This opinion will be unpublished and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
Robert Londo, et al.,
Filed January 27, 2004
Hennepin County District Court
File No. CT-02-7393
William Z. Pentelovitch, Maslon, Edelman, Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for appellant)
Edward T. Wahl, Faegre & Benson, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402 (for respondents)
Considered and decided by Schumacher, Presiding Judge, Randall, Judge, and Shumaker, Judge.
Appellant James Lupient sued respondents Robert and Thomas Londo for breach of contract, promissory estoppel, and unjust enrichment. The district court granted respondents’ motion for summary judgment. On appeal from summary judgment, appellant argues that (1) his performance precludes application of the statute of frauds; (2) the alleged oral contract was not so indefinite that part performance could not have occurred; (3) promissory estoppel precludes application of the statute of frauds; (4) the district court erred by concluding that respondents were not unjustly enriched; and (5) the district court erred by concluding he had unclean hands. Because the evidence of any contract creating an ownership interest is too indefinite, we affirm.
Appellant James Lupient owns and operates automobile dealerships and other businesses and properties throughout the Minneapolis/St. Paul metropolitan area. Respondents Robert and Thomas Londo are father and son, and they provide management and consulting services for automobile reconditioning businesses. Appellant owned and operated an auto body shop at Lupient Oldsmobile’s car dealership called Jim Lupient’s Oldsmobile located in Golden Valley, Minnesota. Appellant’s auto body business was unprofitable, and appellant met with Bob Londo to discuss, among other things, turning over management of his body shop to respondents.
In December of either 1991 or 1992, appellant and Bob Londo had lunch at Jax Café in Minneapolis. Appellant contends that at this meeting he and Bob Londo agreed that appellant would turn over management of his auto body shop to respondents, refer his customers to the new body shop, later close his own auto body shop, and then be given 50% ownership in the new auto body shop opened by respondents. Both sides agree that none of the alleged business terms were ever put in writing. Shortly after the Jax Café meeting, respondents did provide a manager to manage appellant’s business, Lupient Oldsmobile.
Subsequently, Thomas Londo developed a new auto body repair business called Boulevard Collision (Boulevard) in Golden Valley, Minnesota. As part of his efforts to establish the business, Tom Londo executed two written agreements with appellant. On September 29, 1993, appellant d/b/a Lupient Oldsmobile and Tom Londo d/b/a Boulevard executed a written purchase agreement where Lupient Oldsmobile sold the tract of land across the street to the Boulevard business. The purchase price was $614,196. On October 18, 1993, appellant d/b/a Lupient Oldsmobile and Tom Londo d/b/a Boulevard executed a referral agreement, which provided that Lupient Oldsmobile would refer customers to Boulevard for repair in exchange for a monthly referral fee of $1,000 or another amount to be determined by the parties, beginning on January 1, 1994. Pursuant to the land purchase agreement, respondents paid appellant the $614,196. Since the commencement of the referral agreement, Boulevard has paid $460,000 in referral fees. In May of 1994, respondents formally opened Boulevard, and appellant closed his auto body shop. Appellant did not invest any money in the Boulevard business or provide any managerial services to the business.
In a letter dated March 24, 1994, a labor attorney advised appellant to avoid “any relationship that would have you participating in the potential profits, or losses, of such an enterprise.” The letter advised appellant not to have any ownership or name affiliation with the new auto body shop after closing the Lupient Oldsmobile body shop, and to provide the union (Lupient’s auto body shop had been unionized for some time) prior notice and an opportunity to bargain over the effects of closing his shop. The letter specifically raised concerns about appellant’s potential exposure to litigation for unfair labor practices. In his deposition, appellant admitted that he and Bob Londo agreed that appellant would not become a 50% partner in the Boulevard business for five years due to possible unfair labor practice implications.
Between May 21, 1996, and August 2, 1999, the parties exchanged numerous letters and memoranda concerning the nature of appellant’s business relationship with respondents. In a letter from appellant to respondents dated May 21, 1996, appellant requested that Boulevard pay him a monthly commission of $12,000 for the next 20 years. In a letter from appellant to Bob Londo dated February 26, 1997, appellant stated that Boulevard owed him a total of $367,290 in commissions. In another letter from appellant to Bob Londo dated September 4, 1997, appellant claimed that he was a “silent partner” in the Boulevard business. The letter also proposed that appellant receive a $10,000 monthly partnership fee, and a right of first refusal to purchase the Boulevard business and the land purchased by Boulevard.
