Opinion ID: 2630193
Heading Depth: 1
Heading Rank: 7

Heading: Did the district court err in granting the Estate's motion to enforce the settlement agreement despite the statute of frauds?

Text: [¶ 19] In its simplest relevant terms, the statute of frauds requires contracts for the sale of land to be in writing. See supra ¶ 11. The question of whether a contract has been formed is a question of fact, and the district court's determination on that question will not be reversed unless clearly erroneous. In re Estate of Maycock, 2001 WY 103, ¶¶ 10-11, 33 P.3d 1114, 1117 (Wyo.2001). A settlement agreement is a contract and, therefore, subject to the same legal principles that apply to any contract. Id. at ¶ 10; see also In re Estate of McCormick, 926 P.2d 360, 361 (Wyo.1996). We apply the following standard in reviewing whether the district court's determination as to the existence of a settlement agreement was supported by sufficient evidence: [O]n appeal, the Supreme Court assumes that evidence in favor of the successful party is true, leaves out of consideration entirely the conflicting evidence presented by the unsuccessful party, and gives the evidence of the successful party every favorable inference that may reasonably and fairly be drawn from it. Furthermore, a reviewing court cannot substitute its judgment of the facts for that of the trial court unless the trial court's judgment is clearly erroneous or contrary to the great weight of the evidence. McCormick, 926 P.2d at 362 (quoting Wyoming Sawmills, Inc. v. Morris, 756 P.2d 774, 775 (Wyo.1988)). [¶ 20] The intention of the parties is of particular significance when a court is faced with determining whether a contract existed after the oral communications between the parties, or only after the terms were reduced to writing. Recently, we stated the law in that regard as follows: One specific question in determining the parties' intent is whether their contract was meant to be formed only upon the signing of written documents or was meant to be formed upon an oral understanding. `An agreement to make a written contract where the terms are mutually understood and agreed on in all respects is as binding as the written contract would be if it had been executed.' Robert W. Anderson House[w]recking and Excavating, Inc. v. Board of Trustees, School District No. 25, Fremont County, Wyoming, 681 P.2d 1326, 1331 (1984). `In general, the principle is well settled that where the parties to a contract intend that it shall be closed and consummated prior to the formal signing of a written draft, the terms having been mutually understood and agreed upon, the parties will be bound by the contract actually made, although it be not reduced to writing; but, on the other hand, if the parties do not intend to close the contract until it shall be fully expressed in a written instrument properly attested, then there will be no complete contract until the agreement shall be put into writing and signed.' Summers v. Mutual Life Ins. Co., 12 Wyo. 369, 75 P. 937, 943 (1904). Frost Const. Co. v. Lobo, Inc., 951 P.2d 390, 394 (Wyo.1998) ( quoting Wyoming Sawmills, Inc. v. Morris, 756 P.2d 774, 776 (Wyo.1988)). Birt v. Wells Fargo Home Mortgage, Inc., 2003 WY 102, ¶ 11, 75 P.3d 640, 648 (Wyo. 2003). In an earlier case, we set forth the applicable law in even more detail: The law is well stated in Hageman & Pond, Inc. v. Clark, [69 Wyo. 154, 238 P.2d 919], 923-924 [(1951)]:    The courts generally hold that whether or not a contract is to be effective only when reduced to writing and signed by all the parties is mainly a question of intention. In 122 A.L.R. 1248-1250, it is said: `The fact that parties to negotiations contemplated the drawing and execution of a formal written contract is regarded in numerous cases as evidence that they intended the prior oral or informal agreement,    to be merely tentative and not final. Indeed, this circumstance has been considered as strong evidence that the parties did not intend that the negotiations should amount to an agreement prior to the execution of the formal writing.    It has been said that if the parties stipulate for a formal written agreement expressive of their intention, there is a strong presumption that no contract is made until the formal instrument is prepared and executed, also that where there is a statute requiring that a contract be reduced to writing there can be no presumption of an intention to consummate the contract in any other form.' [...] Counsel for defendant contends that the circumstances in this case clearly show that it was the intention of the parties that a written contract was to be drawn and signed by all the parties, and that the case of Summers v. Mutual Life Insurance Co., 12 Wyo. 369, 75 P. 937, 943, 66 L.R.A. 812 [(1904)] is decisive on the point here discussed. The decision was by the late Justice Potter. He cites with approval the case of Mississippi & Dominion Steamship Co. v. Swift, 86 Me. 248, 29 A. 1063 [(1894)], enumerating some of the circumstances in determining as to whether or not an oral contract should be considered as the final contract of the parties, namely, `such as whether the contract is one usually put in writing, whether there are few or many details, whether the amount involved is large or small, whether it requires a formal writing for a full expression of the covenants and promises, and whether the negotiations themselves indicate that a written draft is contemplated as the final conclusion of the negotiations.' Other circumstances may be added in the case at bar, namely that it involves a transfer of an interest in real property which ordinarily under the Statute of Frauds must be in writing and signed by the party sought to be charged; that the contract was in fact reduced to writing and submitted to the other party; the fact that the written instrument contains a blank space where the defendant was expected to sign his name, [...], and perhaps the fact that he actually refused or neglected to sign it.    