Summary
dismissing both fraudulent and negligent misrepresentation claims where a plaintiffs complaint failed to "specify with particularity which statements were false and fraudulent at the time they were made" (citing Minn. R. Civ. P. 9.02)
Summary of this case from McLain v. Andersen Corp.Opinion
No. A05-1263.
Filed April 25, 2006.
Appeal from the District Court, Dakota County, File No. C9-05-6430.
Alex W. Russell, (for appellant)
R. Daniel Rasmus, Michael W. Plambeck, Christensen, Laue Rasmus, (for respondent)
Considered and decided by Lansing, Presiding Judge; Shumaker, Judge; and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant challenges the Minn. R. Civ. P. 12.02(e) dismissal of her complaint, which presents a series of claims based on alleged promises made by respondent. Because appellant has failed to state a claim on which relief may be granted, we affirm.
FACTS
Respondent Patricia Vogelpohl and her husband owned an apartment building, of which respondent became the sole owner when her husband died in 1999. Appellant Marilyn Michel lived in the building and worked as the rental manager for 13 years. As a result, she had reduced rent and received $400 per month. In February 2004, respondent sold the building. Appellant sued respondent, claiming that respondent at various times orally promised appellant that she would be taken care of financially, that respondent would never sell the apartment building, that appellant would receive a one-third interest in the building and have an apartment to live in forever, and that respondent would buy appellant a townhouse. Appellant's action was brought on a variety of theories, including contract, the consumer-fraud act, equitable estoppel, promissory estoppel, unjust enrichment, constructive trust, misrepresentation, and negligence or negligent misrepresentation. The district court determined that appellant failed to state a claim on which relief could be granted and dismissed all of her claims. This appeal follows.
DECISION
In reviewing cases involving dismissal for failure to state a claim under Minn. R. Civ. P. 12.02(e), appellate courts consider "whether the complaint sets forth a legally sufficient claim for relief." Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997). A claim is legally sufficient if it is possible on any factual evidence that might be produced, consistent with the pleadings, to grant the relief demanded. N. States Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963). This court reviews rule 12 dismissals de novo. Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003). Our review accepts the facts alleged in the complaint as true and construes all reasonable inferences in favor of the nonmoving party. Marquette Nat'l Bank v. Norris, 270 N.W.2d 290, 292 (Minn. 1978). It is immaterial whether the plaintiff can prove the facts alleged. Martens v. Minn. Mining Mfg. Co., 616 N.W.2d 732, 739 (Minn. 2000).
A. Contract claims
The district court dismissed appellant's contract claims on the ground that they are barred by the statute of frauds. Minnesota's statute of frauds requires conveyances or contracts for the sale of real property to be in writing. Minn. Stat. §§ 513.04, .05 (2004). The statute also provides that agreements that are "not to be performed within one year from [their] making" must be in writing to be enforceable. Minn. Stat. § 513.01(1) (2004).
Appellant alleges that respondent promised to "take care of her" financially. That purported promise is vague and does not constitute an employment contract, and the district court did not err in its determination that this claim falls within the statute of frauds because it cannot be performed within one year. See, e.g., Bussard v. College of St. Thomas, Inc., 294 Minn. 215, 224, 200 N.W.2d 155, 161 (1972) (noting that a contract of permanent employment does not fall within the statute of frauds because the possibility of death makes it performable within a year).
Appellant also contends that respondent promised to never sell the apartment building, to give appellant a one-third interest in the building, and to provide her with an apartment to live in forever. Because each of these purported promises involves an interest in real property and because appellant fails to allege the existence of a writing documenting the promises, the district court properly dismissed the claims as unenforceable under the statute of frauds.
