Timothy Quinn, Kimberly Quinn and Arlene Dooner, Appellants, vs. Russell Serbus, Respondent.

Timothy Quinn, Kimberly Quinn and Arlene Dooner, Appellants, vs. Russell Serbus, Respondent. A06-319, Court of Appeals Unpublished, December 19, 2006.

This opinion will be unpublished and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

A06-319

 

Timothy Quinn, Kimberly Quinn and

Arlene Dooner,

Appellants,

 

vs.

 

Russell Serbus,

Respondent.

 

Filed December 19, 2006

Affirmed Willis, Judge

 

LeSueur County District Court

File No. 40-CV-05-216

 

 

Shannon M. O'Toole, 223 South Avon Street, St. Paul, MN  55105-3319 (for appellants)

 

Gregory R. Anderson, Anderson, Larson, Hanson & Saunders, P.L.L.P., 331 Professional Plaza, 331 Southwest Third Street, P.O. Box 130, Willmar, MN  56201 (for respondent)

 

            Considered and decided by Ross, Presiding Judge; Willis, Judge; and Dietzen, Judge.

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

Appellants challenge the district court's determination that their purchase agreement with respondent was rescinded and, thus, that they were entitled to no damages for respondent's alleged breach.  We affirm.

FACTS

            Appellants Timothy and Kimberly Quinn owned 50% and appellant Arlene Dooner owned the remaining 50% of the stock in Sh-Boom's, Inc., a Minnesota corporation that operated a seasonal restaurant in Spicer.  In the fall of 2000, appellants began to market the business.  Respondent Russell Serbus presented a written offer to purchase the assets of Sh-Boom's for $350,000; appellants rejected the offer.  Appellants then proposed to sell all of the stock of Sh-Boom's to respondent for $225,000 cash and title to a duplex that respondent owned in Olivia.  On February 5, 2001, appellants and respondent signed an agreement that incorporated appellants' counteroffer and set closing for March 15, 2001.

After the agreement was signed, respondent discovered that the Small Business Administration would finance only an asset purchase, not a stock purchase.  By written agreement, the parties extended the closing date from March 15 to March 30, 2001.  Respondent was not able to obtain financing during that time, and appellants ultimately agreed to extend the closing until April 30, 2001.  Respondent was still unable to obtain financing; and shortly before April 30, 2001, he notified appellants that he would be unable to close on the purchase.

On April 28, 2001, appellants' counsel sent a letter to respondent and his counsel in which he stated that "[a]ssuming the transaction does not close on April 30, 2001, [respondent] will be in default" but that appellants would offer respondent the option of seller financing if respondent deeded the duplex to appellants immediately, paid an additional $5,000 in earnest money at closing, and paid off a $52,000 loan to Sh-Boom's that appellants had personally guaranteed.  Appellants' counsel further stated in the letter that, while appellants would have liked to receive "benefits" commensurate with the earlier March 15, 2001 closing, appellants would "give up those added benefits and close under [the modified terms] in order to get the deal done."  Respondent rejected the proposal.

            On May 18, 2001, appellants' counsel sent another letter to respondent and his counsel in which, in addition to another proposal to modify the terms of the purchase agreement, he stated (1) that "[a]lthough [respondent] is now in default in connection with the purchase agreement," appellants would consider any other offer respondent would like to make "to purchase the stock after [respondent's] financing is available"; (2) that appellants were "now exploring the possibility of selling the business to other buyers as well," and if another acceptable offer was made, appellants would consider accepting; (3) that by accepting the proposal, respondent could eliminate the risk that another buyer "takes away [respondent's] opportunity" and eliminate any potential claim for damages; and (4) that if the offer was not accepted, appellants would "pursue their right to claim damages due to [respondent's] breach of the agreement."  Respondent rejected this proposed modification of the terms of the purchase agreement as well.

            In the spring of 2002, a third party contacted respondent to ask whether respondent had any purchase rights to Sh-Boom's.  In response, respondent told the third party that "he did not have any contractual rights, that his original contract . . . had expired, and that he wished him ([the third party]) well in his effort to buy the property."  In April 2002, appellants sold the assets of Sh-Boom's to the third party.

            Appellants initiated this lawsuit against respondent, seeking damages for respondent's alleged breach of contract.  After a bench trial, the district court denied appellants' damage claim, concluding that the purchase agreement was rescinded by the parties.  This appeal follows.

D E C I S I O N

            Appellants challenge the district court's determination that the parties rescinded the purchase agreement.  Whether a contract has been rescinded is a question of fact.  Desnick v. Mast, 311 Minn. 356, 365, 249 N.W.2d 878, 884 (1976); Berg v. Ackman, 431 N.W.2d 264, 266 (Minn. App. 1988).  Findings of fact are reviewed under the clearly erroneous standard.  Minn. R. Civ. P. 52.01.  Under this standard, we accord deference to the district court's findings of fact and will not disturb the findings unless we are left with the "definite and firm conviction that a mistake has been made."  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quoting Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987)).

Effective rescission requires both an intent to rescind and mutual assent.  Busch v. Model Corp., 708 N.W.2d 546, 551 (Minn. App. 2006).  An intent to rescind a contract "must be clearly expressed, and acts and conduct of the parties to be sufficient [to find rescission] must be positive, unequivocal, and inconsistent with the existence of the contract."  Desnick, 311 Minn. at 365, 249 N.W.2d at 884.  Intent is judged objectively.  Minn. Ltd., Inc. v. Pub. Utils. Comm'n of Hibbing, 296 Minn. 316, 321, 208 N.W.2d 284, 287 (1973).  And mutual assent may be inferred from the circumstances and from the parties' conduct.  Busch, 708 N.W.2d at 551.  A rescission need not be expressly stated; a repudiation of the contract by one party that is acquiesced to by the other party is "tantamount to a rescission."  Desnick, 311 Minn. at 365, 249 N.W.2d at 884.  But rescission must be established by clear and convincing evidence.  Berg, 431 N.W.2d at 266.

Here, the district court made a factual finding that the parties rescinded the purchase agreement.  Appellants specifically maintain that they do not claim that the district court "made any material errors in its factual findings."  Nevertheless, appellants argue that there is not "clear and convincing evidence [of their] intent to rescind the contract."  We therefore conclude that, despite their protestations to the contrary, appellants do in fact challenge the district court's findings of fact.

But appellants have not provided this court with a trial transcript.  An appellant has the burden of providing an adequate record for review.  Setter v. Mauritz, 351 N.W.2d 396, 398 (Minn. App. 1984); see also Minn. R. Civ. App. P. 110.02, subd. 1.  Without a transcript, it is impossible to determine whether the district court's factual findings are supported by the evidence.  See Am. Family Life Ins. Co. v. Noruk, 528 N.W.2d 921, 925 (Minn. App. 1995), review denied (Minn. Apr. 27, 1995).

In determining that the parties rescinded the purchase agreement, the district court found that "by their actions and conduct" appellants intended to rescind their agreement with respondent and that appellants' "intentions were clearly expressed, positive, unequivocal, and inconsistent with the existence of the . . . agreement."  To make this finding, the district court relied on appellants' April 28 and May 18 letters.  The intention expressed by those letters is at best ambiguous:  both contain alternative proposals, but both also discuss respondent's default.  Without a trial transcript, however, we cannot determine what other evidence, if any, of appellants' "actions and conduct" was before the district court.

We cannot, on this record, determine that the district court's factual findings are clearly erroneous.  Because rescission is a question of fact, we affirm.

Affirmed.