Beth Tracy, et al., Appellants, vs. Steve L. Holtegaard, 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This opinion will be unpublished and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

C4-00-474

 

 

Beth Tracy, et al.,

Appellants,

 

vs.

 

Steve L. Holtegaard, et al.,

Respondents.

 

 

Filed September 26, 2000

Affirmed
Foley, Judge*

Lansing, Judge, dissenting

 

Olmsted County District Court

File No. C9993305

 

 

Eric Douglas Larson, Dunlap & Seeger, 206 South Broadway, Suite 505, P.O. Box 549, Rochester, MN  55903 (for appellants)

 

Paul H. Grinde, Ryan & Grinde, Ltd., 407 Fourteenth Street Northwest, P.O. Box 6667, Rochester, MN  55903 (for respondents)

 

Considered and decided by Willis, Presiding Judge, Lansing, Judge, and Foley, Judge.

U N P U B L I S H E D   O P I N I O N

FOLEY, Judge

            Appellants purchased a lot from respondents and contracted to build a home based on respondents' alleged promise to refrain from building a home on the portion of the adjacent lot near appellants' property line.  When construction began on the adjacent lot near the property line, appellants filed a complaint against respondents seeking damages and injunctive relief.  Concluding that appellants did not have an easement restricting construction on the neighboring lot, the district court denied their motion for a temporary injunction and granted respondents' motion to dismiss.  Reviewing this appeal under the standard for summary judgment, we affirm.

FACTS             Respondent Holtegaard Builders, Inc., by its president, respondent Steven R. Holtegaard (Holtegaard), sold lots and built homes on those lots in a subdivision.  Appellants Beth and Brad Tracy claimed that when they met with Holtegaard to discuss purchasing a lot in the subdivision, he showed them a preliminary plat indicating the planned locations of septic systems and drain fields for each lot.   The preliminary plat was filed with the county planning and zoning office. 

            The Tracys claimed they told Holtegaard that they did not want to have another house in close proximity to theirs.  They asserted they chose lot 8 in the subdivision because it gave them the greatest distance between their planned residence and those to be built on the neighboring lots.  Lot 8 abutted lot 7, which included a hill.  The Tracys claimed Holtegaard told them a home on lot 7 would have to be built on top of the hill, with the drain field and septic system next to lot 8 at the bottom of the hill, as shown on the preliminary plat.  By building their home on the edge of lot 8 nearest to the planned lot 7 drain field, the Tracys believed their home would be a sufficient distance from the homes to be built on lots 7 and 9.

            The parties signed a purchase agreement, a construction agreement, and a warranty deed, none of which mention any restrictions on where a home could be built on lot 7. The warranty deed stated that the conveyance of lot 8 was subject to covenants, easements, and restrictions of record.  But a recorded statement of building covenants for the subdivision stated only that building plans were subject to Holtegaard's approval and that he would "review the proposed siting" of homes to ensure, among other things, "privacy between the houses."

            The Tracys claimed Holtegaard made additional representations to them and other prospective buyers that the top of the hill on lot 7 was the only possible place to build a home on that lot.  Via their attorney, the Tracys sought, but did not receive, assurances from Holtegaard that no home would be built in that area of lot 7.

            After the Tracys noticed construction activity on lot 7 in the area they expected to be used as a drain field, they filed a complaint against Holtegaard and his construction company under five causes of action:  (1) breach of contract; (2) intentional misrepresentation; (3) reckless misrepresentation; (4) negligent misrepresentation; and (5) consumer fraud pursuant to Minn. Stat. §§ 325F.68-.70 (1998).  Their complaint requested an injunction to enjoin Holtegaard "and all persons possessing an interest in lot 7" from building a home on the disputed area of lot 7 and damages in excess of $50,000.  At the time of their complaint, the Tracys also filed a motion for a temporary injunction to preclude Holtegaard and his "agents, employees, and those acting in concert with [him]" from building on the disputed area.  Shortly thereafter, the Tracys filed a motion for a temporary restraining order against Holtegaard directing him to cease construction on lot 7.

            The district court denied the motion for a temporary restraining order, and Holtegaard sought dismissal of the entire complaint under Minn. R. Civ. P. 12.02(e) for failure to state a claim upon which relief can be granted.  The parties submitted briefs and affidavits to the court pertaining to the Tracys' motion for a temporary injunction and Holtegaard's motion to dismiss.  The district court denied the Tracys' motion for a temporary injunction and granted Holtegaard's motion to dismiss.  The Tracys now request reversal of the district court's order dismissing their complaint.

