Opinion
Case No. CV 99-607-N-EJL
August 30, 2002
ORDER ON REPORT AND RECOMMENDATION
On June 5, 2002 Magistrate Judge Mikel H. Williams issues a report and recommendation, recommending that Defendants' Motion for Summary Judgment be granted Plaintiff filed timely written objections to which Defendants have responded. Any party may challenge a Magistrate Judges proposed recommendation regarding a dispositive motion by filing written objections within ten days after being served with a copy of the Report and Recommendation. 28 U.S.C. § 636(b)(1)(C). The district court must then "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. The district court may accept, reject, or modify in whole or in part, the findings and recommendations made by the Magstrate Judge. Id.; see also Fed R. Civ. P. 72(b). In contrast, the Court reviews a Magistrate Judge's nondispositive order under a clearly erroneous or contrary to law standard. Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A).
Plaintiffs objections contend the Magistrate Judge erred by finding as a matter of law that 1) the parties intended that their contractual relationship be reduced to writing and thus that mutual assent does not exist and 2) the Plaintiff's contractual claims are barred by the statute of frauds. (Docket No. 34, p. 1). Plaintiff asserts the report's findings are in error and material questions of fact exist as to whether the parties intended the contract to be in writing and whether Defendants waived and/or are otherwise estopped from asserting the statute of frauds as a defense. (Docket No. 34, p. 2).
DISCUSSION
Plaintiff NORID, L.L.C. (hereinafter "Norid") flied this action against Defendants Plum creek Timberlands, L.P. (hereinafter "Plum Creek"). The action involves a contract dispute surrounding Norid's attempt to purchase of two separate parcels of land from an unrelated third party and the corresponding timber rights to the parcels of land From Plum Creek. Norid contends it completed the purchase of the land in reliance Upon Plum Creek's representation that it would sell Norid the timber rights. Norid seeks specific performance and damages resulting from the failed purchase of the timber rights from Plum Creek. (Docket No. 1).
The Magistrate Judge's report and recommendation included a complete and detailed factual background which is hereby incorporated by reference into this Court's order. (Docket No. 33).
Plum Creek filed a motion for summary judgment asserting 1) the parties had no mutual assent; 2) the statute of frauds was not met; and 3) the essential terms of the agreement were not defined. Norid contests these allegations and asserts genuine issues of material fact exist as to whether: 1) the parties had reached a binding agreement as to the terms of the sale and 2) Plum Creek should be estopped or has otherwise waived its right to claim lack of mutual assent or the statute of frauds. (Docket Nos. 24, 27, 33).
1) Mutual Assent:
The Magistrate Judge concluded that the parties intended to reduce their agreement to a written contract and that because Plum Creek never signed the contract there was no mutual assent between the parties; therefore, no contract was ever formed. (Docket No. 33, p. 13). Norid contends that a genuine issue of material fact exists as to the parties intent and the Magistrate Judge failed to properly analyze the factors enumerated in Intermountain Forest Management Inc. v. Louisiana Pacific Corp., 31 P.3d 921 (Idaho 2001).
Formation of a valid contract requires that there be a meeting of the minds as evidenced by a manifestation of mutual intent to contract. This manifestation takes the form of an offer and acceptance. Inland Title Co. v. Comstock, 779 P.2d 15, 17 (Idaho 1989) (citing Pierson v. Sewell, 539 P.2d 590 (Idaho 1975); Turner v. Mendenhall, 510 P.2d 490 (Idaho 1973)). In a dispute over contract formation it is incumbent upon the party seeking to enforce the contract to prove a distinct and common understanding between the parties. Id. (citations omitted).
In this case, it is undisputed that the parties did not sign the written contract. The lack of a signature, however, does not prevent contract formation where the party asserting the contract can show a contract was formed through mutual assent. Intermountain, 31 P.3d at 925. Thus, the question in this case turns on whether the parties had formed a contract through mutual assent. See Thompson v. Pike, 838 P.2d 293 (Idaho 1992) (finding the formation of an contract requires mutual assent of the parties). Mutual assent exists where there is "[a] distinct understanding common to both parties . . . necessary in order for a contract to exist." Thompson, 838 P.2d at 299 (citing Hoffman v. SV Co., Inc., 628 P.2d 218, 220 (Idaho 1981)).
