may not be cited except as provided by
Minn. Stat. §480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Hennepin County District Court
File No. AC9610804
John F. Bonner III, Malkerson Gilliland Martin, LLP, 901 Marquette Avenue, Suite 1500, Minneapolis, MN 55402 (for appellant)
Considered and decided by Schumacher, Presiding Judge, Norton, Judge, and Willis, Judge.
Appellant challenges a contract damages award, alleging that claims were barred by the statute of limitations, respondent failed to mitigate damages, and the doctrine of unjust enrichment does not apply here. The trial court properly ruled that the statute of limitations does not bar respondent's claims and awarded reasonable compensation for the medical services respondent provided. The trial court's application of the unjust enrichment doctrine was harmless error. We affirm.
When Malberg first came to see Dr. Smieja, she provided him with the name and claim number for the store's insurer and instructed him to send bills to that insurer. Dr. Smieja followed Malberg's instructions, but the store's insurer failed to pay. When Dr. Smieja inquired, the insurer explained that the case was in litigation and would not discuss it further.
In November 1988, Dr. Smieja discussed this situation with Malberg's attorney, who requested that the doctor submit required forms to Malberg's husband's health and accident insurance carrier. Dr. Smieja explained to Malberg that she would have to pay a deductible, she would have a co-payment on each bill, and her lifetime coverage could be reduced. Under these circumstances, Malberg strenuously objected to submitting her claims to her husband's insurer. Malberg agreed to pay all medical costs when her case against the store was concluded. Dr. Smieja and Malberg agreed that the doctor would continue billing the store's insurer as he had in the past. The doctor confirmed this arrangement in a letter that he sent to Malberg and her attorney.
After Dr. Smieja retired, he sent a letter to Malberg about the outstanding bill. In response to this letter, Malberg disputed that she owed him the money, refused to pay, and had her attorney instruct Dr. Smieja to submit his claim to her husband's insurer. When Dr. Smieja submitted his bills, however, the insurer objected to the delay and refused to pay.
Dr. Smieja then brought this action in conciliation court to recover payment from Malberg. The conciliation court awarded Dr. Smieja judgment. Malberg removed the case to district court. After a trial, the court found that Dr. Smieja had not been completely compensated for his medical services and awarded him contract damages. The court ruled that Malberg had agreed to pay for her medical costs, that Dr. Smieja's claims were within the statute of limitations, and that Malberg would be unjustly enriched if allowed to retain the benefit of the medical services without paying for them.
1. Statute of limitations
Malberg contends the trial court erroneously ruled that the doctor's "claims are within the Statute of Limitations for services provided which were concluded in July 1991." Dr. Smieja's claims against Malberg allege a breach of contract. Minn. Stat. § 541.05, subd. 1(1) (1996), creates a six-year statute of limitations for actions based on contract. The limitations period begins to run when the cause of action accrues, unless a statute provides otherwise. Minn. Stat. § 541.01 (1996). A cause of action accrues when a party may commence an action without being dismissed for failure to state a claim. Levin v. C.O.M.B. Co., 441 N.W.2d 801, 803 (Minn. 1989).
Malberg argues that the chiropractic services she received from Dr. Smieja were not part of a "continuous course of treatment" that ended in 1991, but rather were specific, unplanned, separate contracts for chiropractic treatment that arose each time Malberg had an appointment. We will not set aside the trial court's findings of fact unless they are clearly erroneous. Hyland Hill N. Condominium Ass'n v. Hyland Hill Co., 549 N.W.2d 617, 621 (Minn. 1996), cert. denied, 117 S. Ct. 610 (1996). The record supports the "continuous course of treatment" finding; Dr. Smieja treated Malberg from 1987 through 1991 for injuries and symptoms related to a single incident.
