Busch v. Model Corp., No. A05-426.

• Decision Date: 10 January 2006
• Docket Number: No. A05-426.
• Citation: 708 N.W.2d 546
• Parties: Estelle BUSCH, Appellant, v. MODEL CORPORATION, et al., Respondents.
• Court: Minnesota Court of Appeals

708 N.W.2d 546

Estelle BUSCH, Appellant, v. MODEL CORPORATION, et al., Respondents.

No. A05-426.

Court of Appeals of Minnesota.

January 10, 2006.

COPYRIGHT MATERIAL OMITTED

Estelle Busch, Minneapolis, MN, pro se appellant.

Joseph Shun, New Brighton, MN, pro se respondent.

Considered and decided by DIETZEN, Presiding Judge; RANDALL, Judge; and PETERSON, Judge.

OPINION

DIETZEN, Judge.

Appellant challenges the district court judgment awarding respondent $5,000 in damages for breach of contract, arguing that the district court erred in not requiring respondent to refund $5,000 paid on a contract to build a garage for failure to comply with Minn.Stat. §§ 325G.06 to 325G.11 (2004) (the home solicitation sale statute). Because the home solicitation sale statute excludes contracts for the sale of real property, which includes improvements to real property, we reverse the district court's determination that the parties' contract constituted a home solicitation sale; however, because the parties' mutually rescinded the contract and appellant retained a benefit from respondent, we affirm the district court judgment in favor of respondent.

FACTS

Appellant Estelle Busch is the owner of residential property located in Minneapolis, Minnesota. In April 2002, appellant and respondent Joseph Shun, a residential construction contractor operating as Model Corporation, entered into a written contract regarding the construction of a new garage on appellant's property.

Respondent agreed to obtain a city permit; remove the old garage, driveway and sidewalk; excavate and grade a new pad for the garage; pour new concrete for the driveway and sidewalk; and construct a new garage. Appellant agreed to pay respondent a contract price of $14,900 in three installments: (1) $5,000 as down payment (Phase I); (2) $5,000 "after concrete" (Phase II); and (3) the balance upon completion (Phase III). Upon signing the contract, appellant paid respondent the $5,000 down payment.

Respondent commenced work on the project. But numerous disagreements between the parties ensued, particularly regarding the due date of the Phase II payment. After completion of the demolition and removal of the old garage, and the pouring of the concrete, appellant refused to make the Phase II payment, arguing that the concrete work was not done in accordance with acceptable standards and, therefore, respondent failed to complete the Phase I concrete work. Respondent asserted that he completed the work contemplated by Phase I of the contract and demanded the Phase II payment before progressing further on the project.

As a result of appellant's continued refusal to pay, respondent stated his intention to terminate the contractual relationship. Then, appellant sent a letter to respondent canceling the contract and demanding return of the $5,000 down payment. Appellant then entered into a contract with a new company to complete the project for $13,500. When respondent refused to return the down payment, appellant filed a lawsuit in conciliation court. The conciliation court found in favor of appellant and awarded her $3,600 in damages. Respondent appealed the award to the district court.

At trial, the parties appeared pro se and stipulated to certain facts, including that respondent obtained a building permit, removed the old garage and garage slab, excavated the rubble, and poured concrete for the new garage. Appellant testified that she was entitled to return of the $5,000 down payment because respondent violated the "home solicitation sale" statute; and that respondent's concrete work was below acceptable standards. Both parties testified that the negotiations and the execution of the contract occurred at appellant's home. Appellant also testified that respondent failed to notify her of the right to cancel the contract, or provide her with a notice of cancellation form as required by the statute.

To support her claim that the concrete work was below acceptable standards, appellant presented photographs and the testimony of her son, a civil engineer. Appellant admitted that the new company was able to use the concrete slab poured by respondent to complete the project. Respondent provided an accounting of his costs for the work that was completed, which totaled $6,565. Appellant did not provide evidence to refute these costs.

Following trial, the district court entered its order for judgment, concluding that the contract between the parties constituted a "home solicitation sale" and that respondent failed to comply with the statute by neither informing appellant of the right to cancel or providing her with a notice of cancellation form as required by the statute. The district court also concluded that appellant was not entitled to damages because the benefit received by appellant from respondent's work exceeded the cost of the down payment; and appellant failed to prove damages. This appeal follows.

