Opinion
A23-0774
03-15-2024
Estate of Jeffrey C. Woodard, Appellant, v. Marion C. Krumrie, Respondent.
Winona County District Court File No. 85-CV-22-2047
Considered and decided by Slieter, Presiding Judge; Larson, Judge; and Ede, Judge.
ORDER OPINION
Keala C. Ede, Judge
BASED ON THE FILE, RECORD, AND PROCEEDINGS, AND BECAUSE:
1. On October 24, 2022, appellant Estate of Jeffrey C. Woodard (the estate) served respondent Marion C. Krumrie with a complaint alleging that Krumrie had been unjustly enriched by the statutory cancellation of a contract for deed. This court previously affirmed that the cancellation of the contract for deed was lawful. See Woodard v. Krumrie, No. A19-0800, 2020 WL 996746 (Minn.App. Mar. 2, 2020), rev. denied (Minn. May 19, 2020).
2. The complaint alleges that the decedent Jeffrey Woodard and his then-wife entered into the contract for deed to purchase a farm from Krumrie and her husband, who were Woodard's in-laws at the time. Woodard received his wife's interest in the farm during their divorce and continued making payments on the contract for deed for 23 years. Prior to Woodard's death, Woodard executed a transfer-on-death deed assigning the farm to his son. After Woodard died, the Krumries served Woodard's son with a statutory notice of cancellation on the basis that the transfer to Woodard's son violated an anti-transfer clause in the contract.
Krumrie's husband passed away prior to the commencement of this action and thus is not a party to this appeal.
3. The complaint alleges that, although the Krumries lawfully cancelled the contract for deed, "[t]he Krumries sought to capitalize on Woodard's death, finding a technical default in the contract for deed because the farm was transferred to [Woodard's son] upon Woodard's death via a transfer on death deed" and that "the Krumries reaped the benefits of Woodard's diligent care of the farm" for 23 years. The complaint also alleges that Woodard paid the Krumries more than $180,000 and, at the time of Woodard's death in 2018, "the tax-assessed value of the farm was $795,500." The complaint seeks damages of "the amount of the value of the farm at the time that it was returned to Krumries or other amounts to be determined at trial."
4. Krumrie moved to dismiss the complaint under Minnesota Rule of Civil Procedure 12.02(e), arguing that the complaint failed to state a claim upon which relief can be granted. Specifically, Krumrie argued that the estate failed to allege that Krumrie acted "unlawfully or immorally in cancelling the contract for deed" or that Woodard made any improvements to the property, and therefore the estate failed to state a claim for unjust enrichment.
5. The district court granted Krumrie's motion to dismiss. The district court determined that, following a statutory cancellation of a contract for deed, there is a "narrow exception for post-cancellation unjust enrichment claims based on fraud or significant improvements to property." The district court noted that "the complaint makes it clear that [the estate's] claim is solely based on the argument that the property owners made out like a bandit as a result of the cancellation." But the district court concluded that the complaint failed to state a claim for unjust enrichment because it did not allege "improvements made to the property," "fraud, trickery, or unclean hands," or "underhanded behavior that should not be rewarded with a financial windfall." The district court determined that the claim was instead "based on disappointment at the outcome of prior litigation between family members over a failed attempt to transfer the Krumries' family farm out from underneath them by their former son-in-law without their approval."
6. The estate challenges the district court's rule 12.02(e) dismissal of its complaint. "We review de novo whether a complaint sets forth a legally sufficient claim for relief." Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014). "In so doing, [appellate courts] consider only the facts alleged in the complaint, accepting those facts as true." Sipe v. STS Mfg., Inc., 834 N.W.2d 683, 686 (Minn. 2013) (quotation omitted). We also "construe all reasonable inferences in favor of the nonmoving party." Walsh, 851 N.W.2d at 606.
7. "Minnesota is a notice-pleading state." Halva v. Minn. State Colls. & Univs., 953 N.W.2d 496, 500 (Minn. 2021) (quotation omitted). Under this standard, "[a] pleading is sufficiently detailed when it gives fair notice to the adverse party of the incident giving rise to the suit with sufficient clarity to disclose the pleader's theory upon which his claim for relief is based." Id. at 503 (quotation omitted). A plaintiff may plead "broad general statements that may be conclusory" and is not "required to allege facts and every element of a cause of action." Id. (quotations omitted). "A claim is sufficient to survive a motion to dismiss if it is possible on any evidence which might be produced, consistent with the pleader's theory, to grant the relief demanded." Graphic Commc'ns Local 1B Health & Welfare Fund A v. CVS Caremark Corp., 850 N.W.2d 682, 692 (Minn. 2014) (quotation omitted).
