the option to purchase the leased property. Two issues are before the Court. First,

whether the district court erred in finding that JSK and New Plan did

not enter an oral option agreement. Second, whether New Plan fraudulently induced JSK into entering the lease agreement with the promise of an oral option. During a two-day trial, the district court heard

conflicting testimony as to the existence of the option agreement,

found all the parties to be credible, and held that JSK did not meet

its burden of proving that an oral option agreement existed. In addition, the district court held that JSK did not prove that New Plan made

any material misrepresentation granting an oral option which induced

JSK into entering the lease. Upon review, we hold the district court

did not commit clear error in reaching its conclusions. Therefore, we

affirm. 

I.

Sam Kusic, his wife, and his son were the sole shareholders of

Moundsville Shopping Plaza, Inc., ("MSP") which owned the Mound2 J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST
sville Shopping Center. New Plan was a real estate investment trust

and a developer of strip malls. For six months, Sam Kusic and New

Plan engaged in intense negotiations for New Plan to purchase the

Moundsville Shopping Center. The Moundsville Shopping Center

consisted of two tracts of land: (1) a 18.5 acre developed tract ("Tract

A"), and (2) a nearby 10.5 acre underdeveloped tract ("Tract B"). On

December 27, 1988, the parties gathered to close the deal on the

Moundsvile Shopping Center. The parties agreed to a $4,000,000 taxfree exchange of the MSP property for stock in New Plan Realty

Trust. Federal tax laws were scheduled to change on January 1, 1999;

therefore, the parties had to complete the transaction before December

31, 1998 in order to realize the tax benefits. Sam Kusic, on behalf of

MSP, negotiated the sale on both tracts to New Plan. Originally, the

parties contemplated only leasing Tract A. Eventually, the parties

agreed that New Plan would purchase Tract B for 33,333 shares of

New Plan Stock and New Plan would lease the property back to

another company owned by the Kusic family, J.S.K. Realty Company.

In sum, under the tax-free exchange MSP sold Parcel A and B to New

Plan in exchange for New Plan giving the Kusic family 233,333

shares of New Plan Realty Trust and assuming the $495,632.20 mortgage debt on the property. (J.A. 517-536.) 

On December 31, 1998, Sam Kusic, on behalf of JSK, entered into

a signed formal agreement to lease Tract B from New Plan. (J.A. at

491-510.) In conjunction with the lease, JSK contends that New Plan

granted JSK an oral unrestricted 10-year option to purchase Tract B

for $500,000. However, the lease agreement from New Plan to JSK

does not contain or reference an option agreement. Moreover, Article

20 of the lease agreement provides as follows: 

NO ORAL AGREEMENTS

This Lease contains all the promises, agreements, conditions, inducements and understandings between Landlord

and Tenant relative to the Premises and there are no promises, agreements, conditions, understandings, inducements,

warranties or representations, oral or written, expressed or

implied, between them other than as herein set forth. 

(J.A. at 509.) 

J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST 3
Three years after the closing, New Plan entered into a lease agreement with the Kroger Company ("Kroger") where New Plan leased

Tract A to Kroger for a 20 year term. (J.A. at 616-657.) The Kroger

lease purported to impose certain restrictions on Tract B. (J.A. at 617-

19, 650.) JSK claims that Tract B was not subject to the restrictions

set forth under the Kroger lease. 

JSK filed suit against New Plan and Kroger seeking (a) declaratory

judgment as to the parties’ rights under the lease, (b) general and special damages against New Plan for alleged breach of the lease, and (c)

declaratory judgment with respect to the enforceability of the option

to purchase Tract B. The district court resolved the first two claims

on summary judgment. Under its remaining claim, JSK sought declaratory judgment with respect to enforceability of the option to purchase Tract B. In the alternative, JSK sought rescission of the lease

on the basis that New Plan misrepresented that it would grant JSK an

option to repurchase Tract B which, in turn, induced JSK into entering the lease. 

Judge Frederick P. Stamp of the Western District of West Virginia

conducted a two-day bench trial. At trial, the parties presented several

witnesses attesting to what occurred at the closing. According to the

testimony of JSK’s witnesses, New Plan’s President, Arnold Laubick,

agreed to grant JSK an option to lease Tract B. JSK stated that Laubick instructed the parties present at the closing to write down the dictated terms of the option on their respective file folders. JSK stated

that Laubick orally represented to JSK its intention to honor the oral

option. Laubick and another New Plan witness stated that New Plan

was willing to enter into some form of an option agreement. However, New Plan’s witness said that New Plan would have required a

signed, written option agreement containing additional provisions

including a reciprocal easement agreement. New Plan never signed

any written option agreement. 