Turner v. Floyd C. Reno & Sons, Inc., 696 P.2d 76, 78 (Wyo.1985) (some internal citations omitted). [¶ 21] In the instant case, the district court concluded that the 2005 Agreement existed and that it was saved from the statute of frauds as a result of the doctrine of partial performance. Under that doctrine, an oral agreement for the sale of land that has been partially or wholly performed by one party, to its detriment, may be enforced by that party. Parkhurst v. Boykin, 2004 WY 90, ¶ 16, 94 P.3d 450, 458 (Wyo.2004); McClellan v. Britain, 826 P.2d 245, 249 (Wyo.1992); Gaido v. Tysdal, 68 Wyo. 490, 508, 235 P.2d 741, 747 (1951). Before the doctrine of partial performance may be applied, however, the terms of the oral agreement sought to be enforced must be a definite and complete agreement between the parties, and the contract terms must be so certain that the court can require the specific thing agreed upon to be done. Fowler, 933 P.2d at 504; see also Hovendick v. Ruby, 10 P.3d 1119, 1124 (Wyo.2000). Where the partial performance is alleged to consist of transfer of possession of the premises to the putative purchaser, such possession must be proved beyond the possibility of findings to the contrary. Hovendick, 10 P.3d at 1124. It also must be referable solely to the contract sought to be enforced, and not such as might have been referable to some other or different contract. Butler v. McGee, 373 P.2d 595, 597-98 (Wyo.1962). [3] [¶ 22] The doctrine of partial performance is a common law equitable doctrine that actually predates the original English statute of frauds. 73 Am. Jur.2d Statute of Frauds § 312 (2001). This common law exception to the statute of frauds is a version of equitable estoppel. It prevents a party to a contract from perpetrating a fraud or injustice on the other party when the latter has fully performed under the terms of the oral contract. Wyoming Realty Co. v. Cook, 872 P.2d 551, 554 (Wyo.1994). Given the legislative policy evidenced by the statute of frauds, partial performance should take an oral contract out from its reach only when necessary to avoid a fraud, and to accomplish justice. Remilong v. Crolla, 576 P.2d 461, 465 (Wyo.1978); see also Crosby v. Strahan's Estate, 78 Wyo. 302, 320, 324 P.2d 492, 499 (1958). The statute of frauds must be applied within the context of competing policies: Application of the statute of frauds to the facts of this case having been called into question, we look to the underlying purposes of that legislation. Furthermore, however jealous we may be of inroads upon application of the statute of frauds, we remain mindful that its rote application is not automatic. Enforcement of the statute of frauds subserves significant policy concerns, not unlike enforcement of the policy favoring settlements: The statute of frauds was enacted to prevent fraud, not to aid it, and should receive a reasonable interpretation with that end in view. The great majority of courts have always endeavored to keep that principle uppermost in rendering their decisions. Mead v. Leo Sheep Co., 32 Wyo. 313, 327, 232 P. 511, 515 (1925). Maycock, 2001 WY 103, ¶ 19, 33 P.3d at 1119. It is helpful to remember that the doctrine of partial performance is not an evidentiary proposition; rather, it is an equitable theory based upon estoppel: The doctrine of part performance operates not upon the theory that the part performance is a substitute for the written evidence required by the statute of frauds, but rather on the theory that the defendant may be estopped in view of the part performance to assert the statute as a defense. Thus, part performance takes the case out of the statute not because it furnishes proof of the contract or because it makes the contract any stronger but because it would be intolerable in equity for the defendant knowingly to allow the plaintiff to invest time, labor, and money upon the faith of a contract that did not exist. The doctrine of part performance accomplishes its purpose of preventing fraud on the theory of estoppel by conduct to assert the statute. 73 Am.Jur.2d Statute of Frauds § 314 (2001). [¶ 23] The injury or loss that supports application of the equitable doctrine of partial performance is not the injury or loss caused simply by the failure of one party to perform the contract. Crosby, 78 Wyo. at 320, 324 P.2d at 499. If the mere failure to perform an oral contract were sufficient to remove it from the reach of the statute of frauds, the statute would be rendered vain and nugatory. Davis v. Davis, 855 P.2d 342, 346 (Wyo.1993). Rather, the injury or loss must arise from the acts done in performance or in pursuance of the oral agreement, and such acts must so far alter the situation of the parties seeking to avoid the statute that it would be unjust and against conscience to allow the other party, who has permitted such change to take place in pursuance of his oral agreement, to thereafter refuse to perform on his part. Crosby, 78 Wyo. at 320, 324 P.2d at 499; see also Allen v. Allen, 550 P.2d 1137, 1143 (Wyo.1976). The court looks to several factors in determining whether equity should defeat the statute of frauds, including the following: (1) the relations of the parties; (2) the nature of the parol agreement; and (3) the relative benefit and detriment derived by the parties. Empfield v. Kimbrough, 900 P.2d 1153, 1155 (Wyo.1995); Davis, 855 P.2d at 346-47. Part performance must be substantial. Id. at 346. On the other hand, the party relying upon partial performance must show only a material detriment, as opposed to irreparable injury. 