SM Investments, LLC, Appellant,

This opinion will be unpublished and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

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-1583

SM Investments, LLC,
Appellant,

vs.

Roger Erickson,
Respondent.

Filed September 4, 2018
Affirmed
Schellhas, Judge

Clay County District Court
File No. 14-CV-14-3557

Michael T. Andrews, Joshua M. Feneis, Anderson, Bottrell, Sanden & Thompson, Fargo,
North Dakota (for appellant)

Mark R. Hanson, Nilles Law Firm, Fargo, North Dakota (for respondent)

Considered and decided by Ross, Presidin g Judge; Schellhas, Judge; and Bratvold,
Judge.
U N P U B L I S H E D O P I N I O N
SCHELLHAS, Judge
Following a jury trial, appellant challenge s the district court’s denial of his motion
for judgment as a matter of law, his motion fo r a new trial, and his request to reform a
purchase agreement. Re spondent/cross-appellant argues th at the district court erred by

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granting partial summary judgmen t in favor of appellant’s breach-of-contract claim. We
affirm.
FACTS
On June 11, 2014, appellant SM Invest ments, LLC agreed in writing to purchase
from respondent Roger Erickson two commercial properties for $825,000. The properties
housed four commercial tenants, including De tails Salon. SM Investments’ purchase was
subject to it obtaining mortgage financing. An addendum to the purchase agreement
required Erickson “to furnish [SM Investment s] any notice of tenants moving out if
[Erickson] has been notified before closin g.” Marv Schlick, do ing business as Marv
Schlick Realty, brokered the sale. The addendum also provided that “Marv Schlick Realty
is not representing the buyer or seller.”
The parties closed the transaction on August 18, 2014. Shortly thereafter, Erickson
informed Details Salon through its owner, Tim Williams, of the sale of the property to SM
Investments and directed Williams to cont act Schlick with any questions. Williams
“immediately” called Schlick and told him th at he had sent Eric kson notice on June 25,
2014, that Details Salon did not intend to renew its lease. On August 29, Williams also
informed Schlick and SM Investments by letter that Details Salon did not intend to renew
its lease and reiterated that he had so advised Erickson by letter on June 25, 2014.
In response to Williams’s information, SM Investments sued Erickson for breach of
contract, consumer fraud, actual fraud, and reformation due to unilateral mistake. In a third-
party complaint, Erickson sued Schlick and Marv Schlick Re alty, claiming that he had
informed Schlick of Details Salon’s intent not to renew its lease, that Schlick said that he

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would so inform SM Investments, that Schlic k was obligated to inform SM Investments,
and that he failed to do so.
The district court granted SM Investments partial summary judgment on its breach-
of-contract claim on the basis that, “as a matter of law, the notice provision [in the purchase
agreement] was breached.” The court also ruled that the “party responsible for the breach
and the amount of damages remain in contr oversy and are not before the Court in this
summary judgment matter.” The court denied summary judgment to SM Investments on
its contract-reformation claim. Subsequently, the court granted SM Investments leave to
amend its complaint to allege punitive damages, and the court dismissed SM Investments’
consumer-fraud and deceptive-trade-practices claims under Minn. R. Civ. P. 12.02(e).
The court conducted a jury trial on SM Investments’ remaining claims. A jury found
that Erickson’s breach of the purchase agreement did not damage SM Investments, and that
Erickson had not engaged in any fraudulent activity. Because the ju ry found against SM
Investments on its fraud claim, the district court did not submit the issue of punitive
damages to the jury. SM Investments tried its claim for reformation of the contract to the
district court. The court denied the claim and denied SM Investments’ posttrial motions for
judgment as a matter of law (JMOL) and a new trial.
This appeal follows.1

1 Erickson filed a “conditional” notice of rela ted appeal, seeking review of the district
court’s partial summary judgment on SM Investments’ breach-of-contract claim. Because
we affirm, we need not reach the merits of Erickson’s related appeal.

