UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THE SPORTS AUTHORITY,

INCORPORATED,

Plaintiff-Appellant,

v.

No. 97-1833

CHESAPEAKE ASSOCIATES; RICHARD'S

CLOTHING & SPORTING GOODS,

INCORPORATED, a/k/a Dick's Clothing

& Sporting Goods, Incorporated,

Defendants-Appellees.

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

Frederic N. Smalkin, District Judge.

(CA-97-830-S)

Argued: January 28, 1998

Decided: May 12, 1998

Before LUTTIG and MICHAEL, Circuit Judges, and

GOODWIN, United States District Judge

for the Southern District of West Virginia,

sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Arthur Friend Fergenson, BALLARD, SPAHR,

ANDREWS & INGERSOLL, Baltimore, Maryland, for Appellant.
Geoffrey Robert Garinther, VENABLE, BAETJER & HOWARD,

L.L.P., Baltimore, Maryland, for Appellees. ON BRIEF: Robert A.

Scott, BALLARD, SPAHR, ANDREWS & INGERSOLL, Baltimore, Maryland, for Appellant. Gail Brashers-Krug, VENABLE,

BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for Appellees.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

The Sports Authority, Inc. (TSA) appeals from a final judgment

entered by the district court after a bench trial in a breach of contract

case. TSA asserts that it formed an enforceable contract with Chesapeake Associates (Chesapeake) to purchase property either on or

before February 14, 1997, or alternatively, on February 25, 1997. The

district court ruled that no contract had been formed on or before February 14 and that the statute of frauds would bar enforcement of any

contract formed on February 25. Alternatively, the district court ruled

that if the parties did form a contract on February 25, 1997, they

abandoned it three days later. We review the district court's findings

of fact for clear error and its conclusions of law de novo. Hendricks

v. Central Reserve Life Insurance Co., 39 F.3d 507, 512 (4th Cir.

1994). Because the district court's findings of fact are not clearly

erroneous and its conclusions of law are correct, we affirm.

I. Background

This case arises out of TSA's efforts to purchase property for one

of its retail stores in a shopping center developed by Chesapeake

Associates. In July 1996, TSA and Chesapeake entered into a letter

of intent for the sale of the property for $1.7 million. However, negotiations proceeded at a snail's pace throughout the remainder of 1996

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and into early 1997. As part of their negotiations, the parties hammered out drafts of three documents: (1) a Purchase and Sale Agreement (Purchase Agreement), which constituted the primary contract

for the sale of the property; (2) a Site Development Agreement,

which addressed Chesapeake's obligations to prepare the site for construction by TSA; and (3) an Operation and Easement Agreement

(OEA), which contained various covenants governing the relationship

between retailers in the shopping center.1 The OEA required the

agreement not only of TSA and Chesapeake, but also of other retailers

in the shopping center, such as Giant Foods.

By January 20, 1997, closing seemed imminent. After losing

money in the prolonged negotiations, Chesapeake attempted to expedite the closing in three ways. First, Robert Gothier, Sr., the managing

general partner for Chesapeake, executed a deed for the sale of the

property on January 20 and placed a copy of the deed in escrow with

Chicago Title Insurance Company. Second, Mr. Gothier executed

free-standing signature pages on January 22, which apparently were

to be attached to the three documents under negotiation in the event

of an agreement between the parties. Mr. Gothier forwarded the signature pages to Theresa McLaughlin, one of TSA's attorneys. Ms.

McLaughlin agreed to "hold the signed pages in escrow until authorized by Pete Paturzo [a general partner for Chesapeake] . . . to release

same." JA 812. Finally, on January 22, Chesapeake's three general

partners each signed an affidavit (Partnership Affidavit) stating that

the Purchase and Sale Agreement had been "duly executed and delivered" and was "valid and binding." JA 1483-86. The partners forwarded the affidavit to Chicago Title to hold for closing.

On February 7, 1997, Nicholas Milano, another of TSA's attorneys

(and Ms. McLaughlin's subordinate on the transaction), forwarded the

executed signature pages to Chicago Title in anticipation of closing.

