This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-400

 

Winthrop Resources Corporation,

Respondent,

 

vs.

 

Cambridge Research Associates, Inc., et al.,

Appellants.

 

Filed December 2, 2003

Affirmed in part, reversed in part, and remanded

Lansing, Judge

 

Hennepin County District Court

File No. 02-11637

 

 

Matthew R. McBride, Karl E. Robinson, Winthrop & Weinstine, Suite 3500, 225 South Sixth Street, Minneapolis, MN  55101 (for respondent)

 

Stephen M. Harris, Meyer & Njus, P.A., 1100 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN  55402 (for appellant)

 

            Considered and decided by Schumacher, Presiding Judge, Lansing, Judge, and Crippen, Judge.*

 

U N P U B L I S H E D   O P I N I O N

 

LANSING, Judge

            The district court ordered summary judgment for Winthrop Resources Corporation in Winthrop’s contract action against Cambridge Research Associates, Inc. and Cambridge’s guarantors.  In this appeal Cambridge and its guarantors challenge jurisdiction, procedural rulings on continuance and joinder, the denial of estoppel, the computation of damages, and attorneys’ fees.  The facts and the law support the district court’s rulings on procedure and on contractual liability but not the determination of damages.  We therefore reverse and remand the issue of damages.

F A C T S

 

            Winthrop Resources Corporation sued Cambridge Research Associates, Inc. for breach of a commercial agreement to lease computer equipment, breach of an associated sales agreement, and for replevin.  Winthrop also sued Andrew L. Carrington and Cambridge Technology Group, Inc. (Cambridge Technology) for breach of their guaranties of Cambridge’s obligation under the lease agreement.  Winthrop is a Minnesota corporation that specializes in leasing computer equipment; Cambridge is a government contractor that specializes in the development of software for high-resolution digital imagery.  Cambridge Research is a Virginia corporation and Carrington is a Virginia resident.

The lease agreement was signed in July 1998.  The parties later signed five separate lease schedules governing specific equipment.  After Cambridge had nearly made full payment under the first lease schedule (001R), Winthrop and Cambridge  signed a sales agreement to allow Cambridge to purchase the equipment.  Cambridge understood that it would have a similar opportunity to purchase the other leased equipment when the scheduled payments had all been made (002X, 003R, 004R, and 005R).  In 2001 Winthrop substituted Wells Fargo & Company as payee to receive the scheduled lease payments.

            On February 12, 2002, Winthrop sent a notice of default to Cambridge for failure to make timely payments under the lease.  On March 11 and 12, 2002, Winthrop sent a revised notice of default and a notice of acceleration, followed by another notice of acceleration the next month.  On May 6, 2002 Winthrop sent a letter to Cambridge, advising that it could “no longer ‘hold back’ any further legal actions to collect on delinquent payments.”  Another notice of acceleration was sent at the end of June 2002.

            In April and May 2002, Winthrop invoiced Cambridge for payments due under the sales agreement.  Cambridge did not pay these invoices in full, although it did make partial payment on one of the invoices.  On June 6, 2002, Winthrop sent Cambridge two invoices for lease payments: numbers 190057 (for lease schedule 005R) and 190059 (for lease schedules 002X, 003R, and 004R).  The invoiced payments were due on July 1, 2002.  Cambridge failed to pay by July 1, and in mid-July Winthrop sued for breach of the lease agreement and replevin, breach of the sales agreement, and breach of the guaranties.  On July 31, Cambridge sent Winthrop full payment for invoices 190057 and 190059.  Winthrop retained the checks for two months but returned them uncashed.

            Winthrop moved for summary judgment and for repossession of the computer equipment.  Cambridge and its guarantors moved to dismiss, asserting that the district court lacked jurisdiction over the computer equipment which was located in Virginia and lacked personal jurisdiction over the guarantors.  The district court dismissed the replevin action for lack of in rem jurisdiction but determined that the court had personal jurisdiction over Cambridge Technology and Carrington.  The court then issued summary judgment for Winthrop in the contract action and ordered damages of $562,621.73 for breach of the lease agreement, calculated under the “Loss and Damage” provision of the lease, and $24,586.90 for breach of the sales agreement. The order provided that Winthrop have possession of all equipment covered by the sales and lease agreements.  The court also held that Winthrop was entitled to judgment for costs and attorneys’ fees.  Winthrop petitioned for attorneys’ fees and costs of approximately $20,000.  The district court denied Cambridge’s posttrial motions and, based on a subsequent affidavit of Winthrop’s attorneys, allowed Winthrop $40,778.55 in attorneys’ fees and costs.  This appeal followed. 