At the conclusion of trial, the district court held that JSK failed to

prove that there was a meeting of the minds with respect to the option

agreement as written on the file folder. In addition, the court held that

JSK failed to sustain its burden of proof to show that the land lease

should be rescinded on the grounds of unconscionability or fraud in

the inducement. Therefore, the court ruled that JSK was bound under

4 J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST
the lease agreement and the agreement did not include an option to

purchase Tract B. JSK appeals.1

II.

The district court’s conclusion that New Plan neither granted JSK

an option to purchase Tract B nor induced JSK to enter the lease with

the promise of an option is not clearly erroneous and is properly supported by the facts. Rule 52(a) provides that if an action is tried without a jury then "the court shall find the facts specially and state

separately its conclusions of law thereon . . . ." See FED. R. CIV. P.

52(a). To satisfy the demands of Rule 52(a), a district court must support its rulings by spelling out the subordinate facts on which it relies.

See Belcon Inc. v. Sherman Constr. Co., 800 F.2d 1321, 1324 (4th

Cir. 1986). 

A court of review should not set aside a finding of fact unless it is

clearly erroneous. See Anderson v. Bessemer City, 470 U.S. 564, 573

(1985). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm

conviction that a mistake has been committed. See id. A court of

appeals may not reverse a district court if the district court’s account

of the evidence is plausible in light of the record when viewed in its

entirety. See id. at 574. When a district court chooses one of two permissible views of the evidence, the court’s choice is not clearly erroneous. See id. This is true even when the district court’s findings are

based on physical or documentary evidence instead of credibility

determinations. See id. However, "mixed questions of law and fact

that require the consideration of legal concepts and involve the exercise of judgment about the values underlying legal principles are

reviewed de novo." See Estate of Waters v. Commissioner, 48 F.3d

838, 842 (4th Cir. 1995). 

1This Opinion focuses on the interactions between JSK and New Plan.

Kroger’s interest in this matter exists to the extent that the outcome of

this dispute may affect its rights under its lease. Kroger aligns with New

Plan in its belief that the written lease agreement governs the arrangement between JSK and New Plan and that the alleged option does not

affect its interest in Tract B. 

J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST 5
A.

The district court properly specified the factual basis, and arrived

at a permissible conclusion, that New Plan did not grant JSK an

option to purchase Tract B. An option to purchase is a contract under

which the owner agrees with another that he will have the right to buy

at a certain price for a specified period of time. See Tate v. Wood, 289

S.E.2d 432, 434 (W. Va. 1982). Therefore, a document representing

an option must evidence a contract by the parties. A determination of

whether circumstances fit within a legal definition of a contract is a

finding of fact that must be reviewed for clear error. See Brewer v.

Hosp. Management Assoc., Inc., 503 S.E.2d 17, 20 (W. Va. 1998)

(stating that "[w]hile the determination of what constitutes a contract

. . . is a question of law, the determination of whether particular circumstances fit within the legal definition of a contract . . . is a question of fact"); see also Kestler v. Bd. of Trustees, 48 F.3d 800, 803

(4th Cir. 1994) (stating that the issue of whether a contract right exists

is governed by state law). Therefore, as long as the district court’s

facts support its finding that no option contract existed, and the finding is plausible in light of the record when viewed in its entirety, then

the reviewing court must uphold the decision.

1.

The district court specified a proper factual basis to support its conclusion that New Plan did not grant JSK an option on Tract B. An

essential element of any binding contract is a meeting of the minds.

See Martin v. Ewing, 164 S.E. 859, 861 (W. Va. 1932). The district

court found that JSK failed to prove this element. JSK’s witnesses testified that the parties entered an oral option contract for Tract B. See

J.S.K. Realty Co. v. New Plan Realty Trust, No. 95-137-5, at 9 (N.D.

W. Va. July 24, 2000); (J.A. at 322-27, 362-63.). New Plan’s witnesses testified that New Plan refused to enter an option agreement

because JSK would not enter into a signed written option agreement.

