Opinion
No. C7-98-1665.
Filed March 30, 1999.
Appeal from the District Court, Red Lake County, File No. C997110.
Kurt J. Marben, (attorney for respondents)
Timothy W. McCann, (attorney for appellants)
Considered and decided by Davies, Presiding Judge, Peterson, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellants assert the district court erred in granting respondents summary judgment. Appellants argue: (1) respondents waived their right to cancel the contract for deed by accepting and retaining partial payment; (2) respondents violated the implied covenant of good faith by making themselves unavailable for payment; and (3) the district court improperly dismissed appellant's equity claims. Appellants also challenge the district court's order releasing appellants' security deposit to respondents, alleging the order was granted without notice and opportunity for hearing. Because we conclude there are no genuine issues of material fact and the district court properly applied the law, we affirm the grant of summary judgment. However, because appellants are entitled to notice and opportunity for hearing regarding the disbursement of the security deposit, we reverse that order and remand for further proceedings.
FACTS
In September 1996, appellants purchased real property from respondents for $30,000 on a contract for deed. Appellants paid $200 in earnest money and a down payment of $6,800. The contract called for monthly payments of $279.06 for a period of ten years beginning on October 1, 1996.
Respondents served appellants with a notice of cancellation of contract for deed on July 14, 1997, alleging appellants had failed to make their June and July 1997 contract payments. The notice set forth that the contract would terminate in 60 days unless respondents received payments including the rent owed, costs of service, $125 toward attorney fees, and $11.16 (representing 2 percent of the amount in default). See Minn. Stat. § 559.21, subd. 3 (1998) (setting forth notice form requirements).
Respondents later notified appellants by letter dated August 12, 1997, that the July 1997 payment had arrived late and that they were in receipt of the August payment. The letter further stated respondents would hold those payments until payment was received for June 1997 and for the other miscellaneous fees detailed in the cancellation notice. The letter specified the amount owing and where payments could be made.
Appellants made numerous efforts to contact respondents and respondents' attorney but were unsuccessful. Appellants did not make any effort to pay the amounts listed initially in the notice and restated in respondents' August letter.
Respondent Knute Knutson signed an affidavit of failure to comply with notice on October 8, 1997. Respondents then filed an unlawful detainer complaint seeking restitution of the property. The unlawful detainer action was heard on December 2, 1997. Due to the court's scheduling change, appellants appeared pro se. Appellants requested a continuance, but that request was denied. The court concluded appellants had failed to comply with the notice of cancellation and ordered restitution of the property to respondents.
The court subsequently granted appellants' request to vacate the unlawful detainer judgment and set the matter for trial. Appellants deposited $3,000 as security with the Red Lake County Court Administrator's Office.
Appellants filed a complaint on January 27, 1998, seeking specific performance of the contract for deed as well as damages for waiver, unjust enrichment and intentional infliction of emotional distress. Appellants claimed they made repairs and improvements to the property worth an estimated $20,000.
The matters were consolidated and respondents moved for summary judgment. The district court granted respondents summary judgment in both actions, ordered immediate restitution of the property, and dismissed appellants' claims. The district court also ordered appellants' $3,000 security deposit released to respondents by separate order. This appeal followed.
DECISION
On appeal from summary judgment, a reviewing court determines whether any genuine issues of material fact exist and whether the district court erred in applying the law. Wartnick v. Moss Barnett , 490 N.W.2d 108, 112 (Minn. 1992). Once the moving party has shown the absence of any material facts, the burden shifts to the nonmoving party to show the existence of a material fact in dispute by "presenting specific admissible facts giving rise to a factual question." Bixler v. J.C. Penney Co. , 376 N.W.2d 209, 215 (Minn. 1985) (citing Continental Sales Equipment Co. v. Town of Stuntz , 257 N.W.2d 546, 550 (Minn. 1977)). In making our determination, we view the evidence in the light most favorable to the nonmoving party. State by Beaulieu v. City of Mounds View , 518 N.W.2d 567, 571 (Minn. 1994). No deference need be given to the district court's application of the law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n , 358 N.W.2d 639, 642 (Minn. 1984).
Unlawful Detainer
a. Waiver
Termination of a contract for deed is governed by Minn. Stat. § 559.21, subd. 2a (1998), which provides in relevant part:
If a default occurs in the conditions of a contract for the conveyance of real estate * * * that gives the seller a right to terminate it, the seller may terminate the contract by serving upon the purchaser * * * a notice specifying the conditions in which default has been made. The notice must state that the contract will terminate 60 days * * * after the service of the notice, unless prior to the termination date the purchaser;
(1) complies with the conditions in default;
(2) makes all payments due and owing to the seller under the contract through the date that payment is made;
(3) pays the costs of service of the notice, including the reasonable costs of service by sheriff, * * *; except payment of costs of service is not required unless the seller notifies the purchaser of the actual costs of service by certified mail to the purchaser's last known address at least ten days prior to the date of termination;
(4) * * * pays two percent of any amount in default at the time of service * * *; and
(5) pays an amount to apply on attorneys' fees actually expended or incurred, of $125 if the amount in default is less than $750 * * * .
