Court Opinion

ID: 3027151
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:37:33.310004+00
Date Added: 2024-06-11T11:47:56.088190
License: Public Domain

United States Court of Appeals
                             FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 00-3670
                                    ___________

Omega Healthcare Investors, Inc.,         *
                                          *
             Plaintiff-Appellee,          *
                                          * Appeal from the United States
      v.                                  * District Court for District of South
                                          * Dakota.
Lantis Enterprises, Inc.; Willis Lantis, *
Mary Ellen Lantis,                        *
                                          *
             Defendants-Appellants.       *
                                     ___________

                             Submitted: June 14, 2001
                                 Filed: July 10, 2001
                                  ___________

Before MURPHY, HEANEY, and BEAM, Circuit Judges.
                           ___________

MURPHY, Circuit Judge.

       Omega Healthcare Investors (Omega) filed a breach of contract claim against
Lantis Enterprises, Inc. and Will and Mary Lantis (Lantis) to recover a loan
commitment fee and other damages and expenses. The district court1 denied Omega's
motion for partial summary judgment, and the case proceeded to trial. The jury
returned a verdict in favor of Omega, and Lantis appeals from the judgment, asserting

      1
       The Honorable Andrew W. Bogue, United States District Judge for the District
of South Dakota.
errors in the jury instructions. We affirm.

       Omega, a corporation that finances healthcare real estate ventures, entered into
discussions with Lantis, a developer and operator of healthcare facilities, to provide a
loan for building assisted living facilities and nursing homes. After extensive
negotiations and many different draft loan documents, the parties entered into a loan
commitment letter. In this letter Omega committed to loan Lantis $27,096,000 for eight
assisted living facilities and three nursing homes. The letter also required Omega to
advance $1,000,000 to Lantis before execution of the final loan documents. Omega
paid the advance and received a promissory note in return. The loan commitment
agreement required Lantis to pay Omega a "nonrefundable commitment fee" of
$270,960, and Lantis paid Omega this amount. The loans were personally guaranteed
by Will and Mary Lantis.

       Omega and Lantis were unable to agree on the terms of the loan after lengthy
negotiations. Omega agreed nevertheless to advance an additional $400,000 in order
to allow Lantis to continue construction of an assisted living facility in Nebraska.
Lantis ultimately withdrew from the transaction with Omega and on that same day
solicited an alternative source of financing. Four months later Lantis transferred
$1,132,662.33 to Omega. Lantis intended this as repayment with interest of Omega's
advanced funds, but it subtracted the amount of the "nonrefundable" commitment fee
it had paid Omega. Omega applied part of the transfer to interest, gave notice of
default to Lantis, and accelerated the entire remaining amount due.

      Omega brought this breach of contract action against Lantis to recover the
commitment fee and other damages and expenses. It moved for partial summary
judgment on the basis that the promissory note had to be repaid regardless of who may
have breached the loan commitment agreement. The district court decided that the
"nonrefundable commitment fee" provision was ambiguous and denied Omega's
motion. The case proceeded to a jury trial where Lantis' theory was that the

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commitment fee would only become nonrefundable at such time as the loan agreement
would be signed. Omega contended on the other hand that the fee was nonrefundable
as soon as it advanced the $1,000,000 to Lantis. The court instructed the jury that

             [t]here has been considerable argument by both parties as to the
      meaning of the "nonrefundable commitment fee." It is for you to
      determine the intention of the parties regarding the payment of this fee
      and you should consider all the documents and evidence surrounding this
      transaction in determining the intention of the parties.

The district court did not give two of the instructions proposed by Lantis which dealt
with ambiguity. The jury found that Lantis had breached the agreement and awarded
Omega $312,300.56.

        Judgment was entered against Lantis for the amount of the verdict, and Lantis
on appeal seeks reversal and a new trial. Lantis argues that the district court should
have included the two jury instructions it proposed on ambiguity in the commitment
letter and that it was prejudiced as a result. Omega responds that the contract was not
ambiguous and that the Lantis instructions were not legally correct in any event.