D E C I S I O N

I

The determination of whether personal jurisdiction exists is a question of law that we review de novo.  Griffis v. Luban, 646 N.W.2d 527, 531 (Minn. 2002).  A plaintiff’s allegations of personal jurisdiction should be taken as true, and doubt should be resolved in favor of retaining jurisdiction.  V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn. 1996).  A Minnesota court with personal jurisdiction over a party can order that party to perform actions outside Minnesota.  Sanders v. Pac. Gamble Robinson Co., 250 Minn. 265, 269, 84 N.W.2d 919, 922 (1957).

Cambridge argues that because the district court dismissed Winthrop’s replevin action, it lacked jurisdiction to order Cambridge to return the computer equipment located in Virginia.  This argument fails to distinguish in rem jurisdiction to repossess property from personal jurisdiction over the party who controls the property.  A state may exercise jurisdiction through its courts to direct a party subject to its jurisdiction to perform an act in another state, provided that the act is not contrary to the law of the state in which it is to be performed.  Sanders, 250 Minn. at 265, 84 N.W.2d at 920; see Giles v. Gageby, 580 N.W.2d 52, 54 (Minn. App. 1998) (holding that Minnesota court with personal jurisdiction over landowner could order specific performance of contract to sell Florida real estate). 

Cambridge does not dispute the Minnesota district court’s personal jurisdiction over it as a party to the contract.  Specific personal jurisdiction exists when a claim arises out of a contract that has a “substantial connection” with the forum state.  Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 31 (Minn. 1995) (citing McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957)).  Cambridge negotiated the agreement with Winthrop, a Minnesota corporation.  The agreement between Cambridge and Winthrop was substantially connected to Minnesota; thus the Minnesota courts maintain personal jurisdiction over Cambridge as a party to the contract.  The terms of the lease expressly provided that the equipment be returned after a default.  Therefore, the district court’s conclusion that it lacked in rem jurisdiction to order execution and levy on the computer equipment located in Virginia does not preclude the court from ordering Cambridge to return that equipment to Winthrop in Minnesota. 

Cambridge Technologies and Carrington do not agree that the district court may constitutionally exercise personal jurisdiction over them as guarantors of the lease.  The Minnesota long-arm statute permits the exercise of jurisdiction over nonresident defendants transacting business in Minnesota subject to the due process requirement that the defendants have minimum contacts with the state.  Minn. Stat. § 543.19 (2002); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564 (1980); Int’l Shoe v. Washington, 326 U.S. 310, 316-17, 66 S. Ct. 154, 158 (1945).  For three reasons we conclude that the district court properly exercised jurisdiction over Carrington and Cambridge Technology.

First, Carrington and Cambridge Technology signed Cambridge’s contract with Winthrop as guarantors.  Second, the forum selection clause in the guaranties provided that venue shall be in Minnesota and that jurisdiction shall be in Minnesota federal district court.  The guarantors do not dispute the designation of venue in Minnesota but argue that the provision allows the action only in Minnesota federal district court, not the Minnesota state courts.  The exact language of the forum-selection clause provides that “venue shall be in the State of Minnesota and jurisdiction shall be in the U.S. district court located in Minneapolis, Minnesota[.]”  The guarantors did not seek removal to federal court under diversity jurisdiction.  The district court properly considered the venue language as part of its determination on whether personal jurisdiction could be exercised over the Virginia guarantors.  See Interfund Corp. v. O’Byrne, 462 N.W.2d 86, 88 (Minn. App. 1990) (citing Nat’l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16, 84 S. Ct. 411, 414 (1964) (noting parties may submit to the jurisdiction of any court through contract)).

Third, and most importantly, the guarantors expressly agreed that they could be joined in any action brought against Cambridge on the lease.  This provision in the guaranty reflects the contractual purpose to allow all claims arising from the breach of the lease to be heard at the same time and in the same forum.  The district court did not err in concluding that it had personal jurisdiction over Carrington and Cambridge Technology for purposes of the breach-of-contract action.