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D E C I S I O N
I. Denial of JMOL to SM Investments
If a party moves for JMOL after a jury re turns a verdict, the district court may
“(1) allow the judgment to stand, (2) order a new trial, or (3) direct entry of judgment as a
matter of law.” Minn. R. Civ. P. 50.02(a). Appella te courts “review de novo a district
court’s decision to deny a motion for judgment as a matter of law.” Christie v. Estate of
Christie, 911 N.W.2d 833, 838 n.5 (Minn. 2018). When reviewing the denial of a motion
for JMOL, appellate courts construe the evid ence “in the light most favorable to the
prevailing party and as k whether there is a legally su fficient evidentia ry basis for a
reasonable jury to find for the prevailing party.” Karl v. Uptown Drink, LLC, 835 N.W.2d
14, 17 (Minn. 2013) (quotation omitted). We will set aside a jury’s verdict “only if it is
perverse and palpably contrary to the evidence, or where the evidence is so clear as to leave
no room for differences among reasonable persons.” Moorhead Econ. Dev. Auth. v. Anda,
789 N.W.2d 860, 888 (Minn. 2010) (quotation omitted).
A damages award for a breach-of-contract claim should put the injured party in the
position in which it woul d be had the contra ct been performed. Lesmeister v. Dilly , 330
N.W.2d 95, 102 (Minn. 1983). Recoverable damages are those “which arose naturally from
the breach or could reasonably be supposed to have been contemplated by the parties when
making the contract as the probable result of the breach.” Id. at 103.
SM Investments contends that the jury did not base its zero-damages verdict on the
evidence because “[a]ll the evidence heard by the Jury pointed to the conclusion that [SM
Investments] would have had to reduce its purchase price [by $181,417.24] to account for

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the loss of income from Details Salon, or decline to purchase at all.” But SM Investments’
argument ignores the possibility that the jury did not find the claimed measure of damages
persuasive. Although SM Investments’ princi pal, Scott Differding, testified that the
“$825,000 price was based on an 8 1/2 percen t CAP [capitalization] rate on the rental
income between the two properties,” he acknowledged that the parties did not discuss how
they “ended up at [an] $825,000 purchase price.” In fact, Differding admitted that neither
the purchase agreement nor addendum identified a CAP rate or how Erickson determined
the $825,000 amount. Differding acknowledged that the parties arrived at a purchase price
after he presented an unsigned purchase agreement to Ericks on with a purchase price of
$750,000, and that Erickson countered with a price of $825,000, signed the agreement, and
then Differding signed and initialed it. The fact that Er ickson was the party who counter-
offered a purchase price of $825,000 does not support Differding’s claim that the $825,000
amount was based on an 8 1/2 percent CAP ra te. The purchase agreement and addendum
also lack any contingency based on the number of tenants occupying the properties and do
not provide for renegotiation upon receipt of a tenant’s vacancy notice before the closing.
The evidence showed that Differding received the leases before the closing, and that
he knew that Details Salon’s lease expire d on its terms on Septem ber 30, 2014, shortly
after the scheduled closing. Differding also ac knowledged at trial that two other tenants
have since vacated the premises. Moreover, Differding admitted that SM Investments did
not attempt to lease Details Salon’s space for at least five or six months after learning that
Details Salon was not renewing its lease.

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The testimony of Erickson and Jerome Weber, Erickson’s expert witness, also
contradicted Differding’s testimony that th e $825,000 amount was based on an 8 1/2
percent CAP rate. Although Differding claime d that SM Investments’ sole purpose for
buying the properties was to maximize the properties’ income-producing potential, both
Erickson and Weber testified that buyers often purchase commercial properties for other
reasons, such as redevelopment, or improvement and resale for profit. The jury simply may
have credited the testimony of Erickson a nd Weber and discredited the testimony of
Differding on the measure of damages, which was well within its province. The jury was
free to reject SM Investments’ evidence on damages and find that SM Investments suffered
no damages from Erickson’s breach. After all, Differding acknowledge d at trial that the
appraised value of the properties exceeded the purchase price.
The jury’s zero-damages verdict is also supported by evidence that SM Investments
obtained mortgage financing to purchase the properties, thereby satisfying the financing
contingency in the purchase agreement. SM Investments obtained financing from two
different lenders, one that, due to lending lim its, partially financed the purchase, and one
that provided refinancing at a mortgage closing on Sept ember 17, 2014, after SM
Investments knew that Details Salon did not intend to renew its lease. When viewed in the
light most favorable to the verdict, a reasonable jury had ample evidence upon which to
find that SM Investments was not entitled to damages for Erickson’s breach. We therefore
conclude that the district court did not err by denying JMOL to SM Investments.

