Craig Colman, et al.,
Timothy P. Hill, Bredahl Hill, P.C., 15 Broadway, Suite 206, P.O. Box 1029, Fargo, ND 58107-1029 (for appellant)
Michelle C. Winkis, Gunhus, Grinnell, Klinger, Swenson & Guy, LTD., 215 30th Street North, P.O. Box 1077, Moorhead, MN 56561-1077 (for respondent)
Considered and decided by Schumacher, Presiding Judge, Huspeni, Judge, and Forsberg, Judge.[*]
Appellant Richard B. Jordahl challenges the district court's award of summary judgment to respondent Concordia College. The court determined that Jordahl was not the proper party to exercise the right of first refusal, and that the notice sent regarding the right of first refusal was sufficient as a matter of law. The district court also denied Concordia's motion for costs and attorney fees. Because we find no genuine issues of material fact and because the district court did not err in its application of the law, we affirm.
Jordahl is a general and sole surviving partner in Tanglewood. The settlement agreement specifically provides for assignability of the right of first refusal to Jordahl. Notice of such assignment, however, was to be recorded immediately with the Otter Tail County Recorder. It is undisputed that no assignment to Jordahl was recorded. The settlement agreement also provided for assignment of the right of first refusal to third persons; however, such assignment required the written consent of Concordia. The record reflects no consent.
Pursuant to their agreement, Concordia forwarded notice of a bona fide offer to Tanglewood Partners on November 1, 1996, by certified mail, return receipt requested. Concordia also provided to Jordahl personally an exact copy of the purchase agreement that Concordia entered into with the bona fide offeror (the Concordia/Colman agreement). The agreement indicated a purchase price of $70,000: an earnest money payment of $500, an additional $19,500 payable at closing, and a balance of $50,000 "payable over 5 years at 71/2%." On November 6, 1996, Jordahl requested and received the specific terms of the Concordia/Colman agreement. Although Jordahl claims that the information was incomplete, on November 13, 1996, he attempted to exercise the right of first refusal in the name of R. B. Jordahl/Krantz Family Trust II, and delivered two checks in the amount of $500 each, reflecting down payment on the property. On November 15, 1996, Concordia returned Jordahl's payment and purchase agreement. The record does not reveal any further communication between the parties until Jordahl attempted to exercise the right of first refusal again on March 20, 1997, this time in the name of Tanglewood Partners. Concordia rejected that offer on the grounds that the ten-day right of first refusal had expired and added a comment stating
that the notice given to Mr. Jordahl by Concordia College on November 1, 1996[,] which included an exact copy of the purchase agreement, minus the purchaser's name, is sufficient notice and satisfied Concordia's obligations under the right of refusal contained within the settlement agreement.
Jordahl brought an action to enforce his right of first refusal and Concordia moved for summary judgment. Counsel for the parties stipulated to limit the scope of the summary judgment motion to the single issue of whether Jordahl was the proper party to exercise the right of first refusal. Jordahl raised the defense that even if he was not the proper party to exercise the right of first refusal, the notice provided by Concordia was insufficient, and therefore the time to exercise the right of first refusal never expired.
The district court held that: (1) the undisputed facts supported the legal conclusion that Jordahl was not the proper party to exercise the right of first refusal, and (2) the notice sent to Jordahl regarding the right of first refusal was sufficient as a matter of law. The district court denied Concordia's motion for costs and attorney fees.
1. Proper Party
The court will not resort to construction where the intent of the parties is expressed in clear and unambiguous language; rather, the court will enforce and give effect to the contract according to its terms, in the absence of fraud or other grounds affecting enforcement according to its terms. Wurdemann v. Hjelm, 257 Minn. 450, 459, 102 N.W.2d 811, 817 (1960) (holding that an agreement constituted a lease with an option to purchase and not a contract for the sale of real property).
In this case, the settlement agreement provides for assignability, but specific conditions attach to an assignment. Jordahl first attempted to exercise the right of first refusal in the name of "R. B. Jordahl/Krantz Family Trust II." This attempt fails on two bases: there was no notice of an assignment to Jordahl recorded in the Otter Tail County Recorder's office, nor was there any indication that Concordia consented to the assignment to a third party such as the R. B. Jordahl/Krantz Family Trust II. Without that agreement, R. B. Jordahl/Krantz Family Trust II could not acquire this right of first refusal.
