Allen R. Block, et al., Appellants, vs. Donna Rahman, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-269

Allen R. Block, et al.,

Appellants,

vs.

Donna Rahman,

Respondent.

Filed November 25, 2003

Reversed and remanded

Robert H. Schumacher, Judge

Rice County District Court

File No. C5021071

Jacqueline A. Dorsey, Mary L. Hahn, Hvistendahl, Moersch & Dorsey, P.A., 311 South Water Street, Post Office Box 651, Northfield, MN 55057-0651 (for appellants)

James Y. Prichard, 101 East Fifth Street, Suite 202, Post Office Box 165, Northfield, MN 55057 (for respondent)

            Considered and decided by Randall, Presiding Judge; Schumacher, Judge; and Shumaker, Judge.

U N P U B L I S H E D   O P I N I O N

ROBERT H. SCHUMACHER, Judge

Allen R. and Nancy R. Block appeal from a judgment dismissing their action for eviction of respondent Donna Rahman, arguing the district court erred as a matter of law in finding a valid oral contract existed for the sale of their townhouse and therefore specific performance cannot lie.  We conclude the oral agreement between the parties is unenforceable under Minn. Stat. § 513.01 (2002).  We reverse and remand.

In June 2002, the Blocks filed an eviction action, alleging Rahman had been renting the property since January 1998 and seeking to have her evicted because she failed to pay rent for the months of January 2002 through June 2002, and was given written notice to vacate, but was still in possession.  Rahman answered that she was not a renter but rather had an interest in the property as a purchaser "pursuant to a contract for deed agreement . . . between the parties."  Rahman also filed counterclaims requesting a declaratory judgment that a valid contract existed between the parties and the Blocks were obligated to transfer title and various equitable theories that would allow enforcement of the contract if it were found invalid.

In February 2003, the district court entered judgment for Rahman, finding she was not a renter, that an oral purchase agreement existed between the parties, and the oral agreement was exempt from Minn. Stat. § 513.04 (2002) because both parties had "substantially performed all of the essential conditions of the agreement."  The court ordered the parties to determine Rahman's pay-off amount and convey title to the property.

            Whether the statute of frauds prevents the enforcement of an oral contract requires this court to determine whether the district court erred in applying the law.  This involves a question of law, which we review de novo.  Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490, 493 (Minn. 1998).

In general, oral contracts are valid, but such contracts might be unenforceable under the statute of frauds.  Schwinn v. Griffith, 303 N.W.2d 258, 260 (Minn. 1981).  The statute of frauds covers contracts relating to interests in land and provides:

No estate or interest in lands, other than leases for a term not exceeding one year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance in writing, subscribed by the parties creating, granting, assigning, surrendering, or declaring the same, or by their lawful agent thereunto authorized by writing. 

Minn. Stat. § 513.04.  In addition to the sale of land, the statute of frauds also covers contracts that cannot be performed in one year.

No action shall be maintained, in either of the following cases, upon any agreement, unless such agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith:

 (1)      Every agreement that by its terms is not to be performed within one year from the making thereof . . . .

Minn. Stat. § 513.01(1). 

Although the doctrine of part performance removes a contract for the sale of land from the purview of Minn. Stat. § 513.04, part performance does not excuse an oral contract from the one-year time limit of Minn. Stat. § 513.01.  Roaderick v. Lull Eng'g Co., 296 Minn. 385, 388, 208 N.W.2d 761, 763-64 (1973) (addressing whether statute of frauds applies to two year oral employment contract).  An oral agreement that by its very terms cannot be performed within one year from the date it is made must be in writing to be enforced, regardless of whether there has been part performance of the agreement.

Here, the oral contract contemplates final payment on December 31, 1999, and the agreement was reached in November 1997.  The final payment term prevents this oral contract from being performed in less than a year.  The oral contract not only falls under Minn. Stat. § 513.04, as a conveyance of property, but it also falls under Minn. Stat. § 513.01.  Because part performance does not exempt a contract from Minn. Stat. § 513.01, this contract is not enforceable.  The district court erred as a matter of law in concluding the oral contract was exempted from the statute of frauds.  The district court's judgment is reversed, and the Blocks' action for eviction is reinstated.

            Reversed and remanded.