Loomis v. Messersmith

IN THE NEBRASKA COURT OF APPEALS
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
(Memorandum Web Opinion)
LOOMIS V. MESSERSMITH
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
DANIEL R. LOOMIS AND JACQUELINE L. LOOMIS, HUSBAND AND WIFE, APPELLEES,
V.
MICHAEL E. MESSERSMITH AND PEGGY S. MESSERSMITH, HUSBAND AND WIFE, APPELLANTS.
Filed June 23, 2015. No. A-14-559.
Appeal from the District Court for Hayes County: DAVID URBOM, Judge. Affirmed.
James R. Korth and Trevor Perkins, of Reynolds, Korth & Samuelson, P.C., L.L.O., for
appellants.
Brock D. Wurl, of Norman, Paloucek & Herman Law Offices, for appellees.
MOORE, Chief Judge, and PIRTLE and BISHOP, Judges.
BISHOP, Judge.
Michael Messersmith and Peggy Messersmith appeal from the order of summary judgment
entered by the Hayes County District Court ejecting them from certain real property that they
previously owned but deeded to Daniel Loomis and Jacqueline Loomis in 2008 via a written real
estate sale agreement and warranty deed. The Messersmiths claim that ejection was improper as
they had an ownership interest in the real property because they had an oral agreement with the
Loomises to “buyback” the real property for a period of time following the 2008 transaction. The
Messersmiths therefore sought enforcement of the oral buyback agreement, or in the alternative,
sought to “disaffirm” the written real estate contract and determine it was void due to fraud
because, at the time they executed the real estate sale agreement, the Loomises represented to the
Messersmiths that they would have the option to buy back their real property. We affirm.
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BACKGROUND
Michael and his wife Peggy owned a parcel of farmland (“the property”) in Hayes County,
where they had lived for 21 years. In the spring of 2008, Michael and Peggy began talking with
American Mortgage Bank about selling the property due to their financial troubles. Sometime in
June 2008, Peggy and Michael began talking to Monty Sever as a potential investor to purchase
the property, and Sever referred them to another investor, Regan Scow. According to Peggy, Scow
proposed he would purchase the property for $650,000, and provided that the Messersmiths would
have an option to buy the property back in 4 to 5 years. Scow’s proposal required the Messersmiths
to make annual payments and pay an investor fee “at the end[.]” Peggy testified that she and
Michael were “very close” to entering into this agreement.
Before entering into the agreement with Scow, Michael testified that he called Daniel in
early fall of 2008 to see if he could help him out with purchasing their property. (Peggy testified
she thought they started talking to the Loomises about a potential sale at the end of July 2008).
The Messersmiths and Loomises had known each other for about 30 to 40 years, as they “grew
up” together in Hayes County. Michael and Daniel went to high school together; Daniel considered
Michael an acquaintance but did not see much of Michael after high school.
Michael testified that when he called Daniel in the fall of 2008, he told Daniel that he and
Peggy were having financial trouble, and asked if Daniel was interested in buying the property.
According to Michael, Daniel said he was interested and would think about it. Michael testified
that Daniel said “he didn’t want to lose anybody out of Hayes County” and agreed to help the
Messersmiths out.
According to Michael, over the next several weeks, he had a few conversations with Daniel
about a potential sale of the property and they arrived at a purchase price of $535,000. Michael
testified they arrived at $535,000 because that was what he and Peggy owed to the various banks
to which they were indebted. Peggy testified this price included the amount to “pay off American
Mortgage, FSA,” “stuff on a credit card,” and insurance. Peggy testified the purchase price of
$535,000 “was pretty well mutual” and was what they “came up with” after talking to their banker.
Daniel testified that the Messersmiths came up with the $535,000 price, which he generally
thought was the fair market value of the property; he did not do any “dickering” with respect to
the purchase price.
According to Michael, prior to selling the property to the Loomises, the only term of the
agreement that they discussed was the purchase price of the land. Michael could not recall if there
were any other terms that he understood to be a part of the agreement to sell the property to the
Loomises. Michael thought he had asked Daniel at some point in their initial conversations about
buying back the property, and according to Michael, Daniel said “fine because he wanted to help.”
