2008AP1845 Town Bank v. City Real Estate Development, LLC

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Contracts
Parol evidence rule

An unambiguous merger clause in a term credit agreement bars the admission of parol evidence.
“The section on ‘Multiple Notes; Multiple Advances’ is clear. It plainly recognizes that Town Bank may make additional extensions of credit to City Real Estate ‘from time to time,’ and if such loans occur, the parties ‘agree that sections 4 through 19 of [the TCA] shall apply to each such extension of credit.’ Significantly, the provision then expressly states that the TCA ‘does not constitute a commitment by [Town Bank] to make such extensions of credit to [City Real Estate].’ Hence, while Town Bank has the option, the TCA does not obligate Town Bank to make any additional extensions of credit to City Real Estate.”

“Second, relying on Stevens Construction Corp., City Real Estate argues that the TCA is latently ambiguous, and therefore, the circuit court properly considered parol evidence to clarify the ambiguity. See 63 Wis. 2d at 354-55. A contract, though clear on its face, may be considered latently ambiguous if its application produces absurd or unreasonable results that the parties could not have intended. See id. at 354. City Real Estate contends that the TCA is latently ambiguous when applied to the context of the Wisconsin Tower project. According to City Real Estate, while an ‘uninformed observer’ could view the TCA as a final expression of the parties’ universal agreement, a latent ambiguity arises ‘as soon as the observer learns that the parties had in place a [c]ommitment [letter] providing for two phases of financing necessary for the project, and that the TCA only provides for one of those phases . . . .'”

“City Real Estate’s argument ignores the presence of the TCA’s unambiguous merger clause. As previously explained, because section 14 of the TCA constitutes an unambiguous merger clause, the court is precluded from considering any prior understanding or agreement that may have existed between Town Bank and City Real Estate, including the commitment letter. Thus, by its very nature, the unambiguous merger clause bars the court from considering the TCA within the context of the commitment letter.”
Affirmed.

Ziegler, J.

Attorneys: For Appellant: Erickson, Paul R., Milwaukee; Race, Kari H., Milwaukee; For Respondent: Jelinske, Thad W., Milwaukee; Walther, Jennifer S., Milwaukee; Anderson, Michael J., Milwaukee

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