In his accompanying letter, Mr. Milano stated: "These documents are

to be held in escrow. Do not disburse or take any action until it is con-

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1 The parties also refer to the Operation and Easement Agreement as

the Reciprocal Easement and Operation Agreement (REA). We will utilize the term "OEA" in referring to this document, except where we

quote from documentary evidence that uses the "REA" designation.

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firmed by me in writing that you are authorized to do so." JA 964. Mr.

Milano claims that he did this at Pete Paturzo's instruction.

Although TSA and Chesapeake were making progress, TSA and

Giant Foods could not reach an agreement on the OEA because of a

dispute over the issue of sidewalk sales. TSA refused to sign the OEA

unless the OEA contained a provision prohibiting the parties to the

OEA from having sidewalk sales. Giant Foods refused to agree to this

condition. At first glance, this dispute might seem like a minor one;

representatives of TSA, however, clearly did not view the sidewalk

sales issue as minor. In fact, Len Weiselberg of TSA told Pete Paturzo

of Chesapeake on February 13 or 14 that the deal was"dead" because

of the failure to reach an agreement on this issue. Shortly thereafter,

Chesapeake began negotiations with Dick's Sporting Goods for sale

of the property.

However, sometime between February 22 and 25, TSA and Chesapeake resumed negotiations after Mr. Weiselberg informed Mr.

Paturzo of local zoning ordinances that TSA believed would prevent

Giant from conducting sidewalk sales. The parties dispute whether,

during a conversation on February 25, they orally agreed to close the

transaction on March 4; regardless, TSA's lawyers proceeded to set

a March 4 closing date.

In the meantime, Mr. Gothier of Chesapeake reached an oral agreement with Dick's Sporting Goods on February 28 to sell the property

for $200,000 more than TSA had offered to pay. Mr. Gothier contacted Mr. Weiselberg and demanded an additional $250,000 for the

property. For a second time, Mr. Weiselberg told Mr. Gothier that the

deal was "dead" and that Chesapeake could sell its property elsewhere. Although Mr. Weiselberg did not write a letter to that effect

or return the signature pages, Mr. Gothier did write a letter to Mr.

Weiselberg confirming that the deal was dead. On March 7, however,

TSA demanded performance under the Purchase Agreement, which

led to the filing of the instant suit.

II. Discussion

TSA challenges the district court's conclusion that Chesapeake and

TSA did not enter into a binding contract before February 14, 1997.

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TSA argues that execution of the deed, signature pages, and Partnership Affidavit clearly constituted an objective manifestation of Chesapeake's intent to be bound by the draft purchase agreement. TSA also

argues that the dispute over sidewalk sales involved a condition precedent to TSA's performance, not a material contractual term that

would indicate the absence of a meeting of the minds. We find that

the district court's conclusion that Chesapeake and TSA did not enter

into a binding contract before February 14, 1997, is not clearly erroneous. First, there is ample evidence to support the district court's

finding that there was no meeting of the minds before February 14,

1997. Second, there is ample evidence to support the district court's

finding that the deed, signature pages, and Partnership Affidavit were

executed in anticipation of an agreement expected to be reached in the

future, not an agreement that had already been reached. Third, there

is ample evidence to support the district court's finding that the issue

of sidewalk sales concerned a material contractual term, not a condition precedent. Accordingly, we affirm.

Under Maryland law, "one of the essential elements for formation

of a contract is a manifestation of agreement or mutual assent by the

parties to the terms thereof; in other words, to establish a contract the

minds of the parties must be in agreement as to its terms." Safeway

Stores, Inc. v. Altman, 296 Md. 486, 489, 463 A.2d 829, 831 (1983)

(citations and internal quotations omitted). Conversely, "[t]he failure

to agree on . . . an essential term of a contract may indicate that the

mutual assent required to make . . . a contract is lacking." Klein v.

Weiss, 284 Md. 36, 63, 395 A.2d 126, 141 (1978) (citations omitted).

"It is essential that the minds of the parties be in agreement on terms

in order for a contract to be established." Marmott v. Maryland Lumber Co., 807 F.2d 1180, 1184 (4th Cir. 1986) (citing Klein v. Weiss,

284 Md. 36, 395 A.2d 126, 141 (1978)), cert. denied, 482 U.S. 929

(1987).

