Opinion
No. C0-01-2085
Filed June 19, 2002.
Appeal from the District Court, Dakota County, File No. C6018143.
Christopher J. Dietzen, Mark D. Christopherson, Larkin, Hoffman, (for appellant)
Michael G. Dougherty, Robert B. Bauer, (for respondent Menard, Inc.)
Timothy J. Grande, Joanne H. Turner, (for respondent Commonwealth Land Title Insurance Company)
Considered and decided by Kalitowski, Presiding Judge, Klaphake, Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In this dispute arising from a real-estate purchase agreement, the district court dismissed the complaint of appellant Watson's Properties, LLC, on the ground that it fails to state a claim on which relief can be granted. Appellant challenges that dismissal, arguing that its amended complaint alleges sufficient facts to support its claims of breach of contract, promissory estoppel, unjust enrichment, negligence, and breach of fiduciary duty. Because we conclude that the complaint does not state legally sufficient equitable claims against respondent Menard, Inc., or a legally sufficient claim of breach of contract against respondent Commonwealth Land Title Insurance Co., we affirm in part. But because the complaint does state a claim of breach of contract against Menard and claims of negligence and breach of fiduciary duty against Commonwealth, we reverse in part and remand.
FACTS
On August 2, 2000, appellant Watson's Properties, LLC (Watson), entered into an agreement to purchase commercial real property in Apple Valley from respondent Menard, Inc. The purchase agreement provides, in relevant part, that
[s]eller agrees to pay, at or prior to closing, all real and personal property taxes on the Property for the year 1999, and prior years and a pro-rated share of the 2000 real and personal property taxes. Said proration shall be made on a daily basis using the actual real and personal property taxes levied for the current year, if known, otherwise on the net taxes for the preceding year.
(Hereafter "tax provision").
Respondent Commonwealth Land Title Insurance Co. (Commonwealth) acted as the closing agent for the sale. Commonwealth interpreted the tax provision to require Menard to pay property taxes due in 1999 and a prorated share of those due in 2000, and Menard paid taxes in accordance with that allocation.
Arguing that the tax provision requires Menard to pay all property taxes due in 2000 and a prorated share of those taxes due in 2001, Watson sued Menard for (1) breach of contract, (2) promissory estoppel, and (3) unjust enrichment and sued Commonwealth for (1) breach of contract, (2) negligence, and (3) breach of fiduciary duty. Menard moved to dismiss Watson's complaint for failure to state a claim on which relief can be granted, and Commonwealth joined the motion. The district court granted respondents' motion to dismiss, and this appeal follows.
DECISION I. Standard of review.
In reviewing cases that are dismissed for failure to state a claim, the only question before the appellate court is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Comm'r of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980); see also Minn.R.Civ.P. 12.02(e). A claim is legally sufficient if it is possible on any evidence that might be produced consistent with the complaint to grant the relief demanded. Northern States Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963). The facts set forth in the complaint are accepted as true, and the plaintiff has the benefit of all favorable and reasonable inferences. Pullar v. Indep. Sch. Dist. No. 701, 582 N.W.2d 273, 275-76 (Minn.App. 1998). Dismissal of a complaint for failure to state a claim is proper if there are no facts consistent with the pleading that support the relief demanded. Brakke v. Hilgers, 374 N.W.2d 553, 555 (Minn.App. 1985). On appeal from a judgment of dismissal for failure to state a claim on which relief can be granted, we review de novo the legal sufficiency of the claim. Leonard v. Northwest Airlines, Inc., 605 N.W.2d 425, 428 (Minn.App. 2000), review denied (Minn. Apr. 18, 2000); see Minn.R.Civ.P. 12.02(e).
Commonwealth argues that the rule 56 summary-judgment standard of review applies here because Menard submitted to the district court the parties' real-estate closing statement. When matters outside the complaint are presented to and considered by a district court on a motion to dismiss, that court's decision is reviewed under a summary-judgment standard. See Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993); see also Minn.R.Civ.P. 56. But because the record does not show that the district court here considered matters other than the complaint, the standard of review for dismissal for failure to state a claim applies.
II. Claims against Menard.
A. Breach of contract.
Watson argues that the district court erred by dismissing its claim of breach of contract against Menard, asserting that the tax provision requires Menard to pay the property taxes assessed in 1999 but due in 2000 and to pay a pro-rated portion of the taxes assessed in 2000 but due in 2001.
The question, here, is whether "taxes on the Property for the year 1999" and "a prorated share of the 2000 * * * taxes," as those terms appear in the tax provision, refer to taxes assessed in those years or taxes due in those years. By dismissing the complaint, the district court implicitly concluded that the tax provision refers to the years in which taxes were due.
