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Brickner v. One Land Development Company: REAL PROPERTY - cancellation; time to claim breach; lawyer advice claims regarding slander of title

Margaret A. Brickner, et al.,
One Land Development Company,
Defendant (A06-1940),
Appellant (A06-1957),
John Andrew Duckwall,
Appellant (A06-1940),
Defendant (A06-1957).
Filed December 24, 2007
Affirmed as modified
Klaphake, Judge
Anoka County District Court
File No. C6-04-1033
Bradley A. Kletscher, Tammy J. Schemmel, Barna, Guzy & Steffen, Ltd., 200 Coon
Rapids Boulevard, Suite 400, Minneapolis, MN 55433 (for respondents)
Kevin E. Giebel, Giebel, Gilbert, Williams & Kohl, P.L.L.P., 2277 Highway 36 West,
Suite 220, St. Paul, MN 55113 (for appellant One Land Development Company)
Lawrence H. Crosby, Jay D. Olson, Crosby & Associates, 2277 Highway 36 West, Suite
234E, St. Paul, MN 55113 (for appellant Duckwall)
Considered and decided by Klaphake, Presiding Judge; Shumaker, Judge; and
Worke, Judge.
1. When one party to a real estate contract initiates cancellation proceedings
under Minn. Stat. 559.21 (2002), in accordance with contractual terms, the other party
must bring an action opposing cancellation or seek injunctive relief before expiration of
the cancellation period and may not avoid cancellation by asserting a prior breach after
the cancellation period expires.
2. A party defending against an allegation of slander of title by alleging
reliance on an attorneys advice bears the burden to produce specific facts showing
reasonable reliance on the attorneys advice.
3. In an action for slander of title where the aggrieved party pleads attorney
fees as special damages, an award of attorney fees is measured by the extent that the
aggrieved party is obligated to pay them.
In these consolidated appeals from a declaratory judgment action, appellant One
Land Development Company challenges the district courts conclusion that respondents
Margaret Brickner, acting for herself and as trustee of the Thomas E. Brickner Credit
Trust, and Braam Investment, Inc., effectively canceled a real estate contract entered into
between respondents and One Land. Respondent John Andrew Duckwall, a purported
assignee of One Land, challenges the district courts order concluding that he slandered
respondents title and requiring him to pay attorney fees.
Because respondents canceled the contract in accordance with Minn. Stat.
559.21 (2002), as modified by contract, we affirm the cancellation. Because Duckwall
did not rebut respondents proof of malice in the slander of title action, we affirm the
slander of title determination. However, because of a contract with the subsequent
purchaser of the real estate, respondents are responsible for only one-half of the attorney
fees claimed as special damages in the slander of title action. Accordingly, we modify
the award of attorney fees by reducing them by half to comport with this agreement.
Respondent Margaret Brickner, personally and as trustee for the Thomas E.
Brickner Credit Trust (collectively, Brickner), owned land in Fridley on which was
located a restaurant named Sandees. Respondent Braam Investments, which was owned
by Brickners daughter, Cindy Braam, and son-in-law Garry Braam, operated the
restaurant and leased the building from Brickner.
Appellant One Land Development Company is a Minnesota corporation engaged
in real estate development. Thomas Gambucci is the principal shareholder of One Land.
Gambucci, acting for One Land, wanted to purchase the Brickner property. One Land
intended to build senior housing on the property and to continue to operate the restaurant.
Appellant John Duckwall is a presumed assignee of the purchase agreement described
On April 22, 2002, respondents and One Land entered into a purchase agreement
for the property and restaurant fixtures. According to the purchase agreement, One Land
had 120 days in which to secure the necessary government approvals for construction;
this was termed the Approval Period. Closing would take place no more than 30 days
after expiration of the Approval Period. One Land could extend the Approval Period
once by 60 days by giving respondents notice and paying ,000 in earnest money. One
Land exercised this option and extended the Approval Period from August 22, 2002, to
October 22, 2002. One Land also waived the contract precondition pertaining to
government approvals.
