MaryEllen Alt, Appellant, vs. Mainstreet Lofts, LLC, Defendant, Daniel E. Basil, et al., Respondents.

MaryEllen Alt, Appellant, vs. Mainstreet Lofts, LLC, Defendant, Daniel E. Basil, et al., Respondents. A05-1476, Court of Appeals Unpublished, July 3, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-1476

 

MaryEllen Alt,
Appellant,
 
vs.
 
Mainstreet Lofts, LLC,
Defendant,
 
Daniel E. Basil, et al.,
Respondents.

 

Filed July 3, 2006

Affirmed

Wright, Judge

 

Hennepin County District Court

File No. 04-009641

 

 

Dennis E. Dalen, 5101 Thimsen Avenue, Suite 200, Minnetonka, MN  55345 (for appellant)

 

Richard A. Lind, William L. Davidson, Lind, Jensen, Sullivan & Peterson, P.A., 150 South Fifth Street, Suite 1700, Minneapolis, MN  55402 (for respondents)

 

 

            Considered and decided by Shumaker, Presiding Judge; Wright, Judge; and Ross, Judge.

 

U N P U B L I S H E D  O P I N I O N

 

WRIGHT, Judge

 

In this breach-of-contract action, appellant argues that summary judgment was granted in error because there are genuine issues of material fact regarding whether respondents fulfilled their obligations under the contract.  We affirm.

FACTS

 

Mainstreet Lofts (Mainstreet) was the developer of Marketplace Lofts, a condominium complex located in Hopkins.  Respondents Daniel Basil and Lisa Basil (the Basils) were agents for respondent-broker Coldwell Banker Burnet (Burnet), which was the exclusive listing agent for the Marketplace Lofts.  On March 25, 2002, appellant MaryEllen Alt signed a reservation agreement and paid a $1,000 reservation fee to purchase a condominium in the Marketplace Lofts complex.  Alt also signed a contract with the Basils that gave them the exclusive right to represent her in the property purchase.  Alt signed a purchase agreement for a condominium unit on August 20, 2002, agreeing to pay as earnest money five percent of the purchase price ($14,350) at that time and an equal amount 60 days later. 

The property sale was originally scheduled to close on October 8, 2003.  Because Alt was unavailable on that date, the closing was rescheduled for October 24.  An inspector hired by Alt inspected the condominium unit on October 7.  The inspector's report detailed items in need of repair or completion, including door adjustments, glass replacement, and paint touchups.  One week later, Alt advised the developers in writing that she no longer wished to purchase the property.  In her letter dated October 14, 2003, Alt stated:

The enthusiasm I [formerly] had for this property has diminished greatly to the point where it is no longer in my best interest to own [the property]. . . . I have lost all emotional attachment to the place.  I even hate the thought of walking [through] the door to [the property].

Alt requested cancellation of the agreement and a return of the reservation fee and earnest money.  She listed the following reasons for her request:  (1) her unhappiness with the sales transaction and the inattentiveness of the agents, mortgage broker, and developer; (2) missed property-development deadlines; and (3) the developer's failure to fix the items identified by the inspector. 

            Alt signed a purchase agreement for a different property on October 23, 2003.  After Alt failed to close on the Marketplace Lofts condominium unit as scheduled, Mainstreet issued a notice of cancellation of the purchase agreement that gave Alt 30 days to cure her breach of the purchase agreement.  Because Alt did not cure the breach, the purchase agreement was cancelled.

On June 17, 2004, Alt filed a complaint alleging three counts of breach of contract against the Basils and Burnet.  Alt claimed that, because the Basils were agents of Burnet, Burnet was liable for the Basils' actions.  The complaint also alleged an unjust-enrichment claim against Mainstreet.  Alt settled her claim against Mainstreet on March 21, 2005.  Burnet and the Basils (collectively, respondents) moved for summary judgment, which the district court granted in an order dated May 27, 2005.  The district court found that there were no genuine issues of material fact and that respondents had not breached their contractual obligations to Alt.  The district court also concluded that the purchase agreement precluded Alt from recovering her down payment because Alt had defaulted by failing to close on the property.  This appeal followed. 

