BLT/4e CP 7-10



Chapter 15

The Statute of Frauds—Writing Requirement

Case 15.1

__ S.W.3d ___

2007 WL 1113038Court of Appeals of Kentucky.

Barbara Lucinda SAWYER, Appellant

v.

Melbourne MILLS, Jr., Appellee.

No. 2006-CA-000697-MR.

March 30, 2007.OPINION

WINE, Judge.
Barbara Lucinda Sawyer (“Sawyer”) appeals a well-written order from the Fayette Circuit Court granting Melbourne Mills, Jr.'s (“Mills”) motion for a judgment not withstanding a verdict (“JNOV”) following a jury trial. For the reasons stated below, we affirm the JNOV.

[1] [2] [3] In considering a motion for JNOV, this Court is required to review the evidence in a light most favorable to the party opposing the motion. A motion for a judgment notwithstanding the verdict shall not be granted unless there is a complete absence of proof on a material issue or if no disputed issues of fact exist upon which reasonable minds could differ. Bierman v. Klapheke, 967 S.W.2d 16 (Ky.1998). On review, an appellate court must consider the evidence in the strongest light in favor of the party against whom the motion was made, and must give such party the advantage of every fair and reasonable inference that the evidence can justify. Sutton v. Combs, 419 S.W.2d 775 (Ky.1967).

Sawyer was employed as a paralegal in Mills's law firm. She brought this action to recover a bonus which she alleges that Mills promised to pay her. On February 9, 2006, a jury entered a verdict in favor of Sawyer in the amount of Nine Hundred Thousand Dollars ($900,000.00) and the trial court entered the judgment.

At trial, Sawyer established that Mills had promised to reward her for her assistance in instituting class action lawsuits. However, the parties never specified any amount the bonus might be or when the bonus would be forwarded to Sawyer other than when “the ship comes in.” The jury found that Mills had in fact promised to pay Sawyer a bonus and that the bonus was due when the Fen-Phen class action was resolved and Mills's firm got a substantial settlement.

After the Fen-Phen settlement, Sawyer, her husband Steve Sawyer (“Steve”), and Mills all met together on June 25, 2001. Sawyer and Steve secretly recorded the conversation. Sawyer testified, and the tape recording confirms, that she and Steve initially asked Mills for a One Million Dollar ($1,000,000.00) lump sum bonus, which Mills quickly rejected. But following much encouragement from Steve and Sawyer, Mills did agree to pay Sawyer a bonus of One Million Dollars ($1,000,000.00) plus the cost of a new luxury car which all agreed would be another Sixty-Five Thousand Dollars ($65,000.00). The full amount was to be paid in monthly installments, on the first of each month, until paid in full. The tape recording and Sawyer's testimony both confirm the parties' dollar amount and the agreed payment plan. Sawyer's Amended Answer No. 8 further alleges that the bonus was to be paid in monthly installments of Ten Thousand Dollars ($10,000.00).

During the June 25, 2001 recorded conversation with Sawyer and Steve, Mills also agreed to sign a writing verifying the parties agreed-to terms of the bonus. During the conversation, Sawyer confirms the importance of a written agreement to protect her interest. Sawyer's attorney, Mark Moseley, drafted an agreement per the parties' request, but Mills never signed. The draft agreement provided that the bonus totaling One Million Sixty-five Thousand Dollars ($1,065,000.00) was due and payable in monthly installments of Ten Thousand Dollars ($10,000.00) for a period of one hundred and seven (107) months, with the last payment being Five Thousand Dollars ($5,000.00).

Mills filed a motion for summary judgment prior to trial, arguing that Sawyer's claims were barred by the statute of frauds. In an order entered on December 1, 2005, the trial court conceded that Sawyer's claims would seem to run afoul of the statute. After reflection, the trial court denied the motion and allowed Sawyer to present her full evidence at trial before a jury. The jury found that Mills had entered into an oral contract for the bonus, and returned a verdict in favor of Sawyer in the amount of Nine Hundred Thousand Dollars ($900,000.00). Thereafter, Mills filed a motion for JNOV, again arguing that any agreement between him and Sawyer is barred by the statute of frauds. The trial court agreed and granted the motion.

Pursuant to the JNOV standard, we accept, as did the trial court in its order of March 30, 2006, the following facts in a light most favorable to Sawyer:

(1) That [Mills] had discussed with [Sawyer], from 1994 to June 25, 2001, that he would reward [Sawyer] for her loyalty to his law firm and for her precedent breaking idea for [Mills] to begin accepting work in “class action litigation” because of its potential for significant financial benefits;

(2) That the amount of any bonus to be paid by [Mills] to [Sawyer] was left intentionally unclear and unspecified because neither party knew if any of the “class action litigation” would prove profitable to [Mills]'s law firm or in what amounts;

(3) That any bonus to be paid by [Mills] to [Sawyer] would only be paid “when the ship comes in” which was understood to be when the “class action litigation” proved to be financially rewarding to [Mills]'s law firm;

(4) That on June 25, 2001, shortly after the class action litigation involving “Fen-Phen[,]” the diet drug[,] ... had been settled and a substantial fee had been received by [Mills]'s firm, an agreement was reached by [Mills] and [Sawyer] as to the amount of the bonus and the terms of its payment;

(5) That in the June 25, 2001 conversation between [Mills], [Sawyer] and [Sawyer]'s husband, Steve Sawyer (hereafter “Steve”), the figure of One Million Dollars ($1,000,000.00) was first proposed by [Sawyer] and Steve as a lump sum payment. [Mills] clearly balked at that figure as a lump sum payment. Quickly, Steve Sawyer, with [Sawyer]'s encouragement and agreement, suggested that a total payment of One Million Dollars ($1,000,000.00) plus the cost of a new luxury car to be paid over ten (10) years at Ten Thousand Dollars ($10,000.00) per month until paid would be acceptable to them. This was the undisputed sworn testimony of [Sawyer], Steve, and their attorney Mark Mosely (sic) at trial. The Court, in accordance with the above JNOV standard, accepts that testimony without qualification. Further, that testimony was accepted by the jury in this case as reflected by the jury verdict when “Yes” was checked in response to Interrogatory No. 1 which specifically found that [Sawyer] and [Mills] had each understood and agreed that [Mills] would pay [Sawyer] a bonus in the amount of One Million Dollars and the value of a new car costing Sixty Five Thousand Dollars for services performed by [Sawyer] for the benefit of [Mills] per Jury Instruction No. 1;

(6) That [Mills] paid [Sawyer] the sum of Sixty-Five Thousand Dollars ($65,000.00) in amounts ranging from Ten Thousand Dollars ($10,000.00) to Fifteen Thousand Dollars ($15,000.00) from June 25, 2001 until mid February 2002 plus a lump sum payment of One Hundred Thousand Dollars ($100,000.00) in or about October 2001 in accordance with that agreement;

(7) That [Mills] broke his promise to and agreement with [Sawyer] in mid-February 2002 and thereafter by failing to make any further payments to her in accordance with his promise and their agreement;

(8) That [Mills] testified at trial and the jury found that he had the financial resources necessary to pay off the total amount promised to [Sawyer] within one year of June 25, 2001 as reflected in the jury verdict checked “Yes” to Interrogatory No. 2.

[4] On appeal, Sawyer argues that enforcement of the agreement between her and Mills was not barred by the statute of frauds. As codified in KRS 371.010, the statute of frauds provides that no action shall be brought to charge any person “[u]pon any agreement that is not to be performed within one year from the making thereof ... unless the promise, contract, agreement, representation, assurance, or ratification, or some memorandum or note thereof, be in writing and signed by the party to be charged therewith, or by his authorized agent.” Because he never signed the written contract, Mills contends that Sawyer cannot recover on his oral representations.

Sawyer responds that the writing requirement of the statute of frauds is satisfied through the combination of the tape recording of their conversation on June 25 and the checks Mills signed to Sawyer totaling One Hundred Sixty-five Thousand Dollars ($165,000.00). We reject this argument. Sawyer cites Calloway v. Calloway, 707 S.W.2d 789 (Ky.App.1986), where the Court held that a party could not assert the statute of frauds to escape liability on a contract in an oral statement that was recorded by a court reporter. Sawyer argues, just as the recording in Calloway satisfied the writing requirement, the June 25 tape recording should also be sufficient to remove Mills's oral agreement from the statute of frauds. But in Calloway, the recorded agreement was made on the record, under oath, and during a deposition hearing. The statement was then transcribed by the court reporter. The Court in Calloway held that this was sufficient to meet the writing requirement.

In contrast, the recording in this case was not taken under oath, and there is no allegation that the written contract represents a verbatim rendition of the parties' alleged oral agreement. We further agree with the trial court that the checks Mills wrote to Sawyer for One Hundred Sixty-five Thousand Dollars ($165,000.00) are insufficient to meet the writing requirement. These checks merely confirm the parties' oral agreement that Mills was to pay Sawyer Ten Thousand Dollars ($10,000.00) on the first of the month.

Finally, Sawyer argues the writing requirement of the statute of frauds was satisfied by the Electronic Signatures in Global and National Commerce Act codified at 15 U.S.C. § 7001(a), et seq. We conclude that this argument is unfounded. The record is devoid of evidence that Mills ever agreed to sign off on their agreement electronically. There is no indication that attorney Moseley attempted to obtain Mills's signature for the draft agreement electronically either. 15 U.S.C § 7001(a) does not apply here and is a reaching argument put forth by Sawyer.

[5] Sawyer next argues that the statute of frauds was not applicable because the agreement was capable of being performed within one year. As outlined above, the parties' agreement was clearly that Mills would pay Sawyer Ten Thousand Dollars ($10,000.00) a month for a period of one hundred and seven (107) months. The tape recording of the parties' conversation on June 25 and the testimony of Sawyer, Steve and their attorney Moseley and his draft agreement all confirm these contemplations by the parties. Thus, it is safe to conclude that, pursuant to the undisputed testimony at trial from Sawyer, Steve, attorney Moseley, and the draft agreement, Mills never agreed to pay the lump sum bonus amount or make any kind of pre-payments towards the bonus. While Sawyer concedes that the parties did not contemplate performance in less than one year, she contends that the agreement did not preclude such performance either. Thus, she contends that the agreement does not violate the statute of frauds.

In support of this argument, Sawyer cites United Parcel Service Company v. Rickert, 996 S.W.2d 464 (Ky.1999), and Johnson v. Kentucky Youth Research Center Inc., 682 S.W.2d 799 (Ky.App.1985). However, unlike this case, none of the parties in Johnson or Rickert specifically reached an agreement that the obligations of the parties would surpass one year.

In Johnson, the parties agreed that the production of a documentary film would begin on a certain date and would be finished no later than fifteen months from that date. Thus, the agreement could have been completed within a year, taking the agreement outside KRS 371.010, with no contemplation from the parties that it definitely would not be completed outside of a year. And in Rickert, UPS promised to hire pilots working for its contract carriers if they would remain employed while UPS got their airline fully operational. At the end of the eighteen-month transitional period, UPS refused to hire Rickert claiming the statute of frauds as a defense. The Kentucky Supreme Court held that the oral agreement was not barred because the parties had not contemplated that the transitional period would extend beyond a year and so it was possible it could have been completed within twelve months.

In contrast, the trial court properly relied on Williamson v. Stafford, 301 Ky. 59, 190 S.W.2d 859 (1945), which is more on point with the facts of this case. In Williamson, the parties' dispute involved an oral contract having to do with the delivery of logs to sawmills as part of a logging operation. The parties agreed their obligations would not be performed within a year. Id. Just like Sawyer, the plaintiff in Williamson argued the oral contract could have been performed within one year so the statute of frauds did not apply. The Williamson Court recognized that, generally, if a contract could be performed within a year from the time it was made, the statute of frauds does not apply, even if its performance might have extended beyond that point. However, the Court also noted the well-recognized exception to that rule that, when it is contemplated by the parties that the contract is not to be performed within the year, regardless of whether it was possible of performance within that time, the contract comes within the inhibition of KRS 371.010(7). Id. at 860. The Court held that since the parties did not contemplate that the contract was to be performed within a year, but several years, the statute of frauds was applicable and barred the oral agreement. Similarly, in this case Sawyer and Mills clearly anticipated that the bonus would be paid over a series of one hundred and seven (107) months from the making of the agreement on June 25, 2001. As this period is more than one year, the statute of frauds applies to bar enforcement of the agreement.

[6] Sawyer further argues that the trial court erred in granting a JNOV setting aside the judgment based on the statute of frauds because she had fully performed her side of the agreement by the time of trial. Thus, she asserts that the lack of writing is no defense. We disagree.

In support of her argument, Sawyer cites the Restatement (Second) of Contracts § 130 (1981) and Pilcher v. Stadler, 276 Ky. 450, 124 S.W.2d 475, 479 (1939). These stand for the proposition that a party to an oral contract is not entitled to take advantage of the statute of frauds once the other party has fully performed her obligations under the contract. But in this case, Sawyer did not perform any obligations pursuant to the contract. Indeed, prior to June 25, 2001, there was no consideration for the agreement because Sawyer and Mills were not bound by any obligation to perform anything.

The Supreme Court makes clear that an enforceable contract must have definite and certain terms setting forth promises of performance to be rendered by each party. Fisher v. Long, 294 Ky. 751, 172 S.W.2d 545 (1943). The parties did not come to an agreement as to the terms of the bonus until June 25. By this time, Sawyer had completed her performance to Mills and was no longer obliged to him. Thus, Sawyer gave no new consideration for the agreement. Sawyer further contends that she worked beyond the agreement on June 25 in anticipation of being paid. But even accepting this as true, the oral agreement still violates the statute of frauds because the parties articulated the performance to be more than one year.

[7] [8] In conjunction with her argument that she had already completed performance by June 25, thus removing the agreement from the statute of frauds, Sawyer contends promissory estoppel precludes Mills from relying on the statute of frauds. The trial court denied her request for jury instructions on promissory estoppel at trial finding lack of proof supporting an instruction. Sawyer does not appear to be appealing the trial court's denial of those instructions. Therefore, the issue is not one of preservation but whether there were undisputed facts showing that she was entitled to promissory estoppel as a matter of law. The elements of promissory estoppel are as follows:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. Lichtefeld-Massaro, Inc. v. R.J. Manteuffel Co., Inc., 806 S.W.2d 42, 44 (Ky.App.1991). Understandably, the agreement Sawyer and Mills formulated on June 25 could not have induced Sawyer to work for Mills prior to that date. Further, we agree with the trial court that Sawyer has not put forth sufficient evidence of reliance as required to establish promissory estoppel. Sawyer contends that she continued working for Mills even after they agreed to the bonus on June 25 in reliance on his promise to pay her. However, she testified at trial that she considered her performance to Mills satisfied as of June 25, 2001, when the parties made the bonus agreement. We can hardly accept this state of mind as reliance pursuant to the elements of promissory estoppel. Finally, Sawyer relies on Fisher v. Long, supra, to illustrate that a contract that is missing a term becomes enforceable when the missing term is reached by the parties. However, in Fisher, there was a meeting of the minds to the effect that the parties had agreed to the essential terms of their contract. Specifically, Fisher was to pay or assume the mortgage on his friend's property, and his friend would pay in cash the mortgage on Fisher's property. The Court held that even though the parties did not specify the amount of the cash payment, the amount could be easily determined by looking at the respective values of each property and the liens encumbering them. In the case sub judice, the bonus amount promised to Sawyer was never articulated until June 25, 2001. Fisher is therefore distinguishable as the facts of this case do not come down to simple math. Therefore, we reject Sawyer's argument based on Fisher v. Long in support of her claim against Mills. Because it is our finding that the trial court did not err in granting the JNOV, it is not necessary for us to address the issue of prejudgment interest. After considering the evidence in a light most favorable to Sawyer pursuant to the JNOV standard, we are persuaded that the evidence supports the finding of the trial court that the JNOV was appropriate in this case. Undisputed testimony from Sawyer, Steve and attorney Moseley and his draft agreement of the parties' June 25 conversation, coupled with the tape recording of that conversation, all confirm that the parties agreed the bonus would be paid in monthly installments over one hundred and seven (107) months. The tape recording clearly shows that Mills never intended to pay Sawyer the bonus as a lump sum and Sawyer is recorded agreeing to the monthly payments. The parties never contemplated that the bonus would be paid within one year. Furthermore, there are no facts showing that Sawyer fully performed her obligations pursuant to the contract, or that Mills should be estopped from relying on the statute of frauds. As such, the statute of frauds bars Sawyer's claim against Mills as she produced no writing signed by Mills agreeing to the oral promise to pay her the bonus. Accordingly, the order of the Fayette Circuit Court granting the JNOV is affirmed. ALL CONCUR.

