Randy Lundgren v. Diane Cash

• Court: Court of Appeals of Minnesota
• Decided: July 27, 2015
• Docket: A14-1004
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A14-1004

Randy Lundgren, Appellant,

vs.

Diane Cash, Respondent.

Filed July 27, 2015 Affirmed Reyes, Judge

Crow Wing County District Court File No. 18CV124441

Peter Radosevich, Radosevich Law Office, Esko, Minnesota; and

Adrienne Pearson, Pearson Law, Duluth, Minnesota (for appellant)

Neil C. Franz, Christopher A. Jensen, Franz Hultgren Evenson, P.A., St. Cloud, Minnesota (for respondent)

Considered and decided by Larkin, Presiding Judge; Reilly, Judge; and

Reyes, Judge.

UNPUBLISHED OPINION

REYES, Judge

On appeal in this contract dispute, appellant Randy Lundgren argues that (1) the

district court erred in admitting parol evidence to interpret the parties’ contract and

(2) the district court erred in finding that appellant breached the contract. We affirm. FACTS

Appellant is the previous owner of property located in Crosby. During his

ownership, appellant amassed multiple encumbrances on the property, and in September

2009, the Crow Wing County Auditor’s Office executed a certificate of forfeiture

transferring the property to the State of Minnesota to satisfy unpaid property taxes,

subject to a right of redemption. In November 2009, appellant’s creditor, CACH, LLC,

filed a lien on the property in the amount of $6,534.14.

On February 16, 2010, appellant and respondent Diane Cash executed a “Letter of

Agreement” (the Agreement) stating that the property would be conveyed to respondent

for $42,000, subject to a number of conditions. The $42,000 purchase price was split into

two payments: an initial $20,000 payment advanced by respondent to satisfy the

property’s previous debts and $22,000 in payments to be made over the course of 18

months. The specific language reads as follows:

[Respondent] has agreed to purchase and [appellant] has agreed to sell the property for a sum of $42,000. [Respondent] will advance funds as necessary to provide relief of the back taxes and the [judgment] to CACH, LLC that is currently recorded on the property. . . .

Upon successful satisfaction of these debts and the availability of a clear title for the property from Crow Wing County, [appellant] will issue a Quit Claim Deed to [respondent] for the above property. [Respondent] will, upon execution of the Quit Claim Deed, provide [appellant] with $20,000 cash less the amounts advanced to clear the title and provide relief from future [judgments] as listed in the above paragraph . . . .

2 The balance of $22,000 will be paid to [appellant] over a period of 18 months at 0% interest. . . . This will be a personal note between [appellant] and [respondent].

The Agreement also states that appellant had secured a “new purchaser.” Respondent

agreed to resell the property to the “new purchaser” in a contract for deed at a higher

price, with payments from the “new purchaser” to respondent occurring “over a

substantially longer period.” The Agreement further states that “[i]n the event that the

new purchaser defaults before the full payment [by respondent] of $42,000 is made to

[appellant], [appellant] and [respondent] agree to renegotiate the terms of the personal

note.” The “new purchaser” was later identified at trial as Audrey Corey.

After the Agreement was executed, respondent made a number of payments:

$4,142.63 to Crow Wing County to satisfy appellant’s tax debt and to exercise

appellant’s right of redemption; $3,000 to CACH, LLC to satisfy its judgment lien

against the property; and $2,555 to appellant directly. On April 30, 2010, appellant

executed a quitclaim deed conveying the property to respondent. On that same day,

respondent executed a contract for deed to convey the property to Corey. At no time

during the April 30, 2010 conveyances did appellant provide respondent with clear title to

the property. This obligation was eventually satisfied on July 26, 2011, when appellant

provided respondent with two mortgage satisfactions.

In 2011, problems occurred with Corey’s payments. Starting in March 2011,

Corey’s payments were late and sporadic, and after July 6, 2011, respondent stopped

receiving payments altogether. At trial, both parties presented different versions as to

what happened after Corey’s default. Appellant testified that he had ongoing discussions

3 with respondent about trying to resolve the problems with the property. Respondent

testified that appellant refused to renegotiate and that any discussions regarding

renegotiation were always one-sided. Respondent submitted a number of letters

corroborating her version of events. The district court found respondent’s testimony

credible.

