Mavco, Inc. d/b/a Maverick Construction Company v. American Family Mutual Insurance Company ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1085
Mavco, Inc. d/b/a Maverick Construction Company,
Appellant,
vs.
American Family Mutual Insurance Company,
Respondent.
Filed March 9, 2015
Affirmed
Halbrooks, Judge
Hennepin County District Court
File No. 27-CV-12-23280
Mark J. Kallenbach, Minneapolis, Minnesota (for appellant)
Kirsten J. Hansen, Jesse C. Beier, Stich, Angell, Kreidler, Dodge & Unke, P.A.,
Minneapolis, Minnesota (for respondent)
Considered and decided by Halbrooks, Presiding Judge; Johnson, Judge; and
Larkin, Judge.
UNPUBLISHED OPINION
HALBROOKS, Judge
Appellant construction company challenges summary judgment in favor of
respondent insurer, arguing that the district court erred by ruling that its breach-of-
contract, promissory-estoppel, and unjust-enrichment claims fail as a matter of law. We
affirm.
FACTS
In May 2008, a hail storm caused damage to three multi-family housing
developments governed by homeowners’ associations. The losses were covered by group
casualty insurance policies issued to the associations by respondent American Family
Mutual Insurance Company. The insurance policies provided American Family with the
option of paying the value of lost or damaged property or paying for repairs.
Each association entered into a contract with appellant Mavco, Inc. to repair the
storm damage, and although Mavco disputed American Family’s adjustment of the
losses, it made the repairs. American Family made a series of payments to the
associations, which included 6% overhead and profit for Mavco. The associations in turn
paid Mavco. Mavco submitted estimates to American Family for supplemental work and
an additional 14% overhead and profit.1 American Family rejected some of the requests
for additional payments, claiming that the costs were either not covered by the policy,
were included in the 6% overhead and profit already paid, or were for unapproved costs.
The associations filed lawsuits against American Family, alleging breach-of-
contract, unjust-enrichment, and promissory-estoppel claims. E.g., Alpine Meadows
Townhome Ass’n v. Am. Fam. Mut. Ins. Co., No. A11-1328, 2012 WL 1070107, at *1
(Minn. App. Apr. 2, 2012). Mavco was not a party to that litigation, and the complaint
did not mention Mavco. Id. In preparation for trial, counsel for American Family
deposed the president of the Alpine Meadows Townhome Association’s board of
1
Mavco asserts that the industry standard is 10% overhead plus 10% profit.
2
directors as well as Bryan Reitzner (Mavco’s president) and Brian Schwab (Mavco’s
estimator and salesperson).
The association board president testified that she “had no idea” that Alpine
Meadows was the plaintiff in the lawsuit, that she had not seen the complaint, and that
she was surprised that Mavco was not the plaintiff.2 Id. She also testified that all of the
money paid by American Family to Alpine Meadows had been paid to Mavco, that
American Family owed nothing to Alpine Meadows, and that Alpine Meadows had not
suffered any damages, rather “it is [Mavco] that is owed the money.” Id. The district
court granted summary judgment to American Family. Alpine Meadows appealed, and
we affirmed, concluding that
Alpine Meadows’ contract claim is based on an allegation
that American Family breached the insurance policy by
failing to pay [Mavco] an amount of money that [Mavco]
asserts it is owed for completing the repairs. Although Alpine
Meadows claims that American Family breached the policy,
Alpine Meadows did not allege that American Family denied
any part of its insurance claim and did not cite any policy
provision that American Family breached. The alleged
breach concerns American Family’s failure to pay [Mavco],
but nothing in the record establishes that American Family
entered into a contract with [Mavco] or that Alpine Meadows
assigned its rights under the policy to [Mavco]. Thus, Alpine
Meadows has not presented facts sufficient to support its
claim that American Family breached the insurance contract.
2
Reitzner testified that he had helped draft Alpine Meadows’s complaint and that there
was a written agreement between Alpine Meadows and Mavco in which Alpine Meadows
agreed to pay to Mavco anything it recovered in the lawsuit, but he was unable to identify
or produce the agreement. Alpine Meadows, 2012 WL 1070107, at *1. Reitzner also
testified that Mavco agreed not to pursue any claim against Alpine Meadows and
confirmed that Alpine Meadows had “never assigned [him] any of their insured rights.”
Id. (alteration in original).
3
Id. at *2. We also affirmed summary judgment to American Family with respect to the
association’s unjust-enrichment and promissory-estoppel claims. Id. at *3.