When Michael was asked what the terms of this buyback were, Michael replied, “Well, there really
wasn’t . . . There wasn’t no terms or nothing then,” and replied affirmatively that “It was more of
a, hey, I’d entertain the offer to let you buy it back[;]” the agreement was that Daniel would “at
least entertain discussions about selling it back[.]” Michael later testified that part of the reason
why he agreed to the $535,000 purchase price was because he also had an agreement from the
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Loomises that they were going to sell the property back after 5 years at the same price plus the
cost of improvements.
Peggy testified that prior to selling their land, she had discussed with Daniel “him paying
off our bills and going along the line as the investors but not having all the added expenses. Just
that in [4] to [5] years, that we would have the option to buy it all back at the price that he gave
plus any improvements that he had did.” Peggy testified that she understood the deal with the
Loomises to be “basically almost along the same line [as the agreement with Scow] except there
wouldn’t be the annual payments” or the investor fee. Peggy testified that “The deals were
basically the same. I didn’t have the added expense with the Loomises. I could buy it back for less
money from the Loomises than I could from [Scow]. So, I went with the Loomises.”
Both Peggy and Michael testified that the agreement to buy back the property was not in
writing.
Daniel testified that he remembered some discussions regarding a buyback option prior to
purchasing the property. Daniel testified that Michael had asked for an option to buy back at least
part of the property, and Daniel’s attorney prepared a proposed “Option to Purchase” written
agreement for the Messersmiths to repurchase a portion of the real property (the portion containing
the residence north of an existing county road). This written option proposed that
[O]n or before October 6, 2009[,] [the Messersmiths] shall have the option to
purchase the Real Estate from [the Loomises] for a purchase price of $245,000 plus (1) the
cost of any improvements made by [the Loomises] to the Real Estate prior to October 6,
2009, (2) all real estate taxes paid by [the Loomises] attributable to the Real Estate and
improvements thereon and (3) all insurance premiums paid by [the Loomises] attributable
to the Real Estate and the improvements thereon.
The proposed Option to Purchase provided that after October 6, 2009, and lasting for a period of
3 years thereafter, the Messersmiths “shall continue having an option to purchase the Real Estate
for the prices set forth below.” The prices and dates were: $294,000 plus improvements, real estate
taxes, and insurance premiums on or before October 6, 2010; $352,800 plus improvements, real
estate taxes, and insurance premiums on or before October 6, 2011; and $423,360 plus
improvements, real estate taxes, and insurance premiums on or before October 6, 2012. After
October 6, 2012, the repurchase option “shall terminate in all respects.” Daniel testified that his
proposed repurchase agreement sat “on my living room table for five weeks. And five times, I said
[to Michael] take it home and read it. It was never responded upon.” Michael testified, however,
that the first time he remembered seeing this document was in 2012.
On September 10, 2008, the Messersmiths and the Loomises entered into a written “Real
Estate Sale Agreement.” Pursuant to this agreement, the Messersmiths agreed to sell the property
to the Loomises for $535,000. This agreement contained no provision regarding a
buyback/repurchase option. The sale agreement stated that the Loomises had retained counsel, and
the Messersmiths “acknowledge that they have, or have had an opportunity to, retain an attorney
of their own choice and that they are not obtaining legal advice from [the Loomises’ attorney].”
The Agreement further stated that
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This Agreement represents the entire Agreement of the parties with respect to the subject
matter hereof and all prior agreements are revoked and superseded by this Agreement. No
representations, warranties, inducements or oral agreements have been made by any of the
parties except as expressly set forth herein or in other contemporaneous written
agreements. This Agreement may not be changed, modified, or rescinded except in writing,
signed by all parties hereto and any attempt of oral modification of the agreement shall be
void and of no effect.
On October 3, 2008, the Messersmiths deeded the property to the Loomises via a warranty
deed.
After the Messersmiths sold the property to the Loomises, Michael began working for
Daniel on the property doing general farm labor. In exchange, the Loomises permitted the
Messersmiths to remain in the residence on the property.
