HomeMy WebLinkAboutOrder
LO)l~E~
~ T1-'1- n ,-\ N\ T
I ::, ~>~ i" \"~ ' t 1 \' \
j \, j' j" ;, ,
...L .,. ~ _', .r. ,,-_.' ._,
\;\ p d a.t'~.... L/
. :"'-~!'
. ~. ,1~:: \. " ~:-:: ~-":
, ." ""-,
I
".
LAW FIRM
.... .......h
. ._~ t~t~.'
.............. ........ ..............
1800 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Lom1//('n. Nelson. Colt- & Sta!{('hcrg. P. A.
Southside Office Plaza, Suite 2A
1810 Crestview Drive
Hudson, WI 54016
(612) 339-8131
Minnesota W A TS (800) 752-4297
FAX (612) 339-8064
Stephen C. Rathke
Attorney at Law
Minneapolis Office
(715) 386-8217
Twin City Line (612) 436-8085
FAX (715) 386-8219
(612) 336-9305
December 23, 1993
Mr. Frank Boyles
City Manager
city of Prior Lake
4629 Dakota St SE
Prior Lake MN 55372
Mr. Doug Gronli
Minnesota League of Cities
3490 Lexington Ave N
st. Paul MN 55126
Mr. Robert Weisbrod
Berkley Risk Service
920 Second Ave S
suite 700
Minneapolis MN 55402
RE: priorview Ltd. Partnership v. ISD No. 719, et ale
Our File No. P31893
Claim No. 11002679
Gentlemen:
~.
Enclosed please find a copy of Judge Richard Menke's Order
granting the City of Prior Lake summary judgment and dismissing all
of Priorview's claims against the city. The school district
continues to be a Defendant in the breach of contract claim (Count
I). I enjoyed working on this case. Thank you for referring it to
this office.
Very truly yours,
LOMMEN, NELSON, COLE & STAGEBERG, P.A.
Stephen C. Rathke
SCR: jrw
Enclosures
--_/ '. ~.
---
STATE OF MINNESOTA
DISTRICT COURT
COUNTY OF SCOTT
FIRST ~uvICIAL DISTRICT
priorview Limited Partnership,
a/k/a priorview Limited, a
Minnesota Limited partnership,
Court File No. 93-08239
plaintiffs,
ORDER
Independent School District No. 719,
and the city of Prior Lake,
FilED ~
U. ~ r 1 7 109....
!:.l" .OJ j
vs.
Defendants.
SCOTT COUNTY COURTS
The above-captioned matter came before me for hearing on
November 3, 1993, at the Scott County Courthouse, City of Shakopee,
County of Scott, State of Minnesota.
Daniel J. Young appeared on behalf of Plaintiff. James E.
Knutson apppeared on behalf of Defendant Independent School
District No. 719.
Stephen C. Rathke appeared on behalf of
Defendant City of Prior Lake.
Having examined all of the evidence submitted by the parties
and having heard arguments of counsel, I make the following:
ORDER
1. Defendant City of Prior Lake's motion for summary
judgment is granted on all counts.
2. Defendant Independent School District No. 719's motion
for summary judgment is granted on counts two and three of
plaintiff's complaint.
3. Defendant Independent School District No. 719's motion
for summary judgment is denied on count one of Plaintiff's
complaint.
4. All other Motions are denied in their entirety.
5 . The attached Memorandum
COURT
Dated: December 1'/, 1993.
JUDGMENT
I hereby certify that the above Order for Summary Judgment shall
constitute the Judgment of this Court.
Dated: December 11, 1993.
Court Administrator
MEMORANDUM
JI.!
Posture:
The parties appeared on Defendants' motion for summary
judgment. Plaintiff's complaint pleads causes of action for breach
of contract, unjust enrichment, and fraud and misrepresentation.
