Court Opinion

ID: 9884766
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:11:07.395015+00
Date Added: 2024-06-11T07:40:55.331115
License: Public Domain

RANDALL, Judge,
dissenting.
I respectfully dissent from the majority opinion and would hold that appellants proved fraud by clear and convincing evidence. The elements of fraudulent misrepresentation are:
(1) There must be a representation.
(2) That representations must be false.
(3) It must have to do with a past or present fact.
(4) That fact must be material.
(5) It must be susceptible of knowledge.
(6) The representer must know it to be false or, in the alternative, must assert it as of his own knowledge without knowing whether it is true or false.
(7) The representer must intend to have the other person induced to act or justified in acting upon it.
(8) That person must be so induced to act or so justified in acting.
(9) That person’s action must be in reliance upon the representation.
(10) That person must suffer damage.
(11) That damage must be attributable to the misrepresentation, that is, the statement must be the proximate cause of the injury.
Weise v. Red Owl Stores, Inc., 286 Minn. 199, 202-3, 175 N.W.2d 184, 187 (1970).
The key dispute between the parties was whether or not respondent White told appellants that the Grathens had obtained a financing commitment from Knutson Mortgage, and thus, would be able to close the deal to buy appellants’ home. The case was tried on this issue. Respondents denied that White had made such a misrepresentation, and appellants claimed that he had made it. On this issue, as the majority acknowledges, the court found in appellants’ favor and found specifically that White had, in fact, represented to the appellants that the Grathens had a financing commitment.
Finding # 5 states as follows:
Before the purchase agreement was signed, defendant Patrick K. White represented to the plaintiffs that he had received a commitment from the Knut-son Mortgage Company relative to the Grathens’ ability to borrow money at Knutson, as well as the amount thereof and the interest rate.
This finding of the court is acknowledged and agreed upon by both the majority and this dissent. Where we differ is finding # 6 where the trial court found that, al*906though the representation had been made, the Boyds did not rely upon it:
Plaintiffs did not rely on these representations as evidenced by the fact that they accepted and executed the purchase agreement with the following contingency clause in it: “In the event the buyer cannot acquire the above mortgage, this purchase agreement shall become null and void, and all earnest money shall be returned to buyer.”
I cannot accept finding #6 of no reliance, even though I acknowledge the deference that must be given to a finding of fact made by a judge trying a case without a jury. Hubbs v. Leach, 355 N.W.2d 470, 473 (Minn.Ct.App.1984). Once finding # 5 was made, finding # 6 is simply not supported by logic nor the evidence.
Appellants testified specifically that White told them that, since Grathens had a firm commitment for financing, the contingency clause was of no effect, could be disregarded, and the deal would now go through. Since the majority in the recitation of the facts admits that appellants were reluctant to sign the purchase agreement with the contingency clause, the only reasonable conclusion after finding that White made the false representation of financing is that appellants did not bother to strike the contingency clause based on their reliance on what White told them. If they did not so rely, they would have struck the clause or had the purchase agreement rewritten without it.
Once the trial court made the key finding of fact that White misrepresented to appellants that Grathens had a firm commitment for financing and could now afford their house, all the elements of Red Owl fall into place. That representation was false; it had to do with the past or present known fact; it obviously was material and susceptible of knowledge; White knew it to be false and obviously wanted appellants to act on it, i.e. sign the purchase agreement; appellants were induced to sign the purchase agreement, and did, in fact, suffer monetary damages because of that misrepresentation.
White found it necessary to persuade appellants to sign the agreement with the clause intact by telling them the clause was of no importance since the Grathens had financing. Appellants were harmed by White's misrepresentations. In reliance on White’s representation that the Grathens had financing, appellants took out an interim loan to begin construction on their new home. They incurred interest, utility, and other out-of-pocket expenses while they attempted to mitigate their damages by placing both their old and new homes on the market. When the Grathen deal fell through, appellants were eventually forced to sell their home for $2,500 less than the Grathens had offered.
Appellants, as laymen, reasonably relied on White’s misrepresentation that Grath-ens had a firm commitment for financing and thus the contingency clause was of no effect and could be left in the purchase agreement. Due to their reliance on that false representation, they suffered monetary damages.
I respectfully dissent and would have reversed.