Filed March 7, 2006.
Appeal from the District Court, Dakota County, File No. C3-04-7269.
Kristine K. Nogosek, Robert B. Bauer, Severson, Sheldon, Dougherty Molenda, P.A., (for appellants).
Jack E. Pierce, Pierce Law Firm, (for respondents Nick J. Dzandzara, et al.)
Timothy J. O'Connor, Sara J. Lathrop, Kevin J. Rodlund, Lind, Jensen, Sullivan Peterson, P.A., and Richard A. Glassman, Glassman Law Firm, (for respondent Title One)
Daniel B. Greenstein, Phaedra J. Howard, Standke, Greene Greenstein, Ltd., (for respondent Bayside Bank)
Considered and decided by Kalitowski, Presiding Judge; Willis, Judge; and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
Appellants Bradley and Brenda Bengston argue that the district court (1) erred in ruling that the conveyance of their homestead was not void; (2) erred by denying their motion for judgment notwithstanding the verdict on their claims of fraud and breach of contract; (3) abused its discretion by committing a number of evidentiary errors; (4) abused its discretion by denying appellants' request for a jury instruction on contract law; (5) erred in granting respondent bank's motion for summary judgment; and (6) abused its discretion by not allowing appellants to amend their complaint to seek punitive damages. We affirm.
Appellants owned property located in Lakeville, Minnesota (the property), which, due to appellants' failure to make mortgage payments, was sold at a sheriff's mortgage foreclosure sale. Prior to the expiration of their right of redemption, appellants entered into a lease-back arrangement with respondents Real Estate Equity Strategies, L.L.C. (REES) and Nick Dzandzara (Dzandzara), an owner of REES. Under the agreement, appellants agreed to sell the property and then lease it with an option to purchase. Respondent Bayside Bank provided Dzandzara with a loan for the transaction, while respondent Title One provided closing services.
Appellants argue that the district court should have determined that the conveyance of the property is void as a matter of law because (1) appellant Bradley Bengston fraudulently obtained his wife's signature on the power-of-attorney form; and (2) respondent Title One added the property's legal description to the power of attorney after Brenda Bengston signed it. We disagree.
We are not bound by and need not give deference to a district court's decision on a purely legal issue. Modrow v. JP Foodservice, Inc., 656 N.W.2d 389, 393 (Minn. 2003). A husband or wife may appoint the other as an attorney-in-fact for property transactions. Minn. Stat. § 519.06 (2004). A conveyance of the homestead requires signatures of both spouses, and "[a] spouse's signature may be made by the spouse's duly appointed attorney-in-fact." Minn. Stat. § 507.02 (2004).
"The power of attorney is validly executed when it is dated and signed by the principal. . . ." Minn. Stat. § 523.01 (2004). It is presumed valid if it "is dated and purports to be signed by the principal named in it." Minn. Stat. § 523.04 (2004). All parties may rely on that presumption "except those who have actual knowledge that the power was not validly executed." Id.
Here, Bradley Bengston claims that he obtained his wife's signature on a power-of-attorney form by lying to her and telling her that she was signing the power of attorney to be used for entering a living will. He further claims that he completed the sale of the property without her knowledge by signing the documents as her attorney-in-fact. Appellants now argue that the power of attorney is not valid, and, therefore, the conveyance is void. We disagree.
The power of attorney was presumed valid because Rhonda Bengston signed and dated it. See Minn. Stat. § 523.04. Additionally, respondents properly relied on that presumption because they did not have actual knowledge that Bradley Bengston obtained his wife's signature by lying to her. See id. Bradley Bengston testified that he was good at hiding how he had obtained the power of attorney and that he did not tell Title One representatives that he lied to his wife. Additionally, the evidence indicates that Bradley Bengston told a REES representative that his wife agreed to sign the power of attorney only after he agreed to buy Rhonda Bengston a bed set and take her out to dinner.
Appellants cite numerous cases for the proposition that a conveyance is void if both parties do not sign the documents of conveyance or if one party signs under false pretenses. See, e.g., Dvorak v. Maring, 285 N.W.2d 675, 677 (Minn. 1979) (conveyance of homestead was void without signature of both spouses); Tomlinson v. Kandiyohi County Bank, 162 Minn. 230, 234, 202 N.W. 494, 495-96 (1925) (spouse who was fraudulently induced to release homestead rights was entitled to set aside conveyance). But those cases do not apply here because a power of attorney is not a conveyance. Minn. Stat. § 507.01 ("The word `conveyance,' . . . includes every instrument in writing whereby any interest in real estate is created, aliened, mortgaged, or assigned or by which the title thereto may be affected in law or in equity, except . . . powers of attorney.") (Emphasis added.).
Furthermore, Minn. Stat. §§ 519.06 and 523.04 offer protection to good-faith purchasers who rely on a presumptively valid power of attorney. See Minn. Stat. §§ 519.06 ("In all cases where the rights of creditors or purchasers in good faith come in question, each spouse shall be held to have notice of the contracts and debts of the other as fully as if a party thereto."); 523.04 ("All parties may rely on this presumption [that the power of attorney is valid] except those who have actual knowledge that the power was not validly executed.").
