This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1567

 

Dan Zimmerman,
Respondent,

vs.

Gary W. Meyer,
Appellant.

 

Filed May 31, 2005

Affirmed

Peterson, Judge

 

Sherburne County District Court

File No. C7032110

 

James W. Hess, Hess Law Office, P.A., 19230 Evans Street, Suite 202, Elk River, MN  55330 (for respondent)

 

James B. Fleming, Metcalf, Larson, Muth & Fleming, P.C., 313 West Broadway, P.O. Box 446, Monticello, MN  55362-0446 (for appellant)

 

            Considered and decided by Peterson, Presiding Judge; Klaphake, Judge; and Shumaker, Judge.

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

In this appeal from a judgment granting specific performance of a real estate purchase agreement, appellant-seller argues that the district court erred in ruling that (1) the parties waived the time-is-of-the-essence provision of the agreement; (2) the parties did not abandon the agreement; (3) the financing contingency in the agreement did not fail; and (4) respondent is entitled to specific performance.  We affirm.

FACTS

Appellant-seller Gary Meyer (seller) and respondent-buyer Dan Zimmerman (buyer) executed a purchase agreement for unimproved property in Big Lake, Minnesota.  The terms of the agreement included a January 3, 2003, closing date and a $159,000 purchase price, with $1,000 earnest money and the balance to be paid by the buyer obtaining a 30-year, fixed-rate, conventional mortgage loan.  The agreement also provides that “[i]f Buyer cannot secure a commitment for such mortgage, this agreement shall become null and void and earnest money paid by Buyer herein shall be refunded to Buyer; Buyer and Seller shall immediately sign a cancellation of Purchase Agreement.”  The agreement does not include a deadline for securing a mortgage commitment.

Shortly after seller executed the purchase agreement, buyer met with a loan officer at a local bank to apply for financing.  The loan officer testified that the bank goes through an underwriting process to determine whether to make a financing commitment.  The purchase agreement required seller to provide as evidence of title either a commitment for an owner’s policy of title insurance or a current abstract of title, but seller provided neither, and the bank’s underwriting process was slowed down, at least in part, by the lack of an abstract.  By January 3, 2003, the bank had not made a financing commitment, and no closing was scheduled.  Neither party appeared for a January 3 closing.  At some point, seller provided an abstract to a title company, and by March 31, 2003, buyer secured a financing commitment from the bank.

Seller testified that after the January 3 closing date passed, he twice asked Phil Onstad, the real estate agent for both parties, to contact seller’s attorney and cancel the purchase agreement.  On March 10, 2003, Onstad appeared at buyer’s business with a form to cancel the purchase agreement.  Buyer refused to sign the cancellation and stated that he wanted to go forward with the closing.  Onstad later appeared at buyer’s business with a new purchase agreement for the property.  Onstad testified that he brought buyer the new purchase agreement because seller requested a clean copy of the purchase agreement.  The new purchase agreement, which buyer signed, included a $158,000 purchase price and a March 31, 2003, closing date.  Seller testified that he did not ask Onstad to prepare the second purchase agreement, and the first time he saw it was on March 11 when Onstad brought it to his office.  Seller testified that he crossed out the $158,000 purchase price and inserted $180,000 and then signed the agreement.  Buyer refused to agree to the price change in the purchase agreement and instructed Onstad to schedule the closing for March 31, 2003.

Seller did not attend the closing scheduled for March 31, 2003, or a later closing scheduled for April 4, 2003.  Buyer brought suit for specific performance, and the district court granted judgment for specific performance.  Seller appeals. 

D E C I S I O N

            In a case tried by the district court without a jury, this court is limited to determining whether the district court’s findings are clearly erroneous and whether the court erred in its conclusions of law.  Powell v. MVE Holdings, Inc., 626 N.W.2d 451, 457 (Minn. App. 2001), review denied (Minn. July 24, 2001).

Time-is-of-the-essence provision

            Seller argues that because the purchase agreement includes a time-is-of-the-essence clause and buyer did not obtain financing by the stated January 3, 2003, closing date, seller was entitled to void the purchase agreement.  The purchase agreement contains a clause that states, “Time is of the essence in this Purchase Agreement.”  But the district court concluded that with respect to the January 3, 2003, closing date, neither party acted as though time was of the essence, and, therefore, “[t]he parties waived the requirements that time was of the essence and that January 3, 2003 would be the closing date.”

            Seller contends that the district court erred in ruling that the parties waived the contract provision that time is of the essence.  “In order for an action to constitute a waiver, there must be an intentional relinquishment of a known right, and it must clearly be made to appear from the facts disclosed.”  Citizens Nat’l. Bank of Madelia v. Mankato Implement, Inc., 441 N.W.2d 483, 487 (Minn. 1989) (quotations omitted).  The record contains evidence that neither party nor their real estate agent scheduled a closing for January 3 or made any preparations for a January 3 closing.  Neither party even contacted the real estate agent about a January 3 closing.  Seller did not provide the title insurance commitment or abstract of title that buyer needed to obtain a financing commitment in time for a January 3 closing.  Also, seller did not sign a seller’s affidavit, pay off the existing encumbrance on the property, or prepare a settlement statement by January 3.  The district court did not err in concluding that this evidence clearly demonstrates that the parties intentionally relinquished their right to close on January 3, 2003.

