Warren v. Michael

• Decision Date: 04 March 2010
• Docket Number: No. 28,839.,28
• Citation: 148 N.M. 172,2010 NMCA 033,231 P.3d 628
• Parties: Warren and Betty BEAVER, Plaintiffs-Appellants,v.Michael and Karen BRUMLOW, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

148 N.M. 172

231 P.3d 628

2010 NMCA 033

Warren and Betty BEAVER, Plaintiffs-Appellants,v.Michael and Karen BRUMLOW, Defendants-Appellees.

No. 28,839.

Court of Appeals of New Mexico.

March 4, 2010.

Richard A. Hawthorne, P.C., Richard A. Hawthorne, Ruidoso, NM, Gibson & Leonard, P.A., JulieAnne Leonard, Ruidoso, NM, for Appellants.

Attorneys at Law, P.C., David M. Stevens, Ruidoso, NM, for Appellees.

OPINION

VIGIL, Judge.

{1} This case is about a verbal agreement made by Warren and Betty Beaver (Sellers) to sell land for a home site to Michael and Karen Brumlow (Buyers). Sellers reneged on the agreement after Mr. Brumlow left Sellers' employment and started working for a competitor. The trial court ordered specific performance of the oral agreement, and Sellers appeal. Sellers acknowledge that the evidence was sufficient for the trial court to find that they made the agreement with Buyers. Nevertheless, Sellers contend that specific enforcement of the verbal agreement is barred pursuant to the statute of frauds. We disagree and affirm.

BACKGROUND

{2} Sellers do not challenge the findings of fact made by the trial court. Therefore, the trial court findings of fact are undisputed and are binding on appeal.

{3} Buyer Michael Brumlow worked for Sellers in their race horse transportation business for approximately ten years, beginning in 1994, and ending in 2004. In October 2000, Sellers purchased twenty-four acres of property in the Village of Ruidoso Downs, and in approximately June or July of 2001, Mr. Brumlow asked Seller Warren Beaver if he would sell some of the land to put a home on. Mr. Beaver agreed, and the parties walked the specific boundaries of the property that Sellers would sell to Buyers.

{4} Sellers allowed Buyers to rely on their representations to Buyers that Sellers would sell Buyers the subject property. Buyers went into possession of the land with Sellers' consent. In reliance on Sellers' agreement to sell, Buyer Karen Brumlow cashed in her IRA and 401-K retirement plans, at a substantial penalty, to pay for the home and improvements. Buyers purchased a double-wide home and moved it onto the property. Mr. Beaver signed an application with the Village of Ruidoso Downs for placement of the home on the property he agreed to sell to Buyers. In reliance on the agreement, Buyers also skirted the mobile home, poured concrete footers and a concrete foundation for the home, built a deck and two sets of stairs to access the home, had electricity and a water supply run to the property, had a septic system installed, had a propane system installed, brought a Tuff Shed for storage onto the property, and landscaped the property. Mr. Beaver signed the application/approval required by the Village of Ruidoso Downs for the construction of the septic system. In reliance on the agreement, Buyers spent approximately $85,000.

{5} Sellers sought legal advice as to the manner in which to sell the property to Buyers, and the parties discussed with Sellers' attorney the requirement of a survey, and either a real estate contract or a note and mortgage. A fair inference from the record is that formal documents were not prepared and executed because Sellers discovered that their property was encumbered with a mortgage containing a due on sale clause. Throughout their time on the land, Buyers repeatedly requested that their contract be formalized, and Sellers responded, “We will work it out.”

{6} A date certain was never determined for the sale of the property or transfer of title to the property, nor was a price actually determined. However, Mr. Brumlow assumed he would pay whatever the market would bear in that particular neighborhood. He testified he thought the price would be “whatever it was worth.”

{7} Sellers drove by Buyers' home location daily during the time Buyers were making improvements to the land and setting up the home without ever expressing an intent not to sell the subject property to Buyers. Sellers never attempted to interrupt Buyers' quiet possession of the property during the years of possession. Sellers allowed Buyers to rely on their representations to Buyers that Sellers would sell Buyers the subject property for years without notifying Buyers they intended to renege on their promise.

