This opinion will be unpublished and

may not be cited except as provided by

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

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-00-273

 

 

Nations Devcon, Ltd.,

Appellant,

 

vs.

 

First Nations Gaming, Ltd., et al.,

Respondents.

 

 

Filed December 12, 2000

Affirmed

Anderson, Judge

 

Hennepin County District Court

File No. 987723

 

Shawn M. Perry, Shane C. Perry, Perry, Perry & Perry, 402 Towle Building, 330 Second Avenue South, Minneapolis, MN  55401 (for appellant)

 

James W. Rude, Frederick W. Vogt, Felhaber Larson Fenlon & Vogt, 601 Second Avenue South, Suite 4200 Minneapolis, MN  55402 (for respondents)

 

 

            Considered and decided by Anderson, Presiding Judge, Kalitowski Judge, and Shumaker, Judge.

 

 


U N P U B L I S H E D   O P I N I O N

 

ANDERSON, Judge

 

             After a failed attempt to construct a casino-hotel complex in Canada, appellant general contractor unsuccessfully sued respondent lender/joint venturer to collect money for services rendered.  Appellant contends the district court erred by (1) declining to submit issues of contract, assumption of contract, partnership, and agency to the jury; (2) declining to submit proposed instructions to the jury on other issues; (3) using respondent's proposed findings verbatim; and (4) accepting jury findings as to the percentage of completion that were contrary to the undisputed evidence.  We affirm.              

FACTS

 

Respondent First Nations Gaming, Ltd. (FNG)[1] entered into a contract with Woodstock First Nation, an Indian nation recognized by the Canadian government, relating to the operation, management, and maintenance of a yet-to-be-built casino in New Brunswick, Canada.  FNG thereafter entered into a construction agreement with appellant Nations Devcon, Ltd. (Devcon), a Minnesota corporation, to design and oversee construction of the gaming casino.

To secure additional funding, FNG entered into a loan agreement with respondent PDS Financial Corp. (PDS), a Minnesota corporation.  PDS agreed to make a construction loan to FNG in excess of $11 million, and to make a term loan to FNG for approximately $1.9 million.  Additionally, FNG and PDS Casinos International, Inc. (PDS Casinos), a Minnesota corporation and wholly owned subsidiary of PDS, entered into a joint venture agreement that provided, among other things, that PDS Casinos would receive a share of the casino’s operating profits.

            After the casino was partially complete, it became clear that the Canadian government would issue only a limited license that would not permit cash gaming.  FNG and PDS concluded that construction of a full-scale casino must stop, but agreed that a temporary casino should be built to accommodate limited gaming.  Devcon was notified that it should “mothball” the original facility for potential use if and when a full gaming license was awarded.

FNG and PDS entered into an amended loan agreement that, among other things, stopped the funding for the original structure and provided monies to cover specified bills.  Devcon was not included among the creditors to be paid under the amended agreement.  The amended agreement also provided funds for a temporary casino for limited gaming, but that structure was not to be constructed by Devcon.

Devcon continued work on the original facility to “mothball” it, allegedly in reliance upon promises for payment from respondent PDS.  Devcon later sued FNG, PDS, and PDS Casinos, alleging (1) breach of express contract; (2) breach of express contract ratified by joint venture; (3) breach of implied-in-fact contract; (4) breach of implied-by-law contract or unjust enrichment; (5) quantum meruit; and  (6) promissory estoppel.

At the conclusion of the trial, the district court concluded, as a matter of law, that some of Devcon’s claims would not be submitted to the jury, including (1) contract; (2) partnership; and (3) most of the third-party beneficiary claim (the question of when FNG defaulted on the loan agreement with PDS was submitted to the jury).  The district court also refused to submit to the jury Devcon’s proposed jury instruction on modification of contracts.

