Opinion
No. A05-2502.
Filed August 8, 2006.
Appeal from the District Court, Blue Earth County, File No. 07-CV-05-2883.
Ryan R. Dreyer, Timothy J. Crocker, Gislason Hunter Llp, (for appellants).
John M. Riedy, Daniel L. Lundquist, Maschka, Riedy Ries, (for respondents Bonnie L. Lantz and Frederic F. Falentin).
Timothy J. O'Connor, Matthew S. Frantzen, Lind, Jensen, Sullivan Peterson, (for respondents Amy M. Lantz, Timothy E. Huglen, and Burnet Realty, Inc., d/b/a Coldwell Banker Burnet).
Considered and decided by Stoneburner, Presiding Judge; Toussaint, Chief Judge; and Dietzen, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellants Deborah K. and Kevin W. Oliva (Olivas) challenge the grant of summary judgment to respondents Bonnie L. Lantz and Frederic F. Falentin (Falentins), Amy M. Lantz, Timothy E. Huglen, and Burnet Realty, Inc., d/b/a Coldwell Banker Burnet, who comprise the sellers, real estate agents, and agencies involved in the sale of the Falentins' home in New Ulm. Because we conclude that (1) the purchase agreement between the Olivas and the Falentins was cancelled by operation of law when the parties failed to agree on an inspection contingency and the Olivas did not waive the contingency, (2) the district court did not err by dismissing the Olivas' nondisclosure claim, and (3) the district court did not err by hearing the Falentins' summary judgment on a foreshortened schedule, we affirm.
DECISION I.
On appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). "Generally, construction of a written contract is a question of law for the district court and therefore summary judgment is particularly appropriate." Knudsen v. Transp. Leasing/Contract, Inc., 672 N.W.2d 221, 223 (Minn.App. 2003), review denied (Minn. Feb. 25, 2004). If terms of a contract can be given their plain and ordinary meaning, construction of the contract is a matter for the court and summary judgment is proper. Denelsbeck v. Wells Fargo Co., 666 N.W.2d 339, 346-47 (Minn. 2003).
The district court concluded that a contract for the sale of the Falentins' property did not exist as a matter of law. The purchase agreement between the parties for the sale of the property included an inspection contingency addendum that required the Olivas to have the property inspected within five business days after acceptance of the purchase agreement and to provide the Falentins with a written list of defects within three business days after the inspection. Thereafter, if the parties failed to reach agreement within three additional business days on the terms of repair work for defects, the purchase agreement was "cancelled without further notice required."
It is undisputed that the parties executed a purchase agreement, which was effective June 30, 2005, and the property inspection occurred on July 8. The Olivas' realtor forwarded a list of defects to the Falentins on July 11. Thereafter, the parties made several offers and counteroffers regarding who should have the duty to repair the defects but never reached agreement on this issue. Even viewing the facts in the Olivas' favor, we agree with the district court's conclusion that when the parties failed to reach agreement on the inspection contingency addendum by July 14, 2005, the contract was cancelled by its own terms.
The Olivas contend that they indicated their agreement to the Falentins' counteroffer by signing it and crossing out a line pertaining to removal of a children's play fort. Minnesota has historically applied the mirror-image rule in determining whether an acceptance of an offer creates a valid contract. Gresser v. Hotzler, 604 N.W.2d 379, 382 (Minn.App. 2000). Under the mirror image rule, "an acceptance must be coextensive with the offer and may not introduce additional terms or conditions." Podany v. Erickson, 235 Minn. 36, 38, 49 N.W.2d 193, 194 (1951). Where acceptance does not differ materially from the terms of the original offer, "modern courts have relaxed the rule," and held that "the acceptance does not impede contract formation." Gresser, 604 N.W.2d at 383. In Gresser, this court noted that "the supreme court and this court have more often applied the strict-construction standard in cases involving real estate, [and Minnesota] caselaw provides no explicit distinction." Id. at 384. This court further noted that the "high volume of real estate transactions in Minnesota reinforces the importance of identifying and preserving a bright line in the formation of purchase agreements." Id. We agree with this reasoning and conclude that because the Olivas' acceptance did not mirror the Falentins' offer, the parties did not reach agreement on the inspection contingency.
