This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Cottage Homesteads of America, Inc., et al.,
Filed April 11, 2006
Affirmed; motion granted
Dakota County District Court
File No. C8-05-8265
Considered and decided by Peterson, Presiding Judge, Klaphake, Judge, and Hudson, Judge.
Rita Hansen brought this action against appellants Cottage Homesteads of
America, Inc., a
By order issued June 30, 2005, the district court denied appellants’ motion for injunctive relief; the court further determined that respondent was entitled to judgment because appellants’ option had expired and because appellants had no legitimate claim against the property. By order issued August 15, 2005, the district court awarded respondent attorney fees and costs of $3,200 under Minn. Stat. § 559.217. Judgments were entered on both orders.
Because the option expired by its own terms on June 7, 2005, and because the district court did not abuse its discretion in refusing to suspend cancellation of the agreement, we affirm.
In 1998, respondent and her husband, who is now deceased, purchased a condominium unit from appellants. In connection with that purchase, they gave appellants the option to repurchase their unit. Under the terms of the repurchase option, respondent received a discount of $4,600 from the base price of $97,425, and gave appellants the option to repurchase the unit for $92,825, until the year 2040. Respondent alleges that she was induced to execute the option, which gave appellants 100% of the appreciation in her home, in exchange for an “illusory” discount of less than 5% of the purchase price; she further alleges that appellants have induced approximately 200 other senior citizens to execute identical repurchase options.
In 2004, respondent sought to rescind the repurchase option and entered into arbitration, which was dismissed after the parties negotiated a settlement. Under the terms of the settlement, appellants agreed to pay respondent, in the event that they chose to exercise the option, $92,825 plus 75% of any “appreciation” in the property. The remaining provisions of the original agreement remained in effect, including paragraph 6(b), which provided: “The Closing upon the purchase shall occur within ninety (90) days after Optionee’s Notice of Exercise[.]”
In February 2005, respondent notified appellants that she intended to sell her unit. On March 7, 2005, appellants notified respondent of their intent to exercise their option to repurchase her unit.
During the 90-day period between March 7 and June 7, 2005, the parties exchanged a series of letters in which it became clear that they disagreed over how the option price was to be calculated. The parties appointed a neutral appraiser, who valued the property at $179,500. Respondent claimed that appellants were required to pay her $157,831.25 under the terms of the settlement agreement. Respondent arrived at this figure by adding $65,006.25 (which represents 75% of the appreciation, or difference between the current value and the original purchase price) to the original purchase price of $92,825. According to respondent, appellants made a series of counteroffers but refused to tender the amount due prior to the expiration of the option or at any time thereafter.
When respondent informed appellants that their repurchase option had expired on June 7, appellants responded with an offer to pay her approximately $10,000 less than the amount she claimed was due. Respondent declined and brought this action seeking a declaration that the option had expired. Respondent thereafter amended her complaint to include a claim for cancellation of the parties’ purchase agreement and on June 15, she served a notice of cancellation under Minn. Stat. § 559.217 (2004).
D E C I S I O N
Appellants argue that the district court erred in determining that their right to purchase respondent’s property expired. They assert that they attempted to reach an agreement with respondent over the price, but that respondent refused to close and place the disputed amounts in escrow.
By its terms, the purchase agreement expired when the closing did not take place by June 7, 2005, which was 90 days after appellants notified respondent of their intent to exercise the option. While appellants claim that a closing did not occur because the parties had a legitimate dispute over the price, appellants failed to tender any amount or agree to a closing date within the 90-day period, two actions that would have given substance to their intent to purchase. Thus, the district court did not err in determining that appellants’ purchase agreement expired on June 7.
Many of appellants’ arguments on appeal assume that respondent’s initiation of these proceedings, particularly her service of the statutory cancellation notice on June 15, somehow revived or extended their option period to June 30, 2005. The statutory cancellation procedure is not exclusive and does not preclude initiation of a judicial action, such as the declaratory judgment action initiated here by respondent. Moreover, the statutory procedure for cancellation is intended to be non-judicial and quick, effective 15 days after service of the notice on the purchaser, unless the “party upon whom notice was served fully complies with the conditions in default and completes the unfulfilled conditions or secures from a court an order suspending the cancellation.” Minn. Stat. § 559.217, subd. 3(c).
Appellants claim that they attempted to comply with the default conditions by scheduling a closing during the 15-day period and offering to escrow the amount demanded by respondent. But appellants never made an unconditional tender. Rather, they placed conditions on their offers and threatened to continue with litigation. Thus, the evidence established that appellants failed to comply with the default conditions.
Because the purchase agreement expired and because the contract was properly cancelled under Minn. Stat. § 559.217, the district court did not err in disposing of this matter by granting judgment on the pleadings.