Appellants contend that we should not consider Minn. Stat. §§ 519.06 and 523.04 because respondents addressed these statutes for the first time on appeal, and they did not file a notice of review. But we may affirm on a theory other than the one presented to the district court. Kuelbs v. Williams, 609 N.W.2d 10, 15 (Minn.App. 2000), review denied (Minn. June 27, 2000); Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn.App. 1995), review denied (Minn. Feb. 13, 1996). Because Rhonda Bengston signed the power of attorney and respondents had no actual knowledge that Bradley Bengston lied to his wife to obtain her signature, we conclude that respondents properly relied on the power of attorney.
Appellants also argue that the conveyance is void because the legal description was not attached to the power of attorney when Rhonda Bengston signed the document. But appellants provide no legal authority for the proposition that a transaction is void if the power of attorney authorizing it does not contain a legal description. Additionally, the county title examiner's stipulated testimony indicated only that a missing legal description delays the recording of the conveyance. Because the power of attorney was presumptively valid and respondents properly relied on it, we conclude that the district court did not err in rejecting appellants' argument that the conveyance was void.
Appellants next argue that the district court should have granted them judgment notwithstanding the verdict because Dzandzara and REES breached and intended to breach the purchase agreement and continuation-of-purchase agreement. This court reviews a district court's denial of a motion for judgment notwithstanding the verdict de novo, but the denial "must be affirmed if there is any competent evidence reasonably tending to sustain the verdict." Thompson v. Hughart, 664 N.W.2d 372, 376 (Minn.App. 2003) (quotation omitted), review denied (Minn. Sept. 16, 2003). We must consider the evidence in the light most favorable to the prevailing party and may not set aside the verdict "if it can be sustained on any reasonable theory of the evidence." Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998).
Here, appellants contend that Dzandzara and REES agreed to tender $490,000 at closing, but they failed to do so. But viewing the evidence in the light most favorable to Dzandzara and REES indicates that appellants never expected to receive $490,000 in certified funds at the closing. First, Bradley Bengston testified that he understood that the equity in the home would be deposited towards the repurchase of his home, but that he would not receive that amount at closing. Second, the purchase agreement does not say that Dzandzara would tender the entire purchase price in cash or certified funds at closing. Instead, the agreement states that Dzandzara would pay $262,000 in cash on the date of closing. Dzandzara complied with the agreement by tendering $274,358 in certified funds.
Because respondents presented evidence that they complied with the purchase agreement and continuation-of-purchase agreement, the evidence reasonably tends to support the jury's verdict. Thus, we conclude that the district court properly denied appellants' motion for judgment notwithstanding the verdict.
Appellants contend that they are entitled to a new trial because the district court made a number of evidentiary errors. "The admission of evidence rests within the broad discretion of the trial court and its ruling will not be disturbed unless it is based on an erroneous view of the law or constitutes an abuse of discretion." Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn. 1997) (quotation omitted). A party is not entitled to a new trial on the ground of improper evidentiary rulings unless that party can demonstrate prejudicial error. Id. at 46. The appellate court is bound by the result "[i]n the absence of some indication that the trial court exercised its discretion arbitrarily, capriciously, or contrary to legal usage." Id.
First, appellants argue that the district court abused its discretion by excluding testimony regarding similar transactions. But the district court did not prohibit evidence of other transactions. Rather, the court ruled that once appellants established that they relied on a misrepresentation of material fact, appellants could present two witnesses to testify regarding similar transactions. But appellants never identified or called witnesses to testify about similar transactions. Thus, the district court did not abuse its discretion.
Second, appellants contend that the district court abused its discretion by precluding use of the phrase "equity stripping" and by excluding the equity-stripping materials from the Minnesota Attorney General's office. The court, however, permitted appellants to use several other equivalent terms that indicated that equity stripping was their theory of the case. For example, appellants repeatedly stated that respondents skimmed appellants' equity from their home and asserted that respondents would have "stolen" the equity in their home if appellants had not filed a lawsuit. Appellants also repeatedly labeled the transaction a "scheme," and they described the checks as "bogus" or as "dummy" checks. Because the court did not preclude appellants from conveying their theory of the case, we conclude that the court did not abuse its discretion by limiting the equity-stripping evidence.
Third, appellants assert that the district court abused its discretion by admitting testimony regarding the depletion of Bradley Bengston's retirement funds. But appellants were the ones who initially introduced evidence that Bradley Bengston depleted his retirement funds. Additionally, appellants did not object when respondents introduced evidence regarding the retirement funds. Thus, we conclude that the district court did not abuse its discretion when it admitted the evidence regarding Bradley Bengston's pension. See Minn. R. Evid. 103(a)(1) (stating that a party seeking to prevent the admission of evidence must make a timely objection).
