NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0343n.06
No. 13-6029
FILED
Apr 29, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
DAVID PATTERSON, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE MIDDLE
GERALD ANDERSON, ) DISTRICT OF TENNESSEE
)
Defendant-Appellant. )
__________________________________/
Before: GUY, GIBBONS, and GRIFFIN, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Judgment in excess of $3.1 million was
entered against defendant Gerald Anderson and in favor of plaintiff David Patterson on
the claim that defendant breached two contracts by failing to repurchase approximately
109 acres of real property intended for residential development in Williamson County,
Tennessee. Defendant appeals from the denial of his pretrial motion for summary
judgment, arguing that it was error to conclude that it was ambiguous whether those
contracts were intended to be option contracts (as defendant claimed) or repurchase
agreements (as plaintiff claimed). Defendant also contends that the district court erred in
Case No. 13-6029 2
concluding that it lacked jurisdiction to decide his motion to alter or amend judgment,
which sought to reduce the judgment on grounds not previously raised. For the reasons
that follow, we affirm.
I.
The central issue in this diversity action was whether two contracts—the 1997
“Purchase Contract” and the 1999 “Purchase Contract”—obligated the defendant to
repurchase the property in question or merely granted the defendant an option to do so.
After a three-day bench trial, the district court issued written findings of fact resolving
the issue in plaintiff’s favor. We draw on those findings to summarize the circumstances
surrounding the transactions involving the two purchase contracts before addressing the
question of ambiguity.
In the mid-1990s, defendant Gerald Anderson acquired and consolidated property
for residential development in an area known as Raintree Forest in Williamson County,
Tennessee. When defendant needed capital in 1997, attorney Peter Curry told defendant
that he had a client who might be interested. Plaintiff David Patterson was that client.
Curry had acted at various times as an attorney for both plaintiff and defendant—each of
whom was a sophisticated businessman. Plaintiff and defendant never met or spoke to
one another, but communicated through Curry.
An agreement was reached, and Curry drafted three documents to effect the
transaction in July 1997. The first two were: the “Real Estate Sales Contract,” by which
defendant agreed to sell 102 acres of property in Raintree Forest to plaintiff for $816,000;
and the “Warranty Deed” by which defendant conveyed those 102 acres to plaintiff. The
Case No. 13-6029 3
third document was the 1997 “Purchase Contract,” stating that plaintiff agreed to sell the
102 acres back to defendant in conveyances of not less than 34 acres at specified intervals
and per-acre prices over the following thirty months. Defendant emphasizes that
although this purchase contract expressly stated plaintiff’s agreement to sell the property
to defendant, it did not also expressly state that defendant agreed to buy the property
back. Notably, although the Real Estate Sales Contract entered into at the same time
similarly lacked an express agreement to buy, it was never claimed to be an option
contract. Plaintiff maintained that the two-part transaction was intended to provide
defendant with financing at an agreed return of 14.5% annually, and was structured as a
land purchase/repurchase for tax reasons.1
In 1999, needing a portion of the 102 acres previously transferred to plaintiff,
defendant arranged to effectively “swap” approximately 29 acres held by plaintiff for a
different and somewhat larger parcel defendant owned in the development. Defendant
involved his mother, Ione Hildegard Anderson, in the transaction by having plaintiff sell
to her three parcels totaling approximately 29 acres over the course of several months.
Then, in October 1999, two documents completed the transaction: a “Warranty Deed” by
which defendant conveyed to plaintiff a 39.74-acre parcel for $308,818.93; and a
“Purchase Contract,” in which plaintiff agreed to sell that property back to defendant at
1
This transaction was apparently intended to allow plaintiff to acquire replacement property so as to defer
federal tax through what is referred to as a Section 1031 exchange. Arguments about whether the
transaction met the requirements for a Section 1031 exchange are immaterial to the issue of whether the
purchase contracts were ambiguous.
Case No. 13-6029 4
an agreed per-acre price by a given date.2 Again, this purchase contract did not expressly
state that defendant agreed to buy the property back. Following this transaction, plaintiff
held approximately 109 acres of land-locked property within the development subject to
the 1997 and 1999 Purchase Contracts.
