This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
Continental Property Group, Inc.,
TCF Financial Corporation,
Filed May 6, 2003
Hennepin County District Court
File No. CT01419
William R. Skolnick, Rolin L. Cargill III, Skolnick & Associates, P.A., 2100 Rand Tower, 527 Marquette Avenue South, Minneapolis, MN 55402 (for appellant)
Timothy D. Kelly, Tracey L. Baubie, Kelly & Berens, P.A., 3720 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)
Considered and decided by Lansing, Presiding Judge, Kalitowski, Judge, and Klaphake, Judge.
Appellant Continental Property Group, Inc. (CPG) challenges the district court’s grant of summary judgment to TCF Financial Corporation (TCF). CPG argues that genuine issues of material fact preclude the district court from determining that the parties failed to establish a joint venture agreement and that, because of this error, CPG was deprived of its right to a jury trial. Because the district court did not err in finding that the parties had failed to satisfy the four elements necessary to a joint venture, we affirm.
The appellate court reviews a summary judgment to determine whether there are any genuine issues of material fact and whether the district court properly applied the law. Minn. R. Civ. P. 56.03. “On appeal, the 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). The district court accepted as true all of the facts alleged by CPG for purposes of summary judgment; neither party has challenged the district court’s findings. Thus, the question before this court is limited to whether the district court misapplied the law by concluding that CPG failed to establish that a joint venture was formed between the parties.
The party claiming that a business relationship is a joint venture must demonstrate four elements:
(a) Contribution–the parties must combine their money, property, time, or skill in some common undertaking, but the contribution of each need not be equal or of the same nature.
(b) Joint proprietorship and control–there must be a proprietary interest and right of mutual control over the subject matter of the property engaged therein.
(c) Sharing of profits but not necessarily of losses–there must be an express or implied agreement for the sharing of profits (aside from profits received in payment of wages as an employee) but not necessarily of the losses.
(d) Contract–there must be a contract, whether express or implied, showing that a joint adventure was in fact entered into.
Rehnberg v. Minn. Homes, 236 Minn. 230, 235, 52 N.W.2d 454, 457 (1952). The district court concluded that because CPG failed to prove as a matter of law that the parties had a profit-sharing arrangement, no joint venture was formed. See id. (holding that all four elements must be present).
Relying on Am. States Ins. Co. v. Ankrum, 651 N.W.2d 513, 522 (Minn. App. 2002), CPG argues that the issue of whether a joint venture exists is generally a question for the fact finder. Where facts are undisputed, however, the issue of whether a joint venture exists is a matter of law. Hansen v. St. Paul Metro Treatment Ctr., Inc., 609 N.W.2d 625, 627 (Minn. App. 2000), review denied (Minn. July 25, 2000); Weber v. Goetzke, 371 N.W.2d 611, 616 (Minn. App. 1985) (concluding that trial court erred in submitting question of joint venture to jury, where as a matter of law, undisputed facts did not support finding of joint venture), review denied (Minn. Sept. 26, 1985). For purposes of review, we accept, as did the district court, all of CPG’s allegations as true. Even reviewing the evidence in the light most favorable to CPG, we conclude that as a matter of law, the elements of contract and profit sharing are lacking and thus no joint venture was formed
The essence of a contract is a promise made by mutual assent by the parties to the contract. Crince v. Kulzer, 498 N.W.2d 55, 57 (Minn. App. 1993). A signed agreement is not necessary to form a binding contract. Powell v. MVE Holdings, Inc., 626 N.W.2d 451, 462 (Minn. App. 2001), review denied (Minn. July 24, 2001). The offeror, however, must receive notification of the offeree’s acceptance of the essential terms of the contract. 451 Corp. v. Pension Sys. for Policemen & Firemen, 310 N.W.2d 922, 924 (Minn. 1981). An agreement to negotiate in good faith to produce a contract is not a complete and final agreement. Lindgren v. Clearwater Nat’l Corp., 517 N.W.2d 574, 574 (Minn. 1994). Where essential terms of a contract are still to be settled or further action is contemplated before an agreement can be concluded, no contract is formed. See 451 Corp., 310 N.W.2d at 924-25; Am. Fed. of State, County & Mun. Employees v. City of St. Paul, 533 N.W.2d 623, 627 (Minn. App. 1995).
Although CPG asserts that the April 10, 2000, letter set forth the terms that the parties agreed to and as such completed the contract, there was no clear manifestation of agreement by TCF to those terms. On that same date, an internal memorandum between the negotiating vice president for TCF and its CEO questioned whether certain terms were acceptable. Essential terms, such as the rent escalator clause and the buy-sell mechanism to exit the arrangement, were not fixed or were changed during the exchange of letters between the parties. Thus, the parties did not reach agreement as to how to terminate their agreement, what their relative financial responsibilities would be and, as such, what would be the relative economic benefit to each party. Further, serious environmental issues remained to be resolved. We conclude, therefore, that no contract was formed.