After we released our decision in the Alpine Meadows case, all three associations
dismissed their lawsuits against American Family. Shortly thereafter, Mavco served its
complaint on American Family. The parties do not appear to have undertaken any new
discovery in the present litigation. American Family promptly moved for summary
judgment. Mavco responded that there were genuine issues of material fact based on
deposition testimony in the Alpine Meadows case,3 showing that American Family had
agreed to pay Mavco and that American Family controlled the work and a January 28,
2013 affidavit that averred generally that American Family had agreed to pay Mavco for
supplemental work and 20% for overhead and profit.
In April 2013, the district court granted partial summary judgment to American
Family, ruling that Mavco’s contract claim failed due to lack of standing and lack of
contract formation, its unjust-enrichment claim failed because American Family did not
receive anything of value from Mavco, and that detrimental reliance was not a separate
cause of action. The district court denied American Family’s motion with respect to
Mavco’s promissory-estoppel claim, ruling that there were fact questions about whether
the promises allegedly made by American Family with respect to overhead and profit and
supplemental work were clear and definite and whether American Family intended to
induce reliance.
3
An American Family adjuster testified that American Family never agreed to pay 20%
overhead and profit in these claims, that American Family doesn’t pay 20% on
commercial claims, and that a different adjuster had negotiated 6% in this case.
4
In early 2014, American Family filed a second summary-judgment motion,
attaching transcript excerpts from the 2011 Reitzner and Schwab depositions in which
one or both acknowledged that American Family never agreed to pay 20% overhead and
profit, that there was never an agreement on the total price of the project, and that
American Family never specifically authorized the supplemental work. In response,
Mavco submitted new affidavits by Reitzner and Schwab. The district court determined
that the assertions in the March 2014 Reitzner affidavit “are contrary to the deposition
testimony of both Schwab and Reitzner” and that the affidavit was “prepared for the
purpose of defeating the summary judgment motion.” Citing the “sham affidavit”
doctrine, the district court ruled that the affidavit did not create a genuine issue of
material fact.
The district court ruled that “Mavco’s promissory estoppel claim fails for lack of a
clear and definite promise,” and that the alleged promises “need not be enforced to
prevent injustice because Mavco has an adequate remedy at law by suing the
Associations for breach of contract and/or unjust enrichment.” Mavco now appeals the
district court’s grant of summary judgment on its contract, promissory-estoppel, and
unjust-enrichment claims.
DECISION
A district court’s grant of summary judgment is reviewed de novo. Savela v. City
of Duluth, 806 N.W.2d 793, 796 (Minn. 2011). On review, appellate courts “determine
whether genuine issues of material fact exist, and whether the district court correctly
applied the law.” Id. We view the record in the light most favorable to the party against
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whom summary judgment was granted, recognizing that summary judgment is a “blunt
instrument” and is improper when reasonable persons may draw different conclusions
from the evidence. Osborne v. Twin Town Bowl, Inc., 749 N.W.2d 367, 371 (Minn.
2008) (quotations omitted). Nevertheless,
there is no genuine issue of material fact for trial when the
nonmoving party presents evidence which merely creates a
metaphysical doubt as to a factual issue and which is not
sufficiently probative with respect to an essential element of
the nonmoving party’s case to permit reasonable persons to
draw different conclusions.
DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). “A self-serving affidavit that
contradicts other testimony is not sufficient to create a genuine issue of material fact.”
Risdall v. Brown-Wilbert, Inc., 759 N.W.2d 67, 72 (Minn. App. 2009), review denied
(Minn. Mar. 17, 2009).
I.
The district court granted summary judgment to American Family on Mavco’s
contract claim on two grounds—because Mavco lacks standing as a third party to the
insurance contract and for lack of contract formation. With respect to standing, the
district court ruled that under Minnesota law, Mavco cannot maintain a direct action for
breach of contract against American Family in the absence of a judgment against its
insured. Mavco does not expressly challenge this ruling on appeal.
“[I]n Minnesota, it is a longstanding common-law rule that courts will not allow
third parties to maintain a direct action against an insurer until the third party has a
judgment against the insured.” Camacho v. Todd & Leiser Homes, 706 N.W.2d 49, 56
6
(Minn. 2005). It is undisputed that Mavco has not pursued any claims against the
associations, nor have the associations assigned their rights under the policies to Mavco.
We therefore conclude that the district court properly determined that Mavco lacks
standing to sue American Family for breach of contract and granted summary judgment
to American Family on this claim. Because of our resolution of the standing question, we
need not reach Mavco’s contract-formation argument.
II.
“Promissory estoppel implies a contract in law where no contract exists in fact.”
Deli v. Univ. of Minn., 578 N.W.2d 779, 781 (Minn. App. 1998), review denied (Minn.
July 16, 1998). The elements of a promissory-estoppel claim are (1) a clear and definite
promise was made; (2) the promisor intended to induce reliance by the promise, and the
promisee relied to the promisee’s detriment; and (3) the promise must be enforced to
prevent injustice. Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 152
(Minn. 2001).
