Opinion
No. C1-99-1168.
Filed January 25, 2000.
Appeal from the District Court, Hennepin County, File No. CT-98-8766.
Douglas J. Peterson, Newquist Ekstrom, Chartered, (for respondent)
Jeffrey C. Paulson, Hammargren Meyer, P.A., (for appellant)
Considered and decided by Randall, Presiding Judge, Klaphake, Judge, and Peterson, 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This opinion will be unpublished and may not be cited except as provided by Minn.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UNPUBLISHED OPINION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 challenges entry of summary judgment against her in this action commenced by respondent, who asserted that appellant breached the parties' real estate listing contract. Appellant asserts that there are genuine issues of material fact regarding (a) whether respondent, who served as appellant's real estate agent, violated his fiduciary obligations to appellant and thereby forfeited any potential commission and (b) whether the written listing agreement between the parties should be reformed to conform to a prior oral agreement. We affirm on all issues.
FACTS
In 1994, appellant Joyce M. Brakemeier and respondent Ervin E. Thompson, a real estate broker who was doing business as Country County Realty, entered into a real estate listing contract for the sale of Brakemeier's mobile home park. The contract period included February 23, 1994, through June 23, 1994. Under the contract, Brakemeier agreed to pay Thompson a five-percent commission if he or anyone else, including Brakemeier, sold the property during the contract period. The contract also stated that Brakemeier would pay Thompson's commission if Brakemeier sold the property within 180 days after June 23 to anyone who had inquired with her about the property during the contract period if she did not inform Thompson of the inquiry. A handwritten amendment on the document stated that if Brakemeier's ex-husband agreed to purchase the property before March 23, 1994, Thompson would receive $1,000 instead of his five-percent commission.
During the pendency of the contract, Thompson contacted four prospective buyers, including Philip Johnson with whom Thompson had conducted other real estate transactions. Johnson expressed an interest in purchasing the property, and Thompson assisted him in preparing a letter of intent. When Brakemeier rejected the offer, Johnson increased his offer, and Thompson drafted a purchase agreement for Johnson. Brakemeier made some amendments to the agreement and signed it April 5, 1994, but after having an attorney review it, as provided for by the agreement, Brakemeier rejected the agreement in May 1994.
Johnson sued Brakemeier for breach of contract and consumer fraud and asserted Brakemeier had waived the attorney-review provision. The district court granted summary judgment to Brakemeier on the breach-of-contract claim and denied summary judgment on the consumer-fraud claim. Final judgment was entered on the breach-of-contract issue, Johnson appealed, and this court affirmed. Johnson v. Brakemeier , No. C1-95-1212 (Minn.App. Jan. 9, 1996).
On April 27, 1994, Brakemeier entered into a purchase agreement with Sterling Ventures, Inc., (Sterling) without informing Thompson. In July 1994, Brakemeier and Sterling entered into an amended agreement and executed and filed a contract for deed.
In May 1998, Thompson commenced suit against Brakemeier, asserting breach of contract and a variety of other claims. Thompson sought partial summary judgment on the breach-of-contract claim. The district court entered summary judgment in Thompson's favor and awarded Thompson his five-percent commission, in addition to interest, attorney's fees, and costs.
Thompson originally brought suit against Brakemeier; Sterling; Loren Habegger, an unlicensed real estate broker who received a commission on the sale; and Bradley Solheim, Brakemeier's former attorney. Brakemeier brought cross-claims against her co-defendants. Thompson and Brakemeier stipulated to dismissal of their claims against Habegger and Solheim, and the district court granted Sterling summary judgment against Thompson and Brakemeier. Thompson and Brakemeier are the only parties on appeal.
DECISION
In reviewing an appeal from summary judgment, the appellate court determines only whether there are genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French , 460 N.W.2d 2, 4 (Minn. 1990). The reviewing court "must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo , 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).