73 Am.Jur.2d Statute of Frauds § 314 (2001). The sufficiency of particular acts as a part performance is for the court to decide as a matter of law. 73 Am.Jur.2d Statute of Frauds § 319 (2001); see also Maycock, 2001 WY 103, ¶ 12, 33 P.3d at 1117, and In re Estate of Jackson, 892 P.2d 786, 788 (Wyo.1995). [¶ 24] In the instant case, the district court concluded first that, as a matter of fact, a contract was formedsettlement was reachedduring the negotiations on July 25-26, 2005. Second, the court concluded that the parties intended for their agreement to be effective upon its oral consummation. Several facts informed these conclusions: (1) the Estate offered possession of the premises before the agreement was reduced to writing and allowed Simek to disarm the house's security system; (2) Simek accepted and took possession of the premises before the agreement was reduced to writing; (3) Simek retained possession of the premises for several months despite not having executed the written agreement; (4) Simek utilized his possession of the premises to bring in contractors for remodeling assessments, which was in furtherance of the oral agreement; (5) neither Simek nor his attorney notified the Estate or its attorney that settlement had not been reached; and (6) after the 2005 Agreement was reached Simek's attorney informed the Estate's attorney that Simek had filed another motion to enforce the 2003 Agreement, not because the 2005 Agreement did not exist, but to protect Simek's rights in case the 2005 Agreement did not receive court approval. [¶ 25] As mentioned above, the two attorneys engaged in repeated e-mail and telephone contacts as the Estate's attorney attempted to determine why Simek was not signing and returning the agreement that had been reduced to writing. The district court set out these contacts at length in its findings of fact, and then relied upon them in concluding that Simek's failure to deny existence of the 2005 Agreement was a factor in estopping him from asserting the statute of frauds as a defense. The Estate's attorney testified that, in one particular telephone call, Simek's attorney told her the following in regard to Simek's renewal of his motion to enforce the 2003 Agreement: Well, we've been through this rodeo before. We had tried towe have settled before, and the 2003 agreement was not approved. And so in case the 2005 agreement also was not approved, she wanted to make sure she preserved her rights under the 2003 agreement. (Emphasis added.) The emphasized language reveals that Simek's position was not that the 2005 Agreement had not been reached; rather, his position was that he wanted to try to fall back upon the 2003 Agreement if the courts did not approve the 2005 Agreement. [¶ 26] This case boils down to a question of lawwhether the Estate's acts in partial performance of the 2005 Agreement were sufficient to estop Simek from asserting the statute of frauds as a defense, especially when coupled with Simek's failure to disclaim the agreement in the face of that conduct. We conclude that the district court did not err in answering that question in the affirmative. The Estate acted to its detriment in reliance upon the agreement by relinquishing possession of the Brehm residential property to Simek for several months, by allowing him repeated access to the residence for remodeling assessments, by allowing him to disarm the security system to obtain entry, and by informing the district court that the civil action had been settled. As noted above in the citations to Empfield, 900 P.2d at 1155, and Davis, 855 P.2d at 346-47, see supra ¶ 23, the court looks to the specific factors of a particular case in determining whether equity should defeat the statute of frauds. In that regard, this dispute had been going on since Simek filed the civil action in 1998for seven years. Brehm cited in 1994, yet probates remained open eleven years later in two states because of the delay in resolving this controversy. The 2005 Agreement settled not just the Brehm residence purchase, but also Simek's separate claims against the Brehm estate based on the ranch purchase. [¶ 27] The Estate seeks an equitable escape from the effects of the statute of frauds. We have said in many contexts that the function of equity is to provide fairness and justice to the parties under the circumstances. See, e.g., Bentley v. Dir. of Office of State Lands & Invs., 2007 WY 94, ¶ 32, 160 P.3d 1109, 1118 (Wyo.2007) (equitable conversion); Countrywide Home Loans, Inc. v. First Nat'l Bank of Steamboat Springs, N.A., 2006 WY 132, ¶ 23, 144 P.3d 1224, 1231 (Wyo.2006) (equitable subrogation); Garlach v. Tuttle, 705 P.2d 828, 829 (Wyo.1985) (equitable estoppel); United States Through Farmers Home Admin. v. Redland, 695 P.2d 1031, 1040 (Wyo.1985) (equitable lien); Fuller v. Fuller, 606 P.2d 306, 309 (Wyo.1980) (constructive trust); Cady v. Slingerland, 514 P.2d 1147, 1149 (Wyo.1973) (contract rescission); and Wantulok v. Wantulok, 67 Wyo. 22, 41, 214 P.2d 477, 484 (1950) (clean hands doctrine). We cannot say in the present case that the district court erred as a matter of law in determining that the acts of partial performance by the Estate, under the circumstances presented, were sufficient to invoke equity to enforce the oral agreement. If we consider the factors mentioned in Empfield and Davis, to do other than what the district court did in this case would be to return these parties to a seemingly never-ending dispute, to neither's benefit and to both's detriment, despite a clear parol agreement that resolved all of their differences.