FN1. Senior Judge William L. Knopf sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.

Case 15.2

--- F.Supp.2d ----, 2007 WL 222575 (D.Kan.)

SCHOOL-LINK TECHNOLOGIES, INC., Plaintiff,

v.

APPLIED RESOURCES, INC., Defendant.

No. 05-2088-JWL.

Jan. 25, 2007.

MEMORANDUM AND ORDER

, District Judge.

*1 This case involves a business dispute between the plaintiff School-Link Technologies, Inc. (SLT) and defendant Applied Resources, Inc. (ARI) arising from ARI's refusal to deliver products to SLT because of SLT's alleged breach of contract. This matter comes before the court on SLT's motions for summary judgment and partial summary judgment (docs. # 73 & # 75), ARI's motion to set aside the clerk's entry of default (doc. # 94), and SLT's motion to strike ARI's jury demand (doc. # 77). For the reasons explained below, the court will grant ARI's motion to set aside the default, will grant SLT's motion for summary judgment as to ARI's counterclaim for breach of oral contract except with respect to goods ARI supplied for the pilot program with the NYCDOE, and will grant SLT's motion to strike ARI's jury demand. SLT's motions are otherwise denied.

STATEMENT OF MATERIAL FACTS

ARI is in the business of supplying computer hardware for point-of-sale systems. It manufactures and sells “kiosks,” which are computers encased in secure, rugged chassis on which card readers, currency adaptors, coin acceptors, or other payment devices are mounted. SLT is in the business of selling food service technology solutions to schools throughout the country. The two companies' business relationship began when SLT received a Request for Proposal (RFP) from the New York City Department of Education (N.Y.CDOE), the largest school district in the nation, for a cafeteria payment system. One of the requirements of the RFP was the inclusion of prepayment machines, or kiosks. SLT contacted ARI, a kiosk vendor, in connection with the preparation of its response to the RFP.

Kristi Noyes was formerly the national account executive for SLT in 2003 and 2004 and she worked on SLT's response to the NYCDOE RFP. She testified in her deposition that SLT received the RFP from NYCDOE in August of 2003. The response deadline was near the end of August, so SLT did not have much lead time to respond. Again, one of the mandatory requirements of the RFP was the inclusion of prepayment kiosks. SLT and its competitors in the school market industry were not offering kiosks at that time, so SLT had to “scramble” to locate a kiosk vendor so that it could provide information regarding kiosks in its response to the NYCDOE RFP. SLT contacted ARI with the idea being that SLT was in a bind, that it needed kiosks very fast if it was going to have any chance of winning the NYCDOE business, that 1,500 kiosks would be needed for final implementation of the NYCDOE contract, and that SLT needed a vendor who could supply quickly, “who could help [SLT] out of the bind [it was] in, who could do the pilot, and would then have the business at New York City schools of 1,500 kiosks.” Noyes Dep. at 67:7-10. SLT wanted ARI to provide the information needed for its response to the NYCDOE RFP, and it wanted ARI to participate in the pilot project if SLT was ultimately chosen as one of the two finalists for the pilot project.

*2 According to an affidavit submitted by E. Brooks Lilly, founder and president of ARI, SLT told ARI that NYCDOE was seeking to purchase 1,500 kiosks and the associated software for a payment system in school cafeterias. SLT promised ARI that if ARI would supply the kiosks for a successful pilot program, ARI would be the supplier of kiosks for the NYCDOE contract if SLT successfully obtained that contract. In reliance on SLT's promise, ARI supplied information for SLT to incorporate into its response to the RFP. When SLT was named as one of two finalists to participate in the pilot project, ARI supplied the kiosks used in the pilot project at no charge to SLT. ARI did so in reliance on SLT's representations and promise that if the pilot project was successful and SLT got the NYCDOE business, ARI would be the exclusive supplier of kiosks for that business. When SLT promised and represented to ARI that it would be the exclusive supplier of kiosks for the NYCDOE business, if that business was awarded to SLT, the parties also discussed and agreed upon pricing.

According to Ms. Noyes' deposition testimony, unbeknownst to ARI, SLT did not like selling products that it did not make itself. SLT did not offer a lot of outside third-party products. She testified that, although SLT had promised to use ARI as the supplier of kiosks for the NYCDOE business, it was her understanding that SLT wanted to be able to offer its own kiosks, its own solution, and that it was “[her] belief that [SLT] wanted to do that all along.” Noyes Dep. at 83:16-17. An e-mail from Ms. Noyes to Chip Goodman, another individual with SLT, reveals that Ms. Noyes was aware as early as June 30, 2004, of SLT's intent to cut ARI out of the NYCDOE project by building its own kiosks or using a different supplier.

At some point in time, the parties discussed preparing a written contract to address an expanded scope of work involving additional products, their overall relationship and future dealings, and they sought to reduce to writing SLT's representations and promise that ARI would be the exclusive supplier of kiosks to SLT for the NYCDOE project. During the course of their negotiations regarding the written contract, SLT included language on a purchase order dated August 13, 2004, which stated as follows: “The parties agree that by issuing and accepting this quote and order All Products required by NYC DOE from SL-Tech shall be provided by ARI subject to reaching a mutually agreeable contractual document by September 15, 2004.”

According to Ms. Noyes' deposition testimony, however, SLT did numerous things that were in complete opposition to trying to reach a contractual agreement. For example, in the spring of 2004, SLT had already planned to send one of its employees to a kiosk expo because SLT wanted to develop its own kiosk instead of using ARI's. In the late spring of 2004, an SLT employee asked Ms. Noyes to overnight a PAD device made by ARI to him so that another employee at SLT could reverse engineer it. Also, a representative of SLT made “an extremely disparaging remark about ARI” to potential clients. Noyes Dep. at 125:17. SLT invited ARI to ship kiosks to a trade show and participate in SLT's booth as SLT unveiled ARI's new kiosk to SLT's customers, but then SLT cut ARI's labels off the shipping boxes to conceal ARI's involvement. SLT was secretively, and unbeknownst to ARI, creating or trying to create its own products based on knowledge it had received from ARI.

*3 SLT's proposed “master agreement” contained new and onerous terms that had never before been discussed by the parties. Ultimately, the parties did not reach a mutually agreeable written contract to govern future dealings by September 15, 2004.

During the time period when SLT had represented and promised that ARI would supply all of the kiosks for the NYCDOE project, SLT contracted under various purchase orders for the production and delivery of kiosks and PAD devices from ARI. According to an affidavit submitted by Mr. Lilly, ARI agreed to supply these keypads at the stated price, on the stated delivery terms, only because it believed SLT's representation and promise that ARI was going to get the NYCDOE kiosk business. SLT made advance payment to ARI with its orders. ARI delivered PADs and kiosks to SLT in the fall of 2004. In the meantime, however, SLT violated the parties' Non-Disclosure and Confidentiality Agreement by using ARI's confidential information.

The NYCDOE pilot project ultimately was successful and NYCDOE agreed to purchase software and hardware for the payment system from SLT. At least as early as November 2004, SLT told NYCDOE that it would not be supplying the ARI kiosks used in the pilot project but would, instead, build its own kiosks to supply to NYCDOE.

In an e-mail from Mr. Lilly to Chip Goodman with SLT dated November 2, 2004, Mr. Lilly informed SLT that ARI had suspended production of products for SLT until the parties reached a resolution to their dealings, and that ARI would not provide the balance of the PAD devices until after the parties agreed to a “concluding document” which clearly terminated their business relationship and confirmed confidentiality to provide protection of ARI's intellectual property. He stated that ARI would “account for [its] expenses in deploying the NYCDOE pilot and deduct those expenses from the pre-payments made by SL-Tech.” The e-mail concluded that the parties' working potential was vast, “[b]ut now, we're done.” According to the deposition testimony of Shannon Lilly, executive vice president and chief operating officer of ARI, ARI ceased production of the goods previously contracted with SLT because of the breakdown in contract negotiations.

SLT immediately responded to Mr. Brooks' e-mail by way of a letter from SLT's attorney dated November 3, 2004. The letter rejected ARI's offer to enter into any new agreements (presumably referring to Mr. Brooks' demand for a concluding document) and stated that it was treating Mr. Brooks' e-mail as a repudiation and breach of ARI's agreements to supply PADs and kiosks.

ARI delivered product to SLT through December of 2004, but did not entirely fulfill SLT's purchase orders. Thereafter, ARI did not deliver the remaining keypads and kiosks to SLT. It is undisputed that ARI did not timely deliver certain goods purchased by SLT by the deadlines agreed upon by the parties even though ARI assessed a separate expedite fee to meet certain critical deadlines; that ARI altogether failed to deliver some of the purchased product to SLT; and that ARI retained and refused to return over $55,000 in SLT's prepayment for goods which ARI refused to supply. Additionally, the kiosks purchased by SLT to mitigate damages cost substantially more than the kiosks ordered from ARI.

*4 The goods ARI sold to SLT were covered by a warranty of repair or replacement. Certain goods delivered to SLT failed to perform as warranted. SLT claims that some of the goods which were delivered by ARI were defective and that ARI refused to credit SLT for those goods or remedy the defective equipment. Mr. Lilly, however, testified in his deposition that ARI honored its warranty in that ARI fixed and returned all products with respect to which ARI received notice of defects.

Based on these facts, SLT filed this lawsuit against ARI in connection with SLT's non-NYCDOE purchases from ARI. SLT asserts claims for breach of contract, breach of warranty, unjust enrichment, and conversion. SLT now seeks partial summary judgment on its breach of contract and breach of warranty claims.

ARI, in turn, asserts counterclaims against SLT in connection with SLT's failure to use ARI as the exclusive supplier for the NYCDOE contract. ARI has never been reimbursed for the expenses it incurred in connection with the NYCDOE project or the provision of kiosks for the pilot project, and it has not received the profits it expected to receive from supplying 1,500 kiosks for the NYCDOE contract. ARI asserts counterclaims for fraud, promissory estoppel, unjust enrichment, and breach of oral contract. SLT now seeks summary judgment on each of ARI's counterclaims.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the moving party demonstrates that there is “no genuine issue as to any material fact” and that it is “entitled to a judgment as a matter of law.” . In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. . A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.” (citing ). An issue of fact is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.” (citing ).

The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. (citing ). In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. (citing

*5 Once the movant has met this initial burden, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” (citing ); see also The nonmoving party may not simply rest upon its pleadings to satisfy its burden. . Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.” (quoting To accomplish this, the facts “must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein.” .

Finally, the court notes that summary judgment is not a “disfavored procedural shortcut”; rather, it is an important procedure “designed ‘to secure the just, speedy and inexpensive determination of every action.’ ” .

ANALYSIS

For the reasons explained below, the court will grant SLT's motion for summary judgment on ARI's counterclaim for breach of oral contract to the extent that claim is barred by the statute of frauds. That claim is not, however, barred by the statute of frauds with respect to goods which SLT already received and accepted, i.e., the goods for the pilot program with the NYCDOE. The court will deny SLT's motions for summary judgment and partial summary judgment in all other respects and will set aside the clerk's entry of default on SLT's breach of warranty claim.

A. SLT's Motion for Summary Judgment on ARI's Counterclaims

1. Purchase Contract

SLT's initial arguments in support of its motion for summary judgment are based on the statement contained in its purchase order dated August 13, 2004, which included the following term: “The parties agree that by issuing and accepting this quote and order All Products required by NYC DOE from SL-Tech shall be provided by ARI subject to reaching a mutually agreeable contractual document by September 15, 2004.” SLT contends, first, that the exclusivity restriction was “subject to reaching a mutually agreeable contractual document” and that this is an agreement to make a contract in the future which is not binding because its conditions were to be the subject of future negotiations. In response to this argument, ARI points out that it is not relying on this statement in the purchase order as a basis for its claims. Rather, ARI's theory is that SLT made representations and promises to ARI to induce ARI to help SLT gain the NYCDOE business; those representations and promises were not subject to or conditioned upon the parties reaching a subsequent written agreement; and that only later did SLT express a desire for the parties to enter into a written contract. In short, ARI is not relying on the express terms stated in the purchase order as a basis for its claims in this case. Consequently, SLT's argument that ARI cannot rely on this provision is misplaced.

*6 The second argument SLT raises in connection with this statement in the purchase order is that any claims by ARI other than those predicated on this statement in the purchase order are barred by the parol evidence rule. SLT's theory in this respect is that the parties expressly agreed in this written purchase order that ARI would be the sole supplier for the NYCDOE project only if the parties reached a mutually agreeable written contract by September 15, 2004, which they failed to do. In support of this argument, SLT cites case law involving the parol evidence rule under Kansas common law. This case, however, involves the sale of goods and therefore the applicable parol evidence rule is set forth in the Kansas Uniform Commercial Code (the Kansas UCC), . See, e.g., (applying the parol evidence rule set forth in in a case involving a contract for the sale of goods); see also, e.g., (same). Here, SLT has addressed the parol evidence rule under Kansas common law, not the Kansas UCC, and therefore in failing to move for summary judgment under the correct legal standard SLT has not met its initial summary judgment burden on this issue. The two legal standards are by no means synonymous. SLT has not established that the statement in the purchase order was “intended by the parties as a final expression of their agreement,” , with respect to the NYCDOE contract such that the parol evidence rule would apply. See, e.g., (considering the issue under the Kansas UCC of whether the parties intended a document to constitute a final expression of their agreement); (same). Even if it were, that term could be explained or supplemented by proof of a course of dealing, usage of trade, or course of performance.

Additionally, simply because a writing may be final on some matters (e.g., perhaps the sale which was the subject of that particular purchase order) should not be taken to mean that it is final as to all matters between them (e.g., perhaps the NYCDOE project). See , official UCC comment. The court is not deciding at this time the extent to which the parol evidence rule applies in this case. It is simply denying SLT's motion for summary judgment on this issue for the sole reason that SLT did not move for summary judgment under the correct legal standard. Consequently, SLT has not met its initial summary judgment burden of demonstrating the absence of a genuine issue of material fact showing it is entitled to summary judgment on this basis.

2. Breach of Oral Contract Claim

SLT raises several arguments as to why it is entitled to summary judgment on ARI's breach of oral contract claim. SLT relies, first, on the statute of frauds. Contracts for the sale of goods over $500 generally must be in writing and must be signed by the party against whom enforcement is sought. ; . Because the NYCDOE contract undisputedly involved the sale of goods in excess of $500, the parties' oral contract that ARI would be the exclusive supplier of kiosks for the project is not enforceable in the absence of an applicable exception to this general rule.

*7 ARI contends that the statute of frauds does not apply with respect to goods which have been received and accepted, citing . In the Tenth Circuit discussed one of the exceptions to the statute of frauds listed in . This provision of the Kansas UCC states that a contract which would otherwise be unenforceable for lack of a writing “but which is valid in other respects is enforceable ... with respect to goods for which payment has been made and accepted or which have been received and accepted.” . This exception allows partial performance to serve as a substitute for the required writing, , but only for goods which have been received and accepted or for which payment has been made and accepted. Here, the goods which arguably fall within that definition are those supplied by ARI for the pilot project with the NYCDOE because those goods were received and accepted by SLT. Consequently, SLT's motion for summary judgment based on the statute of frauds is denied with respect to those goods.

SLT's motion based on the statute of frauds is granted, however, with respect to ARI's claim that it was to be the exclusive supplier for 1,500 kiosks for the NYCDOE project. The only statute of frauds exception ARI has invoked is . The non-pilot program kiosks do not fall within the ambit of because those goods were not received and accepted, nor was payment made and accepted for them. ARI has not directed the court's attention to any other evidence which demonstrates a genuine issue of material fact with respect to any other statute of frauds exception. Accordingly, the court's analysis of ARI's breach of oral contract claim is narrowed to the goods ARI supplied for SLT's pilot project with the NYCDOE, as the remaining aspect of that claim is barred by the statute of frauds.

SLT contends that SLT's performance is excused by ARI's repudiation. The court rejects SLT's argument on this issue primarily because, as with SLT's parol evidence argument, SLT did not move for summary judgment under the correct legal standard. Again, SLT has cited case law involving Kansas common law principles whereas, here, whether and the extent to which ARI's alleged repudiation might excuse SLT's performance is governed by the Kansas UCC and case law involving the relevant statutory provisions under the Kansas UCC. Additionally, as stated above, the oral contract is only enforceable with respect to the goods ARI had already supplied for the pilot project with the NYCDOE. SLT has not discussed the implications of the fact that ARI did not repudiate this aspect of the contract, but rather only arguably repudiated the parties' contract with respect to SLT's non NYCDOE purchases and the 1,500 kiosks for the NYCDOE project. Furthermore, genuine issues of material fact exist concerning the timing and extent of the parties' respective repudiations.

