STEPHEN L. CROCKER, Magistrate Judge.
This lawsuit presents a land contract dispute that arises out of a failed frac sand mining venture. Jurisdiction is present under 28 U.S.C. § 1332. See Jan. 13, 2017 Ord., dkt. 41 (denying motion to dismiss for lack of diversity jurisdiction). Plaintiff Larchmont Holdings, LLC (created by David Westrate, Neil Benham, and Patricia and Richard McHugh) agreed to pay defendant William Bethke and his LLC, North Shore Services (hereafter collectively referred to as North Shore) $4 million on a land contract for 300 acres of wooded land in North Central Wisconsin. Larchmont anticipated that it could quickly assemble and bring on line a frac sand mine from which Larchmont's members would reap millions in yearly profits and pay off the land contract. The mining operation never got off the ground, which left Larchmont with half a square mile of forest and past due installment payments on the land contract's $2,275,000 balance. So, Larchmont brought this lawsuit, asserting seven different claims for relief. See Second Amended Complaint, dkt. 56. In its answer, North Shore filed counterclaims for strict foreclosure on its land contract and for breach of the implied duty of good faith and fair dealing. See dkt. 58 at 57.
Before the court is North Shore's motion for summary judgment on its strict foreclosure counterclaim and on all seven of Larchmont's contract-related claims. See dkt. 73. North Shore has not moved for summary judgment on its counterclaim for breach of the implied covenant of good faith and fair dealing. See dkt. 58. In its response, Larchmont has raised a series of affirmative defenses to North Shore's claim for strict foreclosure. See dkt. 91 at 17-18.
For the reasons explained below, I am granting North Shore's motion for summary judgment against all seven of Larchmont's contract claims. As for North Shore's motion for summary judgment on its strict foreclosure claim, I conclude that North Shore has the right of strict foreclosure under the terms of the land contract and has satisfied the elements of such a claim. That said, I am denying North Shore's motion because it has not developed an argument that some of Larchmont's affirmative defenses — specifically laches, equitable estoppel, and unclean hands — fail as a matter of law.
During the court's review and analysis of the summary judgment submissions, I found that, while the attorneys for both sides presented work that is well-above-average, sometimes they said too much, other times they said too little.
As for the "too much," both parties failed to comply consistently with the court's summary judgment procedures, which are provided in the preliminary pretrial conference order (dkt. 22). The procedures state that
North Shore also contends that Larchmont has proposed several findings of fact that are duplicative of its responses to defendants' proposed findings of fact, thereby ignoring the procedural requirement that the "purpose of additional findings of fact [by the non-moving party] is to SUPPLEMENT the moving party's proposed findings of fact, not to dispute any facts proposed by the moving party." Proc., § II.B.2 at 7. Although I agree that Larchmont proposed findings of fact that duplicate its responses to North Shore's proposed factual findings, I did not see Larchmont violating this procedural requirement by proposing additional facts in lieu of providing responses to defendants' proposed findings.
As for the "too little," notwithstanding the length, detail, and general thoroughness of their presentations, both sides waived arguments by failing properly to present them. As noted below where this occurred, this court does not have the time or resources to explore or analyze matters left unexplored or unanalyzed by the parties. So, pursuant to circuit law, the court has enforced the waivers against the waiving party.
The following facts are undisputed except where noted.
Plaintiff Larchmont Holdings, LLC is a limited liability company organized under the laws of the State of Wisconsin on December 18, 2012, with its principal place of business in Eau Claire, Wisconsin. The members of Larchmont include David Westrate's Roth IRA and traditional IRA, Dr. Neal Benham's Roth IRA, Patricia and Richard McHugh, and Oakdale, LLC. Oakdale LLC's members are David Westrate and the Westerberry Family Trust.
Defendant North Shore Services, LLC is a limited liability company organized under the laws of the Wisconsin on October 18, 2000, with its principal place of business in Eau Claire, Wisconsin. William Bethke, a citizen of Wisconsin, is the sole member of North Shore. For ease of reference, I will usually refer to the defendants collectively as North Shore (primarily in the legal analysis) but will separate them when necessary for clarity (primarily in the facts).
In 2011, North Shore LLC owned approximately 300 acres of land in Jackson County, Wisconsin ("the Property").
Benham and Bethke both are dentists and they have shared a dental office building in Eau Claire, Wisconsin, for over 25 years. Benham and Westrate are friends and both were involved in the negotiations with Bethke for the purchase of the Property on December 20, 2012. Although McHugh was a purchaser, he did not meet Bethke until sometime in 2013.
In a September 2013 email, Westrate described the members of Larchmont as
Around September 2011, Benham started to look for properties to buy in Eau Claire County and Jackson County as possible sites for frac sand mining.
Benham approached his friend, David Westrate, about buying land together to develop a frac sand mine. Westrate was receptive, so in 2011 and 2012, Westrate and Benham visited potential frac sand investment properties with Bollom. By late 2011 or early 2012, Benham approached Bethke about developing the Property — and possibly other nearby properties — as a sand mine. In December 2011 and February 2012, Bollom visited Benham's and Bethke's dental offices to provide an informal presentation about the frac sand industry. Jim Geraghty, Mark Sontag, and Jeff Jones, who all were landowners who owned property near the Property, also were present. (The parties dispute what these individuals understood Bollom's intended role would be with respect to the group.)
On March 7, 2012, Benham emailed Wisconsin's Department of Natural Resources (DNR), stating that he was "getting ready to open a sand mine in Jackson County and would like to know what are the clean air regulations and any permitting that is required." On March 9, 2012, the DNR responded that the limited information provided about the proposal made "it difficult to tell" which DNR permits would be needed, but that "in addition to an air permit," the "[t]ypical permits" would include "non[-]metallic mining[,] general stormwater permits, high capacity well
Benham also began researching the machinery needed for sand mining. After being told on May 18, 2012 about an 80-acre plot in the Dover, Wisconsin that was "adjacent to other tested and proven frac land" possibly coming on the market, Benham indicated that he was "[r]eady to move ASAP."
In November 2011, Bethke began learning more about sand mining and began investigating whether the Property had frac sand reserves. He provided samples of sand from the Property to Bollom for testing, and those samples looked promising. Bollom also worked with Bethke, Benham, and others to collect and analyze sand samples from the nearby properties owned by Geraghty, Sontag, and Jones. On March 10, 2012, Bethke and his then-girlfriend (now wife), Connie Brenny, joined Benham on a visit to a sand processing operation owned by Badger Mining Corporation, in Merrillan, Wisconsin, less than ten miles from the Property.