Under the agreement, respondents warranted that they had good and marketable
title to the property, free and clear of any and all . . . easements . . . except as disclosed
in this Agreement or in any exhibit containing permitted exceptions attached hereto. It
is undisputed that respondents attorney failed to attach an exhibit to the purchase
agreement disclosing the existence of two easements located on the property.
The agreement further required respondents to provide a title insurance policy
evidencing tax liens, bankruptcies, judgments, assessments, and pending assessments.
This was collectively known as Title Evidence. One Land then had 20 days to examine
the Title Evidence and make objections to it, and respondents had 60 days to cure any
defects based on those objections. Closing would occur on the scheduled closing date or
within 10 days after the notice of cure, whichever was later. One Land could either
terminate the agreement if respondents failed to cure defects or waive any objections.
On October 11, 2002, One Land received the title insurance policy, with an
effective date of August 19, 2002. This policy included a reference to three easements.
One Lands only comment to the policy concerned one of the easements, which had been
erroneously included. A second title insurance policy was issued on November 6, 2002,
deleting the erroneous easement. On November 12, 2002, respondent notified One Land
that closing had to occur by November 22, 2002, or One Land would be in default under
the terms of the purchase agreement. No closing occurred.
On December 9, 2002, respondents served a notice of statutory cancellation under
Minn. Stat. 559.21 (2002). According to the purchase agreement, the parties agreed to
cancellation in accordance with Minn. Stat. 559.21 in the event of a default and also
agreed that the 60-day statutory notice period would be shortened to 30 days, as
permitted by Minn. Stat. 559.21, subd. 4. The notice gave One Land until January 8,
2003, to close. No closing took place, and One Land took no action opposing
On January 8, 2003, Gambucci notified respondents attorney that he had assigned
his interest in the contract to Duckwall. Although Gambucci asserted that he had told
respondents earlier of his intent to assign the contract, January 7 or 8, 2003, was the first
time respondents learned Duckwalls name and address.
On April 8, 2003, respondents entered into a purchase agreement with Town
Center Development. Appellants did not contact respondents about the property from
January 9, 2003, until December 3, 2003, when Duckwall filed a notice of adverse claim
against the property. On February 2, 2004, Town Center entered into an agreement with
respondents to pay 50% of any attorney fees and costs incurred by respondents in
quieting title.
Respondents began this declaratory judgment action in April 2005. After a multiday
trial to the court ending on May 26, 2005, the court issued a preliminary order
directing Duckwall to discharge the notice of adverse claim against the property. On
August 23, 2005, the district court issued its second order, concluding that
(1) respondents properly canceled the purchase agreement; (2) appellants abandoned their
interest in the agreement; (3) appellants breached the contract by failing to close;
(4) appellant Duckwall slandered respondents title; (5) appellants were not entitled to
specific performance; (6) respondents had cured any potential breach of contract by
providing last evidence of title and curing title defects; (7) respondents breached the
contract by failing to remove easements, but appellants claim was extinguished by the
valid cancellation of the purchase agreement and appellants waived their right to make a
claim; and (8) appellants failed to set forth a prima facie case of fraud and
misrepresentation. Judgment was entered on September 26, 2005.
The district court denied appellants motion for amended findings and/or a new
trial on February 21, 2006 and appointed a special master to determine fees and costs
pursuant to Minn. R. Civ. P. 53. By e-mail on February 27, 2006, the court
acknowledged that it had not followed the recently amended Rule 53 and stated that the
February 21 order would serve as notice of its intent to appoint a special master. Having
received no objections, the court issued an order, appointing a special master.
The special master returned his report on April 6, 2006; the district court affirmed
the report on June 28, 2006, and later awarded attorney fees of 6,957 and costs and
disbursements of ,080.46. Appellants filed a notice of appeal on October 12, 2006.
