Town Bank v. City Real Estate Development LLC

793 N.W.2d 476 (Wis. 2010)

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Nature of the Case

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Facts

P loaned D $2,500,000 under a term credit agreement so D could acquire an office building. D's development plan consisted of acquiring the building, demolishing and refurbishing its interior, and converting the space into 65 residential condominium units. P recommended approval of a $9,000,000 loan and the write-up indicated an initial draw of $2,500,000 to be put towards the building's purchase price. The write-up contemplated that the 'primary source of repayment will come from [the] sale of condominium units.' P sent a financing commitment for a $9,000,000 Construction Line with terms and conditions that divided the $9,000,000 construction line into two phases: 'A) $2,500,000 initial funding for acquisition of building and completion of demolition, engineering, asbestos removal, and marketing,' and 'B) $6,500,000 additional funding for the construction of condominium units as pre-sales dictate.' Financing was to be based on 75% of the pre-sold units.' D had to submit a complete set of plans to be reviewed and approved by P, $900,000 in upfront equity, D was to pay closing costs, title, filing and documentation fees, and the borrower was to provide personal financial statements and tax returns. The letter called for execution and return by June 11, 2004, and if not the agreement could be terminated by June 25, 2004. It was not executed by June 25^th, but P loaned D $2.5 million. The memorandum stated the first phase is closing was for $2,500,000 for the purchase of the building. The loan will be a 60-day note funding into the $9,000,000 construction loan that was approved in April. The TCA bears the heading 'Entire Agreement' and provides 'This Agreement, including the Exhibits attached or referring to it, the Note and the Security Documents, are intended by Customer and Lender as a final expression of their agreement and as a complete and exclusive statement of its terms, there being no conditions to the full effectiveness of their agreement except as set forth in this Agreement, the Note and the Security Documents. The TCA does not expressly mention the commitment letter. Plenty of other evidence is available to show that D’s version of the events with the two phases and $9 million was in fact what was intended. On October 19 P learned that there was no longer a prospective tenant and that D had no condominium pre-sales. D had not infused its $900,000 in equity into the project, as required by the commitment letter. P informed D that any construction financing would have to be reapproved. D secured alternative construction financing and paid P in full for the $2,500,000 loan. P seeks a declaratory judgment that it fully complied with the agreement and is not obligated to provide additional financing under the terms of a previously-issued commitment letter. The jury returned a verdict in favor of D. P appealed, and the court of appeals reversed. D appealed.