Court Opinion

ID: 5156687
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:23:09.532851+00
Date Added: 2024-06-11T08:25:23.330759
License: Public Domain

CHRISTEN, Justice,
with whom FABE, Justice, joins, dissenting.
I disagree with the court's decision to expand the promissory estoppel and part performance exceptions to the statute of frauds. In my view, the promise in this case was *320insufficiently definite as a matter of law to be enforced by the promissory estoppel exception; the alleged oral contract was likewise insufficiently definite to permit application of the part performance exception. I would affirm the superior court's grant of summary judgment on these claims, but I would reverse the superior court's summary judgment on the unjust enrichment claim and remand that claim for trial.
The key dispute between the parties here concerns the terms of their contract. Did they enter into a lease agreement with an option for purchase in the event Kiernan resolved his troubles with the IRS, as Creech contended? Or did they agree to purchase the property jointly, with Kiernan taking the role of a "silent partner" because of his IRS debt, as Kiernan maintained? -It was fundamentally unclear whether the parties entered into a lease-purchase agreement or a contract to buy the property jointly. And because the contract involved real estate, this case fits squarely within the coverage of the black-letter rule of the statute of frauds.1 The court's decision ignores the sound and well-established policy reasons for the legislature's enactment of the statute of frauds, and permits Kiernan the opportunity to enforce a contract that he concedes was based on his desire to hide assets from his creditors.
Although the court characterizes the dispute in this case as "a straightforward dispute of fact as to the existence of the contract for the trier [of fact] to resolve," whether a contract was ever formed is a distinct question from whether the contract, if formed, is unenforceable because of the statute of frauds.2 We have adopted the part performance exception to the statute of frauds when a buyer of real property takes and retains possession of the property and makes improvements on the land in reliance on an oral agreement.3 But when presented with claims for specific performance under the part performance doctrine, we have required that the party seeking enforcement must show by clear and convincing evidence that the "contract [was] sufficiently definite and certain in its terms to warrant the grant of specific performance." 4 Construing the evidence in the light most favorable to Kier-nan, the parties' agreement simply was not sufficiently definite or certain to warrant specific performance. Kiernan testified about the agreement as follows:
Q: Okay. Why were you making your payments to Willie and Vulcan Towing instead of to the bank and Prudential and the other parties on the other side of the transaction?
A: To protect Willie's interest, I agreed to keep my name off of it.
Q: How would-
A: Until I got my IRS debt cleared up.
In addition, Kiernan actually indicated that he did not know what type of ownership rights he had in the property, testifying that he and Creech "never talked about" what the agreement allowed him to do with his alleged interest in the property. Kiernan's testimony demonstrates that a material term of the contract-what type of interest Kiernan had in the property-was absent. Using the part performance doctrine, we have enforced an oral real estate contract when "the terms of the contract ... can be inferred without too much difficulty.5 5 But here, even accepting Kiernan's account of the contract, there is no fixed time for his performance of the condi*321tion related to his IRS debt or for official transfer of title of his interest.6 The lack of a deadline by which Kiernan was to fulfill his obligation and the lack of a mechanism to transfer title are fatal to the enforceability of the contract.
In addition to the lack of definite terms in the parties' agreement, the superior court could not order specific enforcement of the alleged real estate contract. Even accepting Kiernan's version of the contract, he had not performed his part of the bargain because he had not "cleared up" his IRS debt. Kiernan admitted at his deposition that he had not yet paid off his IRS debt, and by the time the superior court heard the motion for summary judgment, the IRS had filed a lien against Kiernan. Kiernan himself stated that he agreed to "keep his name off" the property until he "got [his] IRS debt cleared up" yet he never satisfied this alleged contract term. In my opinion, Kiernan's testimony, taken as true at the summary judgment stage, establishes that the contract was too indefinite to allow specific performance; the part performance doctrine could not apply.
In Vaidez Fisheries, we declined to extend the promissory estoppel exception to the statute of frauds "to cases involving the sale or lease of real estate, in which the purported oral agreement is ambiguous as to key terms.7 The court today interprets this sentence as permitting promissory estoppel to take an oral real estate agreement outside the statute of frauds when the terms of the oral contract are not ambiguous. But there is simply no way to characterize the terms of the oral agreement in this case as "not ambiguous." When parties cannot agree whether their oral real estate contract was a lease-purchase agreement or an outright purchase, the agreement can only be termed ambiguous as to key terms. Kiernan's case thus fits squarely within our holding in Vaidez Fisheries-it involves real property and an ambiguous oral contract. This case illustrates the reasons why the legislature adopted the statute of frauds in the first place. As we explained in Vaidez Fisheries:
The statute of frauds serves many purposes. First, it provides certain, consistent, and predictable principles to guide negotiators. It recognizes the inherent evi-dentiary worth of written evidence, and the potential injustice created by relying on the memories of interested parties to provide the exact language of an agreement, which is necessary to discern the limits of the promise. It also recognizes the natural tendency of peoples' memories to contour the words they recall to fit their understanding of the agreement. The statute of frauds encourages people to commit their agreements to writing, and the process of putting the agreement in writing helps impress upon them the importance of their agreements. It reduces litigation over alleged oral contracts. Finally, a limited application of exceptions to the statute of frauds preserves the legislative intent behind the statute, and gives effect to the legislative judgment that the benefits conferred by the statute outweigh the potential injustice produced by its application.[8]