In an email to Bollum dated March 31, 2012, Bethke stated that he was "leaning towards selling the whole property. I enjoy treating [patients]. I know there is a lot of money to be made in a frac sand operation. But I think I would prefer to sell the 300 plus acres and let someone else run with it." During the summer and fall of 2012, Bethke still was considering various potential ways to sell the Property, including selling the Property by itself or potentially selling the Property in a package deal involving neighboring landowners. In late July and August 2012, Bethke considered having Robert Archibald, a frac sand industry consultant, represent him as a broker to sell the property. On July 31, 2012, a testing company notified Bethke that the samples from his land showed it to contain "excellent sand" and "very good frac sand." On the same day, Bollom told Benham in an email that Bethke was "giving thought to how he might arrange some type of land contract sale on a portion of [his] land."
As part of Bethke's investigation into finding potential buyers, Connie Brenny emailed Badger Mining Corporation on August 8, 2012 to see if that company would be interested in seeing Bethke's positive test results for the Property. On August 14, 2012, Benham sent a fax to Badger Mining — on Bethke's behalf from the fax machine of their shared office — that included maps of the Property, the sand testing results, and the cover emails from the testing company indicating that it was "excellent sand" and that various tests "all show this to be very good `frac' sand." Bethke sent additional sand test results to Badger Mining in September and October 2012.
Between September and November 2012, Bollum was showing the Property and some of the nearby properties to sand company representatives who were interested in buying sand. During these visits, Bollum did not focus on the Property because the sand companies would view it as a viable site only in conjunction with the other properties. As late as November 2012, Bethke told Bollum he was doing "good job" when he learned about the visits Bollum arranged with sand companies.
Also in the fall of 2012, Bethke discussed with a few businesses — Falls River Group, Sand Source Services, and GulfStar Group — possible transactions involving the use or sale of the Property for frac sand mining. Bethke's wife, Connie Brenny, had
Based on a suggestion from Bollum, Bethke investigated the process necessary to change the zoning on his property from forestry to industrial. On February 14, 2012, Bethke told Bollum that Terry Schmidt, the head of zoning for Jackson County, told him that approval for mining should take 60 days or less. On or about February 21, 2012, Bethke submitted an application with the Town of Cleveland to have the property's zoning changed from forestry to industrial extractive. However, in May 2012, the town issued a resolution opposing Bethke's zone change petition; Jackson County later relied on that decision in part to deny a zone change petition that Bethke submitted in June 2012. Bethke told Benham about Cleveland's denial of the zoning change around the time it occurred.
In August 2012, Benham knew that one of the reasons Bethke's zone change application was denied was regarding concerns about the effect on the 40-acre parcel owned by the Zillmer Family Trust that was bounded by Bethke's property. On August 5, 2012, Benham emailed one of the Zillmers to let them know that he was interested in the 40 acres and would entertain any offer to purchase it. (The parties dispute whether Bethke told Benham that the other issues that he had with the zoning petition had been resolved.) In a September 20, 2012 email, Bethke and Brenny told Viguet that Bethke "had already applied for permits and attended some meetings, so the permit process is in the works and should be in place soon."
On August 15, 2012, Benham emailed Westrate: "Try this scenario. Dave and Neal buy Bill's land for 4M with 1.2M down." Westrate responded stating that Benham had done a "[n]ice job" and that it "look[ed] like Plan A so far." In a document titled "SAND PLAN A 8.15.12," Westrate wrote: "One problem is that the investors may balk at investing in land that is not paid for, and has $2.8 million debt against it." On August 18, 2012, Westrate drafted various thoughts about a frac sand mining investment and created a spreadsheet outlining "Plan A," which meant buying Bethke's land for $4 million with $1.2 million down, leaving Benham and him with what he considered an "unrealistic" amount of $80,000 in working capital. Westrate estimated that the various legal, accounting, consulting, permitting, and regulatory costs required to start a mining operation on Bethke's property would require $800,000 in working capital. He wrote: "It will take upwards of $2.5 million working capital or more, to cover start-up costs and paying the miner/hydrosizer while waiting to sell wet sand and actually get paid.... It looks to me like the wet sand plant is more complicated than we have been led to believe." Westrate also wrote: "I'm beginning to see why Bill wants to sell outright. I'm beginning to understand that there may not be an easy, or cheap, way to do this. We may have to put in more $ $, bring in more
On September 15, 2012, Westrate drafted notes to himself, which he titled "LATEST SAND MINE THOUGHTS," and expressed an interest in buying the Property via a land contract. On September 28, 2012, Westrate sent a "Purchase Pro-Forma" spreadsheet to Benham outlining various possibilities for buying the Property at a sale price of either $4 or $5 million. The cover email to that spreadsheet outlined a deal in which Benham, Westrate, and Bollom would form a three-member LLC to purchase the Property.
On October 28, 2012, Westrate sent Benham an email in which he wrote: "Neal, it is getting close to the end of the year, and events are overtaking us. I think it is getting time for us to buy our share of Bill [Bethke]'s property rather than waiting for the royalty deal to be made ... If Bill still wants to get this done by the end of the year, let's do it." Benham replied via email that same day that he would talk to his investment advisors "to make sure" he had "all of the right procedures" in place to move quickly and concluded, "I think the time is now."
In the fall of 2012, Westrate and Benham began discussing proposals for a sand mine on the Property. One idea proposed by Westrate was acquiring the Property through the purchase of North Shore's assets. (The parties dispute the exact nature of their conversations with each other during this time period.) Bethke retained Michael Vinopal, an attorney from Eau Claire, to prepare the title conveyances and land contracts on behalf of North Shore with respect of the sale of the Property to Larchmont. Although Vinopal did not represent Larchmont, and Larchmont did not have legal counsel in its negotiations with defendants, Richard Eaton, an attorney in Vinopal's law office, had a role in drafting various versions of an operating agreement that Westrate proposed initially for North Shore and then Larchmont.
(The parties dispute whether Bethke and his wife met with Westrate and Benham about the Property or discussed frac mining in the fall of 2012, and whether Bethke told Westrate and Benham that he was only interested in selling the Property and not in partnering with them in a frac sand mining operation.)