We also note that the record included evidence that the play fort had special value to the Falentin family because it had been made by Bonnie Lantz's first husband, a fine antiques collector, and it contained English stained glass windows, a turret, and special shingles.
The Olivas also contend that the district court erred in failing to consider whether they waived the inspection contingency. The record does not support that the Olivas waived the inspection contingency, however, because it provided for waiver only in writing within the specified period. The record does not show, nor do the Olivas allege, that they complied with the waiver requirement. Instead, they contend that by continuing to negotiate regarding defects, even after the period to satisfy the inspection contingency had passed, they indicated their intent to waive the inspection contingency. This argument is without merit, as even the facts claimed by the Olivas do not establish that they waived the inspection contingency. See Pollard v. Southdale Gardens of Edina Condo. Ass'n, Inc., 698 N.W.2d 449, 453 (Minn.App. 2005) (waiver not question of fact when only one inference to be drawn from undisputed facts).
The Olivas further contend that the district court erred by failing to consider or address whether the Falentins unjustifiably prevented them from satisfying the inspection contingency or breached their contractual duty of good faith and fair dealing. As to the good faith and fair dealing requirement, "parties to a contract may not unjustifiably impede the other party from performing its obligations under the contract." Semler Constr., Inc. v. City of Hanover, 667 N.W.2d 457, 467 (Minn.App. 2003), review denied (Minn. Oct. 29, 2003). Because the Olivas' claims pertain to contract formation, not performance, this theory does not apply. See, e.g., id.
Contracts include an implied condition that a party will not unjustifiably impede the other party from performing the contract. Zobel Dahl Constr. v. Crotty, 356 N.W.2d 42, 45 (Minn. 1984). As to this claim, the Olivas have alleged no conduct on the part of the Falentins that would establish a prima facie case. The parties were clearly mistaken about the pertinent contract deadlines and continued to negotiate after the three-day viability period of the inspection contingency, but these facts do not demonstrate the type of intentional conduct that would show unjustifiable obstruction of the condition precedent that would be actionable under this theory.
II.
The Olivas claim that the Falentins fraudulently or negligently failed to disclose that, in accordance with the New Ulm City Code's ordinances on sewer and water, it would have cost them $40,000 to provide sewer and water services to a carriage house located on the property. Minn. Stat. § 513.55, subd. 1 (2004) provides that a residential property seller must disclose to a buyer all "material facts" that could affect the "intended use" of the property. It appears that the disclosure of costs to improve the carriage house was not material to the sale because the carriage house was sold in "as is" condition. We conclude, however, that this issue is moot because the parties' purchase agreement was cancelled by failure of the inspection contingency and the Olivas are not the buyers of the property. See Isaacs v. Am. Iron Steel Co., 690 N.W.2d 373, 376 (Minn.App. 2004) (issue is moot if "it [is] impossible to grant effective relief"), review denied (Minn. Apr. 4, 19, 2005).
III.
Finally, the Olivas claim that the district court erred in setting the summary judgment motion hearing for November 16, 2005, when the last motion for summary judgment was served on November 8, 2005. Minn. R. Civ. P. 56.03 provides that a motion for summary judgment shall not "be served less than 10 days before the time fixed for the hearing." Because this case was decided on undisputed facts as a matter of law and the Olivas have not shown that they were prejudiced by the one-day hearing notice, we conclude that the district court did not err in granting summary judgment. See Kabanuk Diversified Invs., Inc. v. Credit Gen'l Ins. Co., 553 N.W.2d 65, 69 (Minn.App. 1996) (stating that summary judgment may be proper despite violation of notice requirement for summary judgment hearing, when material facts not in dispute, judgment for one party proper as matter of law, and no prejudice to objecting party), review denied (Minn. Oct. 28, 1996).