This opinion will be unpublished and

may not be cited except as provided by

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






Engelhart & Swanson, P.A.,





Interstate Bonding, Inc.,



Filed August 8, 2000


Willis, Judge


Ramsey County District Court

File No. C0991190


Kathleen K. Goddard, 2249 East 38th Street, Minneapolis, MN  55407 (for respondent)


Frank A. Schulte, 1759 Selby Avenue, St. Paul, MN  55104 (for appellant)


            Considered and decided by Randall, Presiding Judge, Lansing, Judge, and Willis, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant challenges the damages awarded to respondent, arguing that the district court misinterpreted the parties’ contract and that the court awarded damages beyond the scope of respondent’s claim.   We affirm. 


In July 1996, appellant Interstate Bonding, Inc., and respondent Engelhart & Swanson agreed orally that respondent would provide certain monthly, quarterly, and annual accounting services to appellant.  The parties put their agreement in writing on March 13, 1997.  The relationship become strained over amounts that respondent claimed were owed, and in January 1998 appellant terminated the relationship.  Respondent billed appellant a total of $10,150 for services rendered from July 1996 through December 1997.  During that period, appellant made payments totaling $2,250, leaving a balance of $7,900. 

In May 1998, respondent filed a statement of claim in Ramsey County Conciliation Court, seeking damages of $7,500, the jurisdictional limit for conciliation court.  Appellant failed to appear on two separate dates set for trial, and the conciliation court granted respondent a default judgment each time.  But the conciliation court vacated the default judgment on both occasions, and the case was heard on the merits in January 1999.  The conciliation court granted respondent judgment for $6,285, and appellant removed the case to district court. 

A district court trial was set for June 15, 1999, and appellant again failed to appear.  The district court entered a default judgment in favor of respondent for $7,535.  On appellant’s motion, the district court then vacated the default judgment and set a new trial date.  On September 28, 1999, appellant appeared, and the case was tried to the district court on the merits.  The district court entered judgment against appellant in the amount of $7,535.  This appeal follows.


I.          Contract Interpretation   


Appellant argues that the parties’ contract unambiguously requires it to pay only for only the time expended by respondent.  Respondent agrees that the contract is unambiguous, but argues that it requires appellant to pay a monthly fee of $350 as a retainer for bookkeeping and accounting services.  Whether a contract is ambiguous is a question of law that is determined in the first instance by the district court.  Kenko, Inc. v. Lowry Hill Constr. Co., 392 N.W.2d 18, 20 (Minn. App. 1986), review denied (Minn. Oct. 22, 1986).  On appeal this court will determine whether the district court was correct in its finding on the issue of ambiguity.  See Employers Liab. Assurance Corp. v. Morse, 261 Minn. 259, 264, 111 N.W.2d 620, 624 (1961).  A contract is unambiguous if the court, without looking to extrinsic evidence, can determine the meaning of the contract’s language.  ICC Leasing Corp. v. Midwestern Mach. Co., 257 N.W.2d 551, 554 (Minn. 1977).   

The relevant portion of the parties’ contract states

[o]ur fees * * * will be based on the time expended at our standard rates and will be billed to you monthly, payable on receipt.  We estimate the fees to be approximately $350 per month for bookkeeping/accounting retainer, approximately $250 for W-2 and 1099 supplies and preparations, and approximately $1,000-$1,100 for the preparation of the financial statements and annual income tax filings.


(Emphasis added.)


Although the district court did not explicitly find that the contract is unambiguous, it awarded respondent its full claim for damages, which included monthly charges of $350 for a bookkeeping and accounting retainer, without requiring respondent to show the amount of work performed each month and without relying on extrinsic evidence to interpret the contract.  Therefore, we can infer that the district court concluded that the contract unambiguously provided that appellant was to pay respondent $350 per month regardless of the amount of work performed.  Although we agree with the result reached by the district court, the contract, on its face, does not unambiguously require appellant to pay $350 per month regardless of the amount of work performed.  The contract states that fees will be based “on the time expended” and that the fees listed in the contract are “estimates.”  Moreover, the word “retainer” has several different meanings, and there is no evidence in the record that “retainer,” as used in the contract, is to be interpreted as a fee paid to ensure availability of the accounting firm such that the fee is earned regardless of services performed.  See 37A Words and Phrases194-96 (1950) & 152-53 (Supp. 1999).

Because extrinsic evidence is required to interpret the contract, we conclude that it is ambiguous.  See Donnay v. Boulware, 275 Minn. 37, 44, 144 N.W.2d 711, 716 (1966).  The parties’ course of dealing may be used to interpret the terms of an ambiguous agreement.  Wabasso State Bank v. Caldwell Packing Co., 308 Minn. 349, 356, 251 N.W.2d 321, 325 (1976).  Generally, the parties’ conduct will furnish the court with persuasive evidence of a term’s meaning.  Security Mut. Cas. Co. v. Luthi, 303 Minn. 161, 167, 226 N.W.2d 878, 883 (1975).

The record shows that (1) before the parties executed the written contract, respondent billed appellant $350 per month from July 1996 through February 1997; (2) appellant made at least partial payment on those billings; and (3) respondent continued to bill appellant $350 per month for “professional services” until appellant terminated their relationship in January 1998.  There is no evidence in the record that appellant challenged this billing practice until trial.  And respondent testified that billing a monthly retainer fee is a common business practice with clients who enter into a one-year contract for services.  Finally, respondent testified that monthly billing allows it to spread its annual fee over a 12-month period to accommodate the client’s cash flow.  The owner of appellant, who signed the contract on behalf of the company, did not testify.  Based on the uncontested, extrinsic evidence of the parties’ course of dealing and respondent’s testimony regarding its billing practices, it is clear that the parties agreed that appellant would be billed $350 per month for a “bookkeeping/accounting retainer.” 

II.        Award of Damages Beyond Scope of Claim

Appellant argues that the district court abused its discretion in awarding damages beyond the scope of the statement of claim filed with the conciliation court.  The district court found that damages accrued from July 1996 through December 1997.  But the statement of claim states that respondent performed accounting services for appellant through July 1997.  Appellant cites no authority for its position but argues that because respondent did not amend its statement of claim to seek additional damages, the district court erred in awarding damages that accrued after July 1997.

Respondent argues that although the statement of claim refers to services provided through July 1997, the $7,500 amount claimed includes services performed through December 1997.  And at trial, James Engelhart testified that the July 1997 date on the statement of claim was an error.

It is well settled that a plaintiff’s recovery is not limited to the amount stated in the complaint unless the defendant is prejudiced.  Ahrenholz v. Hennepin County, 295 N.W.2d 645, 647 (Minn. 1980); Young v. Hansen, 296 Minn. 430, 436, 209 N.W.2d 392, 396 (1973); Wallace v. Nelson, 287 Minn. 438, 445, 178 N.W.2d 698, 703 (1970); see also Minn. R. Civ. P. 54.03 (stating “[e]xcept as to a party against whom a judgment is entered by default, every other judgment shall grant the relief to which the party in whose favor it is rendered is entitled”).  Here, appellant was on notice from the time the claim was filed that respondent sought $7,500, which included amounts billed for services performed after July 1997.  And nothing in the record suggests that appellant was prejudiced.  Therefore, the district court did not abuse its discretion in awarding respondent damages for services performed after July 1997.

III.       Motion for Attorney Fees

In its brief to this court, respondent moved for attorney fees against appellant. We deny respondent’s request at this time on the ground that respondent has not complied with Minn. R. Civ. App. P. 139.06, subd. 1, which requires that a request for attorney fees be made by separate motion.