Opinion
No. C9-98-1134.
Filed February 23, 1999.
Appeal from the District Court, Redwood County, File No. C5-97-78.
J. Brian O'Leary, O'Leary Moritz, Chartered, (for respondent).
L. Wayne Larson, Gregory R. Anderson, Anderson Larson Hanson Saunders, P.L.L.P., (for appellants).
Considered and decided by Davies, Presiding Judge, Klaphake, Judge, and Amundson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
In November 1995, appellants Douglas and Keith Kerkhoff plowed under corn stalks remaining after harvest. The corn had been planted by respondent Mervin Kerkhoff. Respondent thereafter sued appellants, alleging wrongful interference with a contractual relationship, unjust enrichment, and negligence. Following trial, the court concluded appellants knowingly interfered with respondent's leasehold interest and awarded respondent $18,870 in damages.
The parties are related only as "distant cousins."
Because the evidence establishes the elements of a cause of action for intentional interference with contract, which in turn supports the trial court's findings and conclusions, we affirm on the issue of liability. Because the evidence fails to support the damages award, we reverse and remand for a redetermination of damages.
FACTS
The land involved in this dispute consists of 185 acres owned by the Alta Kuhn Estate. Barbara Kuhn, the personal representative of the estate, was authorized to lease the land.
Irvin Plotz leased the land from the Kuhn family for more than 25 years. In December 1994, Plotz entered into a written lease for a one-year period, beginning January 1, 1995. The lease contained a provision prohibiting subletting without Kuhn's consent.
At the time, Plotz was trying to sell his own 20-acre homestead. As an inducement for the purchase of his own property, Plotz offered to sublet the Kuhn land to any buyer. He spoke several times to appellants, but the sale fell through. Plotz eventually sold his land to Gregory Wersal and also sublet the Kuhn land to Wersal for the remainder of 1995.
Soon after Wersal sublet the Kuhn land from Plotz, he contacted appellants to inquire whether they wanted to sublease the land from him, but they declined. On May 1, 1995, Wersal entered into a written sublease with respondent. Respondent planted and harvested the corn, and left the stalks in the field. He claims that he intended to harvest the stalks and use them for cattle bedding.
Meanwhile, in September 1995, appellants contacted Kuhn directly to inquire about renting the land in 1996. Kuhn decided to lease the land to appellants.
On November 2, 1995, Kuhn received Plotz's last rent check. She contacted Plotz and told him that she had decided to lease to appellants in 1996. Kuhn testified that she knew Plotz's lease was not up until the end of the year, but she asked if appellants could plow back the land. Plotz and Kuhn disagreed about whether Plotz gave his permission to enter the land. On November 3, appellants entered the land and plowed it before respondent could harvest the remaining corn stalks.
At trial, appellants testified that they knew that (1) respondent was farming the land for the 1995 crop year; (2) respondent had planted corn on the land; (3) the remaining stalks were respondent's property; (4) respondent commonly used corn stalks in his livestock farming operation; and (5) respondent would be upset when they rented the land and plowed it, "[j]ust like we were upset when [respondent] took * * * land away from us."
Respondent testified that although he could have harvested corn stalks from his other fields, he had already plowed them under. He claimed that he intended to harvest the stalks from the Kuhn land because it was located close to his cattle. Respondent acknowledged that the sale of corn stalk bales is not a significant part of his business and that he either sells bales to neighbors or uses them in his own operations. He further acknowledged that he has never had to purchase baled stalks himself. Respondent further testified that in 1995 he sold about 400 bales to at least two neighbors and in 1996 he sold no bales.
The trial court based its damages award on respondent's testimony that corn stalk bales sold that year for $20 to $30 each, that his cost of production was $3 per bale, that he could have harvested an average of 6 bales per acre, and that the Kuhn land was 185 acres. The court concluded that a reasonable fair market value for the cornstalks was $20 per bale, minus $3 per bale for the cost of production, multiplied by 185 acres. The court thus set respondent's damages at $18,870.
DECISION
In a case tried by the court without a jury, we are limited to determining whether the court's findings are clearly erroneous and whether the court erred in its conclusions of law. Leininger v. Anderson , 255 N.W.2d 22, 26-27 (Minn. 1977). In determining whether findings are clearly erroneous, "due regard [must] be given to the opportunity of the court to judge the credibility of the witnesses." Minn.R.Civ.P. 52.01.
Appellants argue that the trial court erred in concluding that they knowingly interfered with respondent's leasehold interests, in the absence of evidence on each of the elements of this cause of action. We disagree. A cause of action for intentional interference with a contractual relationship requires (1) a contract, (2) knowledge of that contract by the wrongdoer, (3) intentional interference with that contract or intentional procurement of breach of that contract, (4) without justification, and (5) damages. Kjesbo v. Ricks , 517 N.W.2d 585, 588 (Minn. 1994); Furlev Sales Assoc., Inc. v. North American Automotive Warehouse, Inc. , 325 N.W.2d 20, 25 (Minn. 1982).
Existence of Contract
Appellants argue that no contract existed because any interest respondent had in the land derived not from Kuhn, the landowner, but from Wersal, the sublessee. Appellants further argue that the original lease contained a provision prohibiting subleasing without Kuhn's consent and that both Plotz and Wersal sublet the land to others without Kuhn's consent.
