White Bear Township Development, LLC, Appellant, vs. Scott A. Stoddard, et al., Respondents.

White Bear Township Development, LLC, Appellant, vs. Scott A. Stoddard, et al., Respondents. A06-1772, Court of Appeals Unpublished, August 28, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1772

 

White Bear Township Development, LLC,

Appellant,

 

vs.

 

Scott A. Stoddard, et al.,

Respondents.

 

Filed August 28, 2007

Affirmed; motion denied

Ross, Judge

 

Ramsey County District Court

File No. C4-05-2756

 

 

Steven H. Berndt, Zappia, LeVahn & Heuer, Ltd., 941 Hillwind Road Northeast, Suite 301, Fridley, MN 55432 (for appellant)

 

Wynn Charles Curtiss, Steiner & Curtiss, P.A., 1011 First Street South, Suite 400, Hopkins, MN 55343 (for respondents)

 

 

Considered and decided by Ross, Presiding Judge; Shumaker, Judge; and Parker, Judge.*

 

U N P U B L I S H E D   O P I N I O N

ROSS, Judge

This appeal concerns the viability of a real-estate purchase agreement that the sellers cancelled after the buyer failed to close within the time set for closing.  We must decide whether the district court abused its discretion by denying the buyer's motion either to compel the sellers to close on the property and to accept the buyer's proposed new terms or to enjoin the sellers from cancelling the original purchase agreement after the buyer breached.  Because we find that the buyer's proposed new terms would materially alter the terms of the parties' purchase agreement and the buyer offers no legal basis to force the seller to accept or to preclude the seller from cancelling the purchase agreement, we hold that the district court did not abuse its discretion by denying the buyer's requested injunctive relief, and we affirm.

FACTS

Scott and Nanci Stoddard own and reside on a 22-acre parcel in White Bear Township.  In May 2004 the Stoddards and a real-estate developer, White Bear Township Development, LLC, executed a purchase agreement for the sale of the Stoddards' property to the developer for one million dollars.  The developer intended to subdivide and develop the land for residential use.  Under the purchase agreement, the Stoddards would convey the entire parcel and immediately repurchase one of the newly subdivided lots where their home stands.  The agreement designated the closing to occur on or before March 31, 2005.  The agreement required the developer to obtain the necessary township permits and approvals for its subdivision before the closing.

A few days after signing the purchase agreement, the Stoddards claimed that they had been coerced into the agreement, and they demanded that the developer add $410,000 to the purchase price.  The developer declined the raise and made three scheduled payments of earnest money to the Stoddards.  But the developer later stopped payment on the checks and made no further payments, and the Stoddards accused the developer of defaulting on the purchase agreement by failing to make the payments.  The developer responded by accusing the Stoddards of refusing to close.  The parties' negotiated without resolution.

The developer sued the Stoddards, seeking specific performance of the purchase agreement.  The Stoddards asserted a counterclaim for rescission and sought a declaratory judgment that the developer effectively cancelled the agreement by failing to pay the earnest money.  A jury found that the Stoddards materially breached the purchase agreement and that the developer justifiably withheld the earnest money.  In April 2006 the district court adopted the jury's special verdict and ordered specific performance of the purchase agreement, with a new closing date of June 30, 2006.  The developer paid the Stoddards the earnest money due, and the Stoddards consented to the necessary applications for the township to consider the developer's plat proposal.

The developer proposed a 19-lot development, but it modified its proposal in June 2006 to respond to objections raised by area residents and the township's planning commission, reducing the subdivision to 13 lots.  The developer's changes prolonged the township's approval process.  It became clear that the developer could not secure the necessary township approvals to close by June 30.  Because the developer could not provide the Stoddards with a recordable warranty deed for the repurchase of their homestead until the township approved the development's final plat, the developer proposed providing the Stoddards with a title insurance policy, placing the deed in escrow, and offering to record the deed after final plat approval.  The developer drafted and proposed a "closing agreement" with these terms, which the Stoddards rejected.  It then moved the district court to compel the Stoddards to close on the property pursuant to the developer's proposed closing agreement or, in the alternative, to amend the judgment to extend the closing date indefinitely until the development's final plat was approved and recorded.  The Stoddards objected to the developer's new terms as being beyond those of the purchase agreement.  The district court denied the developer's motion as premature and redirected the parties to its April 2006 order.

June 30, 2006, passed with no closing, and on July 1, the Stoddards served the developer with a notice of cancellation of the purchase agreement, under Minnesota Statutes section 559.21, subdivisions 2a and 4.  Although statutory cancellation would give the developer 30 days to cure its failure to meet the terms of closing, the developer's changes to the plat required that the township's hearing on the final plat be rescheduled to occur on a date after the statutory 30-day curing period.

