Dyrdal v. Golden Nuggets, Inc.

• Decision Date: 16 December 2004
• Docket Number: No. A03-214.,A03-214.
• Citation: 689 N.W.2d 779
• Parties: David DYRDAL, Appellant, v. GOLDEN NUGGETS, INC., Respondent, Ron Micke, et al., Respondents.
• Court: Minnesota Supreme Court

689 N.W.2d 779

David DYRDAL, Appellant, v. GOLDEN NUGGETS, INC., Respondent, Ron Micke, et al., Respondents.

No. A03-214.

Supreme Court of Minnesota.

December 16, 2004.

Garth Gerald Gavenda, Christopher Kent Wachtler, Collins Buckley Sauntry & Haugh, P.L.L.P., St. Paul, MN, for Appellant David Dyrdal.

Boris Parker, Patrick Michael Anderson, Floyd E. Siefferman, Jr., Saliterman & Siefferman, P.C., Minneapolis, MN, for Respondent Golden Nuggets, Inc.

Delray Lynn Sparby, Thief River Falls, MN, for Respondent Ron Micke, et al.

Heard, considered and decided by the court en banc.

OPINION

ANDERSON, RUSSELL A., Justice.

In this case we affirm summary judgment dismissing a lessee's claim that he did not receive notice of sale sufficient to exercise a contractual right of first refusal to purchase the land he was leasing. We hold that when, as in this case, the lease provides the lessee with right of first refusal but is otherwise silent regarding the right, the lessor need only provide reasonable notice of the essential terms of an offer of sale to trigger the lessee's obligation to timely exercise his right of first refusal. We acknowledge that upon receiving notice of sale, the lessee may need to clarify or investigate uncertainties or ambiguities in essential sale terms before exercising the lessee's first refusal right, but we also hold that such inquiry, and lessor's response thereto, must be reasonable, timely and in good faith.

In 1988, appellant David Dyrdal (Dyrdal) began leasing 630 acres of land in the Red River Valley from respondent Golden Nuggets, Inc. (Golden Nuggets). In 1999, Golden Nuggets' farm manager, who was also its real estate agent, renegotiated the lease with Donovan Dyrdal (Donovan), Dyrdal's brother. Donovan had power of attorney for Dyrdal and acted in Dyrdal's behalf throughout this matter. Prior leases gave Dyrdal 45 days from offer of sale to accept or reject the offer but the 1999 lease provided only that Dyrdal "has first right of refusal to purchase land if it were to be sold."

In early August 2001, Golden Nuggets' farm manager orally notified Dyrdal of an offer to purchase the land. By letter of August 8, 2001, Golden Nuggets' attorney in Nebraska notified Dyrdal that his right of first refusal had terminated on August 6 at 8:15 a.m. and that Golden Nuggets had a buyer who would pay $252,000.¹ Dyrdal replied by letter of August 15, asserting that he had 45 days to exercise his right, relying apparently upon the terms of the prior lease. On August 16, Golden Nuggets' Nebraska attorney responded by fax to Dyrdal's letter, indicating that he was enclosing copies of a purchase agreement, and stating, "I find nothing in the present lease giving you 45 days to exercise your option of right of first refusal. The written lease controls the terms * * *." Dyrdal replied on August 16, indicating that he had received faxed transmissions that were not legible and requesting legible copies of the transmissions. Dyrdal wrote, "Upon receipt of that information the 45 days I have to exercise my rights will commence."

It appears from the record that on August 13, 2001 Dyrdal received by fax transmission a partially illegible copy of a purchase agreement dated August 9, 2001, providing for sale of the land by Golden Nuggets to respondent Micke Pokel Farms. Although partially illegible, the faxed copy of the agreement clearly provides for a $265,000 cash sale.

On August 21, Dyrdal received a fully typed but unsigned version of the August 9 purchase agreement. When compared with the partially illegible copy received earlier, the unsigned typed version discloses the identical standard form agreement and identical agreement terms. Both versions clearly indicate a sale price of $265,000, a down payment of $15,000, and a closing date on or before February 5, 2002. During the months that followed, Dyrdal made no attempt to exercise his right of first refusal and had no further communications with Golden Nuggets until, by complaint dated December 19, 2001, Dyrdal sued Golden Nuggets and Micke Pokel Farms and one of its general partners, Ron Micke, for breach of the lease. Dyrdal alleged that the land was not "farmable" because Golden Nuggets had failed to repair damage to ditch walls and embankments. Dyrdal also alleged that he had been denied the right of first refusal to purchase the land. Dyrdal filed a notice of lis pendens with the Marshall County Recorder. Golden Nuggets denied the allegations and counterclaimed, alleging that Dyrdal had disrupted the pending sale by filing the notice of lis pendens and that the disruption would result in loss of a " § 1031 exchange" tax benefit.²

