A-21-0747, Lueth v. Lashley Properties, LLC
Dana Lueth and Jeffrey Lueth (Appellants) v. Norma Lashley and Lashley Properties, LLC (Appellees)
District Court for Frontier County, District Judge David W. Urbom
Attorneys for Appellants: James Luers & Robert Bryant (Cada, Cada, & Jewson)
Attorneys for Appellees: Craig Martin & Callie Kanthack (Lamson Dugan & Murray LLP)
Civil Action: Breach of Contract, Promissory Estoppel, and Unjust Enrichment
Action taken by the Trial Court: Following a bench trial, the district court for Frontier County found in favor of Appellees with respect to Appellants’ claims for breach of contract and promissory estoppel. The district court found in favor of the Appellants with respect to Appellees’ counterclaim for unjust enrichment. Specifically, the court found as follows: (1) Appellees did not breach the 2008 Rental Agreement or the subsequent 2018 Agreement; (2) Appellants payment of property expenses were, in reality, rental payments; (3) Appellants failed to prove promissory estoppel damages, including any improvements and bills paid, other than expenses pursuant to the rental agreement; and (4) Appellants received income from the properties and failed to pay the property expenses pursuant to the rental agreement.
Assignments of Error on Appeal: On appeal, Appellants assign error to certain factual findings made by the district court. They assert the court erred in finding (1) that the 2008 rental agreement was still in effect at the time of trial and that Appellees had not breached that agreement; (2) that Appellees had not breached the 2018 agreement: (3) that Appellants had breached the 2008 and the 2018 rental agreements; (4) that Appellants were not entitled to damages under either rental agreement; (5) that Appellees’ payment of farm expenses was in lieu of their rental payments; and (6) that Appellants failed to prove any damages.
Extended Case Summary
Facts: The plaintiffs, Dana and Jeffrey Lueth, are husband and wife and cattle ranchers. The defendant, Norma Lashley, is Dana’s mother and the sole owner of defendant Lashley Properties, LLC, which in turn owns pastureland.
In 2008 the Lueths entered into a rental agreement with Lashley Properties as follows:
This agreement between Lashley Properties LLC and Jeff and Dana Lueth will apply 80% of the yearly payment of $20,000 to the future purchase of the farm ground owned by Lashley Properties LLC. The addition [sic] 20% will be interest on the payment. This payment is due and payable each year from the inception of the rental agreement until such time as the agreement is cancelled by either party. A balance of the amounts will be kept for purchase of farm ground to be applied when ground is to be sold, or at the time of death of the owners of Lashley Properties LLC.
The Lueths made the full rental payments from 2008 to 2010, but in 2011 did not make any rental payments. For all years thereafter, the Lueths made only partial payments due to the lack of success of the Lueths’ farming and ranching operations.
In 2016, Lashley Properties acquired additional property that Norma agreed to allow the Lueths to use on the condition that they pay all expenses in lieu of rent. However, the Lueths subsequently failed to fully pay all expenses.
A new written document was entered into in 2018 providing that “Upon Norma Lashley’s death Lashley Properties, LLC will be given to Dana Lueth and all value associated with Lashley Properties, LLC as declared in the trust and will of Norma Lashley.” The document then states, “Dana Lueth, owner of Lueth Land and Cattle, LLC currently covers all payments and expenses associated with Lashley Properties, LLC.” The Lueths continued to fail to pay all payments and expenses.
Norma subsequently discovered that Dana had embezzled more than $200,000 from another company owned by her and she became less tolerant of the lapses in rent. Norma gave the Lueths notice their lease would terminate if they did not pay past due rent. She also indicated she would no longer be devising the property to the Lueths and sold some of it to third parties.
This suit ensued. The Lueths alleged breach of contract and, in the alternative, promissory estoppel. They alleged that they detrimentally relied on acquiring an ownership interest in the land under the 2008 agreement by virtue of the payments they made. Further, they alleged that they made significant payments towards expenses under the 2018 agreement, which they characterized as substantial performance. Part of their argument below involved claims of “sweat equity” that should excuse them of payment deficiencies or entitle them to damages.
The Lueths argue the district court erred in its findings of fact concerning to what degree, exactly, they fell short in their payments. They relatedly argue that the court erred in concluding that the payments made constituted rental payments only and were insufficient to establish any ownership interest. Finally, the Lueths challenge the court’s finding that they had failed to prove damages based on alleged repairs or improvements. The Lueths summarize that it is not equitable for Lashley Properties to have continued “a charade of expecting the Lueths to pay only what they could if the intent all along was to not give them the property and claim later that not all of the expenses had been paid as agreed and they thereby breached the agreement and are not entitled to anything.” They also argue that coming away with nothing other than the use of the land for eight years (in exchange for below-market rental payments) is fundamentally unfair because they contributed towards the increase in the land’s value over that time and, had they not been deceived by the “charade” of letting them pay “what they could,” they would have invested in a different property.