On November 15, 2012, Vinopal's office sent Bethke a draft North Shore operating agreement, along with comments from Westrate. The draft provided that (1) Bethke, Westrate, Westrate's IRA, and Benham's IRA would be members of the limited liability company, with Bethke owning 25%; (2) Westrate, Westrate's IRA, and Benham's IRA would pay $4 million to Bethke to purchase their shares of North Shore; (3) they would pay Bethke a down payment of $1.4 million; (4) the remaining $1.6 million in payments to Bethke would be made over a three-year period; and (5) "[t]he members anticipate that the payments will be made from periodic royalty payments received for the removal of sand from the property," but "[t]he parties acknowledge that payment in full must be completed within three years, regardless of the source of funds." Dkt. 77, exh. 13 at 5-7. On December 4, 2012, Bethke faxed a version of Westrate's proposed draft operating agreement and a spreadsheet of property parcels to his financial advisor, Mark Orgel, with a request to "get back to me please." Orgel
On December 3, 2012, Mathew Hess
During his drive to South Dakota on December 5, 2012, Bethke spoke to Benham and Hess several times via cell phone regarding the sale of the Property. The other passengers in the vehicle with Bethke — including Greg Bohlig and Don Bethke — heard both sides of these conversations because Bethke's phone was connected by Bluetooth to the vehicle's speaker systems. (The parties dispute what Benham said to Bethke during the phone calls on that day and on what date Bethke made his decision to sell the Property to Benham and Westrate instead of selling to Badger Mining.)
On Monday, December 10, 2012, Connie Brenny sent Vinopal her understanding of what terms should be included in the land contract, including a purchase price of $4 million, a $2.5 million down payment, three annual payments of $500,000 to cover the remaining amount, an interest rate of 1.9%, and a provision that the Property would be returned to Bethke in the event of a default. (The parties dispute whether Bethke assured Westrate, Benham, or McHugh that he would never foreclose on the land contract.)
On December 12, 2012, Westrate emailed Benham and Bethke a new draft "North Shore Services, LLC Operating Agreement," with a cover email that stated that "I think this embodies what it sounded like [Bethke] wants to happen, together with what we need to make it work for us." Dkt. 77, exh. 41. This draft agreement provided that the Property would be sold for $4 million, with a $1.5 million down payment, three installment payments of $500,000, and final balloon payment of $1 million. The proposed members of the yet-to-be-incorporated purchasing LLC were Westrate and his Roth IRA, Benham and his Roth IRA, and McHugh. Bethke was identified as the seller in the document but neither he nor North Shore Services LLC was listed in the signature block in the draft operating agreement.
On December 13, 2012, Bethke faxed a copy of the draft to Orgel with a cover sheet that stated:
On December 18, 2012, Westrate sent a slightly different operating agreement entitled "Larchmont Holdings, LLC Operating Agreement" to Benham, Bethke, and Vinopal. His cover email stated that "this is the deal that I understand will meet everyone's approval." Dkt. 86, exh. 2 at 1. The draft reiterated the $4 million purchase price but now referenced the fact that a land contract would govern the deal between Larchmont and North Shore:
The drafts that Westrate sent on December 12 and December 18 both stated the following in an introductory paragraph in bold font:
Defendants never signed either of these documents or made any statement that North Shore would be paid from the profits of a frac sand operation.
On December 20, 2012, the members of the newly-incorporated Larchmont Holdings LLC — namely Westrate and his Roth IRA, Benham's Roth IRA, Patricia and Richard McHugh, and Oakdale, LLC — executed a document titled "Operating Agreement of Larchmont Holdings LLC." See dkt. 80. The agreement includes an Exhibit A that discusses capital contributions and membership.
Meanwhile, on December 20, Bethke and Brenny went to Vinopal's office to sign four documents drafted by Vinopal: a
The two exhibits attached to the form contract are titled "Legal Descriptions for Land Contract" and "Additional Terms for Land Contract." Bethke signed the form contract and the addendum, both of which Westrate and McHugh countersigned later that day. Bethke never told Vinopal to include the unsigned December 18 draft of the Larchmont operating agreement as part of the land contract, and it was not included as an exhibit. Vinopal did not record the land contract with the register of deeds, and neither Vinopal nor Bethke has the original signed version of the land contract.
On December 22, 2012, Larchmont adopted the following resolutions by unanimous consent:
In January 2013, Benham, McHugh, and Westrate emailed each other about contacting investors, buyers, or brokers for the Property that they had just purchased
On April 21, 2013, Westrate wrote to McHugh that
That same day, Westrate emailed Vinopal, stating that he "urgently" needed "a copy of the land contract." Vinopal's assistant responded with an email that attached an unsigned draft Larchmont Holdings operating agreement dated December 17, 2012
In late April 2013, McHugh contacted Bethke to tell him that Larchmont could not make the first payment of $500,000. Bethke agreed to enter into an amendment to the land contract whereby Larchmont would pay North Shore $100,000 on May 1 and the remaining $400,000 on September 1. At the request of Larchmont, Vinopal drafted the May 6, 2013 amendment to the land contract. The May 6 amendment does not mention future payments coming from sand mining profits and states expressly that "Vendor's forbearance in this instance shall not be construed as a waiver of their [sic] rights and remedies in the future." Around the time the parties signed this amendment, Larchmont paid North Shore $100,000 that had been loaned to Larchmont by Westrate and Benham.
A March 20, 2013 frac sand assessment report commissioned by Larchmont concluded that the quality of the frac sand on the property was "quite good," and a June 2013 report commissioned by Larchmont concluded that the property had a considerable volume of frac sand resources. On June 11, Westrate emailed Benham and McHugh about contacting potential investors, buyers, or brokers.
Around August 1, 2013, Larchmont filed the paperwork for a zoning change in the Town of Cleveland and the Town of Garfield. The Town of Cleveland Board of Supervisors voted 2-1 to oppose the zoning petition. Supervisors Andrew Sorenson and Joe Egloff, who had both been elected as new supervisors in April 2013, voted against the petition. On August 23, 2013, Westrate emailed this message to Benham and McHugh:
When the $400,000 September 1, 2013 payment came due on the amendment to the land contract, McHugh once again contacted Bethke with the news that Larchmont would not make the payment. North Shore and Larchmont eventually agreed to another amendment to the land contract on December 31, 2013: Larchmont would pay $125,000 on December 31, 2013, then another $100,000 on July 1, 2014, and $800,000 on September 1, 2015 (and the remaining $1,530,000 would then be paid in installments over the following three years). The December 2013 amendment did not mention future payments coming from sand mining profits and states that "[f]ailure to comply with any of these terms shall constitute default and all remedies available under the original contract may be utilized by Vendor."
Larchmont made a $125,000 payment to North Shore on December 31, 2013.
Larchmont has not made any more payments to North Shore under the land contract. The amount overdue is $1,415,000 plus interest. North Shore did not foreclose on Larchmont until it filed its counterclaim for strict foreclosure in this action on February 1, 2017.