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II. New trial
A district court may grant a motion for a new trial if “[t]he verdict . . . is not justified
by the evidence, or is contrary to law.” Minn. R. Civ. P. 59.01(g). “Whether the verdict is
justified by the evidence presents a factual question and the district court may properly
weigh the evidence.” Clifford v. Geritom MED, Inc., 681 N.W.2d 680, 687 (Minn. 2004).
In deciding whether to grant a new trial on th e basis that the evidence does not justify the
verdict, a district court looks to “whether the verdict is so contrary to the preponderance of
the evidence as to imply that the jury failed to consider a ll the evidence, or acted under
some mistake.” Id. (quotation omitted). “This caus e vests the broadest possible
discretionary power in the [district] court.” Id. (quotation omitted).
“On appeal from a denial of a motion for a new trial, an appellate court should not
set aside a jury verdict unless it is manifestly and palpably contrary to the evidence viewed
as a whole and in the light most favorable to the verdict.” Raze v. Mueller , 587 N.W.2d
645, 648 (Minn. 1999) (quotations and foot note omitted). This court will not reverse a
district court’s denial of a motion for a new trial absent an abuse of discretion. Christie,
911 N.W.2d at 838. Because a district court is in a better position “to a ssess whether the
evidence justifies the verdict,” an appellate court “usually defer[s] to that court’s exercise
of the authority to grant a new trial.” Clifford, 681 N.W.2d at 687.
SM Investments argues that the jury’s verdict of no damages was “perverse and
irreconcilable with the evidence,” and that the “only plausible explanation” for the verdict
stems from the district court’s erroneous ad mission of Weber’s expert testimony. We
construe SM Investments’ challenge to the district court’s denial of its new-trial motion to

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be based primarily on a claim that the district court erred by allowing Weber to testify as
Erickson’s expert witness.
The Minnesota Rules of Evidence provide th at “[i]f scientific, technical, or other
specialized knowledge will assist the trier of fact to understand the evidence or to determine
a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion or otherwise.” Minn. R. Evid. 702.
To admit expert testimony under rule 702, the testimony must pass a four-part test:
“(1) [t]he witness must qualify as an expe rt; (2) the expert’s opinion must have
foundational reliability; (3) the expert testimony must be helpful to the trier of fact; and
(4) if the testimony involves a novel sc ientific theory, it must satisfy the Frye–Mack
standard.” Doe v. Archdiocese of St. Paul , 817 N.W.2d 150, 164 (Minn. 2012).
“Evidentiary rulings, including the admission of expert testimony, are within the broad
discretion of the district court,” and will not be reversed absent an abuse of discretion. City
of Moorhead v. Red River Valley Coop. Power Ass’n , 830 N.W.2d 32, 39 (Minn. 2013)
(quotation omitted).
Erickson sought to admit the testim ony of Weber, who prepared the bank’s
appraisal. SM Investments vigorously objected at trial to Weber’s te stimony on the basis
that it was irrelevant and constituted “undis closed expert testim ony.” In overruling the
objection, the district court found that We ber’s appraisal report and opinion were well-
known to the parties and ruled that Weber coul d testify to the information related to and
contained in his report “and the reasons for it.”