As previously stated, respondent did not receive mortgage satisfactions until July

26, 2011. Having received these satisfactions, respondent paid appellant $10,307.37 on

August 15, 2011. Respondent eventually sold the property to a new buyer in December

2011. Appellant commenced this action and respondent counterclaimed, alleging that

appellant breached the contract. Following a court trial, the district court found that

appellant breached the contract and dismissed his claims with prejudice. Posttrial

proceedings followed, generating a judgment nunc pro tunc. Those proceedings are not

at issue and this appeal followed.

DECISION

Appellant argues that the district court erred by (1) admitting parol evidence to

interpret the Agreement and (2) finding that appellant breached the contract. The district

court has discretion to grant a new trial and its decision will not be disturbed absent a

clear abuse of discretion. Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d

905, 910 (Minn. 1990). “Findings of fact, whether based on oral or documentary

evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to

the opportunity of the [district] court to judge the credibility of the witnesses.” Minn. R.

Civ. P. 52.01.

4 I. The district court did not err by admitting parol evidence to interpret the contract because the contract is incomplete.

Appellant first argues that the district court, when addressing whether there was a

breach of the Agreement, should not have considered testimony and documentation

regarding respondent’s contract with Corey. Appellant’s argument is based on the parol

evidence rule, which “prohibits the admission of extrinsic evidence of prior or

contemporaneous oral agreements, or prior written agreements, to explain the meaning of

a contract when the parties have reduced their agreement to an unambiguous integrated

writing.” See Alpha Real Estate Co. of Rochester v. Delta Dental Plan of Minn., 664

N.W.2d 303, 312 (Minn. 2003) (quotation omitted). However, when “a written

agreement is ambiguous or incomplete, evidence of oral agreements tending to establish

the intent of the parties is admissible.” Id. (emphasis added) (quotation omitted).

Therefore, we must first determine whether the Agreement was “ambiguous or

incomplete.” See id.

A. Ambiguous

“Whether a contract is ambiguous is a question of law that we review de novo.”

Dykes v. Sukup Mfg. Co., 781 N.W.2d 578, 582 (Minn. 2010). A district court’s

determination of the meaning of an ambiguous contractual provision is a finding of fact

which we review for clear error. Trondson v. Janikula, 458 N.W.2d 679, 682 (Minn.

1990). “A contract is ambiguous if, based upon its language alone, it is reasonably

susceptible of more than one interpretation.” Denelsbeck v. Wells Fargo & Co., 666

N.W.2d 339, 346 (Minn. 2003) (quotation omitted).

5 The district court found that the Agreement was ambiguous because it could not

determine if the Agreement was an agreement for financing or for sale and could not

ascertain respondent’s role in the transaction. Due to this lack of clarity, the district court

found it necessary to examine extrinsic evidence related to the parties’ agreement with

Corey, the future purchaser of the property.

But a general lack of clarity is not the standard for determining whether a contract

is ambiguous. Instead, courts must determine whether, “based upon its language alone,”

a contract “is reasonably susceptible of more than one interpretation.” Id. (quotation

omitted). It is true that the Agreement contains references to both financing and sale.

But neither the district court nor respondent cites any caselaw supporting the notion that

an agreement is ambiguous when it contains both financing and sale elements. And

neither the district court nor respondent offer more than one reasonable interpretation.

Instead, the only reasonable interpretation of the Agreement is that it provides for the sale

of the property, subject to a number of conditions. One of those conditions is that

respondent will provide funds to clear back taxes and lien judgments from the property.

The Agreement makes this arrangement clear when it states, under the heading “Financial

Agreement,” that “[respondent] has agreed to purchase and [appellant] has agreed to sell

the property for a sum of $42,000. [Respondent] will advance funds as necessary to

provide relief of the back taxes and the [judgement] to CACH, LLC that is currently

recorded on the property.” Despite containing both financing and sale elements, these

sentences are not inconsistent and instead describe a sale of property in which a portion

of the funds will be advanced to satisfy previous debts. Cf. Wenner v. Gulf Oil Corp.,

6 264 N.W.2d 374, 383-84 (Minn. 1978) (concluding that a contract’s contradictory clauses

which first provided a warranty and then disclaimed any warranties “cannot be

reasonably reconciled with one another”). We fail to see how such language could be

“reasonably susceptible of more than one interpretation.” See Denelsbeck, 666 N.W.2d at

346 (quotation omitted).

