may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Norman P. Friederichs,
Kinney & Lange, P.A., et al.,
Affirmed in part and reversed in part
File No. 944038
James T. Diamond, Jr., Diamond & Maeyaert, 7380 France Avenue South, Suite 250, Minneapolis, MN 55435 (for appellant)
Donald E. Horton, Michelle M. Lore, Horton & Associates, 4930 West 77th Street, Suite 210, Minneapolis, MN 55435 (for respondents)
Considered and decided by Short, Presiding Judge, Amundson, Judge, and Mulally, Judge.[*]
After being terminated from his shareholder position at Kinney & Lange, P.A., Norman P. Friederichs filed a 14-count complaint against Kinney & Lange, P.A., and firm shareholders David Fairbairn and Jo Fairbairn (collectively, the firm) on the basis of his termination and the firm's alleged breach of three employment-related agreements. The firm counterclaimed against Friederichs, asserting, among other things, defamation per se.
While the lawsuit was pending, Friederichs learned of an unfavorable federal court decision involving Munsingwear, a former client of Friederichs's, which had continued to be represented by the firm. In an apparent attempt to regain Munsingwear as a client, Friederichs wrote a letter to that company's in-house counsel requesting a conference to discuss alternative strategies for the Munsingwear case. In pertinent part, Friederichs's letter stated:
Considering the evidence cited by the court, it is surprising that you could have lost absent someone having dropped the ball in handling the law in briefing or argument. I have several thoughts on how to overturn the decision. I would be happy to meet with you and share those thoughts with you as a matter of courtesy, without charge of course.
* * * I believe you have a very strong chance of having the recent Order overturned if the proper strategy is followed.
(Emphasis added.) Upon receipt, the company's in-house counsel showed the letter to David Fairbairn, firm shareholder and lead counsel on the Munsingwear case, and also brought the letter to the attention of Munsingwear's board of directors.
At the court trial of this employment case, the court received Friederichs's letter to Munsingwear as an additional basis for finding defamation per se on the counterclaim. At the conclusion of trial, the court dismissed all of Friederichs's claims, with the exception of breach of fiduciary duty, and ordered judgment in favor of the firm on its defamation per se counterclaim. The court awarded the firm $30,000 in damages and $18,279.29 in costs and disbursements. On appeal, Friederichs argues the trial court erred in finding defamation per se because: (1) the firm did not amend its pleadings to include a claim based on Friederichs's letter; (2) the letter's contents were opinion not rising to the level of defamation per se; and (3) the firm did not prove the letter's statements were false. Friederichs also appeals both the $30,000 damages award and the award of costs and disbursements. We affirm, but reverse the award of costs related to the firm's acquisition of a partial trial transcript.
Friederichs argues that because the firm failed to amend its pleadings to include a defamation claim based on his letter, the trial court erred by addressing that claim. The Minnesota Rules of Civil Procedure provide:
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of a trial of these issues.
Minn. R. Civ. P. 15.02 (emphasis added). Thus, issues litigated by consent are treated as though they were raised in the pleadings. Roberge v. Cambridge Coop. Creamery Co., 243 Minn. 230, 234, 67 N.W.2d 400, 403 (1954); Shandorft v. Shandorft, 401 N.W.2d 439, 442 (Minn. App. 1987) (same). Consent is commonly implied where a party fails to object to evidence outside the scope of the pleadings or introduces his own evidence relating to such issues. Roberge, 243 Minn. at 234, 67 N.W.2d at 403.
The firm concedes it never formally moved to amend its pleadings to reflect a defamation per se claim based on the letter. However, the record demonstrates: (1) the firm's original pleadings included a count of defamation per se; (2) Friederichs was questioned regarding the letter during the discovery process; (3) when the firm offered the letter into evidence at trial, Friederichs did not challenge it as outside the pleadings; (4) the trial court admitted the letter into evidence as a separate basis for the firm's defamation per se claim; (5) both parties conducted direct and cross-examination of witnesses regarding the letter's contents and the Munsingwear case; and (6) the letter was listed in a damages calculation reviewed by Friederichs and introduced into evidence at trial. Given these facts, Friederichs consented to litigation over the letter. We cannot say the trial court erred in deciding the firm's defamation per se claim on that basis.
A defamatory communication is one that causes enough harm to one's reputation to lower the community's estimation of that person or deter others from associating or dealing with that individual. Weissman v. Sri Lanka Curry House, Inc., 469 N.W.2d 471, 473 (Minn. App. 1991). Imputations concerning one's business, trade, or profession are actionable per se, without proof of actual damages. Anderson v. Kammeier, 262 N.W.2d 366, 372 (Minn. 1977); see also High v. Supreme Lodge of the World, 214 Minn. 164, 168, 7 N.W.2d 675, 678 (1943) (requiring statements to rise to level of "gross, culpable neglect" before finding slander per se).