The developer therefore moved the district court to compel the Stoddards to close pursuant to the developer's proposed closing agreement or, in the alternative, to prohibit the Stoddards from cancelling.  The developer proposed that an affidavit with an attached warranty deed be recorded to provide notice of the Stoddards' ownership interest in their eventual parcel after subdivision.  Alternatively, it proposed that the Stoddards convey the entire parcel to the developer except for the lot that would include their home, purportedly avoiding the need for the Stoddards to repurchase their homestead as contemplated in the parties' purchase agreement.

The district court denied the developer's motion.  It found that the developer failed to close by June 30 as required by the court's April 2006 order and that the developer could not provide the Stoddards with a clear, recordable title to their homestead "without the strings attached in [the developer's] proposed closing agreement."  The district court also refused to prohibit the Stoddards from cancelling the purchase agreement.  This appeal follows.

D E C I S I O N

White Bear Township Development argues that the district court abused its discretion by refusing to compel the Stoddards to close on the sale according to the developer's proposed closing agreement or to indefinitely prohibit the Stoddards from cancelling the purchase agreement.  "A decision on whether to grant a temporary injunction is left to the discretion of the [district] court and will not be overturned on review absent a clear abuse of that discretion."  Carl Bolander & Sons Co. v. City of Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993).  The party seeking the injunction must establish that the injunction is necessary to prevent irreparable harm and that the legal remedy is inadequate.  Cherne Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 92 (Minn. 1979).  On review, we consider the facts in the light most favorable to the prevailing party.  Bud Johnson Constr. Co. v. Metro. Transit Comm'n, 272 N.W.2d 31, 33 (Minn. 1978).

Our determination of whether a district court properly exercised its discretion regarding injunctive relief is generally guided by the following five factors: (1) the nature and relationship of the parties; (2) the balance of relative harm between the parties resulting from the grant or denial of the injunction; (3) the likelihood of success on the merits; (4) any public-policy considerations of applicable statutes; and (5) any administrative burden involving judicial supervision and enforcement of the injunction.  Dahlberg Bros., Inc. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965).  But when a plaintiff fails completely under the third factor and can show no likelihood of prevailing on the merits, the district court errs as a matter of law by granting a temporary injunction.  Metro. Sports Facilities Comm'n v. Minn. Twins P'ship, 638 N.W.2d 214, 226 (Minn. App. 2002), review denied (Minn. Feb. 4, 2002).  Therefore, in this case if the developer has no legal basis to require the Stoddards to accept the developer's proposed closing agreement or to prevent the Stoddards from cancelling the lapsed purchase agreement, the district court appropriately refused to issue the injunction on either theory.  We focus our analysis on that issue, first considering the developer's new proposed closing agreement.

The developer has no chance of success on the merits to obtain an order requiring the Stoddards to accept a conveyance arrangement that was created unilaterally by the developer.  The developer essentially sought to replace terms of the negotiated purchase agreement with the terms of its own proposed closing agreement.  But "[i]njunctive relief is a remedy to protect preexisting rights and a court cannot create a right and then enforce it by injunction."  Lindberg v. Gebo, 381 N.W.2d 905, 907 (Minn. App. 1986) (quotation omitted), review denied (Minn. May 16, 1986).  Courts should not rewrite or modify clear and unambiguous contractual provisions.  Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004).  We agree with the district court that the purchase agreement materially differs from the developer's proposed closing agreement.

The developer asserts that its proposal to record an affidavit with an attached draft warranty deed would sufficiently give notice of the Stoddards' ownership interest, as would its alternative proposal to require the Stoddards to convey their entire parcel to the developer except for the proposed lot that would contain their home.  In an April 2006 letter to the district court, the developer stated that "[t]he Purchase Agreement provides that the Stoddards re-purchase their home on a subdivided lot.  In order to do so, the closing can not take place until the final [p]lat has been signed by the Stoddards and recorded with the [c]ounty. . . .  My client will close as soon as the final [p]lat can be recorded." But neither of the developer's options includes a date when the developer would obtain township approval for its final, recordable plat, and there is no serious dispute that the parties' purchase agreement included the recordable subdivision plat as a condition of closing.