Appellant's complaint also alleges that respondent promised to buy a townhouse for her. The district court dismissed this claim on the basis that it involves an interest in land and is therefore unenforceable under the statute of frauds without a writing. Appellant argues that the promise does not involve an interest in land, but rather constitutes a promise to transfer "money in an amount to afford a townhome in exchange for services" and that the statute of frauds does not apply to such a transfer of money. We are not persuaded by this creative rephrasing. The Minnesota Supreme Court has specifically held that "a contract to purchase land or an interest therein which is not evidenced by a writing is within the evil which the statute opposes and subject to its operation, although not strictly within the letter of the act." Alamoe Realty Co. v. Mut. Trust Life Ins. Co., 202 Minn. 457, 459, 278 N.W. 902, 903 (1938). Because appellant alleges that respondent promised to purchase real property for her, the district court did not err in dismissing this claim as unenforceable under the statute of frauds.
Appellant contends that dismissal was premature because of the possibility that exceptions to the statute of frauds may apply and because of part performance of the contract. Appellant first argues that it is unnecessary for a complaint to anticipate and address defenses that might be raised. Appellant cites no authority for this proposition, and we conclude that appellant should have anticipated and addressed the statute-of-frauds defense in her complaint.
Minnesota is a notice-pleading state that does not require absolute specificity in pleading, but rather requires only information sufficient to fairly notify the opposing party of the claim against it. See Minn. R. Civ. P. 8.01 (requiring pleading to include a "short and plain statement of the claim" showing entitlement to relief); Minn. R. Gen. Pract. 507 (the statement of the claim must "contain a brief statement of the amount and nature of the claim"); Roberge v. Cambridge Coop. Creamery Co., 243 Minn. 230, 232, 67 N.W.2d 400, 402 (1954) (stating that pleadings must be framed so as to give notice of the claim asserted and permit the application of the doctrine of res judicata).
The general rule is that a complaint is sufficient if it "shows a prima facie right in the plaintiff to recover, and it is not necessary that it should negative a possible defense, or state matter which would come more properly from the other side." Jones v. Ewing, 22 Minn. 157, 158-59 (1875) (citations omitted). But while Minnesota courts have held that a complaint need not anticipate the defenses of justification or contributory negligence, laches and statute-of-limitations infirmities must be anticipated and addressed. True v. Older, 227 Minn. 154, 156, 34 N.W.2d 700, 701 (Minn. 1948) (justification); Thompson v. Great N. Ry. Co., 70 Minn. 219, 220, 72 N.W. 962, 962 (1897) (contributory negligence); Sinell v. Town of Sharon, 206 Minn. 437, 439, 289 N.W. 44, 45 (1939) (laches); see Pederson v. Am. Lutheran Church, 404 N.W.2d 887, 889 (Minn.App. 1987), review denied (Minn. June 30, 1987) (statute of limitations). Thus, a dismissal for failure to state a claim is proper when a fatal defect is clear on the face of the complaint and no allegations are included to address the defect and substantiate the vitality of the claim. See Pederson, 404 N.W.2d at 889 (holding that rule 12 dismissal is proper "if it clearly and unequivocally appears from the face of the complaint that the statute of limitations has run and only if the complaint contains no facts to toll that running").
Because it is clear and unequivocal from appellant's complaint that the statute of frauds bars enforcement of the alleged contracts and because appellant does not allege facts sufficient to take her claims out of the statute of frauds, the district court properly dismissed appellant's contract claims.
But appellant further contends there are equitable considerations present in this case that amount to part performance and thereby remove the contract from the requirements of the statute. Appellant contends that her complaint alleged part performance because it included allegations that appellant paid for items for and made improvements to the apartment building.
Appellant cites Ehmke v. Hill, 236 Minn. 60, 68-69, 51 N.W.2d 811, 817 (1952), for the proposition that an oral contract for the transfer of land "may be removed from the purview of the statute of frauds" and specific performance may be granted based on "either the unequivocal reference theory or on the fraud theory of part performance." Indeed, equity requires specific performance "where plaintiff shows that his acts of part performance in reliance upon the contract have so altered his position that he will incur unjust and irreparable injury in the event that defendant is permitted to rely on the statute of frauds" and "where the relationship of the parties, as shown by their acts rather than by the alleged contract, cannot reasonably be explained except by reference to some contract between them, the oral contract is taken out of the statute of frauds and may be specifically enforced." Burke v. Fine, 236 Minn. 52, 55-56, 51 N.W.2d 818, 820 (1952). Appellant's arguments fail.
