Source: http://mn.gov/law-library-stat/archive/ctapun/0203/1285.htm
Timestamp: 2018-06-18 15:39:44
Document Index: 272597449

Matched Legal Cases: ['§ 513', '§ 336', '§ 336', '§ 336', '§ 336', '§ 513']

Joseph Nelson, et al., Appellants, vs. Jeannie Gardner, Respondent, Regina Hudson, et al., Respondents. C3-01-1285, Court of Appeals Unpublished, March 12, 2002.
C3-01-1285
Joseph Nelson, et al.,
Jeannie Gardner,
Regina Hudson, et al.,
File No. 016491
Gary A. Van Cleve, Christopher J. Deike, Larkin, Hoffman, Daly & Lindgren, Ltd., 1500 Wells Fargo Plaza, 7900 Xerxes Avenue South, Bloomington, MN 55431 (for appellants)
Daniel J. Boivin, Meshbesher & Spence, Ltd., 1616 Park Avenue, Minneapolis, MN 55404 (for respondent Gardner)
James P. McCarthy, Jeffrey J. McNaught, Lindquist & Vennum, PLLP, 4200 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for respondents Hudson)
Appellants Joseph and Kathleen Nelson challenge the district court’s order granting summary judgment to respondent Jeannie Gardner and seek enforcement of an oral contract for the sale of real estate. Because the Nelsons do not satisfy the statute of frauds, we affirm.
The Nelsons, who were interested in purchasing residential property on Lake Minnetonka, became aware of Gardner’s home in the summer of 2000. When Gardner listed her home in June 2000, the asking price was $2,395,000. The Nelsons viewed the property shortly after it was listed, but felt that it was overpriced. Over the next several months, Gardner reduced the home’s listing price a number of times. The Nelsons looked at the property again in March 2001, when the price was $1,895,000. On April 21, 2001, the Nelsons contacted the listing agent, Ellen DeHaven, to present Gardner with an offer of $1.4 million. From that point on, DeHaven functioned as a dual agent and negotiations ensued.
DeHaven drafted a purchase agreement that contained signature blocks for the Nelsons and Gardner. The Nelsons signed the agreement on April 21, 2001, and DeHaven presented it to Gardner the following day. Gardner rejected the Nelsons’ offer, but proposed a counteroffer of $1,790,000. On the evening of April 25, 2001, the Nelsons told DeHaven that their maximum offer was $1,500,000.
DeHaven phoned Gardner, who responded that she would consider the offer as long as she could alter some of the terms of the April 21, 2001 offer. These changes included selling the property “as is,” excluding from the sale television and stereo components from the home theater unit, a stained glass piece, and a jet ski lift. Gardner also wanted a different closing date. DeHaven relayed this information to the Nelsons by telephone, and the parties formed an oral contract for the sale of the property.[1]
On the morning of April 26, 2001, DeHaven modified the purchase agreement to reflect the changes and added an “as is” addendum. She faxed the new agreement to the Nelsons’ attorney at approximately 9:15 a.m. The revised agreement contained the signature page from the April 21 agreement that was signed by the Nelsons only.
Respondents Regina and Thomas Hudson, who are Gardner’s neighbors, had some ongoing interest in purchasing the property. Knowing this, DeHaven had periodically contacted the Hudsons to keep them informed of the property’s status. On the morning of April 26, 2001, the Hudsons called DeHaven and said that they wanted to offer $1,600,000 for the property. DeHaven drafted a purchase agreement for $1,600,000 and faxed it to the Hudsons at approximately 11:47 a.m. The Hudsons made several changes to the document, signed it, and faxed it back to DeHaven.
Gardner visited DeHaven’s office the morning of April 26, 2001. DeHaven wrote the following memo, which Gardner signed:
Jean Gardner, seller of the property located at 60 Gideons Point Road, Tonka Bay, Minnesota hereby rescinds her verbal acceptance of the offer to purchase submitted by Joseph Jay and Kathleen Joyce Nelson for the above named property.
