This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Zajac Farms, Inc.,
Cheryl Grueneich, et al.,
Wallace Schiele d/b/a Schiele Auction Service,
Integrity Title, Inc.,
Douglas County District Court
File No. C0-04-63
Kragness Law Office, LTD.,
Michael J. Dolan, Thomas J. Reif, Thornton, Hegg, Reif, Dolan, & Bowen, P.A., 1017 Broadway, P.O. Box 819, Alexandria, MN 56308 (for respondent Wallace Schiele, d/b/a Schiele Auction Service)
Scott T. Johnston,
Johnston Law Office,
Susan R. Anderson, Swenson, Lervick, Syverson, Anderson, Trosvig & Jacobson, P.A., 710 Broadway, P.O. Box 787, Alexandria, MN 56308 (for respondent Integrity Title, Inc.)
Considered and decided by Peterson, Presiding Judge; Randall, Judge; and Dietzen, Judge.
U N P U B L I S H E D O P I N I O N
On appeal from a grant to respondent-auction service of summary judgment on appellant’s amended complaint, appellant argues (a) the summary judgment is defective because respondent-auction service’s motion for summary judgment was made regarding appellant’s complaint, not appellant’s amended complaint, because respondent-auction service made no motion under rule 12 that could be deemed a summary-judgment motion; (b) the district court abused its discretion by striking appellant’s supplemental memorandum; (c) the district court erred in granting summary judgment on appellant’s claim that respondent-auction service was negligent in drafting the escrow agreement; (d) summary judgment was inappropriate because respondent-auction service owed appellant a fiduciary duty; and (e) respondent-auction service is liable to appellant under the Real Estate Broker’s Act. We affirm on all issues.
In February 2003, appellant Zajac Farms, Inc. entered into a contract with respondent Wallace Schiele d/b/a Schiele Auction Service (Schiele) to perform a real estate auction involving appellant’s real property. According to the terms of the agreement, Schiele was to auction the property under certain terms and conditions. As compensation for his services, Schiele was to receive a five percent auction fee of the gross selling price.
An auction was held on June 27, 2003, where respondents Cheryl and James Grueneich (the Grueneichs) were the high bidders on appellant’s property. Appellant initially refused to accept the offer because appellant hoped to obtain a higher bid. But after Schiele’s attempts at obtaining a higher bid for the property failed, appellant decided to execute a purchase agreement with the Grueneichs for the purchase of the property. The purchase agreement contained an addendum that required certain “machinery and junk” be removed from the property by the seller.
The parties closed on the property on September 17, 2003. At the time of the closing, there was some dispute among the parties as to whether the items had, in fact, been removed from the property. Because of the unsettled issues regarding the property, the parties agreed to execute an escrow agreement, whereas $8,500 was to be held in escrow by Integrity Title, Inc. (Integrity). The escrow agreement, which was drafted by Schiele, stated that the escrowed amount would be held by Integrity until certain cleanup had been completed on the property. According to the terms of the agreement, if the cleanup was properly completed, the funds would be returned to the seller. But if the cleanup was not completed by October 1, 2003, the funds would be given to the buyer. Attached to the agreement was a list of the items that were to be removed from the property.
On October 2, 2003, Integrity received a document from Schiele’s son certifying that he had inspected the property earlier that day, and that appellant had failed to remove the items from the property. Based on that certification, Integrity disbursed the escrowed funds to the Grueneichs.
Appellant brought an action against the Grueneichs, Schiele, and Integrity on October 15, 2003, seeking damages in the amount of $8,500. Schiele subsequently moved for summary judgment, which was opposed by appellant and the Grueneichs. Shortly thereafter, appellant filed a memorandum in opposition to the summary judgment motion. At the same time, appellant filed a motion to amend its complaint to allege a violation of the Minnesota Consumer Fraud Act based on the fact that Schiele was not a licensed real estate agent. On April 14, 2004, the district court heard arguments concerning the summary judgment motion only.
On June 3, 2004, appellant sought to file a supplementary memorandum in opposition to Schiele’s motion for summary judgment and in support of appellant’s motion to amend the complaint. Appellant also submitted an affidavit from appellant’s secretary/treasurer, which indicated that the information contained in the proposed amended complaint was accurate. A hearing on appellant’s motion to amend was held on June 14, 2004. The district court refused to accept portions of appellant’s supplemental memorandum and supporting affidavit as it related to issues previously addressed in the summary judgment hearing. But the court did consider the memorandum and affidavit as it related to the motion to amend. The district court then granted appellant’s request to amend the complaint, but then granted Schiele’s motion for summary judgment on all of appellant’s claims. This appeal followed.
D E C I S I O N
motions are granted when the pleadings, depositions, answers to
interrogatories, and admissions, together with any affidavits, show that there
is no genuine issue of material fact and a party is entitled to judgment as a
matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (
Appellant argues that the district court’s decision to grant its motion to amend the complaint, and thereafter treat the amended complaint as subject to the pending summary judgment motion, was an erroneous application of the Minnesota Rules of Civil Procedure. Under Minn. R. Civ. P. 15.01, a party may amend a pleading “by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.” Generally, an amendment will be allowed, except when there is prejudice to the other party, substantial delay will result, or the amendment does not state a cognizable claim. Envall v. Indep. Sch. Dist. No. 704, 399 N.W.2d 593, 597 (Minn. App. 1987), review denied (Minn. Mar. 25, 1987).
