Opinion ID: 2634468
Heading Depth: 2
Heading Rank: 1

Heading: dismissal of buyers' tort claims

Text: ¶11 The Buyers argue that [a]fter determining the statute of frauds made the oral modification [to the REPC] unenforceable, the [district] court erred in disposing of the remainder of [the Buyers'] claims which did not implicate the statute of frauds or require enforcement of the oral modification to succeed. The Buyers contend that the three tort causes of action for fraudulent misrepresentation, breach of common law and statutory duties, and intentional interference with contract arise out of the Realtors' misconduct and not out of the contract. The Buyers assert that, while evidence of the oral modification is relevant to the claims, the modification need not actually be enforceable for the tort claims to survive. In fact, the Buyers point out, if the oral agreement had been enforced and the property was sold to [the Buyers], [the Buyers] would have no damages on any of these claims against [the Realtors]. ¶12 The Realtors counter that because all of the Buyers' tort causes of action are based in fraud, the oral modification must be enforceable to support the claims. The Realtors rely on language from cases out of this court and the court of appeals stating that [f]raud, generally, cannot be predicated upon the failure to perform a promise or contract which is unenforceable under the statute of frauds, for the promissor has not, in a legal sense, made a contract; and, therefore, he has the right, both in law and equity, to refuse to perform. Stangl v. Ernst Home Ctr., Inc., 948 P.2d 356, 362 (Utah Ct. App. 1997) (citing McKinnon v. Corp. of Pres. of Church of Jesus Christ of Latter-day Saints, 529 P.2d 434, 436 (Utah 1974)). In interpreting this language, the Realtors argue, in essence, that Utah has adopted a per se, categorical rule barring any action in contract or tort when the claim relies on evidence of a contract that is found to be unenforceable under the statute of frauds. The case law cited by the Realtors does not support such an interpretation, however, since those cases involve facts very different from those presented in the case at bar. ¶13 In both McKinnon and Stangl, the plaintiffs, who were parties to oral agreements deemed void under the statute of frauds, sought to enforce the oral agreements against the defendants, who were the other parties to the oral contracts. McKinnon, 529 P.2d at 436; Stangl, 948 P.2d at 359. The plaintiffs in both cases argued that because they had acted in reliance on the defendants' oral representations, the defendants should be estopped from asserting the statute of frauds as a defense. McKinnon, 529 P.2d at 436; Stangl, 948 P.2d at 360. ¶14 In rejecting this assertion in McKinnon, we explained that the doctrine of promissory estoppel ha[s] been extended, in a limited form, to those cases concerned with . . . the [s]tatute of [f]rauds, where the promise as to future conduct constitute[s] the intended abandonment of an existing right of the promissor. 529 P.2d at 436; see also Stangl, 948 P.2d at 363. It was in this context that we stated that [f]raud [necessary to establish promissory estoppel], generally, cannot be predicated upon the [mere] failure to perform a promise or contract which is unenforceable under the statute of frauds, as such a rule would virtually eviscerate the effect of the statute. McKinnon, 529 P.2d at 436; see also Stangl, 948 P.2d at 362. Rather, in order to establish the promissory estoppel exception to the statute of frauds, [t]he acts and conduct of the promissor must so clearly manifest an intention that he will not assert the statute that to permit him to do so would be to work a fraud upon the other party. McKinnon, 529 P.2d at 437; see also Stangl, 948 P.2d at 363. ¶15 In contrast, the Buyers in the present case do not seek to enforce the oral modification against the Sellers. Rather, the Buyers have brought separate tort claims against the Realtors and argue that the enforceability of the oral modification, and any potential application of the statute of frauds, is irrelevant to the success of those claims. [2] ¶16 Although this court has recognized that, in some cases, the statute of frauds can act as a bar to certain causes of action arising in tort, we have not gone so far as to bar all tort claims any time they require evidence of an oral agreement rendered unenforceable by the statute of frauds. We have stated that the operation of the statute [of frauds] is not confined to cases where an action is brought directly on the contract. Whatever the form of the action may be, if the proof of a promise or contract within the statute is essential