II

The district court declined to order the joinder of Wells Fargo as an indispensable party or as the real party in interest on the lease schedules for which payment was directed to Wells Fargo.  Cambridge contends that this ruling violates Minn. R. Civ. P. 17.01, which provides that every action must be prosecuted in the name of the real party in interest.  The purpose of rule 17.01 is to protect defendants from facing multiple actions on a single claim.  Indep. Sch. Dist. No. 14 v. AMPRO Corp., 361 N.W.2d 138, 144 (Minn. App. 1985), review denied (Minn. Mar. 29, 1985).  We see scant support for the claim that Winthrop is not the real party in interest to prosecute the claims under the lease schedules.  Winthrop signed the lease schedules; the parties have not alleged that Wells Fargo maintained any interest in the schedules other than a right to collect the lease payments as they came due.  In this context, Wells Fargo’s rights were purely derivative of Winthrop’s with respect to the enforcement of the lease.  Therefore, a resolution of the lawsuit would necessarily bar any rights of Wells Fargo to collect the income stream under the lease schedules and eliminate the possibility of multiple actions.

Cambridge alternatively claims that Wells Fargo is an indispensable party as defined by Minn. R. Civ. P. 19.01.  Under rule 19.01 a person must be joined in an action if (a) in that person’s absence, complete relief could not be accorded among the existing parties; or (b) the person claims an interest in the subject of the action and is so situated that a disposition of the action in the person’s absence would impede the person’s ability to protect that interest or leave a current party subject to a substantial risk of incurring multiple or inconsistent obligations by reason of the person’s claimed interest.

The facts do not support a claim of incomplete relief or multiple liability if Wells Fargo is not joined.  Wells Fargo has not claimed an interest in the proceeding and has never sought to intervene.  Cambridge owes no duty to Wells Fargo under the contract.  The district court did not err in refusing to dismiss the action for failure to join Wells Fargo as an indispensable party. 

III

 

A district court’s decision to deny a motion for a continuance to conduct discovery is reviewed under an abuse-of-discretion standard.  Dunshee v. Douglas, 255 N.W.2d 42, 45 (Minn. 1977).  Under Minn. R. Civ. P. 56.06, a party may move for a continuance to conduct further discovery if it does not have facts that are essential to justify its opposition to the motion.  Minn. R. Civ. P. 56.06.  In deciding whether to grant a continuance, the court must consider whether the plaintiff has been diligent in seeking discovery before its motion and whether the proposed discovery is based on a good faith belief that further material facts will be uncovered.  Rice v. Perl, 320 N.W.2d 407, 412 (Minn. 1982).

In granting summary judgment for Winthrop, the district court implicitly denied Cambridge’s request for a continuance to conduct further discovery on the issue of whether Wells Fargo should be joined in the lawsuit and to discover how Winthrop calculated its casualty loss damages.  Winthrop moved for summary judgment in September 2002, but the summary judgment hearing was not held until January 2003, four months later.  Cambridge filed responsive affidavits on October 15, 2002; these affidavits contained facts sufficient to justify Cambridge’s opposition to the motion.  In view of the extended opportunity for discovery before the hearing and the contents of the responsive affidavits, we cannot conclude that the district court abused its broad discretion in denying Cambridge the opportunity to conduct further discovery.

IV

Relying on the rationale of Cobb v. Midwest Recovery Bureau, Co., 295 N.W.2d 232 (Minn. 1980), Cambridge argues that Winthrop should be estopped from claiming a default when Winthrop repeatedly accepted late payments from Cambridge.  Cobb established that a secured-party creditor’s repeated acceptance of late payments on a retail installment contract may impose a duty to notify the consumer debtor that strict compliance with the terms of the contract would be required before the creditor could lawfully repossess the collateral.  Id. at 237.  Cobb was determined on a theory of a consumer’s detrimental reliance.  Swift County Bank v. United Farmers Elevators, 366 N.W. 2d 606, 609 (Minn. App. 1985), review denied (Minn. June 24, 1985). 