Bethke's use of the property after the land contract was signed — including ATV driving and horseback riding — did not interfere with or impair Larchmont's ability to develop a frac sand mine or sell the Property. Larchmont has never been denied access to the Property since entering into the land contract. Crops planted on the Property were directly in front of the cabin to which Bethke holds a life estate. Larchmont members were aware of these uses, yet did nothing to try to stop them. Bethke harvested timber on the Property because it was required on the state's managed forest crop law program. The amount paid for the timber removed from the Property was $11,549.24. (The parties dispute whether this amount ever got credited to Larchmont.)
Westrate and Benham have identified three alleged interactions between Bethke and nearby property owners — Bob Zillmer, Jerry Jenks, and Dave Holman — claiming that Bethke caused problems with neighbors.
A court must grant summary judgment when no genuine issue of a material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the nonmoving party, but "the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Armato v. Grounds, 766 F.3d 713, 719 (7th Cir. 2014) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
Larchmont's second amended complaint (dkt. 56) alleges seven separate claims related
In count I of its counterclaims, North Shore seeks strict foreclosure under the terms of the land contract, based on its allegations that Larchmont has defaulted on its payment obligations. In its answer to the counterclaim, Larchmont raised the affirmative defenses of laches, unclean hands, fraud, and equitable estoppel.
The core dispute that drives this lawsuit is the parties' conflicting views as to which payment terms actually constitute the complete and final agreement purchase agreement. The parties agree that the contract includes these documents:
Larchmont, however, contends that the land contract also includes the payment terms that were repeated in the December 12, 2012 and December 18, 2012 versions of the draft operating agreement that Westrate provided to Bethke and Vinopal before the land contract was signed. Larchmont points to extrinsic evidence that it believes shows that the parties agreed that future payments owed under the land contract would be made from profits earned from the sale of sand mined from the property. Larchmont contends that the terms of the contract are hotly disputed and prevent entry of summary judgment as to defendants' foreclosure claim and many of its own claims and affirmative defenses. Larchmont also argues that there are genuine issues of material fact concerning whether Bethke promised Bentham and Westrate that he would never foreclose on the property and whether he made misrepresentations about rezoning the property and Badger Mining's intention to buy the property.
I will first address the contours of the parties' agreement in the context of North Shore's strict foreclosure counterclaim and then turn to Larchmont's affirmative defenses and contract claims, which essentially function as affirmative defenses to foreclosure.
The Wisconsin Supreme Court has explained that land contracts "are an important and long-standing instrument in Wisconsin real estate transactions" because they "provide a number of advantages," including a smaller down payment, no mortgage transaction costs, greater flexibility in structuring terms, installment payments for beneficial income tax advantages, and alternative remedies in the event of default. Steiner v. Wisconsin Am. Mut. Ins. Co., 2005 WI 72, ¶ 22, 281 Wis.2d 395, 405, 697 N.W.2d 452, 457. The land contract vendor (the seller) holds legal title as security for the unpaid balance of the
When a land contract vendee defaults under the terms of the contract, the vendor can select from a number of remedies. Kallenbach v. Lake Publications, Inc., 30 Wis.2d 647, 651-52, 142 N.W.2d 212 (1966); Republic Bank of Chicago v. Lichosyt, 2007 WI App 150, ¶ 18, 303 Wis.2d 474, 488, 736 N.W.2d 153, 159. Strict foreclosure is a long-standing equitable remedy available to the vendor. Steiner, 2005 WI 72 at ¶ 25, 281 Wis.2d 395, 697 N.W.2d 452. "In strict foreclosure, the land contract vendor forgoes his or her right to collect the amount remaining on the debt and instead recovers the property." Id. at ¶ 26 ("In the event of a vendee's default on a land contract, under strict foreclosure the circuit court's judgment sets a period, called the redemption period, in which the vendee must pay up or lose all his or her interest in the land.").
It is undisputed in this case that Larchmont failed to make a payment after December 2013. North Shore contends that this puts Larchmont in default of the land contract. Larchmont contends that it did not breach any contractual obligation by failing to make the installment payments because those payments were contingent on Larchmont's generation of profits from the sale of frac sand mined on the Property, and to date, no frac sand has been mined on the property. Larchmont argues that a jury must decide the dispute whether Larchmont's duty to make installment payments arose per the written schedules in the contract regardless whether any frac sand had been sold, or whether Larchmont's duty to pay arises only after sand has been sold.
As an initial matter, Larchmont contends that because North Shore is unable to produce the original signed land contract, it would be inequitable to accept the copy as a true and accurate representation of the parties' agreement. Under the best evidence rule, an "original writing, recording, or photograph is required in order to prove its content unless [the rules] or a federal statute provides otherwise." Fed. R. Ev. 1002. However, "[a] duplicate is admissible to the same extent as the original unless a genuine question is raised about the original's authenticity." Fed. R. Ev. 1003. Because Larchmont is challenging the admission of the duplicate contract, it has the burden to demonstrate that a "genuine issue of authenticity exists." United States v. Chapman, 804 F.3d 895, 902 (7th Cir. 2015). Apart from a general reference to "all of the evidence challenging North Shore's claim that Exhibit 1 [to its answer] shows the authentic Land Contract," Larchmont does not develop this argument. Moreover, both sides agree that the land contract includes all of the signed documents listed above and contained in Exhibit 1; the only dispute is whether the unsigned draft Larchmont operating agreement also was incorporated into the agreement. Therefore, Larchmont has failed to meet its burden of showing that a genuine issue of authenticity exists that affects the outcome of this case. The copy is admissible.
Generally, "the interpretation and application of a contract to undisputed facts present a question of law." Maryland Arms Ltd. Partnership v. Connell, 2010 WI 64, ¶ 21, 326 Wis.2d 300, 310-11, 786 N.W.2d 15, 20. The Wisconsin Supreme Court has explained that the "primary goal in contract interpretation is to `give effect
In this case, the payment terms of the December 20, 2012 form contract and addendum and the 2013 amendments are clear: Larchmont was to make various installment payments, and if it did not make those payments, then North Shore had the right to foreclose. Not so fast, argues Larchmont: it contends that there is more to the story because the contract included payment terms that were outlined in two draft operating agreements and North Shore intended to make these terms part of the land contract. Larchmont continues: for some reason, these payment terms were not included in the operating agreement actually executed by the members of Larchmont on December 20, but Larchmont later passed a resolution on December 22 indicating its intent to pay the installments on the land contract out of its frac sand proceeds.
