may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Thomas R. Kleist, et al.,
L. John Alwin, et al.,
Filed April 22, 1997
Affirmed in part and reversed in part
Hennepin County District Court
File No. CT-95-11262
John M. Koneck, Fredrikson & Byron, P.A., 1100 International Centre, 900 Second Avenue South, Minneapolis, MN 55402 (for Respondents)
Karl L. Cambronne, Becky L. Erickson, Chestnut & Brooks, P.A., 3700 Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, MN 55402 (for Appellants)
Considered and decided by Norton, Presiding Judge, Peterson, Judge, and Mulally, Judge.[*]
Appellants argue that the trial court erred by concluding that the disclosure statement created a warranty covering defective fireplaces in this residential home sale. Respondents challenge the trial court's rejection of their negligent misrepresentation claim and exclusion of evidence regarding appellants' use of the fireplaces.
The trial court erred by construing the Alwins' disclosure statement as a warranty. The trial court did not abuse its discretion by excluding evidence regarding the use of the fireplaces and properly rejected appellants' negligent misrepresentation claim. We affirm in part and reverse in part.
Following a bench trial, the court ruled that the Alwins breached a warranty contained in the disclosure statement because the fireplaces were not in reasonable working order. The court ruled that there was no fraud or negligent misrepresentation because the fireplace problems were a latent defect nondiscoverable by either party and awarded the Kleists the cost of repair plus court costs.
The Alwins argue that the trial court erred by concluding that the disclosure statement contained a warranty covering the fireplaces. "The construction and effect of a contract are questions of law for the court * * * ." Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). When reviewing a trial court's decision on a purely legal issue, this court is not bound by and need not give deference to the trial court's decision. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).
The trial court construed the disclosure statement as a warranty because the language provided that the fireplace and fireplace mechanisms would be "in working order and shall be at the time of closing." The trial court interpreted the phrase "working order" to mean reasonable working order, meaning free of defects such as cracks. The court acknowledged that the disclosure statement said it was not a warranty of any kind, but said that a reference in the disclosure statement to the purchase agreement overrode this disclaimer language. The court then read the Alwins' disclosure statement as an addendum to the purchase agreement.
The Kleists allege that the trial court properly read the purchase agreement and disclosure statement together because they were executed at the same time, by the same parties, relating to the same transaction. See Farrell v. Johnson, 442 N.W.2d 805, 806-07 (Minn. App. 1989) (holding that sales agreement and closing agreement, which were executed at same time and related to same transaction, must be considered together since they are one contract or instrument in the eyes of the law). Although the purchase agreement and disclosure statement both pertain to the condition of the home, they do not both relate to the actual contract of sale and, therefore, should not be read together.
Moreover, the trial court erred by reading the disclosure statement and purchase agreement as one contract because the disclosure statement states that it is not part of a contract or a warranty. By its language, the purchase agreement consists of "any attached exhibits and any addenda or amendments"; the disclosure statement is neither an enumerated part of the contract nor is it labeled as an addendum. The Alwins correctly observe that the purchase agreement provides that the entire contract is six pages long: the three-page original purchase agreement plus three one-page documents labeled as addenda.
Furthermore, the disclosure statement is ambiguous because in one section it states, "This disclosure is not a warranty of any kind by the Seller(s)," while in another it states that fireplaces "are in working order and shall be at time of closing." When a document is reasonably susceptible of more than one meaning, an ambiguity exists, and courts may consider extrinsic evidence of intent to interpret the contract. Blattner v. Forster, 322 N.W.2d 319, 321 (Minn. 1982). The court should avoid interpretation of a contract that renders a provision meaningless and, to that end, must construe the contract as a whole and attempt to harmonize all clauses. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525-26 (Minn. 1990).
The Kleists contend that the disclosure statement's provision that the fireplaces "are in working order and shall be at time of closing" must be construed as a warranty or it is meaningless. We disagree. The purpose of the disclosure statement is to provide buyers with information to use when "deciding whether and on what terms to purchase the subject property." Moreover, the plain language of the disclosure statement provides only that the fireplace will be in working order at the time of closing based on the sellers' knowledge. In this case, the trial court found as a matter of law that the Alwins had no knowledge of the fireplace defects. Indeed, the Alwins burned a fire in the fireplace approximately one month before they moved out. That fact shows that, to the best of the Alwins' knowledge, the fireplaces were working on the date of closing.
The disclosure statement specifies that it "is not intended to be a part of any contract between the Buyer and Seller." The disclosure statement expressly provides that it is not a substitute for any warranty that the parties may wish to obtain. If the disclosure statement is read as a warranty, then these provisions are meaningless. Chergosky, 463 N.W.2d at 525-26 (court must harmonize different portions of contract and give all provisions meaning). To construe the disclosure statement as a warranty under these circumstances would violate the principle that the court should avoid absurd and unjust results. See American Warehousing & Distrib., Inc. v. Michael Ede Management, Inc., 414 N.W.2d 554, 557 (Minn. App. 1987) (court should interpret contract to avoid absurd results and harmonize all provisions whenever possible). Therefore, the trial court's conclusion that the disclosure statement created a warranty is erroneous.