B. Incomplete

Although we conclude that the Agreement is unambiguous, parol evidence may

still be introduced if the Agreement is incomplete or not integrated. “[W]here a written

agreement is ambiguous or incomplete, evidence of oral agreements tending to establish

the intent of the parties is admissible.” Alpha Real Estate Co., 664 N.W.2d at 312

(quotation omitted). “If it appears from the circumstances surrounding the case that the

parties did not intend the agreement to be a complete integration, then parol evidence can

be used to prove the existence of a separate consistent oral agreement.” Id. This has also

been referred to as the “incomplete contract” exception to the parol-evidence rule, see

Bussard v. Coll. of St. Thomas, Inc., 294 Minn. 215, 224, 200 N.W.2d 155, 161 (1972),

and has been recognized since 1893, when the supreme court stated:

It is always competent to prove by parol [evidence] the existence of any separate oral agreement as to any matter on which the document is silent, and which is not inconsistent with its terms, if, from the circumstances of the case, the court infers that the parties did not intend the document to be a complete and final statement of the whole of the transaction between them.

Phoenix Publ’g Co., v. Riverside Clothing Co., 54 Minn. 205, 206, 55 N.W. 912, 912

(1893). Notably, the determination of whether a contract is fully integrated “is not made

7 solely by an inspection of the writing itself . . . for the writing must be read in light of the

situation of the parties, the subject matter and purposes of the transaction, and like

attendant circumstances.” Bussard, 294 Minn. at 224, 200 N.W.2d at 161. This analysis

has been referred to as “a common-sense reading.” Id. at 225, 200 N.W.2d at 161.

The Agreement is incomplete because it is silent with regard to a key aspect of the

contract, the role of the “new purchaser.” Despite spanning just over one page, the

Agreement references the new purchaser five different times. In addition, the Agreement

specifically references another contract between respondent and the new purchaser that

would occur upon execution of the Agreement. The entire renegotiation clause is based

upon the new purchaser defaulting on the then-unsigned contract for deed under which

respondent would convey property to Corey. And yet, the Agreement is silent on how

the new purchaser could default and thus trigger the renegotiation clause. In fact, the

new purchaser is not even named.1 In light of these circumstances, the Agreement is

incomplete and the district court did not err in admitting parol evidence relating to the

then future agreement with Corey, the new purchaser.

1 In Cers v. Schmitz, No. C5-01-882, 2002 WL 47784, at *4 (Minn. App. Jan. 15, 2002), review denied (Minn. Mar. 19, 2002), we concluded that extrinsic evidence was admissible under the incomplete-contract exception where: (1) neither party was represented by counsel; (2) the written portion of the agreement dealt solely with financial terms; (3) the alleged oral terms supplemented the written terms; (4) the parties’ intended negotiations focused on the alleged oral terms; and (5) the written agreement did not contain an integration or a merger clause. Here, every factor except number four is present. While unpublished cases are not precedential, see Minn. Stat. § 480A.08, subd. 3(c) (2014), the lack of published caselaw on the incomplete-contract exception makes this analysis more persuasive.

8 II. The district court’s finding that appellant breached the contract was not clearly erroneous.

“Whether an act or omission constitutes a material breach of a contract is a fact

question.” Sitek v. Striker, 764 N.W.2d 585, 593 (Minn. App. 2009), review denied

(Minn. July 22, 2009). We review a district court’s factual findings for clear error.

Rasmussen v. Two Harbors Fish Co., 832 N.W.2d 790, 797 (Minn. 2013) “The elements

of a breach of contract claim are (1) formation of a contract, (2) performance by plaintiff

of any conditions precedent to his right to demand performance by the defendant, and (3)

breach of the contract by defendant.” Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co.,

848 N.W.2d 539, 543 (Minn. 2014) (quotation omitted). A condition precedent is “any

fact or event, subsequent to the making of a contract, which must exist or occur before a

duty of immediate performance arises under the contract.” Nat’l City Bank of

Minneapolis v. St. Paul Fire & Marine Ins. Co., 447 N.W.2d 171, 176 (Minn. 1989).

Appellant argues that the district court committed clear error when it found that

appellant materially breached the terms of the Agreement by failing to renegotiate with

respondent once Corey defaulted. Appellant makes two general arguments: (1) that he

actually did attempt to renegotiate and (2) that respondent breached the Agreement prior

to any breach by appellant.

A. Appellant’s breach

Appellant argues that the district court clearly erred when it found that he made no

effort to renegotiate after Corey’s default. “When determining whether findings are

clearly erroneous, the appellate court views the record in the light most favorable to the

9 [district] court’s findings.” Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn. App.

