This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
David P. Webb,
Kenneth Savik, et al.,
Filed July 17, 2002
Hennepin County District Court
File No. 998451
J. Michael Dady, Ronald K. Gardner, Jr., Jennifer L. Gehrig, Dady & Garner, P.A., 4000 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellant)
James T. Martin, Gislason, Martin & Varpness, P.A., 7600 Parklawn Avenue South, Suite 444, Edina, MN 55435 (for respondents)
Considered and decided by Toussaint, Chief Judge, Willis, Judge, and Shumaker, Judge.
Appellant contests the district court’s grant of adverse summary judgment on his claim of tortious interference with contract, arguing that (1) respondents are collaterally estopped from seeking summary judgment; (2) the district court erred by concluding that the parol-evidence rule bars consideration of discussions that establish appellant’s exclusive franchise right; and (3) the district court erred by concluding that appellant failed to establish that respondents had knowledge of the alleged contract. Because collateral estoppel does not apply and the district court did not err, we affirm.
On August 1, 1977, appellant David P. Webb entered into a franchise agreement with Original Pancake House (OPH) for the operation of an OPH restaurant in Edina. The written franchise agreement does not give Webb any exclusivity. But Webb asserts that OPH orally granted him an exclusive right during the negotiation of the franchise agreement. Webb does not describe the specific terms of the alleged exclusive right, such as its duration, and variously characterizes it as the exclusive right to open OPH franchises in Minnesota, to develop OPH franchises in Minnesota, to operate OPH franchises in Minnesota, and to generate and develop OPH restaurants in the Twin Cities area. The alleged right and its several permutations will be referred to collectively as the “exclusive OPH franchise right.”
In 1993, the acting president of OPH, Ronald Highet, came to Minnesota to promote the development of additional OPH restaurants here. Webb and William McGee, a shareholder of Webb Enterprises, Inc., which operated the Edina OPH restaurant, reported to Highet that they were interested in opening three additional OPH restaurants in Minnesota. Although Webb divested himself of his interest in the OPH operating entity as part of his 1992 marital dissolution, he apparently continued to assist McGee in McGee’s attempt to develop the three additional restaurants.
In February 1994, respondent Kenneth Savik, who had managed the Edina OPH restaurant since 1978, and his wife, respondent Karen Savik, met with representatives of OPH regarding the purchase by the Saviks of a franchise for a restaurant in Minnesota. Shortly thereafter, McGee’s attorney wrote to OPH, stating that “Mr. McGee and Mr. Webb are vehemently opposed to Ken Savik’s receipt of a local franchise” on the ground that “the information, ingredients and recipes furnished by [OPH] were and are for the sole and exclusive use of the Edina franchise.” OPH responded that there was “no legitimate legal issue regarding any exclusive development contract for the Twin Cities area” and that “the Edina franchise has no area of exclusivity”; OPH then granted a franchise to the Saviks for the operation of a restaurant in Wayzata.
In October 1994, Webb filed suit, alleging (1) breach of contract and violation of the Minnesota Franchise Act against OPH and Highet and (2) tortious interference with contract against the Saviks. The claims against the Saviks were dismissed without prejudice, and the balance of the case settled.
Webb thereupon again sued the Saviks, alleging that they tortiously interfered with his exclusive OPH franchise right. The district court granted judgment on the pleadings against Webb, ruling, in part, that Webb had not sufficiently pleaded the existence of a contract purporting to establish his exclusive franchise right. Webb appealed, and this court reversed and remanded. See Webb v. Savik, No. C0-00-391, 2000 WL 1182802 (Minn. App. Aug. 22, 2000).
Following discovery, the district court granted the Saviks’ motion for summary judgment, concluding that Webb’s tortious interference with contract claim failed because he could not establish either the existence of a contract granting him an exclusive OPH franchise right or that the Saviks had knowledge of the alleged contract. Webb appeals.
On appeal from summary judgment, the reviewing court determines whether genuine issues of material fact exist and whether the district court erroneously applied the law. Gleason v. Metro. Council Transit Operations, 582 N.W.2d 216, 219 (Minn. 1998). “[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted). When deciding a purely legal issue, the reviewing court need not give deference to the district court’s decision. See Frost-Benco Elec. Ass’n v. Minn. Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984).
To establish a claim of tortious interference with contract, a plaintiff must show
(1) the existence of a contract;
(2) the alleged wrongdoer’s knowledge of the contract;
(3) intentional procurement of its breach;
(4) without justification; and
Kallok v. Medtronic, Inc., 573 N.W.2d 356, 362 (Minn. 1998) (quotation omitted).
As a threshold issue, the Saviks argue that summary judgment was appropriate because Webb divested himself of his OPH interests during his 1992 dissolution and therefore does not have standing to assert his claim against the Saviks. But the district court did not address this issue, and a reviewing court may not base its decision on issues not addressed by the district court. Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988).
