This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Mark A. Saliterman, et al.,
Brian H. Burdick, et al.,
defendants and third-party plaintiffs,
Burnet Realty, Inc., d/b/a Coldwell Banker
Filed March 14, 2000
Toussaint, Chief Judge
Hennepin County District Court
File No. 99493
Richard I. Diamond, Richard I. Diamond, P.A., 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 (for appellants)
Dennis P. Moriarty, 206 South Scott Street, Shakopee, MN 55379 (for respondents Brian Burdicks et al.)
William Lawrence Davidson, Lind Jensen & Sullivan, P.A., 150 South 5th Street, Suite 1700, Minneapolis, MN 55402-1498 (for respondent Burnet Realty)
Considered and decided by Toussaint, Chief Judge, Crippen, Judge, and Foley, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellants Mark and Beth D. Saliterman appeal from the district court’s order granting respondents’ motion for summary judgment in appellants’ fraudulent misrepresentation and breach-of-contract claims. Because the district court did not err in concluding that appellants had failed to prove: (1) that respondents’ agent’s representations were of past or present fact; (2) that respondents had knowledge of the zoning ordinance; and (3) any damages, we affirm.
Appellants claim that the district court erred in granting respondents’ motion for summary judgment on appellants’ claim of fraudulent misrepresentation and breach of contractual warranties.
On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.
State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citation omitted).
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 (quoting Murphy v. Country House, Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976)).
Appellants argue that the district court erred in dismissing their fraudulent misrepresentation claim. In order to prove fraudulent misrepresentation, appellants must prove that respondents:
(1) made a representation (2) that was false (3) having to do with a past or present fact (4) that is material (5) and susceptible of knowledge (6) that the representor knows to be false or is asserted without knowing whether the fact is true or false (7) with the intent to induce the other person to act (8) and the person in fact is induced to act (9) in reliance on the representation (10) that the plaintiff suffered damages (11) attributable to the misrepresentation.
Gorham v. Benson Optical, 539 N.W.2d 798, 802 (Minn. App. 1995) (quoting M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992)). The district court granted summary judgment, concluding that appellants had failed to prove: (1) that the representations were of past or present fact; (2) that respondents had knowledge of the zoning ordinance; and (3) any damages.
A. Past or Present Representation of Fact
A representation that a future act will occur is not sufficient to support a claim for fraud. Cady v Bush, 283 Minn. 105, 109, 166 N.W.2d 358, 361 (1969). Appellants argue that the district court erred in concluding that respondents’ agent’s statement that the boathouse could be rented and the rent would cover the property taxes was a statement of future facts. But, both appellant Mark Saliterman’s admissions and the caselaw show the district court did not err in its determination. Appellant Saliterman admitted in his February 19, 1999 deposition that the representations made by respondents’ agent were of future facts. In addition, the facts in this case are similar to those in Cady, where the district court also concluded that the seller’s representations were of future facts. Id. In Cady, the seller sold a motel in which students from a local college were housed. Id. The buyers raised the rent and placed six students in rooms that previously housed four students. When the school did not approve the housing, the buyers sued the seller for fraud, claiming that he had represented to them that they would continue to receive student business in the future. Id. The court held that any such representations would amount to conjecture of future events and therefore, under existing law, would be an insufficient basis for a claim. Id.
Here, appellants were similarly told that they could make a profit from the property, i.e., through the rents of the boathouse apartment. Much like the buyer in Cady, who reconfigured the number of students per room, thereby not complying with the school’s housing policy, these appellants made changes to the property, demolishing the main house, and affecting compliance with a zoning ordinance that prohibited two dwellings on one property. While respondents also had two dwellings on the property when appellants purchased it, the Greenwood City Attorney stated in his affidavit that it was possible that respondents might have had a legal nonconforming use when they sold the property. Respondents’ agent was speculating about how the property could be used in the future, and that speculation may have been based in part or an existing use. But as in Cady, the representations involve future facts and are not actionable.
The district court also concluded that because the representations were of law, not of fact, they were not actionable. We agree. In Gatz v. Frank M. Langenfeld & Sons Constr., Inc., 356 N.W.2d 716, 717 (Minn. App. 1984), the buyers bought property for the purpose of keeping horses, but learned after signing the contract for deed that a local ordinance prohibited this use. The sellers told the buyers that if they got permission from their neighbors to keep horses on their property, the zoning ordinance would not be enforced. Id. Upon learning they would not be allowed to keep the horses, the buyers sued, and this court held that whether a zoning ordinance will be enforced in the future is a matter of law, not fact. Id. at 718. The facts here are similar. Even if respondents’ agent told appellants that the house could be rented in the future and that the rents would cover the property taxes, a local ordinance prohibited this use and any representation by the agent as to the likelihood of future enforcement of the ordinance does not constitute an actionable representation of fact.
Appellants cite Simonsen v. BTH Properties, 410 N.W.2d 458 (Minn. App. 1987), review denied (Minn. Oct. 27, 1987), for their assertion that the agent’s representations were factual. In BTH, the sellers knew that the apartment building they were selling was zoned for five apartments, but they represented to the buyers that the building could be used for six units. The buyers sued for fraud and the district court granted the sellers’ motion for summary judgment, concluding that the representation was one of law and, therefore, not actionable. Id. at 461. This court reversed the district court’s determination, stating that
here there was not a representation of law, but rather, a misrepresentation of a factual condition. That is, through nondisclosure respondents may have misrepresented the fact that the building violated the law.