The jury’s verdict was unfavorable to appellant.  The jury (1) rejected Devcon’s claims for promissory estoppel and unjust enrichment, and (2) concluded that FNG defaulted on its loan agreement with PDS earlier than had been argued by Devcon, which had the effect of rejecting the third-party beneficiary claim.  Additionally, the jury considered appellant’s quantum meruit claim and found that the percentage of completion for the original casino was less than had been argued by Devcon.  The district court adopted verbatim the proposed findings of fact, conclusions of law, and order for judgment of PDS.

Devcon moved for amended findings, or in the alternative, a new trial, arguing (1) the court made errors in law when it refused to submit to the jury the contract, assumption-of-contract, partnership, and agency claims; (2) the court erred in submitting certain special verdict questions, and in refusing to instruct the jury on default; (3) the conclusions of law were erroneous; (4) the verdict, findings, conclusions, and order were not justified by the evidence; and (5) the verdict, findings, conclusions, and order were contrary to law.  The district court denied  all motions.  This appeal followed.

D E C I S I O N

I.

Respondents moved for a directed verdict at the conclusion of the trial.  The court did not explicitly rule on the motion, but did rule as a matter of law that the breach-of-contract, partnership/joint venture, and agency claims, as well as the third-party-beneficiary claims, would not be submitted to the jury.  Appellant contends the district court erred in refusing to submit these claims to the jury.

Standard of Review

In reviewing a directed verdict, we make an independent determination of the sufficiency of the evidence to present a fact question to the jury.  Nemanic v. Gopher Heating & Sheet Metal, Inc., 337 N.W.2d 667, 669 (Minn. 1983).  A motion for directed verdict presents a question of law for the district court: whether the evidence is sufficient to present a fact question for the jury to decide.  Claflin v. Commercial State Bank, 487 N.W.2d 242, 247 (Minn. App. 1992), review denied (Minn. Aug. 4, 1992).  A directed verdict should be granted only where, in light of the evidence as a whole, it would be the duty of the district court to set aside a contrary verdict as manifestly contrary to the evidence or to the law.  Id.  The district court must accept as true all evidence favorable to the party opposing a directed verdict and all reasonable inferences which can be drawn from that evidence.  Id.  We must apply this same standard.  Id. 

Contract Claims

Appellant contends that although there was no written agreement between Devcon and PDS, oral statements and writings resulted in a contract obligating PDS to pay it for work done.  See AFSCME Council 6, 14, 65 & 96 v. Sundquist, 338 N.W.2d 560, 567 (Minn. 1983) (contract may be formed based on facts and circumstances, or acts of parties).  Generally, whether an implied contract exists and the terms for that contract are questions of fact to be determined by the trier of fact, the jury.  Id.; Herron v. Green Tree Acceptance, Inc., 411 N.W.2d 192, 195 (Minn. App. 1987), review denied (Minn.  Sept. 30, 1987).  Where there is no dispute over the relevant facts, however, the existence of a contract is a matter of law for determination by the court.  Triple B & G, Inc. v. City of Fairmont, 494 N.W.2d 49, 53 (Minn. App. 1992).         

Appellant contends the court erred by failing to submit the question of whether an implied contract exists to the jury.  Appellant contends PDS (1) exerted total control over disbursements; (2) refused to advance sufficient sums to pay appellant; and (3) encouraged appellant to continue working to “mothball” the original casino, promising payment after the temporary structure was complete and generating revenue.

At first glance, testimony on alleged promises to pay Devcon would seem to create a question of fact of the existence of an implied contract.  The jury, however, analyzed the same evidence when rejecting Devcon’s claim of promissory estoppel.  “Promissory estoppel is the name applied to a contract implied in law where no contract exists in fact.”  Del Hayes & Sons, Inc. v. Mitchell, 304 Minn. 275, 283, 230 N.W.2d 588, 593 (1975) (footnote omitted).  After evaluating the credibility of the witnesses and considering all of the evidence, the jury found there was no justifiable reliance by Devcon on any promise to pay by PDS.  Thus, even if there was a fact question as to the existence of a contract, the action of the jury in actually weighing the evidence when rejecting the promissory-estoppel claim renders any error in refusing to submit the question of implied contact to the jury harmless.  See Minn. R. Civ. P. 61 (harmless error is ignored).  