But whether Kuhn consented to the subleases is irrelevant. In an action seeking to recover for intentional interference with contract, the underlying contract need not be legally enforceable against the third person and may be voidable. Restatement (Second) of Torts § 766, at 10 (1979) (comment f). The fact that Kuhn may have defenses against the subleases has no bearing on whether respondent had valid and existing contractual rights. Id. ; see also Royal Realty Co. v. Levin , 244 Minn. 288, 292-93, 69 N.W.2d 667, 671-72 (1955) (contract voidable by reason of statute of frauds can afford basis for tort action when defendant interferes with performance).
Knowledge of Contract
Appellants argue that there is no evidence to support a finding that they knew of any contract rights respondent might have had in the land. However, appellants acknowledged that they knew respondent was farming the land, which was located close to their parents' farm. Appellants further acknowledged that they knew Plotz was leasing the land from Kuhn, due to their previous negotiations with Plotz. Appellants further must have known that Wersal was subleasing the land from Plotz, due to Wersal's contacting them to inquire whether they wanted to sublease the land from him in 1995. Although appellants might not have known the exact terms of the contract respondent had with Wersal, the evidence supports the conclusion that appellants knew or should have known that some type of contract existed.
Intentional Interference with Contract
Respondent seeks to recover for appellants' intentional interference with his property or chattels, which resulted in the loss of some or all of his contract rights. See W. Page Keeton, et al. , Prosser Keeton on the Law of Torts § 129, at 992 (5th ed. 1984) (intentional interference with contract may involve inducing third party to breach contract with plaintiff or direct interference with plaintiff's contract rights in property or chattels). Cases involving interference, rather than inducing or procuring a breach by a third party, often involve some independent tort. Id. "[I]n many cases interference with contract is not so much a theory of liability in itself as it is an element of damage resulting from the commission of some other tort[.]" Id. (citing Wild v. Rarig , 302 Minn. 419, 234 N.W.2d 775 (1975)).
In this case, that independent tort takes the form of conversion of a chattel, which is defined as "an act of wilful interference with a chattel, done without lawful justification, by which any person entitled thereto is deprived of use and possession." Larson v. Archer-Daniels-Midland Co. , 226 Minn. 315, 317, 32 N.W.2d 649, 650 (1948) (action for conversion of flax straw) (citation omitted); see also Restatement of Torts§ 226 ("One who intentionally destroys a chattel or so materially alters its physical condition as to change its identity or character is subject to liability for conversion to another who is in possession of the chattel or entitled to its immediate possession.") Thus, the evidence supports the conclusion that appellants intentionally interfered with respondent's contract rights.
Without Justification
Appellants argue that they had justification to enter the land and plow it because they sought and obtained Kuhn's permission. A defendant in an action for trespass or conversion cannot claim as a defense that another had a superior right to the land. See Restatement of Torts § 895(1) ("[O]ne who is otherwise liable to another for harm to or interference with land or a chattel is not relieved of the liability because a third person has a legally protected interest in the land or chattel superior to that of the other.") Moreover, tortious interference is not justified when a plaintiff demonstrates that the "defendant had knowledge of facts which, if followed by reasonable inquiry, would have led to a complete disclosure of the contractual relations and rights of the parties." Kallok v. Medtronic, Inc. , 573 N.W.2d 356, 362 (Minn. 1998) (defendant may not rely on incomplete consultation with counsel and resulting advice as justification for its action; rather, defendant must use some reasonable inquiry in ascertaining whether its actions will tortiously interfere with another's contractual relations) (quoting Swaney v. Crawley , 154 Minn. 263, 265, 191 N.W. 583, 584 (1923)). Finally, interference may be unjustified when the defendant acts with malice or some improper motive. See Restatement of Torts § 767(b), at 32, cmt. d. (interference improper if defendant's motive was to injure plaintiff or vent ill will on him). Given appellants' knowledge that respondent had been farming the land, that respondent commonly used corn stalks in his operations, and that respondent would be upset when they plowed the land, any reliance on Kuhn's representation that they could enter the land and plow could be found to be without justification.
Damages
Appellants argue that the evidence fails to support the trial court's findings on damages. We agree. Minnesota has adopted the contract measure of damages, limiting recovery to those damages that were within the contemplation of the parties when the original contract was made. Prosser § 129, at 1003-04 (citing Swaney v. Crawley , 133 Minn. 57, 60, 157 N.W. 910, 911 (1916)). This measure of damages may include lost profits, if proven to a reasonable degree of certainty. See Nelson v. Smith , 349 N.W.2d 849, 854 (Minn.App. 1984) (lost profits awarded to lessee when lessor breached contract to lease farmland), review denied (Minn. July 26, 1984). An injured party is also legally obligated to minimize loss caused by a breach of contract. Wavra v. Karr , 142 Minn. 248, 251, 172 N.W. 118, 120 (1919).
The trial court's award of damages assumes that respondent would have sold every bale he could have harvested from the Kuhn land, even though he testified that he sold no bales at all in 1996 and that he has never had to purchase any bales himself. The evidence, however, fails to establish that a market actually existed for every bale that respondent could have harvested. In addition, respondent could have mitigated any loss incurred by appellants' actions. We therefore conclude that the evidence fails to support the trial court's award of damages.
Nonetheless, respondent also testified that under the terms of his lease with Wersal, he would have been reimbursed $14 per acre if he had plowed back the land. No testimony was offered as to his labor or equipment costs. We therefore conclude that respondent's damages are limited to $14 per acre, minus any costs of plowing back.
We affirm on the liability issue, but reverse the award of damages and remand for redetermination of the amount of damages.