Plaintiff and defendant agreed to several extensions of these purchase contracts,
both in writing and orally, with accompanying increases in the per-acre prices for the
property. There is no dispute that the last extension expired on January 9, 2008, after
which plaintiff refused to grant further extensions and defendant refused to repurchase
the property. Plaintiff brought this action seeking, in pertinent part, damages for
defendant’s breach of the purchase contracts. Plaintiff moved for summary judgment
and, although no response was filed, the magistrate judge recommended entry of
summary judgment in favor of defendant. That recommendation was accepted in part
and rejected in part when the district court concluded that ambiguities in the purchase
contracts precluded entry of summary judgment. Drawing on the magistrate judge’s
reasoning, defendant brought his own motion for summary judgment. But, the district
court again found that the purchase contracts were ambiguous in several respects and
denied defendant’s motion.
A three-day bench trial followed, after which the district court issued written
findings and conclusions of law adhering to its earlier determination of ambiguity;
weighing credibility with respect to the intent of the parties at the time of execution; and
2
Although an executed copy of the 1999 Purchase Contract was never produced, the district court found
as a factual matter that it was executed. Defendant does not challenge that finding on appeal.
Case No. 13-6029 5
concluding that “these documents are not option contracts, but rather absolute obligations
of Defendant to re-purchase the property previously conveyed to the Plaintiff at the prices
and with the interest rates provided in the contracts.” After calculating damages based on
the difference between the contract price and the fair market value of the property as of
January 9, 2008, and adding statutory prejudgment interest since January 9, 2008,
judgment was entered in favor of plaintiff in the amount of $3,136,661.49.3
Defendant filed a timely notice of appeal, followed by a timely motion to alter or
amend judgment seeking to reduce the damage award by the value of the 29 acres that
plaintiff sold to defendant’s mother (and the associated prejudgment interest). Plaintiff
responded that the claim for a “set off” had not been raised at trial and was without
merit. The district court denied defendant’s motion on the grounds that the already-
filed notice of appeal divested it of jurisdiction to rule on the motion. An amended
notice of appeal followed.
II.
Insisting that the district court erred as a matter of law in finding the contracts
were ambiguous, defendant argues that his motion for summary judgment should not
have been denied, that parol evidence should not have been considered at trial, and that
the district court’s findings regarding credibility were unnecessary and must be
disregarded. Thus, the essence of defendant’s appeal concerns the threshold question of
whether the purchase contracts clearly and unambiguously reflect an intention to create
3
Defendant did not appear at trial due to health issues, but his deposition testimony, taken while serving a
federal sentence for bribing a government official, was admitted into evidence instead.
Case No. 13-6029 6
an option (rather than an obligation) to repurchase the property.
A party may not appeal from the denial of summary judgment after losing at trial
on the merits if summary judgment was denied based on the presence of a material
question of fact. See FDIC v. AmTrust Fin. Corp. (In re AmTrust), 694 F.3d 741, 750-
51 (6th Cir. 2012) (discussing Ortiz v. Jordan, 131 S. Ct. 884, 892-93 (2011)).
However, that limitation does not apply when, as here, the denial of summary judgment
was based on a question of law. Id. (allowing appeal from denial of summary judgment
on question of contractual ambiguity); see also BankOne, N.A. v. Echo Acceptance
Corp., 380 F. App’x 513, 517-18 (6th Cir. 2010) (applying rule to appeal following
bench trial). Further, to the extent the appeal also may be construed as a challenge to
the district court’s adherence at trial to the determination that the contracts were
ambiguous, the district court’s legal conclusions would still be reviewed de novo. See
Overton Distr., Inc. v. Heritage Bank, 340 F.3d 361, 365-66 (6th Cir. 2003).4
There is no dispute that under Tennessee law, which governs this case, contract
interpretation is a question of law. Ray Bell Constr. Co. v. Tenn., 356 S.W.3d 384, 386
(Tenn. 2011). It is also settled that the “central task in interpreting a contract is to
ascertain and to give effect to the intent of the contracting parties.” Hughes v. New Life
Dev. Corp., 387 S.W.3d 453, 465 (Tenn. 2012). The search for that intent “should
focus on the four corners of the contract,” “the circumstances in which the contract was
4
Defendant argues for the first time in his reply brief that the evidence preponderates against the district
court’s credibility determinations. Not only would such factual findings be reviewed for clear error
“giv[ing] due regard to the trial court’s opportunity to judge the witnesses’ credibility,” Fed. R. Civ. P.
52(a)(6), but, more importantly, defendant has waived this argument by failing to present it in his initial
brief on appeal, see Thaddeus-X v. Blatter, 175 F.3d 378, 403 n.18 (6th Cir. 1999) (en banc).
Case No. 13-6029 7
made,” and “the parties’ actions in carrying out the contract.” Id. (citations omitted).