Third-Party-Beneficiary Claims

Appellant argues that it was a third-party-beneficiary to the loan agreement between FNG and PDS.  Appellant contends that the district court erred when submitting to the jury only the issue of default, and in directing a verdict on the third-party-beneficiary claim.  Appellant argues that it was inconsistent for the district court, when denying the summary judgment motion of PDS, to determine that the facts of this case were analogous to and controlled by the holding in Twin City Constr. Co. v. ITT Indus. Credit Co., 358 N.W.2d 716, 718 (Minn. App. 1984), but later reject these same claims.  Although the contractor in Twin City Constr. Co. was permitted to recover final payment as a third-party-beneficiary of the loan agreement, the court’s preliminary observation that this case was analogous is not dispositive.

There are substantial differences between motions for summary judgment and for a directed verdict.  “A summary judgment motion is usually made before trial and decided on the pleadings, depositions, answers to interrogatories, admissions, affidavits, and documentary evidence, if any, while directed-verdict motions are made at trial and decided on all of the evidence admitted in the course of trial.”  DLH, Inc. v. Russ, 566 N.W.2d 60, 70 (Minn. 1997).  “At trial, cross-examination is available, the judge has the opportunity to observe witnesses, and documents can be explained.”  Id.  After considering the evidence submitted at trial, the district court concluded that appellant was not an intended third-party-beneficiary of the loan agreement between PDS and FNG.  The contractor in Twin City Constr. was able to carry the burden of proving the claim at trial; although it appeared to the district court at the time of the summary judgment motion that appellant might be entitled to similar relief, appellant did not carry its burden at trial.  Accordingly, the district court’s denial of summary judgment did not preclude a directed verdict on appellant’s third-party-beneficiary claim.

Assumption of Contract, Partnership/Joint Venture & Agency Claims

Appellant argues that the district court erred in refusing to instruct on or submit to the jury its claims of assumption of contract, partnership/joint venture, and agency.  Appellant relies on A. Gay Jenson Farms Co. v. Cargill Inc., 309 N.W.2d 285 (Minn. 1981).  In Cargill, the Minnesota Supreme Court concluded that a company-lender can become an undisclosed principal or agent of another company where the lender takes over the day-to-day management of the business, to the extent that the lender maintains de facto control over the company.  Id. at 291-293.  Under these circumstances, the lender may be liable for obligations incurred thereafter in the ordinary course of business.  Id. at 291.  

But appellant never established that PDS was involved in the day-to-day management of FNG or that PDS had assumed de facto control of FNG’s operations.  In fact, the evidence established that FNG was involved in other projects without PDS at the time of and after the amended agreement.  Clearly, PDS was not the undisclosed principal or agent of FNG.  The district court did not err when it refused to instruct on or submit to the jury appellant’s claims for assumption of contract, partnership/joint venture, and agency.

II.

Appellant contends the district court abused its discretion when rejecting its proposed jury instruction on the doctrine of contract modification.    

            Standard of Review

District courts are allowed considerable latitude in determining jury instructions.  State Farm Fire & Cas. Co. v. Short, 459 N.W.2d 111, 113 (Minn. 1990); Alholm v. Wilt, 394 N.W.2d 488, 490 (Minn. 1986).  District courts also have broad discretion in drafting special-verdict questions.  Dang v. St. Paul Ramsey Med. Ctr., 490 N.W.2d 653, 658 (Minn. App. 1992), review denied (Minn. Dec. 15, 1992).  This court will not reverse a district court’s decision unless the instructions constitute an abuse of discretion.  Short, 459 N.W.2d at 113; Alholm, 394 N.W.2d at 490.

