Opinion
No. C8-03-301, A03-755.
Filed November 25, 2003.
Appeal from the Wabasha County District Court, File No. C3-00-684.
James P. Ryan, DeAnna J. Schleusner, Ryan Grinde, Ltd., P.O. (for appellant/respondent Arrowhead Bluffs, Inc.)
James R. Doran, Attorney at Law, (for appellant/respondent Paul Blackburn and Justin Blackburn)
William C. Weeding, Hagglund, Weimer Speidel, (for respondent Lang Agency)
Richard A. Lind, William L. Davidson, Lind, Jensen, Sullivan Peterson, PA, (for respondent Burnet Realty, Inc.)
Daniel J. Bresnahan, (for respondent Krahn)
Thomas H. Olive, (for respondent Lickteig)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In one of these consolidated appeals, Arrowhead challenges the district court's dismissal of its claims by directed verdict; in the other, Justin Blackburn challenges the denial of his motion for JNOV or a new trial on his counterclaim. Because we see sufficient evidence to support the directed verdict and no error in the denial of the motion for JNOV or a new trial, we affirm.
FACTS
In 1998, Arrowhead Bluffs, Inc., and its sole shareholders, John, Lester, and Shirley Behrns (collectively Arrowhead) undertook to sell some real property. Paul Blackburn and William Krahn, real estate agents employed by The Lang Agency (Lang), were hired to sell it. One potential purchaser was Thomas Lickteig, a real estate agent employed by Burnet Realty, Inc. (Burnet). Lickteig said he could generate the purchase price of the property (about $2,500,000) by investing $250,000 in a scheme that would generate $4,000,000. Arrowhead declined to provide the $250,000. Lickteig therefore sought that amount from Paul Blackburn, who contributed $92,500 and obtained from his brother, Justin Blackburn (Blackburn) the remaining $157,500.
Paul Blackburn told Arrowhead that, for the deal to go through, the Federal Reserve required certain documents showing that the money invested was "clean." Arrowhead directed its attorney to draft three documents: a promissory note, whereby Arrowhead's officers promised to pay the Blackburn brothers $250,000 plus interest; a mortgage, whereby Arrowhead gave the Blackburn brothers a lien on the property; and a personal guarantee, whereby Arrowhead's officers guaranteed Arrowhead's debt to the Blackburns.
After these documents had been executed, the funds were stolen (by a person not a party to this action) when they were forwarded by wire transfer. Arrowhead sought to have the documents set aside and brought this action, alleging various fraud/misrepresentation claims against the Blackburns, Krahn, Lang, Lickteig, and Burnet. Justin Blackburn counterclaimed for his attorney fees.
Burnet moved successfully for summary judgment. Following Arrowhead's presentation of its evidence, the district court directed a verdict on all Arrowhead's other claims. Justin Blackburn's counterclaim went to the jury, which was asked to determine whether there was a contract between him and Arrowhead. The jury found that there was no such contract. Blackburn's motion for JNOV or a new trial was denied.
On appeal, Arrowhead contends that the evidence was insufficient to support the directed verdict and that Burnet was not entitled to summary judgment; Blackburn contends that the district court erred in denying his motion for JNOV or a new trial.
Arrowhead also raises evidentiary issues, and Blackburn raises issues pertaining to whether the jury should have addressed the questions put before it. None of these issues was presented to the district court in a motion for a new trial. "[E]videntiary rulings and jury instructions are subject to appellate review only if there has been a motion for a new trial in which such matters have been assigned as error." Sauter v. Wasemiller, 389 N.W.2d 200, 201 (Minn. 1986). Moreover, Blackburn did not object to the special verdict form asking the questions, to submitting the issue of contract formation to the jury, or to the instructions given the jury either during the trial or in posttrial motion. When a district court's failure to address an issue is not raised in a new trial motion, there is no ruling for this court to review. Frank v. Illinois Farmers Ins. Co., 336 N.W.2d 307, 311 (Minn. 1983). Blackburn also contends that the directed verdict was res judicata on the fraud claims and that those claims should not have gone to the jury, but no fraud claims went to the jury. Therefore, neither Arrowhead's evidentiary issues nor Blackburn's issues relative to the submission of the questions to the jury are properly before us, and we do not address them.