The intent of the parties is evidenced in the unambiguous language of the settlement agreement. That agreement provides that assignment can be made to certain named individuals upon notice being recorded with the Otter Tail County Recorder's office. No notice was recorded. The settlement agreement also provides for assignment to unnamed third parties, but only with the consent of Concordia. No consent is reflected in the record. As a matter of law, therefore, the right of first refusal was not exercised by the proper party.
2. Notice to Jordahl
Jordahl next argues that if he were not the proper party to receive notice of first refusal, the notice itself was insufficient to meet the requirement of the settlement agreement.
Jordahl complains that the price terms of the Concordia/Colman agreement are subject to varying interpretations and no monthly schedule is set forth in the offer. He also argues that the ambiguous price terms affect a significant portion of the purchase price, thus distinguishing this case from Kennedy v. Hasse, 262 Minn. 155, 114 N.W.2d 82 (1962). In Kennedy, terms similar to those here were found to be sufficient notice, but the court noted that only 10% of the purchase price was reflected in those terms. Id. at 162, 114 N.W.2d at 87. The fact that a larger percent of the purchase price in this case is subject to the five year, 71/2% terms is insufficient, we believe, to compel a decision opposite of that in Kennedy. The Concordia/Colman agreement clearly states the interest rate and the duration. Additionally, the agreement contains the description of the property to be sold, the total purchase price to be paid, the amount of cash in advance, the amount of cash required at closing, the date of closing, and the remaining balance.
Jordahl also cites Brownlee v. Ertzos, 289 Minn. 83, 182 N.W.2d 697 (1970), as supporting the argument of insufficient notice. We believe reliance on Brownlee is misplaced. While we recognize that the Brownlee court found price terms to be indefinite, the relief being sought in Brownlee was specific performance on a contract where part of the purchase price was to be financed under a contract for deed and part under a mortgage. Id. at 85-86, 182 N.W.2d at 699. The present case is distinguishable. The issue here is not whether the terms at issue--"$50,000 payable over five years at 71/2 percent"--are specifically enforceable, but rather whether these provisions provided Jordahl with sufficient notice pursuant to the settlement agreement to enable him to exercise the right of first refusal.
In deciding the issue of sufficiency of the notice, the district court found Hubbell v. Ward, 246 P.2d 468 (Wash. 1952), to be persuasive. The Hubbell agreement contained a minimum monthly payment in addition to provisions similar to those in the agreement in this case. Id. at 469. However, we do not believe that recitation of a minimal monthly payment should be considered a material term. The Concordia/Colman agreement includes the total amount financed, the interest rate, and the duration of the financing; information sufficient to provide Jordahl with notice under the settlement agreement.
Jordahl also argues that the lack of a payment schedule in the Concordia/Coleman agreement made it difficult for him to obtain financing to match the Colmans' offer. We find no merit in this contention. From the express language of the terms of the Concordia/Colman agreement, it is clear that obtaining outside financing is not necessary. Further, Jordahl's argument that the financing terms of the Concordia/Colman agreement are not specific enough to permit him to make a sufficiently exact offer also must fail. To the extent that Jordahl is complaining that he could not determine whether financing was to be by mortgage or contract for deed, that argument is irrelevant. Concordia has never taken the position that Jordahl's attempt to acquire a mortgage in lieu of a contract for deed was fatal to his ability to acquire the property under the right of first refusal.
Our review of the record convinces us that Jordahl had adequate notice of the Concordia/Colman purchase agreement.
3. Attorney Fees, Costs, and Disbursements
Concordia claims that Jordahl pursued a frivolous claim, that it has been costly for Concordia to defend the lawsuit, and that the district court erred in refusing to award costs, attorney fees, and disbursements to Concordia under Minn. Stat. § 549.21 (1996). We disagree. The standard of review in decisions on attorney fees and costs under Minn. Stat. § 549.21 is whether the district court abused its discretion. Radloff v. First American Nat'l Bank, 470 N.W.2d 154, 156 (Minn. App. 1991), review denied (Minn. July 24, 1991). We conclude that the district court properly exercised its discretion here. The record reflects that the arguments set forth by Jordahl were made in good faith. Further, we are reminded that "[s]anctions are not appropriate merely because a party does not prevail on the merits." Id. at 157 (citations omitted).
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.