Minnesota Lawyer
Tuesday, Jan. 3, must have been a tough day for the Minnesota Court of Appeals. Its reversal in Bruntlett v. Bruntlett, though supported in law, shines a light on the line the judiciary must draw between personal feelings and applying legal principles.
Jason Brown
Evelyn and Dale Bruntlett owned a 440-acre Meeker County farm where they maintained crops and livestock and raised their four children: Kevin, Craig, Kimberly, and Heidi.
After Dale died in 1982, Kevin agreed to help Evelyn manage her farm. In exchange, Evelyn agreed that Kevin could eventually purchase the farm at a predetermined price. The two entered into an option-to-purchase agreement.
The agreement gave Kevin the option to purchase the farm for $200,000. He would have to pay $25,000 down, with annual payments of $5,000 (plus interest) thereafter.
The option agreement bound Evelyn, and her heirs, to sell the farm to Kevin. However, only Kevin (not his heirs) could exercise the purchase option. It also prohibited Evelyn from conveying or encumbering her land.
Despite the contract restrictions, Evelyn conveyed and leased the property in the years that followed. She conveyed one-quarter of the farm to Kevin, and 14 acres to Kevin’s son. Evelyn also sold the two acres that included the farmhouse to a nonfamily member.
Through the years, Evelyn wrote notes to her other children suggesting she would pass the farm to all four of them. Her will devised all property to her children to “share and share alike” without specifically referencing her farmland.
Evelyn’s health deteriorated in 2016. The family met to discuss her care and the future of the farm. Evelyn’s attorney drafted a transfer on death deed, conveying to each child a one-quarter interest in the farm upon Evelyn’s passing.
The family gathered in 2017 to address the need to move Evelyn, who had been diagnosed with dementia, to assisted living. Kevin did not mention the option contract. Nor did Evelyn.
Kevin’s lawyer sent Evelyn a letter in July 2019, asserting he was exercising his option and suggesting he had already met the $200,000 purchase price through labor and farm management.
Heidi and Kimberly, acting as Evelyn’s attorneys in fact, refused to convey the farm to Kevin. Kevin filed suit against Evelyn, claiming a breach of contract. Evelyn defended on the basis of laches and revocation based upon an option of indefinite duration.
The District Court found in favor of Evelyn. Kevin appealed.
Kevin first argued that the District Court erred in barring his option on the equitable doctrine of laches.
Judge Kevin G. Ross noted that the doctrine of laches works to prevent “one who has not been diligent in asserting a known right from recovering at the expense of the one who had been prejudiced by the delay.”
The District Court declared that “doctrine of laches…prohibits any future exercise of the [o]ption [c]ontract by Kevin.”
The Court of Appeals disagreed and reversed. Judge Ross opined that a finding that Kevin delayed in litigating has a number of problems.
Judge Ross suggested that a “delay” can implicate laches only if it was “unreasonable and prejudiced the other contracting party.”
In this case, however, he noted that the agreement not only afforded Kevin the right to initiate the purchase at “any time during his life,” but also expressly reflected that his right extended beyond “Evelyn’s life.”
Because the doctrine of laches is equitable in nature, Judge Ross referenced the fact that one “who seeks equity must do equity…with clean hands.”
The court of appeals took issue with Evelyn’s breach along the way, suggesting that she could not identify any authority in support of the idea that the doctrine of laches applies to “strip a nonbreaching party of his contract rights.”
The District Court highlighted a number of instances in which Kevin could have, but did not, personally disclose the option contract to his siblings — resulting in a finding that he was “hiding” the option from them. The Court of Appeals determined that position lacked both legal and factual support.
Judge Ross called out the fact that Kevin publicly disclosed the option agreement three times: (1) by recording it in 1982; (2) by recording his consent to Evelyn’s transfer of land to his son in 2006; and (3) by recording a quitclaim deed releasing any option contract rights he possessed when Evelyn sold the homestead in 2018.
The District Court also held that Kevin’s reliance on the option agreement became a “significant burden on Evelyn’s future financial well-being.” The Court of Appeals disagreed.
Judge Ross referenced the fact that the District Court did not identify, and no party cited, evidence concerning “the amount of financial support Evelyn required or any lack in her means to achieve it.”
According to Judge Ross, the District Court’s “overriding concern” appears to be the seeming incompatibility between the ongoing nature of Kevin’s option to purchase the farm and Evelyn’s occasional notes to all four of her children suggesting she was leaving the farm in their names.
Judge Ross clarified, with seeming reluctance, that the two were not incompatible — as Evelyn did not yet know whether Kevin would exercise the option at the time of her notes. He also referenced that the $200,000 option, now 40 years old, represented an amount “far below” the 2019 value.
Judge Ross concluded that Kevin’s “land-grab attempt” leaned against Evelyn’s repeated handwritten urging to “always be family and friends” — but the Court of Appeals, of course, “appl[ied] the law rather than substitute[ing their] own perception of fairness.”
The lesson from Evelyn’s farm? Make sure an option contract of substantial duration avoids a named price. Instead, use an option that accounts for “market value” at the time of the option exercise. Market value can be determined, for example, by referencing an average of two opinions by a neutral appraiser.
While Bruntlett involves estate planning issues, divorce decrees often include “option” provisions. Think through the worst-case scenario (like Bruntlett) and work backwards.
Best guess is that Kevin’s siblings would take no issue with Kevin if he paid a fair price for the share of the farm their mother promised to the siblings. They must feel twice burned by virtue of Evelyn’s kind notes — and the fact that he named his own mother in a lawsuit.
Aptly, but of no legal consequence, the Court of Appeals did not reverse the District Court’s finding that Kevin’s actions were “suspect” and “self-serving.” Kudos to the appellate court reversing as a matter of law and, concurrently, affirming the feelings of Kevin’s siblings. That has to be one of the more difficult tasks of a judge.
Jason Brown is a shareholder in the family law department at Barna, Guzy & Steffen, Ltd. in Coon Rapids, Minnesota. The firm also has a robust estates, probate and elder law group. Jason can be reached at [email protected]