Moreover, the parties’ intent may be manifested expressly or impliedly, and what is
“‘plainly or necessarily implied in the language of a contract is as much a part of it as
that which is expressed.’” Hamblen Cnty. v. City of Morristown, 656 S.W.2d 331, 334
(Tenn. 1983) (citation omitted). A contract will be found to be ambiguous when its
meaning is uncertain and it may be fairly understood in more than one way. Planters
Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 890 (Tenn. 2002).
We begin, as the district court did, with the pertinent language in the 1997
Purchase Contract:
PURCHASE CONTRACT
WHEREAS David G. Patterson, Jr. (“Patterson”) owns approximately
102 acres of land located in Williamson County, Tennessee, a description
of which is attached hereto as Exhibit A (the “Property”); and
WHEREAS Gerald Anderson (“Anderson”) desires to contract to
purchase said Property;
THEREFORE, Patterson and Anderson agree as follows:
1. Patterson agrees to sell to Anderson the Property or portions of the
same during the following periods at the following prices:
A. On or before 12 months from the date of
execution of this contract: $9,160.00 per acre
B. On or before the end of the next
succeeding 12 months: $10,435.00 per acre
C. On or before the end of the next
succeeding 6 months: $11,237.00 per acre
Each conveyance shall be for no less than thirty-four (34) acres. During
the term of this Contract Patterson agrees to approve those changes to the
Case No. 13-6029 8
OSRD which are approved by the City of Brentwood.
2. The conveyance(s) shall be by general warranty deed. The Property
shall be conveyed subject to the OSRD zoning requirements, the
encumbrances listed on Exhibit B hereto and current property taxes, which
shall be paid by Anderson.
Similarly, the 1999 Purchase Contract provided in pertinent part as follows:
PURCHASE CONTRACT
WHEREAS David G. Patterson, Jr. (“Patterson”) owns approximately
36.74 acres of land located in Williamson County, Tennessee, . . . (the
“Property”); and
WHEREAS Gerald Anderson (“Anderson”) desires to contract to
purchase said Property;
THEREFORE, Patterson and Anderson agree as follows:
1. Patterson agrees to sell to Anderson the Property on or before
January 9, 2000 for $9,073.00 per acre.
Said conveyance shall be for no less than the entire Property. During
the term of this Contract Patterson agrees to approve those changes to the
OSRD which are approved by the City of Brentwood.
2. The conveyance(s) shall be by general warranty deed. The
Property shall be conveyed subject to the OSRD zoning requirements, the
encumbrances listed on Exhibit B hereto and all property taxes, which taxes
shall be paid by Anderson.
It is evident, as the district court concluded, that although the contracts expressly bound
plaintiff to sell the property to defendant, neither contract expressly stated that
defendant agreed to buy the property back from plaintiff. Ultimately, however, we
agree with the district court’s assessment that the absence of such language leaves it
unclear whether the contracts were intended to be option contracts (as defendant
claimed) or repurchase agreements (as plaintiff claimed).
Case No. 13-6029 9
Arguing to the contrary, defendant asserts that the absence of any explicit
obligation to repurchase the property demonstrates an unambiguous intent to create an
option (and not an obligation) to repurchase the property as a matter of law. The
Tennessee case cited by defendant in support defines an option as an obligation by
which the owner of property binds himself to sell but leaves it to the other party’s
discretion whether to buy at a fixed price within a certain time. City of Lebanon v.
Baird, No. 87-24-II, 1987 WL 12988, at *5 (Tenn. Ct. App. June 24, 1987) (quoting
Black v. Maddox, 30 S.E. 723, 724 (1898)), rev’d on other grounds, 756 S.W.2d 236
(Tenn. 1988). This definition is not in dispute; the question, however, is whether the
purchase contracts here unambiguously leave it to defendant’s discretion whether to
repurchase the property at all.
Here, ambiguity exists because the meaning is uncertain and the contracts are
susceptible to being fairly understood either as granting an option to repurchase at
defendant’s discretion or as an agreement to repurchase the property in the future at the
specified intervals and prices. It is relevant, albeit not dispositive, that the purchase
contracts contained no mention of an option or any provisions for exercising the
purported option; included recitals that expressed the defendant’s (albeit nonbinding)
desire to purchase the property; and were both titled and referred to in written extension
agreements as “Purchase Contracts.” Further, defendant retained responsibility to pay
the taxes on the property held by plaintiff subject to the purchase contracts. It is also
relevant that although the Real Estate Sales Contract that initiated the 1997 transaction
also failed to include any express obligation to buy the property, there was never a
Case No. 13-6029 10
claim that it was actually intended to be an option contract.
