may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Joseph L. Posch, Sr., Trust,
Steven Kurtz, et al.,
Steven Kurtz, et al., third-party plaintiffs,
Steven Baklaich, third-party defendant,
Filed January 21, 1997
Stearns County District Court
File Nos. C7-95-540, C0-94-1857
Mark McKeon, Willenbring, Dahl, Wocken & Zimmermann, Red River at Main, PO Box 417, Cold Spring, MN 56320-0417 (for Appellants)
John T. Lund, Schmidt and Lund, 11 North Seventh Avenue, St. Cloud, MN 56303 (for Respondent Joseph L. Posch, Sr., Trust)
James F. Mewborn, Dyanna L. Oian, Arthur, Chapman, McDonough, Kettering, Smetak, and Pikala, P.A., 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214 (for Respondent Baklaich)
Considered and decided by Lansing, Presiding Judge, Huspeni, Judge, and Norton, Judge.
Appellants challenge summary judgment, claiming that genuine issues of fact still exist on their claims of misrepresentation, fraud, promissory estoppel, and breach of an option contract. We affirm.
After Posch died, the Kurtzes discovered that he had conveyed the farm to a trust. The trustee listed the farm for sale with respondent Steve Baklaich. The listing agreement gave Baklaich the exclusive right to sell the farm for the price of $109,900. When the Kurtzes offered $70,000, the Trust rejected the offer and told Baklaich that it would not make a counteroffer, because it believed the initial offer was too low. Baklaich then returned the Kurtzes' earnest money. The Kurtzes asked Baklaich to keep them informed when other buyers made offers on the farm. Baklaich told the Kurtzes, "I'd let them know if any serious buyers came up or if there was an offer on the property." But the trustee later told Baklaich to stop discussing the sale of the property with the Kurtzes.
When Baklaich received a $90,000 offer from the Fishers, the Trust presented a counteroffer of $105,000. While discussing the Fishers' offer with the Trust, Baklaich asked the Trust if it was interested in extending an offer of first refusal to the Kurtzes, given that they had made the earlier offer and a new offer from another party was currently on the table. The Trust was not interested in pursuing another offer from the Kurtzes. The trustee felt the Kurtzes had taken their opportunity to make an offer and, once done, she had no further obligation to go forward with them. The Kurtzes refused to believe that the farm had been sold until they received notice of an unlawful detainer action that the Trust had brought against them.
The Kurtzes counterclaimed for breach of an option contract, negligent misrepresentation, promissory estoppel, and fraud. The Trust brought a cross-claim against Baklaich. The Kurtzes also brought a separate suit against Baklaich. The district court heard cross-motions for summary judgment and granted summary judgment in favor of the Trust and Baklaich.
The Kurtzes contend they raised genuine issues of fact on their fraud claim. We disagree. To raise a prima facie case of fraud, the Kurtzes must show that Baklaich made a false representation of a past or existing material fact susceptible of knowledge; Baklaich made the representation with knowledge of its falsity or without knowledge of whether it was true or false, but with the intent to induce another to act on it; and the representation caused the Kurtzes to act in reliance on it to their pecuniary damage. Housing & Redev. Auth. v. Alexander, 437 N.W.2d 97, 101 (Minn. App. 1989) (citing test set forth in Burns v. Valene, 298 Minn. 257, 261, 214 N.W.2d 686, 689 (1974)), review denied (Minn. May 24, 1989).
The Kurtzes contend Baklaich misrepresented the Trust's intent to inform them of any other offers on the farm. But "[s]tatements made with an intent to act in the future are insufficient to constitute actionable fraud." Hayes v. Northwood Panelboard Co., 415 N.W.2d 687, 690 (Minn. App. 1987), review denied (Minn. Jan. 28, 1988). Fraud requires affirmative evidence that the promisor had "no intention to perform" at the time he made the promise. Id. Baklaich testified, however, that, at the time he told the Kurtzes that he would keep them informed of any serious third-party offers, he had every intention of doing so. He did not have the necessary intent at the time he made the statements to have committed fraud. Furthermore, because the record shows that Baklaich made the statements in good faith, with the intention of carrying them out, "the fact that [the promise] is subsequently broken does not give rise to a cause of action for fraud." Id. We note further that Baklaich's agreement to inform the Kurtzes of serious buyers was not equivalent to telling the Kurtzes the amounts of the third-party offers. Even though the Kurtzes have interpreted his statements to that effect, he made no such representations to them. Indeed, Baklaich knew that the amounts of the offers were confidential information according to the terms of the listing agreement. Consequently, the Kurtzes do not have a cause of action against the Trust simply because Baklaich followed the Trust's instructions not to discuss the sale with the Kurtzes any longer.
The Kurtzes also contend Baklaich misrepresented his authority to speak on behalf of the Trust when he made the remarks mentioned above. Again, however, the record contains no evidence to support their theory that, at the time he spoke, Baklaich knew he had no authority, was unsure of his authority, or somehow intended to mislead the Kurtzes about his authority. On the contrary, the only evidence in the record shows that Baklaich honestly acted within his role as realtor for the Trust when he said he would keep the Kurtzes informed. Although that situation changed later, we must consider his intent at the time he made the statement. That event viewed alone, for purposes of our analysis here, is not grounds for a fraud claim. See Alexander, 437 N.W.2d at 101 (to be actionable, misrepresentation must be made with knowledge of its falsity or without knowing its truth or falsity, but with intent to induce reliance).