The district court determined that the OEA embodied material contractual terms, and reasoned that without the parties' agreement on the

OEA, "there could be no meeting of the minds for the sale of this

property." JA 501. After considering the evidence adduced at the

bench trial, the district court found that the parties had not reached an

agreement on the OEA until February 25th at the earliest. Voluminous evidence in the record supports the district court's finding. We

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need not review all such evidence here because two components of

this evidence adequately depict the negotiation and revision process

that persisted through January and most of February.

First, the time sheets and billing summaries of Theresa McLaughlin

and Nicholas Milano, TSA's attorneys, demonstrate the parties' difficulties in reaching an agreement. Excerpts of Ms. McLaughlin's and

Mr. Milano's time sheets and billing summaries appear below:

January 3, 1997 -- [Theresa McLaughlin] "Extensive revisions to OEA; work on exhibits; numerous and extensive

telephone conferences with all parties re due diligence, OEA

and closing documents; draft memo re OEA." JA 1509.

January 4, 1997 -- [Theresa McLaughlin]"Work on exhibits to OEA; work on site development agreement revisions;

work on purchase agreement revisions . . . ." JA 1509.

January 7, 1997 -- [Theresa McLaughlin]"Numerous telephone conferences with all parties re revisions to OEA . . . ."

JA 1509.

January 10, 1997 -- [Theresa McLaughlin] ". . . work on

issues related to OEA." JA 1510.

January 14, 1997 -- [Theresa McLaughlin] ". . . telephone

conference with Bob Cherry re revisions to OEA." JA 1510.

January 17, 1997 -- [Theresa McLaughlin] "Telephone

conference with Pete Paturzo re status of agreements. . . ."

JA 1511.

January 21, 1997 -- [Theresa McLaughlin] "Work on OEA

issues; numerous telephone conferences with Pete Paturzo

re open issues; draft letter re revised agreements .. . ." JA

1511.

January 23, 1997 -- [Theresa McLaughlin] "Numerous and

extensive work on finalizing OEA, and other exhibits. . . ."

JA 1512.

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January 24, 1997 -- [Theresa McLaughlin] "Extensive

work on issues relating to wetlands; numerous and extensive

telephone conferences with developer, Maryland attorney

and others re same; work on OEA revisions . . . ." JA 1512.

January 25, 1997 -- [Theresa McLaughlin] "Revise OEA,

purchase agreement and site development agreement; work

on title and survey issues; work on all exhibits to all agreements; draft letters to all parties re same; mark up OEA for

comment to Bob Cherry." JA 1512.

January 29, 1997 -- [Nicholas Milano]"Extensive work

finalizing Purchasing Agreement with clarification of

Exhibit A the legal description, Exhibit B-1 permitted

exceptions, need for finalization of OEA to be attached as

exhibit, . . . . Telephone call to all parties to remind them

of time frame and need for comments especially those of

Bob Cherry from Giant." JA 1513.

January 30, 1997 -- [Nicholas Milano]"Review the comments of Mr. Sax, revise the OEA to reflect these comments." JA 1386, 1513.

January 31, 1997 -- [Nicholas Milano]"Telephone call

from Pete Paturzo and Bob Gothier of RVG. They provided

me with extensive list of comments from Giant and RVG to

the OEA." JA 1387, 1514.

February 3, 1997 -- [Theresa McLaughlin] "Work on matters relating to OEA; telephone conference with Len Weiselberg re numerous issues; work on insurance issues;

telephone conference with Peter Cook re insurance issues in

OEA." JA 1514.

February 3, 1997 -- [Nicholas Milano]"Telephone call

with Pete Paturzo, developer on the property and review

thirteen objections from Giant to the OEA. Narrow objections and inform him that we cannot insert any provisions

that the lease will dominate the OEA. Telephone call with

Len Weiselberg of TSA." JA 1514.

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February 4, 1997 -- [Nicholas Milano]"Return call to Pete

Paturzo informing him that TSA cannot agree to a provision

allowing the lease to rule the OEA. Certain items still

remain to be resolved." JA 1388, 1514.

February 6, 1997 -- [Nicholas Milano]"Continued negotiations of OEA." JA 1390, 1515.

February 7, 1997 -- [Theresa McLaughlin] "Work on

issues concerning closing statement, OEA and other matters." JA 1515.