*8 The court also rejects SLT's argument that ARI has not cited factual support proving SLT's breach of the putative promise. Viewing the evidence in the light most favor to ARI, as of course the court must at this procedural juncture, the record contains genuine issues of material fact regarding the extent to which SLT breached its oral contract with ARI.

SLT's argument that ARI must rely on the future adjudication of the separate lawsuit in California to prove the counterclaims asserted in this matter is also without merit. SLT's argument on this issue is based on a statement in the Pretrial Order in which ARI listed its claimed damages as lost profits on 1,500 keypads and kiosks and, additionally, “[t]o be determined in Central District of California case.” Pretrial Order (doc. # 91), ¶ 10(b), at 13-14. ARI, however, explains that SLT has misinterpreted this statement in the Pretrial Order, as ARI merely made this notation in the Pretrial Order “in an overabundance of caution.” To clarify, the claims ARI is asserting in the California lawsuit are the subject of a series of prior Memorandum and Orders by this court. See generally ; ; . The court has previously ruled that all of those claims arise from the Non-Disclosure and Confidentiality Agreement executed by the parties and are subject to a mandatory forum selection clause requiring “[a]ny and all actions, claims or lawsuits arising from [that] Agreement ... to be brought in Los Angeles, California.” Consequently, those claims are not in this lawsuit because they are subject to a mandatory California forum selection clause.

That is not to say, however, that the issues involved in the California lawsuit cannot be litigated in this case to the extent that those issues bear on the claims involved in this case. The claims involved in this lawsuit arise from SLT's alleged promise to use ARI as the exclusive supplier of kiosks on the NYCDOE project. Because they do not arise from the Non-Disclosure and Confidentiality Agreement, then, they are not subject to the California forum selection clause. ARI is not at this time seeking a judgment on any of its counterclaims in this case which would depend on resolution of ARI's claims in the California lawsuit. Thus, the court sees no reason why ARI would need to await adjudication of its claims in the California lawsuit before litigating any and all issues relevant to its counterclaims in this case. In sum, SLT has not presented any argument which persuades the court that SLT is entitled to judgment as a matter of law on ARI's claims in this lawsuit simply because some of the issues involved in resolving those claims might also be involved in the pending California case.

3. Promissory Estoppel Claim

*9 Promissory estoppel is a doctrine by which courts view performance in reasonable reliance on a promise as sufficient to create a legally binding contract where a contract otherwise lacks consideration. . Kansas courts apply the rule on promissory estoppel set forth in the . see also . Under that rule, “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee ... and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Restatement . Of course, a promissory estoppel claim does not necessarily give rise to the full range of damages of an ordinary breach of contract claim; rather, “[t]he remedy granted for breach may be limited as justice requires.” Id. & cmt. d.

SLT's first argument with respect ARI's promissory estoppel counterclaim is that this claim is barred by the statute of frauds. The Kansas Supreme Court has held that where a breach of oral contract claim is barred by the Kansas UCC statute of frauds, , the doctrine of promissory estoppel may nonetheless render that promise enforceable if application of the statute of frauds would otherwise “work a fraud or a gross injustice upon the promisee.” ; accord . The rationale for this rule is that the statute of frauds was enacted to prevent fraud and injustice, not to foster or encourage it, and the court should not permit it to be used as a shield to protect fraud or to enable one to take advantage of his or her own wrong. see also (“The court in made it clear that the statute of frauds may not be used as a shield to protect fraud.”). Before the doctrine of promissory estoppel can be invoked in a case involving the statute of frauds the promisee must first show by competent evidence that a valid and otherwise enforceable contract was entered into by the parties, meaning the agreement must contain all material elements of a contract, ; see also . The promisee must also show that the facts of the case justify application of the doctrine, and promissory estoppel should be applied only if a refusal to enforce the promise would be virtually to sanction the perpetration of fraud or would result in other injustice. Thus, the doctrine of promissory estoppel may be applied to cases where the statute of frauds would otherwise apply as a defense. In arguing that ARI's promissory estoppel claim is barred by the statute of frauds, SLT did not address this separate legal standard but instead categorically lumped together its statute of frauds argument with respect to all of ARI's counterclaims. Having failed to address the correct legal standard, then, SLT has not met its summary judgment burden of demonstrating it is entitled to summary judgment on ARI's promissory estoppel counterclaim on the grounds of the statute of frauds.

*10 SLT also argues that it is entitled to summary judgment on ARI's promissory estoppel counterclaim because ARI's reliance was not reasonable as a matter of law in light of the written provision in the August 13, 2004, purchase order which, SLT contends, meant that ARI would serve as the exclusive supplier for the NYCDOE contract only if the parties reached a mutually agreeable written document by September 15, 2004. But, the provision does not expressly contain such “only if” language. More obviously, however, the statement upon which ARI purportedly relied occurred long before this purchase contract in August of 2004. Additionally, SLT has not established the timing of ARI's delivery of the goods for the pilot project in relation to the August 2004 purchase order. Simply put, SLT's relatively perfunctory one paragraph argument on this element does not even begin to address the issue of reasonable reliance under the facts of this case with the level of detail necessary for SLT to meet its burden of demonstrating it is entitled to summary judgment on this counterclaim.

SLT's argument that its alleged commitment to purchase exclusively from ARI is too indefinite to constitute an enforceable contract meets with the same fate. SLT's argument on this issue is that because the parties left something to further negotiations the alleged promise was “nothing more than an agreement to further negotiate,” citing In however, it was clear to the court that the promisor's alleged promise was nothing more than an agreement to further negotiate. By contrast, in this case, viewing the evidence in the light most favorable to ARI as the nonmoving party, the summary judgment record reflects that the parties' agreement constituted an enforceable contract in all material respects (except for a writing) around the time SLT was preparing its response to the NYCDOE RFP. Thus, the court disagrees with SLT's characterization of the summary judgment record.

SLT's final argument concerning ARI's promissory estoppel claim is that ARI has not shown that it would sanction the perpetration of fraud or result in injustice if the court did not enforce SLT's promise to use ARI as the exclusive supplier on the NYCDOE contract. SLT's rationale is that ARI admits its prior breaches and repudiation, and therefore SLT's mere refusal to perform the contract by seeking another vendor was justified by independent reasons. Again, the court cannot agree with SLT's characterization of the evidence at this procedural juncture. Viewing the summary judgment record in the light most favorable to ARI, it appears that SLT used ARI to obtain the contract with NYCDOE, that SLT could not have fulfilled one of the mandatory requirements of the RFP (prepayment kiosks) without ARI's assistance, that SLT stole ARI's confidential information in an effort to design and build its own kiosks so that it could cut SLT out of the NYCDOE deal, that SLT intended to do so all along, that SLT did not negotiate in good faith to reach a written contract with ARI, and that SLT reneged on its promise to use ARI as the exclusive supplier for the NYCDOE project for no apparent reason. Certainly, a rational trier of fact could conclude that not enforcing SLT's promise to use ARI as the exclusive supplier on the NYCDOE project would essentially sanction the perpetration of fraud or result in injustice. Accordingly, SLT's motion for summary judgment on this claim is denied.

4. Unjust Enrichment Claim

*11 The basic elements of an unjust enrichment claim under Kansas law are

(1) a benefit conferred upon the defendant by the plaintiff; (2) an appreciation or knowledge of the benefit by the defendant; and (3) the acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value.

. SLT argues that it is entitled to summary judgment on ARI's unjust enrichment claim because SLT did not accept any benefit in its dealings with ARI. SLT contends that it was overwhelmingly harmed in its dealings with ARI because SLT paid for useless equipment ARI has refused to accept for return or to repair and that ARI made a substantial profit on its dealings with SLT due to its significant profit margin on the items it sold to SLT. ARI, on the other hand, contends that the summary judgment record reflects that it provided SLT with the products, services, support, and know-how to obtain the NYCDOE business and that, without the products and services supplied by ARI, SLT would not have won the NYCDOE contract. At this procedural juncture, viewing the evidence in the light most favorable to ARI, the court accepts ARI's characterization of the factual record. Neither party, however, has addressed the legal issue of whether the benefit ARI purportedly conferred on SLT is the type of benefit which would support an unjust enrichment claim. As such, SLT has not established that it is entitled to summary judgment on this claim.

SLT also contends that the existence of the putative oral contract precludes ARI's reliance upon the equitable doctrine of unjust enrichment. Quasi-contractual remedies such as unjust enrichment are not available when an enforceable express contract regulates the parties' relations with respect to the disputed issue. . But an unjust enrichment theory may be applicable if the contract is void, unenforceable, rescinded, or waived. In this case, SLT contends, at least in part successfully, that any putative oral contract that may have existed between the parties concerning ARI being the exclusive supplier of kiosks for SLT's contract with the NYCDOE is unenforceable under the statute of frauds. Hence, to this extent no enforceable contract exists precluding an unjust enrichment claim. SLT's motion for summary judgment on ARI's unjust enrichment claim is denied.

5. Fraud

SLT argues that it is entitled to summary judgment on its fraud claim because plaintiff has failed to prove a present intent to defraud. Again, viewing the evidence in the light most favorable to ARI, the court disagrees. ARI has submitted deposition testimony from SLT's then-national account manager, Ms. Noyes, who worked on SLT's response to the NYCDOE RFP. A rational trier of fact could conclude based on the summary judgment record that SLT used ARI to respond to the NYCDOE RFP and for the pilot project, but that SLT never intended to actually use ARI to fulfill the contract.

*12 SLT's next argument with respect to ARI's fraud claim is based on the well-recognized principle that the existence of a contractual relationship bars the assertion of tort claims covering the same subject matter governed by the contract. See . Stated another way, tort duties may not be imposed on a party where the party's duties and rights are specifically defined by contract. See Here, however, ARI's fraud claim is essentially that SLT induced ARI into providing kiosks for the pilot program and further induced ARI into entering into contracts to sell goods other than those for the NYCDOE project, all in reliance on SLT's fraudulent statement that it was intending to use ARI as its exclusive supplier for the NYCDOE project. To the extent that SLT relies on the statement in the August 2004 purchase order concerning the parties' intent to attempt to reach a mutually agreeable written contract in relation to the NYCDOE project, the court has previously recognized that fraudulent inducement to enter a contract constitutes a tort independent of a claim for breach of the same contract. see also . The August 2004 purchase order, which includes the statement upon which SLT relies, was purportedly one of the contracts SLT fraudulently induced ARI to enter into. Consequently, this term contained in the August 2004 purchase order does not bar ARI's fraud claim.

SLT's final argument in its motion for summary judgment on ARI's counterclaims is that ARI had no right to rely on the alleged misrepresentation. SLT's argument on this issue is similar to the reliance argument SLT advanced with respect to ARI's promissory estoppel claim. Again, the alleged reliance predated the August 2004 purchase order. The court has no difficulty concluding that ARI has raised a genuine issue of material fact that ARI in fact relied on SLT's promise that ARI would be the exclusive supplier for the NYCDOE project and that ARI's reliance was reasonable and justifiable at that time. Accordingly, SLT's motion for summary judgment on ARI's fraud counterclaim is denied.

B. Analysis: SLT's Motion for Partial Summary Judgment

1. SLT's Breach of Contract Claim

It is uncontroverted that SLT contracted with ARI for the production and delivery of kiosks and personal access devices (PADs), that SLT paid in advance for those goods, that ARI refused to deliver some of the purchased product to SLT as contracted, and that ARI has retained and refused to return over $55,000 from SLT's pre-payment for goods which ARI refused to supply. ARI nonetheless contends that SLT is not entitled to summary judgment because SLT's material breach (in failing to honor its agreement that ARI would be the exclusive supplier for the NYCDOE contract) justified or excused ARI's failure to perform the contracts embodied in the purchase order. In this respect, ARI relies on the affidavit of Mr. Lilly which states that ARI agreed to supply SLT with those keypads at the stated price on the stated delivery terms only because it believed SLT's representation that ARI would also get the NYCDOE kiosk business. ARI also contends that when SLT breached the parties' Non-Disclosure and Confidentiality Agreement by using ARI's confidential information, SLT undermined ARI, its business, and its confidence and ongoing relationship with SLT.

*13 As discussed previously, the contract relied upon by ARI (i.e., that SLT would use ARI as the exclusive supplier of kiosks on the NYCDOE project) is barred by the statute of frauds except to the extent that ARI delivered goods for the pilot project, because those goods were delivered and accepted. The fact that the contract is not barred by the statute of frauds with respect to the goods for the pilot project does not avoid the statute of frauds with respect to the remainder of the contract relating to the non-pilot project goods. See 2 Lawrence, supra, § 2-201:281, at 465 (exception for goods received and accepted only avoids the statute of frauds with respect to those goods; it does not make the entire oral contract enforceable as to the undelivered goods).

Consequently, ARI cannot use the alleged contract with respect to the non-pilot program goods as a defense. See (stating “a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense ” (emphasis added)). Thus, ARI's argument that its performance is excused with respect to the non-NYCDOE goods must rest, if at all, on SLT's alleged breach in failing to pay for the NYCDOE pilot-program goods.

Here, the fundamental flaw in both parties' summary judgment arguments on this issue is that neither has addressed whether, under the legal standards set forth in the Kansas UCC, their agreement relating to the non-NYCDOE goods and their agreement relating to the NYCDOE pilot-program goods were both a part of the same contract or whether they involved separate contracts. If the two agreements constituted separate contracts, then, absent compliance with the scheme set out in , ARI cannot justify its nonperformance on the contract for the non-NYCDOE goods simply because of SLT's nonperformance on the NYCDOE pilot-program goods. See (a party to a contract may not refuse performance simply because the other party has breached a separate contract between them); (“Neither the Uniform Commercial Code nor general contract law gives either party to a contract the right to refuse performance because the other has breached a separate contract between them.”); cmt. b (1979). If, on the other hand, the two agreements were part of the same contract, then the court must apply the applicable provisions of the Kansas UCC and case law thereunder. At this procedural juncture, SLT has not established that delivery of the two sets of goods was necessarily unrelated or that ARI is not entitled to relief under and, therefore, it has not established that it is entitled to summary judgment on this basis.

ARI also contends that SLT cannot enforce the contracts for the sale of non-NYCDOE purchases because ARI was fraudulently induced to enter into those contracts. Certainly, it is well established that a contract is voidable if it was induced by fraud. ; . Here, the court has already explained (with respect to ARI's affirmative fraud counterclaim) that a rational trier of fact could find based on the summary judgment record that ARI was fraudulently induced to enter into those contracts. Consequently, SLT is not entitled to summary judgment on its breach of contract claim because a genuine issue of material fact exists concerning whether that contract is voidable.

2. SLT's Breach of Warranty Claim

*14 The clerk entered default on SLT's breach of warranty claim (doc. # 92) on December 21, 2006. On January 4, 2007, ARI filed a Motion to Set Aside the Clerk's Entry of Default (doc. # 94). The court may set aside an entry of default for “good cause shown.” . The principal factors the court considers in determining whether a defendant has met this good cause standard are (1) whether the default was the result of culpable conduct of the defendant, (2) whether the plaintiff would be prejudiced if the default should be set aside, and (3) whether the defendant presented a meritorious defense. (unpublished table opinion). The good cause standard for setting aside an entry of default poses a lesser standard for the defaulting party than the excusable neglect which must be shown for relief from a default judgment. .

