Christie v. Estate, A16-1244

• Decision Date: 16 May 2018
• Docket Number: A16-1244
• Parties: James F. CHRISTIE, Respondent, v. ESTATE OF Dilman CHRISTIE, et al., Appellants.
• Court: Minnesota Supreme Court

911 N.W.2d 833

James F. CHRISTIE, Respondent,

v.ESTATE OF Dilman CHRISTIE, et al., Appellants.

A16-1244

Supreme Court of Minnesota.

Filed: May 16, 2018

Ryan B. Magnus, Blair Magnus PLLC, Mankato, Minnesota; and Adam J. Houck, Adams, Rizzi & Sween, P.A., Austin, Minnesota, for respondent.

Ken D. Schueler, Jennifer M. Peterson, Dunlap & Seeger, P.A., Rochester, Minnesota, for appellants.

OPINION

ANDERSON, Justice.

This dispute is on its second appeal, following two jury trials, and requires us to decide whether the preponderance-of-the-evidence standard or the clear-and-convincing-evidence standard applies when determining the existence of an oral contract for the conveyance of farmland when only money damages are sought for the claimed breach of that contract. James Christie claims that his parents, Dilman and Dorothy Christie (now represented by their estates), were obligated under an oral contract for the sale of land to convey farm property to him. At the second trial in this case, the jury found by a preponderance of the evidence that an oral contract existed between James and his parents and awarded James damages for the breach of that contract. The district court concluded that James had detrimentally relied on the alleged oral contract and based on that determination, concluded that the statute of frauds, which would have otherwise barred enforcement of the contract, did not apply. The estates of Dilman and Dorothy ("the Estates") moved for judgment as a matter of law and a new trial, asserting primarily that the standard of proof that the jury used to decide whether the contract existed was erroneous. The district court denied the motion, the court of appeals affirmed, and we granted the Estates' petition for review. We now reverse the decision of the court of appeals and remand to the district court for a new trial.

FACTS

Respondent James Christie contends that he and his parents had an oral agreement concerning the sale of farmland, but appellants, the Estates, assert that there was no agreement. The alleged agreement was reached when James was experiencing significant financial difficulty. According to James, he and his parents orally agreed that (1) James would transfer ownership of his 470-acre farm to Dilman and Dorothy; (2) Dilman and Dorothy would borrow the funds, secured by a mortgage on the property, to finance the purchase of the land, with the loan proceeds going to pay off the debt of James; (3) James would make the loan payments; and (4) Dilman and Dorothy would transfer title to the property to James after the mortgage was satisfied. James eventually paid off the mortgage debt, but Dilman's estate¹ refused to convey title to the land to James.

James sued the Estates for enforcement of the alleged oral contract. Although a warranty deed reflects the conveyance of the property from James to Dilman and Dorothy (as joint tenants) in January 2004, it is undisputed that there is no documentation of an agreement to re-convey the land to James upon his satisfaction of the mortgage and payment of other expenses. In the original complaint, James asserted both legal and equitable causes of action and requested both legal and equitable relief.

At the end of James's case-in-chief during the first trial, the Estates moved for judgment as a matter of law and the district court granted the motion, concluding that there was insufficient evidence that the parties had entered into an oral contract. In addition, the district court concluded that the statute of frauds, which requires contracts for the sale of land to be in writing, Minn. Stat. § 513.05 (2016), prevented enforcement of the alleged contract.

The court of appeals reversed and remanded for a new trial, concluding that there was sufficient evidence of an oral contract to submit the issue to the jury. See Christie v. Estate of Christie (Christie I ) No. A14-2196, 2015 WL 5825096, at *1 (Minn. App. Oct. 5, 2015), rev. denied (Dec. 29, 2015).

At the second trial, the claim was tried as a breach-of-contract claim with damages as the sole remedy. But the parties disagreed about the standard of proof. The district court decided that preponderance of the evidence was the appropriate standard, rejecting the Estates' argument that clear and convincing evidence was the appropriate standard.

The jury returned a special verdict, finding that (1) there was a contract between James and Dilman and Dorothy that they would transfer the 470 acres of land to him following his payment of the mortgage, insurance, taxes, and maintenance; (2) James did, in fact, pay the mortgage in full, including insurance, taxes, and maintenance in reliance upon the contract with his parents; (3) Dilman and Dorothy breached the contract; (4) the breach directly caused James damage; and (5) the amount of money that would fairly and adequately compensate James for the damages caused by the breach was $3,332,000—the market value of the land.

