This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Giles Properties, Inc.,
Donald Kukacka, et al.,
LeSueur County District Court
File No. 40-CV-05-319
Rob A. Stefonowicz, Larkin
Hoffman Daly & Lindgren, 1500
Adam J. Dowd, Schmitz, Ophaug & Dowd, LLP, 220 Division Street South, P.O. Box 237, Northfield, MN 55057-0237 (for appellants)
Considered and decided by Randall, Presiding Judge; Hudson, Judge; and Wright, Judge.
U N P U B L I S H E D O P I N I O N
On appeal from the district court’s grant of specific performance in this real-estate dispute, appellants argue that the district court’s decision is a result of its failure to apply the supreme court’s holding in Hilton v. Nelsen, 283 N.W.2d 877 (Minn. 1979). Because the totality of the circumstances supports specific performance, the district court did not abuse its discretion. We affirm.
Appellants Donald Kukacka,
now deceased, and Agnes Kukacka, husband and wife, owned approximately 80 acres
of undeveloped real property in
Respondent Giles Properties,
After executing the purchase
agreement, respondent sought government approval for the development from the
The parties’ purchase
agreement originally set a closing date on or before 30 days after preliminary
plat approval by the
On October 15, 2002, the parties met to discuss the status of the annexation process, development plans, and the closing date. Because the annexation process was still incomplete, respondent requested an extension on closing. Appellants refused to grant an extension and also refused respondent’s alternative request of signing a cancellation agreement. No agreement was reached, and the parties departed.
The October 31, 2002, closing date came and went without action by either party. Respondent continued with the annexation process. Respondent completed the first development phase, including excavation, grading, and installation of city water and sewer service lines, on the two adjacent properties during the fall and winter of 2003-2004.
Appellants were aware of respondent’s
continued development efforts despite missing the October 31, 2002, closing
deadline. Ronald Kukacka attended city annexation
hearings for the two adjacent properties.
By the fall of 2004, annexation and city approvals were complete for the two adjacent properties. Respondent extended the city’s water and sewer services to all three properties in the development plan. To this point, respondent had incurred approximately $4 million in costs.
After the water and sewer services were extended to appellant’s property (heightening its value), a “For Sale” sign appeared on the property. Appellants’ realtor contacted respondent and inquired into respondent’s interest in purchasing appellants’ property. Respondent replied that the property was already under contract for sale. The sign was subsequently removed.
In December 2004, respondent
notified appellants’ realtor of its intent to close on the property. Respondent notified appellants of a closing
set for January 21, 2005. Appellants did
not object to the notice of closing.
Respondent attended the January 2005 closing; appellants simply did not
attend. Instead, Richard Kukacka
The district court, sitting without a jury, ordered specific performance of the purchase agreement, concluding that both parties, through their words and conduct, demonstrated their intentions to be bound by the purchase agreement. The district court’s judgment and decree, entered May 15, 2006, ordered the parties to close on the sale of the property within 60 days. This appeal followed.
D E C I S I O N
Appellants argue that the
district court abused its discretion in ordering specific performance. “[S]pecific performance of a contract to
convey real estate is not a matter of absolute right, and if enforcement would
be unconscionable or inequitable, performance will not be decreed.” Boulevard
Plaza Corp. v. Campbell, 254
Appellants argue that respondent is not entitled to specific performance. Specifically, appellants assert that respondent’s breach of the purchase agreement by failing to close on October 31, 2002, and “its subsequent failure to take any action whatsoever to enforce the purchase agreement for over two and a half years” negates an award of specific performance. We disagree.
Appellants rely on an
illustration to Restatement (Second) of Contracts § 369 (1981) for
support. Section 369 states “[s]pecific
performance or an injunction may be granted in spite of a breach by the party
seeking relief, unless the breach is serious enough to discharge the other
party’s remaining duties of performance.”
In the illustration, the purchaser of farmland does not tender payment
on the closing date but instead four months later.
