may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Spirit of America Corporation, an Indiana corporation,
Avon Plastics, Inc., d/b/a Master Mark,
Filed May 25, 1999
Stearns County District Court
File No. C7982321
John T. Lund, Schmidt and Lund, Daniel Building, 11 North Seventh Avenue, St. Cloud, MN 56303 (for respondent)
Considered and decided by Schumacher, Presiding Judge, Amundson, Judge, and Huspeni, Judge.
Appellant Spirit of America Corporation challenges the district court's summary judgment dismissing its breach of contract claim. Because neither the language of the contracts nor the extrinsic evidence demonstrates a meeting of the minds, we affirm.
Appellant Spirit of America Corporation (SOA) is a closely held Indiana corporation that produces plastic lawn products. After producing plastic lattice for three or four years, SOA discontinued its lattice product line and decided to sell its two lattice molds. Shortly thereafter, SOA Executive Vice President David W. Hill began negotiations regarding the molds with David Reum, CEO of respondent Avon Plastics, Inc., d/b/a Master Mark. After Master Mark and SOA reached an agreement regarding one of the lattice molds, Hill reduced the agreement to writing, and it was executed by the parties on April 17, 1995.
The agreement states that "Master Mark will have the right to purchase the Dura-Bull® lattice mold * * * currently owned by Spirit of America Corporation." According to the agreement, Master Mark was to pay SOA upon the production and shipment of lattice. The total purchase price was $120,000, and any monies paid by Master Mark to SOA were nonrefundable "in the event that the purchase is not completed by Master Mark." The agreement also states that the "mold title transfers only after the entire purchase price * * * has been paid in full" and that the "[p]urchase must be completed and paid in full within two (2) years of the date of this Agreement, in any event."
On May 1, 1995, SOA and Master Mark executed a substantially similar agreement regarding the second lattice mold. The only significant difference in the second agreement is its statement that "Master Mark will to purchase" the lattice mold. The purchase price for the second mold was $100,000. Both agreements state that they will be governed by Indiana law.
Upon the execution of the agreements, Master Mark took possession of both lattice molds. After Master Mark failed to make some payments, SOA sent numerous letters to Master Mark indicating that its account had an overdue balance. In response to one of the letters, Master Mark informed SOA that "the first tool will not be a hurdle to payoff, however, the second tool could be a leap." Despite this assurance, Master Mark failed to pay completely for either lattice mold. According to SOA, the total amount owed by Master Mark is $142,838.90. Master Mark currently retains possession of the two molds.
According to Reum, he understood the agreements to be rent-to-own contracts from the beginning of negotiations. In contrast, Hill claims that the contracts were for purchase by installment payments. Additionally, Hill has stated that the words "will to purchase" in the second agreement resulted from a typographical error and should have read "will purchase."
SOA brought a breach of contract claim against Master Mark. The district court found that there was no meeting of the minds and, therefore, no binding contracts regarding the two lattice molds, ordered summary judgment for Master Mark, and dismissed SOA's breach of contract claim. SOA appeals.
On appeal from summary judgment, an appellate court asks whether there are any issues of material fact and whether the lower court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). The reviewing court views the evidence in the light most favorable to the nonmoving party. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988).
The cardinal purpose of construing a contract is to give effect to the intention of the parties as expressed in the language they used in drafting the whole contract. Shahan v. Brinegar, 390 N.E.2d 1036, 1041 (Ind. Ct. App. 1979). The intent of the parties is ascertained from a process of synthesis in which the words and phrases are given a meaning in accordance with the obvious purpose of the contract as a whole. Jones v. City of Logansport, 436 N.E.2d 1138, 1143 (Ind. Ct. App. 1982). A contract for sale of goods includes both a present sale of goods and a contract to sell goods at a future time. Ind. Code Ann. § 26-1-2-106 (Michie 1992).
Whether a contract is ambiguous is a legal determination, which this court reviews de novo. Kleen Leen, Inc. v. Mylcraine, 369 N.E.2d 638, 640 (Ind. Ct. App. 1977). A writing is ambiguous if it is reasonably susceptible of more than one meaning. Id. at 640-41.
The express language of the two agreements does not clearly demonstrate the parties' common intent. Some of the language in the documents suggests that Master Mark agreed to purchase the molds by installment payments. For example, paragraph 7 in each agreement states that the "[p]urchase must be completed and paid in full within two (2) years of the date of this Agreement, in any event." This language could be construed to assign unambiguously to Master Mark the obligation to purchase the lattice molds.
However, other language in the agreements indicates that Master Mark was not obligated under the agreement to purchase the molds. Specifically, the first contract states that "Master Mark will have the right to purchase the * * * lattice mold" (emphasis added). The agreement does not state that Master Mark "will purchase" the lattice mold or that, under the agreement, Master Mark "agrees to purchase" the mold. Moreover, paragraph 5 of both agreements indicates that "monies paid" under the agreements are "nonrefundable in the event that the purchase is not completed by Master Mark." This language suggests that Master Mark retained the right to determine whether it would complete the purchase of the molds. For these reasons, the agreements are not unambiguously contracts for purchase by installment payments or rent-to-own agreements.