Friederichs argues the trial court erred in finding his letter constituted defamation per se because: (1) the statements did not rise to the level of "gross, culpable neglect." We disagree. In the letter, Friederichs: (1) used the phrase "dropped the ball" with direct reference to "handling the law in briefing or argument" in the Munsingwear case; and (2) told Munsingwear it had a strong chance of overturning the unsatisfactory order if "the proper strategy is followed," which implied the firm had used the wrong approach. The statements contained in the letter went directly to the heart of the firm's professional capability and reputation. See High, 214 Minn. at 168-69, 7 N.W.2d at 678 (concluding it is defamatory per se to imply attorney's efforts in particular litigation were grossly negligent). Under these circumstances, the trial court did not err in finding the statements constituted defamation per se.
Friederichs also argues the letter was composed of nonactionable opinion. See Diesen v. Hessburg, 455 N.W.2d 446, 451 (Minn. 1990) (concluding challenged speech was protected opinion), cert. denied, 498 U.S. 1119 (1991); see, e.g., McGrath v. TCF Bank Savings, FSB, 502 N.W.2d 801, 808 (Minn. App. 1993) (finding the phrase "troublemaker" did not give rise to action in defamation), aff'd as modified, 509 N.W.2d 365 (Minn. 1993). However, Minnesota law does not insulate statements of "opinion" that can reasonably be understood to state facts. Geraci v. Eckankar, 526 N.W.2d 391, 397 (Minn. App. 1995) (citing Milkovich v. Lorain Journal Co., 497 U.S. 1, 18-21, 110 S. Ct. 2695, 2705-07 (1990)), review denied (Minn. Mar. 14, 1995), cert. denied, 116 S. Ct. 75 (1995); see McGrath, 502 N.W.2d at 808 (examining precision, specificity, and verifiability of statement); see, e.g., Weissman, 469 N.W.2d at 473 (finding accusation of dishonesty was actionable because it implied commission of specific acts of dishonesty). The statements in Friederichs's letter can reasonably be understood to imply the firm was incompetent in its representation on the Munsingwear matter. Therefore, the trial court properly found the letter was actionable in defamation under Minnesota law.
Friederichs further argues the trial court erred because the firm failed to prove the letter's statements were false. See Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980) (requiring defamation plaintiff to prove falsity of statements as part of prima facie case). However, the record demonstrates: (1) at trial, the firm's counsel questioned David Fairbairn extensively regarding the firm's role in the Munsingwear litigation; (2) Fairbairn testified regarding the firm's competent and appropriate handling of the case; and (3) Friederichs introduced no evidence to the contrary. Given these facts, the trial court acted within its discretion in finding the letter's statements were false.
Friederichs argues the $30,000 damage award should be set aside as excessive because the firm did not lose Munsingwear as a client and can point to no specific damages it suffered as a result of the letter. However, because the statements made by Friederichs were defamatory per se, damages are presumed. See Stuempges, 297 N.W.2d at 259 (presuming existence of injury upon showing of defamation per se and leaving determination of award to fact finder's discretion). The damage award is not manifestly or palpably contrary to the evidence, and we decline to set it aside. See Frankson v. Design Space Int'l, 380 N.W.2d 560, 568 (Minn. App. 1986) (affirming award that was not manifestly or palpably contrary to the evidence), aff'd in part, rev'd in nonrelevant part, 394 N.W.2d 140 (Minn. 1986).
Friederichs also argues the trial court erred in concluding the firm was the "prevailing party" for purposes of costs and disbursements. See Minn. Stat. § 549.04 (1996) (allowing reasonable costs to prevailing party). We disagree. It is within the trial court's discretion to determine which party is the prevailing party entitled to costs and disbursements, and we will not overturn the determination absent a clear abuse of that discretion. In re Will of Gerschow, 261 N.W.2d 335, 340 (Minn. 1977). When making this determination, courts should consider the general result of the litigation, and who has, in view of the law, succeeded in the action. Haugland v. Canton, 250 Minn. 245, 254, 84 N.W.2d 274, 280 (1957). The record demonstrates: (1) the trial court dismissed all of Friederichs's claims, with the exception of one claim for which he did not receive a damage award; (2) the firm succeeded in its defamation per se and breach of fiduciary duty claims; and (3) the trial court awarded the firm $30,000 in damages on the defamation claim. Given these facts, we cannot say the trial court erred in finding the firm was the prevailing party.
Friederichs further challenges the reasonableness of the trial court's cost award. After a careful review of the award, we conclude the trial court did not abuse its discretion except as to the award of costs for the partial transcript. Absent an agreement by the parties, costs for partial trial transcripts are not taxable and awardable as costs. Striebel v. Minnesota State High Sch. League, 321 N.W.2d 400, 403 (Minn. 1982); Salo v. Duluth & Iron Range R.R., 124 Minn. 361, 363-64, 145 N.W. 114, 115 (1914). It is undisputed the parties did not agree to allow partial trial
transcripts as a taxable cost. Therefore, we reverse the award of $1,245 related to the firm's acquisition of a partial trial transcript.
Affirmed in part and reversed in part.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.