Opinion
Nos. A05-99, A05-540.
Filed December 27, 2005.
Appeal from the District Court, Sherburne County, File No. C904336.
Jeffrey W. Lambert, Jeffrey W. Lambert, P.A., (for appellants)
Jan Stuurmans, (for Patrick Betcher and B T Construction)
Brian H. Gaviglio, Paul A. Merwin, League of Minnesota Cities, (for James Paulson and City of Zimmerman)
David J. McGee, Thompsen Nybeck, P.A., (for Patty Lundgren)
Considered and decided by Randall, Presiding Judge; Peterson, Judge; and Dietzen, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
In these consolidated appeals, appellants challenge the summary judgment for respondents city and building inspector based on official and vicarious immunity on appellants' claim for breach of a "special duty" concerning the sale and remodeling of the home they purchased. Appellants assert that the inspector undertook a "special" or "assumed" duty to them by voluntarily participating in the home inspection and breached that duty by failing to disclose dangerous conditions about the home of which he had actual knowledge. Appellants also argue that (1) the record shows that they relied on a description of the land by respondents contractor and realtor, that the reliance was reasonable, and that the reliance resulted in damages to appellants; and (2) the district court abused its discretion by denying appellants' motion to amend their complaint to add a claim against the realtor who represented both the buyers and the sellers of the land in question. We affirm.
FACTS
Breach-of-special-duty claim
In August 1998, respondent City of Zimmerman granted a variance and building permit to Dallas Carlson allowing him to move an existing house to 12400 Isle Road, Zimmerman, Minnesota. Carlson hired respondent Patrick Betcher as the general contractor to make improvements to the property and assist in moving the house onto the Isle Road property.
On October 15, 1998, respondent James Paulson performed a footing and frame-insulation inspection on the Isle Road property. On November 11, 1999, Paulson inspected the house's mechanical and plumbing systems. On January 6, 2000, Paulson performed a final inspection of the property and found items that were incomplete, including the firewall between the house and the garage, the deck, and some siding around the house's rim joists. Paulson refused to issue a certificate of occupancy until those items were completed. To date, no certificate of occupancy has been issued.
Appellants responded to a real-estate listing for 12400 Isle Road. Respondent Patty Lundgren, the listing real-estate agent, described the house and property to appellants. Lundgren informed appellants that the house had been relocated from Lake Minnetonka and that Carlson and Betcher had made many improvements to the house.
On March 4, 2000, appellants signed a purchase agreement that contained a contingency for a complete home inspection. Appellant Steve Dank requested that Betcher, who Dank knew was the chairperson of the Zimmerman Planning Commission, and Paulson, who Dank knew was the city's building official, meet him at 12400 Isle Road on March 7, 2000 to perform a complete inspection of the property.
In January 2002, appellants began noticing defects on the property, and in August 2003, Paulson informed them that seven changes were required to bring the property up to code. Those changes, which included the incomplete items identified by Paulson in January 2000, were required before a certificate of occupancy could be issued. Steve Dank stated in an affidavit:
4. At the meeting [on March 7, 2000, Steve Dank] asked about the property, the inspections and the permits which had been issued.
5. During the complete home inspection meeting, Paulson informed him that the home had been moved onto the premises and that there was a new foundation; Paulson told him that all of the items, including the mechanical, plumbing, framing and footings had been inspected and finaled; Paulson told him what efforts he had made to verify the existence of the footings; and Paulson represented to him that a final inspection had been completed.
. . . .
8. At no time did either Paulson or Betcher tell him of the incomplete nature of the final inspection nor did they tell him that a certificate of occupancy had not been issued because certain items had not been completed.
. . . .
10. [Appellants] relied on the representations of Paulson and on March 7, 2000, they removed the inspection contingency.
11. Had [Steve Dank] been told there had not yet been a complete final inspection and that there was no certificate of occupancy, he and his spouse would not have signed off on removing the inspection contingency, they would have canceled the purchase agreement and asked for a refund of their earnest money.