2000). To successfully challenge a district court’s findings of fact, “the party challenging

the findings must show that despite viewing that evidence in the light most favorable to

the [district] court’s findings . . . , the record still requires the definite and firm conviction

that a mistake was made.” Id. at 474.

The only evidence supporting appellant’s claim that he attempted to renegotiate is

his own testimony. The district court did not find this testimony credible. In contrast,

respondent testified that she made a number of attempts at renegotiation, offered several

letters into evidence corroborating this testimony, and further stated that she did not

receive any response from appellant. The district court found respondent’s testimony

credible. We give “great deference to a [district] court’s findings of fact because it has

the advantage of hearing the testimony, assessing relative credibility of witnesses and

acquiring a thorough understanding of the circumstances unique to the matter before it.”

Hasnudeen v. Onan Corp., 552 N.W.2d 555, 557 (Minn. 1996). On appeal, we will

“neither reconcile conflicting evidence nor decide issues of witness credibility, which are

exclusively the province of the factfinder.” Gada v. Dedefo, 684 N.W.2d 512, 514

(Minn. App. 2004). Appellant’s argument essentially asks this court to reevaluate the

district court’s credibility determinations. Because we will not do so, the district court

did not clearly err in finding that appellant failed to renegotiate and thus materially

breached the contract.

10 B. Respondent’s breach

Appellant also argues that respondent breached the Agreement first by:

(1) refusing to make payments until appellant fulfilled “extra tasks” that were not

required under the Agreement; (2) failing to pay the total amount due within 18 months;

and (3) failing to pay appellant the remaining balance of the original $20,000 when she

accepted the quit claim deed on April 30, 2010.

Appellant failed to raise the first argument before the district court. Thus, it is not

properly before this court and we decline to address it on appeal. Thiele v. Stich, 425

N.W.2d 580, 582 (Minn. 1988).

Appellant’s second argument fails. Appellant alleges that respondent breached the

Agreement by failing to pay the remaining $22,000 within 18 months of the execution of

the quitclaim deed, the deadline of which was October 30, 2011. But in March 2011,

Corey’s payments to respondent were late and sporadic. And by July 6, 2011, Corey had

stopped making payments altogether. We concluded above that this triggered the

Agreement’s renegotiation clause and that the district court did not err in determining that

appellant materially breached the contract by failing to renegotiate. Even assuming that

respondent failed to pay the remaining $22,000 by the October 30, 2011 deadline,

appellant’s breach occurred in July 2011, three months prior to the deadline. Because “a

material breach is [a] breach of contract that is significant enough to permit the aggrieved

party to elect to treat the breach as total (rather than partial), thus excusing that party

from further performance,” the district court did not err in determining that appellant’s

failure to renegotiate excused respondent from paying the remaining $22,000 by the

11 October 30, 2011 deadline. BOB Acres, LLC v. Schumacher Farms, LLC, 797 N.W.2d

723, 728 (Minn. App. 2011) (quotation and citation omitted).

Appellant’s final breach-of-contract argument also fails. As previously stated, the

property was conveyed from appellant to respondent on April 30, 2010. Appellant

alleges that upon this transfer, he was owed $20,000 because the terms of the Agreement

states that “[respondent] will, upon execution of the Quit Claim Deed, provide [appellant]

with $20,000 cash less the amounts advanced to clear the title and provide relief from

future [judgments].” Appellant did not receive the remaining balance on the $20,000

payment until August 15, 2011. But appellant’s argument ignores the previous sentence

in the Agreement, which reads: “Upon successful satisfaction of these debts and the

availability of a clear title for the property from Crow Wing County, [appellant] will

issue a Quit Claim Deed to [respondent] for the above property.” Thus, the receipt of

clear title was a condition precedent to respondent’s obligation to make the initial

$20,000 payment. The Agreement’s “Relationship of Trust” section provides further

detail on this matter, stating: “[F]unds will be advanced from [respondent] to [appellant]

based solely on the trust that [appellant] will be willing and able to transfer to

[respondent] clear title to the above mentioned property.” Once clear title was eventually

submitted via the mortgages satisfactions, respondent paid appellant the remaining

$10,307.37 of the initial $20,000 payment. Because all of respondent’s actions were

done in accordance with the terms of the Agreement, the district court did not clearly err

in finding that she did not breach the contract. Accordingly, we affirm.

Affirmed.