I. Fiduciary Obligations
Brakemeier first asserts that there is a material issue of fact regarding whether Thompson breached his fiduciary duty to Brakemeier, thereby precluding Thompson's recovery of a commission. Brakemeier asserts that Thompson breached his duty to her by (a) serving as an agent for both Brakemeier and Johnson and (b) failing to disclose relevant information to Brakemeier, including the fact that Thompson and Johnson had done business together previously and that Thompson ceased marketing the property after Johnson expressed an interest in it.
After a listing agreement is executed, a real estate broker becomes the seller's agent and must comply with the general rules governing principal-agent relationships. White v. Boucher , 322 N.W.2d 560, 564 (Minn. 1982). "The broker owes the utmost good faith and loyalty to his principal" and must inform the seller of all facts within his knowledge that might reasonably affect the seller's rights and interests. Id. , at 564-65 (citation omitted). If an agent engages in dual representation without a principal's knowledge, the agency contract is voidable at the election of the ignorant principal, and the agent may not receive compensation for his services. See Handy v. Garmaker , 324 N.W.2d 168, 171 (Minn. 1982) (holding where agent served as both sellers and buyer's agent, without sellers' knowledge, employment contract voidable at election of ignorant sellers and agent may not recover for services).
Thompson and Brakemeier's agreement did not specify a manner by which Thompson was required to market the property except to state that he agreed "to list the property and try to sell it." Thompson approached three other potential buyers in addition to approaching Johnson. Only Johnson expressed an interest in the property. Once Johnson expressed an interest in the property, Thompson made efforts to sell the property to him. Although Thompson drafted Johnson's written offers, he discussed all of Johnson's offers with Brakemeier and incorporated the changes she suggested into the purchase agreements. There is no evidence in the record that Thompson would have received any payment or other benefit from Johnson in exchange for arranging the sale to him. See White , 322 N.W.2d at 566 (noting real estate broker is generally agent of party who pays him or first employs him).
Notably, Brakemeier has not asserted that she was unaware that Thompson assisted Johnson in preparing his letter of intent or purchase agreements. Brakemeier did not object to Thompson's actions during his service as her agent but objected only when Thompson sought to recover his commission after Brakemeier sold the park to another party without informing Thompson. Brakemeier never notified Thompson that she was exercising her right to void the listing contract because of Thompson's alleged breach of his fiduciary duties. See Handy , 324 N.W.2d at 171 (holding where agent engaged in dual representation without sellers' knowledge, employment contract voidable at election of ignorant sellers and agent may not recover for services).
Even when viewing the evidence in the light most favorable to Brakemeier, Brakemeier has not demonstrated that there is a material issue of fact regarding whether Thompson breached his fiduciary duties under the listing agreement by serving as an agent for Brakemeier while helping Johnson draft offers. Also, there is no evidence of Thompson failing to disclose relevant information to Brakemeier. See DLH, Inc. v. Russ , 566 N.W.2d 60, 71 (Minn. 1997) (holding there is no genuine issue of material fact when nonmoving party presents evidence that merely creates metaphysical doubt as to factual issue and "is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions").
II. Reformation
Brakemeier also asserts that the district court should have reformed the written listing agreement to include an oral agreement she alleges the parties intended to include in the written agreement.
Thompson alleges that Brakemeier should be precluded from asserting fraud or mistake on appeal because she did not raise the issue below. Although Brakemeier did not assert reformation or fraud or mistake as affirmative defenses in her responsive pleadings, in her response to Thompson's summary judgment motion, Brakemeier raised a reformation defense and alleged fraud or misrepresentation by Thompson in support of that defense. Because Thompson did not object when Brakemeier raised this defense, Thompson impliedly consented to litigation of this issue. See Septran, Inc. v. Independent Sch. Dist. No. 271 , 555 N.W.2d 915, 919 (Minn.App. 1996) (stating consent to litigate issues not raised in pleadings is implied when party fails to object), review denied . (Minn. Feb. 26, 1997).
If the following three elements are proved, the court may reform a document:
(1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.