Respondent technically breached the purchase agreement by failing to close on October 31, 2002, but the district court found that “there is no evidence to support a determination that [respondent] and [appellants], through their conduct or words canceled, abandoned or terminated the purchase agreement.” Instead, “following [respondent’s] breach, both parties’ actions were consistent with the existence of an enforceable contract.”
Respondent presented appellants with opportunities to either continue the contract and extend the closing date, or to cancel the purchase agreement. Appellants refused to do either.
Respondent continued the annexation and approval processes while appellants tracked respondent’s progress. Richard Kukacka attended annexation hearings and respondent kept in contact with appellants’ realtor, who presumably informed appellants of all such contacts. It was not until substantial improvements were made to the adjacent properties and respondent again contacted appellants to close that appellants took action. Richard Kukacka attempted to renegotiate a higher price for the land, acknowledging that a contract still existed. Richard Kukacka attempted to manipulate the situation by giving respondent an ultimatum, either sign a cancellation agreement or pay $37,000 per acre.
The district court analyzed respondent’s request for specific performance under the five Saliterman v. Bigos factors:
(a) the contract must be established by clear, positive, and convincing evidence;
(b) it must have been made for an adequate consideration and upon terms which are otherwise fair and reasonable;
(c) it must have been induced without sharp practice, misrepresentation, or mistake;
(d) its enforcement must not cause unreasonable or disproportionate hardship or loss to the defendants or to third persons; and
(e) it must have been performed in such a manner and by the rendering of services of such a nature of under such circumstances that the beneficiary cannot be properly compensated in damages.
352 N.W.2d 494, 496 (
Appellants contend that Hilton is similar to the facts here. In Hilton,
the purchaser, an investor, intended to rent the land to a tenant farmer,
rather than farm or homestead it himself.
First, appellants argue
uniqueness of the land. Appellants argue
that their land is farmland and respondent did not intend to utilize the land
as such, thus rendering the land not unique. Simply because respondent intended
to purchase and use the land for a purpose other than its current use does not
automatically render the property not unique. Not all parcels of farmland are
suitable for development. See In re Kreger, 296 B.R. 202, 209
Second, arguing that respondent did not change its position, appellants assert that respondent failed to present evidence suggesting that the roads, water, and sewer were installed on the two adjacent parcels simply to develop appellants’ property. The record is otherwise. Respondent’s clear purpose for acquiring the two adjacent parcels was development of appellants’ land. The record indicates that respondent continued the annexation process and sought development approvals from the city to complete its overall development plans, which included all three properties, including appellants’, which was the lead property.
Third, appellants claim that unfulfilled contract conditions existed, including the requirements that appellants deliver a warranty deed and title insurance, that would allow respondent to terminate the contract if unfulfilled. Appellants presented no evidence or testimony at trial that respondent would not perform under the purchase agreement due to these unwaived contingencies. These are common contingencies in real-estate purchase agreements, and performance is typically due at the time of closing and not before.
Finally, appellants argue that a misunderstanding existed regarding the purchase price. The purchase agreement clearly stated that the purchase price excluded certain un-developable acreage, including roadways and wetlands. Although the exact figure of $816,000 was not written in the purchase agreement, Richard Kukacka testified to the history of the property and acknowledged that the property contained undevelopable acreage.
The Hilton court, based on the totality of the circumstances, declared specific performance inappropriate. In contrast, the totality of the circumstances here supports the district court’s grant of specific performance. The district court made significant findings. We find no error of law.
 John Anderson is a land-development subcontractor for
 Annexation requires the city to accept the property into its incorporated boundaries in order to receive city services, i.e., water and sewer services. Annexation occurs by orderly annexation, a process where the city and township stipulate to annexation, or annexation by ordinance, a process that does not require township approval but requires the property to be contiguous to city property.
 The costs were related to land acquisitions, infrastructure improvements, and engineering fees.