Opinion
No. C2-01-936.
Filed November 20, 2001.
Appeal from the District Court, Anoka County, File No. CX002290.
Scott R. Martin, Scott R. Martin, P.A., (for appellant)
Richard K. Hocking, Richard K. Hocking, P.A., (for respondent)
Considered and decided by Lansing, Presiding Judge, Stoneburner, Judge, and Hanson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Jeffrey Cody appeals from the district court's grant of summary judgment and award of attorney fees to respondent Tollefson Development, Inc. Because there are no genuine issues of material fact, we affirm the grant of summary judgment. Because Tollefson failed to satisfy the procedural requirements of Minn. Stat. § 549.211, subd. 4(a) (2000), we reverse the award of attorney fees.
FACTS
The parties' dispute is based on their January 28, 1999 contract providing for a density transfer from property owned by Cody to property owned by Tollefson in exchange for $15,000 and a lot in Tollefson's proposed development. The contract provided:
CONTINGENCIES: The following contingencies numbers one (1) and two (2) must be removed by Buyer on or before ninety days (90) days from the signing of this Agreement.
1.) Contingent upon Buyer obtaining density transfer approval of 20 acres by the City of Ham Lake.
2.) The parties agree that this agreement shall be contingent upon Buyer obtaining final plat approval of Kingswood Estates, satisfactory to Buyer, from the City Council of Ham Lake, MN on this property on or before March 15, 1999.
In the event the contingencies numbered (1) and two (2) are not satisfactory to Buyer on or before ninety (90) days from the signing of this Agreement, this Agreement shall become null and void and all earnest money paid thereunder shall be refunded to Buyer. The parties may, however, extend the time upon mutual written consent. In the event of termination, Buyer and Seller agree to execute a cancellation of purchase agreement.
The density-transfer contingency was not removed within the 90 days allowed and the parties did not extend the time. Tollefson considered the contract null and void. Cody sued for specific performance and damages. Tollefson counterclaimed for return of the $14,933.25 in earnest money paid to Cody. Each party moved for summary judgment. The court granted Tollefson's claim and awarded attorney fees pursuant to Minn. Stat. § 549.211, subd. 2 (2000). This appeal followed.
DECISION I. Summary Judgment
When reviewing an appeal from summary judgment, this court should examine "whether there are any genuine issues of material fact and whether the lower courts erred in their application of the law." Cummings v. Koehnen, 568 N.W.2d 418, 420 (Minn. 1997). No genuine issue of material fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)).
The district court concluded that both contingencies in the purchase agreement operated as conditions precedent to the enforceability of the agreement. Because the undisputed facts establish that the density-transfer-approval contingency was not removed within the allotted 90 days, the district court concluded that the contract became null and void by its own terms and ordered Cody to return the earnest money to Tollefson. We agree.
A condition precedent "is one which is to be performed before the agreement of the parties becomes operative." Lake Co. v. Molan, 269 Minn. 490, 498, 131 N.W.2d 734, 740 (1964) (quoting Chambers v. N.W. Mut. Life Ins. Co., 64 Minn. 495, 497, 67 N.W. 367, 368 (1896)). In Aslakson v. Home Sav. Ass'n, the court noted that
[a] conditional promise prevents a party from acquiring any rights under the contract unless those conditions occur. * * * If the event required by the condition does not occur, there can be no breach of contract, since the contract is unenforceable.
416 N.W.2d 786, 789 (Minn.App. 1987) (citations omitted).
Neither party alleges that the contract is ambiguous or that there are material issues of fact. The meaning of the contract with respect to the first contingency is clear on its face. The district court noted that the plain and unambiguous language of the contract with respect to this contingency leaves the matter to the action of a third party, the City of Ham Lake.
Cody concedes that performance of the contingency was dependent on a third party, but argues that the city eliminated density transfers from its ordinance, making Tollefson's need for the density transfer moot. Evidence of the city's elimination of density transfers, however, was not in the record and therefore could not be considered by the district court. The city never approved the density transfer of 20 acres. The city granted final plat approval on March 15, 1999, without mentioning the density transfer.
On July 6, 1999, the city revisited the issue of final plat approval, eliminated three lots for failure to meet "buildability" requirements and re-approved the final plat with three less lots than the original plat. Density transfer was neither mentioned nor approved.
At the time the contract was signed, both parties were aware that the density transfer provision was a provision in Tollefson's favor. Courts are inclined to enforce contractual clauses that are bargained for by parties in an arm's-length transaction. See Hauenstein Bermeister, Inc. v. Met-Fab Indus. Inc., 320 N.W.2d 886, 889 (Minn. 1982) (noting that "persuasive public policy reasons exist for enforcing a forum selection clause in a contract freely entered into by parties who have negotiated at arm's length"). Because the January 28, 1999 purchase agreement was the result of an arm's-length transaction, the district court did not err in enforcing the agreement.
II. Attorney Fees
The district court awarded attorney fees to Tollefson pursuant to Minn. Stat. § 549.211, subd. 2. An appellate court will not reverse a trial court's award of attorney fees absent an abuse of discretion. Radloff v. First Am. Nat'l Bank of St. Cloud, 470 N.W.2d 154, 156 (Minn.App. 1991), review denied (Minn. July 24, 1991). Cody argues that the trial court abused its discretion because Tollefson failed to follow the statute's procedural requirements.
A motion for sanctions based on Minn. Stat. § 549.211 "must be made separately from other motions," and it must "describe the specific conduct alleged to violate subdivision 2." Minn. Stat. § 549.211, subd. 4(a). The statute further requires that the party requesting sanctions serve the motion on the other party in accordance with the Rules of Civil Procedure. Id. But the requesting party cannot file the motion unless the challenged paper, claim, or contention is not withdrawn within 21 days after service of the motion. Id. Sanctions will not be awarded against a party "unless that party is given an opportunity to withdraw or correct the challenged paper or claim." Pfleiderer v. Pfleiderer, 591 N.W.2d 729, 734 (Minn.App. 1999).
The procedural requirements of Minn. Stat. § 549.211 were not satisfied in this case. First, Tollefson failed to make a separate motion for sanctions. Tollefson's request for attorney fees was combined with its motion for summary judgment. Second, Tollefson's request was filed with the court on the same day that it was served on Cody. Tollefson, therefore, did not give Cody an opportunity to correct his alleged bad-faith behavior. Because Tollefson did not comply with the statute's procedural requirements, the district court abused its discretion by awarding attorney fees. We therefore reverse the district court's award of attorney fees to Tollefson.
Affirmed in part and reversed in part.