This case, like Valdes Fisheries, "impli-catel[s] the concerns motivating the statute of frauds.9 Because there is no writing memorializing the contract here, the superior court must "relyf ] on the memories of interested parties" to determine the material terms of a real estate contract.10 Presumably, those memories could "contour the words they recall to fit their understanding of the agreement.11 Expanding promissory estoppel in this case does not "encourage[ ] people to commit their agreements to writing" to "impress upon them the importance of their agreements," nor does it "reduce[ ] *322litigation over alleged oral contracts.12 In short, expansion of promissory estoppel here goes against the sound policies underlying the statute of frauds.
I disagree with the court's conclusion that the issue "whether the contract was for an ownership share or a lease arrangement" is not appropriate for summary judgment because the contract Kiernan described did not "suffer [the same] disabilities" of lack of price and duration as the contract at issue in Valdez Fisheries. Even if the court credited Kiernan's characterization of the contract as an outright sale which hid his share in the property until he "cleared up" his debt to the IRS, the contract was missing a critical element-a date by which Kiernan had to meet his obligation. Kiernan alleged that the parties agreed to purchase the lot jointly in 2001, yet he still had an outstanding IRS debt in 2008, when the court considered the summary judgment motion. Setting aside the important question whether an oral contract motivated by a desire to hide assets from the IRS would be unenforceable as against public policy13-an outcome permitted by the court's decision-the existence of such a contract raises numerous problems. Would Creech have been required to seek Kiernan's permission to sell the property, even though Kiernan's name was not on the title? How could third parties protect themselves from a claim by Kiernan if Creech sold the lot? Kiernan himself was unsure of the nature of his interest in the property-he testified that he did not know if he could transfer his interest in the property to his daughter.
To accept Kiernan's version of the contract is to endorse the use of oral contracts expressly intended to prevent third parties-all of Kiernan's creditors, and specifically the IRS-from possibly attaching his interest in the property. Section 139 of the Restatement sanctions using promissory estoppel when a contract would be unenforceable under the statute of frauds "if injustice can be avoided omly by enforcement of the promise." 14 Because any injustice to Kiernan could be avoided by permitting his unjust enrichment claim to proceed, there is simply no justification for extending the promissory estoppel exception of the statute of frauds to real estate contracts in this case.
In spite of my disagreement with the court, I would not affirm the superior court's summary judgment on all of Kiernan's claims. I would hold that the superior court erred by dismissing Kiernan's claim for unjust enrichment. The superior court decided that Kiernan's unjust enrichment claim failed "without an underlying contract or partnership." But a claim for unjust enrichment "does not depend on any actual contract, or any agreement between the parties, objective or subjective.15 There are three essential elements of unjust enrichment: "1) a benefit conferred upon the defendant by the plaintiff; 2) appreciation by the defendant of such benefit; and 3) acceptance and retention by the defendant of such benefit under such cireumstances that it would be inequitable for him to retain it without paying the value thereof.16
In Mitchell v. Land, we affirmed the trial court's refusal to enforce an oral contract for the sale of an easement as barred by the statute of frauds, but we remanded the case for consideration of "relief as justice might have called for"-even though the plaintiff's complaint did not include a claim for equitable relief or compensatory damages-because the complaint alleged the plaintiff paid $300 and received nothing in return.17 We held "where a party to a contract unenforceable by reason of the Statute of Frauds refuses to go on with the contract after having received a part of the consideration from the *323other party, the consideration received by him may be recovered.18 The Restatement likewise permits restitution under a contract that is unenforceable because of the statute of frauds.19
Viewing the evidence in the light most favorable to the non-moving party, Kiernan showed that he conferred benefits on Creech. Kiernan paid half of the earnest money and closing costs on the property; he supplied improvements that benefitted both businesses; he assisted in developing the property by applying for permits from the city; and he joined Creech in opposing a development in the area that could have damaged the property. Although the superior court noted that these actions were consistent with a lease agreement, they were also consistent with a joint-purchase agreement, so summary judgment was improper.20 Kiernan also showed that Creech appreciated the benefit. Viewing the evidence in Kiernan's favor, he showed that he made substantial improvements that benefitted Creech's business. Finally, Kiernan created a factual issue about whether it would be unjust to permit Creech to retain the benefits. In my view, material factual issues prevented the superior court from entering summary judgment on Kiernan's unjust enrichment claim. I would reverse the superior court's summary judgment on that count.
Because the parties' agreement was too ambiguous as a matter of law for the superi- or court to order specific performance, Kier-nan should not prevail under the part performance doctrine. Promissory estoppel should not be expanded to include real estate contracts in this case: section 189 of the Restatement only applies "if injustice can be avoided only by enforeement of the promise." 21 Kiernan has another remedy available-an unjust enrichment claim-so injustice can be avoided without broadly expanding the promissory estoppel exception to the statute of frauds. In my view, the court's expansion of the exceptions to the statute of frauds undercuts the purposes of this well-settled rule of law. I therefore respectfully dissent.