D E C I S I O N

 

On appeal from summary judgment, we ask whether there are any genuine issues of material fact and whether the district court erred in its application of the law.  Prior Lake Am. v. Mader, 642 N.W.2d 729, 735 (Minn. 2002); 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) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)).  "[T]he party resisting summary judgment must do more than rest on mere averments."  Id.at 71.  A genuine issue for trial must be established by substantial evidence.  Id.at 69-70.  We view the evidence in the light most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  Summary judgment is appropriate when a party fails to establish the existence of an element essential 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).

            Alt contends that the district court erred by making findings of credibility and reasonableness, which, if properly viewed in the light most favorable to Alt, would preclude an award of summary judgment to respondents.  We begin our analysis by determining respondents' obligations under the representation agreement in order to ascertain whether a genuine issue of material fact exists regarding a breach of those obligations.  The construction and effect of a contract present questions of law, which we review de novo.  Logan v. Norwest Bank Minn., 603 N.W.2d 659, 662 (Minn. App. 1999).  A contract is breached when one party fails to perform, without legal justification, a substantial part of the contract.  Estate of Riedel by Mirick v. Life Care Ret. Communities, Inc., 505 N.W.2d 78, 81 (Minn. App. 1993).  "Where one party renounces . . . liability under the contract or makes it impossible for the other to perform, a breach of the contract occurs."  Wormsbecker v. Donovan Constr. Co., 247 Minn. 32, 42, 76 N.W.2d 643, 650 (1956). 

Respondents' obligations to Alt arise from the contract for the exclusive right to represent Alt.  This representation agreement obligates the Basils to

1. Make a reasonable effort to locate property acceptable to [Alt].  

2. Assist in negotiations for the Purchase of property. 

3. Assist [Alt] throughout the transaction. 

4. Act in [Alt's] best interest at all times, subject to the terms of Agency representation[1] . . . . 

 

Alt maintains that the Basils breached three of the four contractual duties.

            Alt first argues that respondents breached their contractual duty to make reasonable efforts to locate a suitable property because the Basils never suggested that she look at other units or locations.  But the record, viewed in the light most favorable to Alt, does not support this contention.

            According to Alt's deposition testimony, until October 2003, she was interested in buying a unit in the Marketplace Lofts complex; she was not interested in looking at other properties; and she did not ask the Basils to show her other properties.  Alt testified that she did not expect the Basils to show her other properties because she was "satisfied with what Marketplace Lofts had to offer."  Alt's testimony is corroborated by other evidence, including Alt's letters to the Basils describing her happiness with her planned purchase.  Indeed, the record does not contain any evidence to the contrary.  Moreover, in her letter requesting cancellation of the purchase agreement, Alt did not identify as a reason for doing so respondents' failure to make reasonable efforts to locate a suitable property. 

            Alt claims that the affidavit of Julie Olson, a real-estate agent, raises a material issue as to the reasonableness of the Basils' decision not to show Alt other properties.  Olson opines that an agent should suggest that a buyer look at other properties to know what is available.  But this standard does not modify respondents' contractual duty to make a reasonable effort to locate a property acceptable to Alt.  Having located a property acceptable to Alt, as her deposition testimony and expressions of satisfaction make evident, respondents satisfied this aspect of their obligations under the contract.  On this record, a genuine issue of material fact does not exist as to this alleged breach.

Next, Alt argues that summary judgment was erroneously granted because respondents' failure to negotiate a financing contingency, which would have allowed Alt to cancel the purchase agreement if she could not obtain financing, constitutes a breach of the Basils' obligation to assist Alt in negotiations for the purchase of the property.

The parties disagree about whether Alt intended to secure a mortgage to finance the purchase.  But there is affidavit evidence to support Alt's contention that, at all times throughout the transaction, she intended to obtain a mortgage.  Because we interpret the facts in the light most favorable to Alt, we assume that Alt required financing to purchase the Marketplace Loft property.  

In May 2002, Prime Mortgage Corporation preapproved Alt for a conventional home mortgage to finance the purchase of the Marketplace Lofts property.  After Alt obtained preapproval, Alt testified, "I felt uncomfortable working with a mortgage broker who had a relationship with [m]y real estate agents.[2]  Therefore I applied for a mortgage through John Larson with Key Mortgage."  On October 7, 2003, one week before Alt advised that she no longer wished to purchase the property, Key Mortgage rejected Alt's mortgage application because the Marketplace Lofts project was not sufficiently complete to qualify for financing. 