Mindful that the interests of justice favor resolution of disputes on their merits, the court believes that ARI has demonstrated good cause for setting aside the entry of default. The entry of default was not the result of any culpable conduct by ARI, but rather appears to have resulted solely from ARI's inadvertence. Additionally, ARI has presented a meritorious defense inasmuch as Mr. Lilly testified in his deposition that ARI believed it had fully honored its warranty by fixing and returning all products with respect to which ARI received notice of defects. To the extent that SLT claims it will be prejudiced by the fact that discovery is now closed, the court finds it significant that SLT has not articulated what discovery it believes it will need to undertake in order to prove this claim. Indeed, in order for SLT to obtain a default judgment, as opposed to simply an entry of default, SLT would have to prove damages on its breach of warranty claim in any event. It appears to the court that SLT would not need to conduct much more discovery on this claim to prove liability than it would need to prove damages, and that this proof will probably lie largely in the hands of SLT, not ARI. The trial of this case is still some two months off. If SLT truly needs to pursue discovery, the parties may agree to reopen discovery on this claim. See Pretrial Order (doc. # 91), ¶ 13, at 14. If they are unable to reach such an agreement, SLT can file a motion for leave to reopen and expedite discovery on this claim. The court would be inclined to grant any such motion in order to alleviate any prejudice SLT might otherwise suffer by ARI's belated defense of this claim. The court is unpersuaded by SLT's argument that Judge Waxse's prior Memorandum and Order (doc. # 79) is the law of the case on this issue. Judge Waxse considered the issue of whether ARI should be allowed to amend its answer. While the court recognizes that Judge Waxse's decision provided a necessary precursor to the entry of default, the motion to set aside the entry of default technically involves a different procedural posture and standard. Accordingly, the court will grant ARI's motion to set aside the entry of default.

*15 The court will deny SLT's motion for summary judgment on this claim. SLT's motion is predicated on the declaration of Terry Roberts, SLT's chief operating officer, that certain goods SLT purchased from ARI failed to perform as warranted and that ARI refused warranty service or credits for many of those defective goods. According to the deposition testimony of Mr. Lilly, however, ARI believed it had fully honored its warranty by fixing and returning all products with respect to which ARI received notice of defects. Viewing the evidence in the light most favorable to ARI, Mr. Lilly's testimony on this issue presents a genuine issue of material fact precluding summary judgment on SLT's breach of warranty claim.

MOTION TO STRIKE JURY DEMAND

Finally, the court turns to Plaintiff's Motion to Strike Defendant's Untimely Jury Demand (doc. # 77). It is undisputed that ARI did not make a timely demand for a jury trial of the claims in this case and thereby waived its right to a jury trial. See ; . Although the court has discretion to order a jury trial later upon motion by a party, see , ARI did not file any motion pursuant to . Instead, ARI simply filed a Request for Jury Trial (doc. # 70) on November 14, 2006. Thus, the court could grant SLT's motion to strike this request for the sole reason that the request was procedurally improper in that it was not a timely demand or a motion pursuant to . Instead, however, the court will construe the Request for Jury Trial as a motion.

“[A]bsent strong and compelling reasons to the contrary, a district court should exercise its discretion under and grant a jury trial.” (per curiam). In this case, the court believes there are strong and compelling reasons for not granting ARI's belated request for a jury trial. As a threshold matter, the court notes that ARI filed its Request for Jury Trial more than eighteen months after completion of the parties' initial round of pleadings; that the Request for Jury Trial itself offers no explanation for the delay; and that ARI also did not file a response to SLT's motion to strike ARI's Request for Jury trial. Thus, despite the opportunity to address this issue, ARI still has not offered any explanation for the delay or provided any reason which persuades the court that it should invoke its discretion and grant ARI's belated request. In short, ARI has not even attempted to show that it is entitled to relief under . See (holding it is not an abuse of the court's discretion to deny a motion where the party seeking a jury trial offers no excuse for an untimely request made more than a year and a half after the original complaint was filed).

*16 In addition, the court believes that this case, in particular, is far better suited to a trial to the court than it is to a jury trial. This is not a negligence case or an employment discrimination case where the jury can be fairly easily tasked with its role as the finder of facts. Instead, this is a commercial transaction which involves a multitude of mixed questions of law and fact. Many of the issues involve complex, interrelated, and potentially confusing facts, legal standards, and remedies. Although the court would ordinarily be inclined to grant a belated request for a jury trial, perhaps even one as late as ARI's here, the court simply does not believe that, in the absence of a timely invocation of the parties' Seventh Amendment rights, this is the type of case where a jury trial ultimately would result in the just, speedy, and inexpensive determination of this case. Accordingly, the court will exercise its discretion and deny ARI's belated request for a jury trial.

IT IS THEREFORE ORDERED BY THE COURT that SLT's Motion for Summary Judgment on Defendant's Counterclaims (doc. # 73) is granted in part and denied in part as set forth above.

IT IS FURTHER ORDERED THAT SLT's Motion for Partial Summary Judgment on Its Breach of Contract Claims (doc. # 75) is denied.

IT IS FURTHER ORDERED THAT ARI's Motion to Set Aside the Clerk's Entry of Default (doc. # 94) is granted.

IT IS FURTHER ORDERED THAT SLT's Motion to Strike Defendant's Untimely Jury Demand (doc. # 77) is granted.

Case 15.3

578 Pa. 479, 854 A.2d 425

Supreme Court of Pennsylvania.

Ronald A. YOCCA, Paul Serwonski and Patty Serwonski, His Wife, and Ronald P. Carmassi, Individually and On Behalf of all Similarly Situated, Appellees

v.

The PITTSBURGH STEELERS SPORTS, INC., A National Football League Franchise, t/d/b/a The Steelers Pittsburgh Football Club, and The Sports & Exhibition Authority of Pittsburgh and Allegheny County, Appellants.

Argued March 2, 2004.

Decided July 20, 2004.

Justice NIGRO.

Appellants, the Pittsburgh Steelers Sports, Inc., t/d/b/a the Steelers Pittsburgh Football Club, and the Sports & Exhibition Authority of Pittsburgh and Allegheny County (collectively, the "Steelers"), appeal from the order of the Commonwealth Court which reversed the order of the Court of Common Pleas of Allegheny County granting the Steelers' preliminary objections to the class action complaint filed by Appellees, Ronald A. Yocca, Paul and Patty Serwonski, and Ronald P. Carmassi, individually and on behalf of all similarly situated persons who purchased "stadium builder licenses" ("SBLs") from the Steelers. For the reasons that follow, we reverse the Commonwealth Court's order.

This dispute involves the sale of SBLs, which are essentially "licenses" that grant the licensee the right to buy annual season tickets to Pittsburgh Steelers football games. According to Appellees, sometime in October 1998, they received a brochure from the Steelers (the "SBL Brochure" or the "Brochure"), which advertised a new football stadium that the Steelers planned to construct for the Pittsburgh Steelers football team and advised them of the opportunity to purchase SBLs for football games in that stadium. The SBL Brochure explained that the new stadium would be both bigger and better than the existing stadium, Three Rivers Stadium, and would have more seats closer to the field. [FN1] See R.R. 36a. The SBL Brochure then stated that any person could purchase an SBL for $250 to $2,700, depending on the section in which the SBL purchaser's seat would be located. [FN2] See id. at 44a-45a. According to the SBL Brochure, each SBL purchaser would be assigned a particular seat in the new stadium and have the right and obligation to buy season tickets for that seat as long as the Steelers football team continues to play in the new stadium. See id. at 40a-41a, 46a, 109a. However, the Brochure also stated that all SBL purchasers would be free to either transfer their rights to purchase season tickets or terminate their SBLs if at some point in the future they determined that they no longer wanted to purchase season tickets for the seats assigned to them. See id.

FN1. Specifically, the SBL Brochure stated that the concourses in the new stadium would be twice as wide as those in Three Rivers Stadium and that there would be larger concessions and more restrooms. See R.R. 36a. The SBL Brochure also stated that the new stadium would be oval, rather than circular like Three Rivers Stadium, and that as a result, there would be more seats closer to the field. See id.

FN2. The Brochure explained that persons who purchased an SBL would be making a "contribution" to the construction of the new stadium because the money made through the sale of SBLs would be "used exclusively to help build" the new stadium. R.R. 41a.

The Brochure further provided that any person interested in purchasing an SBL was required to fill out the application that was included in the SBL Brochure and submit it along with a non-refundable deposit equaling one-third of the price of the desired SBL seat (or seats) by November 30, 1998. See id. at 46a, 49a. A second payment totaling one-third of the amount due was required by October 1, 1999, and a third installment, representing the remaining balance, was to be submitted by October 1, 2000. See id. at 49a. The application further asked the SBL applicant to specify the section of the stadium where he would most like to sit (and calculate the amount due for a seat in that section), as well as list those sections of the stadium that were his second and third preferences. [FN3] See id. at 46a. Notably, the SBL Brochure included two small diagrams of the planned stadium. See id. at 44a-45a. The first diagram depicted the general locations of the sections in the lower level of the stadium while the second diagram showed the general locations of the sections in the upper level of the stadium. See id. Neither diagram was sufficiently detailed so as to show the number of rows or seats in the sections. See id. However, based on the lower level diagram, one of the sections in the lower level, the Club I Section, only appeared to include seats between the twenty-yard lines of the football field. See id. at 44a. Similarly, the depictions of certain sections in the upper level diagram, namely, Sections D, E, and F, appeared to show each section as having the same number of rows. See id. at 45a.

FN3. An SBL applicant only had to pay for those seats actually assigned to him. Therefore, if an SBL applicant was ultimately assigned seats in a section that was not his first choice and that was less expensive than his first choice, the initial deposit overpayment would be applied to any remaining amounts due for the SBL or season tickets.

The SBL Brochure indicated that first priority for seats would be given to those SBL applicants who already had season tickets in Three Rivers Stadium and who applied for seats in a section of the new stadium that corresponded with their current seating sections. See id. at 46a, 50a. With regard to those applicants, the SBL Brochure stated: "We will try to assign seats as close to your current seat location as the new stadium seating configuration will allow." Id. at 50a. According to the Brochure, after seats were assigned to those applicants with first priority, seats would be assigned to all other applicants based on a "random computerized priority number" placed on every application received by the November 30th deadline. Id. at 46a, 50a. Significantly, the SBL Brochure not only made clear that an SBL applicant's first seating preference was "not guaranteed," id. at 50a, but also that no SBL applicant was assured the right to purchase an SBL. See id. at 46a ("To give yourself the best chance of securing seating in the new stadium, you must list your first, second and third preferences. The new seating configuration is much different than Three Rivers Stadium and some Sections are sure to be over-subscribed.") (emphasis added). The SBL Brochure further notified SBL applicants: "You will be mailed a contract by the end of March 1999, notifying you of your Section assignment. The contract must be signed and returned within 15 days. If the completed contract is not returned as required, your season ticket holder discount seating priority and deposit will be forfeited." Id. at 50a. According to the SBL Brochure, SBL applicants would be given their actual seat assignments "in the Spring of 2001 after the seats have been physically installed in the new stadium." Id. at 49a. Finally, the SBL Brochure included a telephone number for people to call if they had questions about the SBLs. See id.

Appellees allege that after reviewing the SBL Brochure, they decided to purchase SBLs. Accordingly, each Appellee completed his application in the SBL Brochure, indicating his seating preferences, and mailed the application and the required deposit to the Steelers by November 30, 1998. [FN4] In August 1999, the Steelers sent each Appellee a letter (the "August 1999 Letter"), advising them that they had been assigned SBL seats and notifying them of the stadium sections in which their seats were located. [FN5] The letter also reminded Appellees that they would soon be mailed a contract that they would have to sign to purchase SBLs to the seats assigned to them. A document containing two diagrams (the "August 1999 Diagrams") was attached to the August 1999 Letter to show "the location of all sections." R.R. 142a. Like the earlier diagrams included in the SBL Brochure, the August 1999 Diagrams only offered a general description of the location of each section, and did not indicate how many rows or how many seats were in any given section. However, in spite of the lack of specificity in both sets of diagrams, it was apparent that the parameters of the sections in the August 1999 Diagrams varied from those in the earlier diagrams. Specifically, in the August 1999 Diagrams, the Club I Section appeared larger than it had in the earlier diagrams, apparently including seats between the ten-yard lines, instead of only those seats between the twenty-yard lines. In addition, the depictions of Sections D, E, and F in the August 1999 Diagrams no longer appeared to be equal in size, but rather, Sections D and E appeared larger than Section F. Nevertheless, it was still impossible to ascertain the precise sizes of these three sections as the August 1999 Diagrams did not specify the number of rows in each section.

FN4. While Appellees assert that they owned season tickets for Pittsburgh Steelers football games in Three Rivers Stadium when they applied for SBLs, they do not allege that they applied for seats in a section that corresponded with the location of their seats in Three Rivers Stadium.

FN5. The August 1999 Letter reminded Appellees that they would not receive their actual seat assignments until just prior to the 2001 Steelers' football season.

Two months after Appellees received the August 1999 Letter, the Steelers mailed them three documents: (1) a "Stadium Builder License and Club Seat Agreement" or a "Stadium Builder License Agreement" (collectively, the "SBL Agreement" or "Agreement"); (2) a document entitled "Additional Terms and Conditions of Stadium Builder License and Club Seat Agreement" or "Additional Terms and Conditions of Stadium Builder License" (collectively, the "Additional Terms document"); [FN6] and (3) another copy of the document containing the August 1999 Diagrams. [FN7] The SBL Agreement was a two-page document requiring the signatures of the named person, partnership, or corporation purchasing an SBL, i.e., the "Licensee," as well as the Public Auditorium Authority of Pittsburgh and Allegheny County, i.e., the "Authority" or the "Licensor." [FN8] The Agreement specified the number of SBLs the Licensee would be purchasing, the section (or sections) in which the SBL seats would be located, and the total fee for the SBLs. Moreover, to assist the Licensee in identifying the location of his seats, the Agreement directed the Licensee to Exhibit A, which it described as representing the "Stadium Seating Area." While the document containing the August 1999 Diagrams was not specifically labeled as "Exhibit A," it was clearly meant to be Exhibit A as it was the only document attached to the contract documents, i.e., the SBL Agreement and the Additional Terms document, and as it clearly described the " Stadium Seating Area." [FN9]

FN6. The "Stadium Builder License and Club Seat Agreement" and "Additional Terms and Conditions of Stadium Builder License and Club Seat Agreement" were provided to those SBL applicants who were assigned SBLs for seats in the club sections, while the "Stadium Builder License Agreement" and "Additional Terms and Conditions of Stadium Builder License" were provided to those persons assigned SBLs for seats in other sections of the stadium.

FN7. The Steelers provided the trial court with copies of the contract documents sent to Appellees and those documents included not only the SBL Agreement and the Additional Terms document, but also a copy of the document containing the August 1999 Diagrams. The trial court subsequently found that the Steelers had indeed sent Appellees a copy of the document containing the August 1999 Diagrams with the SBL Agreement. Notably, Appellees did not contest this finding in their appeal to the Commonwealth Court and likewise, do not contest this finding here. Accordingly, we will accept the trial court's finding that a copy of the document containing the August 1999 Diagrams was sent to Appellees with the SBL Agreement.

FN8. While the SBL Agreement named the Authority as the Licensor, it also explained that "the Authority will lease the Stadium to the National Football League Franchise owned by Pittsburgh Steelers Sports, Inc. ("Steelers") or an affiliate of the Steelers, and that upon completion of the Stadium the Authority will assign this Agreement to the Steelers or its affiliate." R.R. 125a.

FN9. Appellees suggest in their brief to this Court that we cannot consider the document containing the August 1999 Diagrams as part of the SBL Agreement because it was not specifically labeled "Exhibit A." See Appellees' Brf., at 20 ("No such document has ever been presented to the Plaintiffs which bears a legend Exhibit A. No such document exists."). Indeed, the Commonwealth Court seemed to agree with Appellees in this regard. See Yocca, 806 A.2d at 936 n. 5. However, as stated above, the trial court made an unchallenged factual finding that the document containing the August 1999 Diagrams was attached to the SBL Agreement. See supra n. 7. Moreover, that document was the only exhibit to the SBL Agreement and it specifically depicted the stadium seating area. Under these circumstances, it would border on the absurd to conclude that the document containing the August 1999 Diagrams was not Exhibit A merely because it was not labeled as such on its face. Accordingly, we reject Appellees' suggestion that we reach such a conclusion.

The SBL Agreement also stated that the Licensee and the Licensor agreed to the terms and conditions in the Additional Terms document, which it expressly incorporated by reference as part of the Agreement. The Additional Terms document was a four-page document outlining the use of SBLs (including the fact that the Licensee would be notified of his seats prior to the first season of play in the stadium), the SBL fee, the term of an SBL, a Licensee's duty to continually purchase season tickets to maintain his SBL, the terms and conditions associated with transferring an SBL, and the conduct expected of Licensees and their guests. [FN10] The Additional Terms document also contained a clause stating that the Licensee "has read and understands the terms of this Agreement," R.R. 158a, and an integration clause, which stated as follows:

FN10. The Additional Terms document also included a disclaimer clause, a reservation of rights clause, an assumption of risk/liability/indemnity clause, a notices clause, a binding effect clause, see infra n. 19, and a clause indicating that the Agreement should be construed and enforced in accordance with Pennsylvania law and that any actions arising out of the Agreement should be brought in the Court of Common Pleas of Allegheny County. See R.R. 158-59a

Entire Agreement; Modification. This Agreement contains the entire agreement of the parties with respect to the matters provided for herein and shall supersede any representations or agreements previously made or entered into by the parties hereto. No modification hereto shall be enforceable unless in writing, signed by both parties.