In a memorandum from appellant’s manager, Douglas Sailor, to appellant dated October 15, 1997, Sailor stated that respondents agreed to give appellant a right of first refusal to purchase the business but did not agree to appellant’s proposed terms for purchasing the business. In a memorandum from Sailor to respondents dated December 11, 1997, Sailor discussed, among other things, appellant’s right of first refusal, and a formula for profit sharing. In another memorandum from Sailor to respondents dated January 14, 1998, the memo contained the first mention of appellant owning a 49% interest in Boulevard and Boulevard’s stock.
In a letter from Tom Londo to appellant dated January 26, 1998, Londo proposed to issue appellant forty-nine percent of Boulevard’s stock and a $10,000 monthly commission as compensation for appellant’s ownership interest. In a letter from Sailor to Tom Londo dated February 27, 1998, the reference to issuing 49% of the stock is crossed out, but the letter stated that appellant would accept $120,000 as a yearly referral fee. In a letter from Tom Londo to appellant dated March 3, 1998, Londo stated he would not issue any Boulevard stock to appellant, but appellant would receive the $120,000 yearly referral fee and right of first refusal. In a letter from appellant to respondent dated August 2, 1999, appellant agreed that no stock would be issued.
On February 6, 2001, appellant sued respondents, alleging claims for breach of contract, promissory estoppel, and unjust enrichment. Appellant claimed that he was entitled to 50% ownership of the Boulevard business. On May 2, 2002, the action was filed in Hennepin County District Court. On March 25, 2003, the court issued an order granting respondents’ motion for summary judgment. The district court found that (1) the alleged oral agreement was unenforceable under the statute of frauds; (2) promissory estoppel was inapplicable because the alleged promise was too indefinite and unclear; (3) that neither party was unjustly enriched; and (4) the promissory estoppel and unjust enrichment claims were unwarranted because appellant could not demonstrate harm and the undisputed record reflected that appellant had “unclean hands.” This appeal follows.
D E C I S I O N
“On appeal from summary judgment, we must examine two questions, whether there are any genuine issues of material fact and whether the lower courts erred in their application of the law.” Cummings v. Koehnen, 568 N.W.2d 418, 420 (Minn. 1997). Summary judgment should not be entered unless “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no issue as to any material fact and that either party is entitled to judgment as a matter of law.” Minn. R. Civ. P. 56.03. “A reviewing court must view the evidence in the light most favorable to the party against whom summary judgment was granted.” Vetter v. Security Cont’l Ins. Co., 567 N.W.2d 516, 520 (Minn. 1997). Where “the parties do not dispute the relevant facts, a de novo standard of review is applied to determine whether the district court erred in its application of the law.” Medica, Inc. v. Atlantic Mut. Ins. Co., 566 N.W.2d 74, 76 (Minn. 1997).
1. Statute of Frauds
Minnesota’s statute of frauds provides:
No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:
(1) Every agreement that by its terms is not to be performed within one year from the making thereof[.]
Minn. Stat. § 513.01 (2002). The purpose of this statute is to “defend against frauds and perjuries by denying force to oral contracts of certain types which are peculiarly adaptable to those purposes.” Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 423 (Minn. App. 2000) (quoting In re Guardianship of Huesman, 354 N.W.2d 860, 863 (Minn. App. 1984)).
An agreement may be taken out of the statute of frauds by part performance, equitable estoppel, or promissory estoppel. Berg v. Carlstrom, 347 N.W.2d 809, 812 (Minn. 1984). “Part performance does not operate as an excuse to the statute of frauds . . . governing contracts not to be performed within one year.” Kramer v. Bruns, 396 N.W.2d 627, 630 (Minn. App. 1986); see also Roaderick v. Lull Eng’g Co., 296 Minn. 385, 388, 208 N.W.2d 761, 763-64 (1973) (stating that $2,000 payment or loan to plaintiff alleged to be part performance of the contract does not take an oral contract for employment out of the statute of frauds); Worwa v. Solz Enter., Inc., 307 Minn. 490, 492, 238 N.W.2d 628, 631 (1976) (stating that contract for two-year period of service could not be performed within a year).