ISSUES

I. Did the parties' contract constitute a "home solicitation sale," entitling appellant to statutory redress?

II. Did the district court err in entering judgment for respondent?

ANALYSIS

I.

Appellant first argues that the contract to build a garage is covered by Minn.Stat. §§ 325G.06-.11 (2004), the home solicitation sale statute. Appellant contends that, because respondent failed to comply with the statutory notification requirements she is entitled to a refund of the $5,000 paid for Phase I of the project. Although respondent failed to file a brief, we will determine the case on the merits. Minn. R. Civ.App. P. 142.03.

Statutory interpretation presents a question of law, which this court reviews de novo. Eischen Cabinet Co. v. Hildebrandt, 683 N.W.2d 813, 815 (Minn.2004). In Minnesota, consumer protection statutes have been enacted to protect a buyer in a "home solicitation sale." Minn.Stat. § 325G.06, subd. 2. A "home solicitation sale" is defined as:

[A] a sale of goods or services, by a seller who regularly engages in transactions of the same kind, purchased primarily for personal, family or household purposes, and not for agricultural purposes, with a purchase price of more than $25, in which the seller or a person acting for the seller personally solicits the sale, and when the buyer's agreement or offer to purchase is made at a place other than the place of business of the seller.

Id.

The primary protections afforded to a buyer in a home solicitation sale relate to the seller's obligation to notify the buyer of the right to cancel the sale. Id. § 325G.07. The statute requires that notice be provided orally; through specific statutory language in the contract; and by a notice of cancellation form. Id. § 325G.08, subd. 1. Until a seller has complied with the notice requirements, the buyer is free to cancel the home solicitation sale at any time and the seller must return any payments previously made by the buyer. Id. § 325G.09, subd. 1(a)-(c).

But the home solicitation statutes provide various exceptions from the definition of a home solicitation sale, including sales of "real property." Id. § 325G.06, subd. 2(e). Although the statutes do not provide a definition of "real property," other Minnesota statutes define the term. See, e.g., Minn.Stat. §§ 272.03, subd. 1 (2002) (taxation); § 256J.08, subd. 74 (2002) (welfare); § 398A.01, subd. 7 (2002) (regional railroad authorities); § 469.002, subd. 20 (2002) (housing and redevelopment authorities); § 471.656, subd. 3(e) (2002) (municipal bonds). These statutes uniformly define "real property" as including improvements to real property. Id. "As a matter of statutory construction, we presume that the legislature uses the same words the same way, even in different statutes." Stansell v. City of Northfield, 618 N.W.2d 814, 819 (Minn.App.2000). Therefore, we may reasonably conclude that the legislature intended the term "real property" in Minn.Stat. § 325G.06 to include improvements to such property.

An improvement to real property is defined as "a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs." Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 554 (Minn.1977) (citation omitted). This court has interpreted an improvement to real property to include remodeling, Taney v. Indep. Sch. Dist. No. 624, 673 N.W.2d 497, 504 (Minn.App.2004); installation of a furnace, Pacific Indem. Co., 260 N.W.2d at 554; installation of light fixtures, Citizens Sec. Mut. Ins. Co. v. Gen. Elec. Corp., 394 N.W.2d 167, 170 (Minn.App.1986), review denied, (Minn. Nov. 26, 1986); installation of electrical equipment and wiring in a barn, Johnson v. Steele-Waseca Coop. Elec., 469 N.W.2d 517, 519 (Minn.App.1991), review denied (Minn. July 24, 1991); and excavation as part of the process of building an attached garage and basement. Fiveland v. Bollig & Sons, Inc., 436 N.W.2d 478, 480-81 (Minn.App.1989), review denied (Minn. Apr. 24, 1989).

Here, the parties contracted for the removal of appellant's old garage and construction of a new garage. A new garage is a permanent fixture that enhances the value of appellant's property. See Pacific Indem. Co., 260 N.W.2d at 554. Thus, we conclude that the construction project of a new permanent garage constituted an "improvement" to real property, and the contract for such construction falls within the "sales of real property" exception to the home solicitation sale statute. See Minn.Stat. § 325G.06, subd. 2(e). Consequently, the district court erred in concluding that that parties' contract constituted a home solicitation sale; and respondent was not required to comply with the home solicitation statute's notification requirements.

II.

Appellant contends that respondent breached the contract by performing concrete work below acceptable standards, and by demanding the second payment prior to...