February 7, 1997 -- [Nicholas Milano]"Continue revision

to the OEA after discussions with Pete Paturzo." JA 1391,

1515.

February 10, 1997 -- [Nicholas Milano] "Telephone call

from Ann Kemp Esq. Attorney at Nations to inform her of

pending changes to OEA. Telephone call with Pete Paturzo

[redacted] to clarify 4 remaining issues for final agreement

on the OEA." JA 1392, 1515.

February 11, 1997 -- [Theresa McLaughlin] "Review

numerous revisions to REA; telephone conference with client re same." JA 1515.

February 11, 1997 -- [Nicholas Milano]"Continued revisions to OEA for closing. . . . . Telephone call to Lee Sax

to inform him that changes are occurring to the OEA and

need for his client's approval." JA 1393, 1516.

February 12, 1997 -- [Theresa McLaughlin] "Numerous

conferences with client re OEA revisions; review revisions

to OEA." JA 1516.

February 12, 1997 -- [Nicholas Milano]"Letter from Bill

Cherry demanded final wording to be inserted in the OEA.

Discuss [redacted] with Len Weiselberg and send to Debbie

Stear. This mandate is the only way in which Giant will sign

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OEA. . . . Conference call from Bob Gothier and Pete

Paturzo regarding their requirement to have new documents

sent to them before closing for review. Prepare new final

documents and have sent to Chicago Title, Dave Carey, Esq.

and Bob Gothier. Telephone call from Lee Sax, Esq.,

regarding his problems with pending changes." JA 1394,

1516.

February 14, 1997 -- [Nicholas Milano]"Telephone call to

Pete Paturzo Re: last issue involving cash registers. . . .

Telephone call to Cathy Jenkins re: her forwarding a copy

of all signature pages to this office and review of documents

she has." JA 1396, 1517.

February 21, 1997 -- [Nicholas Milano]"Draft letter

requesting return of all closing documents sent to CTIC in

escrow. Telephone call to Cathy Jenkins, Esq. reading this

issue. Return call from Cathy Re; OEA document. Send followup letter demanding return of this document." JA 1398.

Second, Len Weiselberg, TSA's Real Estate Manager, testified that

the parties' difficulties in reaching an agreement resulted in the breakdown of negotiations on February 14, 1997.2

In light of the parties' obvious, and abundant, difficulties in reaching an agreement on material contractual terms, the district court was

not clearly erroneous in finding that Chesapeake's January 22, 1997,

execution, and placement into escrow, of a deed, free-standing signature pages, and Partnership Affidavit, did not represent objective

manifestations of Chesapeake's intent to enter into a binding contract

on that date.3 In Maryland, as in other jurisdictions, the test of con-

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2 Mr. Weiselberg testified that TSA's senior management was concerned about the OEA's sidewalk sales provision, and that the parties

could not agree on it as of the evening of February 13, 1997. JA 339. Mr.

Weiselberg also testified that on February 14, 1997, he had a telephone

conversation with Pete Paturzo of Chesapeake, in which he informed Mr.

Paturzo that "we cannot go forward with this transaction . . . the deal is

dead." JA 340.

3 January 22, 1997, represents the date by which all three of these

instruments had been executed and transferred either to Chicago Title or

TSA's attorneys.

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tract formation is objective, but it is not abstract. "A party's intention

will be held to be what a reasonable person in the position of the other

party would conclude the manifestations to mean." Beckenheimer's

Inc. v. Alameda Assoc. Ltd. Partnership, 327 Md. 536, 547, 611 A.2d

105, 110 (1992) (citations omitted); Slice v. Carozza Properties, Inc.,

215 Md. 357, 368, 137 A.2d 687, 693 (1958) (citations omitted); Ray

v. William G. Eurice & Bros., Inc., 201 Md. 115, 127, 93 A.2d 272,

279 (1952) (citations omitted).