Defendants claim that Plaintiff's action is barred by the statute
of limitations, that Defendants were not unjustly enriched, and
that Plaintiff's fraud claim is not supported by sufficiently
specific facts. Plaintiff withdrew a claim for punitive damages by
filing an amended complaint on November 1, 1993.
Summary judgment is governed by Rule 56 of the Minnesota Rules
of Civil Procedure.
The standard for granting summary judgment
appears in Rule 56.03:
"Judgment shall be rendered if the pleadings,
depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and
that either party is entitled to judgment as a matter of
law." Minn. R. civ. P. 56.03 (1989).
A nonmoving party must demonstrate facts supporting each element of
its cause of action or defense sufficient to "establish the
existence" of each element, to show that a genuine fact issue
remains for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23,
91 L.Ed.2d 265, 273 (1986); See Thiele v. Stich, 425 N.W.2d 580,
583 (Minn. 1988). Absent a genuine issue of material fact, summary
judgment of purely legal issues is appropriate. lOA C. Wright, A.
Miller, M. Kane, Federal Practice and Procedure, S 2725 at 75-77
(2d ed. 1983). The Court always construes the facts, including all
inferences, in favor of the nonmoving party. Grondahl v. Bulluck,
1
318 N.W.2d 240, 242 (Minn. 1982); lOA Federal Practice S 2727 at
125.
Discussion:
Defendants move for summary judgment based on both the
applicable statute of limitations and substantive issues as well.
This Memorandum will discuss the substantive claims first and
address the statute of limitations second.
Plaintiff filed responsive affidavits and a brief in violation
of Rule 115.03(b) of the General Rules of Practice for District
Courts. At the hearing, counsel for the Plaintiff conceded that a
clerical error at counsel's office resulted in the late filing. On
November 3, 1993, at the hearing, Plaintiff acceded to Defendants'
request to file reply briefs following the hearing.
Defendants
both filed reply briefs having considered Plaintiff's tardy
submissions. The opportunity for Defendants to reply offsets any
prejudice created by Plaintiff's error.
I. Breach of Contract.:
The parties to the contract in this dispute, priorview Limited
and Independent School District Number 719, appear to agree that a
document signed by Superintendent Cy F. Kruse and the clerk of the
school board on September 16, 1983 (Exhibit 8 to Affidavit of Larry
Anderson) establishes the terms which govern the rights and
obligations of the relationship between priorview and the school
district. 1
The
document
followed
correspondence
between
lSee Memorandum in Support of Motion for Dismissal, by the
school district, at p. 3; Affidavit of Cy F. Kruse at paragraph 9;
Affidavit of Joseph Knobloch at Paragraph 4.
2
representatives of both parties. Notably, the City of Prior Lake
participated in neither the negotiations nor the subsequent
construction except to advise priorview about constructing the
road. All parties to this action agree that any improvement of
Five Hawks Avenue had to meet standards set and enforced by the
City of Prior Lake. Clearly, the City of Prior Lake was not a
party to the contract. On the undisputed facts, Plaintiff has no
breach of contract claim against the City of Prior Lake. Summary
judgment must be granted as to this Defendant and this count of the
Complaint.
The September 16, 1983 document constituted an offer by the
school district that priorview accepted through its conduct. An
offer "empowers the offeree to create a contract by his or her
acceptance." Leaaue General Insurance Companv v. Tvedt, 317 N.W.2d
40, 43 (Minn. 1982). In Minneaoolis Cablesvstems v. Citv of,
Minneapolis, the Minnesota Supreme Court held that a Minneapolis
City Council resolution left the city's options open and was not an
offer capable of supporting an enforceable contract. 299 N.W.2d
121, 123 (Minn. 1980). The resolution in the Cablesvstems case
qualified itself as subject to final approval by each party. Id.
The September 16, 1983 document has no qualifying provisions and
provides the terms of a potential agreement in great detail. No
priorview representative signed the September 16, 1983 document,
but priorview bound itself to the terms of the document by
commencing the improvement of Five Hawks Avenue.