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SM Investments argues that the court abus ed its discretion by allowing Weber to
testify. We disagree. Given th e nature of the damages evidence presented at trial, we
conclude that the court did not abuse its discretion by finding that Weber’s testimony would
be helpful to the jury in determining whether SM Investments was damaged by Erickson’s
breach. Moreover, SM Investments cannot show any prejudice by Erickson’s failure to
identify Weber as an expert on its witness lis t because SM Investments was familiar with
Weber’s appraisal report, having stipulated to its admission into evidence. We conclude
that the court did not abuse its discretion by denying SM Investments’ motion for a new
trial.
III. Contract reformation
Contract reformation “is an equitable reme dy that is available when a party seeks to
alter or amend language in a contract so that th e contract reflects the parties’ true intent
when they entered into the contract.” SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy
Funeral Corp. , 795 N.W.2d 855, 864 (Minn. 2011 ). This court reviews “equitable
determinations for an abuse of discretion.” City of N. Oaks v. Sarpal , 797 N.W.2d 18, 23
(Minn. 2011).
A party seeking contract reformation must prove that
(1) there was a valid agreement between the parties expressing
their real intentions; (2) the written instrument failed to express
the real intentions of the parties; and (3) this failure was due to
a mutual mistake of the par ties, or a unilateral mistake
accompanied by fraud or inequitable conduct by the other
party.

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SCI, 795 N.W.2d at 865 (quotation omitted). These elements must be established through
“evidence which is clear and consis tent, unequivocal and convincing.” Id. (quotation
omitted). The level of proof for contra ct reformation is a “high burden.” Id. (quotation
omitted).
SM Investments argues that the distri ct court erred by denying its claim for
reformation of the purchase ag reement due to unilateral mistake. We disagree. Here, the
jury rejected SM Investments’ fraud claim, a decision that SM Investments has not
appealed. And SM Investments’ claim that Erickson engaged in “inequitable conduct” is
premised on the assumption that Erickson knew that (1) SM Investments only agreed to
purchase the properties because four tenants occupied the properties and had not given
Erickson notice to vacate, and (2) one of the tenants had given notice to vacate and Erickson
failed to disclose the fact. But no evidence supports a finding that Erickson received notice
of Details Salon’s intention to vacate before the parties signed the purchase agreement on
June 11, 2014. Because Erickson did not receive notice of Details Salon’s notice to vacate
until after the purchase agreement was signed, and the record cont ains no evidence of
inequitable conduct by Erickson, SM Invest ments’ contract-reformation claim cannot be
premised upon unilateral mistake.
In denying SM Investments’ contract-reformation claim, the district court found:
The issue is not whether the parties generally had an agreement
or whether the purchase agreement was valid, but, given the
nature of SM [Investments’] claim and allegations, whether, at
the time of the formation of the agreement, there was an
agreement between SM Investments and Roger Erickson that
the purchase price was based on four, long-term commercial
tenants, or a specific [CAP] rate, or some other economic

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formula, thereby justifying or resulting in a pur chase price of
$825,000.

The district court determined that SM Invest ments failed to satisfy the first element of
contract reformation because “no evidence” suggested that “the parties reached a ‘meeting
of the minds’ as to any issue beyond what was set out in the written contract, which
included the notice provision in the addendum but in no way tied the purchase price or
correlated the transaction to the status or existence of tenants.”
The district court found th at SM Investments purchased the properties “intending
that it would be self-sustaining through the ge neration of rental income,” but that this
“intention was neither part of the purchase ag reement nor discussed with Erickson.” The
court also found that SM Investments and Erickson had no “meeting of the minds” that
“related to a methodology for valuing the Propert[ies], or what type of value was placed on
the Propert[ies] by either of them.” In addition, the court found that the parties reached no
agreement that “the $825,000 purchase price was in fact based on a certain number of
tenants, the lease status of the tenants, a sp ecific stream of inco me or a specific [CAP]
rate.” In fact, the court found that “no eviden ce suggest[ed] any deliberate intention as to
how the $825,000 price was arrived at.”
Ample evidence in the record supports the district court’s findings, and the findings
support the conclusion that the parties did not agree that SM Investments’ purchase of the
properties for the price stated was conditioned on a specific number of tenants who would
generate a certain amount of income based upon an 8 1/2 percent CAP rate, and that in the
event a tenant gave notice to vacate, the parties would renegotiate the purchase price. We

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conclude that the court’s findings are not cl early erroneous, and th at they support the
conclusion that SM Investments is not entitled to contract refo rmation. The district court
therefore did not abuse its discretion by de nying SM Investments’ contract-reformation
claim.
Affirmed.