D E C I S I O N

            In granting Holtegaard's motion for dismissal, the district court considered matters outside the pleadings, including briefs and affidavits submitted by the parties.  Therefore, we review this case under the summary judgment standard.  See Minn. R. Civ. P. 12.02 (stating if "matters outside the pleading[s] are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56"); Wallin v. Minnesota Dept. of Corrections, 598 N.W.2d 393, 399 (Minn. App. 1999) (district court's grant of motion for dismissal on pleadings, where court considered matters outside pleadings, should be reviewed under summary judgment standard). 

            On an appeal from summary judgment, this court asks 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).  No genuine issue of material fact exists "[‘w]here 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 (quotation omitted).

            The Tracys' arguments on appeal pertain to their breach of contract claim.  Because they have not briefed the other claims contained in the complaint, those issues are waived. Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982). 

            The Tracys contend Holtegaard's alleged promise that a home would not be built at the bottom of the hill on lot 7 gives them the right to restrict Holtegaard and, as stated in their complaint, "all persons possessing an interest in lot 7," from building a home at that location.  Specifically, they argue the district court erred in concluding that (1) there was no enforceable reciprocal-negative easement between the parties restricting construction on lot 7; (2) the statute of frauds precludes their action; and (3) application of the statute of frauds was not precluded by fraud, part performance, or estoppel. 

            An easement is an interest in land possessed by another that entitles the grantee to limited use or enjoyment of that land.  Scherger v. Northern Natural Gas Co., 575 N.W.2d 578, 580 (Minn. 1998).  Because easements are interests in land, the statute of frauds requires the grant of an easement to be in writing.  Minn. Stat. § 513.04 (1998).  In this case, there was no written grant of any easement.

            The Tracys first argue that an implied easement exists.  They claim the preliminary plat is evidence of a common scheme of development that created a reciprocal-negative easement, which Holtegaard violated when he began construction in the disputed area of lot 7.  This argument is without merit.

            Reciprocal-negative easements are commonly found in cases involving subdivisions; the elements are set forth in Stony Ridge & Carlos View Terrace Ass'n v. Alexander, 353 N.W.2d 700, 701-02 (Minn. App. 1984):

There must have been a common owner of the related parcels of land, and in his various grants of the lots he must have included some restriction, either affirmative or negative, for the benefit of the land retained, evidencing a scheme or intent that the entire tract should be similarly treated.  Once the plan is effectively put into operation, the burden he has placed upon the land conveyed is by operation of law reciprocally placed upon the land retained.  In this way those who have purchased
in reliance upon this particular restriction will be assured that the plan will be completely achieved.

 

Id. (quoting Lanski v. Montealegre, 104 N.W.2d 772, 773 (1960)). 

            The facts here clearly fail to establish the reciprocal-negative easement claimed by the Tracys.  There is no evidence in the record showing that Holtegaard included a restriction in his grants of subdivision lots against building in the areas marked for drain fields on the preliminary plat.  The plat shows only the planned locations for septic systems and drain fields.  It does not show any definite restrictions on where homes in the subdivision could be built, and the Tracys have otherwise failed to show that there was a common scheme of development including restrictions of the type they seek to enforce.  The recorded building covenants regarding desirable "siting" and "spacing" of homes likewise fail to establish the specific building restriction the Tracys seek to enforce.

            The Tracys also argue Holtegaard's alleged promise should be considered as parol evidence explaining the terms of their written agreement.  They contend that the preliminary plat is part of the documentation of their dealings with Holtegaard as a whole and that the oral promise regarding lot 7 is admissible parol evidence of the parties' intent.  But the parol evidence rule does not allow prior or contemporaneous oral statements to supply a term of a writing evidencing the parties' agreement.  Greer v. Kooiker, 312 Minn. 499, 505, 253 N.W.2d 133, 138 (1977).  Here, the preliminary plat merely outlines areas for drain fields. Allowing parol evidence to construe the plat as a statement of actual building restrictions would violate the rule by supplying an additional term to their unambiguous written agreement for the purchase of lot 8.  See Material Movers, Inc. v. Hill, 316 N.W.2d 13, 17 (Minn. 1982) (evidence of oral agreements tending to establish intent of parties is admissible observing where written agreement is ambiguous or incomplete). 

            In addition, the Tracys argue that, based on the equitable grounds of part-performance, fraud, and estoppel, the statute of frauds does not apply to Holtegaard's alleged oral easement grant.  Their part-performance argument fails because their actions in buying their lot and building their home do not show that they contracted for anything more than ownership of lot 8 and the construction of their home.  See Burke v. Fine, 236 Minn. 52, 55, 51 N.W.2d 818, 820 (1952) (stating under doctrine of part performance, oral contract is taken out of statute of frauds where parties' acts cannot reasonably be explained except by reference to some contract between them).

