Scherping v. Scherping

Bryan Scherping, d/b/a JBR Farms; et al., Appellants, v. Amy Scherping, et al., defendants and third party plaintiffs, Respondents, v. Bryan Scherping, et al., third party defendants,Loren Scherping, et al., third-party defendants, Co-Appellants

A16-1815

STATE OF MINNESOTA IN COURT OF APPEALS

July 3, 2017

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2016).

Affirmed as modified

Worke, Judge

Stearns County District Court

File No. 73-CV-14-3597

Sarah R. Jewell, Reichert Wenner, P.A., St. Cloud, Minnesota (for appellants)

John J. Neal, Willenbring, Dahl, Wocken & Zimmerman, PLLC, Cold Spring, Minnesota (for respondents)

Charles M. Schiff, Law Office of Charles M. Schiff, St. Cloud, Minnesota (for co-appellants)

Considered and decided by Worke, Presiding Judge; Johnson, Judge; and Kirk, Judge.

UNPUBLISHED OPINION

WORKE, Judge

Appellants and co-appellants challenge the district court's interpretation of the parties' settlement agreement and distribution of farming equipment. Appellants claim that the district court erred by failing to award them fixtures to real property and $400,000 in receivership funds under the settlement agreement. Appellants also argue that the district court erred by failing to determine whether a partnership existed between appellants and respondents. Co-appellants argue that the district court erred by failing to make findings of fact in its final distribution order and by failing to award co-appellants items that were conceded to them by respondents. We affirm as modified.

FACTS

This case involves a family dispute over farmland and farming equipment. Co-appellants Loren and Jane Scherping are the parents of respondent Jason, appellants Bryan and Randy, and third-party defendants Lori, Sandy, and Kristin. Co-appellant LaVern is Loren's brother, and respondent Amy is Jason's wife.¹

The dispute centers on three parcels of real property: the CJS Ranch Trust property, the 162-acre property, and the 51-acre property. The CJS Ranch Trust property consists of 240 acres of farmland. Prior to this litigation, Jason, Bryan, Randy, Lori, Sandy, and Kristin each had an ownership stake in the CJS Ranch Trust property.

The 162-acre property was originally owned by Loren and Jane. They forfeited the property to the Federal Internal Revenue Service (IRS) in a foreclosure action, and Jason purchased the property at auction. Jason also acquired the nearby 51-acre property.

In April 2014, Bryan and Randy sued Jason and Amy. The complaint alleged that Jason holds title to the 162-acre property and the 51-acre property on behalf of JBR Farms. Bryan and Randy claimed that JBR Farms was formed in 1998 by Jason, Bryan, and Randy to farm the three properties. Bryan and Randy alleged that Jason withheld partnership profits from them for several years. The complaint sought dissolution of the partnership and an accounting of all JBR Farms' assets and liabilities.

Jason and Amy subsequently filed a separate lawsuit against Bryan, Randy, and the other parties in this matter, claiming that Jason was the "sole owner and operator" of JBR Farms. They also claimed that Loren, LaVern, Bryan, and Randy trespassed and converted their property. The district court consolidated the cases and appointed a receiver to "administer the assets of JBR Farms."

In October 2015, the parties reached a settlement agreement. The district court restated the parties' agreement in an October 30, 2015 order. The order states that "Jason shall assign his entire interest in the CJS Ranch Trust real property and fixtures to Bryan and Randy." It further states that "[t]he CJS Ranch Trust real property and fixtures shall be owned by Bryan, Randy, Sandy, and Kristin free and clear of any claim by any other parties." It awards Bryan and Randy "100% of the [r]eceiver funds (approximately $400,000.00), less and with the [r]eceiver paying from those funds all taxes for 2014 and 2015 and costs relating to JBR Farms (such as property taxes, income taxes from sales ofcommodities, etc.)." The settlement awards Jason the 162-acre property and allows him to "keep all the new farm equipment purchased, as shown on his tax returns; excluding Imperial Investment equipment." Ownership of the Imperial Investment equipment and other personal property not divided in the settlement was reserved for future decision by the district court.