Larchmont's arguments implicate the parol evidence rule, which the Wisconsin Supreme Court has summarized as follows:
Therefore, the first question is whether the parties intended the written contract — in this case, the form contract, addendum and amendments — to be the final and complete expression of their agreement. If they did, then the contract is integrated and "the court construing the contract may not consider evidence of any prior or contemporaneous oral or written agreement between the parties," absent the existence of fraud, duress, or mutual mistake. Id. at ¶¶ 37 -38. "If the contract is not integrated, then the parol evidence rule is inapplicable." Id. at ¶ 38. However, extrinsic evidence is always admissible with respect to the issue of integration. Id. Further, "[t]he determination of whether a contract is integrated is a question of law for the trial judge to decide." Davis v. G.N. Mortg. Corp., 396 F.3d 869, 878-79 (7th Cir. 2005) (applying Illinois law provisions similar to Wisconsin law and finding agreement was fully integrated even without a merger clause).
Larchmont points out — correctly — that the December 20, 2012 land contract does not contain a merger or integration clause, then argues that there is extrinsic evidence
In hopes of creating a genuine issue of material fact with respect to the issue of integration, Larchmont cites only the numbers of a few of its additional proposed findings of fact (nos. 51, 60, and 63) and various responses to defendants' proposed findings of fact (nos. 130, 134-35, 137, 141-46, 158-59, 163, 173-74 and 181). See Pltf.'s Br. in Resp., dkt. at 10-12. This isn't going to cut it. The Court of Appeals for the Seventh Circuit has made clear that "[p]erfunctory and undeveloped arguments are waived, especially when ... a party fails to develop the factual basis of a claim... and, instead, merely draws and relies upon bare conclusions." Campania Management Co., Inc. v. Rooks, Pitts & Poust, 290 F.3d 843, 852 (7th Cir. 2002). Further, "[w]e often call summary judgment, the `put up or shut up' moment in litigation,... by which we mean that the non-moving party is required to marshal and present the court with the evidence she contends will prove her case." Goodman v. National Security Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). See also D.Z. v. Buell, 796 F.3d 749, 756 (7th Cir. 2015) (court not obligated to sift through record in search of evidence to support plaintiff's claim).
Even if this court cuts Larchmont some slack and connects the dots on its own, Larchmont fares no better (which might explain why Larchmont did not do more to develop this argument). Piecing together the evidence cited by Larchmont and briefly summarized by Larchmont in the introductory section of its brief (see Pltf.'s Resp. Br., dkt. 91 at 2), I understand Larchmont to be relying on the following facts to support its position:
None of these facts, either alone or in combination, creates a plausible inference that the parties intended their land contract to include one specific payment term from the introductory paragraph of an unsigned, draft operating agreement, especially in light of the undisputed fact that Bethke never signed or affirmatively agreed to such a term. Even if a jury could reasonably infer from Westrate's email and Bethke's discussions with his financial advisor that Bethke considered signing on to the operating agreement at one point, he never did so. The December
In addition, Vinopal's testimony is inconclusive and not helpful to Larchmont's position. Vinopal was questioned about the introductory language in the December 18, 2012 draft operating agreement concerning payments being made from frac sand profits. In response, he stated that he did not remember talking about that provision with Bethke specifically, but "it was that they would hopefully be able to do that, to make that work, so they wouldn't have to put any of their, you know, outside money in" and "I mean, I think it was — that was the deal." Dkt. 65 at 55-56. When asked whether those were terms that he was going to put into the land contract, Vinopal stated that "Well, sure. Yeah. Something that would be acceptable to them, yeah. But I think if this — if this was the deal, it seems like that was the intent. I mean, that's what the cover letter says." Id. at 56. However, Vinopal clarified that
At most, Vinopal's testimony shows that some of the parties — and it is unclear who from the evidence adduced by Larchmont — may have contemplated including a provision concerning payments on the land contract being made from frac sand profits at some point. In the end, however, there was no such provision included in either the signed land contract or Larchmont's operating agreement, and neither of the signed agreements incorporates the unsigned, draft operating agreements. Pointing in the other direction, Larchmont's draft operating agreement references and incorporates the land contract, which indicates that the land contract is a discrete agreement that is distinct from the unsigned draft operating agreement. The members of Larchmont later passed a resolution stating that they would make every effort to pay the land contract installments out of frac sand profits, but that action was separate from and subsequent to the execution of the land contract itself. In no way can it or does it bind Bethke or North Shore.
As North Shore points out, Larchmont's argument that installment payments were contingent on the generation of profits is undercut by other language immediately following the discussion of profits in the introductory paragraph of the draft operating agreement: "in the event that the Company is unable, in spite of its best
In sum, the only reasonable inference from the evidence of record is that the land contract and its exhibits, addendum and amendments governs the sale of the property and the operating agreement governs Larchmont and its members. Larchmont's vague references to the circulation of draft agreements with a particular payment provision relating to frac sand profits are insufficient by themselves to show that the provision was actually part of the land contract or that it was excluded as a result of fraud or mistake.
Larchmont does not dispute the fact that it failed to make installment payments under the contract, which provides the remedy of strict foreclosure. Larchmont, however, alleges the affirmative defenses of laches, unclean hands, fraud, and equitable estoppel in its answer to defendants' amended counterclaim, see dkt. 59 at 17-18, and it raises these defenses in its response to North Shore's motion for summary judgment, see dkt. 91 at 12-18. North Shore discusses Larchmont's allegations of fraud as a basis for rescission in conjunction with their arguments concerning Larchmont's affirmative claims of fraudulent inducement.
The Seventh Circuit repeatedly has held that arguments raised for the first time in a reply brief are waived. Mendez v. Perla Dental, 646 F.3d 420, 424 (7th Cir. 2011) ("[D]efendants have waived any challenge to the jury instructions by failing to raise
This might turn out to be a bootless victory for Larchmont: based on the court's rulings earlier in this order, Larchmont may not base any of these defenses on its contentions that the land contract included the term that installment payments were to be made from frac sand profits, or that North Shore had acquiesced to this payment plan in some other way. The court has rejected these contentions, so they are out of the lawsuit.
To establish that it was fraudulently induced to enter into the land contract, Larchmont must prove that:
Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 13, 270 Wis.2d 146, 157, 677 N.W.2d 233 (contract fraudulently induced is void or voidable).
In its response brief, Larchmont argues that there are three categories of misrepresentation — intentional (which it alleges in its complaint), negligent, and strict responsibility. However, in its second amended complaint, Larchmont alleges only fraudulent inducement, which is intentional misrepresentation:
See United Vaccines, 409 F.Supp.2d at 1093 (intentional misrepresentation properly characterized as fraud in the inducement). In any event, Larchmont has not developed an argument related to negligent or strict liability representation, so I have not considered its claims under those standards.
