This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
Michelle L. Severson,
Kevin Roche Financial Services, Inc.,
St. Louis County District Court
File No. CX99300683
Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, P.A., 1800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402; and
Daniel F. Jambor, 1555 Iglehart Avenue, St. Paul, MN 55104 (for appellant)
Edward J. Matonich, David A. Arndt, Matonich & Persson, Chartered, 2031 Second Avenue East, P.O. Box 127, Hibbing, MN 55746; and
William J. Mavity, Mavity & Associates, 1650 West 82nd Street, Suite 1460, Minneapolis, MN 55431 (for respondent)
Considered and decided by Amundson, Presiding Judge, Toussaint, Chief Judge, and Huspeni, Judge.
Appellant sued respondent and prevailed on her claim that respondent breached their partnership agreement. She challenges the trial court’s posttrial order granting unconditional remittitur, contending that the trial court erred as a matter of law and arguing that this court should uphold the jury verdict on the merits. Respondent filed a notice of review challenging the trial court’s order denying its motion for a new trial and/or judgment notwithstanding the verdict (JNOV), contending the record contained no evidence supporting the jury’s determination that a partnership existed or that it was breached, and arguing that other errors warranted a new trial; respondent also moved to strike certain portions of appellant’s brief. Because appellant’s appendix contains documents not considered by the trial court, we grant respondent’s motion to strike; because evidence in the record supports the jury’s determination that a partnership existed and that it was breached, and because the trial court did not err in its ruling regarding jury conduct, we affirm the jury’s finding on issues of partnership and its breach; because remittitur may be awarded only conditionally, we reverse the trial court’s grant of unconditional remittitur and remand.
In April 1990, appellant Michelle L. Severson began selling general insurance products for respondent Kevin Roche Financial Services, Inc. While respondent initially gave appellant a training allowance, she soon began to earn an income from commissions on sales. As was the general practice, respondent received 15% (called an override) of the commissions that appellant generated from her insurance sales.
Respondent then proposed to appellant that in addition to general insurance sales, they develop a health insurance network. Appellant would develop the network, respondent would pay office expenses, and an already-existing general insurance network, Blackburn, Nichols & Smith (BNS), would provide a list of trained insurance agents to contact. Rather than respondent receiving the 15% override, it would be split three ways: appellant would receive 33%, respondent 47%, and BNS 20%.
In 1992, after a dispute, BNS was no longer part of the health insurance network. Appellant and respondent adjusted their split of the override so that appellant received 40% and respondent 60% of the 15%. BNS then sued respondent. After binding arbitration, respondent was obligated to pay 5% of the 15% override to BNS for a 10-year period, until January 1, 2003. Pursuant to respondent’s suggestion, appellant and respondent shared that liability, reducing appellant’s share to 38% and respondent’s to 57%.
Respondent became dissatisfied with the amount of work it believed appellant was performing and, in February 1998, cut in half her commissions from the health insurance network. In August 1998, respondent abruptly asked appellant to leave the office.
Appellant sued respondent on several grounds, including breach of contract as to the health insurance network partnership; respondent defended on the theory that no partnership had been formed. The jury determined that appellant and respondent formed a partnership, that respondent had breached the agreement, and that appellant had sustained damages of $250,000. The district court denied respondent’s motions for a new trial or JNOV, but granted unconditional remittitur, reducing appellant’s award of damages to $38,000.
Appellant challenges the unconditional remittitur; respondent, by notice of review, challenges the determination that there was a partnership agreement and that it was breached, and contending a new trial was warranted. Respondent’s motion to strike a portion of the appendix to appellant’s brief was deferred to this panel for consideration.
D E C I S I O N
We first address respondent’s motion to strike a portion of appellant’s appendix as not being part of the record. Appellant filed the challenged documents with the trial court after it ruled on posttrial motions. The documents include a letter from appellant seeking the court’s permission to file a motion for reconsideration, evidence prepared by an expert as to the valuation of the partnership, not previously submitted to the court, and a letter from the court denying the request. The court specifically noted that its ruling as to damages was based only on the record that had been submitted to the jury.
The record on appeal includes “[t]he papers filed in the trial court, the exhibits, and the transcript of the proceedings, if any.” Minn. R. Civ. App. P. 110.01. When the challenged material was not before the trial court in making the decisions from which this appeal is taken, this court will not consider the material on appeal. Midway Nat’l Bank v. Bollmeier, 462 N.W.2d 401, 405 (Minn. App. 1990), aff’d, 474 N.W.2d 335 (Minn. 1991). We grant the motion to strike; however, our ruling does not preclude the trial court in the appropriate circumstances from considering this challenged material on remand or in future proceedings.
