Brian T. Carlson, et al., Appellants, vs. Bloomington Housing Partners II, Respondent.

Brian T. Carlson, et al., Appellants, vs. Bloomington Housing Partners II, Respondent. A05-1324, Court of Appeals Unpublished, April 25, 2006.

This opinion will be unpublished and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

A05-1324

 

 

Brian T. Carlson, et al.,

Appellants,

 

vs.

 

Bloomington Housing Partners II,

Respondent.

 

 

Filed April 25, 2006

Affirmed; motion granted in part

Toussaint, Chief Judge

 

Hennepin County District Court

File No. 05-5593

 

 

Brian T. Carlson, Post Office Box 406, Crosslake, MN 56442 (attorney pro se for appellants)

 

Daniel R. Kelly, Felhaber, Larson, Fenlon & Vogt, P.A., 220 South Sixth Street, Suite 2200, Minneapolis, MN 55402 (for respondent)

 

 

            Considered and decided by Minge, Presiding Judge; Toussaint, Chief Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

Appellants Brian T. Carlson and Susan B. Carlson challenge the district court's denial of their motion to temporarily enjoin respondent Bloomington Housing Partners II, a Minnesota Limited Partnership, from canceling a purchase agreement for a condominium.  Respondent moves to strike portions of appellants' brief.  Because portions of appellants' briefs should be struck as outside the record, respondent's motion to strike is granted in part.  Because the district court did not abuse its discretion in applying the Dahlberg factors, we affirm its denial of the temporary injunction.

FACTS

On April 4, 2004, appellants Brian and Susan Carlson entered into a purchase agreement with Bloomington Housing Partners I (BHPI) for a "townhome-style condominium unit" in a common-interest community.  BHPI and respondent are owned and managed by the same individuals and entities and use the same sales office, sales personnel, form purchase agreements, and association and disclosure statements. 

In October 2004, appellants decided they would prefer a less expensive "flat-style condominium unit" in the same project.  The flat-style units were sold by respondent.  On October 10, 2004, appellants executed documents to (1) cancel the April 4 agreement with BHPI; (2) transfer and get a refund of some of the earnest money paid at the time of the April agreement; and (3) enter into a second purchase agreement for a flat-style condominium with respondent.     

In December 2004, "some things had changed with respect to [appellants'] personal situation and [they] decided [they] no longer wanted to purchase the condo unit."  They asked respondent to cancel the agreement and refund the earnest money, but respondent refused.  When appellants later complained to respondent that they were entitled to a new disclosure statement for the new contract, respondent's counsel provided them with a "courtesy" copy of the same disclosure statement originally provided to appellants with the April agreement.   Respondent's counsel clarified that the same disclosure statement covered both the townhome- and flat-style-condominium units in the development and asserted that the "rescission period with respect to the purchase of any unit  . . .  began to run" upon appellants' receipt of a disclosure statement in April and that the courtesy copy would not restart the statutory rescission period.   

Appellants' attempts to cancel the October purchase agreement were followed by respondent's commencement of a statutory cancellation proceeding.  On April 8, 2005, appellants, pro se, filed a complaint and motion for an order enjoining the cancellation of the purchase agreement and returning the earnest money to appellants.  The motion was heard on April 18, and the following day the court denied it.  Appellants filed a notice of appeal, and respondent filed a motion to strike portions of appellants' briefs. 

D E C I S I O N

I.

Respondent moves to strike portions of appellants' briefs containing arguments not raised in the district court.  Specifically, respondent seeks to strike arguments that (1) appellants would suffer irreparable harm if the purchase agreement were cancelled because they would lose their breach-of-contract claims, (2) the purchase agreement contained a provision making its terms exclusive and disclaiming any prior agreements, and (3) additional errors invalidate the condominium declaration and disclosure statement. 

Loss of Breach-of-Contract Claims.  Appellants argue that they will be irreparably harmed if the purchase agreement is cancelled because their breach-of-contract claims will not survive.  The district court specifically determined that the balancing of harms would not favor an injunction because, even if the injunction were denied and the contract cancelled, appellants could still pursue their breach-of-contract claims.  There is no transcript of the hearing, and no other document in the record indicates that appellants raised this issue before the district court filed its order.  Nevertheless, the order indicates that the district court considered and decided the issue.  Therefore, this court will review the issue on appeal.