The Kleists argue that even if the disclosure statement does not create a warranty for the fireplaces, the purchase agreement's heating system warranty covers the fireplaces. The trial court found that the purchase agreement's warranty statement that all "appliances, heating, air conditioning, wiring and plumbing systems used and located on said property will be in working order on the date of closing, except as noted on the attached addendum," did not include fireplaces. We review the trial court's construction of this warranty de novo. Turner, 276 N.W.2d at 66.
The purchase agreement "heating * * * systems" warranty is unambiguous because it is not reasonably susceptible to more than one meaning. Blattner, 322 N.W.2d at 321. It refers only to a "system" that is used for "heating." In determining what heating means in this agreement, we must give the word its plain and ordinary meaning. Employers Mut. Liab. Ins. Co. v. Eagles Lodge, 282 Minn. 477, 479, 165 N.W.2d 554, 556 (1969). The plain and ordinary meaning of the word "heater" is an "apparatus that heats or provides heat." American Heritage Dictionary 835 (3d ed. 1992). An example of a heating apparatus might be a "boiler" defined as "[a]n enclosed vessel in which water is heated and circulated, either as hot water or as steam, for heating or power." Id. at 212. Another example of a possible heating apparatus is a "furnace" defined as "[a]n enclosure in which energy in a nonthermal form is converted to heat." Id. at 736. A "fireplace," however, is not defined in terms of providing heat, but rather is defined as "[a]n open recess for holding a fire at the base of a chimney; a hearth." Id. at 685. The plain meaning of the word "fireplace" demonstrates that it is mainly an ornamental appendage of the home, not a heating system. Consequently, the Alwins did not breach the "heating * * * system" warranty due to the defective fireplaces.
2. Exclusion of Evidence.
The Kleists argue that, because the purchase agreement is ambiguous as to whether fireplaces are included within the heating warranty of the purchase agreement, the trial court incorrectly excluded extrinsic evidence regarding the Alwins' use of the fireplace for heating their home. The decision to admit or exclude evidence rests within the broad discretion of the trial court; we will not disturb its ruling unless it is based on an erroneous view of the law or constitutes an abuse of discretion. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990).
The trial court did not allow testimony regarding the Alwins' use of the fireplaces for heating because the trial court found that the "heating * * * systems" warranty in the purchase agreement unambiguously excluded fireplaces. As discussed above, we agree that the purchase agreement warranty unambiguously excluded all apparatuses, including fireplaces, whose function is not for heating. We may not interpret an unambiguous contract, but must discover its meaning from its plain language. Metropolitan Sports Facilities Comm'n v. General Mills, Inc., 470 N.W.2d 118, 123 (Minn. 1991). Therefore, the trial court did not abuse its discretion by refusing to permit testimony regarding the use of fireplaces.
3. Negligent Misrepresentation.
The Kleists allege that the trial court erroneously rejected their misrepresentation claim. The trial court found that the Alwins had no knowledge of the fireplace defect and that the defect was not discoverable by either party. Although the trial court's focus on the Alwins' knowledge of the defect was the wrong legal standard under which to dismiss a negligent misrepresentation claim, the evidence supports the dismissal of the claim on the proper legal ground.
To recover under a theory of negligent misrepresentation, the plaintiff must prove that the representor failed to exercise reasonable care or competence in communicating the pertinent information. Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn. 1986). The Kleists allege that the Alwins failed to exercise reasonable care or competence when communicating that the fireplaces were in working order because: 1) Mr. Alwin cleaned his own fireplace and had extensive experience with other fireplaces and woodburning appliances; 2) Mr. Alwin should have seen the cracked flue; 3) as a fireplace expert, Mr. Alwin should have known of the danger that this defect presented; and 4) the metal screen on top of the chimney made the discovery of the defect harder to find.
This evidence does not show that the Alwins failed to exercise reasonableness care or competence in communicating the information regarding the fireplace to the Kleists. Contrary to the Kleists' assertion, Mr. Alwin was not established as a fireplace expert. Moreover, his familiarity with the cleaning of fireplaces does not establish that he failed to exercise reasonable care in informing the Kleists that the fireplaces were in working order. Indeed, the trial court found the fireplace defects were latent and nondiscoverable. This evidence does not show that the Alwins failed to exercise reasonable care in reporting the fireplaces' condition. Therefore, the trial court properly dismissed respondents' negligent misrepresentation claim.
Affirmed in part and reversed in part.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.