As illustrated above, the evidence adduced before the district court

showed that the parties were still negotiating the terms of the Purchase Agreement on January 22. Therefore, when the deed, signature

pages, and Partnership Affidavit were executed and placed in escrow,

the Purchase Agreement itself was not even finalized.4 Furthermore,

evidence adduced before the district court showed that TSA's attorneys understood that Chesapeake's execution of the documents represented a time-saving device rather than an indication that negotiations

had been finalized. Ms. McLaughlin and Mr. Milano both testified

that Chesapeake executed the signature pages and placed them into

escrow in order to expedite the closing; that is, in order "to save a day

or so." JA 274-76; 44-45. Thus, they continued to"revise" and "finalize" the Purchase Agreement after Chesapeake's January 22 actions.5

Having found that the parties continued to negotiate and revise material contractual terms throughout January and most of February, the

district court was not clearly erroneous in finding that Chesapeake's

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4 On January 25, 1997, for example, Ms. McLaughlin faxed a "revised

Purchase and Sale Agreement" to Dave Carey, Chesapeake's attorney. In

her cover letter, Ms. McLaughlin expressed her belief that the newly

revised Purchase and Sale Agreement represented its"final form." JA

842. Mr. Milano echoed this hope four days later. On January 29, 1997,

after performing "[e]xtensive work finalizing[the] Purchase Agreement,"

JA 1513, Mr. Milano faxed a revised version of the Agreement to Chesapeake. In his handwritten cover note, Mr. Milano predicted that the further revised document represented its "final form." JA 943.

5 Significantly, while Ms. McLaughlin's and Mr. Milano's time sheets

and billing summaries include numerous references to"revising" and "finalizing" the OEA and Purchase Agreement, none of their January and

February time sheets or billing summaries contains any reference to

modifying or amending an existing contract.

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January 22 execution, and placement into escrow, of free-standing

signature pages, a copy of the deed, and Partnership Affidavit did not

manifest its intent to be bound by the draft Purchase Agreement on

that date.

Chesapeake should not have executed the Partnership Affidavit

until the parties had actually reached the agreement referenced in the

Affidavit. Furthermore, experienced attorneys should not have facilitated the premature execution, transmittal, and maintenance of the

Affidavit. But the evidence adduced at the district court revealed that,

within the context of this transaction, Chesapeake's execution of the

Affidavit simply represented an attempt to expedite the closing, rather

than an indication that an agreement had been reached.

TSA also argues that the dispute over sidewalk sales involved a

condition precedent to TSA's performance, not a material contractual

term that would indicate the absence of a meeting of the minds. As

support for this argument, TSA cites language in the proposed Purchase Agreement that referred to execution of the OEA, which was

to contain the sidewalk sales provision, as a condition precedent to

TSA's obligation to perform under the contract. The district court did

not err in concluding that the issue of sidewalk sales was a material

one that prevented formation of a contract. The proposed Purchase

Agreement at best is ambiguous about whether entry into the OEA

was really a condition precedent. First, the third paragraph of the Purchase Agreement refers to the OEA as "a part of" the Purchase Agreement and indicates that the terms and conditions of the Purchase

Agreement are "subject to" the OEA. Second, the language in the Purchase Agreement cited by TSA refers to executing the OEA at closing, not reaching agreement on the OEA, as the condition precedent.

There is ample evidence that the parties viewed agreement on the

OEA as material to agreement on the entire contract.

Finally, TSA argues that even if no contract was formed prior to

February 14, 1997, the parties reached a new oral agreement on February 25, 1997.6 Even if the parties did reach a new oral agreement

on February 25, we agree with the district court that this agreement

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6 We do not reach the issue of abandonment of the alleged February 25

contract as it is unnecessary to the disposition of this appeal.

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would be unenforceable because of the statute of frauds. The statute

of frauds provides that contracts for the sale of land are unenforceable

unless they are in writing and signed by the parties to be charged. See

Pyles v. Goller, 109 Md. App. 71, 88, 674 A.2d 35, 43 (Md. Ct. Spec.

App. 1996). The alleged oral agreement on February 25 fails to satisfy this requirement.

However, TSA argues that its claim is not barred by the statute of

frauds because it is relying on the written signature pages executed on

January 22, not the oral February 25 agreement. As discussed above,

no contract was formed in January. Because no contract existed, TSA

may not use the January 22 signature pages to satisfy the statute of

frauds for the alleged February 25 agreement. Accordingly, the judgment of the district court is affirmed.

AFFIRMED

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