. AS 09.25.010(a)(6) provides that an agreement for "the sale of real property or any interest in real property" is unenforceable unless it or some note or memorandum of it is in writing and subscribed by the party charged.

. See Salmine v. Knagin, 645 P.2d 148, 150-51 (Alaska 1982) (citing Restatement (SEconp) or ConTracts § 20 (1981)) (noting material misunderstanding can prevent contract formation). The parties here appear to agree that they entered into a contract but they do not agree upon its terms. Even if the terms of their agreement could be determined, violation of the statute of frauds makes a contract unenforceable, not void. See AS 09.25.010(a). The legislature set out exceptions to the statute of frauds that make an otherwise unenforceable contract enforceable. See AS 09.25.020.

. Jackson v. White, 556 P.2d 530, 533 n. 7 (Alaska 1976).

. Id. at 533-34.

. Prokopis v. Prokopis, 519 P.2d 814, 817 (Alaska 1974).

. Cf. Hollaus v. Arend, 511 P.2d 1074, 1075 (Alaska 1973) (refusing to enforce writing for land sale when writing had no date for transfer of title and no terms relating to exercise of option to purchase).

. Valdez Fisheries Dev. Ass'n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 669 (Alaska 2002).

8. Id. (citations omitted).

. Id.

. Id.

. Id.

. Id.

. See Pavone v. Pavone, 860 P.2d 1228, 1231 n. 2 (Alaska 1993) (setting out rule from Restatement about when contract is unenforceable as being against public policy).

. Restatement (SEeconp) or Contracts § 139(1) (1981) (emphasis added).

. Darling v. Standard Alaska Prod., 818 P.2d 677, 679 (Alaska 1991) (quoting Alaska Sales & Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska 1987)) (internal quotation marks omitted).

. Alaska Sales & Serv., Inc., 735 P.2d at 746.

. 355 P.2d 682, 687 (Alaska 1960).

. Id.

. Restatement (SEconp) or Contracts § 375 (1981).

. I agree with the court that a lease requiring the tenant to pay half the closing costs for purchasing the real property he will rent is "very unusual" and "not normal."

. Restatement (SEconp) or Contracts § 139(1) (1981).