Khan v. Bakhsh

306 P.3d 411, 129 Nev. 554, 129 Nev. Adv. Rep. 57, 2013 WL 3963425, 2013 Nev. LEXIS 68
CourtNevada Supreme Court
DecidedAugust 1, 2013
Docket60262
StatusPublished
Cited by10 cases

This text of 306 P.3d 411 (Khan v. Bakhsh) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Khan v. Bakhsh, 306 P.3d 411, 129 Nev. 554, 129 Nev. Adv. Rep. 57, 2013 WL 3963425, 2013 Nev. LEXIS 68 (Neb. 2013).

Opinion

OPINION

By the Court,

Cherry, J.:

At the bench trial in this case, Muhammad Q. and Maimoona Q. Khan presented evidence of an allegedly written, but lost or destroyed, agreement between the Khans and Qadir Bakhsh to purchase a certain restaurant and land from Bakhsh. The district court excluded this evidence under the statute of frauds because the Khans failed to produce the written agreement. The question in dispute is whether the district court erred when it applied the statute of frauds to preclude consideration of the Khans’ evidence regarding the existence and terms of the allegedly lost or destroyed written agreement. We conclude that the statute of frauds does not apply to a writing that is subsequently lost or destroyed, and oral evidence is admissible to prove the existence and terms of that lost or destroyed writing. Thus, we reverse the district court’s order and remand this matter to the district court for further proceedings.

FACTS

Respondent Qadir Bakhsh owned a restaurant and the real property on which it was located, which appellants Muhammad Q. and Maimoona Q. Khan agreed to purchase. The parties’ first buy-and-sell agreement provided that the Khans would purchase the property for $600,000 by paying off Bakhsh’s outstanding first and second mortgages. Both parties agreed that subsequent second and third agreements existed, and the third agreement set a purchase price of $990,000, wherein the Khans would pay off the $600,000 outstanding first and second mortgages and execute a $390,000 promissory note in favor of Bakhsh. This third agreement and promissory note proceeded through escrow and, according to Bakhsh, was the operative agreement between the parties. The Khans never made any payments on the $390,000 promissory *556 note, and Bakhsh eventually initiated the underlying suit against the Khans to recover the principal and unpaid interest.

At the bench trial, the Khans presented evidence that a fourth agreement existed, which again set the purchase price for the property at $600,000. According to the Khans, the only executed copy of this agreement was given to a third party, Tahir Abbas Shah, for safekeeping. After relations between Bakhsh and the Khans deteriorated, Bakhsh’s brother allegedly stole the signed copy of the fourth agreement from Shah. Shah testified that when he confronted Bakhsh about the stolen fourth agreement, Bakhsh initially agreed to return it, but never did so.

Bakhsh contended that the fourth agreement never existed, and that the third agreement and the promissory note, under which the purchase proceeded through escrow, contained the agreed-upon purchase price and terms of the sale. The Khans maintained that the fourth agreement, while stolen and allegedly destroyed by Bakhsh or his brother, was the actual agreement between the parties, or alternatively that the third agreement was fraudulently induced.

In its order after the bench trial, the district court refused to consider most of the evidence that the Khans presented. The court found that the Khans’ evidence of the destroyed fourth agreement was barred by the statute of frauds because it was an “unwritten” agreement for the purchase of property. The district court also found that Muhammad Khan’s testimony about terms that differed from the terms of the third agreement was barred by the parol evidence rule. After declining to consider this evidence, the district court found that the Khans breached the third agreement and entered judgment in favor of Bakhsh. The district court awarded Bakhsh monetary damages of $390,000 plus interest for the Khans’ failure to pay the $390,000 promissory note, $20,000 for Bakhsh’s remaining interest in the restaurant, $585,000 in liquidated damages pursuant to a provision in the third agreement, and $1,359.77 in costs. The Khans appealed.

DISCUSSION

We begin our review of the issues presented in this appeal by examining the district court’s application of the statute of frauds and the parol evidence rule, before addressing the damages award.

Application of evidentiary rules

Statute of frauds

The Khans argue that the district court erred when it applied the statute of frauds to bar their evidence of a fourth written contract that they alleged was later stolen and destroyed. We agree with the *557 Khans that the statute of frauds does not bar oral evidence of such a contract.

Nevada’s statute of frauds provides that every contract for the sale of land is void unless the contract is in writing, and thus, oral agreements to convey real property cannot be enforced. NRS 111.205(1); see also Butler v. Lovoll, 96 Nev. 931, 934-35, 620 P.2d 1251, 1253 (1980). Because the Khans did not present a writing evidencing the fourth agreement, the district court deemed it an “unwritten” agreement and applied the statute of frauds to bar the Khans’ evidence of the fourth agreement. But the Khans did not allege that the fourth agreement was oral or unwritten. Instead, they presented testimony, from themselves and Shah, and documentary evidence regarding the existence and terms of a fourth written agreement, which was allegedly subsequently lost or destroyed by Bakhsh. Because this evidence pertained to the existence and terms of an allegedly written agreement, the statute of frauds is satisfied and this evidence is admissible. See Lutz v. Gatlin, 590 P.2d 359, 361 (Wash. Ct. App. 1979).

The admissibility of evidence concerning a written agreement is not affected by the subsequent loss or destruction of such an agreement. Its loss or destruction does not render it “unwritten” and the evidence of its existence and terms barred by the statute of frauds. Id. Indeed, when one party allegedly stole or destroyed the agreement, as the Khans allege Bakhsh did here, that party may not use the statute of frauds to sanction his obliteration of the agreement to the detriment of the other party. See Baker v. Mohr, 826 P.2d 111, 113 (Or. Ct. App. 1992). Thus, in this case, the district court erred when it found that the statute of frauds barred the Khans’ evidence of the existence and terms of the alleged fourth written agreement. Edwards Indus., Inc. v. DTE/BTE, Inc., 112 Nev. 1025, 1033, 923 P.2d 569, 574 (1996) (stating that the district court’s application of the statute of frauds is a question of law, which this court reviews de novo). Accordingly, the Khans were entitled to present parol or other evidence to prove the existence and contents of the allegedly lost or destroyed fourth agreement. Joseph E. Seagram & Sons, Inc. v. Shaffer, 310 F.2d 668, 674-75 (10th Cir. 1962); Mark Keshishian & Sons, Inc. v. Wash.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
306 P.3d 411, 129 Nev. 554, 129 Nev. Adv. Rep. 57, 2013 WL 3963425, 2013 Nev. LEXIS 68, Counsel Stack Legal Research, https://law.counselstack.com/opinion/khan-v-bakhsh-nev-2013.