Knorr v. Norberg, 2014 ND 74

Background

Robert and Cheri Knorr transferred their Lake Audubon home to their daughter Alonna and son-in-law Jon Norberg during financial distress; the Knorrs continued living in the home.
The parties dispute whether the transfer included an oral lease with an option for the Knorrs to repurchase the property; a written lease with an option was prepared and signed by Alonna but Jon’s signature is missing.
After the transfer, the Knorrs paid monthly amounts equal to the mortgage, paid taxes, insurance, utilities, maintained the property, and attempted to exercise the alleged option in December 2011; Jon refused to recognize the option.
The Knorrs sued seeking specific performance of the option or, alternatively, relief under promissory estoppel and constructive trust; Jon asserted the oral agreement is barred by the statute of frauds.
The district court found clear and unequivocal evidence of an oral option and partial performance removing the contract from the statute of frauds and ordered the Knorrs be allowed to buy back the home.
The Supreme Court reviewed whether part performance removed the oral agreement from the statute of frauds and whether equitable remedies should be considered.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether part performance removed an alleged oral lease-with-option from the statute of frauds	Knorr: payments, taxes, insurance, maintenance, continued occupancy, and attempted exercise of option are part performance that prove the oral option	Norberg: conduct is consistent with a lease-only arrangement and statute of frauds requires a signed writing for sale/long-term lease	Reversed: part performance did not unmistakably point only to an option-to-purchase; oral agreement barred by statute of frauds
Whether court made adequate findings on the oral contract terms	Knorr: oral terms were proven by testimony and conduct	Norberg: essential terms (price, length, exercise method) were not found or proved	Held: court erred by failing to identify essential terms of the oral agreement
Whether an attempted exercise of an oral option alone constitutes part performance	Knorr: attempted exercise supports specific performance	Norberg: attempted exercise alone cannot supplant statute of frauds protections	Held: mere attempt to exercise is insufficient to remove the agreement from the statute of frauds
Whether equitable doctrines should be considered on remand	Knorr: alternative claims for promissory estoppel and constructive trust were asserted below	Norberg: statute of frauds bars the oral contract; equitable claims disputed on facts	Held: remanded for district court to consider promissory estoppel and constructive trust factually under clearly erroneous standard

Key Cases Cited

Moen v. Thomas, 2001 ND 95, 627 N.W.2d 146 (long-term lease with option ordinarily requires a signed writing)
Bloomquist v. Goose River Bank, 2013 ND 154, 836 N.W.2d 450 (part performance must point unmistakably to the alleged oral agreement)
Fladeland v. Gudbranson, 2004 ND 118, 681 N.W.2d 431 (improvements and payments may be consistent with a lease without an option; insufficient for specific performance)
Trosen v. Trosen, 2014 ND 7, 841 N.W.2d 687 (reiterating standard that part performance must be consistent only with the claimed agreement)
Rickert v. Dakota Sanitation Plus, Inc., 2012 ND 37, 812 N.W.2d 413 (clarifying part performance analysis)
Kohanowski v. Burkhardt, 2012 ND 199, 821 N.W.2d 740 (acts constituting part performance must unmistakably point to the claimed agreement)
Alfson v. Anderson, 78 N.W.2d 693 (tender is a necessary precedent to specific performance for conveyance or leasing of real estate)
Wilhelm v. Berger, 297 N.W.2d 776 (statute of frauds purpose is to prevent fraud and perjury)