Furthermore, the doctor's claims are based on Malberg's agreement to pay for medical services. Malberg negotiated that contract in 1988 and breached it in 1992. An action for breach of contract accrues at the time the breach occurs, even though actual damages may occur later. Estate of Riedel v. Life Care Retirement Communities, Inc., 505 N.W.2d 78, 81 (Minn. App. 1993). There, this court held that the breach of contract claim was timely because the cause of action accrued at the time of breach; the breach occurred when the retirement village miscalculated the refund due from the decedent's endowment fee and refused to pay the heirs. Id.
Here, Malberg agreed in 1988 to have the doctor continue billing through the store's insurer, as he had in the past, in order for Malberg to avoid the expense of changing insurance companies; Malberg agreed to pay the medical costs when her case was concluded. Thus, the billing and payment arrangement between Malberg and Dr. Smieja was a negotiated agreement from which Malberg benefited. When Dr. Smieja requested payment after his retirement, Malberg breached that agreement and refused to pay. As in Estate of Riedel, 505 N.W.2d at 81, the statute of limitations here began to run when this breach occurred. Dr. Smieja sued four years later; the trial court properly determined that his claims are not barred by the statute of limitations.
2. Mitigation of damages
Malberg contends the trial court erred by allowing Dr. Smieja to recover when he had failed to mitigate damages. A nonbreaching party has a duty to take reasonable steps to mitigate damages. Lesmeister v. Dilly, 330 N.W.2d 95, 103 (Minn. 1983); Nelson v. Smith, 349 N.W.2d 849, 854 (Minn. App. 1984), review denied (Minn. July 26, 1984). But the defendant has the burden of showing that damages could have been mitigated with reasonable diligence. Lanesboro Produce & Hatchery Co. v. Forthun, 218 Minn. 377, 381, 16 N.W.2d 326, 328 (1944).
Malberg argues that Dr. Smieja failed to mitigate damages because he never sent her copies of the medical bills from 1987 to 1992 and never informed her that the store's insurer was not paying the bills. Had the doctor informed her of the problem, Malberg contends she would have referred him earlier to her husband's insurer. We are not persuaded. The record shows that Dr. Smieja informed Malberg of his problems with the insurer as early as 1988, when they discussed alternative ways of processing the medical bills and agreed that the doctor would continue to submit process bills to the store's insurer, based on Malberg's promise to pay all medical costs when her case was concluded. In 1992, Dr. Smieja again demanded payment from Malberg. Malberg did not meet the burden of showing the doctor's failure to mitigate. The trial court properly enforced the parties' agreement and did not err in allowing Dr. Smieja to recover contract damages for the medical services he provided.
3. Unjust enrichment
Malberg contends the trial court improperly applied the doctrine of unjust enrichment to this case. The court noted that Malberg would be unjustly enriched if she received the benefit of Dr. Smieja's medical services without payment after she represented that she would pay for such services and received a settlement to help pay for those services.
An unjust enrichment claim arises when a party obtains a benefit illegally or unlawfully. Midwest Sports Marketing, Inc. v. Hillerich & Bradsby of Canada, Ltd., 552 N.W.2d 254, 268 (Minn. App. 1996), review denied (Minn. Sept. 20, 1996). Generally, however, equitable relief under the doctrine of unjust enrichment is not available when a valid contract governs the rights of the parties. United States Fire Ins. Co. v. Minnesota State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981). Nevertheless, a party to a contract may recover on an unjust enrichment claim if the contract is not a "full agreement concerning the details of compensation." Holman v. CPT Corp., 457 N.W.2d 740, 745 (Minn. App. 1990), review denied (Minn. Sept. 20, 1990).
Because a valid contract governs the rights of the parties, the doctrine of unjust enrichment does not apply here. United States Fire Ins. Co., 307 N.W.2d at 497 (when valid contract governs parties' rights, equitable relief cannot be granted). In light of the fact that the agreement between Malberg and the doctor was a "full agreement concerning the details of compensation," the trial court erroneously applied the doctrine of unjust enrichment to the doctor's claim. Holman, 457 N.W.2d at 745. This error is harmless, however, in light of the fact that Malberg remained liable for Dr. Smieja's damages on the basis of breach of contract.