See J.S.K. Realty Co., No. 95-137-5, at 11; (J.A. at 305-7.). In addition, there was a suggestion at trial that a written option agreement

may offend the viability of the tax-free exchange under existing tax

laws. (J.A. at 455.) The district court found that it "has no reason to

doubt the credibility of any of the witnesses, but rather believes that

each witness recalls or understands the transactions to have taken

6 J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST
place in a particular manner." See J.S.K. Realty Co., No. 95-137-5, at

16. Then, the district court concluded that JSK failed to prove that the

parties had a meeting of the minds with respect to the option agreement. See id. at 20. It was plausible for the district court to find that

opposing witnesses are credible even though they have conflicting

testimony: the witnesses could have believed that the closing transpired as they testified. The district court’s finding that no meeting of

the minds took place is permissible in light of its conclusion that the

parties believed different accounts of what transpired at the closing.

Therefore, the district courts’ finding that no meeting of the minds

took place is sufficient under Rule 52(a) to support its conclusion that

the parties did not enter an option contract on Tract B. 

2.

The evidence as a whole supports the district court’s conclusion

that the parties did not enter an option contract. The statute of frauds

calls for an agreement for the sale or lease of land to be in writing.

See Holbrook v. Holbrook, 474 S.E.2d 900, 904 (W. Va. 1996). The

agreement must be certain, in and of itself, or capable of being made

certain by reference to extrinsic factors where a court can ascertain

the agreement’s terms with reasonable certainty. See Milton Bradley

v. Moore et al., 112 S.E. 236, 237 (W. Va. 1922). Under the parol evidence rule, extrinsic evidence of parties’ statements about an unambiguous "instrument which occur contemporaneously with, or prior to

its execution, is inadmissible to contradict, add to, detract from, vary

or explain the terms of such instrument, in the absence of a showing

of illegality, fraud, duress, mistake, or insufficiency of consideration."

See Edmiston v. Wilson, 120 S.E.2d 491, 499 (W. Va. 1961). Article

20 of the lease agreement for Tract B contains a merger clause which

states that all the promises and agreements with respect to the transaction were set forth in the contract. (A.P. at 509.) The lease is clear and

unambiguous. There is no reference to New Plan granting an option

to JSK to purchase Tract B. JSK claims that the district court failed

to consider parol evidence such as the file folder and course of dealing between the parties to determine whether the parties agreed to an

option on Tract B. Such evidence is not sufficient to alter the terms

of the lease agreement. 

Neither the file folder, nor the course of dealing between the parties, is sufficient to contradict or add to the unambiguous terms of the

J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST 7
lease agreement. JSK presents its attorney’s file folder with illegible

writings as documented evidence to support the existence of an option

agreement. See J.S.K. Realty Co., No. 95-137-5, at 10. The terms of

the option cannot be determined from the face of the document. The

terms, as interpreted by JSK, are as follows: 

(A) That during the first five years after the transfer of the

property (December 31, 1988 to December 31, 1993), the

plaintiff had the option of purchasing the leased property for

the sum of $500,000, plus the federal and state capital gains

taxes to be paid by New Plan on the purchase price and (B)

that during the next five years (December 21, 1993 to

December 31, 1998), the plaintiff had the option of purchasing the leased property for the sum of $200,000, adjusted

upwards based upon the yearly increases in the CPI since

December 31, 1988, plus the federal and state capital gains

taxes to be paid by New Plan on the purchase price, or for

the sum of $500,000, plus the federal and state capital gains

taxes to be paid by New Plan on the purchase price, whichever is greater. 

J.S.K. Realty Co., No. 95-137-5, at 10. These terms do not identify

the holder of the option nor do they express how the parties would

exercise the option. Critically fatal to the claim, the file folder option

was never signed by New Plan indicating that it assented to the terms.

In short, the file folder writings are ambiguous and imprecise. These

writings are contrary to the course of dealing between the parties.

This transaction involved a tax-free exchange on property between

sophisticated real estate investors. Prior to closing, the parties

exchanged detailed drafts of the proposed lease. JSK hired a highly

competent West Virginia attorney to help negotiate the land lease

agreement. JSK also consulted the Arthur Anderson Company for tax

advice about the transaction. In light of the sophistication of the parties and their approach to this transaction, it would appear that the

normal course of dealing between the parties would have been to

secure a signed written option agreement. On a whole, the file folder

writings and the parties’ course of dealing are not sufficient to supplement or contradict the clearly unambiguous lease agreement. 