Id. at 159a.

Appellees signed the SBL Agreement and paid the remaining installments due for the SBLs assigned to them. Moreover, in accordance with the provisions in the SBL Agreement, Appellees purchased season tickets for the 2001 Steelers' football season for the SBL seats awarded to them. In the spring of 2001, after all of the seats in Heinz Field were installed, the Steelers informed Appellees of the specific locations of their SBL seats. Appellees subsequently used their seats, and according to Appellees, they immediately discovered that the seats were not located where they expected them to be based on the diagrams in the SBL Brochure. Appellees contend that several of the seating sections surrounding the football field were expanded to include a greater area of seats than shown in the SBL Brochure diagrams. Thus, although Appellees acknowledge that the names of the sections associated with each of their seats are the ones that they had requested to sit in, they assert that their seats are actually in other less desirable and less expensive sections according to the SBL Brochure diagrams. Specifically, Appellee Ronald A. Yocca alleges that he applied for and was awarded two SBL seats in the Club I Section. Mr. Yocca contends that based on the lower level diagram in the SBL Brochure, he reasonably believed that his Club I seats would be located between the twenty-yard lines of the football field. However, Mr. Yocca's seats ended up on the eighteen-yard line, two yards outside of the twenty-yard line. Similarly, Appellees Paul and Patty Serwonski and Ronald P. Carmassi were granted SBL seats in Section D in the upper level. [FN11] Mr. and Mrs. Serwonski and Mr. Carmassi allege, much like Mr. Yocca, that based on the upper level SBL Brochure diagram, they reasonably believed that their seats would be within the first twelve rows of the upper deck. [FN12] Their seats, however, are in the sixteenth row of the upper deck.

FN11. Mr. and Mrs. Serwonski were each granted one SBL and Mr. Carmassi was granted two SBLs.

FN12. According to the Serwonskis and Mr. Carmassi, Section D should have included the first twelve rows because the SBL Brochure upper level diagram depicted the three sections on that level as being equal in size and the upper level contains 36 rows.

As a result of their dissatisfaction with their seats, Appellees commenced the instant class action against the Steelers in early August 2001. [FN13] In their complaint, Appellees initially assert that the Steelers breached their contract with Appellees. According to Appellees, the terms in the SBL Brochure constitute the terms of the parties' contract and the Steelers breached those terms by failing to: (1) provide them with seats in the sections depicted in the two diagrams included in the SBL Brochure; (2) issue seats to them in accordance with the priority promised in the SBL Brochure; and (3) refund their deposits or reduce their future payments, as promised by the SBL Brochure, once the Steelers learned that they could not give Appellees seats in the higher priced sections they had requested. Appellees further assert that the Steelers are guilty of fraud and negligent misrepresentation by: (1) making false assurances both in the SBL Brochure and on "the Steeler web page" that they "would honor requests for specified SBL Sections, or reduce the purchase price if the highest priced Section selected was unavailable ...."; and (2) awarding SBL applicants seats in certain sections when the Steelers knew that such seats were not available. R.R. at 93a-94a. Appellees also contend that the Steelers violated the Unfair Trade Practices and Consumer Protection Law (the "UTPCPL"), 73 P.S. § 201-1 et seq., [fn14] BY ESSENTIALLY MAKING false representations regarding the sale of SBLs.

FN13. Appellees commenced their action by filing a complaint, but subsequently filed three amended complaints. We consider Appellees' Third Amended Complaint here.

FN14. Act of December 17, 1968, P.L. 1224, No. 387.

Besides monetary damages, Appellees also request a declaratory judgment stating that: (1) the SBL Agreement, including the integration clause in the Additional Terms document, is void for want of consideration; or (2) the terms of the SBL Brochure, including the two diagrams in the Brochure, must be integrated within the SBL Agreement to define and describe the location of the section assignments referred to in the SBL Agreement. See R.R. 96a-98a. Furthermore, Appellees seek an injunction requiring that: (1) "all seat licenses and all season tickets be reissued in accordance with the agreed upon priority;" or (2) the SBL Agreements entered into by Appellees be rescinded and Appellees be awarded "full restitution of all money paid, plus interest, and attorneys' fees." R.R. 92a-93a. In response to Appellees' complaint, the Steelers filed preliminary objections in which they essentially alleged that all of Appellees' claims must be dismissed because they failed as a matter of law. [FN15] On November 20, 2001, the trial court held a hearing regarding the Steelers' preliminary objections and approximately one month later, on December 28, 2001, it entered an order and opinion sustaining the Steelers' preliminary objections and dismissing Appellees' complaint. In its opinion, the trial court initially pointed out that because the SBL Agreement was a fully integrated agreement that represented all of the terms of the parties' agreement, it superseded all of the parties' previous negotiations and agreements, including the terms in the SBL Brochure. The court then explained that Appellees' breach of contract claims failed as a matter of law because they were solely based on the terms in the SBL Brochure and the parol evidence rule prohibited evidence of those terms from being used to alter the plain terms of the SBL Agreement.

FN15. In addition to arguing that Appellees' claims failed as a matter of law, Appellant the Sports & Exhibition Authority of Pittsburgh and Allegheny County ("SEA") also filed separate preliminary objections in which it argued that it was immune from liability for negligent misrepresentation, fraud, and violation of the UTPCPL on the basis of the Pennsylvania Political Subdivision Tort Claims Act, 42 Pa.C.S. § § 8541 et seq. Appellees subsequently conceded that SEA was indeed immune from any such liability. See Second Proposed Order attached to Plaintiff's Brf. in Opposition to Defendants' Preliminary Objections; see also Appellees' Commw. Ct. Reply Brf., at 10.

Next, the trial court sustained the Steelers' preliminary objections to Appellees' claims of fraud and negligent misrepresentation, finding that because these claims were directly based on the parties' contractual agreement, they could only be brought as part of Appellees' breach of contract claims rather than as separate tort claims. [FN16] See Tr. Ct. Op. at 12 (" 'To permit a promisee to sue his promisor in tort for breaches of contract inter se would erode the usual rules of contractual recovery and inject confusion into our well-settled forms of action.' ") (quoting Bash v. Bell Telephone Co., 411 Pa.Super. 347, 601 A.2d 825 (1992)). The trial court also found that Appellees' claims that the Steelers had violated the UTPCPL failed as a matter of law because private causes of action under the UTPCPL may only be brought based on the sale of goods or services and SBLs are neither goods nor services. [FN17] The trial court further noted that even if the UTPCPL applied to SBLs, Appellees' claims would fail because Appellees had to establish that they relied on the representations in the SBL Brochure to prevail on those claims and Appellees could not prove that they had relied on those representations given that they had signed the SBL Agreement which specifically superseded the representations in the SBL Brochure.

FN16. The trial court also found that Appellees' claims that the Steelers misled them about the location of their seats based on the SBL Brochure diagrams had no basis as the diagrams did not even include "any numbering of seats or any location of rows of seats." Tr. Ct. Op., at 12.

FN17. Section 201-9.2 of the UTPCPL, which provides for private causes of action under the UTPCPL, only applies to a "person who purchases or leases goods or services primarily for personal, family or household purposes...." 73 P.S. § 201-9.2.

The trial court also determined that Appellees were not entitled to declaratory relief. Specifically, the court found that the SBL Agreement could not be declared void for want of consideration because the parties explicitly agreed in the SBL Agreement to be legally bound by that Agreement and the Pennsylvania Uniform Written Obligations Act, 33 P.S. § § 1 et seq., [FN18] makes clear that a written agreement shall not be void for lack of consideration if it contains an express statement "that the signer intends to be legally bound" by it. [FN19] 33 P.S. § 6. The court further found that the terms in the SBL Brochure could not be integrated into the SBL Agreement to define and describe the sections assigned to Appellees because the SBL Agreement included a copy of the document containing the August 1999 Diagrams to define and describe the section locations. Moreover, the court explained that "[i]t is simply not logical to believe that a sketch of the seating areas of the Stadium published almost two years before the Stadium was built [i.e., the SBL Brochure diagrams] was included in the final contract of the parties [i.e., the SBL Agreement], particularly when a diagram [i.e., the August 1999 Diagrams] was included with the contract." Tr. Ct. Op. at 7. Lastly, with regard to Appellees' claim for injunctive relief, the trial court concluded that such relief was not warranted as Appellees "have failed to allege any irreversible harm that will occur in the absence of an injunction and have failed to plead a clear right to such relief." Id. at 11.

FN18. Act of May 13, 1927, P.L. 985, No. 475.

FN19. The last paragraph of the SBL Agreement states:

Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns....

R.R. 159a.

Appellees appealed from the trial court's decision to the Commonwealth Court. On August 28, 2002, the Commonwealth Court entered an order affirming the trial court's dismissal of Appellees' fraud and negligent misrepresentation claims and injunctive relief claim, [FN20] but reversing the trial court's dismissal of Appellees' claims for breach of contract, violation of the UTPCPL, and declaratory relief. With respect to Appellees' breach of contract claim, the Commonwealth Court found that the terms in the SBL Brochure constituted the terms of the parties' contract. [FN21] Therefore, the court determined that the parol evidence rule did not preclude review of Appellees' claims concerning the SBL Brochure terms, and the trial court improperly granted a demurrer on Appellees' breach of contract claim for that reason. [FN22] In considering Appellees' UTPCPL claim, the Commonwealth Court determined that the Steelers' sale of SBLs constituted a sale of an option contract, i.e., a contract to keep an offer open, [FN23] and that an option contract could conceivably be a "service" for purposes of the UTPCPL. See Yocca, 806 A.2d at 947 ("[W]e cannot say with certainty that the option contracts here cannot be considered a 'service' as under the UTPCPL."). Thus, the court concluded that "the trial court's dismissal of [Appellees'] action under the UTPCPL was improper at [the] preliminary objection stage." Id. Lastly, the Commonwealth Court found that the trial court had improperly dismissed Appellees' secondary claim for declaratory relief because "the law does not state with certainty" that Appellees are not entitled to a declaratory judgment stating that the terms of the SBL Brochure must be integrated within the SBL Agreement to define and describe the section locations referred to in the SBL Agreement. [FN24] Id. at 945.

FN20. The Commonwealth Court agreed with the trial court that Appellees' claims for fraud and negligent misrepresentation were improper because they were based primarily on the parties' contract. See Yocca v. Pittsburgh Steelers Sports, Inc., 806 A.2d 936, 946 (mw.2002). The Commonwealth Court also determined that injunctive relief was unwarranted because Appellees could be adequately compensated by money damages. Id.

FN21. The Commonwealth Court explained that "[a] contract is formed when there is an offer, an acceptance of that offer and an exchange of consideration." Yocca, 806 A.2d at 942 (citing Hartman v. Baker, 766 A.2d 347 (Pa.Super.2000)). The court then found that: (1) the Steelers made an offer to Appellees when they sent them the SBL Brochure; (2) Appellees accepted the Steelers' offer when they returned the application included with the Brochure; and (3) the non-refundable one-third deposit paid by Appellees constituted an exchange of consideration. See id. ("Because [Appellees] had remitted the first one-third of their payment for the SBLs, and because they could not get that money back, the contract was complete at that point."). Accordingly, the court concluded that a contract was fully formed when Appellees submitted their applications with the required deposit and that the SBL Brochure therefore constituted the terms of the parties' contract.

FN22. The court recognized that there was an issue regarding whether the SBL Agreement superseded the earlier contract terms in the SBL Brochure. However, the court ultimately concluded that the issue was not completely clear and that a demurrer was therefore improper at the preliminary objections stage. Moreover, with respect to this issue, the court seemed to find merit in Appellees' claim that "the SBL Agreement and Additional Terms, mailed out after the contract had been formed, contained unilateral, unbargained-for changes to the terms of the contract that cannot be overcome by including an integration clause." Yocca, 806 A.2d at 943.

FN23. The court explained that the SBLs granted Appellees "the right to buy season tickets in a certain Section of the stadium for as many consecutive seasons as they wish. In other words, by purchasing SBLs, [Appellees] paid [the Steelers] to keep open an offer to sell them season tickets...." Yocca, 806 A.2d at 947.

FN24. The Commonwealth Court agreed with the trial court that Appellees were not entitled to a declaratory judgment stating that the SBL Agreement was void for lack of consideration because the Agreement explicitly stated that the parties had agreed to be legally bound by it and such a statement made the SBL Agreement enforceable without consideration. See Yocca, 806 A.2d at 945.

Judge Cohn filed a concurring and dissenting opinion, in which she agreed with the majority's decision to affirm the trial court's dismissal of Appellees' fraud and misrepresentation claims and claim for injunctive relief, but disagreed with the majority's decision to reinstate Appellees' remaining claims. According to Judge Cohn, the terms in the SBL Brochure were not part of the parties' contract because those terms did not promise Appellees anything. [FN25] Judge Cohn found that Appellees' reliance on the Brochure's terms was unreasonable as the Brochure "did nothing more than promise to try to seat people where they wished to be." Yocca, 806 A.2d at 948 (Cohn, J., dissenting) (emphasis added). Moreover, Judge Cohn noted that "since the building of the new stadium had not even begun, reliance on a general diagram that contained no clear objective components from which one could construe exactly where a section would begin and end, much less where individual seats would be, is, in my view, unreasonable reliance as a matter of law." Id. Therefore, based on her conclusion that the terms in the SBL Brochure could not be a part of the parties' contract, Judge Cohn explained that she would dismiss Appellees' breach of contract claims, which were wholly based on the terms in the SBL Brochure, as a matter of law.

FN25. Judge Cohn explained that "[a] contract requires a promise," Yocca, 806 A.2d at 948 (Cohn, J., concurring and dissenting) (citing Ringgold Sch. Dist. v. Abramski, 57 Pa.Cmwlth. 33, 426 A.2d 707 (1981)), and "[a]n expression of intention is not a promise unless it is communicated to one or more persons under such circumstances that they will expect performance and may reasonably act in reliance upon the expression." Id. (citing Corbin on Contracts, § 1.15 (1993)).

Judge Cohn further stated that she would dismiss Appellees' claim that the Steelers violated the UTPCPL because the UTPCPL only applies to sales of goods and services, and in her view, SBLs are neither goods nor services, but rather are intangible property rights. With regard to Appellees' claim for declaratory relief, Judge Cohn explained that she did not believe that Appellees were entitled to a declaration stating that the SBL Brochure terms must be integrated into the SBL Agreement because "integrating [the Brochure terms] would not be helpful to [Appellees'] case" given her conclusion that the Brochure did not contain any promises. Id. at 949 (Cohn, J., concurring and dissenting). The Steelers subsequently filed a petition for allowance of appeal with this Court, arguing that the Commonwealth Court erroneously reversed the trial court's order dismissing Appellees' claims for breach of contract, violation of the UTPCPL, and declaratory relief. On July 22, 2003, we granted the Steelers' petition. The Steelers initially argue that the Commonwealth Court improperly reversed the trial court's order dismissing Appellees' breach of contract claims because the parol evidence rule bars any consideration of Appellees' claims, which are wholly based on the terms in the SBL Brochure. We agree.

[1][2][3] As a trial court's decision to grant or deny a demurrer involves a matter of law, our standard for reviewing that decision is plenary. See Daniels v. Workers' Compensation Appeal Bd. (Tristate Transport), 574 Pa.61, 828 A.2d 1043, 1046-47 (2003). Preliminary objections in the nature of demurrers are proper when the law is clear that a plaintiff is not entitled to recovery based on the facts alleged in the complaint. See HCB Contractors v. Liberty Place Hotel Associates, 539 Pa. 395, 652 A.2d 1278, 1279 (1995). Moreover, when considering a motion for a demurrer, the trial court must accept as true "all well-pleaded material facts set forth in the complaint and all inferences fairly deducible from those facts." Small v. Horn, 554 Pa. 600, 722 A.2d 664, 668 (1998).

[4][5][6][7] This Court has explained the parol evidence rule as follows:

Where the parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only, evidence of their agreement. All preliminary negotiations, conversations and verbal agreements are merged in and superseded by the subsequent written contract ... and unless fraud, accident or mistake be averred, the writing constitutes the agreement between the parties, and its terms and agreements cannot be added to nor subtracted from by parol evidence.

