Betlach v. Wayzata Condominium

• Decision Date: 11 July 1979
• Docket Number: No. 48795.,48795.
• Citation: 281 NW 2d 328
• Parties: Frederick E. BETLACH, III, Appellant, v. WAYZATA CONDOMINIUM and Douglas Peterson, Respondents, Swanson-Abbott Development Co., et al., Defendants.
• Court: Minnesota Supreme Court

281 N.W.2d 328 (1979)

Frederick E. BETLACH, III, Appellant, v. WAYZATA CONDOMINIUM and Douglas Peterson, Respondents, Swanson-Abbott Development Co., et al., Defendants.

No. 48795.

Supreme Court of Minnesota.

April 6, 1979.

Rehearing Denied July 11, 1979.

Brenner & Harroun and Bernard M. Harroun, Minnetonka, for appellant.

Gray, Plant, Mooty, Mooty & Bennett and Stephen J. Snyder, Minneapolis, for respondents.

Heard before KELLY, YETKA and WAHL, JJ., and considered and decided by the court en banc.

KELLY, Justice.

This case is before us on appeal from a summary judgment entered in the district court dismissing plaintiff's suit for specific performance of an alleged contract. We reverse.

The original negotiations between the parties had been initiated by plaintiff, who was interested in establishing a location for his jewelry enterprise. The building which plaintiff found to be most suitable was then owned by Ruth Herrick, who leased the property to Polly Berg, Inc. During conversation with Polly Berg, plaintiff learned that defendant Wayzata Condominium had obtained a first right of refusal on Polly Berg's lease should she decide to relocate her business. The lease was for a renewable 5-year term and included an option to purchase. The lease specified the price and the conditions under which the option could be exercised. Plaintiff also learned from Polly Berg that defendant Swanson-Abbott Development Company was acting as Wayzata's agent in its real estate dealings.

Plaintiff approached Swanson-Abbott regarding the possibility of subleasing the building. Swanson-Abbott encouraged him to submit an offer which he subsequently did by letter dated February 24, 1976. The letter proposed that the sublease commence on May 1, 1976, that the rent, including utilities, insurance and taxes up to $2,400 per year would be $1,100 per month and that defendants would give plaintiff notice of any intention to destroy the building by January 31, 1977. It additionally provided that if a determination to raze the building were made, the sublease would not expire until January 31, 1978, at which time plaintiff would be permitted to dismantle and move the structure. If it were decided not to raze the building, plaintiff would then have the right to assume Wayzata's lease, including the option to purchase. This first letter also expressed plaintiff's desire to rent only the ground floor of the building.

Appellant was informed by Swanson-Abbott that his offer was not satisfactory and he thereafter amended his proposal in a letter of February 27, 1976. The first change in plaintiff's proposal was that it now encompassed the sublease of the entire building. This letter stated that the rent was to be $725 per month, the same as in the present lease plus an amount, not to exceed $5,000, sufficient to cover Polly Berg's relocation expenses. In response, plaintiff received a letter from Swanson-Abbott also dated February 27, 1976. The letter provided that it was "based on our various conversations and your letters of February 24 & 27th * * *." It went on to discuss the form of the sublease to be entered into by the parties and "* * * Acknowledged plaintiff's check * * * in the amount of $1,000.00 as a nonrefundable earnest money deposit to bind this agreement." It also provided that, "we defendants will, however, reserve to ourselves the right to purchase the building * * *." The concluding paragraph of this letter read as follows:

"In view of the mutual understandings outlined in your two letters and of the above we hereby accept your offer and bind ourselves to work out the balance of the details in good faith and as quickly as is practical."

The letter was signed by H. R. Swanson for Swanson-Abbott and was acknowledged by plaintiff.

Plaintiff subsequently moved into the building and commenced making monthly rent payments. He also began renovating the premises, incurring expenses of over $25,000 in the process. Defendants furnished plaintiff with a sublease which he found unacceptable and which he returned with some corrections and deletions. This amended version was similarly unsatisfactory to defendants, particularly with respect to plaintiff's belief that he was contractually entitled to assume the lease, including the option to purchase, should the respondent decide not to destroy the building. After several further meetings,...