After the settlement was reached, a court trial was held on the Imperial Investment equipment, the farming equipment that Loren, Jane, and LaVern sold to Imperial Investments Inc. Jason leased and later purchased the equipment from Imperial Investments. During the trial, Loren, Jane, and LaVern testified that they never sold the equipment to Imperial Investments. Although there was documentary evidence of the sale and they testified in other litigation that the sale took place, they argued that the sale was a sham designed to prevent the IRS from seizing the equipment. In its January 20, 2016 order, the district court found this testimony not credible and awarded the Imperial Investment equipment to Jason and Amy.

Bryan, Randy, and the sibling third-party defendants did not participate in the court trial because they made no claim to the Imperial Investment equipment; however, they did object at trial to the district court receiving evidence relating to fixtures on the CJS Ranch Trust property, arguing that the settlement agreement awarded them these fixtures. The district court sustained the objection but ruled that it was moot because the January 20, 2016 order did not address any such fixtures.

Jason and Amy then moved to enforce the January 20, 2016 order. Bryan, Randy, and the sibling third-party defendants renewed their objection, arguing that the ordererroneously awarded fixtures on the CJS Ranch Trust property to Jason and Amy. They listed specific farm equipment distributed by the order that they claimed as fixtures. On April 28, 2016, the district court issued an order finding that none of the claimed items were fixtures. The district court ordered the items transferred to Jason and Amy.

In its January 20, 2016 order, the district court also included a list of items that remained undistributed. In the event that the parties failed to reach an agreement as to the distribution of these items, the district court ordered them to submit memoranda addressing: 1) whether or not JBR Farms is a valid partnership; 2) if so, which parties were members of that partnership; and 3) as to each piece of property, the owner of the property and whether the property qualifies as a fixture.

The parties failed to reach an agreement, and after reviewing the parties' final submissions, the district court distributed the remaining property in an October 25, 2016 order. The order included no findings of fact, and the district court declined to determine whether JBR Farms was a partnership. The district court awarded Jason and Amy the items listed on Jason's tax returns, duplicates of Imperial Investment equipment, and other items not mentioned in the other parties' submissions. Loren, Jane, LaVern, and the sibling third-party defendants were awarded items listed in section IV of their submissions and items conceded to them at trial. The remaining items were awarded to Bryan and Randy. This appeal followed.

DECISION

Fixtures

Appellants argue that the district court erred by awarding respondents farm equipment that appellants claim are fixtures on the CJS Ranch Trust property. Appellants were awarded the CJS Ranch Trust property and "fixtures" in the settlement agreement.

As a threshold issue, respondents argue that appellants' claims to the farm equipment must be denied because appellants waived their right to appeal in the settlement agreement. "[W]aiver is the intentional relinquishment of a known right." Valspar Refinish, Inc. v. Gaylord's, Inc., 764 N.W.2d 359, 367 (Minn. 2009) (quotations omitted). "Settlement of claims is encouraged as a matter of public policy." Voicestream Minneapolis, Inc. v. RPC Props., Inc., 743 N.W.2d 267, 271 (Minn. 2008). "A settlement agreement is a contract." Dykes v. Sukup Mfg. Co., 781 N.W.2d 578, 581-82 (Minn. 2010). When the language of a contract is clear and unambiguous, this court enforces the agreement of the parties as expressed in the contract. Id. at 582. A contract is ambiguous if it is susceptible to more than one reasonable interpretation. Id. This court reviews de novo whether a contract is ambiguous. Id.

The district court's order reiterating the parties' settlement agreement states that "[t]he parties wish to settle all of their differences." It also states that "[t]he parties have agreed to a complete settlement of all of the disputes existing between them." The order calls the settlement a "full and final settlement, compromise and release of all claims."

But the settlement agreement also contemplates more litigation. It does not divide all property, and the order states that "[t]he only claims reserved for further litigationrelate[] to ownership over the Imperial Investment equipment . . . or otherwise disputed by the parties shall be submitted to the [c]ourt for final decision." It also states, "[a]ll other equipment and tools not specified herein shall be divided by agreement of the parties with the [c]ourt making the final decision." Likewise, the settlement agreement itself provides that the issue of ownership of the Imperial Investment equipment is "reserved for further litigation." It also provides that "[a]ll other equipment and tools not specified herein shall be divided by agreement of the parties with the [district court] being the final decider." Based upon this language, we conclude that appellants did not waive the right to appeal the distribution of the Imperial Investment equipment and other property not specified in the settlement agreement.

Respondents characterize the statement that the district court will make "the final decision"...