Kannan v. Prabhakaran
| Decision Date | 09 July 2018 |
| Docket Number | A17-2069 |
| Parties | Anand Kannan, Appellant, v. Praveen Prabhakaran, Respondent, Vadivazhagi Kannan, Defendant. |
| Court | Minnesota Court of Appeals |
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2016).
Reversed and remanded
Hennepin County District Court
Mark R. Bradford, Bassford Remele, P.A., Minneapolis, Minnesota (for appellant)
Mark K. Thompson, MKT Law, PLC, Minneapolis, Minnesota (for respondent)
Considered and decided by Johnson, Presiding Judge; Reyes, Judge; and Smith, Judge.
UNPUBLISHED OPINION
The plaintiff in this case gifted $55,000 to his sister and her then-husband. The plaintiff later lent the couple an additional amount of money (which he claims was $40,000) in exchange for their promise to pay him $95,000. After that amount was not paid, the plaintiff sued his sister and her then-former husband. The district court granted summary judgment to the plaintiff's former brother-in-law on the ground that the $55,000 gift could not be recharacterized as a loan and that there was no consideration for the promise to pay $95,000. We conclude that the former brother-in-law is not relieved of his obligation to pay $95,000 to the plaintiff. Therefore, we reverse and remand.
In 2007, Praveen Prabhakaran and Vadivazhagi Kannan purchased a home in the city of Plymouth. In October 2007, they asked Anand Kannan (Vadivazhagi's brother) for a $10,000 loan so that they could make a down payment. Anand transferred $10,000 to Praveen and Vadivazhagi for that purpose. In November 2007, Praveen requested an additional loan of $45,000 so that he and Vadivazhagi could pay ten percent of the purchase price in cash. Anand transferred $45,000 to Praveen and Vadivazhagi for that purpose.
Praveen and Vadivazhagi's lender later requested confirmation that the two transfers were gifts that the couple was not obligated to repay. In November 2007, Anand executed two affidavits stating that each transfer was a "bona fide gift with no repayment expected or implied." Each affidavit contained language stating, "Section 1010 of Title 18, U.S.C. provides [that a person who] makes, passes, utters, or publishes any statement knowing the same to be false . . . shall be fined not more than $5,000 or imprisoned not more than two years or both."
In April 2008, Anand transferred an additional amount of money to Praveen and Vadivazhagi to assist them in paying down the mortgage loan on their prior residence, which they had not yet sold. Praveen and Vadivazhagi signed a written agreement thatrefers to a loan of $40,000. But the amount actually transferred pursuant to that loan agreement is disputed; Anand contends that he transferred $40,000; Praveen contends that Anand transferred only $30,000. Shortly after the agreement was signed, Praveen made a $40,000 payment on the mortgage on his and Vadivazhagi's previous home.
In July 2008, Anand transferred $175,000 to Praveen and Vadivazhagi so that they could pay off the mortgage on their previous home. Praveen and Vadivazhagi signed an agreement that states:
We Praveen Prabhakaran and [Vadivazhagi] Kannan hereby agree to repay the borrowed total sum of $95,000 . . . taken at different times @ 4.99% per annum from Anand Kannan. Oct 2007 => $10,000 . . . Nov 2007 => $45,000 . . . April 2008 => $40,000 . . . Additional $175,000 borrowed in July 2008 will be repaid either by title transfer to Anand Kannan or when the townhome (5050 #4) gets sold. The interest will be calculated monthly @ 4.99% per annum on the outstanding effective balance (Unpaid Principle and interest) from Oct 2007. We agree to completely pay off before [Praveen and Vadivazhagi's son] graduates from High School.
(Emphasis added.) Praveen and Vadivazhagi did not pay to Anand the entire $95,000 that is referenced in the first sentence of the July 2008 agreement. The record is silent as to when Praveen and Vadivazhagi's son graduated from high school, but we assume that he has done so. The July 2008 transfer of $175,000 is not at issue on appeal because Praveen and Vadivazhagi deeded their previous home to Anand in December 2010.
In July 2014, Praveen petitioned for the dissolution of his marriage to Vadivazhagi, and the marriage was dissolved in November 2016. See Prabhakaran v. Kannan, No. A17-0482, 2018 WL 577558, at *1 (Minn. App. Jan. 29, 2018). In August 2015, while the dissolution action was pending, Anand commenced this action against Praveen andVadivazhagi, alleging a breach of contract. Vadivazhagi signed a confession of judgment in the amount of $122,780.49. Praveen responded by denying Anand's claims; alleging counterclaims against Anand for fraud, unjust enrichment, conversion, and civil conspiracy; and alleging cross-claims against Vadivazhagi for fraud, indemnification and contribution, unjust enrichment, conversion, and civil conspiracy.