First, appellant has not made any allegations involving the unequivocal-reference theory. Second, because appellant seeks "damages for breach of contract, the doctrine of part performance, which may aid a suit for specific performance, is of no help" here. Hatlestad v. Mut. Trust Life Ins. Co., 197 Minn. 640, 647, 268 N.W. 665, 668 (1936). Finally, the doctrine of part performance applies when an individual takes possession of property and makes valuable improvements to it. Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 900 (Minn. 1982). We note that
[t]aking possession of land (of itself usually not enough) pursuant to an oral agreement for its conveyance ordinarily is an important element of the part performance which takes a case out of the statute. But such possession must of itself indicate the beginning of a new interest, and be shown to be pursuant to the oral contract. There must be no equivocation or uncertainty in the case. If the possession can naturally and reasonably be accounted for otherwise than by a contract for the purchase of the land, it will not avail.
Hatlestad, 197 Minn. at 648-49, 268 N.W. at 669 (quotations and citations omitted). While appellant has alleged that she made improvements to the apartment building, she has not alleged that she had or has taken possession of the apartment building; she admits that she lived there as a manager and that respondent sold the building. Thus, appellant's claim of part performance fails, the statute of frauds applies, and the dismissal of appellant's contract claims is proper.
B. Consumer Fraud Act claim
Appellant alleges that respondent violated the Minnesota Consumer Fraud Act, which provides for the enjoinment of "[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise." Minn. Stat. § 325F.69, subd. 1 (2004). The district court dismissed the claim because a sale is a requisite element of a claim under the act and because appellant failed to allege that a sale took place.
Appellant concedes that she was totally uninvolved in the transaction by which the apartment building was sold. Her argument that the sale at issue here somehow involved respondent's promises and appellant's labor in consideration therefore is unpersuasive. Because appellant has failed to state a claim under the Minnesota Consumer Fraud Act, the district court did not err in dismissing this claim.
C. Estoppel claims
Promissory estoppel
"Promissory estoppel implies a contract in law where no contract exists in fact." Deli v. Univ. of Minn., 578 N.W.2d 779, 781 (Minn.App. 1998), review denied (Minn. July 16, 1998). The elements of a promissory estoppel claim are (1) a clear and definite promise, (2) intended to induce reliance and the promisee relied to his or her detriment, and (3) the promise must be enforced to prevent injustice. Cohen v. Cowles Media Co., 479 N.W.2d 387, 391 (Minn. 1992). Judicial determinations of injustice involve a number of considerations, "including the reasonableness of a promisee's reliance." Faimon v. Winona State Univ., 540 N.W.2d, 879, 883 (Minn.App. 1995), review denied (Minn. Feb. 9, 1996). And if a promise is insufficient to support an employment contract, "the promise is also insufficient to support a claim of promissory estoppel." Aberman v. Malden Mills Indus., Inc., 414 N.W.2d 769, 773 (Minn.App. 1987).
Because the alleged promises here were not definitive and because they do not support the existence of an employment contract, we conclude that appellant has failed to state a claim for promissory estoppel.
Equitable estoppel
Equitable estoppel prevents a party from "taking unconscionable advantage of [its] own wrong by asserting [its] strict legal rights." Brekke v. THM Biomedical, Inc., 683 N.W.2d 771, 777 (Minn. 2004). To establish equitable estoppel, the party seeking relief must demonstrate that the adverse party made a knowing misrepresentation or concealment of a material fact with the intent to induce reliance and that the party seeking estoppel was ignorant to the misrepresentation and subsequently relied on it to its prejudice. Id. at 777. "A fact is material if it is germane to the unconscionable conduct alleged and works a prejudice to the party." Lunning v. Land O'Lakes, 303 N.W.2d 452, 458 (Minn. 1980).