After the sale in October 2008, Michael testified he did not have further conversations with
Daniel about buying the property back until around 2011 or 2012. Michael testified that when
those conversations first started, “There wasn’t no purchase agreement” but there was an
agreement between him and Daniel “That [Michael] could start trying to look for the money to
buy it back.” Michael testified he and Peggy first sought a loan for $1.727 million from McCook
National Bank “[B]ecause that’s what Danny said that we needed” to purchase the entire property;
the Messersmiths were denied that loan. Michael testified that they later sought a loan from Valley
Bank in the amount of $325,000 to finance the purchase of the portion of the property north of the
county road (the part containing the residence). Michael testified that was the amount Daniel
wanted for it. That loan was also denied. Michael testified he and Peggy then went to Kevin
Fornoff, an individual, seeking a loan of $345,000 because “that’s what Danny raised that price up
to.” According to Michael, Fornoff gave them $345,000, but when Michael informed Daniel that
they “got the money,” Daniel “upped it again” and would only sell the entire property for about $2
million. Michael testified they gave back the $345,000 to Fornoff. Michael then asked to borrow
money from another individual, Mackay Brown, but Brown “just said no, he couldn’t do it.”
Michael also asked his dad, Deloit Messersmith, for a $325,000 loan, and he agreed he would give
Michael and Peggy the money; however, because Daniel would not take it, Deloit never extended
the loan.
Peggy also testified about her and Michael’s attempts to buy the property back from the
Loomises. Peggy testified that sometime in March 2012, she and Michael decided they needed to
start working on buying back the property, so Michael approached Daniel to discuss it. Peggy
testified that in late May or early June 2012, she spoke to a representative at Valley Bank about
obtaining $325,000 in financing to purchase the portion of the property north of the county road.
According to Peggy, the representative denied the loan and told them “that it would not work with
just the feedlot as collateral because of the cattle prices. We needed both sides to make the place
pay for itself.” Peggy testified she explained to Daniel that the bank said purchasing the property
north of the county road “wouldn’t work,” and he said he would “think it over for a couple of
weeks” and come back with an answer. Peggy said “he came back with the $1.725 [million]” price
for the entire property. Peggy testified she and Michael then went to McCook National Bank for a
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loan for the entire property, but were denied because they could not “come up with $300,000 for
a downpayment.” Peggy testified that later in October 2012 they talked to Daniel again about
buying just the property north of the county road, and Daniel said if they came up with $325,000,
they could have it. Peggy testified they went to Michael’s dad, Deloit, and asked for $325,000, but
then Daniel said “no sale.” Peggy said Daniel then asked for $345,000; she and Michael talked to
Fornoff in late November or December 2012 and he agreed to loan them $345,000, but Daniel
refused it and said they could buy the entire property for $2 million. Peggy testified her mom said
she would help them get the money, but then the Loomises “upped the price and then they lowered
the price.” The Messersmiths talked to the representative at McCook National Bank again who
said there was “no way he would have went over the two million. It was too close to the value of
the land.” The Loomises never sold the property back to the Messersmiths.
Daniel terminated Michael’s employment in December 2012. On December 28, counsel
for the Loomises sent the Messersmiths a letter confirming that Daniel gave them notice to vacate
on December 13, and stated that the Messersmiths had 30 days from that notice to vacate, no later
than January 13, 2013. The Messersmiths acknowledged they received this letter via certified mail
on December 29, 2012. Michael acknowledged that his employment terminated December 31, and
that he and Peggy remained in the residence on the property as of the time of his deposition in
January 9, 2014, without paying rent.
The Loomises filed a complaint for restitution and ejection on June 5, 2013, against the
Messersmiths. The Loomises alleged that the Messersmiths had resided as tenants in a dwelling
on the Loomises’ property since October 3, 2008, but that the Messersmiths had not paid rent since
at least January 1, 2013. The Loomises alleged they provided notice to the Messersmiths on
December 13, 2012, of their intent to terminate the month-to-month tenancy effective January 13,
2013, and that at the time of the petition, the Messersmiths unlawfully remained in possession of
the property.
The Messersmiths filed an answer and counterclaim on July 12, 2013. They admitted
receiving notice to vacate, but raised the affirmative defenses of waiver, estoppel, laches, accord
and satisfaction, settlement or setoff, unclean hands, and fraud. The Messersmiths also asserted a
counterclaim for fraud in the inducement, fraudulent misrepresentation, breach of contract, and
unjust enrichment. The basis for each of the Messersmiths’ counterclaims was their assertion that
Daniel induced them to sell their property to him because of his promise to sell the property back
to them within 5 years at the same price, plus the cost of improvements. The relief sought by the
Messersmiths in their counterclaim was an order “Compelling the [Loomises] to complete the
agreement between the parties by transferring the Real Property to the [Messersmiths] at a price
equivalent to the 2008 sale price ($535,000.00) plus the cost of any improvements made by the
[Loomises] after October 3, 2008,” consequential damages, pre- and post-judgment interest,
attorney fees, and other relief as just and equitable. The Loomises raised the affirmative defense
of the statute of frauds in their answer to the counterclaim.
