The opinion of the court was delivered by: Karen E. Schreier Chief Judge
ORDER GRANTING DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT
Plaintiffs, Marwin Hofer, Jason Seurer, Margo Investments, L.L.C., Daniel Fischer, Timothy Hofer, and G & R Development, LLC, allege claims for promissory estoppel and equitable estoppel against defendant, Liberty National Bank. Liberty moves for summary judgment on both claims. Docket 22. Plaintiffs oppose the motion. For the following reasons, Liberty's motion is granted.
The pertinent facts viewed in the light most favorable to plaintiffs are as follows:
Plaintiffs are a group of individual and institutional investors who were interested in purchasing a parcel of land located in Sioux Falls, South Dakota. The land was approximately 190 acres, and plaintiffs were considering using v. the land for commercial development. Liberty is a federally chartered bank. This case arose from discussions between plaintiffs and Liberty pertaining to the possibility of plaintiffs receiving financing from Liberty so that plaintiffs could purchase the aforementioned parcel of land.
Plaintiffs had the land appraised on February 10, 2010, in order to gain perspective as to the property's value. The appraisal was requested by Darrel Viereck, a real estate broker, on behalf of Hofer. The appraisal was performed by Dennis Holles of Kaschmitter Appraisals, Inc. In performing the appraisal, Holles did not comply with certain rules and regulations created by the Office of the Comptroller of the Currency (OCC) and the Financial Institutions Reform and Recovery Act of 1989 (FIRREA).*fn1 An appraisal must comply with FIRREA if a bank relies on it in making a loan. The Kaschmitter appraisal valued the property at $13,192,500.
Plaintiffs first contacted Jacob Stahl, the Senior Vice President at Liberty, in July of 2010 to discuss the possibility of obtaining financing to purchase the property. On July 20, 2010, which was after their initial discussions, plaintiffs provided Stahl with the Kaschmitter appraisal. Plaintiffs claim that Stahl informed them that Kaschmitter Appraisals, Inc., was on Liberty's approved list of appraisers and that the Kaschmitter appraisal would be acceptable.
The July 2010 discussions with Stahl did not lead to any commitment from Liberty that it would finance plaintiffs' acquisition of the property. Instead, an August 20, 2010, string of emails between plaintiffs and Stahl shows that plaintiffs were still only in the initial stages of obtaining financing. In the August 20 emails, plaintiffs stated that they were "not asking for 100% commitment" from Liberty at that time but wanted to know Stahl's "thoughts" on whether Liberty could put the "deal together[.]" Docket 41-13. Stahl did not respond that Liberty would be able to provide financing but instead indicated that he would have a better idea after further information was received. Id.
Following discussions with Stahl, plaintiffs met with the owner of the land to further discuss purchasing the property. Plaintiffs entered into a purchase agreement with the owner of the property on September 3, 2010, agreeing to a $7.5 million purchase price. The purchase agreement called for a $40,000 payment on September 4, 2010, a $460,000 payment on October 15, 2010, with the remaining balance due on December 1, 2010. The two initial payments, totaling $500,000, were nonrefundable, regardless of whether plaintiffs obtained financing.*fn2 Plaintiffs made the initial two payments on the dates when they were due.
After entering into the purchase agreement, plaintiffs contacted Liberty in October 2010 in an attempt to get a loan commitment letter (LCL). Between October 13, 2010, and October 19, 2010, Liberty sent four versions of a proposed LCL to plaintiffs, making changes as requested through negotiations with plaintiffs. There was a covenant in all four versions of the LCL, including the executed version, that necessitated Liberty be "furnished an appraisal, in form and substance satisfactory to [Liberty], by a qualified appraiser approved by [Liberty], showing the value for the Mortgaged Property . . . acceptable to [Liberty] in value and condition." Docket 30-13 at 5. The LCL further dictated that the loan amount would not exceed 56 percent of the appraised value or $7,320,000, whichever is less. Id. The LCL also contained an integration clause that prescribed that the LCL "constitutes the entire understanding of the parties concerning the subject matter of [the LCL], and supersedes and replaces any and all prior communications, agreements and understandings of the parties, written or otherwise, concerning the subject matter of [the LCL]." Docket 30-13 at ¶ 22. Plaintiffs acknowledge that the LCL replaced any prior oral understandings plaintiffs thought they had with Liberty. Docket 24 at ¶ 48 (admitted in Docket 35 at 6).
Following formation of the LCL, Liberty contacted Holles and asked him to bring the Kaschmitter appraisal up to date. Holles refused.*fn3 Because Holles refused, Liberty hired a different appraisal company, Shaykett Appraisals, to complete an appraisal of the property. The Shaykett appraisal valued the property at $10 million. Thereafter, Liberty informed plaintiffs that it would approve a loan in the amount of $6 million assuming plaintiffs could satisfy the other conditions set forth in the LCL. The terms of the LCL required Liberty to only loan plaintiffs $5.6 million (56 percent of the appraised value).
The $6 million loan amount was $1,320,000 below the amount plaintiffs had wanted to borrow from Liberty. Docket 35 at 9. Although plaintiffs had the financial ability to come up with the additional funds needed to purchase the property, they chose not to put up the funds and did not purchase the property. Id. at 10.
Because the $500,000 payments were nonrefundable, plaintiffs are now seeking damages in that amount from Liberty. Plaintiffs' claims for promissory estoppel and equitable estoppel arise from the statements Stahl allegedly made to ...