The Law

Sell me your shopping center!
by Michael Blahy

After an oral agreement to sell a property, followed up with months of negotiations and paperwork, does the buyer have the right to purchase the property?

In March 2022, Donavon Meuchel approached Jessy Meyer and Nick Renner of MR Properties, a North Dakota limited liability company interested in purchasing Golden West Shopping Center in New Salem, North Dakota. MR Properties wanted $600,000, which is the amount offered.

Meyer contacted an associate real estate broker, Wade Bachmeier to draft a purchase agreement. The first of multiple drafts was dated May 4, 2022. MR Properties did not sign this or any subsequent draft of the purchase agreement.

MR Properties owned Lots 20 to 23, but while researching the transaction, it was discovered that the shopping center encroached an adjacent lot owned by MKB LLP. Meuchel wanted the additional property included in the purchase and asked MR Properties buy it. Toman Engineering was hired by Meuchel to survey the adjoining lot, which was completed on May 19, 2022.

The same day, a Contract for Earnest Money & Down Payment was signed by Meuchel and Meyer which included:

This agreement for earnest money/down payment, in the amount of $10,000.00, between MR Properties, LLC and Donavon Meuchel on May 19, 2022 is a withstanding contract towards the purchase of above stated property and property discussed with Dave Meyer until purchase agreement is reviewed & accepted between both parties

This contract is only valid until purchase agreement is accepted & signed at which time the signed purchase agreement will take effect.

After the boundary lines on the MKB LLP lot survey were agreed upon, Meuchel requested Toman Engineering to move one line. Upon its discovery, negotiations broke down, and on July 6, 2022 Meyer refunded the earnest money of $10,000 with a letter explaining:

There is too much misunderstanding on the terms of the sale of the Golden West Shopping Mall. We feel that an agreement cannot be reached and are refunding your down [payment] money

On July 20, 2022 Meuchel signed an addendum, and the following day a May 19, 2022 purchase agreement. MR Properties signed neither.

Later in 2022, Meuchel requested a judgement from the district court compelling the transfer of the "real property subject to the purchase agreement prepared by MR Properties LLC and signed by Donavon Meuchel.” MR Properties filed a motion to dismiss the action with supporting affidavits and exhibits, which the district court treated as a motion for summary judgment. Between November 2022 and March 2023 paperwork was filed with the court by the two adversaries.

The district court struck a number of documents and then saying "given the lack of clearly ascertainable terms necessary to specifically enforce the alleged oral contract" Meuchel failed to show specific performance, and dismissed the case.

Meuchel appealed to the North Dakota Supreme Court, arguing that the district court erred in:

By failing to consider evidence submitted by Meuchel while considering evidence from MR Properties.

Improperly using information from the "untimely" motion-to-strike filings to make conclusions about Meuchel's "credibility" for purposes of the summary judgment motion.

He argued the court applied different standards to the evidence and its use of one side's evidence was "fundamentally unfair."

Granting summary judgment to MR Properties LLC, dismissing Meuchel's action for specific performance.

The North Dakota Supreme Court reviewed and analysed the case specifically in light of the errors suggested by Meuchel:

The district court has discretion, either upon a motion by a party or on its own, to strike an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter in a pleading.

A court may consider a motion to strike at any time.
A supporting or opposing declaration must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the declarant is competent to testify on the matters stated. Affidavits that do not meet the standards of Rule 56 must be disregarded on a motion for summary judgment.
Meuchel did not assert the statements the court disregarded were based on his personal knowledge. Based on the district court's order, the supreme court concluded the court only considered MR Properties' motion to strike to determine whether to grant the motion to strike; the court did not consider MR Properties' motion to strike to decide the underlying motion for summary judgment.

The district court did not apply different standards to the parties' evidence. Meuchel had until January 30, 2023 to file their response. His March 2023 supplemental affidavit was untimely filed and within the court's discretion to strike.
MR Properties’ motion to strike was timely; a party may bring a motion to strike at any time. Thus, the court properly considered the evidence supporting MR Properties' motion to strike to determine whether to grant the motion to strike.
The court agrees certain statements in the November 17, 2022 affidavit, which were later shown to lack credibility, should not be considered as persuasive by the court. Specifically, statements as they pertain to Plaintiff's knowledge of who in fact drafted the documents; such as the earnest money agreement, purchase agreements, and any addendums to purchase agreements . . . although not stricken will not be considered by the court.

A mere preponderance of the evidence is insufficient to establish the terms and existence of a claimed oral contract. An agreement for the sale of real property need only show who the contracting parties are, intelligently identify the subject matter involved, express the consideration, and disclose the terms and conditions upon which the contract is entered into.
“Summary judgment” is appropriate if . . . there is no genuine issue as to any material fact and reasonable minds could reach only one conclusion.
“Specific performance” is an equitable remedy and equitable principles must be followed in its use. The person seeking specific performance has the burden of proving he is entitled to it, and may be denied if a contract is not fair, reasonable, and based on adequate consideration. To be specifically enforceable, a contract must fix the price or consideration clearly, definitely, certainly, and unambiguously, it must be complete in itself . . . at least with respect to its essential and material terms . . .
Generally, a contract for the sale of land is unenforceable against one who has not signed it. Courts have recognized an exception where, three major categories of acts by the purchaser may make an oral contract enforceable: paying the contract price, taking possession of the property, and making improvements. The parties' consent must be free, mutual, and communicated to each other. Consent is not mutual unless the parties all agree upon the same thing in the same sense."
A “qualified acceptance” is a counter proposal, in effect a rejection and a new proposal, and not binding as an acceptance on the person making the offer, and no contract is made by such qualified acceptance alone. In other words, the minds of the parties must meet as to all the terms of the offer and of the acceptance before a valid contract is entered into. It is not enough that there is a concurrence of minds on the price of the real estate offered to be sold.

The North Dakota Supreme Court found:

It is is undisputed MR Properties did not sign a purchase agreement for the Golden West Shopping Center.

The earnest money contract, signed by Meuchel and Meyer, is not an agreement for the sale of the Golden West Shopping Center. By its plain terms anticipates a future "purchase agreement [being] reviewed & accepted between both parties."

The May 19, 2022 purchase agreement signed by Meuchel on July 21, 2022, sufficiently identified the parties, the price, and the land to be purchased. However, that purchase agreement was not signed by MR Properties, and MR Properties withdrew the purported offer before Meuchel "accepted" it. Moreover, assuming for the sake of argument the May 19, 2022 purchase agreement was an offer, Meuchel did not absolutely and unqualifiedly accept the purchase agreement. Meuchel's addendum proposed additional purchase terms and conditions. By deviating from the terms of the purchase agreement, Meuchel rejected the offer, making it not binding on MR Properties. At best, by signing the May 19, 2022 purchase agreement and the July 20, 2022 addendum, Meuchel made a counteroffer to purchase the property.

Based on the undisputed facts, a reasonable juror could not conclude an oral contract existed that clearly, definitely, certainly, and unambiguously established the essential and material terms of the sale of the Golden West Shopping Center. The undisputed facts show there was disagreement as to the specific property to be sold (the property line) and MR Properties' obligations.

The North Dakota Supreme Court decided; because the record does not establish the existence of a genuine issue of material fact of an oral contract between the parties, the court did not err in granting summary judgment to MR Properties on Meuchel's claim for specific performance.

(Meuchel v. MR Properties (Supreme Court of the state of North Dakota, Citation: 2024 ND 107))

Decision: May 2024
Published: June 2024

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