On February 14, 2014, the Loomises filed a motion for summary judgment. On March 19,
the Loomises filed a motion to transfer the case to the District Court for Hayes County, and the
county court entered an order on March 20 granting the motion.
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A hearing on the Loomises’ motion for summary judgment was held April 16, 2014. At
the hearing, counsel for the Messersmiths informed the court that although their counterclaim
sought enforcement of an oral contract, because the Messersmiths contend there was fraud in the
inducement, the most appropriate remedy would be to disaffirm the 2008 real estate contract and
determine it was void. The court received deposition and affidavit testimony from Daniel, Michael,
and Peggy. The court also received affidavits from Sever, Scow, and Marlene Bedore (a “Real
Property Tax Liaison for the State of Nebraska”). The Loomises objected to certain statements in
the affidavits of Sever, Scow, and Bedore, on the basis of relevancy and hearsay, regarding those
individuals’ understanding of the existence of a buyback agreement between the Messersmiths and
Loomises; the court reserved ruling on those objections.
On May 19, 2014, the district court entered an order granting the Loomises’ motion for
summary judgment. The court sustained the Loomises’ objections to the statements in Scow,
Sever, and Bedore’s affidavits (discussed further in our Analysis below).
The court found that the alleged oral buyback agreement between the Messersmiths and
the Loomises violated the statute of frauds and thus any alleged contract for the repurchase of the
real property was void and unenforceable. With respect to the Messersmiths’ fraud in the
inducement/misrepresentation claims, the district court concluded that the testimony reflected that
no written repurchase agreement existed and the testimony indicated Daniel told Michael he would
“entertain an offer to let [him] buy it back.” The court also found the facts did not support a claim
for unjust enrichment because the Messersmiths acknowledged that they sold the farm to the
Loomises willingly at the price agreed to by both parties.
The court found that the Loomises owned the property, the Messersmiths’ right to occupy
the residence on the property terminated with the termination of Michael’s employment, the
Loomises gave notice to the Messersmiths to vacate, and the Messersmiths failed to vacate; the
court thus granted the Loomises’ motion for summary judgment.
The Messersmiths timely appealed.
ASSIGNMENTS OF ERROR
The Messersmiths assign nine errors on appeal, which we summarize and consolidate as
follows: the district court erred (1) in excluding certain statements of Sever, Scow, and Bedore
regarding their understanding of the existence of an oral buyback agreement between the Loomises
and Messersmiths, (2) in finding that the Loomises did not acquire title to the real property through
fraud, misrepresentation, or an abuse of relationship, (3) in finding that the statute of frauds
applied, and (4) in granting summary judgment in favor of the Loomises.
STANDARD OF REVIEW
An appellate court will affirm a lower court’s grant of summary judgment if the pleadings
and admitted evidence show that there is no genuine issue as to any material facts or as to the
ultimate inferences that may be drawn from the facts and that the moving party is entitled to
judgment as a matter of law. Johnson v. Nelson, 290 Neb. 703, 861 N.W.2d 705 (2015). In
reviewing a summary judgment, the court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives such party the benefit of all reasonable
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inferences deducible from the evidence. DMK Biodiesel, LLC v. McCoy, 290 Neb. 286, 859
N.W.2d 867 (2015).
ANALYSIS
The Messersmiths generally advanced two theories of recovery at the trial level, both of
which were predicated on their allegations of fraud and would have resulted in them regaining title
to the property they deeded to the Loomises in 2008. First, the Messersmiths sought rescission of
the 2008 written Real Estate Sale Agreement conveying the property to the Loomises on the basis
of fraud, misrepresentation, or abuse of relationship. Alternatively, the Messersmiths sought to
enforce an alleged oral agreement between them and the Loomises permitting them to repurchase
the property, arguing the statute of frauds did not apply due to the Loomises’ fraud. Because the
Messersmiths contend they were entitled to title of the property at issue, they argue that granting
summary judgment in favor of the Loomises on their action for ejection was improper.
