Kassan Realty Co., Appellant, vs. Metzen Realty, Inc., et al., Respondents.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480 A. 08, subd. 3 (1998).

STATE OF MINNESOTA
IN COURT OF APPEALS
C3-99-829

Kassan Realty Co.,
Appellant,

vs.

Metzen Realty, Inc., et al.,
Respondents.

 

Filed December 7, 1999
Affirmed
Harten, Judge

Dakota County District Court
File No. C0-98-8529

Kevin M. Busch, Moss & Barnett, 4800 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for appellant)

Robert B. Bauer, Michael G. Dougherty, Severson, Sheldon, Dougherty & Molende, P.A., 7300 West 147th Street, Suite 600, Apple Valley, MN 55124 (for respondents)

Considered and decided by Toussaint, Chief Judge, Harten, Judge, and Holtan, Judge.[*]

 

U N P U B L I S H E D   O P I N I O N

HARTEN

, Judge

Appellant Kassan Realty Co. challenges the district court's summary judgment for respondents, Metzen Realty, Inc., et al. Because there are no genuine issues of material fact concerning appellant's claims of misrepresentation, statute of frauds, duress, and waiver, we affirm.

 

FACTS

The parties to this action are cotenants who have owned, as various business entities and in varying interests, the subject real property for the last 30 years.[1] In 1992, the parties forfeited the property to the State of Minnesota and confessed judgment for past due taxes. To regain title, the parties agreed to pay proportional back taxes in annual installments due before December 31 of each of the succeeding five years. In 1992 and 1993, each co-owner paid his share of the annual installments required by the repurchase agreement.

In 1994, appellant was unable to pay its 32% share of the annual installment. It offered to sell a one acre parcel adjacent to the subject property to respondents in order to meet its obligation. Respondents accepted. Appellant conveyed its interest in the one acre parcel to them; in exchange, they made appellant's annual installment payment.

On December 28, 1995, the parties met to discuss the fourth annual installment. Appellant again was unable to pay its 32% share ($63,406.55) due on December 31, 1995. Appellant orally agreed to pay $10,000 towards the $63,406.55 and, in exchange for respondents' $53,406.55 contribution, convey 1.16 acres (14.3%) of the subject property to respondents. On December 29, 1995, respondents paid the fourth installment to the Dakota County Treasurer, relying on this oral agreement.

On January 17, 1996, appellant met with respondent Kuntz and his son, Tim Kuntz, an attorney who had prepared deeds to fulfill appellant's agreement to convey the 14.3% interest to respondents. But appellant refused to sign the deed because it did not contain a right of repurchase (a right not previously discussed).

On January 24, 1996, the parties again met and appellant again refused to sign the deed. Appellant claims that respondents "raved and shouted," besmirched its business reputation, said it was unfit ever to do business with anyone in this area, "shouted [it] down," and made comments such as "Kassan doesn't keep his word." The meeting concluded with respondent Metzen stating, "I'm on my way to my lawyer's office. You better get your own attorney and be prepared for a lawsuit." Later that evening, respondent Kuntz gave appellant a check for $10,000 and told him that he "[had] to sign these deeds" or that respondent Metzen would sue him and the others.

On January 25, 1996, appellant cashed the $10,000 check and executed a warranty deed ("the January 1996 deed") conveying an undivided 14.30% interest in the 50-acre parcel as follows:

Respondent David Metzen           2.4%
Respondent Thomas F. Metzen    2.4%
Respondent Edward A. Kuntz      4.8%
Respondent Edward W. Lehmann    4.7%

Appellant retained a 17.7% interest in the property. He paid 17.7% of the property taxes in 1996, 1997, and 1998. He also paid 17.7% of the installment payment due in 1996 under the confession of judgment. As a result of a terminated purchase agreement dated March 12, 1997, appellant received a check for $1,770, an amount equal to 17.7% of the earnest money, which the parties received as liquidated damages. In October 1997, the City of Inver Grove Heights acquired a portion of the 50-acre parcel through eminent domain. Appellant received a check from the City for $20,549.70, or 17.7% of the total settlement.

On January 3, 1997, upon satisfaction of the confession of judgment, the state erroneously conveyed by state deed solely to appellant the 50 acre parcel. On April 8, 1997, appellant corrected the error by conveying 50 acre parcel to the respondents by warranty deed ("the April 1997 deed") in the following percentages:

Respondent Metzen Realty, Inc.    32.00%
Respondent Edward A. Kuntz      20.79%
Respondent Edward W. Lehmann, Sr.    24.77%
Respondent Thomas F. Metzen      2.37%
Respondent David L. Metzen        2.37%

Appellant retained a 17.7% interest in the property.

Appellant brought this action to rescind the January 1996 and the April 1997 deeds. Appellant challenges adverse summary judgment on his claims.

 

D E C I S I O N

On appeal from a grant of 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. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990); see Minn. R. Civ. P. 56.03 (setting forth district court's standard for summary judgment). The evidence is viewed in the light most favorable to the party opposing the motion. The nonmoving party must produce specific facts that create a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986). Appellant advances four arguments to show that the district court erred in granting summary judgment because genuine issues of material fact exist.