      The trial court has "wide discretion" in drafting jury instructions. See Gamma
10 Plastics v. American President Lines, Ltd., 105 F.3d 387, 389 (8th Cir. 1997)
(citation omitted). Our “review is limited to whether the instructions, viewed on the
whole, fairly and adequately represent the evidence and applicable law in light of the
issues presented to the jury in a particular case.”2 Oriential Trading Co., Inc. v. Firetti
236 F.3d 938, 946-47 (8th Cir. 2001) (citation omitted). "The court need not adopt the
language offered by the parties but must give an 'instruction reflecting that party’s
theory of the case if the instruction is legally correct and there is evidence to support
it.'" Id. at 947 (citation omitted).

      2
          The parties agree that Michigan substantive law applies to this dispute.

                                            -3-
       Lantis argues that the district court erred in not instructing the jury that the term
"nonrefundable" in the commitment letter should be construed against Omega which
drafted the letter.3 Even assuming that that provision in the commitment letter was
ambiguous, the proposed instruction was not appropriate in this case. The rule that an
ambiguity should be construed against the drafter is normally not applied in situations
where the agreement has been reached through extensive negotiations and the parties
are sophisticated and represented by counsel. See Regis Assocs. v. Rank Hotel
(Mgmt.) Ltd., 894 F.2d 193, 195-96 (6th Cir. 1990); Homac Inc. v. DSA Fin. Corp.,
661 F.Supp. 776, 788 (E.D. Mich. 1987); see also Terra Int'l, Inc. v. Mississippi
Chemical Corp., 119 F.3d 688, 692-93 (8th Cir. 1997). In this case all parties were
experienced in real estate financing, and Lantis was represented by two attorneys who
engaged in protracted negotiations on the terms of the commitment letter and loan
agreement. The district court did not err by refusing to give the proposed instruction
to construe the term "nonrefundable" against Omega.

       Lantis also contends that the district court erred by not instructing the jury that
a particular construction it claims was given to the disputed term by Omega should be

       3
           It requested the following instruction:

              You are instructed that the term "nonrefundable" as used in the
       Commitment Letter executed by the parties is ambiguous. By ambiguous
       is meant that it is susceptible to more than one meaning. It is for you to
       determine the intention of the parties regarding the payment of the
       commitment fee and you should consider all of the documents and
       evidence surrounding this transaction in determining the intention of the
       parties. In this regard, you are instructed that you should construe the
       phrase "nonrefundable" against the Plaintiff who drafted the agreement
       and caused the ambiguity to exist.

                                             -4-
entitled to great weight.4 Lantis argues that one draft of a loan agreement that Omega
prepared, after the loan commitment letter was signed, referred to the commitment fee
as an "acceptance fee," refundable up until the time the loan agreement was executed.
Although interpretations of contractual terms by the parties may be entitled to great
weight, see Merdler v. Board of Educ. of the School Dist. of the City of Detroit, 259
N.W.2d 211, 213 (Mich. Ct. App. 1977), that is not true unless the extrinsic aid used
for interpretation was a "circumstance[] surrounding the execution of the [commitment
letter]" rather than a "subsequent event." William C. Roney & Co. v. Federal Ins. Co.,
674 F.2d 587, 590 n.2 (6th Cir. 1982). The loan agreement proposal that Lantis claims
is entitled to great weight was drafted well after the commitment letter, and the
proposed instruction did not fit the evidence. Furthermore, the district court allowed
that draft of the loan agreement to be entered into evidence and instructed the jury that
it was to consider all evidence, including previous drafts, in determining the intent of
the parties. The district court did not err by not including this instruction proposed by
Lantis.

        The district court allowed both sides ample opportunity to present conflicting
evidence of their protracted contractual negotiations, including who drafted provisions
of letters and loan agreements and what was included in them. The jury was properly
instructed on the applicable law, and the court did not abuse its discretion by declining
to give the two instructions Lantis requested. The judgment of the district court is
therefore affirmed.

      4
        The proposed instruction stated in part that "[w]here the parties to a contract
have given a practical construction by their conduct in carrying it into effect, as by acts
in partial performance, such construction is entitled to great, if not controlling, weight
in determining its proper interpretation."

                                           -5-
A true copy.

      Attest:

               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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