Routson Investments, Inc. v. Andrews Properties, LLC ( 2014 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2232
Routson Investments, Inc.,
Respondent,
vs.
Andrews Properties, LLC, et al.,
Appellants.
Filed July 21, 2014
Reversed and remanded
Klaphake, Judge*
Washington County District Court
File No. 82-CV-13-507
Mark W. Gehan, Mark H. Gehan, Collins, Buckley, Sauntry & Haugh, P.L.L.P., St. Paul,
Minnesota (for respondent)
Kevin R. Coan, Jessica L. Nelson, Hinshaw & Culbertson LLP, Minneapolis, Minnesota
(for appellants)
Considered and decided by Worke, Presiding Judge; Stauber, Judge; and
Klaphake, Judge.
*
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
UNPUBLISHED OPINION
KLAPHAKE, Judge
In this debt-collection dispute, appellants challenge the district court’s grant of
summary judgment in favor of respondent. Because genuine issues of material fact exist,
we reverse and remand.
FACTS
Appellant Jay Andrews was the sole owner of appellant Andrews Properties LLC
until it became inactive in 2009. Patricia Routson is the president and chief executive
officer of respondent Routson Investments Inc. In March 2006, Routson Investments
loaned Andrews Properties $370,000 (the Routson loan). Appellants agreed to pay
Routson Investments $2,927.58 per month until March 8, 2007, when the remaining
balance would be due.
In April 2006, the parties formed St. Croix Crossing LLC to purchase a property in
Hudson, Wisconsin (the Perkins building), which Andrews and Patricia’s son Dan
Routson intended to use as a car dealership. In order to purchase the property, St. Croix
Crossing borrowed $850,000 from Lake Elmo Bank, secured by Patricia Routson’s home
(the Lake Elmo loan). The parties later learned that the Hudson city council would not
allow them to use the Perkins building as intended and decided to put it on the market.
As of the commencement of this litigation, the Perkins building had not sold.
In March 2007, when the Routson loan came due, appellants continued to make
monthly payments but did not pay the balance of the loan. In July 2008, Patricia Routson
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allowed appellants to stop making monthly payments on the Routson loan until the
Perkins building was sold.
Routson Investments commenced this litigation on January 8, 2013 and later
moved for summary judgment. In October 2013, the district court granted summary
judgment in favor of Routson. This appeal follows.
DECISION
On appeal from a grant of summary judgment, this court reviews whether the
district court erred in its application of the law or if there are any genuine issues of
material fact. Dahlin v. Kroening, 796 N.W.2d 503, 504 (Minn. 2011). We view the
evidence in the light most favorable to the party against whom summary judgment was
granted. Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995). And we resolve any
doubt as to whether issues of material fact exist in favor of the party against whom
summary judgment was granted. Id.Appellants argue that the parties orally modified the terms of the Routson loan so
that it does not come due until the Perkins building is sold. They assert that summary
judgment is inappropriate because genuine issues of material fact exist regarding (1) the
nature and extent of the modification, and (2) whether the modification is supported by
consideration.
A written contract can be modified or rescinded by oral agreement of the
contracting parties, even when the contract provides that it cannot be modified except by
a specified method. Larson v. Hill’s Heating & Refrigeration of Bemidji, Inc., 400
N.W.2d 777, 781 (Minn. App. 1987), review denied (Minn. Apr. 17, 1987). A party
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asserting that there has been an enforceable oral modification of the terms of a written
contract has the burden of proving the modification by clear and convincing evidence.
Bolander v. Bolander, 703 N.W.2d 529, 541 (Minn. App. 2005), review dismissed (Minn.
Nov. 15, 2005). Whether an oral modification occurred and, if so, identifying the terms
of the resulting contract are issues that must be decided by the fact-finder. Rios v. Jennie-
O Turkey Store, Inc., 793 N.W.2d 309, 315 (Minn. App. 2011), review denied (Minn.
Mar. 29, 2011).
Appellants argue that the parties orally modified the terms of the Routson loan in
July 2008 when Patricia Routson permitted appellants to suspend monthly payments until
the Perkins building was sold, and that further modification of the contract terms
occurred at meetings in December 2012 and September 2013. They allege that the
Perkins building had not sold as of the commencement of this litigation; Routson
Investments did not attempt to collect on the loan when the balance came due in March
2007; Patricia Routson did not ask Andrews to resume monthly payments until the fall of
2012; and a document written by Patricia Routson modified loan terms.
Although Routson Investments disputes Andrews’ characterization of the meetings
and the written document, summary judgment is not appropriate when there are genuine
issues of material fact. Dahlin, 796 N.W.2d at 504. Viewing the evidence in the light
most favorable to the nonmoving party, appellants provided clear and convincing
evidence of an issue of fact: whether the contract terms were modified and, if so, what the
current contract terms are. See Thoe v. Rasmussen, 322 N.W.2d 775, 777-78 (Minn.
1982) (concluding that testimony and “substantial documentary evidence” of reduced
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payments, as well as respondent’s failure to demand payment, established clear and
convincing evidence that the parties agreed to a substituted method of payment).
Routson Investments argues that the July 2008 agreement was “temporary relief,”
not a modification, and relies on Tonka Tours, Inc. v. Chadima, 372 N.W.2d 723 (Minn.
1985), to argue that there was no consideration to support the modification because
appellants were already legally obligated to pay the costs of the Perkins building. But the
record is not clear as to the legal obligations of the parties with respect to the Perkins
building. As to the duration of the modification, both Andrews and Routson
Investments agreed that the payments would resume when the Perkins building was sold;
as of the commencement of this litigation, the building had not been sold. Even if it is
unreasonable to conclude that the parties agreed to an indefinite suspension of payment,
determination of what would be a reasonable time is a question of fact. See Bly v.
Bublitz, 464 N.W.2d 531, 535 (Minn. App. 1990) (“As a general rule, what constitutes a
reasonable time for the performance of contract obligations is a question of fact or mixed
law and fact for determination by a jury.”).
Reversed and remanded.
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