 

1. Misrepresentation

Appellant claims that

[it] was pressured and inveigled into making [the] oral agreement by respondents' misrepresentations that the deadline for paying the 1995 installment on the Repurchase Agreements was December 31, 1995 and that the 50 acre tract would be lost if the installment was not paid by that date.

Appellant contends that this alleged intentional misrepresentation about the deadline enticed appellant into offering to sell a portion of the land.

To establish intentional misrepresentation, a plaintiff must show that the defendant intentionally misrepresented a material past or present fact susceptible of knowledge, knowing the representation was false. See Davis v. Re-Trac Mfg. Corp., 276 Minn. 116, 117, 149 N.W.2d 37, 38-39 (1967) (setting out 11 elements of misrepresentation). A plaintiff must also show justifiable reliance to plaintiff's detriment on the defendant's misrepresentations. Id.

The record indicates that the 1995 repurchase installment was due on December 31, 1995. December 31 is set forth in the confession of judgment signed by all parties and in Minn. Stat. § 282.261, subd. 1 (1998), the statute governing the terms of repurchase after tax-forfeiture. The district court found that appellant has over 60 years of experience in the real estate business and "was not an unsuspecting first time [seller] of real estate." It also found that

the whole idea to confess judgment was [appellant's] and [appellant] could have just as easily, as [respondents] could have, determined whether there was any additional time to make the payment.

Accordingly, we agree with the district court that appellant did not establish a prima facie claim of misrepresentation.

 

2. Statute of Frauds

Appellant argues that the district court erred in failing to find that the December 28, 1995, oral agreement made between appellant and respondents was unenforceable under the statute of frauds. This issue is moot, however, because appellant subsequently executed two deeds in furtherance of the oral agreement, one on January 25, 1996, and the other on April 8, 1997.

 

3. Duress and Coercion

Appellant argues that the district court erred in failing to determine whether the deeds were obtained by duress. Appellant claims that respondents "raved and shouted," besmirched appellant's business reputation, said appellant was unfit to do business with anyone in this area, "shouted him down," and made comments such as "Kassan doesn't keep his word." Additionally, respondent Metzen stated at the January 24, 1996, meeting that "I'm on my way to my lawyers office. You better get your own attorney and be prepared for a lawsuit."

Minnesota courts recognize duress as a defense to a contract only when there is coercion by physical force or an unlawful threat, which destroys free will and compels compliance with the demands of the party exerting the coercion. St. Louis Park Inv. Co. v. R. L. Johnson Inv. Co., 411 N.W.2d 288, 291 (Minn. App. 1987) (citing Wise v. Midtown Motors, Inc., 231 Minn. 46, 51, 42 N.W.2d 404, 407 (1950)), review denied (Minn. Oct. 30, 1987). The district court found that "none of the [respondents] made any physical threats to [appellant] or physically touched him in any way to get him to sign the deed."

Appellant contends that respondents' threat of a lawsuit resulted in the destruction of appellant's free will, citing Wise and Snyder v. Samuelson, 140 Minn. 57, 167 N.W. 287 (1918) to support its contention that respondents threatened a lawsuit for an ulterior purpose. In both cases, however, threats of a "big lawsuit" whereby one party would "lose everything" were found to be motivated for ulterior purposes that raised the threat of a lawsuit to the level of coercion. See Wise, 231 Minn. at 52, 42 N.W.2d at 408; Snyder, 140 Minn. at 59, 167 N.W. at 288.

In the instant case, however, there is no evidence to support the contention that respondents acted with an ulterior purpose. Moreover, Wise held that

[b]ecause a person has a right to threaten to do that which he has a right to do, a threat to bring an action to enforce a lawful demand, or one which he in good faith believes to be lawful, does not constitute duress.

231 Minn. at 52, 42 N.W.2d at 407. Appellant acknowledges that respondents had a valid claim for contribution after they paid more than their share of the 1995 installment.

Metzen's statement, "I'm on my way to my lawyer's office. You better get your own attorney and be prepared for a lawsuit," applies to respondents' legal right to contribution, not simply to the execution of the deeds. Appellant's claims of duress or coercion by respondents fail for lack of evidence.

 

4. Waiver

Appellant argues that the district court erred in failing to determine that appellant did not willingly and intentionally waive its right to rescind the deeds.

A party seeking recission must do so upon the first opportunity after discovering fraud or coercion. Beck v. Northwestern Fed. Sav. & Loan Ass'n, 206 Minn. 125, 132, 288 N.W. 217, 220 (1939) (citation omitted).

The record indicates that appellant took no steps to rescind his conveyance for almost 30 months after claiming to have been coerced into making it. Instead, appellant (1) received and deposited a $10,000 check associated with the conveyance, (2) executed a deed on January 25, 1996, and another deed on April 8, 1997, (3) paid property taxes and assessments in recognition of its altered land interest in 1996, 1997, and 1998, and (4) received income under a purchase agreement and condemnation award at the lessened share percentage. These acts support the district court's summary determination that appellant waived its claim for recission.

We agree with the district court that appellant failed to present issues of material fact to support its claims.

 

Affirmed.

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

[1] "Appellant" refers to Kassan Realty Co. Limited Partnership, f/k/a Kassan Realty Company, and its sole principal, Michael Kassan. However, only Kassan Realty Co. Limited Partnership is a party to this action.