Evidentiary Exclusions.
The Messersmiths first argue that the district court erred in excluding admissible evidence.
At the summary judgment hearing, the district court sustained hearsay and relevancy objections to
certain testimony in affidavits from Sever, Scow, and Bedore (a “Real Property Tax Liaison for
the State of Nebraska”), which the Messersmiths argue on appeal was error.
Bedore’s excluded testimony was her statement that she was advised by the county assessor
(Sue Messersmith) that Sue had learned from the Messersmiths that the sale between them and the
Loomises involved the Messersmiths “being granted the right to buy back the real estate after a
specified period of time.” Similarly, Sever and Scow’s excluded testimony was that they learned
from the Messersmiths that they would be doing the “same deal” with “the neighbors” that they
were on the verge of doing with Sever and Scow, including an option to buy back the property.
Hearsay is a statement, other than one made by the declarant while testifying at the trial or
hearing, offered in evidence to prove the truth of the matter asserted. Neb. Rev. Stat. § 27-801(3)
(Reissue 2008). The Messersmiths argue that the above excluded statements were “not offered to
prove the truth of the matter asserted, but to show the effect on the hearer and should have been
properly considered as evidence of a contemporaneous agreement between the parties.” Brief for
appellants at 15. A statement offered to prove its impact on the listener, instead of its truth, is
offered for a valid nonhearsay purpose if the listener’s knowledge, belief, response, or state of
mind after hearing the statement is relevant to an issue in the case. State v. McCave, 282 Neb. 500,
805 N.W.2d 290 (2011). The knowledge, belief, or state of mind of Sever, Scow, and Bedore is
irrelevant to any issue in the instant case; the only purpose of their testimony is to prove that the
Messersmiths and Loomises had a buyback agreement, i.e., to prove the truth of the matter
asserted. Further, substantially similar evidence was admitted at the summary judgment hearing;
Sue Messersmith’s affidavit testimony was admitted, wherein she testified that she heard from
Peggy that the sale between the Loomises and Messersmiths involved a right to buy back the
property. Even if the district court’s exclusion was error, an erroneous exclusion of evidence is
reversible only if the complaining litigant was prejudiced by the exclusion of such evidence, and
an improper exclusion of evidence is ordinarily not prejudicial where substantially similar
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evidence is admitted without objection. See Sturzenegger v. Father Flanagan’s Boy’s Home, 276
Neb. 327, 754 N.W.2d 406 (2008). We therefore find no error in the district court’s exclusion of
Sever, Scow, and Bedore’s testimony.
Fraud in Inducement/Fraudulent Misrepresentation.
The Messersmiths’ primary contention is that the 2008 real estate agreement should be
voided based upon fraudulent inducement and fraudulent misrepresentation committed by the
Loomises, and that there are sufficient facts in controversy to defeat entry of summary judgment
against them on these claims. The Messersmiths contend that the Loomises fraudulently induced
them into entering into the 2008 Real Estate Sale Agreement. Fraud in the inducement goes to the
means used to induce a party to enter into a contract; in such cases, the party knows the character
of the instrument and intends to execute it, but the contract may be voidable if the party’s consent
was obtained by false representations. See Heritage Bank v. Bruha, 283 Neb. 263, 812 N.W.2d
260 (2012). A contract is voidable by a party if his or her manifestation of assent is induced by
either a fraudulent or a material misrepresentation by the other party upon which he or she is
justified in relying. InterCall, Inc. v. Egenera, Inc., 284 Neb. 801, 824 N.W.2d 12 (2012). The
Messersmiths, therefore, sought to void or rescind the 2008 Real Estate Sale Agreement conveying
title to the property to the Loomises, and “have their land returned to them and disgorge the
$535,000.00 they received in payment[.]” Brief for appellants at 17.
In order to sustain the affirmative defense of false representation, a defendant must prove
by a preponderance of the evidence that a representation was made; that the representation was
false; that the representation was known to be false when made, or was made recklessly without
knowledge of its truth and as a positive assertion; that it was made with the intention that the
defendant should rely on it; that the defendant did so rely; and that the defendant suffered damages
as a result. Prod. Credit Ass’n of Midlands v. Eldin Haussermann Farms, Inc., 247 Neb. 538, 529
N.W.2d 26 (1995). A misrepresentation induces a party’s manifestation of assent if it substantially
contributes to the party’s decision to manifest his or her assent. InterCall, supra.