The analysis in Cobb is inapposite.  Both Winthrop and Cambridge are corporate entities that may be assumed to have equal bargaining power, and the lease contained no Article 9 security interest under which Winthrop could engage in self-help repossession.  Furthermore, Winthrop’s May 2002 letter to Cambridge operated as a legally sufficient notification of default under the lease.  The letter stated that Winthrop could “no longer ‘hold back’ any further legal actions to collect on delinquent payments.”  Cambridge may not credibly argue that it detrimentally relied on Winthrop’s past practice of accepting late payments when Winthrop expressly notified Cambridge that legal action would be forthcoming to collect delinquent payments.

Similarly, Cambridge’s argument that Winthrop waived strict compliance with the terms of payment under the lease and sales agreements by repeatedly accepting late payments must fail.  Waiver constitutes “a voluntary and intentional relinquishment . . . of a known right.”  Montgomery Ward & Co. v. County of Hennepin, 450 N.W.2d 299, 304 (Minn. 1990) (citation omitted).  The record reflects that although Winthrop sometimes accepted late payments from Cambridge, Winthrop also repeatedly attempted to collect delinquent payments and sent notices of default, culminating in the May 2002 letter.  These actions illustrate Winthrop’s intent to enforce rather than waive its rights under the lease.

Cambridge alternatively argues that it retained the right to cure any default, because the lease provided that remedies may be pursued only “[s]hould any Event of Default occur and be continuing . . . .”  Cambridge maintains that it tendered payment to Winthrop before any default became “continuing.”  But the lease defines an event of default as “the nonpayment by Lessee of any Lease Charges when due, . . . which non-payment continues for a period of ten (10) days from the date when due.”  When read together these two provisions allow Winthrop to pursue its remedies if nonpayment continues for a period of ten days beyond the specified due date, and the default is “continuing.”  See Current Tech. Concepts, Inc. v. Irie Enters., 530 N.W.2d 539, 543 (Minn. 1995) (“[a] contract must be interpreted in a way that gives all of its provisions meaning”); see also Black’s Law Dictionary 316 (7th ed. 1999) (defining continuing as “uninterrupted”).

The invoices at issue were dated June 6, 2002, and had a stated payment due date of July 1, 2002.  The payments of these invoices on July 31, 2002 were received nearly a month after their due date.  Cambridge’s default continued uninterrupted well beyond the ten-day grace period specified in the lease.  The district court did not err in concluding that the lease did not provide Cambridge with an ongoing and unlimited right to cure its default. 

V

The district court granted summary judgment on Winthrop’s requested damages.  On appeal from summary judgment, we determine whether there are genuine issues of material fact and whether the district court erred in its application of the law.  Cummings v. Koehnen, 568 N.W.2d 418, 420 (Minn. 1997).  In assessing the evidence we take the view most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  But if the nonmoving party fails to raise a material issue of fact on an element essential to establishing its case, summary judgment is appropriate.  Lubbers v. Anderson, 539 N.W.2d 398, 410 (Minn. 1995).  “[E]ssential to granting a motion for summary judgment is a showing not only that the issue is one of law but also that the material facts which affect the result or outcome of the case are both disclosed and undisputed.”  Rossman v. 740 River Drive, 308 Minn. 134, 137, 241 N.W.2d 91, 93 (1976) (citation omitted).

Cambridge argues that the district court erred in granting summary judgment on the issue of casualty-loss damages because the lease is unclear in defining when a casualty loss may be claimed for a default and because the record does not support Winthrop’s calculations in reaching the casualty loss figure.

Cambridge maintains that the lease must be interpreted to require that in order to recover the “Casualty Loss Value” of the equipment, Winthrop must first claim a “casualty loss” as defined under paragraph 12 of the lease.  Cambridge raises this argument for the first time on appeal.  An appellate court generally reviews only issues raised and considered in the court below.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).  But even if we were to consider Cambridge’s argument on this issue, Minnesota law provides that if a lessee is in default under a lease contract, “the lessor may exercise the rights and pursue the remedies provided in the lease agreement.”  Minn. Stat. § 336.2A-523(3) (2002).

