This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-97-1443

Louis W. Brenner, Sr., et al.,

Appellants,

vs.

Ross M. Fefercorn, et al.,

Respondents.

Filed February 10, 1998

Affirmed

Peterson, Judge

Dakota County District Court

File No. C0966310

Kevin J. Kennedy, Hanson, Lulic, & Krall, 920 Second Avenue South, Suite 500, Minneapolis, MN 55402 (for appellants),

Jordan M. Lewis, Siegel, Brill, Greupner, Duffy & Foster, P.A., 1300 Washington Square, 100 Washington Avenue South, Minneapolis, MN 55401 (for respondents).

Considered and decided by Short, Presiding Judge, Kalitowski, Judge, and Peterson, 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 summary judgment, appellants argue that the district court erred by: (1) excluding their statutory warranty claim under Minn. Stat. § 327A.02; (2) holding that their breach of contract claim could not be based upon the terms of the purchase agreement; (3) finding that they did not plead their fraud claim with sufficient particularity; and (4) dismissing their negligence claim. We affirm.

FACTS

In December 1993, appellants Louis W. Brenner and Lois A. Brenner, husband and wife, and Kelly Crowley and Jody Crowley, husband and wife, purchased adjoining townhomes from respondent Woodland CountryHomes, Inc. Respondent used a model townhome in its sales effort and warranted that the construction and quality of the purchased homes would be equal to the model.

Appellants claim that after purchasing their townhomes, they discovered that the homes were unlike the model townhome in significant and material respects, and constructed in a substandard and unworkmanlike fashion.

In June 1994, the Brenners, purporting to represent a class of similarly situated townhome owners, brought statutory consumer fraud, common law fraud, and breach of contract claims against respondents Ross Fefercorn, James E. Siekmann, and Ron Mains, individually, and doing business as Woodland CountryHomes, Inc., Country Home Builders Incorporated, Woodland CountryHomes Association, and RMF Limited.

D E C I S I O N

On appeal from summary judgment, this court must determine whether any genuine issue of material fact exists and whether the district court erred in applying the law. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). This court must view the evidence in the light most favorable to the nonmoving party. Id.

I.

The district court determined that appellants were precluded from bringing a statutory warranty claim because they improperly pleaded the claim. We agree. The initial complaint did not contain a warranty claim. When the Brenners sought class certification in April 1996, they moved in the alternative to add the Crowleys as plaintiffs. The Brenners did not move to amend the complaint to add a warranty claim. Nevertheless, they attached to their motion a proposed amended complaint that included new language-- in the breach of contract section-- that could be construed as asserting a warranty claim.

The district court granted the motion to add the Crowleys as plaintiffs but expressly denied all other requests not specifically granted. No leave was granted to assert a warranty claim. Nevertheless, on August 13, 1996, four days after the scheduling order deadline for completing motions, the Brenners attempted to file an amended complaint that added the Crowleys as plaintiffs and included one count labeled "BREACH OF CONTRACT/BREACH OF WARRANTY," which asserted that appellants purchased their townhomes pursuant to "contracts of warranty express and implied." Appellants did not make any concomitant motion to amend their complaint to add claims for breach of warranty. The district court allowed appellants to file and serve the complaint but excluded the statutory warranty claim under Minn. Stat. § 327A.02 (1996) because the two-year statute of limitations period had run.[1] Therefore, at that point, the complaint did not include a warranty claim

Nevertheless, in February 1997, in response to respondents' motion for summary judgment, appellants filed another amended complaint that included one count labeled "BREACH OF CONTRACT/BREACH OF WARRANTY," and asserted that appellants purchased their townhomes pursuant to "contracts of warranty express and implied."

In the memorandum accompanying the summary judgment order the court stated:

Neither [appellants'] original Complaint nor Amended Complaints allege a statutory warranty claim, rather the only reference to a statutory warranty claim is in Plaintiffs' Memorandum in Opposition to Defendants' Motion for Summary Judgment.

The court then concluded:

[I]t appears to this Court that the Brenners are precluded from bringing a statutory warranty claim on the grounds that they improperly pleaded the statutory warranty claim.

The district court concluded correctly that appellants never properly amended their complaint to assert a warranty claim.

Appellants argue that the order granting summary judgment failed to cure the inappropriateness of the August 1996 order, which excluded their statutory warranty claim. Appellants contend that respondents did not move to have any express warranty claim excluded from the suit and that there was no opportunity to brief this issue.