Appellants submitted to this court an affidavit stating that they raised the issue of the loss of their breach-of-contract claims to the district court and attached a letter that they filed with the district court the day after the hearing.  "A temporary injunction may be granted if by affidavit, deposition testimony, or oral testimony in court, it appears that sufficient grounds exist therefor."  Minn. R. Civ. P. 65.02.  The letter submitted by appellants after the hearing and without permission of the district court does not fall within rule 65.02 and was not of record when the district court made its decision to deny the injunction.  "An appellate court may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence below."  Petition of Nelson, 495 N.W.2d 200, 204 (Minn. 1993).    Therefore, the letter must be struck.  Similarly, the portions of appellant Brian Carlson's affidavit purporting to supplement the record by explaining conduct at the hearing for which no transcript was ordered must also be struck.

 Purchase Agreement "Zipper" Clause.   Respondent argues that appellants never raised in the district court paragraph 24 of the purchase agreement or its effect on the motion for an injunction.  Appellants did argue to the district court that the October purchase agreement required a new disclosure statement, but did not cite or discuss this particular clause of the agreement.  Nevertheless, any court considering whether the purchase agreement required another disclosure statement would necessarily read the entire agreement before evaluating a party's likelihood of success on the merits of its breach-of-contract claim.  Therefore, this court, too, will consider the entire agreement in evaluating the district court's decision.

Inaccuracies in the Condominium Documents.  Respondent also argues that appellants made only general arguments regarding the declaration and disclosure statement to the district court but add six new specific arguments in their reply brief on appeal.  This accurately describes the record.  The district court order addressed the only argument raised by appellants belowthat the April disclosure statement did not cover the unit purchased in October and that they were entitled to a second disclosure statement, with a notice of right to rescission, at the time they executed the October agreement.

This court's review is necessarily limited to issues that the record establishes were "actually raised in, and decided by, the trial court."  In re Estate of Magnus, 436 N.W.2d 821, 823 (Minn. App. 1989).  Because appellants presented neither facts nor argument regarding the specific alleged errors in the declaration and disclosure statement in the district court and because the district court order contains no reference to or resolution of them, they are not properly before this court on review.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

In conclusion, appellants' motion to strike is granted in part and denied in part.  This court will strike the portions of appellants' briefs and affidavit (1) containing or referring to the letter filed with the district court after the temporary-injunction hearing; (2) attempting to supplement the record; and (3) arguing inaccuracies in the condominium documents not raised below.

II.

            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 v. Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993).  On review, this court views the facts most favorably to the prevailing party.  Paradata of Minn., Inc. v. Fox, 356 N.W.2d 852, 854 (Minn. App. 1984) (citing Cramond v. AFL-CIO, 267 Minn. 229, 234-35, 126 N.W.2d 252, 256-57 (1964)).  In determining whether to grant an injunction, the court considers: (1) the relationship between the parties; (2) the harm to be suffered by plaintiff if the temporary restraint is denied as compared to that inflicted on defendant if the injunction issues pending trial; (3) the likelihood of a party prevailing on the merits; (4) the aspects of the fact situation, if any, that permit or require consideration of public policy expressed in the statutes; and (5) the administrative burdens involved in judicial supervision and enforcement of the temporary decree.  Dahlberg Bros., Inc. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965).

The Relationship.  The district court found that the parties were in "comparable" bargaining positions because respondent was a real-estate-development company and appellant Brian Carlson was a seasoned attorney.  Carlson argues that this was an abuse of discretion because it would take years for him to become thoroughly versed in condominium law.  We agree with the district court that the facts do not suggest unfair bargaining positions requiring special or equitable relief for appellants.