8 J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST
B.

The district court properly specified its factual basis, and arrived at

a permissible conclusion, that New Plan did not induce JSK to enter

the lease agreement. In order for JSK to show that New Plan fraudulently induced JSK into entering the lease agreement, JSK must show:

(1) that New Plan committed the allegedly fraudulent act; (2) the act

was material and false; (3) JSK justifiably relied upon the act; and (4)

JSK was damaged because he relied upon it. See White v. Nat’l Steel

Corp., 938 F.2d 474, 490 (4th Cir. 1991) (citing Lengyel v. Lint, 280

S.E.2d 66, 69 (1981)). The district court found that JSK did not sustain its burden of proving fraudulent inducement because JSK failed

to prove (1) the commission of a fraudulent act, and (2) justifiable

reliance. 

First, the district court found that New Plan did not commit a

fraudulent act. Specifically, the district court found that JSK did not

misrepresent any present existing facts to JSK. See J.S.K. Realty Co.,

No. 95-137-5, at 20. The district court made this finding after listening to, and acknowledging, testimony from witnesses on behalf of

JSK and New Plan who described what occurred during the closing.

Second, the district court found that JSK did not justifiably rely

upon any alleged act. See J.S.K. Realty Co., No. 95-137-5, at 20. The

district court reached this finding after noting that (1) the parties’ representations did not show the court that the parties entered an option

agreement; (2) Article 20 of the lease agreement contained a merger

clause which specifically prohibited any outside agreements not contained within the lease; (3) JSK produced no written signed option of

any type with respect to Tract B; and (4) representatives of both parties were educated, sophisticated attorneys and businessmen who had

substantial experience in real estate transactions. These findings of

fact are sufficient to support the district court’s conclusion that New

Plan did not promise JSK an option which fraudulently induced it into

signing the lease agreement. 

The district court did not err in holding that JSK failed to meet its

burden of proving that New Plan induced JSK to enter the lease

agreement. The district court’s findings, and the evidence submitted,

supports the district court’s conclusion. JSK had sophisticated attorJ.S.K. REALTY CO. v. NEW PLAN REALTY TRUST 9
neys and business men negotiating the deal on its behalf. The parties

agreed to various terms for the leasing of Tract B as evidenced by the

detailed 20 page lease. Prior to the closing, the parties reviewed, discussed, and exchanged drafts of this lease. The lease agreement contains no reference to an option agreement. Moreover, the lease

specifically prohibits any outside written agreements. The district

court found that the parties should have known that an oral option,

signified by illegible writings on a file folder, would not be enforceable. The district court did not commit clear error in its conclusion

that JSK, as a sophisticated party, did not justifiably rely on the option

to purchase real estate which was not reduced to writing and was in

consideration of signing an integrated lease which prohibits outside

agreements. JSK should have known that the statute of frauds and the

parol evidence rule would prevent such extrinsic, ambiguous, and

undocumented evidence from altering an otherwise fully integrated

lease. Therefore, the district court did not make a mistake in holding

that New Plan did not induce JSK into entering the lease.2

III.

The crux of this appeal involves what occurred during the December closing on the sale and lease of the former Moundsville Shopping

Center. The district court properly specified the findings of fact on

which it relied to reach its conclusion that no option agreement

existed and that New Plan did not fraudulently induce JSK into entering the lease. The testimony of the parties, writings on the file folder,

2

 JSK raises additional issues which are immaterial in light of the district court’s conclusion that JSK did not prove that the parties had a

meeting of the minds. First, the district court did not err in allocating the

burden of proof to New Plan for the affirmative defenses of laches and

waiver because the district court found that JSK did not prove its prima

facie case that an option agreement existed. Second, the district court did

not err in failing to stop the parties from asserting statute of frauds

because an instrument relied upon to take a contract out of operation of

the statute of frauds must contain every element essential to an agreement. See Milton Bradley Co. v. Moore et al., 112 S.E. 236, 237 (W. Va.

1992). Third, the court did not err by finding that the oral option agreement is not enforceable under West Virginia law because the district

court’s conclusion was an alternative to the court’s original finding that

the parties did not enter into an option agreement. 

10 J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST
and course of dealing between the parties also support the district

court’s conclusions. Therefore, the district court did not commit clear

error in its declaration that the parties are bound by the signed written

lease on Tract B and JSK has no option to purchase this tract. Accordingly, we affirm.

AFFIRMED

J.S.K. REALTY CO. v. NEW PLAN REALTY TRUST 11