As evidence of the Loomises’ fraud, the Messersmiths point to the unequal bargaining
power between themselves and the Loomises (as this was the Messersmiths’ first land transaction
whereas the Loomises owned several pieces of land), their own financial troubles, the unexecuted
agreement they had reached with Scow, and the sale price of the property (which the Messersmiths
claim was below fair market value). However, the evidence was undisputed that prior to any
involvement with the Loomises, the Messersmiths had already decided to sell the property due to
their financial distress. Further, the Messersmiths approached Daniel, not vice versa, to see if he
would be interested in purchasing their property. The Messersmiths were seeking an alternative
agreement to the one they had reached with Scow. And, although the Messersmiths attempt to
impart significance to the purchase price being below fair market value, their own testimony
reflected that they were the ones who “came up with” the purchase price of $535,000, and that the
purchase price was “mutual.”
More importantly, noticeably absent from the Messersmiths’ above claimed evidence of
fraud were any affirmative actions or statements on the Loomises’ part constituting a false
representation made with the intent that the Messersmiths would rely on it. The only evidence
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offered with respect to any statements made by the Loomises to the Messersmiths were the
Messersmiths’ affidavit testimony that “Daniel . . . told [us] that he would ‘take care of everything,’
and then he and his lawyer drew up some papers and we did nothing else except [sign] the papers
they told us we needed to sign” and that “We believed Daniel . . . when he told us he was providing
us a better deal and would take care of all the details.” Such statements, however, are not false
representations or misrepresentations of fact. The evidence offered reflects that the parties had
discussed a repurchase or buyback option of the property during negotiations prior to the execution
of the 2008 real estate agreement. The evidence further reflects that Daniel in fact had his attorney
prepare a written “Option to Purchase” agreement for the Messersmiths to repurchase a portion of
the real property (the portion containing the residence north of an existing county road). However,
this agreement remained unsigned. According to Michael himself, no definitive buyback
agreement was ever reached. Michael testified that the only terms of the agreement that they
discussed prior to selling the property was the purchase price of the land; when Michael was asked
what the terms of the oral buyback agreement were at that point, he replied, “Well, there really
wasn’t . . . There wasn’t no terms or nothing then,” and replied affirmatively that “It was more of
a, hey, I’d entertain the offer to let you buy it back[;]” the agreement was that Daniel would “at
least entertain discussions about selling it back[.]” Peggy testified that prior to selling their land,
they had “discussed” with Daniel “him paying off our bills and going along the line as the investors
but not having all the added expenses.” The written real estate agreement unambiguously stated:
This Agreement represents the entire Agreement of the parties with respect to the
subject matter hereof and all prior agreements are revoked and superseded by this
Agreement. No representations, warranties, inducements or oral agreements have been
made by any of the parties except as expressly set forth herein or in other contemporaneous
written agreements. This Agreement may not be changed, modified, or rescinded except in
writing, signed by all parties hereto and any attempt of oral modification of the agreement
shall be void and of no effect.
(Emphasis added). The written real estate agreement contained no option to repurchase/buyback
the property, and the Messersmiths do not allege they did not understand the written agreement or
raise concerns with the fact that the written agreement did not contain a buyback provision. The
fact that the Messersmiths thought or believed they would be able to repurchase the property after
selling it to the Loomises, despite the parties’ unambiguous written agreement, does not give rise
to an inference of fraud or misrepresentation on behalf of the Loomises. “The fact that matters did
not develop as one or all of the parties might have expected or hoped does not prove that [anyone]
misrepresented anything.” Prod. Credit Ass’n of Midlands v. Eldin Haussermann Farms, Inc., 247
Neb. 538, 545, 529 N.W.2d 26, 32 (1995). Even viewing the evidence in the light most favorable
to the Messersmiths, we conclude the evidence was insufficient to create a genuine issue of
material fact with respect to the Messersmiths’ affirmative defenses of fraudulent inducement and
fraudulent misrepresentation.
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Statute of Frauds.