Respondent challenges the denial of its motion for JNOV on the jury determination that a partnership existed and that it was breached. An appellate court must affirm the denial of a motion for JNOV if any competent evidence exists to support the verdict. Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998). The appellate court will consider the evidence in the light most favorable to the prevailing party. Id. Review is de novo. Id.
“An oral agreement is generally sufficient to establish a partnership.” Sit v. T & M Properties, Inc., 408 N.W.2d 182, 185 (Minn. App. 1987) (citation omitted). Whether the parties intended to form a partnership is determined from all the evidence and circumstances. McAlpine v. Millen, 104 Minn. 289, 297-98, 116 N.W. 583, 586 (1908). The existence of a partnership is generally a question of fact. Cyrus v. Cyrus, 242 Minn. 180, 183, 64 N.W.2d 538, 541 (1954). “A partnership is an association of two or more persons to carry on as coowners a business for profit * * *” not formed under some other statutory provision. Minn. Stat. § 323.02, subd. 8 (2000). It is formed when the parties have decided to combine “their property, labor, and skill” for profit. Cyrus, 242 Minn. at 184, 64 N.W.2d at 541. The parties may choose the extent to which each partner manages or contributes to the partnership. McAlpine, 104 Minn. at 298, 116 N.W.2d at 586. While the sharing of gross returns alone does not establish a partnership, the receipt of a share of the profits is prima facie evidence of partnership. Minn. Stat. § 323.06(3), (4) (2000).
Respondent argues that it did not consent to or intend to form a partnership with appellant. Instead, it argues that appellant was an independent contractor. Taking the view of the evidence most favorable to appellant, the parties explicitly agreed that they would share their profits, that respondent would pay the office expenses, that appellant would develop the network through her time and effort, and, initially, that BNS would provide a list of trained agents. For more than a six-year period, appellant worked 20 to 30 hours per week developing the network. She was compensated through her share of the commissions the network generated, continuing to receive the share during her maternity leave. Even though respondent may not have been aware of the legal ramifications of the parties’ agreement, under the law of partnership, the jury had sufficient evidence to support its verdict that a partnership existed. See Georgens v. Federal Deposit Ins. Corp., 406 N.W.2d 95, 97 (Minn. App. 1987) (upholding determination of partnership when finding supported by evidence, even where both parties denied existence of partnership on appeal).
Respondent also challenges the jury verdict that the partnership agreement was breached. It contends that, assuming the partnership existed, it was terminable at will because the parties had not agreed on the length of its existence. See Minn. Stat. § 323.30(1)(b) (2000) (providing partnership may be dissolved at will when partners do not specify definitive term or particular undertaking). Consequently, respondent contends that appellant may not bring an action for breach of the partnership agreement.
Appellant, however, does not challenge the termination of the partnership agreement. Instead, she challenges respondent’s breach of the agreement to pay her the commission the health insurance network generated. Considering the facts most favorably toward appellant, the parties agreed that they would split the profits. But in February 1998, respondent paid appellant only one-half of her agreed-upon share, and in August 1998, asked her to leave the agency. Further, the jury was presented with evidence that as a result of arbitration, BNS was entitled to receive 5% of the health insurance network override for a 10-year period through 2003, with appellant and respondent sharing the obligation. The jury had evidence from which it could conclude the partnership agreement was breached.
Respondent also challenges the trial court’s decision to deny a new trial. On appellate review, the district court’s decision to deny a motion for a new trial will not be reversed absent an abuse of discretion. Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990). Generally, to preserve issues for review by an appellate court, the party must raise the claims of error to the district court in a new trial motion. Sauter v. Wasemiller, 389 N.W.2d 200, 201-02 (Minn. 1986).
Respondent first contends that appellant’s failure to respond to discovery and the testimony of one of her witnesses created surprise requiring a new trial. See Minn. R. Civ. P. 59.01(c) (providing new trial may be granted for “[a]ccident or surprise which could not have been prevented by ordinary prudence”). The trial court rejected this argument, noting that the discovery issue was addressed in its order in limine and in off-the-record discussions at trial. Further, the court noted that respondent failed to object to the introduction of such evidence or to request a continuance at trial, waiving any claim of surprise. We see no abuse of discretion in the trial court’s determination on the issue of surprise.