Fourth, appellants argue that the district court abused its discretion by excluding evidence of the impact that Parkinson's disease had on Bradley Bengston and testimony from his treating physician. But appellants' counsel informed the court that appellants would not call the physician as a witness. Additionally, the court granted appellants' requests to provide a jury instruction regarding Parkinson's disease and an instruction that Bradley Bengston's disease should not sway their vote. Because the court instructed the jury as appellants requested, we conclude that the court did not abuse its discretion.
Finally, appellants contend that the district court abused its discretion by excluding the live testimony of the county title examiner. But both parties agreed to the examiner's stipulated statement, which the court read to the jury. Furthermore, respondent Title One's counsel objected to the stipulation, but appellants' counsel did not. We conclude that appellants' failure to object at trial precludes them from doing so here. See Minn. R. Evid. 103(a)(1); Park Hill Apartments v. Anderson, 409 N.W.2d 924, 925 (Minn.App. 1987) (stating that alleged error not presented to district court cannot be considered on appeal).
Appellants argue that the district court improperly denied their request for a jury instruction on contract interpretation. District courts have broad discretion in selecting the language in jury instructions and will not be reversed absent an abuse of discretion. State Farm Fire Cas. Co. v. Short, 459 N.W.2d 111, 113 (Minn. 1990). A new trial is not warranted when the instructions fairly and accurately state the applicable law. Kohoutek v. Hafner, 383 N.W.2d 295, 300 (Minn. 1986).
Here, appellants requested an instruction that contract terms should be given their plain and ordinary meaning. See Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998) (stating that contract language should be given its plain and ordinary meaning). But appellants do not indicate how the instruction would have changed the verdict. Moreover, the district court instructed the jury on contract formation and breach of contract. Because the instructions fairly and accurately state the law, the court did not abuse its discretion by denying appellants' request for further instruction on contract law. See Kohoutek, 383 N.W.2d at 302 (concluding that language of jury instructions reasonably informed jury of plaintiffs' claims).
Appellants contend that the district court erred in granting respondent Bayside Bank summary judgment on appellants' civil-conspiracy claim. Whether the district court properly granted summary judgment when no genuine issues of material fact exist is a question of law, which this court reviews de novo. Prior Lake Am. v. Mader, 642 N.W.2d 729, 735 (Minn. 2002). On appeal from summary judgment, this court must consider (1) whether any genuine issues of material fact exist; and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). A genuine issue of material fact does not exist when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quotation omitted). This court "must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Additionally, summary judgment is appropriate when a party fails to establish the existence of an essential element to the party's case. Bersch v. Rgnonti Assocs., Inc., 584 N.W.2d 783, 786 (Minn.App. 1998), review denied (Minn. Dec. 15, 1998).
"A conspiracy is a combination of persons to accomplish an unlawful purpose or a lawful purpose by unlawful means." Harding v. Ohio Cas. Ins. Co., 230 Minn. 327, 337, 41 N.W.2d 818, 824 (1950). To constitute a conspiracy, the alleged conspirators must have a meeting of the minds regarding a plan or purpose of action to achieve the contemplated result. Bukowski v. Juranek, 227 Minn. 313, 318, 35 N.W.2d 427, 429 (1948). In addition, a civil-conspiracy claim must be supported by an underlying tort. D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn.App. 1997).
Here, appellants argue that they offered sufficient evidence to present a material factual issue on whether respondent Bayside Bank conspired with the other respondents to cheat or defraud appellants. We disagree. First, no underlying tort exists to support a claim of conspiracy because the evidence reasonably tends to sustain the jury's verdict in favor of respondents. Second, the parties did not provide any evidence that Bayside Bank was involved in a mutual agreement or understanding to cheat or defraud appellants, an essential element of appellants' civil-conspiracy case.
Appellants also argue that the district court erred in granting summary judgment because Bayside Bank would be affected if the court found the conveyance void. But because we have determined the conveyance is not void, appellants' argument is moot. We conclude the district court did not err when it granted Bayside Bank's motion for summary judgment.
Appellants argue that the district court abused its discretion when it denied appellants' motion to amend its complaint to seek punitive damages. This court "will not reverse a district court's decision to grant or deny a motion to add a claim for punitive damages absent an abuse of discretion." LeDoux v. Nw. Publ'g., Inc., 521 N.W.2d 59, 69 (Minn.App. 1994), review denied (Minn. Nov. 16, 1994). To claim punitive damages, a party must make a motion to amend the pleadings after filing the suit. Minn. Stat. § 549.191 (2004). If the district court finds prima facie evidence in support of the motion, the court shall grant the party permission to amend. Id. But a court may allow a claim for punitive damages only "upon clear and convincing evidence that the acts of the defendant showed deliberate disregard for the rights or safety of others." Minn. Stat. § 549.20, subd. 1(a) (2004); see also LeDoux, 521 N.W.2d at 69 (concluding that clear-and-convincing evidence standard for allowing punitive damages claim was not met).
Here, the jury determined that respondents neither engaged in fraud nor breached their contract with appellants. Because the evidence reasonably tends to support the verdict, we conclude that the issue of pleading punitive damages is moot.