2. Profit Sharing
The district court granted summary judgment based on its conclusion that to the extent that the parties entered into an agreement for a joint venture, the element of profit sharing was missing. CPG asserts that the below-market rate of rent that TCF would have enjoyed under the agreement was just a different way to pay out profit, relying on Hammel v. Feigh, 143 Minn. 115, 117, 173 N.W. 570, 570 (1919) (stating that division of anticipated profits can be made on such basis as parties agree to in their contract). CPG’s reliance on Hammel is misplaced. The Hammel court held that the parties can agree in various ways to the division of profits, but ultimately, it is still profits that must be divided. Id.
The element of profit sharing must be just that – a share of actual profits. See Ringier Am., Inc. v. Land O’Lakes, Inc., 106 F.3d 825, 828-29 (8th Cir. 1997) (concluding that receipt of 20% of profits in lieu of publishing fee not profit sharing); Treichel v. Adams, 280 Minn. 132, 135-36, 158 N.W.2d 263, 266 (1968) (holding repayment of debt out of profits not profit sharing); Rehnberg, 236 Minn. at 236, 52 N.W. 2d at 457 (holding that payment in form of or in lieu of wages not profit sharing); see also Anderson v. Rothschild Fin. Corp., 1993 WL 319066 *4 (Minn. App. 1993), review denied (Minn. Oct. 28, 1993) (holding that fixed percentage of rents not equivalent to sharing of profits). CPG describes the arrangement here as a sharing of profits in the form of reduced rents because the rent reduction is based on a capitalization rate, which in turn posits a proposed return on equity. But this arrangement is speculative and does not constitute an actual sharing of profits. Further, the parties’ negotiations make clear that no future division of profits would occur; the outstanding proposal had CPG as sole owner of the project and the proposed buy-sell arrangement would reimburse TCF for its project expenses, without even interest.
The district court did not err in concluding that, by law, no joint venture was formed. Because we decide that the grant of summary judgment was appropriate, we do not reach CPG’s argument that it was wrongfully denied a jury trial.
3. Attorney Fees
TCF moved for an award of attorney fees pursuant to Minn. Stat. § 549.211 (2002). The decision on this motion was deferred to the panel.
Minn. Stat. § 549.211 (2002) permits an award of attorney fees upon a showing that a party’s actions in a civil lawsuit were done for an improper purpose, such as to harass, cause needless delay, or increase costs, or that claims and defenses raised by a party are frivolous or without basis in law. The party moving for imposition of attorney fees has the burden of proving the improper purpose or frivolous nature of the other party’s actions. Uselman v. Uselman, 464 N.W.2d 130, 140 (Minn. 1990). This court in its discretion may award fees under the statute. Allstate Ins. Co. v. Allen, 590 N.W.2d 820, 823 (Minn. App. 1999). Generally, sanctions are not imposed where a party has an objectively reasonable basis for pursuing a claim or position or where an attorney could reasonably believe that a pleading is well grounded in law and fact. Leonard v. Northwest Airlines, Inc., 605 N.W.2d 425, 432 (Minn. App. 2000), review denied (Minn. Apr. 18, 2000).
TCF’s first basis for its motion is the allegation that CPG’s owner, Bradley Hoyt, has previously been a party in frivolous lawsuits where sanctions have been awarded and that this shows a pattern of behavior that should subject him to sanctions. Conduct in previous litigation, however, is irrelevant to an award of attorney fees in another action. Gary Builders Supply, Inc. v. Menard, Inc., 378 N.W.2d 98, 101 (Minn. App. 1985).
TCF’s second basis is that because CPG did not appeal the district court’s factual finding made after the bench trial, that no contract existed between the parties, it is precluded from challenging the summary judgment. TCF argues that the district court’s finding effectively buttresses its previous conclusion that no joint venture existed and because CPG did not challenge the finding, its appeal is frivolous. TCF ignores, however, the fact that CPG sought a new trial on the joint venture issue, and in its appeal, argued that the findings of the bench trial should not have res judicata effect, should its appeal be successful.
Finally, TCF asserts that the law of joint venture is so well settled in Minnesota that CPG’s position that below market value rent is the equivalent of profit sharing is frivolous. Although TCF is correct in saying that Minnesota case law has affirmed that a fixed payment cannot be a share of profits, the particular circumstance of below-market rental has apparently not been before the courts. The mere fact that a party is unsuccessful in appeal does not warrant an award of fees to the other party. Leonard, 605 N.W.2d at 433. A position must be totally unfounded to support an award of bad faith attorney fees. Bergmann v. Lee Data Corp., 467 N.W.2d 636, 641 (Minn. App. 1991), review denied (Minn. May 23, 1991). Therefore, no basis exists for awarding attorney fees to TCF on appeal.
Affirmed; motion denied.
 Uselman was decided under Minn. Stat. § 549.21 (1982), which contained language similar to the current Minn. Stat. § 549.211.