Rejection of Proposed Jury Instruction

            In certain circumstances, the failure to submit to the jury the issue of modification of a written contract can be reversible error.  Wormsbecker v. Donovan Constr. Co., 247 Minn. 32, 47-48, 76 N.W.2d 643, 653 (Minn. 1956).   Appellant argues that Wormsbecker required that the jury in this case be
informed that subsequent conduct of the parties, as well as a course of dealing, may result in contract modification.  

Instructions not supported by the evidence should not be given, and a district court properly refuses requests for such instructions.  Hueper v. Goodrich, 263 N.W.2d 408, 412 (Minn. 1978).  After a thorough review of the record, we conclude that Wormsbecker does not apply because the evidence in this case would not have supported any finding that the default provision of the loan agreement had been modified.  

The evidence showed that the loan agreement default provisions were not modified.  The loan agreement required specified conditions precedent and specified warranties, and did not require written notice of default.  A January 26, 1995 letter from counsel for PDS explained to FNG its nonconforming actions with respect to the loan agreement.  David Mylrea, the chief operating officer of PDS, testified that FNG did not resolve the problems mentioned in the letter.  Mylrea also testified that PDS made efforts to enforce the loan-agreement requirements before and after the January 26, 1995 letter.

Although an amendment to the loan agreement did modify the original contract, the record does not reflect any modification to the default provisions of the agreement.  Moreover, the jury, well aware of this later amendment to the loan agreement, decided that the default occurred January 31, 1995.  We
conclude that the district court acted within its discretion in refusing to present to the jury appellant’s proposed jury instruction.

III.

Appellant contends that the district court abdicated its duty to make independent findings by adopting the proposed findings, conclusions, and order submitted by PDS.

Standard of Review

Although the adoption of a party’s proposed findings and conclusions might prompt further examination of whether the district court independently reviewed the evidence, it is not reversible error per se.  Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993).  It is ultimately the district court’s responsibility to assure that the findings and conclusions -- from whatever source derived -- are specific and provide a meaningful basis for appellate review.  Id.  Findings of fact will not be disturbed unless clearly erroneous.  Minn. R. Civ. P. 52.01.

Independent Review of the Evidence

Appellant makes two arguments in support of its claim that the district court did not make an independent review of the evidence.  Appellant argues that the court contradicted itself when it dismissed and refused to submit some claims to the jury, although it had previously denied summary judgment on the same
claims.  Appellant also asserts that the findings of fact contradict the trial testimony.

            We have already rejected the first argument, which overlooks the fundamental differences between motions for summary judgment and for a directed verdict.  As to the second argument, even if appellant’s contentions are true, neither factual error would affect the outcome.  Any error is, therefore, harmless.  See Minn. R. Civ. P. 61 (harmless error is ignored).   

After careful review of the record, we conclude that the district court’s findings and conclusions in this case are specific, permit meaningful review, and are supported by the record, and as a result, the district court did not commit reversible error by adopting the respondent’s proposed findings of fact and conclusions of law.

IV.

Appellant claims that the jury findings on percentage of completion are contrary to the evidence and warrant a new trial. 

Standard of Review

A jury’s answer to a special-verdict question will not be set aside unless it is “perverse and palpably contrary to the evidence” and “no reasonable mind could find as did the jury.”  Russell v. Johnson, 608 N.W.2d 895, 899 (Minn. App. 2000) (citation omitted).

Sufficiency of the Evidence

The jury was asked to determine what percentage of construction-management services had been “completed” as of two specific dates.  Appellant argues that there is no credible evidence to support the findings that construction-management services were 30% complete on January 31, 1995 and 32% complete on April 3, 1995.  But appellant’s witness testified that determining the completion percentage involved a degree of subjective judgment, and cannot be fixed absolutely until the final inspection.  The jury also received photographs of the construction site and a model of the casino.  Reasonable minds could make the same factual determination, based on all of the evidence, as did the jury.  We conclude the jury’s findings are not perverse or palpably contrary to the evidence.

            Affirmed.



[1] FNG, although a listed party to this case, has no assets, is insolvent, and has not been an operating entity since 1996.  FNG has never answered the complaint and is in default.