Opinion
No. C0-01-1938
Filed July 30, 2002.
Appeal from the District Court, Hennepin County, File No. CT9816270.
William R. Skolnick, Rolin L. Cargill III, (for respondent Sergio Nessi)
John F. Beukema, and David F. Herr, (for appellant Sudovest Group)
Considered and decided by Kalitowski, Presiding Judge, Lansing, Judge, and Anderson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
These consolidated cases involve a claim that appellant company defaulted on a settlement agreement and promissory note and related counterclaims, including an action for breach of contract. In this appeal from a judgment and posttrial order, appellant contends that the district court (a) erred by refusing to apply Italian law to a counterclaim involving rescission of a contract for unilateral mistake; and (b) clearly erred in its findings of fact and consequently erred as a matter of law in ruling that respondent did not breach the July 1995 contract. We reverse and remand.
DECISION I.
A choice of law question is a legal issue. A reviewing court is not bound by and need not give deference to a district court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).
Appellant Sudovest contends that the district court erred by applying Minnesota law to Sudovest's fifth counterclaim regarding unilateral mistake as a reason for rescission of a contract. We agree.
When analyzing a choice of law issue, a court must first consider whether the choice of one jurisdiction's law over another's causes an actual conflict. Jepson v. General Cas. Co. of Wisconsin, 513 N.W.2d 467, 469 (Minn. 1994). If there is a conflict between the laws of two jurisdictions, then the court examines the five choice influencing factors:
(1) predictability of result; (2) maintenance of interstate and international order; (3) simplification of the judicial task; (4) advancement of the forum's governmental interest; and (5) application of the better rule of law.
Id. at 470 (citing Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973)). These rules were intended to prompt courts to examine each new fact situation closely and not as a means of applying a mechanical rule. Id.
Based on the record, Italian law allows for rescission based on unilateral mistake if the mistake was material and the mistake was recognizable (i.e. "it would have been detectable by a person of normal diligence"). In Minnesota, a unilateral mistake is not a ground for rescission absent ambiguity, fraud, or misrepresentation. North Star Center, Inc. v. Sibley Bowl, Inc., 205 N.W.2d 331, 332 (Minn. 1973). Thus, there is a conflict between the laws of the two jurisdictions.
Having decided there is a conflict between Minnesota and Italian law, we must examine the choice influencing factors. Jepson, 513 N.W.2d at 470. We find the first factor, predictability of result, strongly favors application of Italian law. The agreement: (1) was negotiated by two Italian resident citizens in Italy; (2) was written in Italian; and (3) called for substantial performance in Italy. The parties could only have assumed that Italian law would govern any disagreement. There is no evidence that the parties would expect Minnesota law to govern a conflict over the agreement simply because a corporation benefiting from the agreement happened to have been incorporated in Minnesota.
The second factor, the maintenance of interstate and international order, must be examined to ensure the free movement of people and goods, which requires deference to another jurisdiction's rules when that jurisdiction has a substantial concern with the situation, regardless of whether the forum state has an identifiable interest. Nodak Mut. Ins. Co. v. American Family Mut. Ins. Co., 590 N.W.2d 670, 673 (Minn.App. 1999). This factor favors the application of Italian law as well. Italy had more significant connections with the agreement than Minnesota as is demonstrated under the predictability of results factor. Both parties are citizens and residents of Italy; the negotiations took place in Italy, the contract is written in Italian, and it calls for substantial performance in Italy.
The third factor, simplification of the judicial task, favors the application of Minnesota law as the court would have to examine and translate unfamiliar Italian rules. The fourth factor, the advancement of the forum's governmental interest, also favors application of Minnesota law. Minnesota has an interest in applying its own laws, especially in a circumstance where there could be a fear of fabrication as may be the case with rescission for unilateral mistake. The fifth factor, application of the better rule of law, has received little consideration in recent cases. Nodak, 590 N.W.2d at 673 n3. However, if this factor were examined, it would probably favor application of Minnesota law due to concerns with fabrication.
Like the Jepson court, we are more influenced by our analyses of predictability and maintenance of international order than by the last three factors. See Jepson, 513 N.W.2d at 472. Thus, we conclude that Italian law applies to Sudovest's fifth counterclaim regarding rescission of contract.
We, therefore, reverse the district court's decision regarding choice of law to be applied to Sudovest's fifth counterclaim, and remand to the district court to determine whether the 1995 agreement between Antonio Percassi, Sudovest's indirect owner, and Sergio Nessi, Percassi's father-in-law, could be rescinded under Italian law because it was based on a material, recognizable unilateral mistake.
II.
Because the operation of Italian law may negate the contract between Sergio Nessi and Percassi, we do not reach the issue of whether that contract was breached. Additionally, while it appears Italian law more properly applies to the entire contract dispute, including whether the contract was breached, because neither the parties nor the district court considered this issue, we do not address it. See Freundschuh v. Freundschuh, 559 N.W.2d 706, 709 (Minn.App. 1997) (stating reviewing courts should consider only those issues presented to and considered by the district court), review denied (Minn. Apr. 24, 1997).