Liebig v. Edward C. Kirchoff & Cross Country Real Estate, LLC

851 N.W.2d 743

2014 S.D. 53

Shane LIEBIG, Plaintiff and Appellee,and concerning,Lieben Promotions, LLC, a South Dakota Limited Liability Company, Kenneth Reinert, and Spearfish Excavating, Inc., a South Dakota Corporation, Interested Parties,

v. Edward C. KIRCHOFF and Cross Country Real Estate, LLC, a Wyoming Limited Liability Company, Defendants and Appellants,andWilliam J. “Bill” Keester, Defendant.

Nos. 26840, 26841, 26893.

Supreme Court of South Dakota.

Considered on Briefs May 27, 2014.

Decided July 23, 2014.

Thomas E. Brady, Eric T. Davis of Brady Pluimer, PC, Spearfish, South Dakota, Attorneys for plaintiff and appellee.

John K. Nooney, Robert J. Galbraith of Nooney Solay & Van Norman, LLP, Rapid City, South Dakota, Attorneys for defendants and appellants.

ZINTER, Justice.

[¶ 1.] Shane Liebig sued Edward Kirchoff for specific performance of an alleged oral contract to purchase real property owned by Kirchoff. Liebig also sued for fraud and deceit. Kirchoff counterclaimed for “unjust enrichment/quantum meruit” arising out of Liebig's use of the property. After a bench trial, the circuit court denied Liebig's claim for enforcement of the alleged contract. A jury determined the remaining claims. The jury awarded Liebig compensatory and punitive damages on his fraud-and-deceit claim. The jury awarded Kirchoff damages on his “unjust enrichment/quantum meruit” claim. Kirchoff and Liebig both appeal. We affirm in part, reverse in part, and remand for a new trial on damages related to Liebig's fraud-and-deceit claim.

Facts and Procedural History

[¶ 2.] In May 2010, Shane Liebig and Kenneth Reinert leased and operated the Black Hills Speedway in Rapid City. During the 2010 racing season, Liebig attempted to purchase the Speedway, but the owners declined, opting to sell the property at auction.

[¶ 3.] Before the auction, Edward Kirchoff signed an agreement with a real estate agent identifying Cross Country Real Estate, LLC (CCRE), a company Kirchoff owned, as a prospective buyer of the Speedway. The agreement also indicated that Liebig was the authorized representative of CCRE to bid on the Speedway. Liebig and the real estate agent, acting on behalf of CCRE, purchased the Speedway for $350,000 at the auction, and the property was transferred to CCRE.

[¶ 4.] Liebig and Kirchoff had a business relationship before the auction. Kirchoff had helped finance Liebig's purchase of a different commercial property. According to Liebig, Kirchoff orally agreed to a similar financing arrangement for the Speedway. Liebig testified that before the auction, he and Kirchoff orally agreed that Kirchoff would purchase the Speedway and later convey it to Liebig on certain terms. Kirchoff disputed this testimony.

[¶ 5.] From November 2010 to March 2012, while CCRE was the record title owner, Liebig possessed the property and operated the Speedway. During that time, Liebig invested time and money improving the Speedway. Reinert, his company (Spearfish Excavating, Inc. (SEI)), and other third parties also provided labor and materials to improve the Speedway.

[¶ 6.] In February 2011, a convenience store owner contacted Liebig about purchasing part of the Speedway's highway frontage. Liebig indicated that others had inquired about similar purchases but development never seemed feasible because Rapid City refused to plat the property and the South Dakota Department of Transportation refused to allow full vehicle access. Regardless, the owner offered $250,000 for a one-acre lot if the property could be platted and vehicle access approved. Liebig informed Kirchoff of the offer.

[¶ 7.] Liebig then began efforts to get the property platted and vehicle access approved. According to Liebig, when it appeared the approvals were possible, he and Kirchoff entered into another oral agreement under which Kirchoff would develop the frontage property and add the costs of development to Liebig's purchase price.

[¶ 8.] In February 2012, the Department of Transportation granted full vehicle access, and Rapid City approved a preliminary plat for the Speedway's frontage property. Liebig testified that after he informed Kirchoff of the approvals, Kirchoff told Liebig that “things [were] going to change.” Liebig testified that Kirchoff told Liebig that Kirchoff was going to take possession and control of the Speedway, and that Liebig owed Kirchoff rent for the time Liebig operated the Speedway.

[¶ 9.] Liebig subsequently sued Kirchoff for enforcement of the alleged purchase agreement. He also sued for fraud and deceit. Kirchoff counterclaimed, alleging “unjust enrichment/quantum meruit.” Reinert and SEI were joined as parties after Reinert claimed in a deposition that he also had a right to purchase the Speedway. However, Reinert and SEI never followed through and filed a claim against Kirchoff.