to maintain it, there can be no recovery unless the statute is satisfied. . . . Even an action sounding in tort may be barred by the statute where an essential element of the cause of action is an oral contract within the statute; but where the oral contract or representation is a mere circumstance or incident of a fraud it may be shown in an action in tort for damages as the statute has no application to such a case. Easton v. Wycoff, 295 P.2d 332, 336 (Utah 1956) (internal quotations omitted) (alteration in original) (emphasis added); see also Papanikolas v. Sampson, 274 P. 856, 861 (Utah 1929). ¶17 In Papanikolas, we addressed whether prospective buyers could bring a tort action for fraud and deceit to recover damages they sustained when the prospective sellers failed to perform an oral promise for the sale of land. In that case, it was clear that any contract claim would fail because the oral contract was unenforceable under the statute of frauds. Since the statute of frauds barred recovery under a contract action, the buyers attempted to bypass the statute by asserting a tort cause of action against the prospective sellers for fraud and deceit. The damages claimed by the buyers with respect to their tort claim were equal in amount to the damages they would have pursued under a breach of contract claim. Papanikolas, 274 P. at 859-60. Because the claimed tort damages directly coincided with the damages for a breach of contract claim, and because it appeared that any evidence of fraud was dubious at best, we held that the buyers' action was really a claim for breach of contract disguised as a tort claim and was thus barred by the statute of frauds. Id. at 861. We explained that a complaining party cannot set up a promise void under the statute of frauds and base recovery upon rights or damages alleged to have been created by such promises which he would not have except for such agreement. Id. at 862. ¶18 Thus, in Papanikolas, no claims, in contract or in tort, were allowed because there were no actual damages. The only damages claimed by the plaintiffs were due to the defendants' refusal to perform an oral contract that was not legally enforceable. Because the oral contract was not enforceable, no rights were created in the plaintiffs, the loss of which could occasion legally cognizable damages. ¶19 Papanikolas demonstrates that the statute of frauds does not necessarily bar a tort claim simply because the claim calls for evidence of an oral agreement that is void under the statute of frauds. Rather, the statute only bars those tort claims that require an oral contract as an essential element to maintaining the claim. Id. at 861; see also Easton, 295 P.2d at 336. This is not such a case. ¶20 In the present case, the Buyers' tort claims against the Realtors do not rely on any rights created by the purported oral modification. The relevant contract in this case is not an oral one, but is the written REPC, which, prior to its breach, created enforceable rights between the Buyers and the Sellers. If representations made by the third-party Realtors induced the Buyers to breach the REPC, as the Buyers allege, then the Realtors may be liable in tort. We think it is clear that a realtor is capable of making representations, which may or may not be enforceable, that could induce either sellers or buyers to act to their detriment. In this case, the Buyers do not bemoan the loss of artificial rights that never really existed under an unenforceable oral contract; rather, they complain of the rights and benefits lost under the REPC to which they would have been entitled were it not for the Realtors' alleged misconduct. Thus, the oral modification is not an essential element, as that term is understood in Papanikolas, to maintaining the Buyers' tort claims, but is a mere circumstance or incident of a fraud, which may be shown in an action in tort for damages as the statute [of frauds] has no application to such a case. Papanikolas, 274 P. at 861; see also Easton, 295 P.2d at 336. ¶21 Therefore, it was incorrect for the district court to dismiss the Buyers' tort claims on the ground that the oral modification is void under the statute of frauds. The enforceability of the oral modification is not a prerequisite to the success of the tort claims, and summary judgment on those claims was in error. We express no opinion as to whether the Buyers have alleged facts or law sufficient to support the elements of the tort causes of action brought against the Realtors. Additionally, given our disposition, we need not reach the issue of whether the oral modification was, in fact, enforceable by virtue of any of the exceptions to the statute of frauds.