{8} In March 2004, Mr. Brumlow gave Mr. Beaver a two-week notice of termination of his employment with Sellers, intending to go to work for a competitor of Sellers in the race horse transportation business. The relationship between the parties rapidly deteriorated, and Sellers changed their mind and decided not to sell the agreed upon tract of land to Buyers because of hurt or anger. Sellers then attempted to restructure the agreement as a “lease” as opposed to a sale, and then attempted to terminate the “lease” and evict Buyers. Sellers prepared and required Buyers to sign an “Agreement.” The “Agreement” required Buyers to pay Sellers $400 per month, and Buyers complied, believing it was payment for the land. When Buyers began writing “Land Payment” on the checks, Sellers stopped cashing the checks and alleged that the “Agreement” was for rental, although the “Agreement” did not contain the words “Rent,” “Rental,” “Lease,” or “Leasehold.” Buyers attempted to amicably resolve the dispute by offering to pay cash in the amount of the fair market value for the property and to have the property surveyed at their expense. Sellers refused.

{9} Sellers then filed a suit for ejectment against Buyers, seeking to remove them from the property by alleging that Buyers were in violation of a rental agreement. Buyers denied the existence of a rental agreement and affirmatively alleged that their occupancy was pursuant to an agreement to purchase the property. Buyers also filed counterclaims which included claims for breach of contract, fraud, and prima facie tort. Sellers pleaded the statute of frauds as a defense.

{10} The trial court concluded that Sellers entered into a contract with Buyers to sell them a specific portion of their land and that Sellers reneged on their agreement to sell the property to Buyers. The trial court further determined that Sellers changed their mind three years after making the contract, chose not to honor it, and attempted to unilaterally restructure the contract into a lease, which was never intended. In committing these acts, the trial court concluded, Sellers committed a prima facie tort, which they knew would harm Buyers. Addressing the statute of frauds defense, the trial court concluded that while the parties had no written agreement, the verbal agreement was proven by clear, cogent, and convincing evidence and that part performance of the contract by both Buyers and Sellers was sufficient to remove the contract from the statute of frauds. Furthermore, the trial court concluded, requiring a cash payment of the fair market value, as determined by a professional appraiser, was a proper equitable remedy.

{11} The trial court allowed Buyers a choice of remedy: money damages for the prima facie tort or specific performance of the contract. Buyers chose specific performance.

The property was appraised at a value of $10,000 by a professional appraiser, and a survey of the property to be sold was prepared. The final judgment directs that Buyers tender to Sellers the amount of $10,000 by depositing that amount into the trust account of Buyers' attorney within thirty days from the entry of the judgment, and that Sellers prepare and execute a good and sufficient warranty deed to Buyers for the property as described in the testimony of Mr. Brumlow and as depicted on the survey of the property. Upon receipt of the warranty deed executed by Sellers, payment of the $10,000 is to be made to Sellers. All other claims and counterclaims were dismissed with prejudice. Sellers appeal.

{12} Sellers contend that specific enforcement of the oral contract is barred pursuant to the statute of frauds because: (1) Buyers' part performance was not “unequivocally referable” to the verbal agreement; and (2) the verbal agreement was not certain as to the purchase price and time of performance. Sellers also argue that specific performance was improper because Buyers had an adequate remedy at law in damages. For the following reasons, we disagree and affirm.

STANDARD OF REVIEW

{13} Applicability of the statute of frauds raises a question of law, which we review de novo. Ellen Equip. Corp. v. C.V. Consultants & Assocs., 2008-NMCA-057, ¶ 16, 144 N.M. 55, 183 P.3d 940. We review the trial court judgment granting specific performance for an abuse of discretion. See Three Rivers Land Co. v. Maddoux, 98 N.M. 690, 693-94, 652 P.2d 240, 243-44 (1982) (stating that we review the grant of an equitable remedy for an abuse of discretion) overruled on other grounds by Universal Life Church v. Coxon, 105 N.M. 57, 58, 728 P.2d 467, 469 (1986). “An abuse of discretion will be found when the trial court's decision is contrary to logic and reason.” Three Rivers Land Co., 98 N.M. at 694, 652 P.2d at 244.

THE STATUTE OF FRAUDS

{14} The origin of the statute of frauds in the United States was the English statute entitled, “An Act for the Prevention of Frauds and Perjuries,” 29 Charles 2, ch. 3 (1677). See 72 Am. Jur. 2d Statute of Frauds § 1 (1974). “This statute was originally enacted to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the parties.” Weber v. De Cecco, 61 A.2d 651, 653 (N.J.Super.Ct. Ch. Div.1948). When the statute was enacted in England, it was deemed necessary because the jury system was unreliable, rules of evidence were few, and the complaining party was disqualified as a witness so he could neither testify on direct examination nor be cross-examined. See McIntosh v. Murphy, 52 Haw. 29, 469 P.2d 177, 179 (1970) (citing Summers The Doctrine of Estoppel and The...