Property description
Appellants deposited $1,000 in escrow as earnest money. Before the closing, Lundgren told appellant Sandra Dank that the property that appellants were purchasing included the land to the birch tree. Betcher and Lundgren both described the property to include the area to the birch tree located about 100 feet east of the tarred part of Isle Road and 30 feet northeast of the actual lot corner.
After removing the home-inspection contingency from the purchase agreement but before the closing, appellants received a survey that showed that the area that Betcher and Lundgren described as included in the property is part of Isle Road, and that the lot line for the property that they were purchasing was at the edge, not the middle, of the unpaved portion of Isle Road. Steve Dank understood that the property did not extend to the middle of the unpaved portion of Isle Road. Appellants did not have their own survey performed before closing. Betcher and Lundgren represented to appellants that Betcher could obtain a vacation of the road as a member of the Zimmerman Planning Commission.
At the closing, Steve Dank did not discuss the discrepancy between Lundgren's representation and the actual lot line, and he did not request any adjustment in the purchase price. Rather, he assumed that Betcher would obtain the vacation.
Leave to amend complaint
On March 6, 2000, Lundgren received a letter from Carlson expressing concerns about Paulson's inspection. Lundgren did not inquire as to what concerns Carlson had and did not inform appellants that Carlson had concerns. After receiving a copy of the letter on March 11, 2000, Steve Dank asked Lundgren if he should have any concerns about the building official's inspections, and she replied that he should not.
DECISION I.
On appeal from a summary judgment, this court examines the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). This 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). Summary judgment is appropriate when a party fails to make a showing sufficient to establish the existence of an element essential to the party's case. Bersch v. Rgnonti Assocs., Inc., 584 N.W.2d 783, 786 (Minn.App. 1998), review denied (Minn. Dec. 15, 1998).
Appellants argue that by voluntarily performing the March 7, 2000 inspection of the property, Paulson assumed a special duty to them. Citing Hoffert v. Owatonna Inn Towne Motel, Inc., 293 Minn. 220, 199 N.W.2d 158 (1972) and Cracraft v. City of St. Louis Park, 279 N.W.2d 801 (Minn. 1979), appellants argue that, despite immunity, a plaintiff can recover against a municipality upon a showing that the municipality owed plaintiff a special duty as opposed to a duty owed to the general public. Appellants' argument is contrary to the supreme court's decision in Sletten v. Ramsey County, 675 N.W.2d 291 (Minn. 2004). The Sletten court explained:
Cracraft addressed an issue of substantive tort law. It involved a duty to inspect and established a test to determine if a government entity has a special duty of care rather than a general public duty to assure that third persons comply with the law. Id. at 806-07. In Cracraft, we cited to Hoffert v. Owatonna Inn Towne Motel, Inc., 293 Minn. 220, 199 N.W.2d 158 (1972), which recognized that the Minnesota legislature had abolished the doctrine of sovereign immunity as it applied to political subdivisions of the state and held that" these statutory provisions [abolishing immunity] merely removed the defense of immunity * * * and did not create any new liability for a municipality." Hoffert, 293 Minn. at 222, 199 N.W.2d at 159-60. In Cracraft, we mentioned that the applicable codes, ordinance, or statutes had not been drawn with sufficient specificity to create an inspection duty in favor of a class of individuals rather than the public as a whole. Id. at 806. We affirmed the grant of summary judgment because the record failed to show the creation of an assumed or special duty and reiterated that the abolition of sovereign immunity created no new torts. Cracraft, 279 N.W.2d at 808. So, while Cracraft may ultimately be utilized in this case, utilizing Cracraft before reaching the official immunity issue was an error [by the district court]. The question of whether a special duty to an individual exists differs from whether official immunity applies to the governmental conduct in issue, that is, whether the conduct at issue is discretionary or ministerial. If Ramsey County's agents were protected by official immunity, the district court would not reach duty of care, special duty, or foreseeability issues.