Gianni v. Russell & Co., 281 Pa. 320, 126 A. 791, 792 (1924) (citations omitted); see also Scott v. Bryn Mawr Arms, Inc., 454 Pa. 304, 312 A.2d 592, 594 (1973). Therefore, for the parol evidence rule to apply, there must be a writing that represents the "entire contract between the parties." Gianni, 126 A. at 792. To determine whether or not a writing is the parties' entire contract, the writing must be looked at and "if it appears to be a contract complete within itself, couched in such terms as import a complete legal obligation without any uncertainty as to the object or extent of the [parties'] engagement, it is conclusively presumed that [the writing represents] the whole engagement of the parties...." Id. An integration clause which states that a writing is meant to represent the parties' entire agreement is also a clear sign that the writing is meant to be just that and thereby expresses all of the parties' negotiations, conversations, and agreements made prior to its execution. See HCB Contractors, 652 A.2d at 1280; McGuire v. Schneider, 368 Pa.Super. 344, 534 A.2d 115, 117 (1987),aff'd, 368 Pa.Super. 344, 534 A.2d 115 (1988).

[8][9][10] Once a writing is determined to be the parties' entire contract, the parol evidence rule applies and evidence of any previous oral or written negotiations or agreements involving the same subject matter as the contract is almost always inadmissible to explain or vary the terms of the contract. See Bardwell v. Willis Co., 375 Pa. 503, 100 A.2d 102, 104 (1953); McGuire, 534 A.2d at 117-18. One exception to this general rule is that parol evidence may be introduced to vary a writing meant to be the parties' entire contract where a party avers that a term was omitted from the contract because of fraud, accident, or mistake. [FN26] See HCB Contractors, 652 A.2d at 1279; Bardwell, 100 A.2d at 104. In addition, where a term in the parties' contract is ambiguous, "parol evidence is admissible to explain or clarify or resolve the ambiguity, irrespective of whether the ambiguity is created by the language of the instrument or by extrinsic or collateral circumstances." Estate of Herr, 400 Pa. 90, 161 A.2d 32, 34 (1960); see also Waldman v. Shoemaker, 367 Pa. 587, 80 A.2d 776, 778 (1951).

FN26. Notably, while parol evidence may be introduced based on a party's claim that there was a fraud in the execution of the contract, i.e., that a term was fraudulently omitted from the contract, parol evidence may not be admitted based on a claim that there was fraud in the inducement of the contract, i.e., that an opposing party made false representations that induced the complaining party to agree to the contract. See HCB Contractors, 652 A.2d at 1279; Bardwell, 100 A.2d at 104.

[11] In the instant case, we cannot agree with the Commonwealth Court that the SBL Brochure represented the terms of the parties' contract concerning the sale of SBLs. Contrary to the Commonwealth Court's understanding, the SBL Brochure did not represent a promise by the Steelers to sell SBLs to Appellees. Rather, the Brochure was merely an offer by the Steelers to sell Appellees the right to be assigned an unspecified seat in an unspecified section of the new stadium and the right to receive a contract to buy an SBL for that later-assigned seat. See R.R. 50a ("You may apply for any Section you wish as your first preference.... [E]very application ... will be assigned a random computerized priority number and that priority number will be used to assign both sections and seats.") (emphasis added); see also id. ("[Y]ou will be mailed a contract by the end of March 1999, notifying you of your Section assignment. The contract must be signed and returned within 15 days."). Moreover, by sending in their applications with the initial non-refundable payment, Appellees simply secured their right to be considered for assigned seats and the opportunity to receive a subsequent offer to purchase SBLs for those seats. In this respect, the SBL Brochure was similar to an option contract in that it merely gave Appellees the option to possibly accept an offer for SBLs at some later date. See Warner Bros. Theatres v. Proffitt, 329 Pa. 316, 198 A. 56, 57-58 (1938) (explaining that in an option contract, the optionee pays the seller to keep an offer of sale open until a specified later date and therefore an option contract is not a contract to buy goods, but merely contemplates a possible future contract to buy goods).

On the other hand, the SBL Agreement clearly represented the parties' contract concerning the sale of SBLs. Unlike the SBL Brochure, the SBL Agreement reflected a promise by the Steelers to actually sell Appellees a specific number of SBL seats in a specified section. Furthermore, the SBL Agreement detailed all of the terms and conditions of that sale, i.e., the precise number of seats to be sold to the named Licensee, the exact section in which those seats were located (including a visual depiction of that location), the total amounts due for each SBL, the dates those amounts were due, and all of the rights and duties associated with owning an SBL, including the Licensee's right to transfer the SBL. Most importantly, the SBL Agreement explicitly stated that it represented the parties' entire contract regarding the sale of SBLs. See R.R. at 58a ("This Agreement contains the entire agreement of the parties with respect to the matters provided for herein and shall supersede any representations or agreements previously made by or entered into by the parties hereto."). Accordingly, we find that the SBL Agreement represented the parties' entire contract with respect to the sale of SBLs and that the parol evidence rule bars the admission of any evidence of previous oral or written negotiations or agreements entered into between the parties concerning the sale of the SBLs, such as the SBL Brochure, to explain or vary those terms expressed in the SBL Agreement. See Bardwell, 100 A.2d at 104-05; Gianni, 126 A. at 792; McGuire, 534 A.2d at 117-18.

[12] Appellees also argue, however, that even if the SBL Agreement was the parties' contract concerning the sale of SBLs, evidence of the SBL Brochure diagrams must be admitted to describe and define the seating section assignments referred to in the SBL Agreement. According to Appellees, the Agreement's reference to the section where the Licensee was assigned SBL seats was ambiguous because it simply stated the section and failed to describe where that section was located in the stadium. Contrary to Appellees' claims, however, the Agreement was not the least bit ambiguous with regard to the location of Appellees' section assignments as the Agreement specifically referenced the attached August 1999 Diagrams, which depicted all of the section locations. As a result, there was no need to look outside of the SBL Agreement to ascertain where a section was located in the stadium. See Scott, 312 A.2d at 597 n. 2.

[13] Having determined that the SBL Agreement was the parties' whole contract and cannot be supplemented by the parties' previous negotiations or agreements, including the SBL Brochure, we agree with the trial court's conclusion that Appellees' breach of contract claims must be dismissed. As noted previously, Appellees' breach of contract claims are entirely based on allegations that the Steelers violated the terms and conditions set forth in the SBL Brochure. Therefore, because those terms and conditions are not, in fact, part of the parties' contract, Appellees' breach of contract claims fail to state a claim upon which relief may be granted.

[14] We further conclude that the trial court properly dismissed Appellees' claim that the Steelers violated the UTPCPL because the allegations in Appellees' complaint fail to establish that they are entitled to relief on that claim. As is clear from the lower courts' discussion and findings with respect to this claim, the law is not completely settled as to whether an SBL constitutes either a good or a service. See Tr. Ct. Op., at 14-15 (finding that SBL is not a good); Yocca, 806 A.2d at 936 (finding that SBL is an option contract and thus, potentially a type of service covered by UTPCPL); see also id. at 949-50 (finding that an SBL is intangible property and thus, neither a good nor a service) (Cohn, J., concurring and dissenting). Nevertheless, Appellees have failed to state a UTPCPL claim upon which relief can be granted regardless of whether an SBL constitutes a good or a service.

[15] To bring a private cause of action under the UTPCPL, a plaintiff must show that he justifiably relied on the defendant's wrongful conduct or representation and that he suffered harm as a result of that reliance. See Weinberg v. Sun Co., 565 Pa. 612, 777 A.2d 442, 446 (2001); see also Debbs v. Chrysler Corp., 810 A.2d 137, 156-57 (Pa.Super.2002); Sexton v. PNC Bank, 792 A.2d 602, 607 (Pa.Super.2002). Appellees' UTPCPL claims, like all of the other claims in their complaint, are premised on the representations made by the Steelers before the parties entered into the SBL Agreement, particularly, the representations made in the SBL Brochure. According to Appellees, they are entitled to relief because they justifiably relied on these representations in deciding to purchase their SBLs and they suffered damages as a result of that reliance. [FN27] However, given this Commonwealth's adoption of the parol evidence rule, Appellees simply cannot be said to have justifiably relied on any representations made by the Steelers before the parties entered into the SBL Agreement. Indeed, by signing the SBL Agreement, which contained an integration clause stating that the terms of the SBL Agreement superceded all of the parties' previous representations and agreements, Appellees explicitly disclaimed reliance on any such representations. See Gianni, 126 A. at 792; see also Blumenstock v. Gibson, 811 A.2d 1029, 1035-36 (Pa.Super.2002) ("a party cannot justifiably rely upon prior oral representations yet sign a contract denying the existence of those representations"); Sunquest Information Systems, Inc. v. Dean Witter Reynolds, Inc., 40 F.Supp.2d 644, 654 (W.D.Pa.1999) ("As a matter of basic logic, [plaintiff] cannot be said to have relied upon representations specifically excluded by the integration clause."). Accordingly, as any reliance on the SBL Brochure or any other representation preceding the SBL Agreement was not justifiable, Appellees' allegations in their complaint fail to establish that they are entitled to relief under the UTPCPL and the trial court did not err in dismissing Appellees' UTPCPL claims for failing to state a claim.

FN27. Appellees do not specifically allege justifiable reliance in the paragraphs of their complaint that comprise their UTPCPL count. However, that count incorporates by reference all of Appellees previous allegations in their complaint and the prior count of fraud and negligent misrepresentation does include an allegation that Appellees justifiably relied on the representations made by the Steelers before the parties entered into the SBL Agreement.

Finally, Appellees are also not entitled to relief with respect to their request for a declaratory judgment stating that the terms of the SBL Brochure must be integrated within the SBL Agreement to define and describe the section assignments referred to in the SBL Agreement. As noted above, the SBL Agreement properly defined and described the section assignments it referred to by attaching the August 1999 Diagrams. Therefore, contrary to Appellees' contentions, the SBL Agreement was not ambiguous when it referred to Appellees' section assignments, and the terms of the SBL Brochure, including its two diagrams, are not necessary to clarify those section references.

Accordingly, we reverse the Commonwealth Court's order reversing the trial court's order dismissing Appellees' claims for breach of contract, violation of the UTPCPL, and declaratory relief.

Supplemental Case Printout for: Contemporary Legal Debates

(Cite as: 563 N.W.2d 90)

1997 ND 82

Supreme Court of North Dakota.

In The Matter of the ESTATE OF Emanuel LUTZ, Deceased.

Lavilla LUTZ, Appellant,

v.

Ingrid SCHNEIDER and Edward Lutz, co-personal representatives of the Estate of

Emanuel Lutz, Appellees.

Civil No. 960177.

April 24, 1997.

MESCHKE, Justice.

[¶ 1] Lavilla Lutz appeals two summary judgments, one dismissing her creditor's claim for her extraordinary services to Emanuel Lutz before his death, and another dismissing her petition for an elective share and exempt allowances from Emanuel's estate. Lavilla also appeals an order approving the distribution of Emanuel's estate. We reverse and remand for trial of Lavilla's claims and for reconsideration of distribution of the estate.

I. Background

[¶ 2] Lavilla and Emanuel met in 1983 when she was age fifty-three and he almost sixty. Lavilla moved into Emanuel's home in 1985. They discussed marriage in 1987. Then, Emanuel said he wanted to leave the bulk of his property to his children and grandchildren, and he told Lavilla a premarital agreement would be needed for their marriage. According to Lavilla, however, Emanuel told her "there would still be something to take care of me anyway," and she expected him to do more than the premarital agreements assured.

[¶ 3] In May of 1987, Emanuel contacted attorney Morris Tschider to prepare a marriage agreement, consents to wills, and wills for Emanuel and Lavilla. Emanuel and Lavilla met with Tschider to discuss the documents, including Lavilla's will, prepared by Tschider. In Tschider's office, Lavilla reviewed a disclosure of financial information identifying Emanuel's assets and obligations.

[¶ 4] Before signing, Lavilla did not consult another attorney about their legal effect. According to Lavilla, she believed Tschider was acting as counsel for both herself and Emanuel. Tschider denies he acted as her attorney, and he asserts he told her to seek independent counsel. Emanuel and Lavilla signed the premarital agreement, consents to will, and wills on February 1, 1988. Emanuel and Lavilla married February 14, 1988.

[¶ 5] When Emanuel had heart trouble in 1991, Lavilla cared for him extensively for two months, and again when Emanuel began suffering from cancer in early 1994. After his cancer surgery in April, Lavilla increased her care, but he gradually recovered enough to take his own medication and dress himself. Lavilla drove Emanuel to Mayo Clinic in August 1994, where doctors said his condition was terminal. After they came home, Emanuel became very weak and begged Lavilla not to move him into a nursing home.

[¶ 6] From then on, Lavilla cared for Emanuel nearly around the clock until he died. Besides ordinary household tasks, her care included bathing and dressing Emanuel, helping him to the bathroom and his favorite chair, bringing him his food, and even feeding him. She took him to the doctor, picked up his prescriptions and, to give him pain medication, got up nearly every two hours each night.

[¶ 7] After nearly ten years together, Emanuel died on November 9, 1994.

II. Decisions Appealed

[¶ 8] In the premarital agreements, Emanuel and Lavilla each waived any share in the other's estate "except as provided in their respective wills." They each specifically waived "all rights of [d]ower, courtesy, community property, homestead, inheritance, succession, surviving spouse or family allowance, exempt property, claims for support, alimony, attorneys' fees, costs of property settlement."

[¶ 9] Emanuel's will gave Lavilla certain property in Article II:

BEQUESTS TO SURVIVING SPOUSE: I give and bequeath to Lavilla [Lutz] the resident property used and occupied by us as a home if I be the owner thereof or have any interest therein at my death for the remainder of her natural life, or until she remarries. I further give and bequeath to Lavilla [Lutz], if she survives me, all furniture *93 and household items and all other tangible personal property located in or used in connection with my home including the family automobile. Any personal property listed in any handwritten instrument prepared by me, as hereinafter set forth, shall be excluded from this bequest. If Lavilla [Lutz] does not survive me all property items bequeathed under this Article shall become part of my residuary estate.

His residuary clause, Article III, directed:

RESIDUARY ESTATE: In the event Lavilla [Lutz] does not survive me, all of the rest and remainder of my property, whether real, personal or mixed, and wheresoever situated, I give, devise and bequeath as follows: to my children, to-wit, Ingrid L. Schneider and Edward J. Lutz, each an equal one-half ( 1/2 ) interest in and to the residue of my estate.

Emanuel's will named his two children as his personal representatives but, without explanation, his will was silent about disposition of the residue if Lavilla survived him.

[¶ 10] Lavilla filed a creditor's claim in Emanuel's estate for her extraordinary services to him while he suffered from heart disease and cancer. After his children disallowed her claim, Lavilla petitioned the trial court for compensation. His children moved for summary judgment, contending her services were gratuitous and not extraordinary. The trial court granted this motion because there was no evidence of an express agreement to compensate Lavilla for her services, and the court believed evidence about the type and degree of services for an implied agreement was missing.

[¶ 11] Lavilla petitioned for an elective share of Emanuel's estate as his surviving spouse, a family allowance, a homestead allowance, and an exempt property entitlement. The children moved for summary judgment, contending Lavilla had waived all those rights in the premarital agreements. Lavilla argued the premarital agreement was involuntary because she did not have independent legal counsel before signing and she was induced to sign by constructive fraud. She also urged the agreement was unconscionable for "harshness and one-sidedness." The trial court concluded the premarital agreements were legally enforceable waivers of Lavilla's rights and not unconscionable, and granted summary judgment dismissing these claims by Lavilla.

[¶ 12] Later, Emanuel's children petitioned for approval of distribution of the estate, to distribute the household property and a life occupancy of half of Emanuel's duplex home to Lavilla, and to distribute the rest of the estate to themselves and their children. Lavilla objected, contending Emanuel's residuary gift to his children was inoperative because it took effect only if "Lavilla [Lutz] does not survive me." Since the residuary clause was ineffective, Lavilla argued she was entitled to half of the estate through the combined effect of the incomplete will and the intestacy laws.

