This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Gary Otte,



LeRoy Olmschenk d/b/a

Olmschenk Construction Company,


Filed December 31, 1996


Schumacher, Judge

Stearns County District Court

File No. C1953924

David Bradley Olsen, Scott A. Neilson, Henson & Efron, P.A., 1200 Title Insurance Building, 400 Second Avenue South, Minneapolis, MN 55401 (for Respondent)

Jerry O. Relph, Hughes, Thoreen, Relph & Hanson, P.A., 110 South Sixth Avenue, Suite 200, Post Office Box 1718, St. Cloud, MN 56302-1718 (for Appellant)

Considered and decided by Schumacher, Presiding Judge, Klaphake, Judge, and Forsberg, Judge.[*]



LeRoy Olmschenk d/b/a Olmschenk Construction Company appeals from summary judgment, arguing that an agreement between him and respondent Gary Otte was conditioned on Olmschenk's ability to pay. We affirm.


In 1988, Olmschenk contracted to build a house for Otte. In 1993, Otte discovered defects with the fireplace, chimney, and ceiling. Otte asked Olmschenk to cure the defects, but Olmschenk failed to do so.

In 1995, Otte's attorney, David Olsen, began settlement negotiations with Olmschenk's attorney, Mark Uphus. Olsen offered by letter to settle the dispute for $10,482.86. Uphus responded with the following letter, dated May 26, 1995:

Despite my client's extreme reluctance for the several reasons related to you in my recent letter, my client agrees to make payment of the settlement you have requested, $10,482.86, on the conditions that your client gives him and his firm a release of all claims arising from or related to this project and that he can have 30 days within which to raise the money.

In the event the settlement is not actually completed and your clients have not actually received the settlement funds within 30 days of the date of this letter, my client will not use this 30-day period as a basis for any defense which is based on the doctrine of laches or upon any statute of limitation which could hereafter be deemed applicable.

The letter indicates that a copy of it was sent to Olmschenk. In a letter dated June 1, 1995, Olsen responded that the terms of the May 26th letter were acceptable.

Otte did not receive payment within 30 days. Olsen learned from Uphus that Olmschenk did not have the money to pay. When Olsen requested a financial statement from Olmschenk, Olmschenk responded that he was not obligated under the May 26th letter because the agreement was contingent on his ability to raise the funds.

Otte then initiated this action, claiming, among other things, breach of the settlement agreement. Both parties moved for summary judgment. The district court concluded that the undisputed facts showed the parties agreed to a settlement for $10,482.86 that would release Olmschenk from all claims related to the dispute. The district court granted judgment in favor of Otte.


In an appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

A settlement agreement is contractual in nature, requires an offer and acceptance, and is subject to all of the other rules of contract interpretation. Beach v. Anderson, 417 N.W.2d 709, 711 (Minn. App. 1988), review denied (Minn. Mar. 23, 1988). When the parties' intent "is totally ascertainable from the writing, construction is for the court." Hunt v. IBM MidAmerican Employees Fed. Credit Union, 384 N.W.2d 853, 856 (Minn 1986). But when there is ambiguity, a factfinder may need to examine extrinsic evidence to construe the agreement. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979).

The test of contractual formation is an objective one, to be judged by the words and actions of the parties and not by their subjective mental intent.

Hill v. Okay Constr. Co., 312 Minn. 324, 332, 252 N.W.2d 107, 114 (1977). Any ambiguity in the May 26th letter must be construed against Olmschenk. See Cherne Indus. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 89 (Minn. 1979) (any alleged ambiguity must be construed against drafter).

Olmschenk contends that the settlement agreement included a condition precedent that was not met. He contends Uphus's May 26th letter conditioned the formation of the contract on Olmschenk's ability to raise the funds within 30 days. Olmschenk points to the second paragraph of the May 26th letter, claiming it shows that he contemplated not being able to raise the funds and the agreement was therefore contingent on that fact.

We agree with the district court that the parties' agreement did not contain a condition precedent. An objective reading of the parties' correspondence shows that Olmschenk agreed to pay $10,482.91 for a release of all claims and that he was given 30 days in which to pay. The inclusion of the second paragraph does not change our analysis. Even in the absence of a condition precedent, the tolling of the statute of limitations could have been included to protect Otte in case he was forced to pursue his rights on the underlying claim because the settlement agreement's validity was attacked for some reason. Olmschenk does not point to any genuine issues of material fact and the district court did not err in its application of contract law.


[ ]* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.