Jerry Lehn, Appellant, vs. Sylvester Kolles, et al., Defendants, Leuer-Munsterteiger Properties, Inc., Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1602

 

Jerry Lehn,

Appellant,

 

vs.

 

Sylvester Kolles, et al.,

Defendants,

 

Leuer-Munsterteiger Properties, Inc.,

Respondent.

 

Filed May 11, 2004

Affirmed
Klaphake, Judge

 

Wright County District Court

File No. C6-01-2963

 

Richard I. Diamond, Jay E. Carey, Richard I. Diamond, P.A., 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 (for appellant)

 

Gerald W. Von Korff, Rinke-Noonan, P.O. Box 1497, St. Paul, MN 55302 (for respondent)

 

            Considered and decided by Randall, Presiding Judge, Klaphake, Judge, and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

            Appellant challenges the grant of summary judgment to respondent dismissing his claims of tortious interference with contract, tortious interference with prospective contractual relations, and tortious interference with business expectancy.  Because no genuine issues of material fact exist, we affirm.

FACTS

            In June 1999, Sylvester Kolles sold a 20-acre parcel of farmland to respondent Leuer-Munsterteiger Properties, Inc. for $16,000 per acre and gave respondent a "Right of First Offer" on his remaining farmland.  The right gave respondent 30 days to deliver an executed purchase agreement for the land "for the price and substantially according to the terms set forth in the [offer received by the other party]."

            Appellant Jerry Lehn performed mechanical, electrical, and other tasks on Kolles's farm for approximately 15 years and received approximately $3 to $4 per hour for his services.  Appellant claimed that he and Kolles had an understanding that appellant would be given the option to purchase Kolles's farm or find a purchaser for it whenever Kolles was ready to sell, a claim that Kolles denied.  

During the summer of 2001, appellant introduced Kolles to attorney Robert Pearson and real estate agent Howard Triggs as potential purchasers of the farm property.  In early July, Triggs, on behalf of his company, Acorn Development, offered to buy the property for $1,344,000 ($32,000 per acre).  Kolles signed the agreement and added language stating that the agreement was "subject to termination of first right of refusal," referring to respondent's right of first offer.  The purchase agreement included an addendum at page six, stating that Acorn Development agreed to pay $301,000 at closing to appellant for work done on the property.[1]  Kolles testified by deposition that he did not sign page six of the agreement.[2]

            Copies of the purchase agreement were mailed to respondent.  Ralph Munsterteiger, acting on respondent's behalf, contacted Kolles.  Munsterteiger advised Kolles to retain an attorney.

            Kolles thereafter retained attorney Rebecca McDaniel.  On August 24, 2001, McDaniel sent a letter to Acorn Development and Triggs, demanding termination of the purchase agreement because it contained errors, inconsistencies, and ambiguities.  McDaniel threatened to file suit to have the purchase agreement set aside and to contact authorities regarding the filing of a criminal complaint against Acorn Development for fraud.  On August 28, 2001, Triggs met with Kolles, and the purchase agreement was terminated.

            Appellant sued Kolles in October 2001, claiming damages for services rendered, promissory estoppel, breach of implied covenants of good faith and fair dealing, and tortious interference with purchase agreement.  Kolles counterclaimed for fraud and moved for summary judgment or dismissal of appellant's claims.  The district court denied summary judgment.[3]  Appellant also filed claims against respondent for tortious interference with contract, tortious interference with prospective contractual relations, and tortious interference with business expectancy.  Respondent filed a cross-claim against Kolles to enforce the purchase agreement it submitted when it exercised the right of first offer.

            Respondent moved for summary judgment on appellant's claims, and Kolles moved for summary judgment on respondent's cross-claim.  On May 22, 2003, the district court granted summary judgment to Kolles on respondent's cross-claim, determining that because the purchase agreement submitted by respondent was materially different from the Acorn Development agreement, respondent had not properly exercised its right of first offer.  The district court granted summary judgment to respondent on appellant's claims, determining that any communication between respondent and Kolles was proper in light of its right of first offer.  Appellant challenges the grant of summary judgment to respondent.