Abandonment

Seller argues that the district court erred in ruling that the parties did not abandon the purchase agreement.  “[A]bandonment . . . must be clearly expressed, and acts and conduct of the parties to be sufficient must be positive, unequivocal, and inconsistent with the existence of the contract.”  Desnick v. Mast, 311 Minn. 356, 365, 249 N.W.2d 878, 884 (1976).  The intention to abandon a contract “may be ascertained from the facts and circumstances surrounding the transactions and may be implied from the acts of the parties.”  Republic Nat’l Life Ins. Co. v. Marquette Bank & Trust Co. of Rochester, 295 N.W.2d 89, 93 (Minn. 1980); see Ahlstrand v. McPherson, 285 Minn. 398, 401, 173 N.W.2d 330, 333 (1969) (stating that “[a]bandonment of a contract is a matter of intent and is to be ascertained from the facts and circumstances surrounding the transaction out of which the abandonment is claimed to have resulted, and may be implied from the acts of the parties”).  “Mere failure to pay the purchase price under a real estate contract does not, in itself, constitute an abandonment.  There must be other circumstances present, such as, for instance, a lengthy lapse of time, in order that the intent to abandon may properly be inferred.”  Melco Inv. Co. v. Gapp, 259 Minn. 82, 85, 105 N.W.2d 907, 909 (1960).  

Seller contends that his submission of a new purchase agreement with modified terms to buyer, coupled with his directing Onstad to deliver a notice of cancellation of the first purchase agreement provided the district court “with positive, unequivocal evidence of action and intent inconsistent with the continued existence of the original purchase agreement.”  But these acts only indicate seller’s intent to abandon the purchase agreement.  Seller cites buyer’s inability to obtain financing by the agreed-upon closing date, buyer’s proffer of the second purchase agreement, and buyer’s rejection of seller’s counteroffer as evidence of buyer’s intent to abandon the purchase agreement.  But these acts are evidence of buyer’s intent to abandon the purchase agreement only if we accept seller’s characterization of the acts.  There is evidence that seller’s failure to provide proof of title delayed buyer’s effort to secure financing in time for a January 3, 2003, closing and that buyer continued to pursue financing after the original closing date passed, which indicates that buyer did not intend to abandon the agreement.  There is also evidence that Onstad brought the second purchase agreement to buyer and that buyer did not initiate action with respect to the second purchase agreement.  Finally, there is evidence that buyer rejected seller’s offer to sell the property for $180,000, which is consistent with a belief by buyer that there continued to be a contract to sell the property for $159,000.  Seller has not shown that the district court erred in ruling that the parties did not abandon the first purchase agreement.

Failure of financing contingency

Seller argues that the district court erred in ruling that because buyer secured financing in time for a later closing, the financing contingency in the purchase agreement did not fail.  Seller contends that the district court “attempted to resurrect a failed financing contingency from an abandoned agreement by reasoning that the closing date noted in [buyer’s] new offer somehow related back to the original purchase agreement, when the evidence clearly demonstrates that the original purchase agreement had been abandoned by the parties.”  But this argument rests on the premise that the parties did not waive the time-is-of-the-essence provision of the original purchase agreement and, instead, abandoned the agreement.  As we have already explained, the district court rejected this premise.  The district court concluded that by failing to take the steps necessary to close on January 3, 2003, the parties intentionally relinquished their right to close on that date, but buyer still intended to proceed with the transaction.  The financing contingency did not state a deadline for buyer to obtain financing, and when the parties relinquished their right to close on January 3, 2003, buyer’s failure to secure financing by that date did not mean that the financing contingency failed.

Specific performance

[S]pecific performance of a contract to convey real estate is not a matter of absolute right, and if enforcement would be unconscionable or inequitable, performance will not be decreed.  In so far as the court may take into consideration the diligence and good faith of the parties, and the fairness of the transaction, specific performance is a matter of discretion. 

 

Boulevard Plaza Corp. v. Campbell, 254 Minn. 123, 136, 94 N.W.2d 273, 284 (1959); see Lilyerd v. Carlson, 499 N.W.2d 803, 811 (Minn. 1993) (stating that specific performance is an equitable remedy within the sound discretion of the district court).

The district court found that “sometime after January 3, 2003, [seller] learned that new development would be occurring near the Big Lake property.  [Seller] believed that the proposed street improvements, better access to the property, and other development would increase the value of the Big Lake property.”  The court also found that “[i]t is evident that [seller] was simply seeking to avoid the Agreement in order to obtain a higher selling price.”  Under these circumstances, it is not unconscionable or inequitable to require specific performance of the purchase agreement, and the district court did not abuse its discretion by granting specific performance.

Affirmed.