Nichols v. Shelard Nat'l Bank , 294 N.W.2d 730, 734 (Minn. 1980) (citations omitted). These facts must be established by "clear and consistent, unequivocal and convincing" evidence. Id. (citation omitted). oParol evidence may be used to determine whether a "contract is invalid because of illegality, fraud, mistake or other reasons, or whether the writing was the final integration of the parties' agreement." Stromberg v. Smith , 423 N.W.2d 107, 109 (Minn.App. 1988) (citations omitted).
The listing agreement in this case contains a handwritten amendment stating that if Brakemeier's former husband agreed to purchase the property before March 23, 1994, Brakemeier would pay Thompson $1,000. Brakemeier asserts that the listing agreement should be reformed to incorporate the parties' oral agreement that Brakemeier could sell the property directly to anyone without incurring more than a $1,000 liability to Thompson. Brakemeier maintains that because she asserts that (a) the parties had a valid agreement expressing these intentions, (b) the written document did not state these intentions, and (c) Brakemeier made a unilateral mistake that was accompanied by fraud or inequitable conduct by Thompson, there are material issues of fact in this case that preclude summary judgment.
In Brakemeier's deposition taken in October 1994, during discovery for the previous litigation between Johnson and Brakemeier, Brakemeier initially testified that she believed Thompson would cancel the listing agreement if she found a buyer for the park. Opposing counsel pushed Brakemeier further on the issue, however:
Although this deposition testimony was taken during discovery for the Johnson/Brakemeier litigation, it was made part of the record in this case when Brakemeier attached this portion of her deposition to her memorandum in opposition to Thompson's summary judgment motion. See Minn.R.Civ.App.P. 110.01 (stating record on appeal includes papers filed in district court, exhibits, and transcripts).
Q: I understood you to say earlier, ma'am, that if you brought any buyer to the closing table yourself that there would only be a thousand dollar commission?
A: That's what we had a verbal agreement upon.
Q: But that's not in the agreement?
A: I guess I didn't even think at that point about my children or anything so we just — that was the — that day was the day that we wrote that.
Q: But so we understand —
A: We had a verbal conversation after that.
Q: So you had a conversation after you signed the agreement about the possibility of having other exclusions; is that right?
A: Yes.
Q: But that was never added to the agreement?
A: No. I didn't think it was necessary.
In her affidavit dated January 1999, Brakemeier contradicts this testimony by stating that before she signed the listing agreement, she and Thompson agreed that she had the right to sell the park herself to anyone and would only need to pay Thompson $1,000 if she did so. She insisted that although her written agreement with Thompson granted her this right only in regards to her ex-husband, their "intent was always to allow [her] to sell to anyone."
Although the district court may not decide disputed issues of material fact on summary judgment, here, Brakemeier's own testimony is contradictory. Her deposition states that after executing the listing agreement, she and Thompson entered into an oral agreement permitting her to sell the property on her own. Her affidavit indicates that this oral agreement was made before she signed the listing agreement. Brakemeier's own evidence fails to demonstrate that the parties had a valid agreement that the written contract failed to express.
Because Brakemeier's own evidence is contradictory and does not support reformation, the district court correctly found there are no material issues of fact regarding whether the listing agreement should be reformed. See Banbury v. Omnitrition Int'l, Inc. , 533 N.W.2d 876, 881 (Minn.App. 1995) (holding "self-serving affidavit that contradicts earlier damaging deposition testimony is not sufficient to create a genuine issue of material fact").
III. Motion to Strike
In his reply brief, Brakemeier asserts that a portion of Thompson's appendix should be stricken because it is not contained in the record. The pages Brakemeier seeks to have stricken include a portion of Thompson's deposition from previous litigation between Johnson and Brakemeier. Although other portions of Thompson's deposition are contained in the record, the portion in Thompson's appendix is not contained in the record.
An appellate court may not consider "matters outside the record on appeal, and may not consider matters not produced and received in evidence below." Thiele v. Stich , 425 N.W.2d 580, 582-83 (Minn. 1988) (citations omitted). Thus, pages 201-07 of Thompson's appendix, which contain a portion of his deposition not in the record, are stricken from Thompson's appendix.
Although Brakemeier also seeks to have page 200 stricken, page 200 is the cover page of the transcript of Thompson's deposition and is contained in the record.