The district court dismissed appellant's equitable-estoppel claim partly because appellant failed to allege facts indicating a misrepresentation of material fact. Additionally, the court noted that the complaint contained "no allegations of any `unconscionable' conduct by [respondent]." We conclude that the dismissal of appellant's equitable-estoppel claim is appropriate because there is no allegation that respondent made a misrepresentation regarding a material fact.
D. Constructive trust and unjust enrichment claims
A constructive trust is an equitable remedy that "may be imposed when there is clear and convincing evidence that the trust is necessary to avoid unjust enrichment." Spiess v. Schumm, 448 N.W.2d 106, 108 (Minn.App. 1989). To establish unjust enrichment, a "claimant must show that another party knowingly received something of value to which he was not entitled, and that the circumstances are such that it would be unjust for that person to retain the benefit." Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn.App. 2001).
While appellant asserts claims for constructive trust and unjust enrichment, she fails to allege that respondent received something to which she was not already entitled. Accordingly, dismissal of the claims for constructive trust and unjust enrichment is appropriate.
E. Fraudulent-misrepresentation claim
Fraud must be pleaded with particularity. Minn. R. Civ. P. 9.02. A claim for fraudulent misrepresentation has five elements:
(1) there was a false representation by a party of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made as of the party's own knowledge without knowing whether it was true or false; (3) with the intention to induce another to act in reliance thereon; (4) that the representation caused the other party to act in reliance thereon; and (5) that the party suffer pecuniary damage as a result of the reliance.
Flynn v. Am. Home Prods. Corp., 627 N.W.2d 342, 349 (Minn.App. 2001).
Here, the district court characterized appellant's misrepresentation claim as a claim for fraudulent misrepresentation and dismissed it because appellant failed to "specify with particularity which statements were false and fraudulent at the time they were made." Appellant has not objected to the court's characterization of the misrepresentation claim as a fraudulent-misrepresentation claim, and we note that such a characterization seems appropriate, given appellant's separate negligent-misrepresentation claim. Because appellant has not alleged fraudulent misrepresentation with the particularity required under rule 9.02, appellant has not stated a claim on which relief may be granted. Dismissal on that basis is therefore appropriate.
F. Negligence and negligent-misrepresentation claims
Negligent misrepresentation
Minnesota has adopted the definition of negligent misrepresentation set forth in the Restatement (Second) of Torts:
One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Hebrink v. Farm Bureau Life Ins. Co., 664 N.W.2d 414, 420 (Minn.App. 2003).
A misrepresentation, "whether negligent or fraudulent, constitutes fraud under Minnesota law." Juster Steel v. Carlson Cos., 366 N.W.2d 616, 618 (Minn.App. 1985). Therefore, the strict pleading requirements of rule 9.02 that apply to claims for fraudulent misrepresentation also apply to claims for negligent misrepresentation. See id. at 620 (noting that "[w]hile it is true that Minnesota courts have recognized that negligent misrepresentation constitutes fraud, that does not lessen the standards of pleading").
Here, appellant's complaint baldly alleges that respondent's actions and representations constitute negligent misrepresentation, without specifying which acts and representations constitute such misrepresentation. Because appellant has not alleged negligent misrepresentation with sufficient particularity, she has not stated a claim on which relief may be granted. Dismissal is therefore appropriate.
Negligence
The district court dismissed appellant's negligence claim, in part because a contract claim cannot be converted to a tort claim absent an independent tort. To prove negligence, a plaintiff must show (1) a duty of care existed; (2) that duty was breached; (3) an injury was sustained; and (4) breach of the duty proximately caused the injury. Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995).
This court has previously held that a contract claim cannot be converted to a tort claim in the absence of an independent tort. Hanks v. Hubbard Broadcasting, Inc., 493 N.W.2d 302, 307 (Minn.App. 1992), review denied (Minn. Feb. 12, 1993). It follows that a party may not recover tort damages for a breach of contract unless the breach "constitutes or is accompanied by an independent tort." Wild v. Rarig, 302 Minn. 419, 440, 234 N.W.2d 775, 789 (1975). Because the gravamen of appellant's suit concerns alleged breaches of contract and because appellant has failed to sufficiently allege an independent tort, dismissal of the negligence claim is proper.