Webb argues that because the Saviks were denied summary judgment against him in the 1994 case, from which they were eventually dismissed without prejudice, the Saviks are now collaterally estopped from seeking summary judgment.
Collateral estoppel precludes relitigation of issues which are both identical to those issues already litigated by the parties in a prior action and necessary and essential to the resulting judgment. Its application is appropriate when: (1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.
In re Discipline of Morris, 408 N.W.2d 859, 862 (Minn. 1987) (citation omitted) (quotations omitted).
Here, the prior denial of the Saviks’ motion for summary judgment was not a final judgment. “Final judgment” is defined as “[a] court’s last action that settles the rights of the parties and disposes of all issues in controversy, except for the award of costs.” Black’s Law Dictionary 847 (7th ed. 1999). The Saviks are not, therefore, collaterally estopped from seeking summary judgment.
Webb asserts that the district court erred by concluding that the parol-evidence rule bars evidence of statements establishing Webb’s alleged exclusive OPH franchise right. “[T]he application of the parol-evidence rule, premised on an examination of the contract, presents a question of law.” Lund v. Southam, 617 N.W.2d 623, 625 (Minn. App. 2000) (citations omitted). This court reviews questions of law de novo. Frost-Benco Elec. Ass’n, 358 N.W.2d at 642.
In support of his claim that he orally was granted an exclusive right as part of his franchise, Webb provides the deposition testimony of an individual who was an OPH franchising agent in 1977. Webb argues that parol evidence is therefore admissible here because the parol-evidence rule “does not operate to exclude evidence of an oral agreement where both parties to a contract admit that the oral agreement was indeed made,” citing Selover v. Selover, 201 Minn. 562, 566, 277 N.W. 205, 207 (1938). But Selover involves the admission of statements that were “really not in dispute” and that “do not tend to vary the document in [the] suit.” Id.; see also Hield v. Thyberg, 347 N.W.2d 503, 507 (1984) (stating that parol-evidence rule prohibits use of evidence outside of written document to vary or contradict plain terms of that document). Webb sought the admission of statements to show that the franchise agreement included an oral grant of an exclusive OPH franchise right; the parol evidence in this case, therefore, would vary the terms of the franchise agreement.
We find no exception to the parol-evidence rule in Minnesota that would allow Webb to introduce evidence of conversations with OPH representatives that vary the terms of his written franchise agreement for the purpose of establishing the contract with which he now claims the Saviks interfered. The district court did not err by concluding that the parol-evidence rule bars evidence of oral statements establishing Webb’s alleged exclusive OPH franchise right.
Webb acknowledges that he did not tell the Saviks that he had an exclusive OPH franchise right, but he contends that the district court erred by concluding that he failed to establish that the Saviks had knowledge of such a right. He argues that, under the circumstances, the Saviks should have known that Webb had an exclusive right. See Kjesbo v. Ricks, 517 N.W.2d 585, 588 n.3 (Minn. 1994)(stating that knowledge element of tortious interference with contract satisfied by showing defendant “had knowledge of facts which, if followed by a reasonable inquiry, would have led to complete disclosure of the contractual relations and rights of the parties”).
Webb argues that the Saviks had “first hand knowledge” of Webb’s alleged exclusive OPH franchise right because (1) Kenneth Savik managed Webb’s Edina-based restaurant from 1978 through February 1994, (2) Kenneth Savik knew that Webb was an OPH franchisee and was seeking to develop additional OPH restaurants, and (3) the Saviks approached shareholders in the various corporations that operated the Edina OPH restaurant, in one instance seeking to purchase McGee’s stock and in another instance asking Webb’s brother about the possibility of “entering into a partnership” for the operation of an OPH restaurant. But these facts do not compel the conclusion that the Saviks knew or should have known about Webb’s alleged exclusive OPH franchise right; rather, they only suggest that the parties were pursuing their own economic interests and that the Saviks wanted an ownership interest in an OPH restaurant.
Additionally, Webb admits that he believed the franchise rights belonged sequentially to the various Edina OPH operating entities and that he did not know until March 1994 that he personally was the franchisee and therefore had the alleged exclusive OPH franchise right. The Saviks met with OPH representatives regarding the purchase of a franchise in February 1994. The district court noted that if Webb himself did not know until March 1994 that he personally had the alleged exclusive OPH franchise right, the court was “at a loss” as to how the Saviks could have had such knowledge when they sought an OPH franchise a month earlier. We share the district court’s reaction. The district court, therefore, did not err by concluding that Webb failed to establish that the Saviks had knowledge of Webb’s alleged exclusive franchise right when they met with representatives of OPH to discuss the purchase of a franchise.