Id. Appellants suggest that respondents misrepresented the fact that the property could be used for multiple dwellings through their agent’s nondisclosure of the ordinance prohibiting two dwellings on one property. But this case is distinguishable from BTH because there, the seller had knowledge of the ordinance. The seller’s knowledge was a significant factor in this court’s decision to reverse the district court’s grant of summary judgment. Here, where there is no evidence in the record that respondents had knowledge of the ordinance, Gatz requires us to conclude that respondents’ representations concerned matters of law.
Appellants claim that the district court erred in concluding that they had failed to prove that respondent Burdick had knowledge of the ordinance that prohibited two dwellings on one property. There is no evidence in the record indicating that respondent Burdick had knowledge of the ordinance. Respondent Burdick denies knowing about the ordinance when he sold the property. The city attorney for the City of Greenwood stated in his affidavit that it was possible that respondent had a legal non-conforming use, which ceased to exist the moment appellant demolished the main house. While the city attorney did not make a conclusive statement as to this issue, it provides evidence suggesting respondents did not have knowledge of the ordinance.
Appellants argue that because respondent Burdick was a member of the Greenwood Planning Commission, he should have known about the ordinance, or at least, it raises a material issue of fact as to whether he had knowledge. However, appellants’ burden is not a “should-have-known” standard but instead, appellants must provide sufficient evidence to show that respondents knew or asserted the representation with knowledge of whether it was true or false. Gorham, 539 N.W.2d at 802. For example, in BTH, where there was evidence in the record that the seller had knowledge of the ordinance and failed to tell the buyer, this court reversed the grant of summary judgment and concluded that “there was a material fact issue as to whether respondents had committed fraud by nondisclosure.” BTH, 410 N.W.2d at 462. Here, there is no direct evidence of respondent Burdick’s knowledge. To defeat a motion for summary judgment, the nonmoving party must establish a genuine issue of material fact through affirmative evidence tending to support each element of the claim. Carlisle v. City of Minneapolis, 437 N.W.2d 712, 715 (Minn. App. 1989). “Mere speculation, without some concrete evidence, is not enough to avoid summary judgment.” Bob Useldinger & Sons, Inc. v. Hangsleben, 505 N.W.2d 323, 328 (Minn. 1993). Aside from evidence that respondent Burdick was on the planning commission, appellants failed to provide affirmative evidence supporting their contention that respondent Burdick knew of the zoning ordinance applicable to this property. Appellants’ theory consists of speculations that are insufficient to defeat a motion for summary judgment. Id.
Appellants also relied on the minutes from the July 1, 1997 planning commission meeting that respondent Burdick attended, where a citizen sought a variance to make improvements to his boathouse. Appellants suggest that this proves that respondent Burdick was aware of the zoning requirements applicable to boathouses. We disagree. The citizen at the July 1, 1997 meeting was seeking to make improvements on his boathouse, not convert it into an apartment. The facts are dissimilar and do not rise to the level of respondents’ knowledge of the zoning ordinance relating to construction.
Appellants also argue that the district court erred in concluding that they had not established damages. Respondents argued and the district court concluded that under the “out-of-pocket-loss” rule, appellants were not entitled to damages. The out-of-pocket-rule provides:
[D]amages are the difference between the actual value of the property received and the price paid for the property, along with any special damages naturally and proximately caused by the fraud prior to its discovery, including expenses incurred in mitigating the damages.
B.F. Goodrich Co. v. Mesabi Tire Co., 430 N.W.2d 180, 182 (Minn. 1988). The out-of-pocket loss rule is flexible with respect to damages, such that “consequential damages which were not contemplated by the parties at the time of the sale may be taken into account.” Raach v. Haverly, 269 N.W.2d 877, 882 (Minn. 1978).
Appellants failed to meet any of the requirements under the rule and therefore, were unable to show damages. While appellants claim that they are entitled to consequential damages, the rule provides that a party is entitled to “any damages * * * caused by the fraud.” Here, there is no fraud because appellants failed to show sufficient evidence that respondents had knowledge of the ordinance and that their agent’s representations were not of future facts. Because the district court properly concluded that appellants failed to show damages, summary judgment was appropriate.
Next, appellants argue that the district court erred in granting summary judgment as to the breach-of-contract claim. The purchase agreement signed by the parties included respondents, warranty that they had no notice of any violations of ordinances or regulations. Appellants contend that respondent Burdick’s membership on the planning commission, as well as the minutes from the July 1, 1997 meeting, raises an issue as to whether he had knowledge of the ordinances and therefore, breached the warranty in the contract.
To survive summary judgment, the non-moving party must provide sufficient evidence to support each element of his claim. Carlisle, 437 N.W.2d at 715. Appellants cannot overcome summary judgment by mere speculation. Hangsleben, 505 N.W.2d at 328. Appellants need to show that the warranty was breached, i.e., that appellant had knowledge of the ordinance. Here, appellants have not provided sufficient evidence to show that respondent Burdick had knowledge. The evidence they rely on, respondent Burdick’s membership on the planning commission and the minutes from the July 1, 1997 meeting is insufficient. It requires this court to assume that, because of his membership in the planning commission, he must have known of the ordinance. Because appellants provided insufficient evidence to show that respondents had knowledge of the ordinance violation, the district court properly granted respondents’ motion for summary judgment as to the breach-of-warranty claim.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.