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Sunday, June 15, 2014

Minnesota Court of Appeals Finds E-Signature Did Not Apply to Attachment

TenementsPlaintiffs in SN4, LLC v. Anchor Bank wanted to buy two multi-unit apartment buildings for which Anchor Bank (the Bank) held title.  Through an exchange of e-mails, the parties seemed to have agreed to a purchase price of $1.7 million, but they continued to exchange drafts of a final agreement.  The opinion catalogues and summarizes 19 e-mails relevant to the transaction, but there was no e-mail and no hard copy in which the Bank signed any purchase agreement relating to the properties.  When the Bank refused to sell the properties, plaintiffs sued alleging breach of an agreement that they had signed.  

The trial court granted summary judgment in favor of the Bank on the ground that that the statute of frauds was not satisfied.  On appeal before the Minnesota Court of Appeals, the plaintiffs argued that the Bank had electronically subscribed to the agreement.  The matter of first impression for the court was plaintiffs' claim that the Bank had subscribed to the agreement that plaintiffs later signed because the Bank electronically signed the e-mail to which the agreement was attached.  This claim required the court to address the Minnesota's version of the Uniform Electronic Transactions Act (UETA).  

The court noted that, although the parties conducted their negotiations electronically, UETA does not require them to also subscribe to their transaction electronically unless the parties so intended to limit the means by which they would enter into agreement.  Here, the parties repeatedly made it clear that they expected to sign hard copies of their final agreement.  The court also rejected plaintiffs' contention that the Bank had signed the agreement in two e-mails which included the typed-in name of one of the Bank's principals and a signature block.  The court found that a reasonable factfinder could conclude that the Bank had provided electronic signatures, but under UETA, such signatures must be attached to or associated with the electronic record at issue.  An electronic signature in an e-mail does not automatically apply to a document attached to that e-mail.  In this case, the Bank did not electronically sign the attached document, nor does it seem that the parties considered the attached document the final version of their agreement, as they referred to it as a draft.

Based on these findings, the Court of Appeals upheld the trial court's conclusion that UETA did not apply to the alleged agreement and that no reasonable finder of fact could conclude that the Bank had electronically signed the agreement.  The Court of Appeals therefore upheld the grant of summary judgment to the Bank.  The Court of Appeals also upheld the trial court's rejection of the plaintiffs' equitable estoppel claim.

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