Sletten, 675 N.W.2d at 307.
Under Sletten, liability only arises under the special-duty doctrine when conduct is not protected by immunity. Therefore, we must first determine whether immunity applies. The precise government conduct at issue in this case is the representations made by Paulson while performing the March 7, 2000 inspection and his failure to disclose information from the earlier inspections. Appellants specifically argue that Paulson had a duty to inform them that no certificate of occupancy had been issued for the home. Paulson's conduct in performing the earlier inspections and his decision to not issue a certificate of occupancy are not at issue in this case.
"Official immunity is a common law doctrine that protects government officials from suit for discretionary actions taken by them in the course of their official duties." Sletten, 675 N.W.2d at 299. The goal of official immunity is to protect public officials from the fear of personal liability, which might deter independent action and impair effective performance of their duties. Elwood v. Rice County, 423 N.W.2d 671, 678 (Minn. 1988). Whether official immunity applies is a question of law that we review de novo. Sletten, 675 N.W.2d at 299.
Unlike statutory immunity, official immunity protects the kind of discretion which is exercised on an operational rather than a policymaking level. But the discretion involved with official immunity requires something more than the performance of ministerial duties. * * * An official's duty is ministerial when it is absolute, certain and imperative, involving merely execution of a specific duty arising from fixed and designated facts.
Id. at 301-02 (quotations omitted).
In attempting to establish the existence of a special duty, appellants argue that Paulson's performance of the March 7 inspection, specifically his decision as to what information to disclose about the earlier inspections, was a discretionary act. Appellants make no attempt to explain why the same conduct was not discretionary for purposes of official immunity, and we find no evidence in the record that Paulson's conduct was absolute, certain, and imperative, involving merely execution of a specific duty arising from fixed and designated facts. We, therefore, conclude that the district court properly applied official immunity to Paulson's performance of the March 7 inspection.
"Generally, if a public official is found to be immune from suit [based upon official immunity], his or her government employer will be vicariously immune from a suit arising from the employee's conduct and claims against the employer are dismissed without explanation." Anderson v. Anoka Hennepin Indep. Sch. Dist. 11, 678 N.W.2d 651, 663-64 (Minn. 2004). "[V]icarious official immunity [is appropriate] in situations where officials' performance would be hindered as a result of the officials second-guessing themselves when making decisions, in anticipation that their government employer would also sustain liability as a result of their actions." Id. at 664. We conclude that the application of vicarious official immunity is appropriate in this case. Accordingly, we affirm the summary judgment for Paulson and the city based on official and vicarious official immunity and need not address the merits of appellants' special-duty claim.
II.
Regarding the misrepresentation that a portion of the unpaved portion of Isle Road was included in the property, the district court determined that the evidence was insufficient to show that appellants were justified in acting upon the representation because they knew the actual property line before the closing. Justifiable reliance is a required element of a claim for intentional or reckless fraud and misrepresentation. See Florenzano v. Olson, 387 N.W.2d 168, 174 n. 4 (Minn. 1986) (listing elements of fraud and misrepresentation). The reasonableness of a plaintiff's reliance is ordinarily a fact question for the jury. Nicollet Restoration, Inc. v. City of St. Paul, 533 N.W.2d 845, 848 (Minn. 1995).
A party may be justified in relying on a representation of fact, even though that party might have ascertained its falsity upon investigation. City of Coon Rapids v. Suburban Eng'g, Inc., 283 Minn. 151, 156-57, 167 N.W.2d 493, 496 (1969); Erickson v. Midgarden, 226 Minn. 55, 57, 31 N.W.2d 918, 919 (1948). But, "courts cannot, under ordinary circumstances, extend relief to parties who fail to exercise reasonable diligence or discretion." Morrill v. Madden, 35 Minn. 493, 495, 29 N.W. 193, 194 (1886) (holding that it was unreasonable for a creditor to rely on representations of a debtor, a hostile and interested party, when it was easy to investigate the validity of the debtor's statements).