Carlson successfully negotiated the April real-estate transaction and was sophisticated and knowledgeable enough to re-negotiate a different and preferable purchase after the rescission period had run on the first transaction.  He was not a layperson in this transaction and has further demonstrated his competence and knowledge of the issues by representing himself and his wife in this litigation. 

Balancing of Harms.  Appellants alleged that they would suffer irreparable harm if they lost their right to purchase the condominium and lost their earnest money.  The district court determined that appellants would not suffer irreparable harm if the purchase agreement were cancelled.  The district court also found that appellants could still pursue their breach-of-contract and wrongful-cancellation claims but that they had the option of closing on the property and losing nothing.  The court stated that appellants might forfeit their earnest money, but respondent may lose "thousands of dollars in carrying costs by delaying its ability to complete construction and close on a sale of the unit."   

It is well established that appellants' primary argument for irreparable harm, loss of their earnest money, is not independently sufficient to provide a basis for injunctive relief.[1]  Miller v. Foley, 317 N.W.2d 710, 713 (Minn. 1982).  It is also undisputed on appeal that a party who has no remedy after a contract is cancelled may be irreparably harmed.  "It is a long-standing law in Minnesota that once statutory notice has been served and cancellation effected, all rights under a contract for deed are terminated."  Gatz v. Frank M. Langenfeld & Sons Constr. Inc., 356 N.W.2d 716, 718 (Minn. App. 1984); see also Tran v. Estate of Ditzler, 411 N.W.2d 6, 8 (Minn. App. 1987) (citing West v. Walker, 181 Minn. 169, 171, 231 N.W. 826, 827 (1930)).  But, here, in addition to the breach-of-contract claims that do not survive cancellation, appellants raised statutory claims under the Minnesota Common Interest Ownership Act, Minn. Stat. §§ 515B.1-101-.4-118 (2004).  Appellants argue that respondent's disclosure statement and declaration did not satisfy the good-faith and other requirements of the statutes and these statutory claims would survive contract cancellation.  See, e.g., id., §§ .1-113 (stating that every "duty governed by this chapter imposes an obligation of good faith in its performance or enforcement"), .1-114 (stating that remedies provided by "this chapter shall be liberally administered to the end that the aggrieved party is put in as good a position as if the other party had fully performed"), .4-116 (stating that if "a declarant or any other person violates any provision of this chapter . . . any person  . . . adversely affected  . . . has a claim for appropriate relief").

In weighing the harm to the parties, the district court found that appellants had indicated that they would still like to close on the property and that they still had that option, which would have precluded any loss.  It also found that respondent had shown substantial harm if the cancellation were enjoined.  Viewing the facts in the light most favorable to respondent, the district court did not abuse its discretion in determining that appellants had not demonstrated irreparable harm if the injunction did not issue.                                                               

            Likelihood of Success on the Merits.  The district court found it apparent from the documents in the record that appellants had received the disclosure statement prior to entering the second purchase agreement and that they were not entitled to another period of rescission.  Accordingly, the court determined appellants were unlikely to prevail on the merits.  

In addition to the documentary evidence presented to the district court, appellants' affidavit in support of their motion for injunctive relief clearly indicates that they initially sought cancellation of the second purchase agreement because they had changed their minds.  When the seller refused to cancel the second agreement, appellants began developing a laundry list of alleged technical errors in the seller's documents.  After reviewing the facts and documents in the light most favorable to respondent, we conclude there was no abuse of discretion in the district court's determinations that  appellants were not entitled to a second disclosure statement and that their right to rescind had expired. 

Public Policy.  The district court stated that nothing in the fact situation required consideration of public-policy issues.  Although important public policies underlie the statutes governing both cancellation of the agreement and condominium sales, consideration of these policies does not compel issuance of an injunction in this case. 

Administrative Burden.  Appellants do not dispute the district court's determination that there would be no administrative burden resulting from an injunction.  

In summary, the district court did not abuse its discretion in applying the Dahlberg factors to the facts presented and denying the temporary injunction.    

Affirmed; motion granted in part.

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

[1] Appellant Brian Carlson's affidavit accompanying the motion for a temporary injunction set out clearly that his irreparable harm was the loss of his earnest money.