In addition to the five factors identified above, Larchmont must show that the misrepresentation occurred before contract formation, Kaloti Enterprises, Inc. v. Kellogg Sales Co., 2005 WI 111, ¶ 30, 283 Wis.2d 555, 699 N.W.2d 205, and that its reliance on the misrepresentation was reasonable. Kailin v. Armstrong, 2002 WI App 70 ¶ 31, 252 Wis.2d 676, 702, 643 N.W.2d 132, 146. Silence or the failure to disclose a fact is treated as equivalent to representing the nonexistence of that fact, if the silent party was under a duty to
In its second amended complaint, Larchmont alleges that it was induced to enter into the land contract by misrepresentations that Bethke made with respect to the following:
In addition, Larchmont alleges that Bethke had a duty to disclose material facts regarding the feasibility of developing a frac sand mine on the property because:
In addition to compensatory and punitive damages, Larchmont seeks the equitable remedies of rescission of the land contract and restitution, dkt. 56 at 28. See Olympia Hotels Corp. v. Johnson Wax Dev. Corp., 908 F.2d 1363, 1371-72 (7th Cir. 1990) (noting that it would be unreasonable to make a party choose between two forms of damages before trial and verdict).
"The economic loss doctrine is a judicially-created remedies principle that operates generally to preclude contracting parties from pursuing tort recovery for purely economic or commercial losses associated with the contract relationship." Tietsworth, 2004 WI 32, ¶ 23, 270 Wis.2d 146, 677 N.W.2d 233. The Wisconsin Supreme Court has held that the doctrine bars a claim for fraudulent inducement unless the alleged fraud is "extraneous to, rather than interwoven with, the contract." Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶ 42, 283 Wis.2d 555, 585, 699 N.W.2d 205, 219 (quoting Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶ 47, 262 Wis.2d 32, 662 N.W.2d 652). In other words, for such a claim to proceed, the alleged fraud must "concern[] matters whose risk and responsibility did not relate to the quality or the characteristics of the goods for which the parties contracted or otherwise involved performance of the contract." Id.
North Shore argues that all of the alleged misrepresentations either concern the quality or character of the property that was sold to Larchmont, or were terms addressed in the land contract itself. See Ritchie v. Clappier, 109 Wis.2d 399, 406, 326 N.W.2d 131 (Ct. App. 1982) ("If the facts are undisputed, whether the party claiming fraud was justified in relying on a misrepresentation is a question of law.") (citing Williams v. Rank & Son Buick, Inc., 44 Wis.2d 239, 246-47, 170 N.W.2d 807, 811 (1969)). Larchmont not only disputes this argument, it contends that the doctrine does not apply to its claim against Bethke, who was not a party to the contract; Larchmont further contends that in any event, the economic loss doctrine does not prevent it from seeking the remedies of rescission and restitution.
For the reasons discussed below, I find that Larchmont is correct that the doctrine does not bar its fraudulent inducement claims to the extent that Larchmont seeks rescission or restitution, but Larchmont's contention that the doctrine does not apply to Bethke is unfounded. Further, Larchmont has failed to oppose North Shore's argument with respect to the remaining question — whether the economic loss doctrine bars Larchmont's tort claims against both defendants for compensatory and punitive damages — and merely relies on its unsuccessful argument that there is a genuine issue of material fact as to the terms and scope of the land contract. Therefore, I am granting North Shore's motion for summary judgment as to Larchmont's fraudulent inducement claims seeking damages in tort on the ground that these claims are barred by the economic loss doctrine. These rulings are discussed separately below:
In its opening brief, North Shore states in a footnote that it is not aware of any court "that has squarely addressed Kaloti's extraneous/interwoven distinction in the context of a fraudulent inducement claim seeking contract rather than tort remedies." Dkt. 79 at 35 n. 22. In response, Larchmont correctly notes that the Court of Appeals for the Seventh Circuit and the Wisconsin Supreme Court both have held that Wisconsin's economic loss doctrine does not bar misrepresentation claims seeking the remedies of rescission and restitution.
North Shore seems to concede this point in its reply brief, see dkt. 96 at 11 ("Wisconsin law is clear that fraudulent inducement claims seeking rescission and restitution are not barred by the economic loss doctrine."), but then asserted that its argument is different: "fraudulent inducement claims, whether brought in tort or in contract, are only viable when the alleged fraud is extraneous to the contract," id. I fail to see North Shore's point. Although North Shore cites AVL Powertrain Eng'g, Inc. v. Fairbanks Morse Engine, 178 F.Supp.3d 765, 774 (W.D. Wis. 2016), as "analogizing to Kaloti's extrinsic/interwoven framework in the context of a rescission claim," that case does not discuss or apply the economic loss doctrine. The court in AVL cited the extraneous/interwoven standard in Kaloti as a comparison in its discussion of whether the alleged misrepresentations were material and whether the plaintiff reasonably relied on them. Id. To the extent that North Shore is arguing that the alleged misrepresentations are not material or that Larchmont did not reasonably rely on them-which are arguments North Shore raises in other sections of its brief, I will deal with those arguments below.
Accordingly, I conclude that the economic loss doctrine does not bar Larchmont's fraudulent inducement claims to the extent that the remedies sought are limited to rescission and restitution.
Larchmont argues that its fraudulent inducement claims seeking damages against Bethke as an individual are not subject to the economic loss doctrine because Bethke was not a "party" to the land contract. Larchmont cites no authority for this attempted end-run around the economic loss doctrine; that's because there is none. Lack of contractual privity between the plaintiff and defendant does not provide a basis for avoiding the economic loss doctrine. Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis.2d 395, 400, 573 N.W.2d 842, 844 (1998) ("[E]ven in the absence of privity, the economic loss doctrine bars a remote commercial purchaser from recovering economic losses from a manufacturer under tort theories of strict liability and negligence."). See also Digicorp, 2003 WI 54, ¶ 65, 262 Wis.2d 32, 662 N.W.2d 652 (barring subdistributor of telephone calling services from recovering economic losses in tort from telecommunications provider: "We answered the question in Daanen [], and unequivocally held there that even in the absence of privity, the economic loss doctrine bars one party in the distributive chain from recovering economic losses in tort from another party in that chain.").
