Heart River Partners v. Goetzfried

• Decision Date: 22 August 2005
• Docket Number: No. 20050003,20050003
• Citation: 2005 ND 149,703 NW 2d 330
• Parties: Heart River Partners, a partnership, and Dave D. Mees and James W. Allen, partners, Plaintiffs and Appellants v. Darrell S. Goetzfried and Karen A. Goetzfried, Defendants and Appellees
• Court: North Dakota Supreme Court

2005 ND 149

703 NW 2d 330

Heart River Partners, a partnership, and Dave D. Mees and James W. Allen, partners, Plaintiffs and Appellants v. Darrell S. Goetzfried and Karen A. Goetzfried, Defendants and Appellees

No. 20050003

Supreme Court of North Dakota.

Filed August 22, 2005

Thomas D. Kelsch, Kelsch, Kelsch, Ruff & Kranda, P.O. Box 1266, Mandan, N.D. 58554-7266, for plaintiffs and appellants.

Charles "Casey" L. Chapman, Chapman and Chapman, P.C., P.O. Box 1258, Bismarck, N.D. 58502-1258, for defendants and appellees.

Opinion of the Court by Sandstrom, Justice.

Sandstrom, Justice.

[¶1] Heart River Partners and its partners, David D. Mees and James W. Allen, (collectively referred to as the "Partnership") appealed from a summary judgment dismissing their lawsuit against Darrell and Karen Goetzfried for reformation of a warranty deed and for damages. We affirm.

I

[¶2] In March 2002, Mees approached the Goetzfrieds on behalf of the Partnership to purchase commercial property consisting of seven lots and three storage buildings in Mandan. The property is bordered by 4th Street and 5th Street and was subject to two separate special assessments for completed improvements on those streets. In March 2002, the costs for the improvements on 5th Street had been assessed and certified with a balance due of about $8,000, but the costs for the improvements on 4th Street had not been certified. A special assessment of $46,599.18 for the 4th Street improvements was certified in the fall of 2002.

[¶3] According to Darrell Goetzfried, he told Mees about both special assessments at a March 2002 meeting, and the Goetzfrieds agreed to pay the balance of the assessment for 5th Street but not the uncertified assessment for 4th Street. According to Mees, he did not recall being told about the uncertified assessment for the improvements on 4th Street. In his deposition, Mees testified:

Q. Okay. During that conversation Darrell Goetzfried told you that there had been work done on Fourth Street, did he not?

A. No.

Q. He didn't mention anything about Fourth Street?

A. No.

Q. Didn't mention anything about construction?

A. No.

Q. Nothing about sewers?

A. No.

Q. Wasn't mentioned at all?

A. No.

Q. Did you ask anything about improvements that had been done?

A. The only thing that was talked about was some specials for some water and sewer that had been put in on Fifth Street.

Q. Okay. So tell me, if you could, what was said about Fifth Street.

A. Water and sewer, that there was some specials on that.

Q. Okay. Was there any other conversation about that?

A. That he would—I'm not sure if it was that day. He said he would pay for the specials that were there.

Q. Okay. That he'd pay for the specials that were there, and those were his words?

A. Basically.

Q. Okay. That's what I'm asking. You're not saying those were his exact words. You're kind of paraphrasing?

A. Right.

Q. And, to your knowledge, he was talking at that time about Fifth Street?

A. Right.

Q. Did you actually walk over to Fifth Street to look at it?

A. No.

Q. Did he just mention Fifth Street by name?

A. I believe not. He just looked that direction—we were looking that direction and he pointed to that direction. I knew it was Fifth Street.

Q. Okay. That's what I was getting to. So at some point in this conversation he points over in the direction of Fifth Street and talks about the specials; is that correct?

A. Right.

Q. And he said that he would pick up those specials?

A. Right.

Q. Okay. Was there any other talk about special assessments?

A. No.

Q. In fact, up until the date of closing, Mr. Mees, other than this one conversation that you just related to me, was there any discussion at all about special assessments?

A. There possibly could have been maybe something, you know, about him picking up them specials, but other than that, no.

Q. Okay. What I'm asking—understand this as you hear this—I'm asking for you to recall for me, can you recall any other conversation? You said maybe there might have been. Can you remember any?

A. No.

Q. So what you actually remember is the one conversation?

A. Right.

Q. And that would have been either, what, the first or second time that you met at the property?

A. Right.

Q. And that's when Mr. Goetzfried pointed over towards Fifth Street and said he'd pick up the specials?

A. Right.

Q. And is it fair that other than that conversation, you can't actually tell me about any other conversation prior to closing in which special assessments were even discussed?