Although paragraph 12 of the lease defines the calculation of a “Casualty Loss Value,” paragraph 17 expressly allows Winthrop, on default by Cambridge, to seek concurrent remedies, including recovery of the “Casualty Loss Value” of the leased equipment, return of the equipment, and the acceleration of payments under the lease.  See In re Estate of Hoffbeck, 415 N.W.2d 447, 449 (Minn. App. 1987) (holding that on default, lessor had right both to repossess equipment and to accelerate all unaccrued rent).  Winthrop chose to seek casualty loss damages rather than to accelerate payments under the lease; it was within its contractual rights to pursue that remedy.  We reject Cambridge’s argument that the remedies provision is unconscionable.  See id. (listing standards for unconscionability).  The parties to this commercial contract bargained for its terms, and we cannot conclude that the district court erred in allowing casualty loss damages under the lease. 

Cambridge also maintains that the district court erred in granting summary judgment because a genuine issue of material fact exists on the proper calculation of casualty loss damages.  According to paragraph 12 of the lease, “Casualty Loss Value” is defined as the sum of:

(i)    the Monthly Lease Charges (and other amounts) due and owing under this Lease Agreement at the time of the Loss, plus (ii) one-hundred twelve (112%) percent of the original cost of the Equipment subject to the Loss amortized by the Monthly Lease Charges received by Lessor during the Initial Term using an amortization rate of 350 basis points over the interest rate of the three (3) year United States Treasury Note as reported by the Wall Street Journal on the Commencement Date . . . .

 

In seeking casualty loss damages, Winthrop presented an exhibit showing, in summary form, the original costs of the leases, the monthly lease charges, the months remaining on the lease, and a “casualty loss percent” for each lease, among other figures.  The total casualty loss value claimed for the four lease schedules amounted to $470,395.89.

We note that the lease itself does not refer to a “casualty loss percent,” and the district court record contains no detailed documentation to show exactly how the casualty loss value was calculated using the procedure specified in the lease.  At the summary judgment hearing, in response to the district court’s questions, Winthrop’s counsel stated that he could not personally come up with a number for the casualty loss using the formula in the lease.  He stated that an officer of Winthrop had made the calculations; however, no detailed affidavit was submitted to indicate how the formula was applied.  In addition, the record contains inconsistencies on the starting dates for lease payments among several of the lease schedules, the payment history submitted by Winthrop, and Winthrop’s statement of casualty loss damages.  Because a material factual issue exists on the proper amount of casualty loss damages due under the lease, summary judgment on damages is premature.

Cambridge’s challenge to the application of a casualty loss in ordering damages also includes a challenge to the court’s failure to provide that if the computer equipment is sold or re-leased, Winthrop would be required to credit any judgment for proceeds of the sale, less costs.  In its memorandum of law accompanying the order denying Cambridge’s motions for posttrial relief, the court noted that under the terms of the lease, Winthrop would be required to apply the proceeds to the amounts owed by the defendants.  The court’s memorandum of law was incorporated into that order.  But because the order only denied Cambridge’s posttrial relief, and the issue was not expressly addressed in the earlier summary judgment order, the court, on remand, should specifically state the effect of sale or re-lease on the judgment amount.

VI

 

We review a district court’s order for attorneys’ fees under an abuse-of-discretion standard.  Becker v. Alloy Hardfacing & Eng’g. Co., 401 N.W.2d 655, 661 (Minn. 1987).  The lease expressly provides that in the event of default by the lessee, the lessor may recover its costs and attorneys’ fees.  Although determination of the amount for attorneys’ fees is within the district court’s discretion, the factors to be considered include “time and effort required, novelty or difficulty of the issues, skill and standing of the attorneys, value of the interest involved, results secured at trial . . . customary charges for similar services, and certainty of payment.”  Jadwin v. Kasal, 318 N.W.2d 844, 848 (Minn. 1982). 

In determining the amount of attorneys’ fees the district court found that the hourly rate was reasonable and customary, the time and labor expended appropriate, and the results obtained were what were sought.  The use of multiple attorneys does not by itself establish excessive attorneys’ fees.  See Wolfson v. City of St. Paul, 535 N.W.2d 384, 389 (Minn. App. 1995) (holding that district court did not abuse discretion in allowing attorneys’ fees based on work of two attorneys), review denied (Minn. Sept. 28, 1995).  The district court found credible Winthrop’s contention that it had spent substantial time in responding to Cambridge’s posttrial motions, and Winthrop’s counsel provided detailed time records to substantiate its claim for fees and costs.  On this record, we cannot conclude that the district court abused its discretion in determining the amount of attorneys’ fees.

            Affirmed in part, reversed in part, and remanded.



* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.