Relying in part on Digicorp and Daanen, the U.S. District Court for the Eastern District of Wisconsin rejected an argument similar to that made by Larchmont in this case. Schreiber Foods, Inc. v. Lei Wang, No. 08-C-962, 2010 WL 4683726, at *6
The Wisconsin Supreme Court has explained that "misrepresentations that concern `the quality or character of the goods sold' are either: (1) expressly dealt with in the contract's terms, or (2) ... go to reasonable expectations of the parties to the risk of loss in the event the goods purchased did not meet the purchaser's expectations." Kaloti, 2005 WI 111, ¶ 43, 283 Wis.2d 555, 699 N.W.2d 205 (citing Digicorp, 262 Wis.2d 32, ¶ 47, 662 N.W.2d 652 and Huron Tool and Engineering Co. v. Precision Consulting Services, Inc., 209 Mich.App. 365, 372-73, 532 N.W.2d 541, 545 (1995)). For example, in Kaloti, the court found that the economic loss doctrine did not apply because Kellogg's alleged failure to disclose to Kaloti that it had begun selling directly to Kaloti's customers was not a matter that one would expect to be dealt with in the purchase agreement. Id. at ¶ 45. The representation must relate to something that is a fact at the time it is made. Harley-Davidson, 319 F.3d at 991-92 (citing Restatement (Second) of Contracts § 159). "Such facts include past events and present circumstances but not future events.... However, a promise or prediction of future events may by implication involve an assertion that facts exist from which the promised or predicted consequences will follow, which may be a misrepresentation as to those facts." Id. at 992 (quoting Restatement § 159 cmt. c).
North Shore contends that all of Larchmont's allegations of misrepresentations can be sorted into four categories that all present issues "interwoven" with the subject matter of the contract: the quality of the sand and suitability of the property for frac sand mining; the ability to obtain necessary zoning and permits; the risk of foreclosure; and the alleged agreement that contract payments would come from frac sand profits.
Larchmont's sole response to this argument is the court cannot make this determination at the summary judgment stage because the parties dispute the terms and scope of the land contract. But the court has resolved that issue in this order, finding that there is no genuine dispute as to the facts establishing that, as a matter of law, the land contract does not include any provision that installment payments will be made from frac sand proceeds.
Lawyers often present binary arguments in their legal briefs in order to address both possible outcomes on a disputed point. Not here. Instead of anticipating this ruling as a possible outcome and presenting facts and arguments substantively to refute defendants' contention that the misrepresentations are interwoven with the land contract, Larchmont states only that:
By not explaining how any of the alleged misrepresentations involve matters extraneous to the land contract as written and supporting that explanation with evidence in the record, Larchmont has waived the issue and forfeited the argument. Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) ("Failure to respond to an argument... results in waiver."); Palmer v. Marion Cnty., 327 F.3d 588, 597-98 (7th Cir. 2003) (deeming plaintiff's negligence claim abandoned because he failed to delineate it in brief in opposition to summary judgment); Borcky v. Maytag Corp., 248 F.3d 691, 695 (7th Cir. 2001) ("The mere existence of some alleged factual dispute will not defeat an otherwise properly supported motion for summary judgment.") (internal citation omitted); Cent. States, Se. and Sw. Areas Pension Fund v. Midwest Motor Express, 181 F.3d 799, 808 (7th Cir. 1999) ("A party's failure to meaningfully respond to a motion for summary judgment ... constitutes waiver.")
Given the court's ruling on the scope of the land contract, it may be that all of the alleged misrepresentations are interwoven with that contract, but there is no need to perform a substantive analysis of a party's forfeited arguments. I am granting North Shore's motion for summary judgment as to Larchmont's fraudulent inducement claims except to the extent that Larchmont is seeking the remedies of rescission and restitution. This segues to North Shore's contention that Larchmont has waived its right to seek rescission and restitution by affirming the land contract.
The equitable remedy of rescission is available when a party is induced to assent to a contract by justifiably relying on a fraudulent or material misrepresentation by the other party. First Nat. Bank & Tr. Co. of Racine v. Notte, 97 Wis.2d 207, 222, 293 N.W.2d 530 (1980); Whipp v. Iverson, 43 Wis.2d 166, 171, 168 N.W.2d 201 (1969). However, even where grounds might exist to set aside a contract, a party waives his right to rescind for fraud or mistake if that party unreasonably delays asserting that right or affirms the agreement after learning of the fraud or mistake giving rise to the right of rescission. ERA Franchise Sys., LLC v. Hoppens Realty, Inc., No. 12-cv-594-slc, 2013 WL 3967869, at *7 (W.D. Wis. July 31, 2013); Grube v. Daun, 213 Wis.2d 533, 551-52, 570 N.W.2d 851, 859 (1997) (plaintiffs affirmed contract by continuing to live on property and make extensive improvements after discovering it was contaminated); Thompson v. Vill. of Hales Corners, 115 Wis.2d 289, 319, 340 N.W.2d 704 (1983) (although village ordinance made plaintiff's arcade unprofitable, plaintiff waived right to rescind lease because he knew about ordinance when he signed lease and delayed asserting rights for six months); Notte, 97 Wis.2d at 222, 293 N.W.2d 530 (As remedy for misrepresentation, "aggrieved party has the election of either rescission or affirming the contract and seeking damages" for breach of contract.). Further, when the facts regarding the parties' conduct after the alleged fraud comes to light are "practically undisputed," waiver is a question of law appropriately decided at summary judgment. Weinhagen v. Hayes, 174 Wis. 233, 178 N.W. 780, 786 (1920); Thompson, 115 Wis.2d at 319, 340 N.W.2d 704; AVL Powertrain, 178 F.Supp.3d at 772.
North Shore contends that Larchmont, by signing amendments to the contract in May and December 2013 but then waiting to sue for rescission until 2016, has affirmed its obligations under the land contract after learning of the alleged misrepresentations
As it has done in its response to most of North Shore's arguments, Larchmont states generally that summary judgment is not appropriate because there are genuine issues of material fact affecting the question of waiver. However, Larchmont has addressed North Shore's argument with respect to two of the misrepresentations it has alleged: that payments would be made from frac sand profits and that North Shore would not foreclose on the property.
In a brief argument, Larchmont contends that even though the 2013 amendments adjusted the payment schedule of the contract, they did not change the parties' "basic understanding" that payments would be made from the profits of the sale of frac sand. However, as discussed at length above, Larchmont has failed to adduce sufficient evidence showing that North Shore had such an understanding or that the land contract included this term.
This leaves the alleged misrepresentation that Bethke continued to promise not to foreclose on the property even though the contract and the amendments all contained a foreclosure provision. Larchmont correctly points out that the parties dispute whether Bethke made such representations both before and after they signed the land contract and 2013 amendments, and that North Shore in fact did not bring a foreclosure action until 2017. Because I agree that the facts are not clear on this one issue, I find that Larchmont has not waived its claim for rescission with respect to the alleged misrepresentation that North Shore would never foreclose on the property.
Because Larchmont fails to address the issues of waiver and affirmance as they relate to any other alleged misrepresentation, including those concerning the quality of the frac sand, the property's suitability for a frac sand mine, and zoning and permitting, Larchmont has forfeited all such arguments.
