This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).






American Hotel Ventures, Inc.,


A&J Vendor Services, Inc., et al.,


Filed July 11, 2000


Amundson, Judge


Hennepin County District Court

File No. 973779


Richard M. Carlson, Morris Carlson & Hoelscher, P.A., 7380 France Avenue South, Suite 200, Minneapolis, MN 55435 (for respondent)


Cass W. Weil and Jerrie M. Hayes, Moss & Barnett, 80 South Seventh Street, 4800 Norwest Center, Minneapolis, MN 55402 (for appellants)


            Considered and decided by Crippen, Presiding Judge, Amundson, Judge, and Anderson, Judge.

U N P U B L I S H E D   O P I N I O N




            Appellants challenge the denial of their motion for attorney fees and costs, arguing they were entitled to such an award under the terms of the stipulation between the parties.  Because we conclude such an award would be an absurd result under the terms of the contract between the parties, we affirm the denial of the motion for attorney fees and costs.



            Respondent American Hotel Ventures, Inc., d/b/a Specialty Mortgage (American Hotel), held a promissory note between appellant A & J Vendor Services (A&J) and Kalbart Commercial, Inc.  A dispute arose between the parties concerning the debt evidenced by the note.  To avoid further litigation, the parties entered into a stipulation of settlement requiring appellants A&J and A&J’s owner, Jack Hulbert, to pay life insurance premiums on a policy assigned to American Hotel.  As part of the stipulation, appellants executed a confession of judgment to secure payment of the insurance premiums, and posted a bond in that amount.

            The stipulation defined the events constituting default, including the failure of appellants to pay the life insurance premiums when due or within ten days thereafter.  The stipulation provided that American Hotel could file the confession of judgment and apply for a court order directing payment from the bond in the event of a default upon 30 days written notice.  The stipulation also contained a dispute resolution clause, providing that disputes arising under the stipulation were to be heard in district court, and that the prevailing party in such a dispute was entitled to recover costs and attorney fees.

            Appellants do not dispute they defaulted by failing to pay the insurance premiums.  American Hotel filed the confession of judgment with the district court, without giving prior written notice.  After American Hotel refused to consent to the vacation of the resulting judgment, appellants requested an order vacating the judgment.  The district court granted appellants' motion to vacate the judgment.  Appellants then moved for an award of attorney fees under the dispute resolution clause of the stipulation, the district court denied appellants' motion for attorney fees in the interests of justice.  This appeal followed.



            Settlement agreements are contractual in nature, and, as contracts, are binding upon the parties.  Chalmers v. Kanawyer, 544 N.W.2d 795, 797 (Minn. App. 1996).  “The construction and effect of any contract is a question of law, unless an ambiguity exists.”  Brookfield Trace Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998) (citation omitted).  An ambiguity exists where contract language is reasonably susceptible to more than one interpretation.  Id.  Where ambiguity exists, extrinsic evidence may be consulted and construction of the contract becomes a question of fact, which this court, viewing the evidence in a light most favorable to the district court's findings, review pursuant to a clearly erroneous standard.  Swanson v. Parkway Estates Townhouse Ass'n, 567 N.W.2d 767, 768 (Minn. App. 1997).  When interpreting a contract, we give the language its "plain and ordinary meaning," and read "contract terms in the context of the entire contract * * * [so] as to give meaning to all of its provisions."  Brookfield, 584 N.W.2d at 394.

            Appellants assert they were entitled to attorney fees and costs from their motion to vacate the judgment, arguing that the stipulation provides for attorney fees and costs for the prevailing party in a dispute over the terms of the stipulation.  Appellants do not dispute that the judgment was entered as a result of their default.  We will not construe contract terms to lead to an absurd result.  Id.  Appellants defaulted on their obligation to pay the insurance premiums, leading to the filing of the judgment.  For appellants to reap the benefit of attorney fees and costs from their admitted default would require that the stipulation be read to reach an absurd result.  Accordingly, we affirm the district court's denial of appellants' motion for fees and costs.

            Respondents challenge the district court’s decision to grant appellants’ motion to vacate, arguing that appellants were not entitled to 30 days written notice.  Respondent's argument ignores the paragraph of the stipulation that concerns the confession of judgment and provides that "in the event of any default," in addition to any rights and remedies available, respondent may file the confession of judgment, "upon 30 days written notice."  While another paragraph of the stipulation does not require such notice, we read the contract as a whole, Id., and therefore conclude that the district court did not err in granting appellants' motion to vacate.