Mavco argues on appeal that American Family “authorized” Mavco to perform the
work, made a “clear and definite promise to pay Mavco for restoring its insureds’ storm
damaged buildings,” and “gave the ‘go ahead’ to do the work,” but fails to identify
evidence in the record to support these claims beyond the March 2014 affidavits. The
March 2014 affidavits declare that “American Family . . . instructed Mavco to complete
the work, keep track of what work was done, and bill for the same,” “Mavco’s agreement
with American Family was that Mavco would be paid . . . ‘10 and 10,’” “American
Family breached its promise to Mavco by refusing to pay 10 and 10,” and “American
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Family adjuster, [K.H.], informed me that American Family would pay for overhead and
profit.”
But in 2011, Reitzner testified that “[n]obody ever told us” that American Family
would pay 10% overhead and 10% profit. Reitzner also stated that (1) “10 and 10” was
standard in the industry, (2) an American Family adjuster told him American Family
would pay “3 and 3” and that Mavco continued to do work on the project after that,
(3) certain items were missing from American Family’s adjustment of the claim and that
he asked Schwab to write up general estimates of missing items, and (4) Schwab was
Mavco’s primary contact with American Family. Schwab testified that (1) there was
never an agreement between Mavco and American Family as to the total price of the
project, (2) American Family adjusters told him to keep track of and document any
supplemental work, (3) “the insurance company doesn’t really authorize to say go ahead
and start the work,” and (4) American Family never told Mavco not to do the
supplemental work.
Excluding the Reitzner affidavit, which the district court found was a “sham
affidavit” prepared for the purpose of defeating summary judgment,4 the district court
determined that viewing the evidence in the light most favorable to Mavco, there was no
clear and definite promise to pay Mavco for supplemental work or 20% overhead and
profit. The district court found that “[t]he failure to object to the 10% term included in
4
Although the district court did not expressly find that the Schwab affidavit was a sham
affidavit, it noted skepticism of the belated identification of the adjuster who purportedly
promised “that American Family would pay for overhead and profit when the work was
completed.”
8
Mavco’s estimates does not constitute a clear and definite promise to pay it. Similarly,
the evidence of industry standard . . . does not prove that they promised to pay 10% in
this matter.”
We conclude that the district court properly applied the sham-affidavit doctrine for
purposes of the summary-judgment motion because the Reitzner affidavit contradicts the
earlier deposition testimony of Reitzner and Schwab. See Risdall, 759 N.W.2d at 72
(stating that an affidavit contradicting prior testimony is insufficient to create a genuine
issue of material fact). We also conclude that the district court properly granted summary
judgment to American Family on Mavco’s promissory-estoppel claim. Viewed in the
light most favorable to Mavco and excluding the affidavits that contradict earlier
deposition testimony, there is no genuine issue of material fact and American Family is
entitled to judgment in its favor. And as the district court observed, “there is no need to
find an implied contract because two contracts govern the relationships and obligations in
this matter.”
III.
Unjust enrichment is an equitable doctrine. Caldas v. Affordable Granite & Stone,
Inc., 820 N.W.2d 826, 838 (Minn. 2012). The standard of review of a district court’s
grant of summary judgment on an unjust-enrichment claim can be de novo or abuse of
discretion. Id. at 837-38. “[W]hen the relevant facts are undisputed the standard of
review is de novo, but a more deferential abuse of discretion standard of review might be
applicable where the district court, after balancing the equities, determines not to award
equitable relief.” Id. at 838.
9
To establish a claim for unjust enrichment, Mavco must show that American
Family knowingly received something of value for which it “in equity and good
conscience should pay.” ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544
N.W.2d 302, 306 (Minn. 1996) (quotation omitted). An action for unjust enrichment
does not lie simply because one party benefits from the efforts of others, rather “it must
be shown that a party was unjustly enriched in the sense that the term ‘unjustly’ could
mean illegally or unlawfully.” First Nat’l Bank of St. Paul v. Ramier, 311 N.W.2d 502,
504 (Minn. 1981).
The district court found that American Family “did not receive something of value
from Mavco.” Mavco argues on appeal that “American Family’s refusal to pay for
Mavco’s work which satisfies a contractual obligation that it owed to its insureds unjustly
enriches American Family.” But American Family did satisfy its contractual obligations
to its insureds. Alpine Meadows, 2012 WL 1070107, at *3 (affirming grant of summary
judgment to American Family because homeowners’ association had neither presented
facts sufficient to support breach-of-insurance-contract claim nor established any
damages). And the associations received the benefit of Mavco’s work, which was
governed by written contracts between Mavco and the associations. Because American
Family received nothing of value from Mavco, we conclude that the district court
properly granted summary judgment to American Family.
Affirmed.
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