Larchmont's only remaining claim for fraudulent inducement involves Bethke's alleged misrepresentation that North Shore would never foreclose on the property.
In support of its argument, defendants cite Amplicon, Inc. v. Marshfield Clinic, 786 F.Supp. 1469, 1478 (W.D. Wis. 1992) (internal citation omitted), for the proposition that "a party cannot reasonably rely upon allegedly fraudulent promises which are directly contradicted by the terms of... a subsequently executed contract." In Amplicon, a lessor sued for breach of a lease agreement and the lessee raised fraud in the inducement as a defense. Id. at 1470. The lessee asserted that, prior to the signing of the lease agreement, the lessor told the lessee that no deposit or interim rent was required under the agreement. Id. at 1475. The lease clearly provided that the lessee would pay interim rent and a deposit and contained two merger clauses stating that the lease agreement was the complete agreement between the parties and that no representation was binding unless made part of the lease by addendum. Id. at 1479. In light of the merger clauses and the fact the representations directly contradicted the written agreement, the court held that reliance on the representations was not justified as a matter of law. Id. at 1478.
Larchmont distinguishes its claim in this case on the grounds that the land contract did not contain a merger clause like the lease in Amplicon and that there is disputed evidence that Bethke continued to make representations about not foreclosing on the property through at least 2014. See Am. Custom Surfacing, LLC v. Manitowoc Cranes, Inc., 2012 WI App 11, ¶ 33, 338 Wis.2d 485, 808 N.W.2d 742 (unpublished decision) ("Amplicon adheres to a rule that ... is inconsistent with Wisconsin law. The proper inquiry under Wisconsin law is whether all the surrounding circumstances here create a factual dispute on the reasonableness of [plaintiff's] reliance on the misrepresentations that ... induced it to sign the [contract]."). However, as North Shore points out, Amplicon did not announce a per se rule that a contractual party can never reasonably rely on allegedly fraudulent promises which are directly contradicted by the terms of the executed contract. The court in that case considered all of the circumstances surrounding the alleged misrepresentation and concluded that reliance on it was not reasonable. The same is true here.
Although the land contract in this case does not contain a merger clause, Larchmont has not alleged or argued that it is not integrated with respect to North Shore's right to foreclosure in the event of default. Larchmont cites a few cases for the proposition that a plaintiff can raise fraud claims based on misrepresentations that are inconsistent with the express terms of the parties' contract. See Bank of Sun Prairie v. Esser, 155 Wis.2d 724, 731, 456 N.W.2d 585, 588 (1990) (finding question of fact as to whether bank misrepresented terms of a guaranty to induce defendant to enter guaranty contract); Hennig v. Ahearn, 230 Wis.2d 149,
Even assuming, arguendo, that Larchmont's version of the facts is true — that Bethke lied to the members of Larchmont about his intent or willingness to exercise North Shore's foreclose rights in the event of a default, and leveraged his relationship with Benham and Westrate to inveigle them to sign the contract with a foreclosure provision — no jury could reasonably conclude that it was reasonable for Larchmont's principals to rely on those representations when the contract and all subsequent amendments contained explicit language to the contrary.
Larchmont points to draft language circulated by the parties indicating that foreclosure was unlikely to occur, but this does not-cannot-negate the fact that the parties agreed that North Shore retained a right to strict foreclosure. The only logical and reasonable response to oral representations that contradicted written provisions of the contract would have been to insist that the written contract reflect the oral representation. Larchmont could have-should have-demanded removal of the foreclosure provision or inclusion of an condition further specifying and limiting the conditions under which foreclosure could take place. Larchmont did neither. To the contrary, Larchmont passed an internal resolution after signing the land contract recognizing the fact that North Shore had the right to foreclose. Although Larchmont chose not to hire an attorney to review the contract before signing it, the facts show that its members are educated, experienced businessmen. See United States v. Giles, No. 14-cv-978, 2017 WL 564012, at *5 (E.D. Wis. Feb. 10, 2017), appeal dismissed, No. 17-1529, 2017 WL 4173485 (7th Cir. Aug. 25, 2017) ("In determining whether reliance was negligent in a given case, Wisconsin courts also consider... the party's intelligence and experience. When Giles signed the note, she was well-educated, she had signed for and received many prior student loans, and the promissory note was short and clear in its terms.").
The Wisconsin Supreme Court has made clear that
See also Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 768 (7th Cir. 2010) (citing same in holding that "the Agreement [for the provision of electronic banking services], combined with the circumstances of its negotiation, permitted the district court to conclude that any reliance on oral representations in this case was unreasonable."); Osowski v. Howard, 2011 WI App 155, ¶ 27, 337 Wis.2d 736, 807 N.W.2d 33 (unpublished) ("A plaintiff cannot justifiably rely on a misrepresentation while ignoring contradictory information that he or she knew or could have discovered."). Accordingly, I am granting North Shore's motion for summary judgment on Larchmont's remaining fraudulent inducement claim.
As alleged in their second amended complaint and articulated in their response brief, Larchmont's claims of frustration of purpose, unjust enrichment, reformation, and illusory contract are all based on the premise — which I have found to be incorrect — that the land contract provided that installment payments would be made from frac sand mining profits. As with North Shore's challenges to its fraudulent inducement claims, Larchmont's sole response is that the validity of its claims cannot be made on summary judgment because the parties dispute the terms and scope of the land contract. Larchmont makes the same vague argument with respect to its claims for breach of contract and breach of the implied covenant of good faith and fair dealing, stating only that the claims "directly arise from the Land Contract. Here, what the contract consists of is in dispute." Dkt. 91 at 46. Larchmont has abandoned all of these claims by failing to develop any argument about why the claims should survive in the event that the court determines that there was no genuine issue of material fact as to the terms of the land contract. Accordingly, North Shore's motion for summary judgment as to Larchmont's claims for frustration of purpose, unjust enrichment, reformation, illusory contract, breach of contract, and breach of the implied covenant of good faith and fair dealing must be granted.
This order speaks for itself, so there is no need for any wind-up observations by the court. It will be up to the parties to tailor their trial presentations to fit what's left of this lawsuit.
As a procedural matter, I will extend by one day the parties' deadline to submit their Rule 26(a)(3) materials, motions in limine and any proposals as to the voir dire, jury instructions and verdict forms. The new deadline is November 14, 2017, with responses still due on November 22, 2107 and replies due on November 28, 2017. The December 6, 2017 telephonic final pretrial conference and December 11, 2017 jury selection and trial remain firm.
IT IS ORDERED that the motion for summary judgment (dkt. 73) filed by defendants North Shore Services, LLC and
