This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1994).




David Heyer, et al.,



John Moldenhauer, et al.,


Koeckeritz Realty, et al.,


Filed November 19, 1996


Short, Judge

Brown County District Court

File No. C395143

Kenneth R. White, Farrish, Johnson & Maschka, 201 North Broad Street, Suite 200, P.O. Box 550, Mankato, MN 56002-0550 (for appellants)

Patrick J. Moriarty, Moriarty Law Office, P.O. Box 415, New Ulm, MN 56073 (for respondents John Moldenhauer, et al.)

Robert G. Haugen, Michelle Gill Murray, Johnson & Lindberg, P.A., Suite 1610, 8500 Tower, 8500 Normandale Lake Boulevard, Minneapolis, MN 55437-3828 (for respondents Koeckeritz Realty, et al.)

Considered and decided by Randall, Presiding Judge, Short, Judge, and Davies, Judge.


SHORT, Judge

This case involves allegations of fraud relating to the sale of a New Ulm home located next to a closed construction landfill. David and Kathryn Heyer (buyers) sought to rescind the purchase agreement on grounds of the sellers' failure to disclose material facts and fraud in procuring an arbitration clause. The trial court initially found the arbitration clause covered both claims, and granted summary judgment for the sellers and their real estate agent. On the first appeal, we held the arbitration clause covered claims relating to the property but did not encompass the claim of fraud in the inducement, and remanded the fraud claim for determination by the trial court. Heyer v. Moldenhauer, 538 N.W.2d 714, 717 (Minn. App. 1995). On remand, the trial court found the buyers failed to raise issues of fact on the essential elements of their fraud claim and granted summary judgment for the sellers and their agent. On this second appeal, the buyers argue the trial court erred because the evidence supports their claims. We affirm.


On appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990); see Minn. R. Civ. P. 56.03 (setting forth trial court standard for summary judgment). While we view the evidence in the light most favorable to the party opposing the motion, the nonmovant must produce specific facts that create an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986); Grondahl v. Bulluck, 318 N.W.2d 240, 242 (Minn. 1982).

The buyers claim the sellers' real estate agent fraudulently procured their initials on the arbitration clause. To withstand summary judgment, the buyers must offer evidence that: (1) the real estate agent made a false representation of past or existing material fact; (2) the representation was made with knowledge of its falsity or disregard for its truth; (3) the representation was intended to induce the buyers to rely on the statement; and (4) the representation caused them to act in reliance thereon. See Specialized Tours v. Hagen, 392 N.W.2d 520, 532 (Minn. 1986) (listing elements of misrepresentation claim); Veit v. Anderson, 428 N.W.2d 429, 432 (Minn. App. 1988) (same).

The sellers' real estate agent made two statements that the buyers claim induced them to initial the arbitration clause. At the time of executing the purchase agreement, the buyers asked the sellers' agent about the meaning of the optional arbitration clause. The agent said: (1) arbitration is a meeting of the buyers, sellers, and agent at the agent's house "if something minor occurred, like a refrigerator not working or a hot water heater blowing up"; and (2) "everybody signs [the clause]."

The buyers argue the agent's omissions of information regarding the arbitration process and its effect on the buyers' remedies and right to judicial review, as well as her statements, constituted misrepresentations. See M.H. v. Caritas Family Servs., 488 N.W.2d 282, 288 (Minn. 1992) (citing Newell v. Randall, 32 Minn. 171, 172-73, 19 N.W. 972, 973 (1884)) (recognizing a party who chooses to speak must say enough to prevent words from misleading the other party, particularly where special relationship exists between parties). We disagree. The record demonstrates: (1) the agent's general statements and alleged omissions concerned the purpose and legal effects of the arbitration clause; (2) the buyers chose to purchase the home without seeking legal advice or real estate expertise; (3) the buyers knew the agent represented the sellers' interests and not the buyers' rights; (4) the agent made no statement regarding the six-month limitation period on filing claims under the arbitration clause; (5) the buyers were represented by legal counsel before the six-month period expired; and (6) the buyers seek to rescind the clause because their failure to comply with the six-month limitation left them without a remedy for alleged damages relating to the physical condition of the property. Given these facts, no special relationship existed between the buyers and the sellers' agent, and the alleged misrepresentations by the sellers' agent cannot support a claim of fraud. See Pieh v. Flitton, 170 Minn. 29, 30, 211 N.W. 964, 964 (1927) (recognizing misrepresentations as to legal effects of contracts not actionable). Under these circumstances, the trial court properly granted summary judgment in favor of the sellers and their agent.