The district court properly granted summary judgment on the fraud claim.
2. Negligent misrepresentation
The Kurtzes contend summary judgment was improper on the negligent misrepresentation claim, because issues of material fact exist over whether Baklaich and the Trust used reasonable care when communicating with the Kurtzes about the sale. As evidence of negligent misrepresentation, the Kurtzes allege that Baklaich told them he would inform them of other offers on the farm and they could then tender a counter-offer. For purposes of summary judgment, we must view the evidence in a light most favorable to the Kurtzes, the party against whom judgment was granted, and assume that Baklaich made these statements. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
A negligent misrepresentation occurs when a person shares information without first discovering or communicating certain information that the ordinary person in his/her position would have discovered or communicated. Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn. 1986). This standard of care applies only to individuals who supply information to guide others in the course of a transaction in which one has a pecuniary interest or in the course of one's business or employment. Id.; Restatement (Second) of Torts § 552 (1977).
The flaw in the Kurtzes' argument is that Baklaich did not owe them a duty. Liability for negligent misrepresentation is limited to cases where the business person manifests an intent to provide information for the type of use that ultimately results in the plaintiff's loss. Restatement (Second) of Torts § 552(2)(a) and cmt. a. Baklaich was not the Kurtzes' agent, but rather was the realtor for the Trust. The "dual agency" provision of the listing agreement does not apply to impose any duties upon Baklaich with respect to the Kurtzes, because they never reached the level of "buyer;" they simply made a bid on the farm. Cf. Florenzano, 387 N.W.2d at 175 (holding insurance agent liable for negligent misrepresentation after he gave his clients incomplete and unreliable information). Consequently, Baklaich owed his duty of care to the Trust.
Furthermore, Baklaich made a true statement when he told the Kurtzes that he would inform them of other buyers. It was the trustee that later decided not to involve the Kurtzes any longer and told Baklaich not to speak with them. A strong factor in that decision was the Kurtzes' initial low offer of $70,000 and later comment that $85,000 would be their highest offer. The Trust concluded that the bid demonstrated their lack of willingness to be a serious buyer and offer a reasonable price for the farm. The Trust determined that it had met its duty by initially offering the Kurtzes the opportunity to make an offer on the farm. Given these facts in the record, neither the Trust nor Baklaich owed a duty to the Kurtzes. Summary judgment was proper.
3. Promissory estoppel
The Kurtzes next claim a fact issue exists over their promissory estoppel claim. We disagree. Promissory estoppel implies "a contract in law where none exists in fact." Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981). A party claiming promissory estoppel must establish four elements: a clear and definite promise; the promisor intended to induce reliance on the promise; the claimant did in fact rely on the promise; and justice requires enforcement of the promise. Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 372 (Minn. 1995); Restatement (Second) of Contracts § 90 (1981).
The Kurtzes base their claim on Baklaich's comment that he would inform the Kurtzes of any "serious buyers" or "if there was an offer on the property." At the outset, we consider it questionable that this comment was a clear and definite promise. Ruud, 526 N.W.2d at 372. Even if it were, however, the record contains no evidence that Baklaich or the Trust sought to induce the Kurtzes to rely on this statement to their detriment. If anything, Baklaich was acting out of courtesy by offering to keep the Kurtzes informed of other serious buyers. Nothing he said or did prevented the Kurtzes from making another offer to the Trust. Yet they failed to do so. Even after learning that the Fishers had offered $105,000 for the farm, the Kurtzes still refused to tender a counteroffer until they saw the Fishers' purchase agreement. Neither the Trust nor the realtor gave them a copy, because it was a confidential document under the specific terms of the listing agreement. Justice did not require enforcement of the alleged promise here, because the record shows that the Kurtzes had ample opportunity to help themselves in this situation, yet failed to do so.
Finally, we are not persuaded by the Kurtzes' argument that the district court made impermissible "findings" on the elements of promissory estoppel before it granted summary judgment. In evaluating the promissory estoppel issue, the district court merely discussed the elements and determined that no facts existed to support their claim.
4. Breach of an option contract
The Kurtzes allege that an option contract existed, allowing them to make a counteroffer to purchase the farm. We disagree. "An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer." Restatement (Second) of Contracts § 25 (1981). The Kurtzes have not shown that they formed a contract with the Trust, however. The formation of any contract requires an offer and an unconditional acceptance. St. Paul Fire & Marine Ins. Co. v. Bierwerth, 285 Minn. 310, 317, 175 N.W.2d 136, 141 (1969). A party's outward manifestation of assent to the contract is determinative of contract formation, rather than the party's subjective intent. Speckel v. Perkins, 364 N.W.2d 890, 893 (Minn. App. 1985) (citing Markmann v. H. A. Bruntjen Co., 249 Minn. 281, 287, 81 N.W.2d 858, 862 (1957)). In challenging summary judgment, the Kurtzes have not presented any facts showing that they reached any agreement with the Trust over an option contract. The law requires the Kurtzes to have verbalized or somehow communicated their intent to contract; their mere internalized intentions are not sufficient. See id. (requiring outward sign of assent to contract). The lack of an objective manifestation of mutual assent is fatal to their claim. See Bierwerth, 285 Minn. at 317, 175 N.W.2d at 141 (requiring offer and acceptance for valid contract). Summary judgment was proper.