When the language of a contract is ambiguous, a court may examine extrinsic evidence, and the construction of the contract becomes a question of fact. English Coal Co. v. Durcholz, 422 N.E.2d 302, 308-09 (Ind. Ct. App. 1981). Summary judgment is appropriate if there is no genuine issue of material fact. Brockmeyer v. Fort Wayne Pub. Transp., 614 N.E.2d 605, 606 (Ind. Ct. App. 1993). Ambiguous contract language should be construed against the drafter. Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d 1307, 1313 (Ind. Ct. App. 1991).
Due to the agreements' ambiguity and the failure of extrinsic evidence to demonstrate a common intent by the parties, the district court determined that the objective manifestations of the parties' intent did not indicate that there was an agreement, even when viewed in the light most favorable to SOA. See Brant Constr. Co. v. Lumen Constr. Co., 515 N.E.2d 868, 872 (Ind. Ct. App. 1987) (holding that objective evidence supported finding of no enforceable contract).
SOA argues that the district court erred in its analysis because there are genuine issues of material fact created by the record. In support of this contention, SOA cites Hill's averments that the agreements constituted contracts for purchase. While Hill's statements may establish SOA's intent at the time that the contract was executed, they are not evidence that Master Mark intended to form a contract for purchase. It is well established that "the party resisting summary judgment must do more than rest on mere averments." DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). Accordingly, Hill's statement that SOA intended to form a contract to purchase does not establish a triable issue of fact regarding Reum and Master Mark's intention in executing the agreements.
Additionally, SOA bases its claim that Master Mark intended to purchase the lattice molds on the payments Master Mark made to SOA, and on the fact that Master Mark moved and altered the lattice molds. Those actions do not indicate that Master Mark understood the agreements to be for purchase by installment payments. Under a rent-to-own contract, Master Mark would still have to pay SOA for the use of the lattice molds until it paid the full purchase price or until the expiration of the agreements, whichever came first. Similarly, Master Mark's modification of the lattice mold was consistent with a rent-to-own agreement and does not show that Master Mark considered the agreements to be contracts for purchase.
SOA further bases its claim that Master Mark intended to form a contract for purchase on the correspondence between the parties. After the execution of both agreements, Hill sent numerous letters to Reum and Master Mark indicating that Master Mark owed the balance of the purchase price at the end of the contract term. According to SOA, Master Mark's failure to respond to these letters constituted an admission of an obligation to purchase the molds. See Ind. Code Ann. § 26-1-2-208 (Michie 1992) (stating that acquiescence with course of performance "shall be relevant to determine the meaning of the agreement"). But in light of the convincing evidence to the contrary, Master Mark's mere failure to respond to SOA's letters does not create a genuine issue of material fact with regard to Master Mark's intent in executing the agreements.
Finally, SOA argues that the district court prematurely entered summary judgment before it had the opportunity to view Master Mark's tax returns for 1995, 1996, and 1997. According to SOA, the tax returns may show that Master Mark treated the molds as purchased items. Summary judgment before the completion of discovery may be premature. Independent Sch. Dist. No. 197 v. Accident and Cas. Ins., 525 N.W.2d 600, 608 (Minn. App. 1995), review denied (Minn. April 27, 1995). However, summary judgment is appropriate where the party resisting summary judgment has failed to pursue discovery diligently. Schluter v. United Farmers Elevator, 479 N.W.2d 82, 86 (Minn. App. 1991), review denied (Minn. Feb. 27, 1992).
In this case, SOA's sole request for the tax returns came during Reum's deposition. This fleeting request was made in June 1998, and the district court did not order summary judgment until October 1998. There is nothing in the record to show that, in the intervening months, SOA made a written request for the tax returns or that SOA brought a motion to compel discovery in the district court. Because SOA did not diligently pursue discovery of the tax returns, the district court did not err in ordering summary judgment before the completion of discovery. Bixler by Bixler v. J.C. Penney Co., 376 N.W.2d 209, 217 (Minn. 1985).
As the preceding analysis indicates, the parties' objective manifestations of intent conclusively demonstrate that there was no issue of material fact regarding the parties' failure to agree and that summary judgment was appropriate. Moreover, as already noted, ambiguous contracts should be construed against the drafter. Bicknell, 570 N.E.2d at 1313. For these reasons, the district court correctly dismissed SOA's breach of contract claim.
Finally, SOA contends that the district court erroneously ordered summary judgment without addressing Master Mark's continued possession of the molds and the possible depreciation of the molds' value. The district court's failure to address those issues, however, is a direct consequence of SOA's failure to address those same issues in the district court. SOA has not attempted to bring a replevin action against Master Mark. Because SOA failed to address in district court the issues of possession and depreciation of the molds, we will not consider SOA's plea for equitable relief on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 The documents state that they will be governed by Indiana law.
 SOA argues that language in the second contract that Master Mark "will to purchase" the mold indicates clearly a purchase-by-installments agreement. We believe this language only exacerbates the documents' ambiguity, however. The record indicates that the parties intended the two documents to have the same meaning.