Pankratz v. Hoff
2011 SD 69
| S.D. | 2011Background
- Hoffs owned 9,334.71 acres (Hoff Ranch) in Perkins County, SD; sale discussed to Pankratz in two transactions due to funding constraints.
- Real Estate Purchase Agreement conveyed 6,107.91 acres to Pankratz for $3,732,035; a separate Right of First Refusal and an option covered 3,226.8 acres targeting the remainder.
- Option provided sale ofGrantors’ interests in the 3,226.8 acres for $935,325 with a prorated option price per acre if a smaller tract was sold.
- After discovery of Brian Hoff’s ownership in the option land, Pankratz agreed to partition the option land to 2,066.8 acres to complete sale.
- Trial court admitted parol evidence, found ambiguity, and awarded specific performance at an average $500 per acre, inconsistent with the explicit option price structure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the option agreement is ambiguous and whether parol evidence is admissible | Pankratz argues option is ambiguous and parol evidence reflects intent to sell all ranch for $500/acre | Hoffs contend option is fully integrated, unambiguous, and parol evidence is inadmissible | Option agreement ambiguous; parol evidence allowed to interpret terms and remedies. |
| Whether the Real Estate Purchase Agreement and option agreement are fully integrated | Pankratz contends both contracts read together as a staged sale of the entire ranch | Hoffs maintain each contract is fully integrated and standalone | Contracts are fully integrated; each stands alone. |
| Proper price for the option land when a smaller tract is sold | Price should be the $500/acre average across all acres | Prorated option price controls (289.86 per acre) per contract | Prorated option price applies; but specific performance price must reflect contract terms, yielding $289.86/acre for 2,066.8 acres. |
| Remedy for breach and scope of specific performance | Sought specific performance to transfer 2,066.8 acres at $171.92/acre | Remedy limited by contract terms to prorated price per acre | Remand for judgment consistent with opinion; specific performance allowed but at prorated price of $289.86/acre. |
| Whether the court erred in excluding or improperly using parol evidence to set price | Parol evidence explains contract terms and parties’ intent | Extrinsic evidence cannot alter unambiguous contract terms | Court erred in ignoring contract price framework; must adhere to option price of $289.86/acre for the reduced tract. |
Key Cases Cited
- Schulte v. Progressive Northern Ins. Co., 699 N.W.2d 437 (S.D. 2005) (contract interpretation de novo; ambiguity governs parol evidence rule)
- Cowan v. Mervin Mewes, Inc., 546 N.W.2d 104 (S.D. 1996) (contract interpretation and merger rule; parol evidence limits)
- Pesicka v. Pesicka, 618 N.W.2d 725 (S.D. 2000) (ambiguity and integration principles in contract disputes)
- Alverson v. Northwestern Nat’l Cas. Co., 559 N.W.2d 234 (S.D. 1997) (integration and interpretation of written contracts)
- Ziegler Furniture and Funeral Home, Inc. v. Cicmanec, 709 N.W.2d 335 (S.D. 2006) (ambiguity depends on reasonable interpretations of terms)