Town Bank v. City Real Estate Dev., LLC

2010 WI 134, 330 Wis. 2d 340, 793 N.W.2d 476



Reviewing courts have long recognized the importance of protecting parties' freedom to contract. When construing contracts that were freely entered into, a reviewing courts goal is to ascertain the true intentions of the parties as expressed by the contractual language. Stated another way, the best indication of the parties' intent is the language of the contract itself, for that is the language the parties saw fit to use. They construe the contract language according to its plain or ordinary meaning. If the contract is unambiguous, the reviewing court's attempt to determine the parties' intent ends with the four corners of the contract, without consideration of extrinsic evidence. Only when the contract is ambiguous, meaning it is susceptible to more than one reasonable interpretation, may the court look beyond the face of the contract and consider extrinsic evidence to resolve the parties' intent.


Town Bank and City Real Estate Development, LLC (City Real Estate) entered into a Term  Credit Agreement (the TCA), through which Town Bank loaned $2,500,000 to City Real Estate for the purpose of acquiring an office building in downtown Milwaukee. Town Bank seeks a declaratory judgment that it fully complied with the TCA and is not obligated to provide additional financing to City Real Estate under the terms of a previously-issued commitment letter (the commitment letter).  Town Bank twice moved for summary judgment, which the circuit court denied. Because those motions were denied, the case proceeded to a jury trial. The jury returned a verdict in favor of City Real Estate. Town Bank appealed, and the court of appeals reversed. The state supreme court found that the TCA was an unambiguous, fully integrated agreement between the bank and customer, that the bank fully complied with it, that it contained a merger clause that barred the customer from introducing any other evidence regarding the parties' intent, and, in any, event, the customer had not complied with all the conditions set forth in the commitment letter, meaning it would not be entitled to additional financing even if that letter was considered.


May an executed contract, with valid integration clauses, be held to be an unambiguous contract where it contained a merger clause and barred introduction of additional evidence of intent of the parties?




The court concludes that the TCA is an unambiguous, fully integrated agreement with which Town Bank fully complied. Accordingly, Town Bank should have been granted summary judgment, and the case should not have proceeded to a jury trial. Moreover, section 14 of the TCA constitutes an unambiguous merger clause which should have precluded City Real Estate from introducing any evidence of prior understandings or agreements that may have existed between the parties, including the commitment letter. Such section unambiguously demonstrates the parties' intent to exclude additional understandings or agreements not contained in the TCA. Section 14 "expressly negatives collateral or antecedent understandings," see id., by delineating an exhaustive list of the documents that are included in the parties' agreement: "This Agreement" (meaning the TCA), "the Exhibits" to the TCA, "the Note," and "the Security Documents." Pursuant to the plain language of section 14, Town Bank and City Real Estate intended that list of documents to comprise the "final expression of their agreement" and the "complete and exclusive statement of its terms." Hence, the parties intended to exclude from their final agreement any understanding or agreement not contained within the TCA, the exhibits, the Business Note, and the security documents.

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