8. A seller may cancel a contract for deed if a purchaser materially breaches the contract. See Kuhn v. Dunn, 990 N.W.2d 491, 495 (Minn.App. 2023), rev. granted (Minn. Aug. 8, 2023). If the purchaser does not cure the asserted breach and meet other statutory requirements, the contract will terminate, resulting in the purchaser's "forfeiture of all payments made and restoration of full legal and equitable title in the property to" the seller. In re Butler, 552 N.W.2d 226, 230 (Minn. 1996); see also Kuhn, 990 N.W.2d at 495. Although this results in a harsh forfeiture, the court may not consider the equities when determining whether the contract should terminate because "equitable relief cannot be granted where the rights of the parties are governed by a valid contract." U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981).
9. A party who breaches a contract for deed, however, "may have a cause of action for unjust enrichment after a statutory cancellation." Hommerding v. Peterson, 376 N.W.2d 456, 459 (Minn.App. 1985). "Unjust enrichment is an equitable doctrine that allows a plaintiff to recover a benefit conferred upon a defendant when retention of the benefit is not legally justifiable." Herlache v. Rucks, 990 N.W.2d 443, 450 (Minn. 2023) (quotation omitted). "To establish an unjust enrichment claim, the claimant must show that the defendant has knowingly received or obtained something of value for which the defendant in equity and good conscience should pay." ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 306 (Minn. 1996) (quotation omitted). Accordingly, a purchaser must establish "fraud, mistake, or moral wrongdoing on the part of" the seller to succeed on an unjust-enrichment claim following the lawful cancellation of a contract for deed. Fort Dodd P'ship v. Trooien, 392 N.W.2d 46, 49 (Minn.App. 1986).
10. The complaint alleges that the estate seeks compensation "for the unjust enrichment of the Krumries due to their cancellation of the contract for deed after 23 years of payments on the contract, and care and investment in the farm by Woodard." The complaint alleges that "Woodard made payments on the contract for deed to the Krumries [for] 23 years, paid taxes, and insurance on the farm for 23 years, and cared for and maintained the farm for 23 years," and that "[the] Krumries knowingly accepted this benefit." And the complaint alleges that "Woodard diligently performed on the contract for deed and his 'default' was only due to his diligent estate planning and unfortunate death." These allegations-accepted as true and construing all inferences in the light most favorable to the estate-provide fair notice that Krumrie "obtained something of value for which [she] in equity and good conscience should pay." ServiceMaster, 544 N.W.2d at 306 (quotation omitted). As a result, the complaint is sufficient to survive a motion to dismiss because it is possible that evidence could be produced, consistent with the estate's unjust-enrichment theory, to grant relief. See CVS Caremark Corp., 850 N.W.2d at 692.
11. We are unpersuaded by Krumrie's argument that the statutory cancellation of the contract for deed here cannot be an act of moral wrongdoing sufficient to sustain an unjust-enrichment claim. A purchaser may bring an unjust-enrichment claim even if the seller lawfully cancelled the contract for deed. See, e.g., Anderson v. DeLisle, 352 N.W.2d 794 (Minn.App. 1984) (affirming the jury's finding of unjust enrichment following sellers' statutory cancellation), rev. denied (Minn. Nov. 8, 1984). The parties have not identified any caselaw assessing similar allegations-a contract for deed cancelled after the death of the purchaser, based on a violation of an anti-transfer clause. We therefore cannot conclude that the cancellation here does not, as a matter of law, qualify as moral wrongdoing. Cf. Herlache, 990 N.W.2d at 451 (explaining that the supreme court recently "cautioned against restricting the broad scope of the unjust enrichment remedy, given that the whole point of the action was to relieve against the too narrow procedure of the law" (quotation omitted)); see also Hepfl v. Meadowcroft, No. A22-1706, 2023 WL 5341094 (Minn.App. Aug. 21, 2023) (nonprecedential but persuasive opinion affirming the district court's order, following a bench trial, and concluding that the plaintiff was entitled to damages for unjust enrichment), rev. granted (Minn. Nov. 28, 2023) (Issue Granted: "What factors should be reviewed when determining a statement is either immoral or illegal to meet the standards for an unjust enrichment claim?").
We note that the district court's contrary conclusion appeared to rely, in part, on facts from the prior litigation involving the lawfulness of the cancellation. But in considering a motion to dismiss, we must consider only the allegations in the complaint, accepted as true. Sipe, 834 N.W.2d at 686. Thus, to the extent that the district court relied on extra-complaint information, that reliance was erroneous.
IT IS HEREBY ORDERED:
1. The district court's judgment is reversed and remanded.
2. Pursuant to Minn. R. Civ. App. P. 136.01, subd. 1(c), this order opinion is nonprecedential, except as law of the case, res judicata, or collateral estoppel.