City of Green Isle, Appellant, vs. Timothy E. Boelter, et al., Respondents.Annotate this Case
This opinion will be unpublished and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
City of Green Isle,
Timothy E. Boelter, et al.,
Filed October 3, 2006
Sibley County District Court
File No. C8-03-262
George C. Hoff, Kimberly B. Kozar, Hoff, Barry & Kuderer, P.A., 775 Prairie Center Drive, 160 Flagship Corporate Center, Eden Prairie, MN 55344-7319 (for appellant)
John W. Munger, 808 Colwell Building, 123 North Third Street, Minneapolis, MN 55401-1668 (for respondents)
Considered and decided by Willis, Presiding Judge, Wright, Judge, and Forsberg, Judge.U N P U B L I S H E D O P I N I O N
Appellant City of Green Isle challenges the district court's judgment in favor of respondents Tim and Mary Boelter after a court trial, arguing that the court (1) interpreted the parties' contract in a manner inconsistent with the parties' intent as evidenced by the contract's overall purpose, i.e., the creation of wetlands; (2) erred by ruling that the city breached the contract when it failed to record the Declaration of Restrictions and Covenants For Replacement Wetland before creating the wetlands; and (3) abused its discretion by dismissing the city's claims for specific performance or unjust enrichment. Because the district court correctly interpreted the parties' unambiguous contract, did not err in determining that the city breached the contract's requirement that the necessary documents be properly recorded, and did not abuse its discretion by dismissing the city's claims for equitable relief, we affirm.
In 1997, appellant City of Green Isle, Sibley County, Minnesota, began development of the Green Isle Industrial Park, the location for a new water tower, water well, and an underground sanitary sewer system. Because the development affected existing wetlands, the Minnesota Wetland Conservation Act required the city to replace ("mitigate") the destroyed wetlands by acquiring new wetlands. The city could either create the required new wetlands, or it could purchase credits from a "wetland bank." If the city chose to create credits itself, any credits exceeding the amount required to mitigate the industrial park wetlands affect could be "banked" for future use, i.e., to offset the effect on wetlands of the city's future projects. To create credits, the city would have to locate a site and obtain approval by the Sibley Soil and Water Conservation District (SWCD) of a plan for wetlands construction.
Respondents Tim and Mary Boelter live in Sibley County, approximately four miles from the City of Green Isle. Tim Boelter learned that the city was looking for wetland mitigation sites, and he contacted the mayor to discuss the possibility of allowing the city to create some wetlands on the Boelters' property. After numerous meetings, the city and the Boelters agreed that the city could construct wetlands on a 20-arcre parcel that the Boelters owned. The city's engineer drafted the agreement, including a "normal use" provision that the Boelters requested.
The parties reached the following agreement.
This agreement, made and signed this 12th day of July, 1999, by and between Tim and Mary Boelter hereinafter called "Owners" and the City of Green Isle, MN hereinafter called "City" with regard to the construction of wetland mitigation and banking on "Owner's" property located southeast of the City is hereby agreed to with the following general understanding:
1. Tim and Mary Boelter own the property (see attached Exhibit A for legal description) intended for the wetland mitigation and banking project.
2. The Owners agree to the construction of the wetland mitigation and banking project in compliance with the requirement of the regulatory agencies having authority over the project.
3. The Owners shall provide the land at no cost to the City.
4. The City shall contract to complete the wetland mitigation and banking project and pay for all costs associated with the construction and restoration of the site including seeding of the area disturbed.
5. All material from the construction shall remain on-site and be spread and leveled as per the approved plan for the project.
6. The City shall ensure access to all areas of the property by the Owners for normal use.
7. The City shall prepare all necessary permanent easement documents for proper recording and the Owner shall provide all necessary legal documents for the recording of said permanent easement. The City shall pay for all recording costs.
8. The City shall retain all wetland credits created by the project.
The agreement had an attached exhibit with a legal description of the 13.15-acre project site, which was zoned as agricultural land. The mayor and the city administrator signed the agreement on behalf of the City of Green Isle. In addition to the agreement, the Boelters had been shown an approved site plan for the project. Before signing the agreement, the Boelters were not given or shown any other documents that they were expected to sign.
By the fall of 2000, the city had completed construction of wetlands on the Boelters' property. In February 2003, the city sent the Boelters two documents for them to sign, along with a copy of the city's "Wetland Alteration Permit Application, Mitigation/Banking Plan, Sibley SWCD" dated July 1999. The first document the Boelters were asked to sign was the Consent to Replacement Wetland (consent document), which referred to the attached legal description of the 13.15-acre parcel and an attached Declaration of Restrictions and Covenants For Replacement Wetland (declaration document). The second document they were asked to sign was an Affidavit of Landowner(s) (affidavit). This was the first time the Boelters had seen any of these documents.
The permit application included the requirement that the declaration document must be recorded before any work was done that affected the wetlands. The declaration document itself also stated that it had to be recorded and "such proof shall be provided to the [SWCD] before proceeding with construction of the Replacement Wetland." The mayor signed the permit application.