1. Did the district court err by determining that respondents had canceled the
purchase agreement, thus terminating appellants interests in the real property?
2. Did the district court err by concluding that Duckwall had slandered
respondents title to the property?
3. Did the district court abuse its discretion by awarding respondents their
entire claimed attorney fees for slander of title?
Standards of Review
In a matter tried to the court, findings of fact will not be set aside unless clearly
erroneous; deference is paid to the trial courts ability to judge the credibility of the
witnesses. Minn. R. Civ. P. 52.01. Findings are clearly erroneous if manifestly
contrary to and unsupported by the evidence. Rogers v. Moore, 603 N.W.2d 650, 656
(Minn. 1999) (quotation omitted). This court reviews the evidence in the light most
favorable to the judgment. Id.
We are not bound by the district courts ruling on a question of law, which we
review de novo. Modrow v. JT Foodservice, Inc., 656 N.W.2d 389, 393 (Minn. 2003).
Construction of an unambiguous contract is a question of law. Wolfson v. City of St.
Paul, 535 N.W.2d 384, 386 (Minn. App. 1995), review denied (Minn. Sept. 28, 1995).
We review the district courts award of attorney fees or costs for abuse of discretion.
Kellar v. Von Holtum, 605 N.W.2d 696, 703 (Minn. 2000); Becker v. Alloy Hardfacing &
Engg Co., 401 N.W.2d 655, 661 (Minn. 1987).
Cancellation under Minn. Stat. 559.21
The seller in a contract for the conveyance of real estate may cancel the contract
upon default by serving on the purchaser a notice of intent to cancel specifying the
default. Minn. Stat. 559.21, subd. 2a (2002). The statutory 60-day notice period may
be shortened to 30 days by agreement of the parties. Minn. Stat. 559.21, subd. 4
(2002). During the notice period, the buyer may cure the default and reinstate the
contract by paying certain costs and fees. Minn. Stat. 559.21, subd. 2a. The parties here
agreed that in the case of default in performance by either party, the other party could
cancel the agreement upon 30 days notice in compliance with Minn. Stat. 559.21
Under the statute, the party opposing cancellation may cure the default, or in the
alternative, may bring an action or seek injunctive relief, so long as that action is begun
before the cancellation period expires. Minn. Stat. 559.211, subd. 1 (2002); Bell v.
Olson, 424 N.W.2d 829, 831 (Minn. App. 1988); Thomey v. Stewart, 391 N.W.2d 533,
535-36 (Minn. App. 1986).
Appellants may have had a basis for avoiding cancellation based on the breaches
of contract cited by them, but by failing to take action within the 30-day cancellation
period, appellants waived their right to oppose cancellation. See Thomey, 391 N.W.2d at
535-36. The district court did not err by concluding that respondents properly canceled
the purchase agreement, thus terminating One Lands interest in that agreement and any
interest that Duckwall acquired by assignment.
Slander of Title
The elements of a slander of title claim are (1) a false statement concerning the
ownership of real property; (2) publication of the false statement; (3) malice; and
(4) special damages. Paidar v. Hughes, 615 N.W.2d 276, 279-80 (Minn. 2000).
Filing a document known to be inoperative constitutes a false statement. Kelly v.
First State Bank of Rothsay, 145 Minn. 331, 332, 177 N.W. 347, 347 (1920). The record
supports the district courts determination that Duckwall knew the purchase agreement
had been canceled. [O]nce statutory notice has been served and cancellation effected,
all rights between the parties under a contract for deed are terminated. In re Butler, 552
N.W.2d 226, 230 (Minn. 1996). Thus, Duckwall knew when he filed a notice of adverse
claim against the property that he no longer held an interest in the property. He also
satisfied the publication element by filing the notice of adverse claim. Attorney fees
incurred as a result of a slander of title are considered to be special damages. Paida, 615
N.W.2d at 281. Although appellants claim that respondents failed to introduce evidence
of damages, respondent Cindy Braam did testify that respondents had incurred attorney
The element of malice requires a [r]eckless disregard concerning the truth or
falsity of a matter . . . despite a high degree of awareness of probable falsity or
entertaining doubts as to its truth. Contract Dev. Corp. v. Beck, 627 N.E.2d 760, 764
(Ill. App. Ct. 1994) (quotation omitted). Duckwall asserts that no malice has been shown
because he consulted an attorney before filing the notice of adverse claim and reasonably
relied on that attorneys advice. But a mere assertion of reliance on an attorneys advice
without disclosure of the basis for that reliance or the facts supporting the attorneys
advice is insufficient to rebut the deliberate filing of a false statement.