[¶ 10.] Following a bench trial, the circuit court ruled that Liebig failed to establish a contractual right to purchase the Speedway. The court found that “Liebig and Kirchoff never reached a meeting of the minds as to the essential terms of the contract.” A jury decided the remaining claims. The jury awarded Liebig compensatory and punitive damages on his fraud-and-deceit claim. The jury also awarded Kirchoff damages on his “unjust enrichment/quantum meruit” claim. The circuit court awarded Liebig costs and disbursements.

[¶ 11.] Kirchoff raises the following issues on appeal:

1. Whether the circuit court erred in denying Kirchoff summary judgment on Liebig's fraud-and-deceit claim.

2. Whether the circuit court erred in denying Kirchoff's motion to dismiss Reinert and SEI as parties to the litigation.

3. Whether the circuit court erred in admitting Liebig's evidence of damages for the value of labor and materials Reinert and SEI supplied to improve the Speedway.

4. Whether the circuit court erred in admitting Liebig's evidence of damages for the value of labor and materials supplied by nonparties to improve the Speedway.

5. Whether the circuit court erred in admitting Liebig's evidence of damages incurred before he learned that Kirchoff would no longer adhere to the alleged oral agreement.

6. Whether the circuit court erred in awarding Liebig costs and disbursements as the prevailing party.

By notice of review, Liebig raises the following issues:

7. Whether the circuit court erred in denying Liebig a judgment as a matter of law on Kirchoff's “unjust enrichment/quantum meruit” counterclaim.

8. Whether Liebig, who allegedly used the property in reliance on Kirchoff's fraudulent statements, can be liable as a matter of law to Kirchoff for any benefits Liebig received from that use.

9. Whether the circuit court erred in concluding that no oral contract was formed for Liebig to purchase the Speedway from Kirchoff.

Decision

1. Denial of Summary Judgment on Fraud and Deceit

[¶ 12.] Kirchoff argues that the circuit court erred in denying his motion for summary judgment on Liebig's fraud-and-deceit claim. Kirchoff contends that Liebig did not identify specific material facts of fraud and deceit sufficient to resist summary judgment.

[¶ 13.] “[T]hose resisting summary judgment [must] show that they will be able to place sufficient evidence in the record at trial to support findings on all the elements on which they have the burden of proof.” Bordeaux v. Shannon Cnty. Sch., 2005 S.D. 117, ¶ 14, 707 N.W.2d 123, 127 (quoting Chem–Age Indus., Inc. v. Glover, 2002 S.D. 122, ¶ 18, 652 N.W.2d 756, 765). Therefore, on his fraud-and-deceit claim, Liebig had the summary judgment burden to identify evidence suggesting: (1) that Kirchoff made a statement of fact to Liebig about the sale of the Speedway; (2) that Kirchoff knew this statement was untrue, or that he recklessly made it; (3) that Kirchoff intended to deceive Liebig; and (4) that Liebig justifiably relied on the statement to his detriment. See Ehresmann v. Muth, 2008 S.D. 103, ¶ 20, 757 N.W.2d 402, 406 (citations omitted); N. Am. Truck & Trailer, Inc. v. M.C.I. Commc'n Servs., Inc., 2008 S.D. 45, ¶ 8, 751 N.W.2d 710, 713 (citations omitted).

[¶ 14.] In reviewing the adequacy of summary judgment responsive showings, we “look at all the evidence.” Rumpca v. Brenner, 2012 S.D. 33, ¶ 8, 814 N.W.2d 128, 130 (emphasis added) (citation omitted). In this case, Kirchoff moved for summary judgment after the bench trial. In response to Kirchoff's statement of undisputed facts, Liebig relied on the testimony from the bench trial regarding representationsallegedly made by Kirchoff. Liebig testified that based on those representations, he was led to believe that Kirchoff agreed to finance and sell Liebig the Speedway. Liebig also testified that in reliance on Kirchoff's statements, Liebig and others began improving the Speedway. Liebig further testified that once the Department of Transportation granted full vehicle access and Rapid City approved the preliminary plat for the Speedway's frontage property,¹ Kirchoff changed the alleged agreement to sell the property. According to Liebig, Kirchoff also changed the alleged agreement to develop the frontage property and add the costs to Liebig's purchase price. We conclude that the record contained sufficient facts or inferences of fact to support findings on the elements of fraud and deceit. The representations supporting fraud and deceit were disputed, but reasonable doubts concerning genuine issues of material fact must be resolved against Kirchoff. See, e.g., De Smet Farm Mut. Ins. Co. v. Busskohl, 2013 S.D. 52, ¶ 11, 834 N.W.2d 826, 831. The circuit court did not err in denying Kirchoff's motion for summary judgment on Liebig's fraud-and-deceit claim.

2. Motion to Dismiss Reinert and SEI

[¶ 15.] Kirchoff argues that the circuit court erred in denying his motion for summary judgment seeking to dismiss Reinert and SEI as parties to the litigation. Kirchoff contends that after the circuit court ruled there was no contract to purchase the Speedway, the only remaining claims...