The district court concluded that James had "detrimentally relied on the agreement to a sufficient extent to justify" enforcing the agreement as an exception to the statute of frauds.² According to the court, James detrimentally relied on the alleged oral agreement by conveying the property to his parents at a price "substantially less than fair market value" and making substantial—if not all—principal mortgage payments, in addition to paying the insurance, taxes, and maintenance. Because of his detrimental reliance, the court concluded that James "would incur unjust and irreparable injury" if the court applied the statute of frauds to prevent enforcement of the agreement.

After the second trial, the Estates moved for judgment as a matter of law or a new trial.³ The Estates contended that they were entitled to a judgment as a matter of law because (1) the oral agreement did not satisfy the statute of frauds; (2) the alleged oral agreement could not be removed from the statute of frauds "because there is not clear and unequivocal evidence of the alleged oral agreement"; (3) there could be no detrimental reliance without "clear and unequivocal evidence of the alleged agreement"; and (4) the jury's verdict was contrary to the evidence presented. They argued that they were entitled to a new trial because the district court improperly instructed the jury that a preponderance of the evidence, rather than clear and convincing evidence, is the standard of proof required to prove the existence of an oral contract. They also contended that they were entitled to a new trial because the evidence submitted at trial did not support the jury's verdict even when measured under the preponderance-of-the-evidence standard.

The district court rejected the Estates' argument that the jury should have used the clear-and-convincing-evidence standard to determine whether a contract existed. The court reasoned that the jury was simply "determining the existence of a stand-alone oral contract" and that James was not seeking specific performance, the relief normally associated with the clear-and-convincing-evidence standard, but instead was claiming money damages. The district court also concluded that "the evidence submitted supports the jury's verdict."

On appeal, the Estates argued that the district court erred by denying their posttrial motions. The court of appeals affirmed. Christie v. Estate of Christie (Christie II ) A16-1244, 2017 WL 1436081, at *4 (Minn. App. Apr. 24, 2017). The court of appeals concluded that the district court did not err by allowing the jury to use the preponderance-of-the-evidence standard instead of the clear-and-convincing-evidence standard to determine the existence of an oral contract because James sought damages and declined to seek specific performance. See id. at *2–3. The court suggested that the concern underlying the statute of frauds—that "real property is unique"—disappears when the parties agree not to seek specific performance and thus the standard of proof need not be elevated to the clear-and-convincing level. Id. The court also concluded that, when viewed in the light most favorable to the nonmoving party, the evidence in the record was sufficient to support the jury's findings. Id. at *3. We granted review.⁴

ANALYSIS

The Estates contend that the district court erred by denying their motion for a new trial because the district court improperly instructed the jury on the applicable standard of proof and because the evidence at trial did not support the jury's verdict.⁵ We review a district court's decision to grant or deny a new trial for an abuse of discretion. Moorhead Econ. Dev. Auth. v. Anda , 789 N.W.2d 860, 892 (Minn. 2010). A district court may grant a new trial for "[e]rrors of law occurring at the trial" or when "[t]he verdict ... is not justified by the evidence, or is contrary to law." Minn. R. Civ. P. 59.01.

"The district court has broad discretion in determining jury instructions, and we will not reverse where jury instructions overall fairly and correctly state the applicable law." Daly v. McFarland , 812 N.W.2d 113, 122 (Minn. 2012) (citation omitted) (internal quotation marks omitted). But "[a] new trial is required if the jury instruction was erroneous and such error was prejudicial to [the objecting party] or if the instruction was erroneous and its effect cannot be determined." Id. (citation omitted) (internal quotation marks omitted). "A jury instruction is prejudicial if a more accurate instruction would have changed the outcome of the case"; and if "the effect of the erroneous instruction cannot be determined, we will give the complainant the benefit of the doubt and grant a new trial." Domagala v. Rolland , 805 N.W.2d 14, 31 (Minn. 2011) (citation omitted). To determine whether the jury instruction was erroneous, we evaluate the applicable standard of proof, which is a question of law requiring de novo review. See C.O. v. Doe , 757 N.W.2d 343, 352 (Minn. 2008).

According to the Estates, the standard of proof required...