The Messersmiths argue that the district court erred in finding that the alleged oral buyback
agreement between them and the Loomises violated the statute of frauds. “Every contract . . . for
the sale of any lands, shall be void unless the contract or some note or memorandum thereof be in
writing and signed by the party whom the . . . sale is to be made.” Neb. Rev. Stat. § 36-105 (Reissue
2008). An oral contract to buy land falls under the statute of frauds. American Cent. City, Inc. v.
Joint Antelope Valley Auth., 281 Neb. 742, 807 N.W.2d 170 (2011). The alleged agreement
between the Loomises and the Messersmiths was for the sale of land and was not in writing, and
thus it falls squarely within the statute of frauds. Nevertheless, the Messersmiths urge that equity
should not permit the Loomises to “perpetrate a fraud upon the Messersmiths” and then “hide
behind a statute designed to prevent . . . fraud.” Brief for appellants at 25. In support of their
argument, the Messersmiths cite to Hecht v. Marsh, 105 Neb. 502, 502, 181 N.W. 135, 137 (1920),
which stated the rule that:
Equity will not allow the statute of frauds to be used as an instrument of fraud, and will
decree specific performance or hold the maker of a parol contract estopped from denying
it when the other party, by virtue of it, and under and in pursuance of it, has so far acted as
that it would be aiding in a fraud to permit the contract to be repudiated. And what equity
would do our courts of law, under proper allegations, will also do.
Hecht v. Marsh, supra, involved a sale and exchange of lands; the seller refused to sign a contract
unless the buyer put up forfeit money as evidence of good faith. To induce the seller to waive this
requirement, the broker orally agreed to waive his commission if the transaction was not
completed. When the contract was not performed, the broker sued for his commission. In
concluding that the oral contract was not precluded by the statute of frauds, the court stated that
equity will not allow the statute of frauds to be used as an instrument of fraud, and where a party
to a written contract within the statute of frauds induces another to waive some provision upon
which he is entitled to insist and thereby change his position to his disadvantage because of that
party’s inducement, the inducing party will be estopped to claim that such oral modification is
invalid because not in writing. See id. However, the court in Farmland Serv. Coop, Inc. v. Klein,
196 Neb. 538, 543, 244 N.W.2d 86, 90 (1976) limited this rule, stating that:
[T]he mere breach or violation of an oral agreement which is specifically covered by the
statute of frauds by one of the parties thereto or the mere denial of an agreement or refusal
to perform it is not of itself a fraud either in equity or in law for which the court should
give relief. The mere pleading of reliance on the contract to his detriment should not be
sufficient to permit a party to assert rights and defenses based on a contract barred by the
statute of frauds. If he were permitted to do so, the statute of frauds would be rendered
meaningless and nugatory. The mere failure to perform an oral contract within the statute
where no relation of trust and confidence exists does not constitute fraud authorizing the
right to relief.
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As discussed above, although the Messersmiths repeatedly allege that the Loomises, and in
particular Daniel, engaged in fraud, they offered no evidence from which fraud could be inferred.
It appears the Messersmiths’ allegations of fraud simply were that they thought or believed that
they would be able to repurchase the property at a later date, but “the mere breach or violation of
an oral agreement which is specifically covered by the statute of frauds by one of the parties thereto
or the mere denial of an agreement or refusal to perform it is not of itself a fraud either in equity
or in law for which the court should give relief.” Id. We therefore agree with the district court that
any alleged oral repurchase agreement between the parties was barred by the statute of frauds.
Summary Judgment on Loomises’ Ejection Action.
The Messersmiths’ defense to the Loomises’ action for ejection was that they were in
lawful possession of the property as title owners. The essential elements of the action of ejectment
are legal estate, a right of possession in the plaintiff, and unlawful detention by the defendant.
Johnston v. Robertson, 171 Neb. 324, 106 N.W.2d 192 (1960). Having concluded the district court
properly determined that the Messersmiths were not entitled to title of the property, the evidence
is undisputed that the Loomises were the owners of the property; the Messersmiths acknowledged
they received written notice to vacate the property; the Messersmiths remained in possession of
the property for nearly a year after being given notice to vacate; and that they have not paid any
rent to the Loomises since January 1, 2013. Therefore, the district court properly granted summary
judgment in favor of the Loomises.
CONCLUSION
For the foregoing reasons, we affirm the district court’s order of summary judgment in
favor of the Loomises.
AFFIRMED.
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