Appellant argues that the alleged oral agreement falls outside of the statute of frauds because he fully performed his obligations under the alleged oral agreement. Specifically, appellant argues that he is entitled to 50% ownership in the Boulevard business because he fully performed when he turned over management of his business to respondents, later closed his body shop business, and then referred body shop customers to Boulevard. Respondent argues, with logic, that this contract could not be performed within a year so it falls within the statute of frauds. However, we do not need to consider this part of the controversy because the cases discussing whether part performance takes it out of the statute of frauds or whether the statute of frauds bars enforcement of the contract all hinge on “there being a contract to begin with.” Because, like the district court, we find the alleged contract too indefinite to enforce, we do not address the statute of frauds issue. There are no disputed fact issues left for a fact-finder that, depending on how they were resolved, could ever lead to an enforceable contract because, as a matter of law, what happened here was just a series of preliminary negotiations and no deal was ever struck. The district court was correct when granting judgment for respondents and in doing it as part of a summary judgment motion. As a matter of law, there never was a contract formed between these two parties. There was a sale of land, which was consummated, and there were referrals, for which referral fees were paid. Those two facts do not “deny the existence of a contract,” but neither do they, taken together, prove that there ever was one.
2. Indefinite Terms
Appellant argues that the alleged oral contract was not so indefinite it could not be enforced. We disagree. As part of the district court’s reasoning that part performance did not take the alleged oral contract out of the statute of frauds, the district court found that the alleged oral contract was “too indefinite to support specific enforcement.” The district court stated that “[t]here clearly was not a meeting of the minds at the Jax Café meeting on all the essential terms of the agreement, as evidenced by the multiple attempts by the parties to reach an agreement concerning the nature of [appellant’s] interests in the Boulevard Collision business.”
A contract does not exist unless the parties have agreed “with reasonable certainty about the same thing and on the same terms.” Peters v. Mut. Ben. Life Ins. Co., 420 N.W.2d 908, 914 (Minn. App. 1988); see also Jensen v. Taco John’s Int’l, Inc., 110 F.3d 525, 527 (8th Cir. 1997) (applying Minnesota law for proposition that an oral contract, to be enforceable, requires reasonably certain proof of parties’ intent on fundamental terms). An alleged contract “which is so vague, indefinite, and uncertain as to place the meaning and intent of the parties in the realm of speculation is void and unenforceable.” King v. Dalton Motors, Inc., 260 Minn. 124, 126, 109 N.W.2d 51, 52 (1961). Consequently, when substantial and necessary terms are left open for future negotiation, the purported contract is void. Id. Where alleged promise is vague and indefinite, claims for breach of contract, promissory estoppel, and fraud are properly dismissed. Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 372 (Minn. 1995).
Appellant claims that the correspondence between the parties was essentially settlement negotiations reflecting attempts to settle the parties’ differences. We do not disagree; the correspondence underscores the lack of definite terms concerning any initial contract. As the district court points out, the correspondence between appellant and respondents indicates that the parties failed to finalize the essential terms of any contractual relationship, and just kept on negotiating. The voluminous correspondence, taken at its written word, illustrates preliminary negotiations between the parties. The letters and the alleged oral agreement of the parties, taken together, show a lack of specifics. For example, appellant was supposed to close his business when the Boulevard business opened, but no definite time was given as to when the two eventswould occur. These events tookplace two or three years after the Jax Café meeting. Appellant was supposed to receive payment for his referrals to Boulevard. But the parties never did agree on any specific referral fees for appellant. As noted above, the correspondence was sprinkled with offers, rejections, and counteroffers. As respondents point out, the parties seemed to work out the issue of referrals on the legal basis that respondents maintain; respondents owned the Boulevard business outright, and Lupient would refer work to the business and be paid referral fees.
We conclude the district court properly granted summary judgment to respondents on the grounds that the alleged oral contract was too indefinite to specifically enforce. Put another way, as a matter of law, there was never a contract.