A. Right.

In a subsequent affidavit, Mees stated the Goetzfrieds agreed to pay for all the special assessments against the property and did not specify that the agreement to pay was limited to the special assessment for the 5th Street improvements or to the special assessment that had been certified.

[¶4] Before the closing, the Goetzfrieds provided Mees with a copy of the annual tax statement for the property, which showed the certified special assessment for the improvements on 5th Street. On April 10, 2002, the parties executed an offer to purchase the property for $465,000. The offer to purchase said the property was "free and clear of all encumbrances," and it did not refer to either special assessment or indicate who would pay for special assessments. On May 1, 2002, the parties executed a warranty deed for the property, which stated the property was "free from all encumbrances, except installments of special assessments or assessments for special improvements which have not been certified to the County Auditor for collection." The Goetzfrieds' "seller's affidavit" stated there were "no unrecorded contracts for sale, liens, encumbrances or easements which affect the marketability of title to said property." Although the parties' closing statement prorated the 2002 installment for the special assessment for the improvements on 5th Street, Darrell Goetzfried thereafter paid the balance for that assessment. In the fall of 2002, the Auditor certified a special assessment of $46,599.18 for the improvements on 4th Street.

[¶5] The Partnership subsequently sued the Goetzfrieds, seeking reformation of the deed to require the Goetzfrieds to pay all the special assessments for the property, and $45,599.18, plus interest, for the special assessment for the improvements on 4th Street. The Goetzfrieds admitted they agreed to pay the special assessment for 5th Street, but denied they had agreed to pay all the certified and uncertified special assessments for the property.

[¶6] The trial court granted the Goetzfrieds' motion for summary judgment, concluding the warranty deed unambiguously required the Partnership to pay the special assessment for the improvements on 4th Street. The court concluded there was no evidence of a mutual mistake by the parties, nor were the Goetzfrieds aware the Partnership was under a mistaken impression about the assessments. The court decided the Goetzfrieds did not commit constructive fraud, because there was no special relationship between the Goetzfrieds and the Partnership that placed an affirmative duty of disclosure on the Goetzfrieds. The court decided the Goetzfrieds had no affirmative duty to the Partnership to disclose the uncertified special assessment for the improvements on 4th Street. The court also decided the Goetzfrieds did not commit actual fraud when they signed a disclosure statement indicating there were no unrecorded liens or unsatisfied encumbrances against the property, because the pending special assessment for the improvements on 4th Street was not at that time an encumbrance on the property under N.D.C.C. § 42-24-03.

[¶7] The trial court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶8] In State v. North Dakota State University, 2005 ND 75, ¶ 8, 694 N.W.2d 225 (quoting Zuger v. State, 2004 ND 16, ¶¶ 7-8, 673 N.W.2d 615 (citations omitted)), we explained our standard of review for summary judgment:

Summary judgment is a procedural device for promptly disposing of a lawsuit without a trial if there are no genuine issues of material fact or inferences which can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. "Whether summary judgment was properly granted is 'a question of law which we review de novo on the entire record.'" On appeal, this Court decides if the information available to the trial court precluded the existence of a genuine issue of material fact and entitled the moving party to summary judgment as a matter of law. Summary judgment is appropriate against parties who fail to establish the existence of a factual dispute on an essential element of a claim on which they will bear the burden of proof at trial.

Mere speculation is not enough to defeat a motion for summary judgment, and a scintilla of evidence is not sufficient to support a claim.

[¶9] Although the party seeking summary judgment has the burden to clearly demonstrate there is no genuine issue of material fact, the court must also consider the substantive evidentiary standard of proof when ruling on a motion for summary judgment. Swenson v. Raumin, 1998 ND 150, ¶ 9, 583 N.W.2d 102; Estate of Stanton, 472 N.W.2d 741, 743 (N.D. 1991). In considering the substantive standard of proof, the court must consider whether the trier of fact "could reasonably find either that the plaintiff proved his case by the quality and quantity of evidence required by the governing law or that he did not." Stanton, at 743 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986)).

III

A

[¶10] The Partnership argues there are genuine issues of material fact regarding its claim for reformation of the warranty deed. The Partnership argues the warranty deed does not reflect the parties' intent, because of fraud or mistake, and the trial court erred in...