Appellants argue that the purchase agreement became final when the home-inspection contingency was removed and, at that time, they were justified in relying upon the misrepresentation. But appellants did not attempt to avoid the purchase agreement or have the price adjusted after discovering the actual lot line. This case falls within the rule that ordinary prudence would have prevented the deception because the existence and location of a public road are matters of public record. See Corazalla v. Quie, 478 N.W.2d 197, 198 (Minn. 1991) (buyer claimed that seller fraudulently induced a purchase of a parcel of land by advertising it as including shoreline on a "private" lake when an adjoining shoreline-property owner also had access to the lake; supreme court held that the seller was entitled to summary judgment based on "evidence of public record, readily available for inspection by a purchaser, which clearly discloses the fact that two parcels of land abut the lake"). Because ordinary prudence would have prevented the deception, appellants were not justified in relying upon the representations about the location of the lot line.
Regarding Betcher's representation that he would obtain a vacation of the road, a representation or expectation as to future acts is not a sufficient basis to support an action for fraud merely because the represented act or event did not take place. Martens v. Minn. Mining Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000); see Dollar Travel Agency, Inc. v. Nw. Airlines, Inc., 354 N.W.2d 880, 883 (Minn.App. 1984) (stating that fraud claims cannot be based on statements of intentions or opinions), review denied (Minn. Dec. 21, 1984). A representation as to future acts will only support an action for fraud if the promissor did not intend to perform at the time the promise was made. Martens, 616 N.W.2d at 747. The record contains no evidence that Betcher did not intend to perform at the time he made the representation.
The district court properly granted summary judgment for Lundgren and Betcher on appellants' fraud and misrepresentation claims.
III.
After a response has been filed, a party may amend its complaint only with the consent of the adverse party or by leave of the court. Minn. R. Civ. P. 15.01. "The decision to allow a party to amend its complaint after responsive pleading had been made lies within the sound discretion of the [district] court." Wessin v. Archives Corp., 592 N.W.2d 460, 468 (Minn. 1999). The district court should liberally grant motions to amend when justice requires and doing so will not result in prejudice to the adverse party. Minn. R. Civ. P. 15.01; Fabio, 504 N.W.2d at 761. The supreme court has recognized that "[t]he interests of justice may sometimes require denial of leave to amend where the motion is not made timely." Webster v. Schwartz, 249 Minn. 224, 229, 81 N.W.2d 867, 871 (1957). We review the denial of the motion to amend under an abuse-of-discretion standard. Fabio, 504 N.W.2d at 761.
The district court denied appellants leave to amend their complaint to add a claim alleging that because Lundgren represented both the buyers and the sellers of the property, she should have known what problems Carlson was referring to when she received a letter from Carlson on March 6, 2000, expressing concern about Paulson's January 6, 2000 final inspection of the property, and she did not disclose the problems to appellants. The district court denied leave to amend based on its findings that appellants failed to explain what concerns they had in mind when the letter from Carlson to Lundgren was provided to them, Lundgren would incur significant expense in having to conduct additional discovery, and appellants did not seek leave to amend the complaint until after the November 1, 2004 deadline for nondispositive motions had passed.
Appellants argue that their motion was timely because the facts on which the motion was based were not discovered until Paulson's and Lundgren's depositions. Paulson did not disclose the problems he discovered during the January 6, 2000 inspection until his deposition on October 25, 2004. Due to scheduling conflicts, Lundgren's deposition was not taken until December 3, 2004. Appellants filed their motion to amend the following Monday, December 6, 2004. But appellants received a copy of the March 6, 2000 letter from Carlson to Lundgren on March 11, 2000. A party must act with due diligence in seeking leave to amend a complaint. Meyer v. Best W. Seville Plaza Hotel, 562 N.W.2d 690, 694 (Minn.App. 1997), review denied (Minn. June 26, 1997). The district court did not abuse its discretion in denying appellants leave to amend their complaint.