The declaration document required permanent "vegetative cover" of both the wetland and non-wetland areas. It also listed prohibitions against producing agricultural crops, grazing livestock, haying, mowing, timber management, erecting structures, or "placing any materials, substances, or other objects" on the areas specified in the replacement plan or bank plan. Tim Boelter testified that the only restriction he had been made aware of was that the Boelters could not drain the ponds that would be created.
The Boelters refused to sign the documents. The city sued the Boelters for breach of contract, and the matter was tried to the district court in July 2005. The district court entered judgment for the Boelters, dismissing all of the city's claims. The district court found that the parties had a valid, unambiguous contract that did not require the Boelters to sign documents that "severely and permanently restrict the use of their land." The city was entitled to construct wetlands and "retain any wetland credits so long as those wetland credits are compatible with the Boelters' normal use of their land."
The district court concluded that because the declaration document was not recorded before construction of the wetlands on the Boelters' property, the city breached the parties' agreement by failing to perform a contractual obligation, i.e., paragraph 7 of the contract. The district court found that the city's breach caused any damages it may have sustained because the Boelters never would have allowed the project to go forward if they had known of the restrictions that the city subsequently asked them to agree to. The district court dismissed the city's claims for equitable relief. This appeal follows.D E C I S I O N
Contract interpretation is a question of law, which we review de novo. Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004). The primary goal of contract interpretation is to determine and enforce the intent of the parties. Id. A contract must be interpreted in a way that gives all of its provisions meaning. Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn. 1995). When there is a written agreement, courts must determine the intent of the parties from the plain language of the agreement itself. Travertine Corp., 683 N.W.2d at 271. Courts cannot remake contracts or imply provisions through judicial interpretation. In re Marriage of Brodsky v. Brodsky, 639 N.W.2d 386, 393 (Minn. App. 2002), review denied (Minn. April 23, 2002).
The parties agree that their dispute centers on the meaning of the "normal use" clause in paragraph 6. The city contends that the term "normal use" is ambiguous; the district court concluded it was not. On appeal, we determine whether a contract is ambiguous without deference to the district court. Blackburn, Nickels, & Smith, Inc. v. Erickson, 366 N.W.2d 640, 643 (Minn. App. 1985), review denied (Minn. June 24, 1985). A contract is ambiguous if, based on its language alone, it is reasonably susceptible of more than one interpretation. Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn. 2003). In order to be ambiguous in the legal sense, both interpretations must be reasonable. Collins Truck Lines, Inc. v. Metro. Waste Control Comm'n, 274 N.W.2d 123, 126 (Minn. 1979). Absent ambiguity, the terms of a contract will be given their plain and ordinary meaning and will not be considered ambiguous solely because the parties dispute the proper interpretation of the terms. Knudsen v. Transp. Leasing/Contract, Inc., 672 N.W.2d 221, 223 (Minn. App. 2003), review denied (Minn. Feb. 25, 2004).
The city argues that the meaning of "normal use" must be construed in the context of the overall agreement, the purpose of which is "construction of wetland mitigation and banking" on the Boelters' property. Any use, according to the city, must be consistent with the contract's purpose, the use of the property as a wetland mitigation and banking site. The city's position is that "normal use" must be viewed in this context, together with the restrictions on the property contained in paragraphs 2 and 7.
There are two problems with the city's argument. First, paragraph 2 requires the construction of the wetland mitigation and banking project to "compl[y] with the requirements of the regulatory agencies having authority over the project." The requirements address the construction of wetlands, not the land's use. Paragraph 7 talks about a "permanent easement," but the easement requirement in itself does not mandate the degree of severe restrictions that the city now wants the Boelters to comply with.
Second, and more important, the meaning that the city would ascribe to "normal use" is contrary to the plain and ordinary meaning of the term. Courts frequently look to dictionaries for the plain and ordinary meaning of a contract term. See, e.g., Bank Midwest, Minnesota, Iowa, N.A. v. Lipetzky, 674 N.W.2d 176, 180 (Minn. 2004) (referring to Black's Law Dictionary to ascertain plain meaning of "transfer," within context of contract for deed's consent clause). Here, the plain and ordinary meaning of "normal" is "according to a regular pattern; natural," Black's Law Dictionary 1086 (8th ed. 2004), or "conforming with, adhering to, or constituting a norm, standard, pattern, level, or type; typical," The American Heritage Dictionary of the English Language 1233 (3rd ed. 1992). The parties' contract, in paragraph 6, requires that "[t]he City shall ensure access to all areas of the property by the Owners for normal use." The city's argument, when carried to its logical conclusion, is that "normal use" means that the Boelters cannot use the property for any activity that interferes with the required permanent vegetative cover that must be maintained and that the Boelters may not produce agricultural crops, graze or water their horses or livestock, plant or cut hay, mow, cut firewood, erect structures, or "plac[e] any materials, substances, or other objects" anywhere on the 13.15 acres. The district court did not err in finding that this interpretation of "normal use" is unreasonable, particularly when contrasted with an interpretation of the owners' "normal use" as allowing them to do things that conform to their regular pattern or typical use of their agricultural land.
