Opinion ID: 2634894
Heading Depth: 1
Heading Rank: 5

Heading: Breach of Sales Contract

Text: [¶ 17] The sales contract in this case consists of multiple documents. First is the initial offer to purchase by Foxley. This document contains most of the standard provisions for the sale. The Ellises counteroffered, with the only change being the price. Attached to this counteroffer were multiple exhibits including the BLM lease and grazing allotments. Foxley replied with another counteroffer to purchase at a slightly higher price than initially offered, although below the Ellises' requested price. Again, no basic provisions other than the purchase price were altered. The Ellises accepted this counteroffer. Finally, there is an addendum, offered by Foxley and accepted by the Ellises, giving Foxley time to conduct a due diligence investigation into the property, specifically including leased lands and ranching operations. All documents are expressly incorporated to collectively form the sales contract. [¶ 18] Foxley points to several different provisions in the sales contract that it alleges were breached by the existence of common use in the West Pasture. For instance, Foxley alleges the common use agreement violates a contractual provision stating: Title shall be merchantable in Seller.... Title shall be subject to ... easements, restrictive covenants, and reservations of record and the following additional encumbrances which shall NOT be released or discharged at closing: none. [¶ 19] There is some discussion on appeal as to whether grazing rights amount to an encumbrance on the private lands. Grazing rights constitute a profit a prendre, otherwise known simply as a profit. Denver Joint Stock Land Bank of Denver v. Dixon, 57 Wyo. 523, 538, 122 P.2d 842, 847 (1942) (profits include the right to feed beasts). Profits fit within the general legal category of servitudes: A servitude is a general category that includes a variety of non-possessory interests in land, including easements and profits. Id. [Restatement (Third) of Prop.: Servitudes] § 1.1(2) [(2000 & Cum.Supp. 2006)]. An easement is defined as `an interest in land which entitles the easement holder to a limited use or enjoyment over another person's property.' Hasvold v. Park County Sch. Dist. No. 6, 2002 WY 65, ¶ 13, 45 P.3d 635, 638 (Wyo.2002) (quoting Mueller v. Hoblyn, 887 P.2d 500, 504 (Wyo.1994)). Profits have been referred to as easements `plus.' Restatement (Third) of Prop.: Servitudes § 1.2 cmt. e. The Restatement explains that [p]rofits are easements (rights to enter and use land in the possession of another) plus the right to remove something from the land. Id. Similarly, 28A C.J.S. Easements § 9 (1996) notes that [t]he [profit] right is in the nature of an easement, and it is often called an easement; but it is more than an easement. It is an interest or an estate in the land itself as distinguished from a mere personal obligation of the owner of realty. Cf. 25 Am.Jur.2d Easements and Licenses § 3 (2004) ([A] profit a prendre is a liberty in one person to enter another's soil and take from it the fruits not yet carried away. A profit a prendre is therefore distinguishable from an easement, since one of the features of an easement is the absence of all right to participate in the profits of the soil charged with it.) In agreement with these general rules, we have said that a profit a prendre is ... a right to take a certain thing or things from the land of another. If, accordingly, the right to take does not exist, the right cannot, at least strictly, be called a profit a prendre. Denver Joint Stock Land Bank of Denver v. Dixon, 57 Wyo. 523, [538,] 122 P.2d 842, 847 (1942). Seven Lakes Development Co., L.L.C. v. Maxson, 2006 WY 136, ¶ 12, 144 P.3d 1239, 1245-46 (Wyo.2006). [¶ 20] From the above, it is clear that a profit is an encumbrance, which is defined simply as any property right that is not an ownership interest. Black's Law Dictionary 568 (8th ed. 2004). [4] This leads us back to the original question of whether the Agreement affects private lands. We have already determined the answer to this question is dependent upon unanswered questions of material fact. Summary judgment on this ground is thus inappropriate under these circumstances. [¶ 21] The Ellises present three more defenses to the breach of contract claim. First, they argue, as a matter of law, the contractual language shifted the risk of nondisclosure of the common use rights to Foxley. They are partially correct. For instance, Foxley consistently references all the opportunities the Ellises had to disclose the common use during the negotiations for the sale of the ranch. The contract, however, provides that Foxley, in making its decision to enter into the sales contract, was not relying on any representations by the Ellises as to any condition which Buyer deems to be material. The risk of nondisclosure before the entry of the sales contract is placed accordingly on Foxley. See generally Snyder v. Lovercheck, 992 P.2d 1079 (Wyo.1999). [¶ 22] As for any potential failure to disclose the common use in the contract itself, the Ellises argue Foxley voluntarily accepted the attendant risks by proposing and entering into the Addendum to the Contract. The Addendum gave Foxley time to conduct a due diligence investigation into the leased land and ranch operations. In continuation, the Addendum provides that if Foxley did not inform the Ellises of any problems by the end of the due diligence investigation period, then the condition and characteristics of the Property shall be deemed satisfactory to the Buyer. [¶ 23] We agree that, as written, the Addendum shifts the risk of loss from lack of disclosure of the common use rights to Foxley, but it is not a blanket risk. By the terms of the Agreement, it is limited to facts that reasonably could be discovered in a due diligence investigation. How extensively Foxley should have searched, and what information could have been discovered as a result of such search, are issues of material fact that have yet to be resolved. [¶ 24] Second, the Ellises claim they did disclose the common use rights. It is unrefuted Mr. Ellis instructed his real estate broker to inform Foxley's real estate broker of the common use rights. Foxley's real estate broker, however, testified at deposition that he was never informed of such rights, creating an issue of material fact. [¶ 25] Additionally, the Ellises claim they expressly informed Foxley of the common use rights in the exhibits attached to their counter-offer. The exhibits included a BLM grazing allotment of 314 AUMs in the West Pasture for 2002. Handwritten on top of the page is 9V. Foxley saw this document, but since it expired in 2002, it discerned no significance in it. The Ellises argue the document disclosed common use by 9V irrelevant of the date. We find, given the circumstances of this case, whether this document constitutes a definitive disclosure of common use in the West Pasture by 9V is an issue of material fact. [¶ 26] Third, the Ellises argue the 2002 grazing allotment at least should be accepted as having put Foxley on notice of the possibility of common use rights. They point again to Foxley's opportunity to conduct a due diligence investigation. The Ellises argue Foxley should be charged with the responsibility for following up on the document, thus relieving them of any further duty to disclose. This argument is of no avail against the grant of summary judgment. As already noted, how extensive Foxley's due diligence investigation should have been under these circumstances is a question of material fact. The existence of the 2002 grazing allotment is simply one fact to be considered. We do not find it to be dispositive as a matter of law.