A contract therefore exists between priorview and Independent
3
School District Number 719. On summary judgment, Plaintiff needs
to at least show a factual dispute about any alleged breach of
contract by the school district. The terms of the contract are
paramount to any such dispute. In the September 16, 1983 document,
The school district agreed to bear certain percentages of the
expenses for paving Five Hawks Avenue.2 The document specifically
notes that all costs listed in the document, but for the specific
credit to the school district, represent estimates. Payment for
each project was to have occurred upon completion of the projects.
The document stated that Phase II had to be completed within five
years of September 16, 1983.
Plaintiff has demonstrated a factual dispute and a legal basis
for the breach of contract claim in light of the terms in the
document. Though the parties dispute the actual completion dates
for phases 1 and 2, the terms clearly provide for payment at the
end of each project and completion of both projects by September
16, 1988.
Whether priorview completed phase 1 in 1983, as
Defendants claim, or in 1987, as Plaintiff claims, completion of
phase 1 fell within the five year limit. The school district has
not paid any portion of the e.A.!:Jense for phase 1.
Phase 2 was
completed in either 1985 or 1991, and the school district has paid
~he school district agreed to pay 39.53% of "Phase I reshaping
surfacing as well as walkway costs so long as those costs are
directly related to full compliance with the requirements of the
City of Prior Lake and so long as the project is advertised for
public bidding pursuant to Minnesota Statute." priorview agreed to
credit the school district's $25,204.70 past payments for improving
the gravel road as well. In addition, the school district also
agreed to pay various percentages of phase II costs for roadways,
walkways and drainage.
4
no portion of phase 2 expenses either.
II. Uniust Enrichment:
Plaintiff alleges that both Defendants were unjustly enriched
by Plaintiff's paving work on Five Hawks Avenue. with respect to
the school district, unjust enrichment is an alternative theory to
the breach of contract count. Plaintiffs allege that the City of
Prior Lake unjustly benefitted from priorview's road work without
compensation. Minimal analysis of unjust enrichment reveals why
the theory cannot apply to either Defendant in this case.
Unjust enrichment is a theory of restitution based on the idea
that no one should gain benefits at another person's expense
without compensating them. Cady v. Bush, 166 N.W.2d 358, 361
(Minn. 1969). The theory is historically based on equitable or
quasi-contractual principles. Joseph M. Perillo, Restitution in a
contractual Context" 73. Colum. L. Rev. 1208, 1210-11 (1973).
Courts may find a quasi-contractual obligation in two scenarios.
First, a quasi-contract may provide recovery where the parties
clearly did not contract. Second, a court may imply a legal
obligation where parties intended to contract but erred by mistake,
failure to comply with the Statute of Frauds, or some other
problem. Id. at 1209.
The history of unjust enrichment emphasizes that courts will
only resort to it absent a definite agreement. One may not recover
based on unjust enrichment where the parties made an express
contract. u.s. Fire Insurance Co. v. Minnesota State Zooloaical,
Boarq, 307 N.W.2d 490, 497 (Minn. 1981); See Cady v. Bush, 166
5
N.W.2d at 361. As discussed above, an express contract controls
plaintiff's relationship with the school district.
Therefore,
plaintiff may not recover from the school district based on this
theory.
The claim that the City of prior Lake was unjustly enriched
lacks merit in light of relevant case law.
Where a contractor
sought costs for connecting a city water main and his development,
the Minnesota supreme Court held that plaintiff needed to show
"whether the city actually received any benefit from he
installation of the water main extension. II
Rettman v. city of
Litchfield, 354 N. w. 2d 426, 429 (Minn. 1984). 3
Notably, the
construction in Rettmanwas initiated under a statute that made the
construction a city project. Id.. at 427; .See Minn. Stat. S429 et
seq. (1988).
priorview's project other than to certify that the work complied
with city ordinances.