Appellant argues respondents waived the right to enforce the default and cancel the contract by accepting payment checks for July, August, and September. In order to establish a waiver, a vendee must show that the "waiving party had full knowledge of the facts, had full knowledge of his legal rights, and intended to relinquish these rights." Thomey v. Stewart , 391 N.W.2d 533, 536 (Minn.App. 1986) (citing Freitag v. Wolf , 303 Minn. 139, 142, 226 N.W.2d 868, 870 (Minn. 1975)).
Appellants rely on Odegaard v. Moe , 264 Minn. 324, 119 N.W.2d 281 (Minn. 1962), and Jandric v. Skahen , 235 Minn. 256, 50 N.W.2d 625 (Minn. 1951), review denied (Minn. Jul. 10, 1997), for the proposition that acceptance of partial payment can constitute waiver. Appellants' reliance is misplaced. Both Odegaard and Jandric involve factual contexts where acceptance of partial payment created an inference that the vendors intended to waive their rights to cancel the contract. Odegaard , 264 Minn. at 328, 119 N.W.2d at 284; Jandric , 235 Minn. at 261, 50 N.W.2d at 628.
The mere transfer of the sum of money * * * does not establish the required acceptance by plaintiff. In order to find that plaintiff had accepted the payment, it is necessary to find that he at some time formed an intent to accept the money as payment.
Jandric , 235 Minn. at 261, 50 N.W.2d at 628.
In the instant case, there is no question as to respondents' intent. Respondents clearly informed appellant by letter that they were holding the July and August payments pending receipt of the other amounts due. Respondents gave no indication that they intended to relinquish their right to cancel the contract. Here, as in Aune v. Bona , 305 N.W.2d 602 (Minn. 1981), "[t]here was no conduct on the part of the [respondents] that misled the [appellants], took undue advantage, or which could be construed as waiver." Id. at 604. Therefore, there was no waiver.
Implied Covenant of Good Faith
Appellants also argue that respondents made themselves unavailable for payment, violating the implied covenant of good faith, and the court should invoke its equitable powers to reinstate the contract or remand the matter for trial. Appellants rely on Coddon v. Youngkrantz , 562 N.W.2d 39, 43 (Minn.App. 1997), review denied (Minn. Jul. 10, 1997), for the proposition that a vendor "cannot benefit from a default he helped create." However, given the facts of the instant case, Coddon is inapposite.
Coddon involved a vendee who attempted to cure a default by mailing the monthly payments to a third party according to the parties' custom. Id. at 44. The court construed the vendors' acts of returning and refusing the payments as an attempt to force a default. Id. The court determined that "the circumstances of this case justify equity's `beneficent jurisdiction.'" Id.
In the instant case, the circumstances are quite different. Appellants made no effort to mail the amount owing to respondents or respondents' attorney. Respondents' letter clearly stated the amounts owing and where payment could be sent. Moreover, this case does not involve a "delay in a single installment payment" as in Coddon . See id. at 43. This case involves a missed payment and a lack of any effort to cure the default under the terms of the notice and Minn. Stat. § 559.21, subd. 2a.
Equity Claims
Appellants further argue the district court erred in granting respondents summary judgment and dismissing appellants' claims for unjust enrichment and quantum meruit. Statutory cancellation of a contract for deed does not preclude an action for unjust enrichment. Anderson v. DeLisle , 352 N.W.2d 794, 796 (Minn.App. 1984), review denied (Minn. Nov. 8, 1984)). But an unjust enrichment claim does not lie solely because one person benefits from another's efforts. Custom Design Studio v. Chloe, Inc. , 584 N.W.2d 430, 433 (Minn.App. 1998), review denied (Minn. Nov. 24, 1998). "It must be shown that a party was unjustly enriched in the sense that the term `unjustly' could mean illegally or unlawfully." Id. (quoting First Nat'l Bank v. Ramier , 311 N.W.2d 502, 504 (Minn. 1981)). There may be no recovery under a theory of unjust enrichment where the vendor does no more than exercise the right to cancel the contract in the event of a default. Roseberg v. Steen , 415 N.W.2d 904, 907 (Minn.App. 1987); Hommerding v. Peterson , 376 N.W.2d 456, 459-60 (Minn.App. 1985).
Appellants have not introduced any evidence of any wrongdoing on the part of respondents. Respondents have merely exercised their right to cancel the contract due to appellants' default. The district court properly dismissed the claim.
Appellants' quantum meruit claim is also without merit. "[P]roof of an express contract precludes recovery in quantum meruit." Breza v. Thaldorf , 276 Minn. 180, 183, 149 N.W.2d 276, 279 (Minn. 1967); see also Sterling Capital Advisors, Inc. v. Herzog , 575 N.W.2d 121, 126 (Minn.App. 1998). The parties' contract called for all improvements made to the property to go to respondents in the event of a default and cancellation. Therefore, there can be no recovery in quantum meruit.
Security Deposit
Appellants contend the district court erred by ordering their $3,000 security deposit released to respondents without prior notice to appellants. Respondents do not oppose appellants' request for notice and an opportunity for a hearing.
The deposit of funds with the court pursuant to Minn.R.Civ.P. 67.01 does not operate as a relinquishment of appellants' interest in the property. See 2A David F. Herr Roger S. Haydock, Minnesota Practice § 67.3 (1998). Therefore, appellants are entitled to notice and an opportunity for a hearing regarding the disposition of the funds on deposit.