Golden Nuggets and Micke Pokel Farms filed motions for summary judgment dismissing Dyrdal's complaint. At a prehearing conference on the motions, the district court denied Dyrdal's discovery request for information about other land purchases or attempted land purchases by Micke Pokel Farms. Dyrdal asserted, without factual support, that Micke Pokel Farms had conspired to buy other lands that Dyrdal or his family owned or were farming. The district court subsequently granted the motions for summary judgment dismissing Dyrdal's complaint. The court concluded Golden Nuggets had no duty under the lease to provide "farmable" land, and that Dyrdal had been afforded his right of first refusal but had failed to exercise it. Concluding that Dyrdal had initiated the lawsuit in bad faith based only upon "suspicions" and "personal opinion," the district court awarded costs, fees and attorney fees to Golden Nuggets and Micke Pokel Farms. The court of appeals reversed the award of bad faith attorney fees but otherwise affirmed the district court, also concluding that Dyrdal had been afforded this right of first refusal but had failed to exercise it. Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578, 586, 589 (Minn.App.2003). We received cross-petitions for review but granted only Dyrdal's petition seeking review of summary judgment dismissing his claim that he was denied right of first refusal. We affirm.

I.

On appeal from summary judgment, we consider whether there are genuine issues of material fact, and whether either party is entitled to judgment as a matter of law. Christensen v. Milbank Ins. Co., 658 N.W.2d 580, 584 (Minn.2003). The party opposing summary judgment may not establish genuine issues of material fact by relying upon unverified and conclusory allegations, or postulated evidence that might be developed at trial, or metaphysical doubt about the facts. See Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn.2001)

; DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn.1997).

Genuine issues of material fact

We turn to the question of whether there are genuine issues of material fact that preclude summary judgment. Under power of attorney from Dyrdal, his brother, Donovan, negotiated and signed the 1999 lease and also acted on Dyrdal's behalf throughout this matter. Donovan admitted at his deposition that he knew from copies of the purchase agreements he received in August 2001 that the sale price for the land was $265,000, that the down payment was $15,000, and that closing was to be on or before February 5, 2002. The only term that he did not understand in the purchase agreement concerned the land exchange. Yet, in the district court and the court of appeals, and now in this court, Dyrdal claims that there are genuine issues of material fact regarding the terms of the purchase agreement. He claims that Golden Nuggets agreed orally to sell the land to him before agreeing to sell the land to Micke Pokel Farms. Golden Nuggets denies that there was such an agreement and, in any event, an oral agreement to sell land is not enforceable under the statute of frauds. See Minn.Stat. § 513.05 (2002). Dyrdal next claims that he "heard" of a "land exchange" that might have altered the sale terms in the purchase agreement, but he made no inquiry concerning a "land exchange." The "land exchange" would not affect sale terms, however, because it concerned a "1031 land exchange" allowing Golden Nuggets to reinvest sale proceeds to avoid capital gains tax. See 26 U.S.C. 1031 (2000).

Dyrdal also claims that he was misinformed as to the sale price when Golden Nuggets' attorney first wrote advising him of a sale price of $252,000; yet, as already noted, his brother, Donovan, who acted for him with power of attorney throughout this transaction, admitted that he knew in August 2001 that the sale price for the land was $265,000, that the down payment was $15,000, and that closing was to occur on or before February 5, 2002. Dyrdal also asserts that he had doubts concerning terms of the sale because Golden Nuggets' farm manager and real estate agent had a history of engaging in "questionable business practices."³ Such general and conclusory allegations fail to raise fact issues that would defeat summary judgment in this case. See Funchess, 632 N.W.2d at 672

. Finally, Dyrdal's reliance upon "general comments around town" that the sale was proceeding on terms other than those stated in the purchase agreement is but metaphysical doubt that will not defeat summary judgment. See DLH, Inc.,

566 N.W.2d at 71. We conclude that Dyrdal has failed to establish genuine issues of material fact concerning the essential terms of the purchase agreement. Dyrdal received a legible copy of the purchase agreement by August 21, 2001, and he made no inquiry regarding the sale terms during the 45 days that he insists he had to exercise his first refusal right.

Discovery violation

Dyrdal also argues that the district court abused its discretion when it denied his discovery request for information about other land purchases or attempted land purchases by Micke Pokel Farms. Dyrdal asserts, without factual support, that Micke Pokel Farms was conspiring to buy other land that he or his family owned or were farming. We...