[¶ 13] The trial court concluded the will was ambiguous because, while the introductory phrase of the residuary clause could be read to vest Lavilla with an intestate share, the court believed that would be inconsistent with what Article II specifically designated Lavilla was to get through the will. Relying on Lavilla's waiver of "all rights of ... inheritance" in the premarital agreements as extrinsic evidence of Emanuel's testamentary intent, the trial court concluded Emanuel had intended to "limit the devise to Lavilla and to provide for his children and grandchildren by devising everything not specified for Lavilla to them." The court approved the children's proposed distribution.

[¶ 14] Lavilla appealed the order for distribution and the two summary judgments. Under our mantra of review in NDRCivP 56, a summary judgment should be approved only when there are no genuine disputes about material facts. Matter of Estate of Otto, 494 N.W.2d 169, 171 (N.D.1992). The litigant moving for summary judgment has the burden of demonstrating no material facts are disputed. Id. In deciding a motion for summary judgment, a court must view the evidence in the light most favorable to the litigant resisting the motion, and give that party the benefit of all favorable factual inferences. Kristianson v. Flying J Oil & Gas, Inc., 553 N.W.2d 186, 188 (N.D.1996). We reverse these summary judgments because *94 we conclude genuine disputes about material facts exist on each claim.

III. Extraordinary Services

[¶ 15] Lavilla contends the trial court erred in dismissing her compensation claim because her care "went beyond the general care one family member would generally provide to another gratuitously." Lavilla argues an implied agreement to compensate arose because her benefits from the marriage did not equal the value of her extraordinary services. She contends Emanuel's estate was enriched by her extensive services because she saved his estate the cost of institutional nursing care.

[¶ 16] The children argue her services were not extraordinary since volunteers and health aides helped her care for Emanuel near the end. The children urge that it is speculative to think the only alternative to Lavilla's care was institutional nursing care. They note Lavilla admitted she had not expected to be paid for her services. They contest any lack of mutuality because Lavilla received many lifetime benefits from the marriage.

[1][2] [¶ 17] Ordinarily, someone who performs substantial services for another without an express agreement for compensation becomes entitled to the reasonable value of the services. Matter of Estate of Raketti, 340 N.W.2d 894, 901 (N.D.1983). When, however, services are performed by a family member in the same household, it is presumed that the services were gratuitous and that compensation was not intended. Id. Compare NDCC 14-07-05: "Any person after marriage has with respect to ... contracts ... the same capacity and rights and is subject to the same liabilities as before marriage, including liability to suit by his or her spouse."; Riebe v. Riebe, 252 N.W.2d 175, 178 (N.D.1977) (Spouses may contract with one another as if unmarried). Under NDREv 301(a), a family claimant has the burden of overcoming the judicially fashioned presumption against compensation by proof that the services were extraordinary and not gratuitous.

[¶ 18] Prior North Dakota precedents applying the presumption against compensation for services by a family member were thoroughly analyzed in Raketti. We explained that "[o]nly where the services were of a particularly extraordinary nature did the Court find that the presumption had been overcome." 340 N.W.2d at 901. In Raketti, too, we emphasized that courts should consider all of the surrounding facts and circumstances, not only the degree and nature of the family relationship but also the lack of mutuality of benefits, a request for the help, and the degree of hardship on the care giver. Id. at 902. We stressed the factual nature of this inquiry:

[T]he court should take into consideration all of the surrounding facts and circumstances when determining whether an agreement to pay should be implied. The central question presented in these cases is whether or not, under the facts and circumstances of each particular case, it would reasonably be expected that compensation would be paid. These cases will, of necessity, turn on the particular facts presented therein.

Id. This kind of factual inquiry is generally unsuitable for summary judgment.

[3] [¶ 19] This trial court recognized: "The record makes clear that [Lavilla] provided considerable care for [Emanuel], particularly in the six months or so preceding his death. Her claim that he would have required nursing home care without the services she was providing is not refuted in the record." Still, the trial court reasoned:

The record of this case does not support the conclusion that an implied agreement for compensation can be construed. The services provided by [Lavilla] were not of the type or degree referred to in In Re: Estate of Thompson [191 N.W.2d 578 (N.D.1971) ] except near the very end of [Emanuel's] lifetime. The mutuality of benefit concept when applied to the present case clearly indicates (by her testimony) that [Lavilla] derived considerable enjoyment from the marital relationship she shared with [Emanuel] until his death.

Although this might be one factual inference after a complete factual assessment, we disagree *95 with it as a legal conclusion. See, for example, Bergerson v. Mattern, 41 N.D. 404, 170 N.W. 877 (1918), affirming a jury verdict against a mother's estate for her daughter's exceptional services: Although the usual presumption is that services rendered by a child to its parents are acts of kindness and gratuitous and do not create by their rendition an implied promise to pay therefor, nevertheless, where the services rendered are so exceptional and peculiar and the surrounding circumstances such as to lead to the reasonable belief of an understanding that pecuniary compensation should be made, a contract to pay therefor may be implied. Id. The conflicting evidence in this case created material factual disputes about whether Lavilla's services were so exceptional and lacking in mutuality as to imply a contract to pay her.

[¶ 20] Lavilla offered much evidence about the extraordinary nature of her extensive services to Emanuel in the last three years of a ten-year relationship. During his serious illnesses, she helped him for months with all his bodily and medical needs while he was very weak, including the basic functions of bathing, dressing, eating, and toileting. While assisting Emanuel physically, Lavilla claims she injured her back to an extent that now prevents her from fully supporting herself financially. This evidence on the degree of Lavilla's effort and hardship in caring for Emanuel necessitates factual findings.

[4] [¶ 21] The children argue Lavilla admitted her services were gratuitous when she said in her deposition that she had not expected to be paid. But an isolated statement is not dispositive because her initial expectation, when her services started, may have changed over time. See Matter of Estate of Zent, 459 N.W.2d 795, 800 (N.D.1990) (girlfriend's statement, "I didn't ask for anything," did not prevent recovery on implied contract for extraordinary care of aging Alzheimer's patient in his home). According to Lavilla, Emanuel pleaded with her to make sure he would not be put in a nursing institution, and she agreed. The effect of this request for her services and the extent of the mutuality of benefits are other factual factors to be weighed at a trial and, altogether, the factors here do not fit summary disposition.

[¶ 22] Viewing Lavilla's evidence in the light most favorable to her, as we must, summary judgment was inappropriate. We remand for trial her claim for extraordinary services.

IV. Premarital Agreements

[¶ 23] In her premarital agreements with Emanuel, Lavilla waived any share of his estate "except as provided in" his will, including waiver of "all rights of ... homestead, inheritance, succession, surviving spouse or family allowance, [and] exempt property." NDCC 30.1-05-04 [FN1] authorized such waivers:

FN1. NDCC 30.1-05-04 was originally enacted in 1973. 1973 N.D. Laws ch. 257, § 1. It was amended in 1993 to take effect on August 1, 1995. See 1993 N.D. Laws ch. 334, §§ 15, 51. Before that 1995 effective date, NDCC 30.1-05-04 was again amended and renumbered as NDCC 30.1- 05-07, to take effect on January 1, 1996. See 1995 N.D. Laws ch. 322, §§ 3, 27.

The right of election of a surviving spouse and the rights of the surviving spouse to homestead allowance, exempt property and family allowance, or any of them, may be waived, wholly or partially, before or after marriage, by a written contract, agreement, or waiver signed by the party waiving after fair disclosure. Unless it provides to the contrary, a waiver of "all rights" or equivalent language in the property or estate of a ... prospective spouse ... is a waiver of all rights to elective share, homestead allowance, exempt property, and family allowance by each spouse in the property of the other and a renunciation ... of all benefits which would otherwise pass to him from the other by intestate succession or by virtue of the provisions of any will executed before the waiver .... (our emphasis). This statute begins the analysis, but other statutes affect it, too.

[¶ 24] In the trial court, Emanuel's children argued for summary judgment because Lavilla had read a written disclosure of his $280,000 in assets before she signed the premarital agreements so she had received fair and reasonable disclosure as a matter of law. *96 Lavilla relies on the overlapping provisions of the Uniform Premarital Agreement Act, NDCC ch. 14-03.1, to assert that her premarital agreements were unenforceable and unconscionable.

[¶ 25] The Uniform Premarital Agreement Act, enacted in 1985, see 1985 N.D. Laws ch. 190, authorizes prospective spouses to contract the "rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located," the "disposition of property upon ... death, or the occurrence or nonoccurrence of any other event," and the "making of a will ... or other arrangement to carry out the provisions of the agreement." NDCC 14-03.1-03(a), (c), (e). A premarital agreement becomes effective upon marriage, NDCC 14-03.1-04, but several other parts of this Act affect the enforceability of a premarital agreement.

[¶ 26] Emanuel's children emphasize parts of NDCC 14-03.1-06:

Enforcement.

1. A premarital agreement is not enforceable if the party against whom enforcement is sought proves that:

a. That party did not execute the agreement voluntarily; or

b. The agreement was unconscionable when it was executed and, before execution of the agreement, that party:

(1) Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;

(2) Did not voluntarily sign a document expressly waiving any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and

(3) Did not have notice of the property or financial obligations of the other party.

2. If a provision of a premarital agreement modifies or eliminates spousal support and that modification or elimination causes one party to the agreement to be eligible for support under a program of public assistance at the time of separation or marital dissolution, a court, notwithstanding the terms of the agreement, may require the other party to provide support to the extent necessary to avoid that eligibility.

3. An issue of unconscionability of a premarital agreement is for decision by the court as a matter of law.

Lavilla argues, "[b]ecause of Lavilla's lack of independent representation ..., [her] signing of the premarital agreement[s] cannot be deemed voluntary and is also unconscionable as a matter of law" under NDCC 14-03.1-06(3). Lavilla also stresses another section in the Act, one not derived from the Uniform Act, but unique to North Dakota's version:

Enforcement of unconscionable provisions. Notwithstanding the other provisions of this chapter, if a court finds that the enforcement of a premarital agreement would be clearly unconscionable, the court may refuse to enforce the agreement, enforce the remainder of the agreement without the unconscionable provisions, or limit the application of an unconscionable provision to avoid an unconscionable result. NDCC 14-03.1-07. Lavilla contends "[t]he latter section overrides the former section regarding the issue and application of unconscionability," and insists the trial court should not have summarily concluded these premarital agreements were enforceable.

[¶ 27] Because enforceability of premarital agreements is a matter of first impression in North Dakota, Lavilla suggests we use the dual analysis often employed to evaluate commercial contracts for unconscionability: Procedural Unconscionability, focusing on unfair surprise, oppression, and inequality of bargaining power; and Substantive Unconscionability, focusing upon the harshness of the contract. See Construction Associates, Inc. v. Fargo Water Equip. Co., 446 N.W.2d 237, 241 (N.D.1989); In re Marriage of Spiegel, 553 N.W.2d 309, 316 (Iowa 1996). Lavilla urges that these premarital agreements are unenforceable under both the procedural and substantive standards of NDCC 14-03.1-07, because "there was something wrong with the bargaining process and the agreement has terms that are unconscionable."

*97 A. Procedural Enforceability

[¶ 28] Lavilla contends these agreements were procedurally defective because she lacked independent counsel and because Emanuel induced her to sign it by falsely promising to take care of her "anyway." Lavilla argues she could not have signed voluntarily unless she understood her rights fully, and that depends on whether she had been adequately represented by an attorney. Emanuel's failure to keep his "anyway" promise in a relationship of mutual trust and confidence where he benefited disproportionately, Lavilla contends, was constructive fraud that should prevent enforcement of these agreements.

[¶ 29] Emanuel's children contend Lavilla had plenty of time to consult independent counsel between May 1987 when attorney Tschider sent out the prepared documents and February 1988 when they signed them. The children point out that Lavilla testified in her deposition that, during this time, she did not seek independent counsel nor consult with another attorney about the documents. The children summarized Lavilla's deposition testimony:

(1) she read the marriage agreement before signing; (2) she understood the effect of the documents; (3) she was asked if she understood the documents by Morris Tschider; (4) she was asked if she had any questions by Morris Tschider; (5) she didn't ask any questions; (6) she was asked if she wanted to sign the document; and (7) she signed the document.

The children dispute Lavilla's deposition testimony that Tschider did not advise her to seek separate counsel with Tschider's deposition testimony "that he advised Lavilla that he could not represent her on the premarital agreement and consent to will and that she should obtain separate counsel." The children concede, however, that "for summary judgment, Lavilla's version of these facts [is] assumed to be true."

[¶ 30] A premarital agreement is not enforceable if the disadvantaged spouse did not execute it voluntarily. NDCC 14-03.1-06(1) directs: "A premarital agreement is not enforceable if the party against whom enforcement is sought proves that ... [t]hat party did not execute the agreement voluntarily." In holding this premarital agreement was voluntary and valid as a matter of law, the trial court reasoned: "Other than the inferences which [Lavilla] contends resulted from statements made by [Emanuel] prior to his death regarding 'taking care of her,' the record is devoid of any basis on which to conclude that the premarital agreements of the parties should be cast aside." We disagree. The trial court failed to recognize the factual dispute about whether Lavilla was adequately advised to obtain independent counsel.

[¶ 31] Although we have never decided whether a premarital agreement can be avoided for lack of counsel, several other states have. No state makes independent counsel an absolute requirement for validity. Randolph v. Randolph, 937 S.W.2d 815, 822 (Tenn.1996). Some states require at least an opportunity to consult with independent counsel, but do not require actual consultation. McKee-Johnson v. Johnson, 444 N.W.2d 259, 266 (Minn.1989); Gant v. Gant, 174 W.Va. 740, 329 S.E.2d 106, 116 (1985). Many states, however, treat the absence or presence of independent legal counsel as a factual factor in assessing the voluntariness of a premarital agreement. Ex Parte Walters, 580 So.2d 1352, 1354 (Ala.1991); McHugh v. McHugh, 181 Conn. 482, 436 A.2d 8, 12 (1980); Matter of Estate of Benker, 416 Mich. 681, 331 N.W.2d 193, 199-200 (1982); Fletcher v. Fletcher, 68 Ohio St.3d 464, 628 N.E.2d 1343, 1348 (1994); Randolph, 937 S.W.2d at 822; Matter of Marriage of Matson, 107 Wash.2d 479, 730 P.2d 668, 671 (1986); Button v. Button, 131 Wis.2d 84, 388 N.W.2d 546, 550-51 (1986); see generally Robert Roy, Annotation, Enforceability of Premarital Agreements Governing Support or Property Rights Upon Divorce or Separation as Affected by Circumstances Surrounding Execution--Modern Status, 53 A.L.R.4th 85 (1987 & Supp.1996). Kahn v. Kahn, 756 S.W.2d 685, 695 (Tenn.1988), said it clearly: "We hold that whether or not a wife should be explicitly advised about what she is giving up or should be urged and given full opportunity to seek independent counsel is a factual issue, in that it may be required in some circumstances and not in others."

*98 [5][6][7][8][9][10] [¶ 32] Lack of opportunity to consult independent counsel may be a factor in a fiduciary relationship. A fiduciary relationship is "something approximating business agency, professional relationship, or family tie impelling or inducing the trusting party to relax the care and vigilance ... ordinarily exercise[d]." Asleson v. West Branch Land Co., 311 N.W.2d 533, 539 (N.D.1981) (quoting 37 C.J.S. Fraud § 2, p. 213 (1943)). A fiduciary relationship develops when someone is under a duty to act for, or to give advice to, another person upon matters within the scope of the relationship. Restatement (Second) of Torts § 874, cmt. a (1979). A fiduciary relationship generally arises from an unequal relationship between the parties. Compare Land Office Co. v. Clapp- Thomssen Co., 442 N.W.2d 401, 406 (N.D.1989) (fiduciary relationship ordinarily does not exist when business persons deal at arm's length). For a fiduciary relationship, the superior party must have a duty to act in the dependent party's best interest. As Production Credit Ass'n v. Ista, 451 N.W.2d 118, 121 (N.D.1990), explained, whether a fiduciary relationship exists is generally a question of fact.

[11][12] [¶ 33] An agreement to marry can create a fiduciary relationship between individuals if they do not deal at arms length. Persons contracting about marriage are sometimes mismatched in bargaining power and sophistication. See Weber v. Weber, 548 N.W.2d 781, 783 (N.D.1996) ( "Property settlement agreements in divorce cases must be scrutinized for unconscionability. The review for unconscionability is not ended by finding a lack of a trust relationship between the parties."); Crawford v. Crawford, 524 N.W.2d 833, 836 (N.D.1994) ("Marriage involves a confidential relationship, and the law should not permit one marital partner to take 'unconscientious advantage' over the other through the trust which is part of that relationship."); Syllabus by the Court in Barker v. Barker, 75 N.D. 253, 27 N.W.2d 576, 577 (1947): "Ordinarily, and presumptively, a confidential relation exists between husband and wife, and generally business transactions between them will be deemed to be within the rule of confidential relations."