From the record, it is clear that Duckwall knew the purchase agreement had been
canceled; the statutory notice of cancellation required by Minn. Stat. 559.21, subd. 3,
includes specific language that cancellation terminates the contract and all claims or
defenses a party has under the contract. But Duckwall offered no evidence as to the
information he provided to his attorney. In order to deny a charge of malice, Duckwall
could rely on the advice of his attorney only to the extent that this reliance was
reasonable. Duckwall cannot assert reasonable reliance on the attorneys advice, absent
evidence that the attorney had been fully informed as to all the facts surrounding
Duckwalls interest in the property and the cancellation of the purchase agreement.
We conclude that Duckwalls reckless disregard of the fact of cancellation is
sufficient to support a finding of malice and, therefore, the district court did not err by
determining that Duckwall slandered respondents title.
Attorney Fees
Duckwall challenges both the district courts appointment of a special master to
determine costs and attorney fees for the slander of title and the amount of the award.
Pursuant to Minn. R. Civ. P. 53.01(a)(2), (3), the district court may appoint a special
master only to address pretrial and post-trial matters that cannot be addressed effectively
and timely by an available district judge or to recommend findings of fact to be decided
by the court without a jury that involve a difficult computation of damages or an
accounting. Here, the district court directed the special master to determine costs and
attorney fees to be awarded against Duckwall. The court cited the sheer volume of the
record as a reason to appoint a special master, noting the length and complexity of the
trial, the number of exhibits, and the request for a sizeable amount of fees and costs. We
agree that this was an appropriate use of the skills of a special master.
We have reviewed the record, including the special masters report and the district
courts order awarding fees, and conclude that the record supports their findings as to the
amount of attorney fees and costs. But in this matter, the attorney fees are awarded as
special damages for the tort of slander of title. We review the amount of an award of
special damages as a question of law. Paidar, 615 N.W.2d at 279.
Attorney fees are considered to be special damages in a slander of title action
because they are incurred as a direct and necessary result of the tort. Id. at 281. Here,
however, respondents had a contractual agreement with Town Square Development that
obligated Town Square Development to assume responsibility for 50% of respondents
attorney fees and costs for bringing an action to quiet title. Thus respondents
responsibility for fees and costs, and therefore their special damages, can be no greater
than one-half of the fees and costs. We therefore modify the district courts order and
reduce the 6,957 attorney fee award by one-half, to ,478.50, and the ,080.46
costs award to ,540.23, with ,770.11 attributable to Duckwall, and ,770.11
attributable to One Lane.
Respondents canceled the contract in accordance with Minn. Stat. 559.21
(2002). Because it failed to oppose the cancellation or seek injunctive relief before the
expiration of the cancellation period, appellant One Land cannot avoid cancellation by
asserting a prior breach. Because he did not produce specific facts showing reasonable
reliance on his attorneys advice, appellant Duckwall failed to rebut an allegation of
malice in the slander of title action. But because the court awarded attorney fees as
special damages and respondents were contractually relieved of their obligation to pay
one-half of their attorney fees, we modify the courts order awarding 6,957 in
attorney fees from appellant Duckwall by reducing the amount by one-half to ,478.50,
and by reducing the costs levied against appellants to ,540.23 from ,080.46, with
each appellant responsible for one-half of the costs.
Affirmed as modified.


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