Appellants argue that the district court abused its discretion by refusing to grant them injunctive relief to suspend cancellation of the purchase agreement. Minn. Stat. § 559.217, subd. 6, allows the party upon whom notice of cancellation was served to “commence a proceeding [under section 559.211] to obtain a court order to suspend the cancellation of a purchase agreement.” Minn. Stat. § 559.211, subd. 1 (2004), in turn, provides that the district court has the authority to enter an order “temporarily restraining or enjoining further proceedings to effectuate termination of the contract.”
decision to grant or deny a temporary injunction is left to the discretion of
the district court and will not be overturned on review absent an abuse of
discretion. Carl Bolander & Sons Co. v.
(1) The nature and background of the relationship between the parties preexisting the dispute giving rise to the request for relief.
(2) The harm to be suffered by [the moving party] if the temporary restraint is denied as compared to that inflicted on [the nonmoving party] if the injunction issues[.]
(3) The likelihood that one party or the other will prevail on the merits when the fact situation is viewed in light of established precedents fixing the limits of equitable relief.
(4) The aspects of the fact situation, if any, which permit or require consideration of public policy expressed in the statutes[.]
(5) The administrative burdens involved in judicial supervision and enforcement of the temporary decree.
Dahlberg Bros., Inc.
v. Ford Motor Co., 272
Relationship of Parties
The district court determined that this factor “weighs strongly” in favor of respondent and against appellants. In particular, the court stated:
[Appellants] have taken advantage of the elderly, politely referring to them as senior citizens, for more than ten years with their unconscionable overreaching and dealing. [Appellants] are experienced and sophisticated real estate developers. [Respondent] is a 74 year old widow who was not represented when [appellants] originally induced her to sign the unconscionable repurchase option.
Appellants argue that the district court improperly focused on appellants’ relationships with other purchasers; appellants further argue that this dispute involved the parties’ settlement agreement, which respondent entered into voluntarily and while she was represented by counsel. We disagree. Given the equitable nature of the relief sought by appellants, the district court did not abuse its discretion in considering the parties’ past relationship and appellants’ business practices.
Balance of Hardships
Appellants insist that respondent’s actions prevented a closing from taking place because she rejected all of their offers and failed to deliver marketable title to them. Appellants further insist that a “bona fide dispute” existed between the parties over the purchase price, “that is, how one calculates ‘appreciation.’”
The district court determined that an injunction would only cause further delay to respondent, who had already waited four months to close on her home. The court further noted that appellants spent that time attempting to persuade respondent to “give them money to get out of her contract or sell her home to them for less than the amount due,” and that appellants “made the disingenuous argument . . . that appreciation is not the increase in the market value of the property but is the increase in value minus real estate commissions and closing costs and other expenses that have no relationship to appreciation whatsoever.” Indeed, the parties’ agreement discussed closing costs as separate from the purchase price and specifically indicated that “there shall be no brokers’ fees or commissions payable in connection with this Option Agreement.” We cannot conclude that the district court abused its discretion with respect to this factor.
Likelihood of Success on the Merits
The district court determined that this factor favors respondent because appellants “failed to pay the amount due within 90 days so their option expired.” Again, appellants insist that there was a legitimate dispute between the parties over the purchase price. Appellants further insist that the district court ignored the fact that they still had an absolute right to cure any default under Minn. Stat. § 559.217. We have already discussed and rejected these arguments.
district court found that this factor supports respondent because the
“agreement [appellants] are attempting to revive arises out of an original
contract that this Court has ruled to be unconscionable as a matter of law.” Again, appellants seek equitable relief based
on a contract that is inequitable on its face.
See Gully v. Gully, 599 N.W.2d
814, 825 (
We therefore conclude that the district court considered the appropriate factors and did not abuse its discretion in denying appellants’ request for injunctive relief. Any contract created by appellants’ exercise of their option to repurchase was cancelled by operation of Minn. Stat. § 559.217.
Respondent moves to strike a letter dated June 30, 2005, from Dakota County Abstract & Title to appellants’ attorney, and any references to and arguments in appellants’ brief that are based on this document. Because the letter was not filed with the district court until October 13, 2005, well after the appeal was filed in this case, it was not considered by the district court and is not part of the record on appeal. See Minn. R. Civ. App. P. 110.01 (providing that record on appeal consists of papers filed in district court). We therefore grant respondent’s motion to strike.
Respondent further moves for an award of $500 in attorney fees. In her motion papers, respondent indicates that her attorney informed counsel for appellants that the challenged letter was not part of the record before the district court and that it should not be included or referred to on appeal; respondent’s attorney further informed appellants’ counsel that he would move to strike any reference to the document. Respondent claims that appellants “simply did not care if they forced respondent to have to incur the expense to bring a motion to strike documents and arguments that were clearly improper.” We agree, and grant respondent’s request for $500 in attorney fees.
Affirmed; motion granted.