“Evidence offered to support or defeat a motion for summary judgment must be such evidence as would be admissible at trial.” Hopkins v. Empire Fire & Marine Ins. Co., 474 N.W.2d 209, 212 (Minn. App. 1991); Minn. R. Civ. P. 56.05. To show that the alleged contract was indefinite, the district court alludes to the extensive correspondence between appellant and respondents discussing, among other things, the terms of appellant’s referral fees and ownership interest. Appellant argues that the various items of correspondence were improperly considered by the district court. Appellant offered the correspondence as part of his opposition to respondents’ motion for summary judgment! The correspondence is part of the record, and the district court was entitled to consider it. See, e.g., Anderson v. Twin City Rapid Transit Co., 250 Minn. 167, 185-87, 84 N.W.2d 593, 605 (1957). Appellant argues that, somehow, the correspondence should not be admissible to change the terms of the alleged prior agreement. We can only note that both parties used the correspondence to bolster their respective position; both parties made it part of the record. It was not error for the district court to consider it.
4. Promissory Estoppel
Appellant argues that the district court erred by denying his claim for promissory estoppel. “Whether the evidence is sufficient to raise a fact question for the jury’s determination is a question of law to be decided de novo by the reviewing court.” Spanier v. TCF Bank Sav., 495 N.W.2d 18, 20 (Minn. App. 1993), review denied (Minn. Mar. 22, 1993). “Promissory estoppel is an equitable doctrine that ‘impl[ies]’ a contract in law where none exists in fact.” Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732, 746 (Minn. 2000). Application of promissory estoppel requires a showing that (1) there was a clear and definite promise; (2) the promisor intended to induce reliance and such reliance occurred; and (3) the promise must be enforced to prevent injustice. Olson v. Synergistic Techs. Bus. Sys. Inc., 628 N.W.2d 142, 152 (Minn. 2001).
We need not go beyond the first requirement, that the promise be clear and definite. As a matter of law, the alleged oral contract here was simply not “clear and definite” enough to support a claim for promissory estoppel.
5. Unjust Enrichment
To establish unjust enrichment, the claimant must show that the defendant has knowingly received or obtained something of value for which the defendant “in equity and good conscience” should pay. ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 306 (Minn. 1996).
Appellant argues that respondents were unjustly enriched because he fully performed. Respondents argue that they were not unjustly enriched because appellant was paid for his referrals and for the sale of land. The district court weighed the evidence and accepted respondents’ position. We do not find any abuse of discretion on this issue.
6. Unclean Hands
Appellant claims that the district court erred as a matter of law by concluding that his claims for promissory estoppel and unjust enrichment were barred by the doctrine of unclean hands. Respondents argue that appellant was barred from relief because he had unclean hands. A bar to enforcement of a contract is that it cannot be contrary to public policy. See, e.g., Vercellini v. U.S.I. Realty Co., 158 Minn. 72, 74. 196 N.W. 672, 672 (1924) (holding that a contract for the sale of stock was illegal and unenforceable when it violated securities law); Goodrich v. Northwestern Telephone Exchange Co., 161 Minn. 106, 201 N.W. 290, 292 (1924) (holding that a contract to purchase city council influence is void as against public policy);Anheuser-Busch Brewing Ass’n v. Mason, 44 Minn. 318, 321, 46 N.W. 558, 559 (1890) (holding that a contract is void as against public policy if it “would be in violation of the settled policy of the state”).
In its determination that appellant had unclean hands, the district court relied on a letter written to appellant from a labor attorney stating:
As a follow up to Monday’s meeting, I have further analyzed the matters discussed, to see if any other options are available with the respect to the Oldsmobile body shop. I have concluded that the situation is the same as we discussed. I believe that it is imperative that you avoid even the appearance of being in a joint venture relationship with the owner of the body shop. Consequently, I do not believe that you may have the Lupient name associated with such an enterprise, nor should you have any ownership interest in the operation itself. It is my understanding that you sold the land to this particular independent, which, at its own expense, has now constructed a body shop.
. . . .
[T]he current law requires that you provide the union prior notice and opportunity to bargain over the effects of your decision to shut down the body shop. I understand that there is a natural reluctance to do so, in light of the potential problems that may occur. However, the remedy for failure to bargain can be rather severe, as illustrated by the case I have sent along with this correspondence. In that case, the employer was found to have failed to bargain over the effects of its decision to shut down an operation. As a remedy, the Board imposed a back pay obligation that ran for a fairly extensive period of time. Because of this concern, I would encourage you to afford the union sufficient notice of your decision and then take appropriate steps internally to avoid having quality or theft problems.
We cannot criticize the district court for concluding that appellant “had unclean hands.”