Said verbal acceptance was reached at approximately 11:00 P.M. April 25, 2001 and is hereby rescinded at 11:15 a.m. April 26, 2001.
DeHaven’s office faxed the memo to the Nelsons’ attorney at approximately 11:15 a.m.
Gardner never signed the Nelsons’ April 21, 2001 offer for $1,400,000, the “as is” addendum, or the Nelsons’ April 26, 2001 offer for $1,500,000. Gardner did sign the facsimile rescinding the oral agreement with the Nelsons as well as the Hudsons’ April 26, 2001 offer for $1,600,000.
The Nelsons filed suit for specific performance, claiming that Gardner unilaterally breached the contract by selling her home to the Hudsons. Gardner counterclaimed, asking for a declaration that the Nelsons have no right, title, or interest in the property. The parties brought cross-motions for summary judgment. The district court denied the Nelsons’ motion and granted Gardner’s motion, ruling that the Nelsons did not have an enforceable contract to purchase the property because the rescission memorandum did not satisfy the statute of frauds. The district court held that the Hudsons have an enforceable contract to purchase the property and dismissed the Nelsons’ complaint with prejudice. This appeal follows.
When evaluating summary judgment appeals, we “consider whether there are genuine issues of material fact and whether the district court erred in applying the law.” Buchanan v. Minnesota State Dep’t of Health, 573 N.W.2d 733, 736 (Minn. App. 1998) (citing State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990)). We view the evidence in the light most favorable to the nonmoving party. Id.
The Nelsons submit that the April 21, 2000 purchase agreement, the revised April 26, 2000 purchase agreement, and Gardner’s April 26, 2000 rescission note collectively constitute a note or memorandum of the oral contract, thereby satisfying the statute of frauds.
A writing satisfying the statute of frauds must include
(1) a statement of the consideration; (2) an adequate description of the parties; (3) an adequate description of the land; (4) the general terms and conditions of the transaction; and (5) subscription by the vendor.
Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 899 (Minn. 1982) (citation omitted). The terms of a real estate contract must be present in a single writing:
Every contract for * * * the sale of any lands * * * shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made * * * .
Minn. Stat. § 513.05 (2000). The statute plainly states “note or memorandum,” not “notes or memoranda.” Absent special circumstances discussed below, multiple documents do not satisfy the statute of frauds in a real estate transaction.
The Minnesota Supreme Court has stated of real estate contracts that
[o]ral acceptance is insufficient. The minds of the parties may have met, but that is not sufficient. The convention of the minds must be solemnized by an appropriate writing * * * .
Bey v. Keeping, 192 Minn. 283, 286, 256 N.W. 140, 142 (1934).
The Nelsons’ argument that multiple writings may collectively satisfy the statute of frauds is misplaced because it is derived from sales theory rather than contract theory. The Uniform Commercial Code (UCC) allows multiple writings to satisfy the statute of frauds:
Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of [the statute of frauds] against such party unless written notice of objection to its contents is given within ten days after it is received.
Minn. Stat. § 336.2-201(2) (2000). The Nelsons cite numerous sales cases for the proposition that rescission letters satisfy the statute of frauds in real estate transactions, yet these cases are not relevant to real estate transactions because the UCC only applies to sales of goods. Minn. Stat. § 336.2-102 (2000). “Goods” are “all things * * * which are movable at the time of identification to the contract for sale.” Minn. Stat. § 336.2‑105(1) (2000) (emphasis added).
The Nelsons further assert that the writings bear sufficient relation to each other so as to constitute a note or memorandum of the alleged transaction. In Swallow v. Strong, 83 Minn. 87, 93, 85 N.W. 942, 944 (1901), the court held that multiple writings relating to the sale of timber were sufficiently connected to remove the transaction from the statute of frauds, noting that the multiple documents were “connected by mutual reference so as to show that they all relate to the same subject matter.” Swallow is inapposite because it, too, is a sales case, as timber is a movable good. Minn. Stat. § 336.2-107(2) (2000). The Nelsons also rely on Tice v. Freeman, 30 Minn. 389, 15 N.W. 674 (1883), for the proposition that related documents can satisfy the statute of frauds in a real estate transaction. Tice, however, holds that the letters in question were not sufficiently related because their relationship could only be demonstrated with parol evidence. Id. at 391, 15 N.W. at 674. The documents in this case are similarly unrelated.
