Opinion
No. C0-00-1007.
Filed November 21, 2000.
Appeal from the District Court, Hennepin County, File No. 9816291.
Richard D. Donohoo, (for appellant)
Michael B. Chase, (for respondent)
Considered and decided by Klaphake, Presiding Judge, Harten, Judge, and Anderson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant S. Kris Bandal sued respondent Marlo Baldwin on an alleged personal guarantee after respondent defaulted on a $70,000 business loan. Appellant's complaint alleged claims of breach of contract, promissory estoppel, and fraud. The district court dismissed the action, ruling that the statute of frauds barred the claims. We agree that the statute of frauds bars the contract claim, but because appellant's complaint also sets forth a valid promissory estoppel claim, which is an exception to application of the statute of frauds, we reverse and remand on that issue. Because appellant's complaint does not properly set forth a fraud claim, which would otherwise also be exempt from application of the statute of frauds, we affirm on that claim.
DECISION
Minnesota's statute of frauds provides:
No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:
(1) Every agreement that by its terms is not to be performed within one year from the making thereof;
(2) Every special promise to answer for the debt, default or doings of another[.]
Minn. Stat. § 513.01 (1998). The purpose of this statute is to "`defend against frauds and perjuries by denying force to oral contracts of certain types which are peculiarly adaptable to those purposes.'" Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 423 (Minn.App. 2000) (quoting In re Guardianship of Huesman, 354 N.W.2d 860, 863 (Minn.App. 1984)).
Contract Claim
Appellant orally agreed to lend respondent $70,000 for a business loan and released the funds to respondent before a written agreement was fully executed. The term of the loan was for 31 months, and the alleged guarantee covered this term. Courts have typically treated a promise to pay in monthly installments for a definite term of over one year to be within the statute of frauds. See John D. Calamari Joseph M. Perillo, The Law of Contracts § 19.18, at 744 (4th ed. 1998). Because the term of the alleged guarantee necessarily covered the term of the loan, it came within the statute of frauds. Thus, the district court properly dismissed the contract claim because, as a matter of law, any guarantee did not comply with the statute of frauds' writing requirement for contracts not to be performed within a year.
Promissory Estoppel
Appellant argues that his complaint set forth a valid promissory estoppel claim that would preclude respondent from claiming the statute of frauds as a defense. In Minnesota, promissory estoppel may be claimed in an attempt to circumvent a valid statute of frauds defense. See, e.g., Berg v. Carlstrom, 347 N.W.2d 809, 812 (Minn. 1984); Del Hayes Sons, Inc. v. Mitchell, 304 Minn. 275, 284-85, 230 N.W.2d 588, 594 (1975); Norwest Bank Minn. v. Midwestern Mach. Co., 481 N.W.2d 875, 880 (Minn.App. 1992), review denied (Minn. May 15, 1992). Promissory estoppel exists if "a party makes a promise knowing another party reasonably relies and acts upon that promise, and the promise must be enforced to avoid injustice." Norwest Bank Minn., 481 N.W.2d at 880 (citation omitted). However,
[t]he trier of fact is in the best position to judge whether oral promises were made, what the mutual understanding of the parties was, and whether the promisor's benefits were merely incidental.
Mill Elevator Mut. Ins. Co. v. Barzen, 553 N.W.2d 446, 451 (Minn.App. 1996) (citation omitted), review denied (Minn. Nov. 20, 1996).
Here, a fact issue exists on whether respondent promised to personally guarantee the $70,000 loan to induce appellant to release the funds to him before the loan agreement was fully executed. The evidence before the district court also includes respondent's fax of his home address and social security number, as well as the $70,000 check, which was made payable both to respondent and his company. This evidence, in addition to the alleged promise, and appellant's reliance on that promise to his detriment, tends to support respondent's promissory estoppel claim. Because the alleged facts must be presumed true for the purposes of this appeal, we conclude that the district court erred in dismissing appellant's promissory estoppel claim. See In re Milk Indirect Purchaser Antitrust Litig., 588 N.W.2d 772, 775 (Minn.App. 1999) (allegations of complaint dismissed for failure to state a claim must be accepted as true and viewed in light most favorable to plaintiff on appeal).
Fraud
Appellant also claims that respondent's conduct constituted fraudulent misrepresentation. He alleges that respondent represented that "the loan documents would be executed, the loan would be secured * * *, and the loan would be paid in full at the interest rate" set forth in their agreement. He also alleges that the representations were false, that respondent knew the representations were false, and that respondent induced appellant to make the loan.
A claim of fraudulent misrepresentation includes the following conduct by the tortfeasor:
"* * * a representation (2) that was false (3) having to do with a past or present fact (4) that is material (5) and susceptible of knowledge (6) that the representor knows to be false or is asserted without knowing whether the fact is true or false (7) with the intent to induce the other person to act (8) and the person in fact is induced to act (9) in reliance on the representation (10) that the plaintiff suffered damages (11) attributable to the misrepresentation."
Gorham v. Benson Optical, 539 N.W.2d 798, 802 (Minn.App. 1995) (quoting M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992)).
Minn.R.Civ.P. 9.02 requires fraud claims to be stated with particularity. Where the allegations of fraud are not specific, the record will not sustain an action for fraud. Westgor v. Grimm, 318 N.W.2d 56, 58 (Minn. 1982); Stubblefield v. Gruenberg, 426 N.W.2d 912, 914-15 (Minn.App. 1988). In fraudulent misrepresentation cases, this rule has been interpreted to require particular allegations of specific false or fraudulent representations. See Alho v. Sterling, 266 Minn. 71, 71-73, 122 N.W.2d 869, 870 (1963); Seafirst Commercial Corp. v. Speakman, 384 N.W.2d 895, 899 (Minn.App. 1986) ("all elements of a fraud cause of action must be pleaded") (citations omitted).
The facts alleged here do not satisfy rule 9.02. The representations alleged in the complaint are vague and lack content. See Juster Steel v. Carlson Cos., 366 N.W.2d 616, 619 (Minn.App. 1985) (affirming summary judgment for defendant where complaint alleging fraudulent misrepresentation "only vaguely refer[red] to the content of the misrepresentations"). Also, the alleged facts do not include a representation that was false or known to be false at the time it was made. Because appellants failed to satisfy rule 9.02, the district court properly granted summary judgment dismissing their fraud claim.
Finally, appellant also claims that the district court erred in making findings that are contrary to the facts as alleged in his complaint. These findings, however, merely established a factual setting for the dispute. Thus, we conclude that the district court did not indulge in impermissible factfinding in this case.