But the supreme court has considered a similar tax provision where the seller agreed to pay a prorated portion of the property tax "for the year in which the deed is delivered" and the full property tax for the year preceding. Wisconsin Town Lot Co. v. Astleford, 301 Minn. 331, 331-32, 222 N.W.2d 285, 286 (1974). There, as here, the provision did not explicitly state whether the years referred to were the years in which taxes were assessed or the years in which taxes were due. See id. The supreme court examined the provision's proration clause, interpreting the ambiguity against the drafter, and arrived at a conclusion that could support Watson's interpretation of the tax provision here. Id. at 334, 222 N.W.2d at 287-88.
We conclude that, because, on its face, the tax provision here is reasonably susceptible of two interpretations, the district court erred by dismissing Watson's claim of breach of contract against Menard.
B. Promissory estoppel.
Watson asserts that the district court erred by dismissing its promissory-estoppel claim against Menard. Promissory estoppel is an equitable doctrine that implies a contractual obligation where none, in fact, exists. Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981). Watson's complaint does not allege that Menard made any promises outside of the purchase agreement, and "[e]quitable relief cannot be granted where the rights of the parties are governed by a valid contract." Colangelo v. Norwest Mortgage, Inc., 598 N.W.2d 14, 19 (Minn.App. 1999), review denied (Minn. Oct. 21, 1999) (citation omitted). The district court, therefore, did not err by dismissing Watson's claim of promissory estoppel against Menard.
C. Unjust enrichment.
Watson also claims that the district court erred by dismissing its unjust-enrichment claim against Menard. But unjust enrichment is also an equitable doctrine. See ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 306 (Minn. 1996). And, again, "[e]quitable relief cannot be granted where the rights of the parties are governed by a valid contract." Colangelo, 598 N.W.2d at 19. Accordingly, the district court did not err by dismissing Watson's claim of unjust enrichment against Menard.
III. Claims against Commonwealth.
A. Breach of contract.
Watson alleges that the district court erred by dismissing its claim of breach of contract against Commonwealth because Commonwealth did not apply the tax provision properly. Watson's complaint claims that Watson "entered into a contract pursuant to which Commonwealth was obligated to issue a title commitment." But a reading of the portion of the complaint alleging a breach of contract by Commonwealth shows that the only contract that Watson claims was breached is the purchase agreement between it and Menard.
And Watson identifies the damages resulting from Commonwealth's alleged breach as the damages resulting from Menard's alleged breach of the purchase agreement. Because Commonwealth is not a party to the purchase agreement, and because the only breach alleged is a breach of that agreement, the district court did not err by dismissing Watson's claim of breach of contract against Commonwealth.
B. Negligence.
Watson claims that the district court also erred by dismissing its claim of negligence against Commonwealth. The elements of negligence are (1) the existence of a duty of care, (2) a breach of that duty, (3) injury, and (4) that the breach of the duty was the proximate cause of the injury. Louis v. Louis, 636 N.W.2d 314, 318 (Minn. 2001). Here, Watson asserts that Commonwealth negligently interpreted the tax provision.
We cannot say, as a matter of law, that Watson could not establish that it suffered damages as the result of a breach of duty by Commonwealth. See Williams v. Harris, 518 N.W.2d 864, 868 (Minn.App. 1994) (recognizing that if one voluntarily assumes duty, one must perform that duty with reasonable care or be liable for resulting damages), review denied (Minn. Sept. 28, 1994). The district court, therefore, erred by dismissing Watson's claim of negligence against Commonwealth.
C. Breach of fiduciary duty.
Watson argues that the district court erred by dismissing its claim of breach of fiduciary duty against Commonwealth. A fiduciary duty is the "duty to act * * * in the best interests of [an]other person." Black's Law Dictionary 523 (7th ed. 1999). Negligent performance of a fiduciary duty can be a breach of that duty. See Padco, Inc. v. Kinney Lange, 444 N.W.2d 889, 891 (Minn.App. 1989), review denied (Minn. Nov. 15, 1989). Watson's complaint asserts that Commonwealth had a "fiduciary duty to ensure that payment was made by [Menard] according to the terms of the Purchase Agreement."
We cannot say, as a matter of law, that Watson could not establish that Commonwealth owed Watson a fiduciary duty and breached that duty by disbursing funds inconsistently with the written terms of the contract. See, e.g., Minn. Stat. § 82.24, subd. 1 (2000) (providing requirement that closing agents maintain funds in trust account "except as such money may be paid to one of the parties pursuant to express written agreement between the parties" (emphasis added)). The district court, therefore, erred by dismissing Watson's claim of breach of fiduciary duty against Commonwealth.
IV. Conclusion.
Because promissory estoppel and unjust enrichment are equitable remedies and because a valid written contract exits between the parties, equitable relief cannot be granted. We therefore affirm the district court's dismissal of those claims against Menard. Because Commonwealth is not a party to the purchase agreement, we affirm the district court's dismissal of Watson's claim of breach of contract against Commonwealth. But because the tax provision, on its face, is reasonably susceptible of two interpretations, we conclude that the district court erred by dismissing Watson's claims against Menard for breach of contract and its claims against Commonwealth for negligence and breach of fiduciary duty. We therefore reverse and remand those issues.