[13][14] [¶ 34] Unlike many private contracts, the state has an interest in every marriage contract. We agree with the view that lack of adequate legal advice to a prospective spouse to obtain independent counsel is a significant factual factor in weighing the voluntariness of a premarital agreement.

[15][16] [¶ 35] Indeed, adequate legal representation will often be the best evidence that a spouse signed a premarital agreement knowledgeably and voluntarily. Here, the evidence conflicts on whether Tschider actually advised Lavilla to obtain independent counsel. [FN2] Tschider testified he did. Lavilla, however, disputes this and testified she believed Tschider was her attorney and relied on him as an advisor. [FN3] Her belief is understandable *99 since Tschider also prepared her will. [FN4] Whether Tschider adequately advised Lavilla about his potential conflict of interest, her need to have independent counsel, and the effect of her consent to his dual representation are disputed material facts that preclude summary judgment.

FN2. Tschider's duty to Lavilla is detailed in NDRPC 4.3:

In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The commentary to this rule elaborates: This Rule prohibits a lawyer from misleading an unrepresented person as to the lawyer's role in a matter. An unrepresented person, particularly one not experienced in dealing with legal matters, might assume that a lawyer is disinterested in loyalties or is a disinterested authority on the law even when the lawyer represents a client. A lawyer also has an affirmative duty to clarify the lawyer's role to an unrepresented person when the lawyer knows or reasonably should know that the person misunderstands that role. During the course of a lawyer's representation of a client, the lawyer should not give legal advice to an unrepresented person other than the advice to secure counsel.

FN3. Tschider offered no documentation that he advised Lavilla to get independent counsel. To document the lawyer's role in this situation, attorneys can write a letter explaining their role as an advocate for their client, or require each spouse to sign a written waiver that they were advised to obtain independent counsel and expressly waived their right to do so. See The Florida Bar v. Ward, 472 So.2d 1159, 1162 (Fla.1985)(recognizing that only careful documentation of full disclosure and consent can clearly refute a charge of failure to fulfill the requirements of the ethical rules); In re Altstatt, 321 Or. 324, 897 P.2d 1164, 1167-68 (1995)(requiring written confirmation of disclosure to satisfy full disclosure requirements of ethical rules); see also NDRPC 1.5 cmt. ("A written statement concerning the fee reduces the possibility of misunderstanding.").

FN4. Tschider's preparation of Lavilla's will indicates he represented her in part, and raises the possibility of a conflict of interest under NDRPC 1.7(a). See NDRPC 1.7 cmt., "Other Conflict Situations," recognizing the possibility of conflict when preparing wills for husband and wife. Again, documentation is the best evidence; parol evidence will often leave a question of fact as in this case. See 2 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 15.14, at 371 (4th ed.1996)(describing the advantages of obtaining written consents before representing conflicting interests); see also Matter of Disciplinary Proceedings Against Wildermuth, 141 Wis.2d 679, 416 N.W.2d 607, 611 (1987)(noting new rule requiring written consent to representation of conflicting interests and recommending written consultation along with written consent); Cal.R.P.C. 3-310(C)(1)(requiring informed written consent before an attorney can represent persons with potentially conflicting interests).

[¶ 36] Emanuel's children contest Lavilla's claim of his constructive fraud for failing to fulfill his oral promise to take care of her "anyway." Any amendment to a premarital agreement must be in writing, they argue, citing NDCC 9-06-07 (a written agreement supersedes any oral negotiations), and NDCC 14-03.1-05 (a premarital agreement may only be amended or revoked by a signed written agreement). They argue, "if an intent to deceive is absent, a promise to do something in the future cannot be considered fraud." Urging that "Lavilla does not allege that Emanuel made any misrepresentations about past or existing facts," Emanuel's children contend he did not mislead Lavilla "by promising to take care of Lavilla outside of the marital agreement and then failing to do so."

[17][18] [¶ 37] However, parol or extrinsic evidence can be used to show that a contract has no effect because of fraud, illegality, or mistake, or to show that the contract was only partially integrated because essential elements were not reduced to writing. Mau v. Schwan, 460 N.W.2d 131, 134 (N.D.1990). The factual circumstances of an unfulfilled oral promise would be additional evidence on the voluntariness of the premarital agreements, and leaves an additional factual dispute for trial. See NDCC 9-03-08(2)(fraud by a contracting party who makes a "positive assertion, in a manner not warranted by the information of the person making it, of that which is not true though he believes it to be true" to induce another to enter into the contract); Barker, 27 N.W.2d 576 (husband abused confidential relation with spouse by secretly acquiring title to home in his name alone); Bourgois v. Montana-Dakota Utilities Co., 466 N.W.2d 813, 818 (N.D.1991)(recognizing a statutory claim for relief based on negligent misrepresentation).

[¶ 38] We reverse the summary judgment and remand for trial of the factual questions on the voluntariness and enforceability of these premarital agreements.

B. Substantive Enforceability

[¶ 39] Even if a premarital agreement has been validly and voluntarily obtained, its substantive effect may be unconscionable and thus unenforceable. Under NDCC 14-03.1-06(3), the substantive enforceability of these premarital agreements is a matter of law to be decided by the court.

[¶ 40] Lavilla contends these premarital agreements were substantively unconscionable for their "harshness and one-sidedness." Lavilla values the decreed distribution to her of the "right of occupancy of residence-main floor unit[ ]" of the duplex at $30,000, the household goods at $3,000, their joint bank account at $2,000, and the auto at $400, for a total of $35,400. Lavilla compares her estimated $35,400 distribution to the $280,000 in assets Emanuel disclosed to her in 1987. Lavilla contends this is "less than 13% of Emanuel's estate" and "is certainly a low percentage based on the length of marriage and time that Lavilla committed to the marriage in caring for Emanuel and providing companionship." Lavilla thus argues the trial court should have declined to enforce the premarital agreements because they "will violate *100 public policy by allowing Emanuel's heirs to take an estate worth approximately $300,000 (or larger because of appreciated value) and leave Lavilla with only a life estate in the home, household belongings, a small bank account and a used car."

[¶ 41] Emanuel's children question the $30,000 value Lavilla places on her lifetime occupancy of the "residence-main floor unit[ ]," but we observe it was not separately evaluated in the filed inventory and appraisement, nor was the value determined by the trial court. Anyway, the children insist, a court "need not determine the appropriate values to determine whether this agreement is unconscionable as a matter of law." The children say that Lavilla and Emanuel "were only married for six years at the time of his death and ... after Emanuel had acquired all the assets that are the subject of this estate," and that Lavilla knew that it "was a condition of their marriage" for his property "to go to his children and grandchildren."

[¶ 42] Lavilla mainly contends her outlined financial circumstances will force her onto public assistance. NDCC 14-03.1-06(2) authorizes, "[i]f ... a premarital agreement modifies or eliminates spousal support and that modification ... causes one party ... to be eligible for support under a program of public assistance at the time of separation or marital dissolution, a court, notwithstanding ... the agreement, may require the other party to provide support to the extent necessary to avoid that eligibility." [FN5] Without any conflicting evidence, Lavilla's affidavit would permit an inference of her need for public assistance in the near future.

FN5. NDCC 30.1-05-04, the section on waiver of rights by a surviving spouse in the Probate Code when Emanuel died, did not mention the effect of forced public assistance on the enforceability of a waiver. In 1993, however, this section was amended to create a protection for a waiving spouse similar to NDCC 14-03.1-06(2), effective August 1, 1995. See 1993 N.D. Laws ch. 334, §§ 15, 51. That amendment, at subsection 2(a), declared a surviving spouse's waiver not enforceable upon proof that "The waiver, if given effect, would reduce the assets or income available to the surviving spouse to an amount less than those allowed for persons eligible for a program of public assistance." Before that amendment took effect, section 30.1-05-04 was replaced by NDCC 30.1- 05-07, effective January 1, 1996. See 1995 N.D. Laws ch. 322, §§ 3, 27. NDCC 30.1-05-07(2)(a) now makes a spouse's waiver unenforceable when "The waiver, if given effect, would reduce the assets or income available to the surviving spouse to an amount less than those allowed for persons eligible for medical or other forms of assistance from any state or federal government or governmental agency for which the surviving spouse must qualify on the basis of need."

[¶ 43] Lavilla's affidavit said, "based upon the reduced amount of my social security and lack of other substantial assets received from Emanuel [ ] Lutz's estate, I expect to soon have to seek some type of public assistance." The children did not submit any affidavit or other evidence to dispute Lavilla's, but simply argue here that NDCC 14-03.1-06(2) does not apply because "[t]his subsection only applies if a party to a premarital agreement is eligible for public assistance 'at the time of separation or marital dissolution,' " and "[t]here is no reference in this section to death."

[19] [¶ 44] However, the Prefatory Note to the Uniform Premarital Agreement Act, the identically worded source of NDCC 14-03.1-06(2) explains:

[I]f a provision of a premarital agreement modifies or eliminates spousal support, and that modification or elimination would cause a [spouse] to be eligible for support under a program of public assistance at the time of separation, marital dissolution, or death, a court is authorized to order the other party to provide support to the extent necessary to avoid that eligibility.

9B U.L.A. 370 (1987)(our emphasis). In view of her undisputed affidavit, whether Lavilla's financial circumstances will actually make her eligible for public assistance is a factual inquiry that precludes summary judgment in this case. While unconscionability of a premarital agreement is a matter of law to be decided by the court, NDCC 14-03.1-06(3), a conclusion of unconscionability necessarily turns on factual findings about the relative property values, Lavilla's other financial circumstances, and her ongoing needs.

[¶ 45] Also, "[n]otwithstanding the other provisions of" NDCC ch. 14-03.1, if the trial court "finds that the enforcement of [these] *101 premarital agreement[s] would be clearly unconscionable," the trial court "may refuse to enforce the agreement[s], enforce the remainder of the agreement[s] without the unconscionable provisions, or limit the application of an unconscionable provision to avoid an unconscionable result." NDCC 14-03.1-07. This additional standard for when premarital agreements are "clearly unconscionable," supplements the standards in NDCC 14-03.1-06 and, together, they require complete factual findings about the relative property values, Lavilla's other resources, and her foreseeable needs.

[¶ 46] We remand for trial of whether Lavilla procedurally executed these premarital agreements voluntarily and whether they are unconscionable in their substantive application to her.

V. Estate Distribution

[¶ 47] Lavilla argues the trial court erred in approving the children's proposed estate distribution because she believes the will is not ambiguous. She objects to the court's conclusion that her specific bequests in Article II and the incomplete disposition in the Article III residuary clause are inconsistent. Lavilla asserts the residuary clause's condition, "[i]n the event Lavilla [Lutz] does not survive me," is clear and unambiguous. Since she survived Emanuel, she insists the residuary clause is ineffective and she is accordingly entitled to an intestate share of Emanuel's estate. She contends the court modified the will by concluding there was an ambiguity and then used extrinsic evidence to rewrite the will.

[20] [¶ 48] How courts must construe a will was recently summarized in Matter of Estate of Fern L. Brown, 1997 N.D. 11, ¶ 15, 559 N.W.2d 818:

Courts must construe a will to find the testator's intent from full consideration of the will in light of surrounding circumstances. Whether an ambiguity exists in a will is a question of law for the court to decide. A will is ambiguous only if it has more than one reasonable interpretation. If a will is ambiguous, extrinsic evidence can be used to aid in clarifying the ambiguity. As we [have] held, resolution of an ambiguity by extrinsic evidence is a finding of fact that will not be set aside unless it is clearly erroneous. (citations omitted). Here, the trial court primarily used the premarital agreements as controlling extrinsic evidence of Emanuel's intent in order to resolve a perceived ambiguity in favor of his children. Because the trial court's analysis was based on agreements that may or may not be enforceable after a trial on remand, we reverse the court's construction of the will and its order approving the children's proposed estate distribution, and we remand for interpretation of the will after the trial on the enforceability of the premarital agreements.

[21][22] [¶ 49] Even if the premarital agreements are enforceable, the trial court should be mindful that the premarital agreements permitted Emanuel to give Lavilla more property under a will than the minimum he agreed to in the premarital agreements. A spouse who has entered into a premarital agreement remains free to give a surviving spouse more than the agreed minimum either by will or agreement later. See 41 Am.Jur.2d Husband and Wife § 123 (1995); Coffman v. Adkins, 338 N.W.2d 540, 543 (Iowa.Ct.App.1983)("It may not be entirely logical for a man to enter into a contract to keep his property separate from his wife's and then transfer it into joint tenancy with her, but that does not constitute a legal basis on which this court could void a transfer freely made."); Estate of Strickland, 181 Neb. 478, 149 N.W.2d 344, 354 (1967)(widow, who had agreed before marriage to receive nothing from husband's estate on his death, was entitled to bequest made in his later will). Here, Lavilla did not waive any gifts made by Emanuel's will because the premarital agreements excepted what was "provided in their respective wills."

[¶ 50] If the trial court finds the premarital agreements were voluntary, then it must also consider them for the substantive elements of unconscionability under NDCC ch. 14-03.1. If the premarital agreements are either unenforceable or unconscionable, however, the trial court must reconsider the interpretation of Emanuel's will accordingly. Compare *102 Matter of Estate of Ruben J. Peterson, Deceased, 1997 ND 48, ¶¶ 11-14, 561 N.W.2d 618 (Although P.O.D. designation may not be altered by will, testamentary intent should not be thwarted by apparent mistaken assumption). Although the invalid premarital agreements would not be controlling, they nevertheless may be some evidence of Emanuel's testamentary intent.

[¶ 51] If the premarital agreements are unenforceable or unconscionable, Lavilla may or may not be entitled by intestacy to inherit half of the intestate estate, see NDCC 30.1-04-02(4)(1994), but she would likely be entitled to an elective share of one-third of the augmented estate. See NDCC 30.1-05-01(1)(1994). [FN6] She would also likely be entitled to her family allowance, homestead allowance, and exempt property entitlement. See NDCC 30.1-07-01 (1994)(Exempt property); NDCC 30.1-07-02 (1994)(Family allowance); NDCC 47-18-01 (Homestead exemption). On the other hand, if Lavilla's premarital agreements are valid, enforceable, and not unconscionable, her waiver of rights to an intestate share and to elective and exempt shares will prevent Lavilla from receiving more from Emanuel's estate than express gifts to her in his will.

FN6. Effective January 1, 1996, a surviving spouse is now entitled by intestacy to the first $100,000 of the intestate estate and half of the remaining balance. NDCC 30.1-04-02(4); 1993 N.D. Laws ch. 334, § 4; 1995 N.D. Laws ch. 322, § 27. A surviving spouse is also now entitled to an elective share of one-half of the augmented estate. NDCC 30.1-05- 01(1); 1993 N.D. Laws ch. 334, § 15; 1995 N.D. Laws ch. 322, §§ 3, 27.

[¶ 52] In that event, the interpretation of "the resident property" gift to Lavilla in Article II may become important. They lived in half of a duplex, and Emanuel rented out the other half. Emanuel gave Lavilla "the resident property used and occupied by us as a home ... for the remainder of her natural life, or until she remarries." Lavilla contends in this appeal, since the "duplex has one legal description and is therefore one resident property," she should also "have the right to use, occupy and take the income from all of the duplex for the remainder of her life or until she remarries." Emanuel's children insist "there are two residences and two street addresses located on the property and that Lavilla has only resided at" one of them, so she cannot claim the other one. Since the income from the rental half of the duplex is used to pay the mortgage on the whole, and the mortgage payment exceeds the income received from the rental side, Emanuel's children argue there is no basis for Lavilla claiming the entire duplex as a testamentary gift.

[¶ 53] Because the trial court did not explain the reason why it approved the children's proposed distribution to Lavilla of only a "right of occupancy of residence-main floor unit[ ]," and did so without any provision for the mortgage, taxes, and other common expenses for the property, the trial court may also have to re-visit and resolve ambiguities about this gift in Emanuel's will to finally approve distribution of his estate.

VI. Conclusion

[¶ 54] We reverse both summary judgments because material facts are genuinely disputed. On remand, the trial court should hold a trial to decide Lavilla's claims against the estate.

[¶ 55] We also reverse the order approving the distribution of Emanuel's estate. After resolution of Lavilla's other claims, the trial court should again address interpretation of the will and decide the distribution of the estate.

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