The Stoddards are not bound to accept the additional riskhowever slightassociated with an affidavit purporting to provide notice in lieu of a recorded plat and recordable warranty deed.  An executory agreement to convey land implies that the vendor will transfer recordable title, free from any encumbrances.  Ortendahl v. Bergmann, 343 N.W.2d 309, 313 (Minn. App. 1984).  Not providing the Stoddards with a final warranty deed at the time of repurchase of their home may have jeopardized their interest against a subsequent good-faith purchaser who recorded a deed before they did.  See Minn. Stat. § 507.34 (2006) (providing that any conveyance of real estate not recorded shall be void against subsequent good-faith purchaser whose conveyance is first duly recorded).  And under the township's ordinances, conveying the entire parcel except the Stoddard's homestead lot would constitute a subdivision that is equally subject to the permit and approval requirements.  See Town of White Bear, Minn., Ordinance No. 15, § 3-1.27 (1984) (defining "subdivision" as "the separation of an area, parcel or tract of land under single ownership into two or more parcels, tracts, lots or long-term leasehold interests").

The developer contends that ultimate township approval is a sure bet based on the township's July 17, 2006 meeting minutes.  But the developer offers no legal authority that establishes that the Stoddards must convey their property on the expectation of what the township would do in a future meeting.  Similarly uncompelling is the developer's proffered declaration by the title insurance company that "defects in the title to real property" may be resolved by the sort of escrow agreement and title insurance coverage that the developer proposed in lieu of its satisfying the express terms of the purchase agreement.  The Stoddards bargained to receive clean title based on a township-approved, recorded plat at the closing, not an alternative document and an insurance policy that promised, with qualifications, to cover potential defects in their title.  There being no legal authority for the court to compel the Stoddards to accept either of the developer's alternative agreements, the district court did not abuse its discretion by rejecting the developer's motion to require the Stoddards to do so.

The developer also has provided no legal basis for the district court to order the Stoddards to forgo their statutory and contractual right to cancel a purchase agreement that has lapsed by virtue of the developer's material breach.  A land seller is generally entitled either to sue for the amount due under the contract or to cancel the contract and repossess the property when the purchaser defaults.  Am. Family Mut. Ins. Co. v. Staeheli, 520 N.W.2d 422, 425 (Minn. App. 1994).  The statutory notice-of-cancellation provision affords the buyer a limited opportunity to cure a default.  Minn. Stat. § 559.21, subds. 2a, 4 (2006).  So after the Stoddards gave their notice of cancellation, they could exercise their right to cancel 30 days later if the developer failed to obtain the necessary approvals required under the terms of the purchase agreement.  See id.  Section 559.211, also allows the pending buyer to seek injunctive relief after notice of cancellation "if a purchaser has a meritorious defense, but lacks the resources to cure [the] default."  Bell v. Olson, 424 N.W.2d 829, 833 (Minn. App. 1988).  The developer's only defense here is that it offered substitute terms that it contends would have put the Stoddards in the same position they would have been in if the developer met the terms of the purchase agreement.  As we have discussed, this is not accurate, and the Stoddards have no legal duty to accept the developer's substitute terms.

The developer has no likelihood of success on the merits, and the district court properly considered and applied the Dahlberg factors.  We therefore hold that the court did not abuse its discretion by denying injunctive relief to the developer.

II

The Stoddards move this court to strike the copy of the minutes from the July 17, 2006 township board meeting, appended to White Bear Township Development's reply brief.  They emphasize that the minutes were not considered by the district court and were not available when the district court issued its July 26, 2006 order denying the developer's motion for injunctive relief.  The developer opposes the motion, asserting that the district court considered the events of the board meeting because the developer informed the district court at the July 25 hearing that the township board had approved its preliminary plat.  The developer contends that it attached the minutes to its reply brief to substantiate its representations to the district court.  The minutes reflect that at the July 2006 board meeting, the township board approved the developer's revised request for a major subdivision of the Stoddards' property.

The record on appeal consists of "[t]he papers filed in the [district] court, the exhibits, and the transcript of the proceedings."  Minn. R. Civ. App. P. 110.01.  We generally will not base our decision on matters outside the record on appeal, and we will not consider matters that were not produced and received in evidence in the district court.  Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988).  But we may consider publicly available legal resources that were not presented to the district court.  See Fairview Hosp. v. St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 340 n.3 (Minn. 1995) (noting that court may consider publicly available documents not presented to district court); Podvin v. Jamar Co., 655 N.W.2d 645, 648 (Minn. App. 2003) (denying motion to strike public document that respondent included in appellate brief).  Because the developer discussed the outcome of the township board meeting at the July 25 hearing before the district court and because the minutes are a publicly available legal document, we deny the motion to strike.

Affirmed; motion denied.

*    Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.