The Nelsons also cite authority in which parties use outside writings to supplement vague provisions in real estate contracts. In Doyle v. Wohlrabe, 243 Minn. 107, 108-09, 66 N.W.2d 757, 760 (1954), a contract of sale for real estate met the requirements of the statute of frauds, yet it failed to provide an adequate description of the land. The court held that the contract was valid under the statute of frauds because a separate sketch detailed the parameters of the property. Id. at 111-12, 66 N.W.2d at 761-62. The Nelsons cannot use the principle of supplementation to prompt the court to view the writings collectively, as they are not attempting to explain a vague term of the alleged contract.
Minnesota law does not allow multiple writings to constitute a “note or memoranda” of the oral agreement in this case. Consequently, it is necessary to examine each document individually to determine whether it comports with the statute of frauds. Although the April 21, 2001 purchase agreement states consideration, Gardner did not sign it. The same is true of the April 26, 2001 purchase agreement. Although Gardner signed the April 26, 2001 rescission letter, it fails to state consideration and, therefore, does not satisfy the statute of frauds. Minn. Stat. § 513.05.
The Nelsons argue that policy considerations relating to the prevention of fraud and wrongful repudiation in real estate contracts warrant a decision in their favor. The fundamental purpose of the statute of frauds, however, is the promotion of certainty and finality in real estate transactions. Two recent Minnesota cases have reinforced the principle that certainty in real estate transactions is a more compelling interest than that of preventing “wrongful” contract repudiations. In Bouten, respondent buyer was interested in purchasing a lot in a housing development from appellant seller. 321 N.W.2d at 897. The parties agreed on a contract price based on the contingency that respondent would only place limited reliance on secondary financing. Id. Appellant drafted a purchase agreement to that effect, but did not sign it. Id. at 897-98. Respondent was unable to secure sufficient primary financing, so appellant cancelled the agreement. Id. at 898. Respondent asserted that the parties had an oral contract, but the court determined that there was no enforceable contract because appellant had not signed the purchase agreement. Id. at 898-99. Absent appellant’s signature, it was impossible to determine whether appellant accepted respondent’s offer. Id. at 899.
Gresser v. Hotzler, 604 N.W.2d 379 (Minn. App. 2000), although not a statute of frauds case, illustrates the principle that a real estate transaction is not final until the seller signs a document that accurately sets forth the terms of the sale. In Gresser,appellant buyer offered respondent sellers an unsigned purchase agreement. Id. at 381-82. Respondents changed and initialed several terms in the agreement, signed the agreement, and returned it to appellant’s attorney. Id. at 382. Appellant initialed respondents’ changes and signed the purchase agreement. Id. But appellant made two changes to the purchase agreement. Id. He changed the survey delivery date and the closing date. Id. Appellant initialed both changes and returned it to respondent. Id. Respondent did not initial appellant’s changes to the agreement and decided to accept another offer for the property. Id. We held that appellant’s alterations to the purchase agreement prevented the parties from forming the contract and that no contract existed between the parties. Id. at 384. Gresser is relevant to the present case because Gardner had not signed the purchase agreement. Since Gardner did not sign the purchase agreement, and since the rescission notice fails to state consideration, the Nelsons lack a written commemoration of the oral contract.
Because the Nelsons do not have a note or memorandum of the oral contract that is signed by the vendor and states consideration, they are unable to satisfy the plain text of the statute of frauds.
[1] Although a factual dispute exists concerning whether or not the Nelsons and Gardner reached an oral contract, the district court viewed the facts in the light most favorable to the Nelsons for purposes of deciding the cross-motions for summary judgment and assumed that they had an oral agreement. Had the district court not made this assumption, Nelsons’ enforceability arguments would be moot.