Nor is the ambiguity resolved by defendant’s claim that the fact that the
arrangement was intended to be a loan was still consistent with an intention to create an
option contract. Specifically, defendant explained that he deeded the property to
plaintiff for an amount equal to half of its fair market value with the intention to create
a non-recourse loan with the only remedy being plaintiff’s retention of the property in
the event of default. It is not clear whether defendant means to say repayment of the
loan was optional; but, even so, it does not alter our conclusion that the purchase
contracts did not unambiguously manifest an intention to create an option (and not an
obligation) to repurchase the property. Because the purchase contracts were ambiguous
in this regard, defendant’s motion for summary judgment was properly denied and parol
evidence was properly considered at trial to determine the parties’ intent. See Allstate
Ins. Co. v. Watson, 195 S.W.3d 609, 612 (Tenn. 2006).
III.
Defendant filed a timely notice of appeal, followed by a timely motion to alter or
amend judgment under Fed. R. Civ. P. 59(e). In that motion, defendant sought to
reduce the damage award (and associated prejudgment interest) arguing for the first
time that the district court failed to account for the approximately 29 acres of property
that were repurchased by defendant (or, more accurately, defendant’s mother). The
district court denied the motion on the grounds that the previously filed notice of appeal
divested the court of jurisdiction. Defendant filed an amended notice of appeal, as
required by Fed. R. App. 4(a)(4)(B)(ii).
Case No. 13-6029 11
A district court generally loses jurisdiction over an action once a party files a
notice of appeal. See Dixon v. Clem, 492 F.3d 665, 679 (6th Cir. 2007). However, in
civil cases, the timely filing of certain listed motions not only tolls the time to appeal
but also suspends the effectiveness of a notice of appeal until the last of such motions is
resolved. See FED. R. APP. P. 4(a)(4) Advisory Committee Notes (1993 Amendment)
(“A notice [of appeal] filed before the filing of one of the specified motions or after the
filing of a motion but before disposition of the motion is, in effect, suspended until the
motion is disposed of, whereupon, the previously filed notice effectively places
jurisdiction in the court of appeals.”). That is, the timely filing of a motion listed in
Rule 4(a)(4)(A)—including a motion to alter or amend judgment under Rule 59—has
been held to suspend or render dormant a notice of appeal “regardless of whether the
motion was filed before or after the notice of appeal.” Ross v. Marshall, 426 F.3d 751-
52 (5th Cir. 2005); see also Warren v. Am. Bankers Ins., 507 F.3d 1239, 1245 (10th Cir.
2007); United States v. Silvers, 90 F.3d 95, 98 (4th Cir. 1996). Accordingly, “[w]hen a
party has filed a timely motion to alter or amend a judgment after a notice of appeal has
been filed, the district court still retains jurisdiction to consider the motion.” O’Sullivan
Corp. v. Duro-Last, Inc., 7 F. App’x 509, 519 (6th Cir. 2001) (citations omitted).5
Although defendant is correct that the district court was not divested of
jurisdiction to decide the motion, defendant has made no attempt to demonstrate on
appeal that this error was not harmless. A motion to alter or amend judgment under
5
Indeed, the docket reflects that just after the district court entered its order, this court advised counsel that
the initial appeal would be “held in abeyance until after the district court rules on pending motions,
identified in Fed. R. App. P. 4(a)(4), and jurisdiction transfers to the Sixth Circuit Court of Appeals.”
Case No. 13-6029 12
Rule 59(e) may be granted if there is “(1) a clear error of law; (2) newly discovered
evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest
injustice.” Interra Corp. v. Henderson, 428 F.3d 605, 620 (6th Cir. 2005) (citing
GenCorp, Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 834 (6th Cir. 1999)).
The record supports plaintiff’s unrefuted contention that no claim for a “set off”
or reduction to the damage calculation was raised at trial or in the proposed findings of
fact and conclusions of law. Further, defendant’s assertion that the damages should be
reduced by the amount paid to plaintiff for the approximately 29 acres purchased by
defendant’s mother disregards the remainder of the transaction in which the proceeds
were used by plaintiff to purchase the 36.74-acre parcel from defendant that became the
subject of the 1999 Purchase Contract. Defendant offered no argument on appeal
concerning the merits of his Rule 59 motion. There being no evident error of law,
newly discovered evidence, intervening change in the law, or manifest injustice,
remand is not required.
AFFIRMED.