In April 2016, Anand and Praveen filed cross-motions for summary judgment. In July 2016, the district court granted Praveen's motion and denied Anand's motion. With regard to the 2007 transfers totaling $55,000, the district court reasoned that the transfers must be deemed to be gifts because Anand executed affidavits saying so, with knowledge that a false statement to that effect would be a violation of federal law. With regard to the April 2008 loan, the district court determined that Anand made a loan to Praveen and Vadivazhagi in the amount of $30,000 and further determined that Praveen and Vadivazhagi had repaid the loan in full.
Anand later moved for reconsideration of the district court's ruling. The district court granted the motion for reconsideration. In May 2017, the district court issued an amended order in which it again granted Praveen's motion and denied Anand's motion but for different reasons. With regard to the April 2008 loan, the district court reasoned that there is a genuine issue of material fact concerning the amount of the loan. But the district court reasoned that Praveen and Vadivazhagi were not obligated to repay any unpaid amount of the April 2008 loan on the ground that there is a lack of consideration. The district court found a lack of consideration because the affidavits Anand signed in November 2007 do not allow a gift to be converted to a loan, any subsequent conversionof the gifts to loans would be fraudulent, and recognizing a conversion of the gifts to loans would be contrary to public policy. Anand appeals.
Anand argues that the district court erred by granting Praveen's motion for summary judgment. A district court must grant a motion for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn. R. Civ. P. 56.03. A genuine issue of material fact exists if a rational trier of fact, considering the record as a whole, could find for the non-moving party. Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn. 2008). This court applies a de novo standard of review to a district court's legal conclusions on summary judgment and "view[s] the evidence in the light most favorable to the party against whom" the motion was granted. Commerce Bank v. West Bend Mut. Ins. Co., 870 N.W.2d 770, 773 (Minn. 2015).
Anand argues that the district court erred in two ways. First, Anand argues that the district court erred by reasoning that the parties could not enter into an agreement that obligates Praveen to pay Anand an amount that accounts for the 2007 gifts totaling $55,000. Second, Anand argues, in the alternative, that even if Praveen is not obligated to pay him an amount that accounts for the 2007 gifts of $55,000, Praveen remains obligated to repay the April 2008 loan (the amount of which is disputed but which Anand claims is $40,000).
Anand does not challenge the premise that, at the time of the 2007 transfers, they were intended to be gifts. He acknowledges that if the parties had not entered into any subsequent agreements, he would have no right to demand repayment of the $55,000. His acknowledgement is consistent with Minnesota caselaw. See Oehler v. Falstrom, 281 Minn. 561, 563, 160 N.W.2d 403, 405 (1968); Oehler v. Falstrom, 273 Minn. 453, 454-57, 142 N.W.2d 581, 583-85 (1966). Anand's theory is that, even though the 2007 transfers were intended to be gifts when they were made, the parties' subsequent agreements "converted" them to loans that must be repaid. Anand contends, in effect, that the parties entered into an independent agreement that is supported by consideration because "Mr. Prabhakaran and Ms. Kannan promised to do something they were not already obligated to do (repay the $55,000 gift)" and that, "in exchange, Mr. Kannan promised to do something he was not already obligated to do (lend an additional $40,000)."
A valid contract exists if "two or more parties exchange bargained-for promises, manifest mutual assent to the exchange, and support their promises with consideration." Medical Staff of Avera Marshall Reg'l Med. Ctr. v. Avera Marshall, 857 N.W.2d 695, 701 (Minn. 2014). "'Consideration requires that one party to a transaction voluntarily assume an obligation on the condition of an act or forbearance by the other party.'" Id. (quoting U.S. Sprint Commc'ns Co., Ltd. v. Commissioner of Revenue, 578 N.W.2d 752, 754 (Minn. 1998)). "A valuable consideration may consist of some benefit accruing to one party or some detriment suffered by the other, and the tendency is to emphasize the detriment to the promisee." Estrada v. Hanson, 215 Minn. 353, 355, 10 N.W.2d 223, 225 (1943).
It is undisputed that, in the July 2008 agreement, Anand agreed to lend Praveen and Vadivazhagi either $30,000 or $40,000, and Praveen and Vadivazhagi agreed to pay Anand $95,000, an amount of money that accounts for the 2007...
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