Alt maintains that, if the Basils had negotiated a financing contingency, she would have been entitled to a return of her earnest money when she refused to close on the purchase agreement because financing was not available.  But the record establishes that Alt's refusal to close on the purchase agreement was not related to the lack of a negotiated financing contingency or the inability to secure financing.  Rather, Alt listed her reasons for cancelling the purchase agreement as: (1) her general unhappiness with the conduct of the sales transaction and the inattentiveness of the agents, broker, and developer; (2) missed property-development deadlines; and (3) the developer's failure to address the items identified by the inspector. 

At her deposition, Alt testified that she had decided not to proceed with the purchase before Key Mortgage withheld its approval of a mortgage for the Marketplace Lofts property.  Alt admitted that she neither made an effort to contact other mortgage lenders regarding financing nor notified the Basils of Key Mortgage's reasons for rejecting the mortgage application. 

Alt cites Olson's affidavit for the proposition that it was the Basils' duty to protect Alt's interest by "mak[ing] sure that the sale is, in some way, contingent on obtaining financing."  To establish an actionable breach, however, Alt's default would have to be based on her inability to secure a mortgage.  And there is no evidence that Key Mortgage's decision caused Alt to abandon the purchase agreement.  Thus, the failure to negotiate a financing contingency does not establish a genuine issue of material fact to preclude summary judgment on a breach-of-contract claim.

Finally, Alt contends that respondents breached their contractual duty to act in Alt's best interest at all times by representing both Alt and Mainstreet in the transaction.  Alt argues that a material fact issue exists as to whether she was fully informed when she agreed to dual representation. 

"Dual agency" or "dual representation" is created when a licensed real-estate broker owes a duty to more than one party to a real-estate transaction.  Minn. Stat. § 82.17, subd. 5 (2004).  Dual agency can arise when a broker represents both the buyer and the seller.  Id., subd. 5(1).  In a real-estate transaction, dual representation of the buyer and seller is permitted if the broker makes a full disclosure to all parties to the transaction and obtains their consent.  Minn. Stat. § 82.22, subd. 5 (2004).

The record demonstrates that, on March 25, 2002, and August 20, 2002, Alt signed a representation agreement with respondents that informed her of respondents' representation of both the buyer (Alt) and the seller (Mainstreet).  Both representation agreements stated: "[A] dual agency will be created.  This means that Broker will represent both you and the Seller(s), and owe the same duties to the Seller(s) that Broker owes to you."  Both agreements included an agency-relationship disclosure notification that complied with the statutory requirements for making a full disclosure.  Alt signed and initialed both disclosure forms.  Alt also signed a separate notification from Marketplace Lofts that described the nature and duties of dual representation. 

Alt provides no evidence of a breach of the duty of dual representation by respondents.  Nor does Alt argue that she was harmed or prejudiced by entering the dual-representation agreement.  Rather, Alt maintains that the district court improperly weighed the credibility of Olson's affidavit testimony regarding the manner in which Alt agreed to dual agency, making this issue inappropriate for summary judgment.  We disagree.  Olson testified that

[a]n agreement to allow dual agency must be made with full information.

            . . .  One of the problems with dual agency, especially where the agent (and not just the brokerage) represents both the buyer and seller, is that the prospect of getting ‘both sides of the commission' can blind the agent to her fiduciary duties.

 

This testimony merely describes the nature of the conflict of interest inherent in a dual-representation agreement without identifying any evidence of a breach of the duties or contractual obligations arising from the dual representation at issue here. The district court's grant of summary judgment was not founded on an adverse credibility determination.  Indeed, Olson's statements are entirely consistent with the obligations specified by the statute and the dual-representation disclosure forms signed by Alt.  Dual-representation agreements are permitted by statute pursuant to full disclosure and consent.  Because it is uncontested that respondents satisfied these disclosure requirements and Alt gave her consent, a genuine issue of material fact does not exist, based on the dual-agency agreement, to preclude summary judgment.

            Accordingly, summary judgment was properly granted for respondents. 

            Affirmed.

[1] The agency representation included, in relevant part, limitations created in the event of a dual agency.

[2] The Prime Mortgage loan officer was Daniel Basil's brother.