Owens v. M.E. Schepp Limited Partnership – 8/23/2007
Arizona Court of Appeals Division One Holds That an Oral Partition Agreement Is a “Sale” of an Interest in Real Property For Purposes of the Statute of Frauds, But the Doctrine of Part Performance May Apply as a Defense to the Statute.
In a suit for statutory partition of three lots owned by Plaintiff and Defendant as tenants in common, Defendant counterclaimed alleging breach of an oral partition agreement. The trial court granted partial summary judgment to Plaintiff finding no legal partition agreement had been entered into by the parties. Plaintiff timely appealed, and a split panel of the Arizona Appeals Court reversed and remanded. The majority first determined that a question of fact existed as to whether the parties had entered into a reasonably certain and definite oral partition agreement. The facts presented tended to show that the parties agreed to divide the lots held by them as tenants in common but disagreed as to the amount of an equalization payment to the party taking the less valuable property. The Court held that, although the equalization payment was a material term, it could be added by a court in an enforcement proceeding, thus the agreement could be enforceable.
Having found a triable issue of fact regarding the existence of an oral partition agreement, the Court next held that such agreements were subject to the statute of frauds. Specifically, the Court held such an agreement constituted an “agreement for . . . the sale of real property or an interest therein.” A.R.S. § 44-101(6). The Court also noted, however, that the equitable doctrine of “part performance” may serve to remove an agreement from the statute of frauds. In this case, the majority held that a genuine issue of material fact existed as to whether an act of part performance had occurred that as a matter of law would refer unequivocally to the alleged oral agreement, such that it would not be subject to the statute of frauds.
On the question of part performance, Judge Timmer split from the majority. Judge Timmer argued that the majority’s ruling improperly expanded the partial performance defense. The majority based its holding primarily on the Plaintiff’s act of removing trees from the lots allegedly partitioned to Plaintiff and on the Defendant’s lack of intervention and partial payment for that removal. Judge Timmer argued that the part performance defense must be founded solely on the act itself, and should not refer to any act or explanation on the part of the party attempting to enforce the agreement. Thus, Judge Timmer did not find the act of tree removal taken in isolation, to be “unequivocally referable” to the alleged oral partition agreement. Such an action would also be consistent with tenancy in common. Thus, Judge Timmer would have affirmed the trial court on the ground that the alleged oral agreement violated the statute of fraud.
Judge Barker authored the majority opinion, joined by Presiding Judge Hall; Judge Timmer dissented.