To survive s~ary judgment, Plaintiff must allege that the
road gave some real benefit to the city as a whole. The examples
contemplated by the Minnesota supreme Court include parks,
playgrounds or pedestrian skyWays. Rettman, 354 N.W.2d at 428.
Whether a the city received a benefit is a factual question. Id.
at 429. prio~view has submitted no facts to show that the city
benefitted from the project, relying merely on assertions that the
city did indeed benefit from the paved road. without any factual
The city of prior Lake did not participate in
311There must be, however, a strong showing of benefit actually
received by .the city as a whole to alloW recovery under quasi-
contract. . . II ;Rettman., 354 N. W. 2d at 429.
6
dispute, the city is entitled to judgment as a matter of law on the
unjust enrichment count.
III. Fraud and Misrepresentatio~:
This Court need not address the substantive aspects of
plaintiff's fraud and misrepresentation claims because, as
discussed below, the statute of limitations bars plaintiff's cause
of action for fraud and misrepresentation.
IV. statute of Limitations,:
A. Contracts,:
plaintiffs must commence contract claims within six years by
state statute. Minn. stat. S54L05, subd. 1 (1) (1986). The
statute of limitations runs from the time a party can initiate an
action. Leisure Dvnamics, Inc. v. Falstaff Brewina CorP." 298
N.W.2d 33, 37 (Minn. 1980). The right to pursue a claim begins
when damage occurs. Block v. Litchv, 428 N.W.2d 850, 854
(Minn.APP' 1988). On the breach of contract count, the question is
when was priorview allegedly damaged by Defendants' conduct.
By the termS of the contract, plaintiffs were to be paid upon
completion of each part, phase 1 and phase 2, of the project. The
contract also notes that the school district would pay costs
"directly related to full compliance with the requirements of the
City of prior Lake." The latter statement implies that the school
district would consider the road completed when it complied with
the city'S requirements. A letter from Gregory Mead of the school
district, dated April 18, 1985, reinforces this implication and
states that "obviously the school district will not do anything
7
relative to payment until: the city accepts the road." The city had
not accepted the road when priorview first paved it in 1985.
Although Plaintiff may have requested payment in 1984, the
language of the contract and related correspondence indicate that
completion meant acceptance by the city of prior Lake. Subsequent
problems with the road necessitated further work. The road was
accepted on July 21, 1987, and Plaintiff filed its complaint on
July 20, 1993, within the statute of limitations.
B. Fraud,:
Fraud claims must be filed within six years of discovery by
the complaining party of "the facts constituting the fraud." Minn.
stat. SS41. OS subd.1 (6)
unidentified representatives of the city of prior Lake and
Independent school District 719:
"represented that the existing gravel road had been
adequatelY maintained to sustain no further work
necessary to proceed with asphalt on the road."
plaintiff's Memorandum in apposition at p. 17.
In a letter dated November 25, 1985, Jack D. Van Remortel of
(1986).
Plaintiffs allege that
Northwest Asphalt, Inc. wrote to Plaintiffs and referred to
independent testing on the road which indicated that:
"the 12" base thickness claimed by the school district,
and confirmed by Larry Anderson' s "visual" inspection
just was not there."
Clearly, Plaintiff knew of the facts constituting the alleged fraud
as early as 1985.
Plaintiffs do not allege that the fraud was not discovered
until within the six year statute of limitations. The Minnesota
supreme court has held that, "in an action for fraud brought more
8
than 6 years after the f~audulent acts relied upon, the plaintiff
must allege in his complaint that he did not discover fraud until
within 6 years before commencement of the action." Kellv v. Kellv:,
229 N.W.2d 526, 530 (Minn. 1975). Bere, Plaintiff knew all the
facts relevant to the alleged fraud by November, 1985. AS a
result, plaintiff's fraud claim must be dismissed as outside the 6
year statute of limitations.
9