The Tracys' arguments for fraud and equitable estoppel depend on whether Holtegaard intentionally misrepresented where a home on lot 7 could be built in an effort to induce the Tracys to purchase lot 8 in reliance.  See Transamerica Ins. Group v. Paul, 267 N.W.2d 180, 183 (Minn. 1978) (recognizing party asserting equitable estoppel must show party to be estopped made knowing misrepresentation of material fact intended to induce reliance and party asserting estoppel had no knowledge of true facts and reasonably and detrimentally relied on misrepresentation); Karlstad State Bank v. Fritsche, 392 N.W.2d 615, 618 (Minn. App. 1986) (stating fraud is knowingly false representation of material fact for purpose of inducing another to act in reliance on material fact). 

But the Tracys, in response to the motion for summary judgment, have failed to produce substantial evidence that Holtegaard knowingly misrepresented where a home could be built on lot 7 with the intent of inducing the sale of lot 8.  Thus, there is no genuine issue of material fact that would preclude summary judgment based on the application of the statute of frauds.  See Hayes v. Northwood Panelboard Co., 415 N.W.2d 687, 690 (Minn. App. 1987) (stating mere promise or statement of intention of performance does not constitute misrepresentation unless at time there was no intention to perform), review denied (Minn. Jan. 28, 1988); L & H Transport, Inc. v. Drew Agency, Inc., 403 N.W.2d 223, 227 (Minn. 1987) (observing when only one inference can be drawn from facts, estoppel is question of law).

In addition, we find independent grounds for affirming summary judgment based on the impossibility of granting the Tracys their requested relief.  Their complaint requested an injunction against Holtegaard "and all persons possessing an interest in lot 7" against building a home on the disputed area of lot 7 and damages in excess of $50,000. The record contains a signed purchase agreement for lot 7.  Accordingly, the purchasers of lot 7 have an interest in that property.  There is no evidence that the purchasers of lot 7 had any knowledge of Holtegaard's alleged promise, and the purchasers are not a party to this action.  Therefore, there is no equitable basis for granting the Tracys' requested injunction.  Moreover, the Tracys have failed to produce any evidence of monetary damages arising from the alleged breach of contract.  Their claim for damages rests on mere averments, which will not survive a motion for summary judgment.  Minn. R. Civ. P. 56.05; see also Sloggy v. Crescent Creamery Co., 72 Minn. 316, 317-18, 75 N.W. 225, 226 (1898) (affirming dismissal of breach-of-contract claim where party did not show damages arose from contract). 

            The Tracys did not comply with rule 56.05, nor were damages raised as a legal issue on appeal.  In their motion for a temporary injunction, the Tracys argued they could not be "compensated monetarily."  They argued further, "Lot 8 is [their] home used by them every day.  This significant alteration to their use is not subject to monetary offset." Thus, we have no choice but to affirm the district court's grant of what is, functionally, a summary judgment.

Affirmed.

LANSING, Judge (dissenting)

            I respectfully dissent because I believe that the Tracys allege facts sufficient to demonstrate a genuine issue of material fact on their misrepresentation claim.  I concur in the majority view that the district court properly denied the temporary injunction, but the appellants have stated that they do not seek review of this issue.

To prove misrepresentation, the Tracys must demonstrate that they reasonably relied on Holtegaard's knowing misrepresentation of material facts; that they did not know the true facts; that Holtegaard intended them to rely on the misrepresentation; and damages.  Burns v. Valene, 298 Minn. 257, 261, 214 N.W.2d 686, 689 (1974).  Neither the motion to dismiss nor the district court's order is predicated on the issue of damages; thus it is the remaining elements that determine whether the Tracys survive summary judgment. 

Statements of future intention cannot support a misrepresentation claim.  Vandeputte v. Soderholm, 298 Minn. 505, 508, 216 N.W.2d 144, 147 (1974).  But the record demonstrates adequate evidence to create a genuine issue of material fact on whether Holtegaard made mere statements of future intention or whether he made assertions of fact.  Read in the light most favorable to the Tracys, which the summary judgment posture requires, the record demonstrates that Holtegaard told the Tracys that he couldn't build a house on the portion of Lot 7 nearest to their land.  This statement of fact is distinguishable from a promise that he wouldn't build the house there, which is a statement of intention.  A reasonable homebuyer could infer from Holtegaard's statements that building on the portion of Lot 7 nearest the Tracys' land was not physically or logistically possible.  For these reasons, I would reverse the district court's order granting summary judgment and remand for further proceedings on the misrepresentation claim. 

 

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