Murray v. Harvey Hansen-Lake Nokomis, Inc.

360 N.W.2d 658, 1985 Minn. App. LEXIS 3740
CourtCourt of Appeals of Minnesota
DecidedJanuary 15, 1985
DocketC3-84-857
StatusPublished
Cited by6 cases

This text of 360 N.W.2d 658 (Murray v. Harvey Hansen-Lake Nokomis, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Murray v. Harvey Hansen-Lake Nokomis, Inc., 360 N.W.2d 658, 1985 Minn. App. LEXIS 3740 (Mich. Ct. App. 1985).

Opinion

OPINION

LANSING, Judge.

This appeal arises out of a contract for the listing and sale of residential property. Harvey Hansen — Lake Nokomis, Inc. (Harvey Hansen), the real estate agent, appeals from a judgment awarding respondent Gregory Murray compensatory damages for breach of contract. Respondent cross-appeals, contending the trial court should have returned the real estate commission and allowed punitive damages. We affirm and modify.

FACTS

Gregory Murray and his wife, Colleen Miller Murray, anticipating dissolution of their marriage, contracted with Harvey Hansen to sell their house. The contract was set forth in threé documents — a listing agreement, a guaranteed sale agreement, and an expense sheet. Harvey Hansen agreed to list the property for 90 days at graduated sales prices beginning at $72,-900, and if the property were not sold within that time, to purchase it for a guaranteed price of $69,500.

The guaranteed sale agreement provided that the purchase price of $69,500 would be paid in part by Harvey Hansen’s assumption of a mortgage valued at approximately $45,000 and by payment of $11,685 to the Murrays. The balance of the purchase price was to be paid from an escrow account of $12,195, as credit against expenses listed on the expense sheet portion of the contract. These expenses included a sales commission, a mortgage assumption fee, three repair expenses, and an allocation for “points” (loan replacement fee). The guaranteed sale agreement provided that if Harvey Hansen sold the property for more than the guaranteed price, the excess would be refunded to the Murrays after deduction of the actual cost of holding and sale.

No purchaser was found within the 90-day period, and Harvey Hansen acquired the property under the guaranteed sale agreement. Harvey Hansen paid the Mur-rays $11,060 (the parties had agreed that $469 for the June mortgage payment and $150 for a closing fee could be deducted from the $11,685). Shortly after the closing with the Murrays, Harvey Hansen resold the property for $66,900 — $2,600 less than the guaranteed price. The buyer purchased the house “as is,” before several of the originally estimated repair expenses listed on the expense sheet had been incurred.

After the sale, Harvey Hansen notified the Murrays of the deductions from the escrow account, which showed a negative balance. Harvey Hansen had deducted expenses not listed on the expense sheet, including interest expense on a loan taken out to pay the Murrays cash at closing, a *660 July mortgage payment, a discount on a contract for deed Harvey Hansen issued to the purchasers and subsequently sold, and various other expenses totalling approximately $11,000. Harvey Hansen’s commission was the only expense both listed on the expense sheet and actually incurred.

Murray sued for the amount Harvey Hansen deducted for expenses not listed on the expense sheet and for the estimated expenses not actually incurred, claiming Harvey Hansen was not entitled to actual expenses but rather only to those listed on the expense sheet. Murray argued that testimony should be allowed on the contracting parties’ intention because the guaranteed sale agreement is ambiguous. It provides that if the house sells for more than the guaranteed price, the Murrays receive the additional payment less actual expenses, but it does not specify whether costs are deductible if the property sells for less.

The trial court found the guaranteed sale agreement ambiguous as written and after construing the contract found Harvey Hansen in breach and estopped from denying that it was limited to those expenses on the original expense sheet. The court awarded judgment to Murray for $7,800 and determined that Colleen Miller Murray, who no longer lives in Minnesota, was not an indispensable party to the action. Finally, the court found that Murray failed to meet his burden of proof in showing any breach of fiduciary duties or conduct justifying punitive damages.

ISSUES

1. Did the trial court err in using extrinsic evidence to construe the contract because the parties’ agreement was incomplete and ambiguous?

2. Did the trial court err in finding Harvey Hansen in breach for failing to limit expenses incurred to those agreed on by the parties?

3. Is Colleen Miller Murray an indispensable party under Minn.R.Civ.P. 19.02?

ANALYSIS

I

The question of whether a contract is ambiguous is a question of law. See Blattner v. Forster, 322 N.W.2d 319, 321 (Minn.1982). If the terms of a written contract are ambiguous or incomplete, a court may resort to extrinsic evidence of intent to construe the contract. See Republic National Life Insurance Co. v. Lorraine Realty Corp., 279 N.W.2d 349, 354 (Minn.1979); Flynn v. Sawyer, 272 N.W.2d 904, 908 (Minn.1978).

The contract as written is both incomplete and ambiguous. The guaranteed sales agreement provides that actual costs of holding and sale are deductible if the property is resold in excess of the guaranteed price, but does not address whether or not costs may be deducted if the property is sold for less than the guaranteed price. The expense sheet creates an ambiguity because nothing in the parties’ agreement specifies whether it is an exclusive list of authorized, fixed expenses or a list of estimated expenses that can be fixed at a later date. Both interpretations are equally plausible. In addition, the amounts on the various lists do not tally consistently, adding to the ambiguity. The trial court’s finding of ambiguity is well supported, and its decision to consider extrinsic evidence of intent was proper.

II

The trial court construed the contract, based on extrinsic evidence, to mean that Harvey Hansen had authority to incur only those expenses itemized on the original expense sheet, and if those enumerated expenses were not actually incurred, that Harvey Hansen would remit to Murray the equivalent amount in cash.

The witnesses who testified on the issue of intent were present when the agreement was reached. Greg Murray testified vehemently that the items on the expense sheet were carefully and specifically negotiated and were fixed items, not examples of what might be charged. Although this testimo *661 ny was disputed, even Harvey Hansen’s agent, Melodie Wicking, acknowledged that the Murrays were told the list contained exact figures. The evidence supports the trial court’s findings on the issue of intent and the purpose of the expense sheet.

The trial court found that Harvey Hansen did not incur the following expenses:

FHA-VA points $5,400
Water pressure $1,200
Exterior repair $ 700
Kitchen repair $ 500

The court determined that under the contract Harvey Hansen must remit to Murray $7,800, the cash equivalent of the authorized expenses not incurred.

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Cite This Page — Counsel Stack

Bluebook (online)
360 N.W.2d 658, 1985 Minn. App. LEXIS 3740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/murray-v-harvey-hansen-lake-nokomis-inc-minnctapp-1985.