DECISION
1. Directed Verdict on Arrowhead's Claims
When the district court grants a motion for a directed verdict, on review we determine whether the evidence and its inferences could reasonably sustain a contrary verdict. Northwestern State Bank of Luverne v. Gangestad, 289 N.W. 449, 453 (Minn. 1979). The evidence is viewed in the light most favorable to the nonmoving party. Boone v. Martinez, 567 N.W.2d 508, 510 (Minn. 1997). The directed verdict dismissed claims of consumer fraud and common law fraud/misrepresentation, breach of fiduciary duty, and negligence that Arrowhead brought against Paul Blackburn, Lickteig, and Krahn personally and against Lang vicariously.
a. Consumer Fraud and Common Law Fraud/Misrepresentation Claims
Both of these claims require that the defendant make a false statement with the intent that the plaintiff rely on it. Alsides v. Brown Institute, Ltd., 592 N.W.2d 468, 474 (Minn.App. 1999) (consumer fraud requires plaintiff "to demonstrate that the defendant made a false promise or misrepresentation with the intent that others rely thereon. . ."); Davis v. Re-Trac Mfg. Corp., 276 Minn. 116, 117, 149 N.W.2d 37, 38-39 (1967) (elements of common law fraud claim include that the representation be false and that it be made with the intent of inducing another person to act on it). Arrowhead claimed that (1) Paul Blackburn and Krahn misrepresented the nature of Lickteig's investment scheme and the extent of their knowledge of it; (2) Lickteig misrepresented the investment scheme and the extent of his own knowledge of it; (3) Lang was vicariously liable for the misrepresentations its agents, Paul Blackburn and Krahn; and (4) Paul Blackburn misrepresented that he needed a mortgage and that the mortgage had to be recorded to satisfy Federal Reserve requirements.
Common-law fraud claims also require that the plaintiff actually have acted in reliance on the misrepresentation. Davis, 276 Minn. at 117, 149 N.W.2d at 38-39. Arrowhead consistently testified that it did not believe the representations made about the investment and did not invest.
But the representations made about the investment were predictions of the amounts the investment would generate. These were never shown to be false because, as a threshold matter, the investment was never made: the funds to be invested were stolen. In any event, predictions of future value are not actionable. Kennedy v. Flo-Tronics, Inc., 274 Minn. 327, 332, 143 N.W.2d 827, 830 (1966). Therefore, Paul Blackburn, Krahn, and Lickteig are not liable for fraud or misrepresentation, and Lang is not vicariously liable.
Arrowhead claims that Paul Blackburn misrepresented that he needed a recorded mortgage to satisfy Federal Reserve requirements, but provided no evidence that his statements were false. Moreover, these statements concern legal requirements, and misrepresentations of the law are not actionable . Northernaire Prod., Inc. v. Crow Wing County, 309 Minn. 386, 388-389, 244 N.W.2d 279, 281 (1976).
We conclude that Arrowhead did not make a prima facie case on its fraud claims. There was no error in granting a directed verdict on them.
b. Breach of Fiduciary Duty Claim
The duties owed to Arrowhead were listed in a document provided by Burnet and entitled "Agency Relationships in Real Estate Transactions." Arrowhead contends that three of the listed duties were breached: loyalty, or acting only in client's best interest, disclosure of all material facts that might reasonably affect the client's rights and interests, and using reasonable care in performing duties. Arrowhead first argues that Paul Blackburn did not act in its best interests by obtaining the note, mortgage, and guarantees. But Paul Blackburn did no more than see that Lickteig's offer was put before Arrowhead, which was his responsibility. Arrowhead made the decision to use money from the Blackburn brothers to enable Lickteig to buy the property.
Secondly, Arrowhead contends that Paul Blackburn should have disclosed that he would gain financially. Blackburn did disclose that he would receive a ten percent commission on the sale. He stood to gain more than that only if those who invested in Lickteig's scheme agreed to rollover their earnings, and Arrowhead did not show that Blackburn had any obligation to disclose the possibility of future earnings.