Respondent next challenges the jury instructions and verdict form, contending they were so deficient and ambiguous as to require a new trial. The trial court also rejected this claim, determining that respondent neither objected to these alleged errors at trial nor raised issues of fundamental error. See Wadena v. Bush, 305 Minn. 134, 151, 232 N.W.2d 753, 763 (1975) (stating that unless party objects at trial, new trial not required unless fundamental error exists). Respondent has not demonstrated that the trial court abused its discretion in denying the motion for a new trial based on jury instructions or the verdict form.
Respondent next contends that appellant made misleading statements in her final argument. Generally, a party who alleges an improper final argument must object and seek a curative instruction from the trial court to preserve the issue for review, unless the misconduct was so flagrant or extreme as to require the trial court to take action on its own. Hake v. Soo Line Ry. Co., 258 N.W.2d 576, 582 (Minn. 1977). A review of the transcript of the oral argument does not reveal either that respondent objected or that the court should have taken corrective action on its own. Further, respondent did not raise the issue in a motion for a new trial and this matter was not preserved for appeal.
Respondent also alleges that the jury members were conversing with a witness, and it cites several letters in which it raised this concern to the trial court. The trial court did not conduct a Schwartz hearing. The decision of whether to grant a Schwartz hearing is within the discretion of the district court. Zimmerman v. Witte Transp. Co., 259 N.W.2d 260, 262 (Minn. 1977). Respondent has not shown that the district court has committed any abuse of discretion on this issue.
Finally, we address the challenge of appellant to the trial court’s award of unconditional remittitur. A party may seek a new trial or remittitur for excessive damages based on the argument that the jury was affected by “passion or prejudice.” Minn. R. Civ. P. 59.01(e). If the court finds the jury award excessive, it may grant a new trial, but allow the party against whom the motion is directed to consent to remittitur in lieu of a new trial. Runia v. Marguth Agency, Inc., 437 N.W.2d 45, 49-50 (Minn. 1989).
Respondent sought a new trial on damages, or remittitur. While the district court denied respondent’s motion for a new trial on the damages issue, it did grant an unconditional remittitur, reducing the jury’s award of damages from $250,000 to $38,000. Appellant is correct in challenging this remittitur as unauthorized. An unconditional remittitur award cannot stand appellate scrutiny. Id. Even respondent, while continuing to assert that the large size of the verdict showed passion or prejudice on the part of the jury, recognizes that a remand for the district court to grant conditional remittitur is an acceptable alternative.
The supreme court has clearly indicated that remittitur should be conditional:
In no case reported has this court upheld the unconditional imposition of additur or remittitur. The law in Minnesota remains as it was stated to be in [an earlier case]: a new trial may be granted for excessive or inadequate damages and made conditional upon the party against whom the motion is directed consenting to a reduction or an increase of the verdict. Consent of the nonmoving party continues to be required.
Id. Therefore, we reverse the unconditional remittitur and remand for further trial court determination on that issue consistent with the mandate of Runia.
Ordinarily, recognition of the invalidity of an unconditional remittitur and remand for further proceedings would constitute full appellate review. Appellant, however, contends that because judgment was entered, she can obtain a review on the merits of the jury award of damages under Minn. R. Civ. App. P. 103.03(a) (authorizing appeal from judgment). We disagree. Had the issue of remittitur been properly resolved by the trial court, appellant could not have obtained review of the remittitur/new trial disposition here. First, she could not have obtained review of an order granting a new trial because it is not appealable. Quast v. Prudential Prop. & Cas. Co., 267 N.W.2d 493, 495 (Minn. 1978). Nor could appellant have obtained appellate review of the jury award of $250,000 in damages because she would have either consented to remittitur or respondent would have obtained a new trial on damages. We should not grant substantive review of an issue that is not properly before us — the merits of the damages award of the jury. As in Runia, the trial court here determined the award of damages was excessive. We do not disturb that determination.
We reverse the unconditional remittitur and remand to enable the trial court and the parties to determine whether an unconditional remittitur award is acceptable to appellant or whether respondent is entitled to a new trial on damages. The trial court, in its discretion, may reopen the record to receive additional evidence, including that stricken by this court from appellant’s appendix, regarding an appropriate amount to be considered in a conditional remittitur award. If a new trial is had on damages, that additional evidence may also be received, subject to the trial court’s rulings on admissibility.
Affirmed in part, reversed in part, and remanded; motion granted.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.