Appellants' argument fails to recognize that no express warranty claim was ever part of the suit. No warranty claim was asserted in the initial complaint. Minn. R. Civ. P. 15.01 provides that "a party may amend a pleading only by leave of court." Respondents were not required to move to exclude a claim that had not been asserted; appellants were required to move for leave of court to assert a warranty claim. In August 1996, appellants attempted to file an amended complaint that asserted a warranty claim but they did not move for leave to assert the claim. Had appellants moved for leave to assert the claim before the scheduling deadline for completing motions, they would have had an opportunity to brief the issue. The August 1996 order simply excluded from appellants' proposed complaint a claim that appellants had not timely sought leave to assert.

The district court properly granted respondents summary judgment on appellants' warranty claim because the initial complaint did not contain a warranty claim, appellants never moved to amend their complaint to add a warranty claim, and the district court never granted leave to add a warranty claim. The complaint before the court in February 1997 improperly included a warranty claim that appellants had not obtained leave of court to assert.

II.

Appellants argue that the district court erred in holding that their breach of contract claim could not be based on the terms of their purchase agreement because those terms merged with the warranty deed under the merger rule. Appellants contend that the district court failed to recognize that Minn. Stat. § 327A.02, subd. 2, provides:

The statutory warranties provided in this section shall survive the passing of legal or equitable title in the dwelling to the vendee.

Appellants conclude that this statute prevents contractors and real estate developers from avoiding the statutory warranties contained in Minn. Stat. § 327A.02 by conveying property to buyers.

Appellants' argument assumes that they properly included a statutory warranty claim in their complaint. As we have held, however, appellants did not plead a statutory warranty claim. Therefore, Minn. Stat. § 327A.02, subd. 2, does not apply, and appellants' contract claims based on the terms of their purchase agreements are precluded by the merger rule. Under the merger rule,

[t]he deed is conclusively presumed to express the final agreement of the parties in the absence of fraud or mistake, and any contractual provisions omitted from the deed are waived.

B-E Constr., Inc. v. Hustad Dev. Corp., 415 N.W.2d 330, 331 (Minn. App. 1987), review denied (Minn. Jan. 20, 1988). The deeds appellants received expressed the final agreements of the parties, and appellants do not allege any breach of terms in the deeds.

III.

Appellants argue that the district court erred by dismissing their fraud claims because they were not pleaded with sufficient particularity. The district court stated two reasons for dismissing the fraud claims: (1) they were not pleaded with sufficient particularity and (2) appellants presented no evidence to support their claims that the alleged fraudulent representations "were meant to be false, and were made with the intent that Plaintiffs would rely upon them in connection with their purchase of their townhome units." In their brief, appellants acknowledged that intent to deceive is an element of their fraud claims, but they did not address the district court's second basis for dismissing these claims.

[T]he nonmoving party cannot rely on the pleadings alone to defeat a summary judgment motion but instead must produce specific facts which establish the existence of a genuine issue for trial.

Krogness v. Best Buy Co., 524 N.W.2d 282, 285 (Minn. App. 1994), review denied (Minn. Jan. 25, 1995).

[S]ummary judgment on a claim is mandatory against a party who fails to establish an essential element of that claim, if that party has the burden of proof, because this failure renders all other facts immaterial.

Lloyd. v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994).

Our review of the record persuades us that the district court properly dismissed the fraud claims because appellants failed to present specific evidence of intent to deceive.

IV.

Appellants argue that the district court erred in dismissing their negligence claim on the basis that appellants did not establish that respondents owed any duty to appellants other than those duties imposed by contract. We disagree.

To prevail in negligence, a plaintiff must prove as one element that the defendant breached "some duty imposed by law, not merely one imposed by contract."

D & A Dev. Co. v. Butler, 357 N.W.2d 156, 158 (Minn. App. 1984) (quoting Keiper v. Anderson, 138 Minn. 392, 398, 165 N.W. 237, 238 (1917)). The distinction between contract and tort is "whether a duty has been breached other than one established by contract." Id. Where a contract provides the source of duties between the parties, the action is one in contract. Lesmeister v. Dilly, 330 N.W.2d 95, 102 (Minn. 1983). see also United States v. Johnson, 853 F.2d 619, 622 (8th Cir. 1988) (action for negligence not permitted where contract provides only source of duties between parties).

Affirmed.

[1] The record does not indicate why the district court addressed a statutory warranty claim under Minn. Stat. § 327A.02. The proposed amended complaint did not assert a claim under Minn. Stat. § 327A.02.