D E C I S I O N

            On appeal from summary judgment, an appellate 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).

I.  Tortious Interference with Contract

            A claim of tortious interference with contract requires (1) the existence of a contract, (2) the alleged wrongdoer's knowledge of the contract, (3) intentional procurement of the contract's breach, (4) without justification, and (5) damages resulting from the breach.  Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994).

Appellant argues that respondent is liable for tortious interference because its communications with Kolles led to the termination of the Acorn Development purchase agreement.  But the holder of a right of first offer who receives notice of a purchase agreement has the "duty to undertake a reasonable investigation of any terms unclear to him."  Koch Indus., Inc. v. Sun Co., 918 F.2d 1203, 1212 (5th Cir. 1990) (citing Texas law).   

            When Kolles notified respondent that he had signed the Acorn Development purchase agreement, respondent had the right and duty to inquire about its details.  Because respondent's communications were required as a matter of law and were made for the purpose of protecting its right of first offer, the communications were justified and were not interference.  A person does not interfere with a contract when he "asserts in good faith a legally protected interest of his own" in the belief that "his interest may otherwise be impaired or destroyed by the performance of the contract or transaction."  Kjesbo, 517 N.W.2d at 588 (quotation omitted).  Therefore, the district court did not err in granting summary judgment on appellant's claim of tortious interference.[4]

II.  Tortious Interference With Prospective Contractual Relations

            Tortious interference with prospective contractual relations involves a showing that the defendant "intentionally and improperly interfere[d] with another's prospective contractual relation," and requires that the defendant (1) induced or otherwise caused a third person not to enter into or to continue the prospective relation, or (2) prevented the other from acquiring or continuing the prospective relation.  United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982).

            Appellant claims that the evidence established that respondent's improper communications with Kolles caused Acorn Development and Kolles to cancel the purchase agreement and prevented appellant from receiving payment as a third-party beneficiary.  As we concluded above, once respondent received notice of the Acorn Development purchase agreement, it had a duty to inquire about any unclear terms.  See Koch, 918 F.2d at 1212.  Because any communications were not interference and were not improper as a matter of law, summary judgment was appropriate on this claim.

III.  Tortious Interference With Business Expectancy

            The party making a claim for tortious interference with business expectancy must prove that (1) the plaintiff had a reasonable expectation of economic advantage or benefit; (2) the defendant knew of that expectation of advantage; (3) the defendant wrongfully interfered with plaintiff's reasonable expectation without justification; (4) without defendant's wrongful act, it is reasonably probable that plaintiff would have realized the economic advantage or benefit; and (5) plaintiff suffered damages as a result.  Harbor Broad., Inc. v. Boundary Waters Broadcasters, Inc., 636 N.W.2d 560, 569 (Minn. App. 2001).

            Appellant argues that he presented evidence of respondent's wrongful interference with his reasonable expectation.  But, as in the other claims, respondent had the duty to inquire about any unclear terms in the Acorn Development purchase agreement.  See Koch, 918 F.2d at 1212.  Because respondent's communications with Kolles were required as a matter of law, there was no wrongful interference.  The district court properly granted summary judgment on this claim also.

            Affirmed.

 

[1] Appellant admitted at his deposition that his services were not worth $301,000 and testified that the amount was calculated by taking 25% of the estimated amount of profit from developing the land.

[2] Kolles admitted that he signed pages one through five.  The copy of the purchase agreement in the record shows Kolles's signature and the additional term he added on page five also on page six; it appears that the signature and handwritten term transferred by carbon copy onto page six from page five.

[3] Appellant's claims against Kolles have since settled.

[4] We note that summary judgment was also appropriate on this claim because appellant failed to establish a breach of contract; Kolles and Acorn Development mutually rescinded the purchase agreement when they signed the termination on August 28, 2001.  See R.A., Inc. v. Anheuser-Busch, Inc., 556 N.W.2d 567, 570 (Minn. App. 1996), review denied (Minn. Jan. 29, 1997).