Here, Norid asserts the parties had reached an oral agreement for the sale and purchase of the property. Plum Creek, however, argues the parties had not reached an agreement until a written contract was formalized. An oral agreement is valid if the written draft is viewed by the parties as a mere record; conversely, the oral agreement is not valid if the parties view the written draft as a consummation of the negotiation. Thompson, 838 P.2d at 299 (citing Elliott v. Pope, 247 P. 796, 797 (Idaho 1926)). The Idaho Supreme Court has identified certain factors in ascertaining whether the parties intended to have their negotiations formalized in a written contract:
(1) whether the contract is one usually put in writing, (2) whether there are few or many details, (3) whether the amount involved is large or small, (4) whether it requires a formal writing for a full expression of the covenants and promises, and (5) whether the negotiations indicate that a written draft is contemplated as the final conclusion of negotiations.
Intermountain, 31 F.3d at 925; Thompson, 838 P.2d at 299. Norid asserts a genuine issue of material fact exists as to whether the parties intended to have a written agreement and whether Plum Creek's representative creating a binding oral contract on the parties as to the sale of the land during the negotiations. Plum Creek, on the other hand, asserts no genuine issue of material fact exists that the parties intended to execute a written contract and that its representative did not have the authority to bind Plum Creek.
In viewing the evidence in this case in the light most favorable to Norid, this Court agrees with the Magistrate Judge's conclusion that the parties intended to have a written contract control their negotiations and, therefore, the parties lacked mutual assent to form an oral contract. Even viewing the factors enumerated in Intermountain and Thompson as Norid has argued in its objections, there is no question that the parties intended to have a written contract govern their relationship and that the writing was more than a "mere record" of the parties agreement. See Thompson, 838 F.2d 299. The parties negotiations during both 1997 and 1999 involved written contracts. The most significant factor is the undisputed evidence that during the negotiation at issue here, Plum Creek insisted that Norid submit a "clean" contract with the new sale price before Plum Creek would sign. Norid's own conduct also evidences its awareness of the importance of the writing because Norid extended the closing date of the land purchase and repeatedly contacted Plum Creek as to whether the contract had been signed. Conversely, any representation made by Plum Creek's representative that the signing was a "company formality" does not raise a genuine issue of material fact as to the parties intent to execute a written contract. Even assuming the representative made such a statement, it does not change the parties clear intent to execute a written contract as a consummation of the parties negotiation nor did the representative ever indicate that he had the authority to finalize the contract or otherwise bind Plum Creek to the contract. Since no mutual assent existed between the parties, the Court finds Plum Creek's motion for summary judgment should be granted.
Norid contends that Plum Creek never insisted on a written contract and that the writing was only that submitted by Norid. Even considering this fact in the light most favorable to Norid, the Court finds the fact that the parties did not explicitly discuss the necessity of a written contract does not negate the fact that the evidence shows the parties intended to execute a written contract.
Based on the foregoing and being fully advised in the premises, the Court adopts the Magistrate Judge's report and recommendation as to the section relating to mutual assent.
2) Statute of Frauds:
The Magistrate Judge also determined, as an alternative, that summary judgment is proper based upon the statute of frauds, finding the unsigned contract for the sale of real property violated Idaho Code § 9-503. (Docket No. 33, p. 13). Norid asserts that equitable estoppel precludes Plum Creek from raising the statute of frauds as a defense because of Norid's reliance upon Plum Creek's misrepresentations. (Docket No. 34).
It is true that a party asserting the statute of frauds as a defense may be precluded by equitable estoppel. See Mikesell v. Newworld Development Corp., 840 P.2d 1090 (Idaho App. 1992) (Recognizing that a party who is induced to rely on an oral agreement and who changes position to his own detriment cannot be defrauded by one who interposes the Statute of Frauds to declare the agreement invalid.). The Court, however, has determined that as a matter of law no contract existed it is unnecessary for the Court to determine whether Plum Creek is precluded from raising the statute of frauds as a defense. Therefore the Court does not agree that the statute of frauds may be asserted as an alternative theory upon which to grant the motion for summary judgment. Thus, the Court does not adopt the portion or the recommendation relating to the statute of frauds as an alternative ground upon which to grant the motion for summary judgment.
ORDER
Having conducted a de novo review of the objected to portions of the Report and Recommendation, the Court finds that Judge Williams' Report and Recommendation is well founded in the law and consistent with this Court's own view of the evidence in the record. Acting on the recommendation of Judge Williams, and this Court being fully advised in the premises, IT IS HEREBY ORDERED that except to the extent it has been modified by the Court herein, the Report and Recommendation entered on June 5, 2002 (Docket No. 33) should be and is hereby, INCORPORATED by reference and ADOPTED except as modified herein.
IT IS FURTHER ORDERED that the Report and Recommendation is REJECTED as it relates to the statute of frauds as an alternative ground upon which to grant summary judgment.
IT IS FURTHER ORDERED that Defendant's Motion for Summary Judgment (Docket No. 19) is HEREBY GRANTED and the matter is DISMISSED IN ITS ENTIRETY.