Finally, Arrowhead alleges that Paul Blackburn did not use reasonable care in that he did not check out the workings of Lickteig's plan and did not require earnest money. But Arrowhead failed to show that Paul Blackburn had a duty to do either of these things.
In sum, the fiduciary duties that Arrowhead claims were breached were the duties of investment counselors, not the duties of real estate agents. Arrowhead, as seller of the property, was responsible for evaluating the reasonableness of a purchaser's offer and accepting or rejecting it. Arrowhead did not make a prima facie claim of breach of fiduciary duty.
c. Negligence Claim
To make a negligence claim, a plaintiff must show that there was a duty and a breach of that duty, that the breach was the proximate cause of plaintiff's injury, and that the plaintiff did in fact suffer injury. Davis v. Midwest Disc. Sec., Inc., 439 N.W.2d 383, 387 (Minn.App. 1989). But the activities of Paul Blackburn, Krahn, and Lickteig were not the proximate cause of the injury in this matter, because the theft of the $250,000 was a superseding cause. A cause is superseding if its effects occurred after the alleged negligent act, it was not brought about by that act, it caused a result not otherwise following from that act, and it was not reasonably foreseeable by the tortfeasor. Wartnick v. Moss Barnett, 490 N.W.2d 108, 113 (Minn. 1992). The $250,000 was stolen after the real estate agents' dealings with Arrowhead; their dealings did not bring about the theft; the loss of the money was not caused by their dealings, and the real estate agents could not reasonably have foreseen that the money would be stolen. Therefore, Arrowhead's negligence claim was properly dismissed by directed verdict.
Because Arrowhead's claims against Burnet were predicated on the assumption that Lickteig acted with apparent authority from Burnet, our affirmance of the directed verdict on the claims against Lickteig renders moot Arrowhead's appeal from the summary judgment granted to Burnet.
2. Denial of Blackburn's Motion for JNOV or a New Trial
The district court denied Blackburn's motion for JNOV or a new trial. Because a district court has the discretion to grant a new trial, we will not disturb the decision absent a clear abuse of that discretion. Halla Nursery, Inc., v. Baumann-Furrie Co., 454 N.W.2d 905, 910 (Minn. 1990). On appeal from denial of a motion for a new trial, the verdict must stand unless it is manifestly and palpably contrary to the evidence, viewed in a light most favorable to the verdict. ZumBerge v. N. States Power Co., 481 N.W.2d 103, 110 (Minn.App. 1992), review denied (Minn. 29 Apr. 1992). On appeal from a denial of a motion for JNOV, the denial must be affirmed if there is any competent evidence reasonably tending to sustain the verdict. Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998).
The district court entered judgment based on the jury's findings that (1) Arrowhead did not enter into a contract with Blackburn requiring it to pay $175,000 plus interest, (2) Arrowhead did not agree to guarantee the promissory note, and (3) Arrowhead did not agree to grant a lien against its real property to secure the promissory note. Ample evidence supports these findings: Arrowhead's principals consistently testified that they did not intend to borrow money from the Blackburns.
The district court relied on Hruska v. Chandler Assoc., Inc., 372 N.W.2d 709, 714 (Minn. 1985) ("[Parol e]vidence is admissible to show that the parties, in effect, never entered into a binding agreement because the written agreement was intended as a sham" and because "the parties never intended that the agreements' terms affect their own relations"). Blackburn argues that this reliance was error because Hruska is concerned with the admissibility of parol evidence and the admissibility of parol evidence was not at issue here: all parties to the documents testified extensively. Blackburn claims, however, that their testimony does not support the jury's verdict that no contract existed. The jury, with Blackburn's agreement, was instructed that
[a] contract exists when the parties agree with reasonable certainty about the same things and on the same terms. In other words, there must be an agreement between the parties [on] all the essential elements of the contract.
From the parties' testimony, particularly the testimony of Arrowhead's principals that they did not intend to invest $250,000 in Lickteig's scheme, the jury reasonably could have found that the parties had not agreed on the essential elements and that there was no contractual relationship between them. There was no abuse of discretion in denying Blackburn's motion for JNOV or a new trial.