Here, the record reflects that after Schiele moved for summary judgment on appellant’s original complaint, appellant moved for leave to amend the complaint. The district court granted appellant’s motion to amend the complaint, but then granted Schiele’s motion for summary judgment on all claims made by appellant. In dismissing the amended portion of the complaint, the district court stated:
Rule 12.03 of the Minnesota Rules of Civil Procedure allows the Court to consider [the amended portion of the complaint] as part of this summary judgment motion. The Court may simply grant a motion for summary judgment when a count fails to state a claim upon which relief may be granted to the [appellant].
Appellant argues that the district court erred by dismissing the amended complaint because Schiele never made a motion to dismiss the amended complaint under rule 12.03. We disagree. Although the district court stated that appellant’s motion to amend the complaint failed to state a cause of action, the district court did not dismiss the amended complaint under rule 12.03. Instead, the district court’s order was a summary judgment dismissal of appellant’s amended complaint. Moreover, a district court may, sua sponte, grant summary judgment if the court would have granted summary judgment on a party’s motion. See Septran, Inc. v. Independent Sch. Dist. No. 271, 555 N.W.2d 915, 920 (Minn. App. 1996), review denied (Minn. Feb. 26, 1997). Accordingly, the district court’s order, granting summary judgment in favor of Schiele, was not an erroneous application of the rules of civil procedure.
Appellant argues that because the supplemental memorandum and affidavit were filed within the Minnesota Rules of Civil Procedure’s time limits for appellant’s motion to amend the complaint, the district court abused its discretion by striking appellant’s supplemental documents. Appellant mischaracterizes the district court’s ruling. The record shows that the district court considered appellant’s supplemental memorandum and affidavit so far as it concerned appellant’s motion to amend the complaint.
However, the district court did strike the supplemental memorandum and affidavit as far as it pertained to the summary judgment motion. The summary judgment motion was heard on April 14, 2004, and the district court took the matter under advisement at that time. Appellant attempted to submit the supplemental memorandum and affidavit for the summary judgment motion almost two months after the matter was heard. Because the record was closed on that matter, the district court was not obligated to accept any further arguments concerning the summary judgment motion. The district court properly exercised its discretion with respect to appellant’s supplemental memorandum and affidavit.
argues that the district court erred in granting summary judgment on
appellant’s claim that Schiele was
negligent in drafting the escrow agreement.
A defendant is entitled to summary judgment as a matter of law
when the record reflects a complete lack of proof on an essential element of
the plaintiff’s claim. See Nicollet
Restoration, Inc. v. City of
that Schiele owed a legal duty to appellant because Schiele was acting as
appellant’s broker when he signed the contract to auction appellant’s property. We are
not persuaded. A broker’s
duty to a client is to exercise the degree of care and skill usually exercised
by members of the profession under similar circumstances.
Appellant also contends that summary judgment was inappropriate because Schiele, as appellant’s real estate agent, owed appellant a fiduciary duty. Appellant argues that Schiele breached this duty to appellant when Schiele’s son met with the Grueneichs on October 2, 2003, to discuss the property, and then later certified to Integrity that the Grueneichs were entitled to the escrowed money.
Despite appellant’s assertions to the contrary, the only evidence offered by appellant in support of its position that Schiele was appellant’s real estate agent was an affidavit from the secretary/treasurer that indicates that appellant relied on Schiele, as appellant’s agent, to act in appellant’s best interests. But this mere assertion by appellant is not evidence that Schiele owed appellant a fiduciary duty. The agreement between appellant and Schiele states that Schiele was hired to auction appellant’s property. Schiele complied, and the property was sold to the Grueneichs. There is no evidence demonstrating that Schiele owed a broader duty to appellant.
Finally, appellant argues that because Schiele was not licensed
to sell real estate, Schiele is liable to appellant under the Real Estate
Broker’s Act for the five percent fee Schiele received for selling the
property. We disagree. The Real Estate Broker’s Act does not create
a private cause of action. Semrad v. Edina Realty, Inc., 493 N.W.2d
528, 532 (
Appellant further contends that Schiele is liable to appellant under the Consumer Fraud Act because Schiele held himself out as a licensed real estate agent. In fact, Schiele was not actually a licensed agent. Despite the fact that Schiele was not a licensed agent, under the Consumer Fraud Act, the only party who would be in a position to claim injury as a result of alleged false advertising would be the buyer. Appellant here was the seller, not the buyer. Appellant has a claim for his escrow but it is not against Schiele under the Consumer Fraud Act. Appellant’s claim for the $8,500 in escrow on grounds that it substantially performed the cleanup is still alive, has yet to be litigated, and is not affected by our affirming the district court on the only issue before us, namely, the district court’s dismissal of appellant’s claim (on various grounds) that Schiele had to return the real estate commission.
 Integrity and the Grueneichs are not parties to this appeal.