Finally, the city argues that without the severe restrictions on use, it is prevented from receiving any wetland credits. But Paragraph 8 says that the city shall retain all wetland credits that are createdby the project. The contract does not guarantee the city any minimum number of credits or any credits at all. If no credits are created, that is not the Boelters' fault. See Denelsbeck, 666 N.W.2d at 346-47 ("If a contract is unambiguous, the contract language must be given its plain and ordinary meaning, and shall be enforced by courts even if the result is harsh."). The contract, viewed in its entirety and giving effect to all its provisions, provides that the city can construct wetlands on the Boelters' property without paying them anything. And, subject to the Boelters' normal use of the land and a permanent easement to the city, the city retains all wetland credits that are created by the project.
The district court correctly determined that the contract is unambiguous because, based on its language alone, the contract is not reasonably susceptible of the city's interpretation of "normal use," and the plain and ordinary meaning of the term precludes the severe restrictions the city would impose on the Boelters.
The city argues that the district court misinterpreted the parties' contract when the court determined that the city breached the contract. Contract interpretation is a question of law, which we review de novo. Travertine Corp., 683 N.W.2d at 271.
The city contends that it did not breach the contract by failing to prepare all necessary permanent easement documents for proper recording, as the district court concluded. The district court found that the contract required the city to record the declaration document that is referred to in the consent document that the city requested the Boelters to sign.
The city does not dispute that the consent document and the declaration document are essential to its claim against the Boelters. But it asserts that the contract, in paragraph 7, requires only that the city "prepare" the necessary documents for proper recording and that the contract does not require that the documents be recorded before beginning construction of the replacement wetlands. The city also argues that even if there were a requirement to record before beginning work, the contract does not expressly state which partythe city or the Boeltersis required to record the documents. But the declaration document clearly requires that it be recorded before constructing the replacement wetlands. The only reasonable interpretation of paragraph 7 is that the city, which is the party responsible to prepare the documents for proper recording, must also give any documents to the Boelters that need their signatures before beginning construction of the wetlands. Otherwise, proper recording could not take place. "Whatever is necessarily implied in a contract is as much a part thereof as if expressly stated therein, but the implication must result from the language employed in the instrument or be indispensable to carrying the intention of the parties into effect." Closuit v. Mitby, 238 Minn. 274, 282, 56 N.W.2d 428, 432-33 (1953).
The district court did not err in ruling that the city breached the parties' contract requirement that the necessary documents be properly recorded before construction of the replacement wetlands.
This court reviews a district court's denial of equitable relief for an abuse of discretion. City of Cloquet v. Cloquet Sand & Gravel, Inc., 312 Minn. 277, 279, 251 N.W.2d 642, 644 (1977).
The city argues that the district court abused its discretion by failing to order the Boelters to execute the consent document, with the attached declaration document and the affidavit. The district court, having found that the city breached the parties' contract, dismissed the city's claim for specific performance. "[A] party who first breaches a contract is usually precluded from successfully claiming against the other party." Carlson Real Estate Co. v. Soltan, 549 N.W.2d 376, 379-80 (Minn. App. 1996), review denied (Minn. Aug. 20, 1996). The district court found that the city's breach caused its own damages because the Boelters would not have entered into the contract had they been presented with a document that identified the severe restrictions to be placed on their land. See Greer v. Kooiker, 312 Minn. 499, 513, 253 N.W.2d 133, 142 (1977) (concluding that district court did not err in dismissing party's claims for relief when that party's actions caused failure to consummate contract).
There was testimony and documentary evidence in the record to support the district court's findings that the city breached the contract and that its breach caused the Boelters to enter into a contract that they otherwise would not have entered. Therefore, the findings were not clearly erroneous, and the district court did not abuse its discretion by dismissing the city's claim for specific performance.
The city argues that the district court abused its discretion by dismissing its claim for unjust enrichment. A claim for unjust enrichment arises when a party gains a benefit illegally or unlawfully. Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of Canada, Ltd., 552 N.W.2d 254, 268 (Minn. App. 1996), review denied (Minn. Sept. 20, 1996). But equitable relief cannot be granted where the rights of the parties are governed by a valid contract. Id. Also, in order to establish a claim for unjust enrichment, "the claimant must show that another party knowingly received something of value to which he was not entitled, and that the circumstances are such that it would be unjust for that person to retain the benefit." Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. App. 2001).
The parties have a valid, enforceable contract precluding the city's unjust enrichment claim. Furthermore, the district court found that the city failed to prove that the Boelters were unjustly enriched. The city provided evidence that its construction costs were approximately $97,000. But there was evidence that the Boelters had equipment in working order that they were prepared to use to dig their own ponds on the subject property, as they had done on another parcel they owned. The Boelters did not receive $97,000 in value because they could have dug the ponds for little or no cost without the city's involvement. Nor were the Boelters enriched by the value of the "wetland credits" because, under the contract, all wetland credits created by the project belong to the city, not the Boelters.
Because the district court's findings have support in the record and are not clearly erroneous, the district court did not abuse its discretion by dismissing the city's claim for unjust enrichment.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.